Laidlaw Transportation, Inc. and Subsidiaries - Page 21

                                        - 21 -                                        
          investment banks' proposals and use funds from LIIBV to pay for             
          GSX.                                                                        
               LTL assigned its rights and obligations under the GSX                  
          purchase agreement to LWSI before the closing date.  LTL and LTI            
          recorded the transaction on their books as an intercompany                  
          receivable owed to LTL by LTI.  LTI recorded the transaction as             
          an intercompany receivable owed by LWSI.                                    
               LTL borrowed $349,812,613 from TDB on September 30, 1986,              
          and on October 10, 1986, deposited it in a GSX purchase escrow              
          account.  In a document entitled "Loan Agreement" signed by                 
          Cairns and dated as of September 30, 1986, LTL agreed to many               
          conditions for the loan that typically accompany commercial                 
          loans, including not to allow its ratio of current assets to                
          current liabilities to be less than 1 to 1, its debt to equity              
          ratio13 to be greater than 2.5 to 1, its cash-flow ratio14 to be            
          less than 1.25 to 1, and its net worth to be less than C$325                
          million.                                                                    
               On October 10, 1986, LWSI wrote promissory notes payable to            
          LTI on demand for $124,812,613, $125 million, and $100 million (a           
          total of $349,812,613).  Each promissory note required LWSI to              




               13 Debt to equity ratio is computed by dividing the debt of            
          a company by its shareholders' equity.  The ratio indicates the             
          level of financing that is provided by the company's shareholders           
          and its creditors.                                                          
               14 Cash-flow ratio is computed by dividing cash-flow by                
          anticipated debt payments.                                                  




Page:  Previous  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  Next

Last modified: May 25, 2011