- 26 -
When a Laidlaw entity asked for an advance, LIIBV asked LIL
to provide funds for the transaction. When LIL advanced those
funds to LIIBV, LIL told LIIBV to record the advance as an
interest-free loan and as a capital contribution, in proportions
designated by LIIBV and Coopers & Lybrand. This was done in part
to comply with Dutch tax rulings.
Written agreements between LIL and LIIBV generally required
LIL to provide funds requested by LIIBV, as long as those amounts
were no more than amounts that LIIBV agreed to advance to
petitioners or their subsidiaries. LIIBV agreed to repay
advances from LIL on demand. LIIBV's managing directors issued
more stock to LIL as needed to make LIIBV's debt to equity ratio
comply with Dutch tax rulings.
2. Advances at Issue
LIIBV transferred the following amounts of money to Transit,
LWSI, and Tree during the years in issue:
LIIBV Advances To -- CUMULATIVE
DATE TRANSIT LWSI TREE TOTAL BALANCE
12/18/85 $5,000,000 -0- -0- $5,000,000 $5,000,000
02/18/86 18,000,000 -0- -0- 18,000,000 23,000,000
04/29/86 30,100,000 $29,000,000 -0- 59,100,000 82,100,000
05/29/86 9,588,797 -0- -0- 9,588,797 91,688,797
08/06/86 54,000,000 -0- -0- 54,000,000 145,688,797
08/28/86 2,204,674 -0- -0- 2,204,674 147,893,471
Total FY1986 118,893,471 29,000,000 -0- 147,893,471
10/20/86 -0- 124,812,613 -0- 124,812,613 272,706,084
11/10/86 43,800,000 125,000,000 -0- 168,800,000 441,506,084
11/25/86 5,870,270 -0- -0- 5,870,270 447,376,354
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