Laidlaw Transportation, Inc. and Subsidiaries - Page 77

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          Indus. Park v. United States, 561 F.2d at 581; Jewell Ridge Coal            
          Corp. v. Commissioner, 318 F.2d 695, 698 (4th Cir. 1963), affg.             
          T.C. Memo. 1962-194.  Rademacher's position would subject the               
          creditor to undue risk.                                                     
               Jacobs testified that it would have been possible for                  
          petitioners to get large loans.  However, he said that loans this           
          size would require security because petitioners were highly                 
          leveraged.  He cited examples of large bank loans made to highly-           
          leveraged companies during the years in issue.  However, those              
          examples are not compelling here because those loans were to                
          companies that were much larger than petitioners, and they                  
          included various security arrangements including guaranties, as             
          here.  Jacobs concluded that it was not clear that LTI and LII              
          could have borrowed as much from commercial banks as they                   
          received from LIIBV.  He said they might have been able to borrow           
          large amounts if they first had a public offering of subordinated           
          debt.                                                                       
               Petitioners contend that Enger testified that petitioners              
          could have obtained bank financing in the amounts that LIIBV                
          advanced to petitioners.  We disagree.  Enger testified that                
          petitioners could not obtain bank financing from commercial                 
          lenders on terms comparable to the LIIBV agreements, and could              
          obtain financing only by using equity and subordinated and senior           
          indebtedness.                                                               
               Petitioners contend that the three investment bankers'                 
          proposals show that they could have reasonably obtained                     



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