- 13 -
Immediately following the closing, pursuant to MGM's prior
irrevocable instructions, the Disbursing Agent transferred
$22,725,000 from MGM's account to UA's account in partial payment
of amounts due from MGM to UA under clause 6.4 of the Merger
Agreement.12 On or shortly after March 25, 1986, MGM made a net
intercompany loan of approximately $107.7 million cash to TBS, in
accordance with TBS' customary cash management procedures. This
intercompany loan was reflected on MGM's books as an intercompany
receivable (i.e., as an asset of MGM).
The status of the parties on March 25, 1986, after the
completion of the transactions contemplated in the transaction
documents, was as follows:
a. TBS, directly and through wholly owned subsidiaries,
owned 100 percent of MGM.
b. TBS had disbursed $994,902,740 cash and 49,745,137
shares of TBS Preferred Stock and received $107.7 million cash in
an intercompany loan from MGM.
c. MGM had disposed of UA.
d. MGM had received $447,706,233 cash, which it had used in
part to prepay its $294,809,215 debt to the banks and to satisfy
a $40 million obligation to UA.
12Clause 6.4 of the Merger Agreement provided for "Post
Closing Adjustment[s]". These adjustments related to the
allocation of the economic, financial and legal consequences of
transactions occurring during the period from May 31, 1985, to
March 25, 1986, as reflected in the intercompany accounts between
MGM and UA.
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