BTR Dunlop Holdings, Inc. - Page 9




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               BTR Dunlop was also interested in acquiring Schlegel                   
          Corporation because BTR Dunlop had a small sealing systems                  
          business that Schlegel Corporation fit into synergistically.  BTR           
          Dunlop submitted a bid to purchase Schlegel Corporation on                  
          December 12, 1988.  BTRS Acquisition, a New York corporation, was           
          formed on December 20, 1988, as a wholly owned subsidiary of BTR            
          Dunlop, joining the BTR affiliated group.  BTRS Acquisition                 
          subsequently purchased Schlegel Corporation on January 27, 1989,            
          for $200 million plus the assumption of $33,864,000 in debt.                
          Immediately thereafter, BTRS Acquisition merged into Schlegel               
          Corporation pursuant to a merger agreement dated December 22,               
          1988.  As a result, Schlegel Corporation became a wholly owned              
          subsidiary of BTR Dunlop.                                                   
               In January 1989, James Thom (Thom), treasurer of BTR Plc,              
          contacted Robert Coyle (Coyle), director of taxation of BTR                 
          Dunlop, concerning the potential transfer of Schlegel UK and                
          Schlegel GmbH to BTR Plc and BTR International.  Thom asked Coyle           
          to calculate the "tax cost" of the transfers, i.e., the Federal             
          capital gain tax that would have to be paid in the event of these           
          transfers.  Shortly thereafter, Schlegel Corporation hired                  
          Valuation Research Corporation (VRC), an appraisal firm, to value           
          the stock of Schlegel UK and Schlegel GmbH.                                 
               Assisting in the VRC valuation, Schlegel Corporation                   
          management prepared sales forecasts for the automotive and                  





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