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Tridel Corp. (Tridel) provided overall management and
planning for all of the affiliated corporations.
In 1990, Del Commercial needed funds to refinance and to make
improvements to some of its real property located in the United
States. In order to obtain the necessary funds, officers of
Tridel, acting on advice of an accounting firm, initiated and
planned the following essentially simultaneous transactions.
On July 18, 1990, the Royal Bank of Canada (Royal Bank), an
independent Canadian commercial bank, lent $14 million1 to Delcom
Financial Ltd. (Delcom Financial) at an interest rate based on a
specified bank prime interest rate plus one-half percent per
annum, payable in 20 approximately equal quarterly installments
due in full on July 15, 1995 (Royal Bank loan).
On July 18, 1990, Delcom Financial purportedly made an
unsecured loan to Delcom Holdings Ltd. (Delcom Holdings) in the
principal amount of $14 million at the same bank prime interest
rate plus five-eights percent per annum. Delcom Holdings issued
a promissory note to Delcom Financial in exchange for the
purported loan.
On July 18, 1990, Delcom Holdings purportedly contributed $14
million to Delcom Cayman Ltd. (Delcom Cayman) in exchange for
common shares of stock in Delcom Cayman. Delcom Cayman then
purportedly contributed $14 million to Delcom Antilles N.V.
1 All references to dollars are to U.S. dollars.
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