- 10 -
WFNNB: Capitalization and Liquidity Needs
WFNNB had cash (liquidity) needs that could not be met
without borrowing. Limited Service Corp. (Limited Service),
another member of the affiliated group, performed the “treasury
function” for WFNNB. That function included assisting WFNNB in
meeting its liquidity needs. Limited Service had access to funds
generated by petitioner’s sale of its commercial paper.
Initially, WFNNB’s liquidity needs were met from within the
affiliated group. On May 1, 1989, Limited Service granted WFNNB
a line of credit in the amount of $500 million. On December 1,
1993, Limited Service increased to $1 billion the line of credit
it granted to WFNNB. At various times, WFNNB obtained funds from
Limited Service pursuant to various other long- and short-term
loan agreements. WFNNB also borrowed money from, and was granted
lines of credit by, various unrelated, outside lenders. On
December 4, 1992, WFNNB was granted a $280 million line of credit
by a syndicate of 17 banks. WFNNB never drew on that line of
credit because it could obtain funds less expensively from
Limited Service.
Certificates of Deposit
WFNNB first issued (sold) a certificate of deposit (CD) on
May 1, 1989. That CD was sold to Limited Service for $100,000,
the minimum acceptable time deposit pursuant to the CEBA
restrictions incorporated in the articles.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011