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Revenue Rulings to the Trust's indebtedness on
the Trust Note to Seller.
* * * * * * *
In contrast to the facts in Franklin, (i)
the Unitholders will be personally obligated to
pay the Trust Note, (ii) the Transaction will
generate cash flow, if Additional Rent is paid,
to the Trust and, therefore, to the Unitholders,
(iii) the Trust Note will require no lump sum
payments in the event of a default thereunder,
in order completely to amortize the principal and
(iv) in the opinion of the Appraiser, the fair
market value of the Equipment when purchased
will not be less than its purchase price and the
estimated residual value of the Equipment at the
end of the Leases could be expected to be at
least 20 percent of the purchase price.
[Emphasis added.]
As discussed above, however, it is apparent from the
face of the Appraisal that the value determination made by
the Appraisal is wrong. It is based upon the present value
of the aggregate residual values of the equipment upon the
expiration of the initial user leases, rather than upon the
expiration of the 96-month master leases. Accordingly, the
Appraisal cannot reasonably be relied upon to establish the
fact that "the fair market value of the Equipment when
purchased will not be less than its purchase price."
Second, the fact that the equipment "should have a
value at the end of the terms of the [Master] Leases (the
'residual value'), without regard to inflation, equal to
or exceeding 20 percent of its cost" is one of the key
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