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Brunswick filed a Form 1120 (U.S. Corporation Income Tax
Return) for 1990 reporting capital gains of $29,809,938 and
$100,782,182 attributable to the sales of its Technetics division
businesses and Nireco stock, respectively.
D. Merrill Lynch Partnership Proposal
In December 1989, after Brunswick had announced its
intention to sell its Technical businesses and Nireco stock,
Brunswick officials, including McManaman, Erwin, and Zelisko, met
with representatives of Merrill Lynch's investment banking group,
including E.S.P. Das (Das), managing director and vice chairman
of Investment Banking, Arshad R. Zakaria (Zakaria), Thomas R.
Williams, Jr. (Williams), and Jeff Neal (Neal). During this
meeting, Das described a structured transaction, including the
formation of a partnership between Brunswick and a foreign
financial institution, that would generate capital losses that
Brunswick could use to offset the capital gains that it would
realize from the sale of its Technical businesses.
Merrill Lynch used flowcharts in making its presentation to
Brunswick. The only scenario depicted in the flowcharts was a
tax loss for Brunswick.
E. The Zelisko Memorandum
In January 1990, O'Brien and Zelisko attended a second
meeting with Das and other Merrill Lynch representatives for
further discussions regarding the partnership proposal. On
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