- 15 - January 26, 1990, Zelisko prepared a memorandum, addressed to Erwin and McManaman, summarizing the Merrill Lynch partnership proposal in pertinent part as follows: Set forth below is a bullet point summary of a transaction proposed by Merrill Lynch to Brunswick Corporation (BC) on December 8, 1989 to generate sufficient capital losses to offset the capital gain which will be generated on the sale of the Nireco shares. The specific dollar amounts can be adjusted to increase or decrease the capital loss required. Step 1: BC and an unrelated foreign partner (FP) would form a Partnership no later than March 1, 1990 with BC contributing $20 million in cash and the FP contributing $180 million in cash. The Partnership would have a fiscal year-end of March 31st since that would be the year-end of the FP, the majority Partner. Step 2: Partnership buys a private placement note for $200 million with the cash in the Partnership and holds the note for one month. Step 3: Before March 31, 1990, the Partnership would sell the $200 million private placement note for $160 million in cash and five-year contingent note with an assumed fair market value (fmv) of $40 million. Under this contingent note, payments would be made to the Partnership over a five-year period equal to LIBOR[1] times a fixed notional principal. The details concerning the terms of this note require further discussion by the Treasury Department with Merrill Lynch. 1 LIBOR is an acronym for London Interbank Offering Rate which is the primary fixed income index reference rate used in European financial markets.Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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