Saba Partnership, Brunswick Corporation, Tax Matters Partnership - Page 86




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         note to BFCE.  The swap, which was designed to replicate the                 
         economic effect of investing in an amortizing loan that paid a               
         margin over LIBOR, effectively converted the purchase of the                 
         LIBOR Note, from BFCE's perspective, to a synthetic amortizing               
         asset at a rate above LIBOR.                                                 
              E.  Brunswick Swaps                                                     
              On April 5, 1990, Brunswick and Merrill Lynch entered into              
         an Interest Rate and Currency Exchange Agreement to govern                   
         anticipated swap transactions between them.  On July 16, 1990,               
         concurrent with Brunswick's purchase of 50 percent of Sodbury's              
         interest in Saba, Brunswick and Merrill Lynch entered into a swap            
         agreement.  Brunswick used the swap to hedge a substantial                   
         percentage of its interest in the LIBOR notes held by Saba.                  
              On August 20, 1990, concurrent with the Saba's distribution             
         of 3 LIBOR notes to Brunswick, Brunswick and Merrill Lynch                   
         entered into a second swap agreement.  Brunswick used the swap to            
         hedge a substantial percentage of its interest in the LIBOR                  
         notes.                                                                       
              On September 6, 1990, Brunswick and Merrill Lynch partially             
         terminated the July 16, 1990, swap in connection with Brunswick's            
         sale of the 3 LIBOR notes to BOT.  The July 16, 1990, swap was               
         completely terminated on July 2, 1991, following SBC's sale of               
         the remaining Norinchukin LIBOR note.  On September 6, 1990,                 
         Brunswick and Merrill Lynch partially terminated the August 20,              





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