Saba Partnership, Brunswick Corporation, Tax Matters Partnership - Page 98




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         value of the Sumitomo LIBOR notes based on the sum of the par                
         value of the IBJ CDs plus accrued interest, less the private                 
         placement discount and the cash received upon the sale of the IBJ            
         CDs, as follows:                                                             
         Par value of IBJ CDs                    $100,000,000                         
         Plus accrued interest (through 7/29)         201,562                         
         100,201,562                                                                  
         Less private placement discount         (750,000)                            
         Net amount                                99,451,562                         
         Less cash received                      (80,000,000)                         
         Merrill Lynch origination value         $19,451,562                          
         Sumitomo valued the LIBOR notes that it had issued to Otrabanda              
         at $18,905,565.                                                              
              According to Pepe's computations, Otrabanda received                    
         consideration totaling $99,451,562 consisting of the $80 million             
         in cash and the Sumitomo LIBOR notes with a present value of                 
         $19,451,562.  The difference between the par value of the IBJ CDs            
         plus accrued interest ($100,201,562) and the total consideration             
         that Otrabanda received ($99,451,562) reflects the $750,000                  
         private placement discount on the sale of the IBJ CDs.                       
         Contrary to the origination value that Pepe assigned to the                  
         Sumitomo LIBOR notes, Otrabanda carried the LIBOR notes on its               
         audited and unaudited financial statements at their cost of                  
         $20,201,562--the present value of the LIBOR notes of $19,451,562,            
         plus the $750,000 private placement discount on the sale of the              
         IBJ CDs.  Otrabanda adopted this approach based upon advice from             
         Merrill Lynch.  As discussed in detail below, the private                    





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