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in connection with the sales of the Chase PPNs and IBJ CDs. In
particular, Smith determined that, as of March 23, 1990, the
present values of the Fuji and Norinchukin LIBOR notes issued to
Saba were $18,728,061 and $18,760,828, respectively. Smith
further determined that, as of July 27, 1990, the present values
of the Sumitomo LIBOR notes issued to Otrabanda were $18,909,546.
Smith's valuations of the LIBOR notes were lower than those
determined by Pepe. See supra pp. 33-34, 63-64.
Relying on his lower valuations of the LIBOR notes, Smith
concluded that Saba incurred transaction costs of $2,605,495 on
the sale of the Chase PPNs, and that Otrabanda incurred
transaction costs of $1,292,017 on the sale of the IBJ CDs.
Smith opined that these transaction costs included fees to
Merrill Lynch for locating the issuers of the PPNs and CDs and
the LIBOR notes, a spread between the bid-ask price on the sale
of the PPNs and CDs, and a spread on the bid-ask price on the
purchase of the LIBOR notes. Considering the volatile nature of
LIBOR notes, Smith concluded that the bid-ask spread included the
cost that the issuers of the LIBOR notes would incur in obtaining
interest rate swaps.
B. Legal and Accounting Fees
Brunswick paid the Mayer, Brown & Platt law firm for
services related to Saba and Otrabanda as follows:
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