Salina Partnership LP - Page 15




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          the Treasury bills that it sold short ($344,447,250) as a liability         
          on its opening balance sheet.                                               
               For the period December 17 through 27, 1992, Salina earned             
          $398,292 on its investments for an annualized return of 17.62               
          percent.                                                                    
               C.  FPL’s Investment in Salina                                         
               On December 14, 1992, Mr. Evanson obtained authorization from          
          FPL’s board of directors to invest in the Salina partnership.  The          
          minutes of the December 14, 1992, board of directors’ meeting state         
          in pertinent part:                                                          
               [The Chairman] reported that the officers of the                       
               Corporation were considering investing approximately $75               
               million of the funds raised from the sale of common stock              
               in 1992 for future capital requirements in an investment               
               partnership.  These funds were not needed immediately and              
               were currently invested in short-term securities yielding              
               a little more than 3% per annum.  Investing in the                     
               partnership would increase the return on the funds                     
               substantially and still keep them available for capital                
               expenditures as needed.  In addition, the partnership                  
               could engage in certain transactions that could utilize                
               certain of the tax losses from the sale of Colonial Penn.              
               Mr. Evanson then explained the proposed investment                     
               activities of the partnership.                                         
               FPL conditioned its participation in the partnership upon              
          Salina’s agreements to: (1) Appoint Mr. Silverstein as its                  
          investment manager, and (2) liquidate its investments by December           
          30, 1992.  Salina agreed to FPL’s conditions.  On December 28,              
          1992, Salina executed a “Financial Advisory Agreement” appointing           









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