- 5 - entered into a contract (sublease) with petitioner, under which petitioner reserved 75 percent of the vessel’s capacity and was responsible for 100 percent of the payments due under the Bareboat Charter; (4) UMTC also entered into an operating agreement with Marine Transport Management, Inc. (a subsidiary of MTL), to manage and operate the vessel; and, (5) UMTC entered into a marketing agreement with another MTL subsidiary to market the portion of the vessel not used by petitioner, including the 25 percent not reserved by petitioner. The terms of the Bareboat Charter permitted petitioner to terminate the lease and walk away from the arrangement by the payment of a scheduled amount. Petitioner, however, chose to acquire the vessel. On December 29, 1993, petitioner purchased, for $107,748,925, Merrill Lynch’s interest in the grantor trust that held the vessel, including the title to the vessel and rights to its use. The $107,748,925 payment was about 20 percent less than the amount that petitioner would have had to pay to terminate the lease without acquiring ownership of the vessel.7 On June 30, 1994, the Bareboat Charter and related contracts were canceled, the UMTC partnership was dissolved, and petitioner acquired title to the vessel from the trust. After December 1993, petitioner did not make any (lease) payments under the 7 For purposes of deciding the issue in this summary judgment motion, it should not matter whether it was more or less costly to acquire the vessel or to simply terminate the lease.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011