- 10 - payable by City to Finance was due only upon Finance’s written notice to City. 3. 1979 Capitalization of Finance On July 31, 1979, City drew a check payable to the order of Finance in the amount of $22 million as a contribution to capital. On the same day, the check was endorsed by Finance to the order of HGI. Also on the same day, the check was endorsed by HGI to the order of City, and City recorded a $22 million dividend from HGI on its general activity register. HGI issued a document captioned as a promissory note in the face amount of $22 million (1979 HGI note) to Finance in exchange for the endorsement of the $22 million check. The 1979 HGI note bore no interest, was unsubordinated and unsecured, and was payable on August 1, 1980, or upon demand thereafter. HGI disclosed the 1979 HGI note as an obligation to Finance on its audited financial statements for each of the years the 1979 HGI note was outstanding, which statements were submitted to the Securities and Exchange Commission and various State regulatory agencies. City prepared an offering circular for prospective purchasers of the notes to be sold by Finance in 1979 which disclosed that City’s $22 million capital contribution to Finance would be lent by Finance to HGI, that HGI would pay this amount as a dividend to City, and that Finance’s capital thereafterPage: 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