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1979 promissory notes--that is, an amount equal to one-fourth of
1 percent per annum of the aggregate principal amount of the 8-
3/4-percent notes and FR notes outstanding and an amount equal to
any annual cost of operation exceeding gross receipts--was never
paid. The monthly statements for Finance’s bank accounts
indicate that the monthly balance of the account never exceeded
$1,000, which was the amount paid by City for 1 share of
Finance’s common stock.
7. Dissolution of Finance
On May 1, 1984, the aggregate principal on all of the 8-3/4-
percent notes outstanding became due. City transferred
$27,405,000 into Finance’s bank account which on the same day was
transferred to the fiscal agent to repay the principal in the
amount of $25,200,0007 and make the final interest payment of
$2,205,000.
After the 8-3/4-percent notes matured, Finance distributed
$20,500,000 of the consolidated HGI note to City as a return of
capital. On September 6, 1985, City liquidated and dissolved
Finance. In connection with the liquidation, Finance distributed
7 Of the $30 million of debt issued, $4.8 million had been
canceled. City entered into agreements with Blyth Eastman Dillon
& Co. International Ltd. in connection with the 8-3/4-percent
notes and with the Banque de Paris in connection with the FR
notes to purchase in the open market up to maximum specified
amounts of the notes under certain circumstances, which after
purchase would be canceled and destroyed. City used its own
funds to pay for these purchases.
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