Flint Industries, Inc. and Subsidiaries - Page 6




                                        - 6 -                                         
          little or no value because the underlying technology was widely             
          available in other forms.                                                   
          IV.  G�nther's Subsidiaries                                                 
               G�nther was the majority owner of several subsidiaries that            
          manufactured or sold products in India, France, Switzerland, and            
          Germany (Berlin).  The French and Swiss subsidiaries were                   
          distribution outlets that sold G�nther's products.  The Berlin              
          subsidiary was essentially a manufacturing subcontractor for                
          G�nther.  The Indian subsidiary began as a joint venture in 1991.           
          It operated a manufacturing facility that was supposed to produce           
          G�nther’s products at a lower cost.  G�nther’s subsidiaries were            
          valued at historical cost (book value) on G�nther’s balance                 
          sheet.  As of May 31, 1992, the subsidiaries’ book values                   
          exceeded their fair market values.                                          
          V.  Flint’s Guaranties of G�nther’s Bank Loans and Lease                    
               In the 1980s, Flint also provided some working capital to              
          G�nther and guaranteed certain of G�nther’s bank loans.  With one           
          exception discussed below, all of these guaranties were given               
          between 1983 and 1989.  During this period, G�nther did not have            
          much equity, it had a poor relationship with German banks, and              
          its earnings were erratic.                                                  
               At some point before January 1992, without the knowledge or            
          approval of Flint’s management,7  G�nther obtained a loan of                

               7Although Flint had imposed restrictions on the authority of           
                                                             (continued...)           




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