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To ensure that all of G�nther’s creditors benefited from the
Actium sale, Flint directed G�nther to use 80 percent of the cash
generated by the Actium sale to pay down G�nther’s guaranteed
bank loans in proportion to their balances. The remaining cash
was used to pay employee salaries, trade creditors, and tenant
improvements. None of the sale proceeds were used to repay any
part of the intercompany account balance owed by G�nther to
petitioner.
H. Petitioner’s Efforts To Dispose of G�nther
Throughout the period following discovery of the Omega
transaction and dismissal of G�nther's management, petitioner
continued G�nther’s operations while seeking potential purchasers
for G�nther and its product lines. Petitioner retained
investment banks and brokers, but there was very little interest
in G�nther. Before the purchase of G�nther by G�nther America,
Inc. (GAI), during FYE May 31, 1994, discussed infra, only one
offer to purchase G�nther was received. In March 1993, Celduc,
one of G�nther's principal competitors, offered to purchase
G�nther, if petitioner contributed cash of DM 20 million
(approximately $12,050,000) and made guaranties and concessions
worth several million dollars more. After unsuccessful efforts
to negotiate a more favorable deal, petitioner ultimately
16(...continued)
to approximately DM 8 million.
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