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backed notes (Notes). ACC intended through the offering to raise
funds for its current operation, including the acquisition of
installment contracts which would be (and were) pledged to secure
ACC’s obligations under the Notes. The Notes matured in 36
months but could be redeemed by the noteholders at 12 or 24
months. The Notes bore interest at 12 percent during the first
year, 13 percent during the second year, and 14 percent during
the final year. The Notes were purchased by approximately 50
investors, and approximately five of these investors redeemed
their Notes before maturity.
East-West Capital Corporation (East-West) sold the Notes on
ACC’s behalf and was paid a commission equal to 4 percent of the
principal amount of the Notes sold, plus 1 percent of the
principal outstanding at 12 months, plus 1 percent of the
principal outstanding at 24 months. Included in East-West’s
commission was a 1 percent due diligence fee.
ACC deducted $29,647, $38,239, and $33,783 of offering
expenses, commissions, and professional fees, respectively, for
1993. ACC deducted $36,251, $74,361, and $110,432 of offering
expenses, commissions, and professional fees, respectively, for
1994. The deductions for 1993 and 1994 included costs
attributable to a second private placement offering that was
planned in 1993 and abandoned in 1994.
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