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defaulted on dividends (or redemption), the preferred
shareholder(s) would take over voting control of U.S.
Company. This, in turn, would trigger the “excess loss
account” of U.S. Company (that is, the excess of tax
losses previously claimed from this transaction over the
parent company's investment in the U.S. Company) as
immediate taxable income of the parent. (This would be
a disaster since it plans to never have to trigger the
excess loss account). * * *
On September 25, 1993, Barbara Spudis with Baker & McKenzie
faxed to the firm’s Amsterdam office an urgent request for answers
to questions posed by Mr. Temko. The fax stated in part:
The client [Comdisco] is planning to close the
transaction involving the LLC on Tuesday, September 28,
1993. At the last minute, the two original investors
(Swiss individuals) in the transaction appear to have
backed out, and now the client is attempting to replace
them with two Belgian individuals. In order to do so, we
are attempting to describe the entire transaction and
satisfy their counsel as to the minimal risks associated
with the transaction on a rush basis. * * *
* * * * * * *
To give you more information about the transaction
I am attaching a description of the facts which was
prepared when Swiss involvement was contemplated. * * *
The entire transaction is expected to involve
approximately $120 million. Basically, the individuals
forming the company are involved for two months during
which the income allocation occurs and then the interest
is transferred to the U.S. corporate investor who reaps
the benefit of ongoing depreciation deductions.
IV. Formation of Andantech and the Sale-Leaseback (Appendixes A,
B, and C)
Andantech’s articles of organization were signed on September
25, 1993, by Ms. Spudis and Regina Howell, also of the Baker &
McKenzie law firm, and the certificate of organization was issued
by the Wyoming secretary of state on September 27, 1993.
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