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that the value of the equipment in categories E through I was
between $11,600,000 and $12,225,000.
The principal amounts of the balloon notes for categories E
through I (junior promissory notes 2e-2i) were: $1,083,615;
$699,454; $3,891,020; $2,313,841; and $7,933,856, respectively.
The aggregate principal amount was $15,921,786. The notes bore
interest at 9 percent, compounded monthly. The total liability on
the early termination date was $20,222,439.
Ms. Grossman and Mr. Vandermark discussed Comdisco’s exercise
of its early termination option, as well as Comdisco’s belief that
the value of the equipment in categories E through I was less than
the liability for principal and interest on the balloon notes. Mr.
Vandermark was disconcerted to learn that there was a good chance
that RD Leasing would receive nothing for its position in the
lease. On May 30, 1996, Ms. Grossman engaged ARI Propertylink Co.
(ARI Propertylink) to appraise the 40 mainframe computers
comprising the Andantech portfolio as of the early termination
dates. Mary O’Connor (who had appraised the equipment in 1993) was
ARI Propertylink’s appraiser.
On June 5, 1996, ARI Propertylink advised Ms. Grossman that
the value of the equipment was $13,465,000. The appraisal stated
that the equipment had “eroded” in value more rapidly than had been
anticipated in 1993 because of: (1) A change in IBM pricing
strategy (i.e., increased discounting); (2) an increase in
production of mainframes by IBM; (3) the introduction of new
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