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operating losses (“NOL’s”) not used in the various
ML&Co. 1986 unitary returns. The remaining liabilities
in Leasing would consist solely of deferred taxes.
MLCR will then sell the stock of Leasing. * * *
The 1986 retained assets were not included in the description of
ML Leasing’s portfolio.
On June 19, 1986, Mr. Sands prepared a memorandum entitled
“Status of ML Leasing Sales Effort”. The memorandum reported on
a telephone call Mr. Sands received from Mr. Smith, the Vice
President-Finance for Inspiration. As summarized in the
memorandum, Mr. Smith “expressed strong interest” in purchasing
ML Leasing and reported that he had prepared a detailed analysis
for consideration by Inspiration’s executive committee. Although
Mr. Smith had expressed reservations about the status of
Inspiration’s NOLs and about the lack of certainty regarding the
lease residual values, Mr. Sands reported that Mr. Smith’s
concern regarding Inspiration’s NOLs was not a serious problem
and that Mr. Smith’s concern regarding the residual values would
be addressed in a meeting on June 23 when Mr. Smith and his staff
would meet with a representative of ML Leasing to review the
residuals on a lease-by-lease basis. Mr. Sands reported that, if
Mr. Smith were satisfied after the June 23 meeting, Inspiration
“will make a go - no go decision on buying Leasing at the $80
million asking price based on the assumption that the residual
values can be confirmed by an outside appraiser.”
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