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million dividend to ML Capital Resources consisting of cash
received from ML Asset Management, plus other cash, receivables,
and certain liabilities. After removal of the 1986 retained
assets, the summary represented that Merrill Parent would then be
in a position to sell the principal investments business portion
of ML Leasing.
The summary unequivocally identified Inspiration as the
purchaser of ML Leasing’s stock, described Inspiration, and
stated that “In return for the stock of ML Leasing, we will
receive $126 million in cash (subject to adjustments for residual
value appraisals) from the purchaser, Inspiration Resources
Corporation.” The summary also explained how the sale price was
determined,13 quantified the after-tax income and the tax benefit
that would result from the sale, explained the tax risks of the
transaction, and recommended the creation of a $37 million tax
13The sale price was determined by calculating the present
value of the cashflow stream generated by ML Leasing’s assets
($42 million), discounting the pretax cashflow to reflect the
value of the cashflow to Inspiration ($143 million), calculating
the value of Inspiration’s NOLs ($101 million), and adding to the
present value of the cashflow stream a premium of $53 million
(representing a split of the benefits arising from Inspiration’s
NOLs). The resulting base sale price ($95 million) was then
increased by the amount of cash to be left in ML Leasing
(estimated to be $31 million) to arrive at a total sale price of
$126 million (subject to adjustment for residual value
appraisals).
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