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assets from ML Leasing for a period of 5 years. In addition,
Inspiration suggested that “Merrill Lynch may have to arrange
with the lessee and the secured noteholders to waive certain
restrictions on transfer of ownership” in order to accommodate
its request. Inspiration also pointed out that the existing
draft purchase agreement did not contain a representation from
petitioner that the cashflows as presented to Inspiration were
correct. Inspiration advised that in order for a lender or a
purchaser to make financing decisions based on “these cash flows,
a legal due diligence review will be insufficient and it will be
essential for Merrill Lynch to represent that the cash flows [of
the leases] are accurate.” Inspiration concluded its letter by
expressing its continued interest in completing the transaction.
In order to give the parties to the letter of intent
additional time to finalize their deal, the parties on August 29,
1986, agreed to extend the term of the nonbinding letter of
intent to September 19, 1986, and negotiations and discussions
continued with Inspiration after August 29, 1986.16
Shortly after August 29, 1986, petitioner’s appraiser and
Inspiration’s appraiser completed their analysis of residual
values. Both appraisers valued the residual values of the leases
16A Sept. 8, 1986, interoffice memorandum from Mr. Sands
stated that although Inspiration still had not secured financing
to purchase ML Leasing, Inspiration was optimistic that it would
do so. Mr. Sands also indicated that Inspiration’s financing
efforts were going very well.
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