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Merrill Parent, approved the sale of all the stock of five
subsidiaries wholly owned by ML Capital Resources to ML Realty:
Merrill Lynch Business Financial Services, Inc. (Financial
Services or MLBFS);21 Merrill Lynch Private Capital, Inc.
(Private Capital or MLPC);22 Merrill Lynch Venture Capital, Inc.
(Venture Capital or MLVC); Merrill Lynch Energy Investments, Inc.
(Energy Investments or MLEI); and Merrill Lynch R&D Management,
Inc. (MLRDM) (collectively referred to as the five subsidiaries).
ML Capital Resources and ML Realty entered into a stock
purchase agreement dated March 30, 1987, for the sale of stock of
the five subsidiaries to ML Realty. The purchase price of the
stock of the five subsidiaries was $53,972,607 (which was
allocated to each subsidiary based on their respective book
values). The sale closed on March 30, 1987. Immediately before
its purchase of the five subsidiaries, ML Realty had accumulated
earnings and profits that exceeded the purchase price. The sales
of the five subsidiaries were five of the eight cross-chain sales
21Before the sale of Financial Services, effective Mar. 30,
1987, ML Capital Resources contributed certain loan receivables
and other assets and liabilities with a net book value of $10
million to Financial Services. These assets and liabilities were
part of the 1987 retained assets and thus were not intended to be
included in the assets of ML Capital Resources at the time of the
sale of its stock.
22Private Capital had a substantial negative book net worth
as of Mar. 29, 1987. Before the sale of Private Capital,
effective Mar. 30, 1987, ML Capital Resources contributed $32
million in cash to the capital of Private Capital and thereby
created a positive book net worth in Private Capital.
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