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Resources, and review of a report prepared by IBM Credit
Corporation for the partners of the IBM partnerships.
On April 23, 1987, a formal presentation regarding the sale
of ML Capital Resources was made to Merrill Parent’s board of
directors at its regular meeting. The presentation was made by
Courtney F. Jones. The substance of the presentation was
summarized in a written summary and slides illustrating the
details of the plan for the sale of ML Capital Resources. The
written summary began as follows:
We have identified a significant economic benefit,
based on an opportunity in the tax law, in selling
Merrill Lynch’s proprietary middle market lease
business. This economic benefit can be achieved by
structuring a transaction to sell the stock of one of
our leasing subsidiaries, Merrill Lynch Capital
Resources. We believe that such a sale could
realistically result in an after-tax financial
statement gain of approximately $73 million.
In conjunction with Merrill Lynch Capital Markets we
have identified a purchaser. The purpose of this
presentation is to secure your approval for the
Executive Committee to approve the final details of the
transaction and sign the definitive agreement.
The written summary laid out the various steps of the plan to
dispose of Merrill Lynch’s proprietary middle-market lease
business culminating in the sale of ML Capital Resources’ stock.
The written summary informed the board of directors that--
due to the exhaustion of tax benefits, many of * * *
[ML Capital Resources’] leases have begun to produce
taxable income in 1987. The projected cash flow from
the leases will in most years not be sufficient to
service the debt and the tax liability generated by the
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