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The final step is for MLCR to declare a dividend of
cash, certain subsidiaries, and receivables to ML
Consumer Markets Holdings Inc. This intercompany
dividend triggers a taxable gain that also increases
our tax basis in MLCR. What remains is our tax basis
at the time of sale, $340 million.
As our basis in the stock is greater than the sales
price, the sale results in a $278 million long term
capital loss. This capital loss will offset other long
term capital gains, resulting in a tax benefit of $94
million.
The intercompany dividend to ML Consumer Markets
Holdings triggers a tax liability of $8 million, which
reduces the maximum potential tax benefit to $86
million.
The summary represented that Merrill Parent’s corporate law
department and outside counsel had already prepared a proposed
definitive sales agreement and that the purchaser had submitted
its desired contract changes, which were being negotiated.
Although the summary requested the board of directors to
authorize the executive committee to approve the final details of
the transaction and to sign the definitive agreement for a
minimum sales price of $70 million, the board authorized the
proper officers to finalize the sale of all the capital stock of
ML Capital Resources for not less than $60 million, subject to
adjustments based on the valuation of certain assets.
D. GATX/BCE Modifies Its Initial Bid
In a letter addressed to Mr. Sands dated April 27, 1987,
GATX modified its April 21, 1987, bid proposal (April 27, 1987,
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