Merrill Lynch & Co., Inc. & Subsidiaries - Page 35




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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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