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in achieving its objective of modifying the 1985 sale and
leaseback in order to reduce substantially its minimum annual
basic rent obligation. First, pursuant to the terms of the 1984
tax-exempt bonds, such bonds were not redeemable before December
30, 1994. Second, the 1985 sale and leaseback did not allow
petitioner to require Mercer County to redeem the 1984 tax-exempt
bonds. Third, although each owner participant had the right
under the 1984 bond indenture to require Mercer County to redeem
those bonds, petitioner did not have the right under the 1985
sale and leaseback to request that the owner participant exercise
its right.
Petitioner, in consultation with its lease advisor Morgan
Stanley, developed a strategy to overcome the foregoing hurdles.
That strategy included petitioner’s offering certain inducements
to each owner participant and Mercer County in order to persuade
them to agree to the modification of the 1985 sale and leaseback
and the concomitant refinancing of the 1984 tax-exempt bonds.
Thus, petitioner offered (1) to exercise its option under the
1985 sale and leaseback to elect to extend for five years the
term of the lease and (2) to pay the costs associated with
modifying the 1985 sale and leaseback and effecting the concomi-
tant refinancing of the 1984 tax-exempt bonds.
Petitioner’s strategy to overcome the hurdles that it faced
in achieving its objective of modifying the 1985 sale and
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