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consisted of 25,000 shares of series C exchangeable preferred
stock, 5,450 shares of series S preferred stock, and 1,000 shares
of series T preferred stock. Each share of these other classes
of preferred stock accrued dividends whether or not declared, but
holders of those shares (as well as holders of Sterling common
shares) were generally precluded from receiving dividends or
distributions as to their shares before the vested rights of the
holders of series A preferred stock were satisfied in full.
Accordingly, after the dates of the scheduled redemptions for the
series A preferred stock, Sterling would need first to honor its
redemption obligation before it could satisfy the requirements of
its other shareholders.
Although Sterling was prohibited by its senior debt and
senior subsidiary debt agreements from redeeming any of its stock
or paying any dividends on its stock in certain circumstances, we
do not believe that a hypothetical buyer would have considered
these agreements to have prevented Sterling from redeeming its
series A preferred stock timely. In appendix C, we list on a
consolidated basis Sterling’s debt as of December 31, 1989
through 1992. The relevant provisions underlying this debt
generally tied a redemption to Sterling’s profitability. As of
the applicable valuation date, Sterling was a viable entity that
had a positive cashflow for that and the previous 2 years.
Although it had reported losses for 1991 and 1992, those losses
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