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in an agreed amount to enhance and monetize the value of Generale
Bank’s and CLIS’s preferred interests.110 This proposed
transaction “would require Generale Bank and CLIS simply to
transfer their respective assets to a Newco in exchange for
preferred interests which will be monetized.” The drafts
provided that after 5 years the preferred interests were
convertible into Newco common membership interests and provided
that, if the conversion right were exercised, Newco could redeem
all of the preferred interests at their liquidation value.
Throughout the course of the drafting process, these fundamental
features of the deal between CDR and Rockport Capital did not
materially change, and they were incorporated into the various
agreements.111
In these various drafts, CDR was not focused on the letter
agreement but was instead focused on the side letter agreement,
110 The Ackerman group originally proposed that Generale Bank
would acquire MGM Group Holdings stock, would contribute the $974
million in receivables to MGM Group Holdings, and would then
contribute the MGM Group Holdings stock to Newco for preferred
interests. In the draft term sheet, the Ackerman group proposed
an alternative transaction (involving CLIS’s contribution of MGM
Group Holdings stock) “if CLIS’s current basis in Group stock is
significant”.
111 At certain points, the identities of the parties changed.
For instance, CDR was substituted for Generale Bank and CLIS at
certain points. A CDR affiliate, Santa Monica (Rotterdam)
Finance B.V., at one point was to hold the preferred interests
for Generale Bank or CLIS. In the early drafts, Rockport
Advisors was identified as an initial member in Newco rather than
Rockport Capital.
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