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Dear Irv. I have thought about our conversation last
night and the risk at this point in time. I suggest
the following: Lets just do the transaction for a loss
of 70 mil (the amount you need, or perhaps a little
more or less) through, as we discussed, a new
partnership. This reduces the risk related to size. I
like this structure much better as it solves your
problem today. We can take next year as it comes.
Thus, the plan would be as follows: We will create a
new partnership [Corona] into which we will transfer
high basis debt. * * * [Imperial] will buy a part of
our partnership interest for a price related to the
value of the partnership’s assets. This will be much
less than the amount we originally discussed, probably
around $500,000. On the pricing, my partner wants to
keep the pricing the same, which we should discuss. In
any event, think about this and let me know. We can
get this done quickly as I have the entities set up.
Thanks, Perry.
Mr. Lerner testified that he was uncomfortable with the large
size of the capital loss resulting from the proposed transaction
with SMP; he suggested a smaller capital loss. He testified that
he purposely told Imperial that it would be very expensive for
them because he felt that SMP should profit from Imperial’s
capital loss.
On December 12, 1997, Mr. Lerner sent a second email to Irv
Gubman concerning the proposed transaction with Corona. In this
email, Mr. Lerner recommended that Imperial purchase part of
SMP’s partnership interest for an amount “sufficient to give it
a share of the basis equal to around 60-65 million dollars. This
loss will be triggered if the * * * [$79 million receivable] is
sold. * * * (I think that most of this should be claimed in 1997
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