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company.) In exchange for its Target Stock, Times
Mirror will receive 100% of MB Parent common stock.
* * * * * * *
5. [MB] Parent contributes $1,000 to LLC in
exchange for non-voting LLC interest.
Times Mirror is sole manager of LLC but is not a
member of the LLC.
An April 22, 1998, memorandum from Charles P. Fontaine
(Fontaine), director of taxes for Reed, to Ian Malcolm (“Mac”)
Highet, executive vice president of corporate development for
Reed, posed the following questions regarding the dividend
requirements of the CJV structure:
Are current dividends required to be paid on the MB
preferred stock or the MB Parent preferred stock?
Can dividends not be paid until the MB preferred stock
is redeemed?
Is a dividend rate of 5% acceptable?
Shefter, for GS, and Hatef Behnia (Behnia), a partner at GD&C,
responded to these questions in the following manner:
Current dividends are required to be paid on both
classes of preferred stock.
Dividends cannot be deferred until the preferred stocks
are redeemed.
A dividend rate in the range of 5.0 to 5.5% is
acceptable (5% is likely to be used). The dividend
rate will be some rate below Treasuries * * *
Fontaine posed the following questions regarding the restrictions
on transfers:
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