Tribune Company, As Agent of and Successor By Merger to the Former the Times Mirror Company, Itself and its Consolidated Subsidiaries - Page 61

                                       - 25 -                                         
               equivalent to Matthew Bender’s value, but without                      
               having paid a tax for the shift in control.                            
               The steps in this structure * * * involve the creation                 
               of a special purpose corporation (referred to as                       
               MB Parent * * *) that is owned partly by Times Mirror                  
               and partly by the acquiring company.  This special                     
               purpose corporation is controlled by the acquiring                     
               company through its ownership of relatively low value,                 
               nonparticipating preferred stock with 80% voting                       
               control.  MB Parent in turn owns preferred stock and                   
               nonvoting common stock in an acquisition subsidiary                    
               that will merge with Matthew Bender and a nonvoting                    
               interest in a single member limited liability company                  
               that holds the cash referred to above.  As a result of                 
               the merger of Matthew Bender into the acquisition                      
               subsidiary, Times Mirror will own all of the common                    
               stock and remaining 20% voting power of MB Parent, the                 
               special purpose corporation.  However, even though                     
               Times Mirror will not have voting control over                         
               MB Parent, it will control the limited liability                       
               corporation holding all of the cash by virtue of being                 
               the sole (nonequity) manager of the LLC.                               
               The results are as follows:                                            
               •    Times Mirror will control the LLC, thereby                        
                    controlling the cash in it and any assets or                      
                    businesses acquired with such cash.                               
               •    Times Mirror and the LLC will be consolidated for                 
                    financial reporting purposes.                                     
               •    The acquiring company will control Matthew Bender                 
                    and will be able to consolidate for financial                     
                    reporting purposes.                                               
               •    The merger of Matthew Bender into the acquisition                 
                    subsidiary in exchange for MB Parent common stock                 
                    will qualify as a tax-free reorganization for tax                 
                    purposes (even though such common stock does not                  
                    carry with it voting control).                                    
               •    MB Parent, the LLC and Matthew Bender will not be                 
                    consolidated for tax purposes with either Times                   
                    Mirror or the acquiring company.                                  







Page:  Previous  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  Next

Last modified: May 25, 2011