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The Fairness Package also included a page entitled “Summary of
Financial Impact” that listed Times Mirror’s “After-tax Cash
Proceeds from Sale” using the CJV structure as $1,641,500,000.
GS determined this $1,641,500,000 amount by assuming (1) a
$1.4 billion “tax-free” purchase of Bender and (2) that the sale
of Times Mirror’s 50-percent interest in Shepard’s would generate
$241.5 million in after-tax proceeds.
R. Melone Drafts Memorandum Regarding the Bender
Transaction for E&Y’s Files
On or about April 29, 1998, Melone drafted a memorandum
entitled “Times Mirror Matthew Bender Sale” for E&Y’s files.
Melone included the following statements regarding the Bender
transaction and Times Mirror’s sale of its 50-percent interest in
Shepard’s in this memorandum:
Times Mirror has entered into an agreement with Reed
Elsevier for the sale of Matthew Bender for
$1,375,000,000 and the sale of Times Mirror’s interest
in Shepard’s Inc. for $225,000,000. The sale of
Matthew Bender is structured as a reorganization in
which the $1,375 million proceeds from the sale will
end up in an LLC whose ownership is as shown in the
attached chart. Through the various shareholder
agreements, certificates of incorporation and the LLC
management agreement, Times Mirror has total control
over the assets and operations of the LLC and Reed
Elsevier has total control over the assets and
operations of Matthew Bender. The structure is
designed to result in no tax due by Times Mirror on the
profit from the sale of Matthew Bender.
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