ABC Beverage Corp., f.k.a. Beverage America, Inc. - Page 9

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          (of rent) would return to Bottlers when Properties made payments            
          to Bottlers (of loan repayment), and Properties could not divert            
          any cash to other uses.  Prudential approved the loan on these              
               Petitioner and respondent stipulated that Properties’                  
          purchase of the bottling facilities from CPA7 was not motivated             
          in any significant way by tax considerations and that Bottlers              
          and Properties were not related parties under the Code.                     
               The management group had a reasonable expectation that G&K             
          would acquire the necessary financing to purchase the facilities            
          to satisfy the loan or that the loan would be repaid through                
          rental income.  They expected that once the transaction with G&K            
          closed and G&K paid the $18 million purchase price to Properties,           
          Properties would pay Bottlers the balance due on the Properties             
          loan, and Bottlers would pay Prudential the balance due on its              
          loan.  The parties intended that Properties would be liquidated             
          once G&K bought the facilities.                                             
               The management group continued working with G&K through the            
          end of 1994, when the first full payment of principal and                   
          interest on the Properties loan was due.  Given the short-term              
          solution that creating Properties was intended to be, the                   
          management group decided Bottlers should not make full lease                
          payments to Properties.  Bottlers paid only enough so that                  
          Properties could pay interest on the Properties loan, not the               

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Last modified: May 25, 2011