ABC Beverage Corp., f.k.a. Beverage America, Inc. - Page 10

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          principal.  Properties’ bookkeeping entries reflected Bottlers’             
          failure to pay the full amount of rent and Properties’                      
          corresponding failure to repay principal on the loan.                       
               The management group had not anticipated that it would take            
          G&K so long to obtain the financing.  Given this delay, the                 
          management group decided not to pay the full amount of rent for             
          two reasons.  First, they were concerned that paying the portion            
          of the rent corresponding to the principal Properties owed would            
          enable Properties, which was owned by the management group, to              
          build equity in the facilities, which might alarm the limited               
          partners.  Second, the important net zero cashflow effect of the            
          transaction would be destroyed if Bottlers paid Properties the              
          rent corresponding to the principal.  Properties would have an              
          interest deduction for the portion of the rent corresponding to             
          the interest but no deduction for the portion of the rent                   
          corresponding to the principal.  Properties would therefore have            
          net income and would be exposed to income tax.                              
          Buyer Financing Collapses                                                   
               Unexpectedly, G&K’s purchase of the bottling facilities fell           
          through in early 1995.  The insurance company G&K expected to               
          provide the bulk of the financing was unable to complete the                
          deal.  Bottlers searched fruitlessly for alternate buyers.                  









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