Opinion ID: 2308864
Heading Depth: 1
Heading Rank: 5

Heading: The Fallout

Text: Certain significant events occurred thereafter which bear upon the structural fairness of the transaction. See Weinberger, 457 A.2d at 711-12. First, on January 27, 1988, the same day in which the Combination closed, Tri-Star made a public offering of $575 million in subordinated debt and notes, roughly equal to the sum of cash and receivables retained by Coca-Cola from the Entertainment Sector. Although defendants characterize their offering as a standard refinancing of old debt under a new credit agreement, the fact remains that no mention was made of this offering to the stockholders in the proxy materials. Then, less than two months later on March 15, 1988, Coca-Cola and Tri-Star jointly announced that Tri-Star would write down the book value of the Entertainment Sector assets, just acquired from Coca-Cola under the Transfer Agreement, by nearly $200 million. Although defendants explained this action as taking advantage of a stub period to record certain adjustments to the book value of those assets, had Coca-Cola taken the $200 million write down prior to the Combination the book value attributed to Coca-Cola's assets would have been $545 million instead of $745 million, and materially altered the net book value ratio which was constructed to deliver 80% control to Coca-Cola. As a result of this write down, Tri-Star suffered an immediate after tax loss of $105 million. [7]