Opinion ID: 613690
Heading Depth: 4
Heading Rank: 4

Heading: Step Four: Termination of the Loan

Text: Taxpayers did not exercise their option to terminate the loan in July or December 2002. Accordingly, the transaction terminated on January 15, 2003, as provided for in the Addendum. What happened upon termination, according to Taxpayers, was that Refco purchased the Securities from Taxpayer for the market price of $1.698 billion. Taxpayers owed Refco $1.684 billion (the amount of the cash collateral plus accrued Cash Collateral Fee). The amounts owed were settled via offset, so the only cash that changed hands at this point was $35.3 million transferred from Refco to Taxpayers on January 16, 2003. This amount was the sum of $13.6 million in actual economic gain for Taxpayers (the excess of the price Refco paid Taxpayers for the Securities over the amount Taxpayers had to return to Refco for the collateral), the return of the Taxpayers' $21.25 million deposit, and accrued interest on that deposit of just over one-half million dollars.