As filed with the Securities and Exchange Commission on March 23, 1998
Securities Act File No. 333-37349
Investment Company Act File No. 811-2688
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
/ / Pre-Effective Amendment No. /x/ Post-Effective Amendment No. 1
(Check appropriate box or boxes)
- --------------------------------------------------------------------------------
MERRIL LYNCH MUNICIPAL BOND FUND, INC.
(Exact name of Registrant as specified in its charter)
-------------------------------
(609) 282-2800
(Area code and telephone number)
-------------------------------
800 Scudders Mill Road
Plainsboro, New Jersey 08536
(Address of principal executive offices:
Number, street, city, state, zip code)
--------------------------------
Arthur Zeikel
Merrill Lynch Municipal Bond Fund, Inc.
800 Scudders Mill Road, Plainsboro, New Jersey 08536
Mailing Address: P.O. Box 9011, Princeton, New Jersey 08543-9011
(Name and address of agent for service)
-------------------------------
<TABLE>
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Copies to:
<S> <C> <C>
Leonard B. Mackey, Jr., Esq. John A. MacKinnon, Esq. Philip L. Kirstein, Esq.
Rogers & Wells LLP Brown & Wood LLP Merrill Lynch Asset Management
200 Park Avenue One World Trade Center 800 Scudders Mill Road
New York, NY 10166 New York, NY 10048-0557 Plainsboro, NJ 08536
---------------------------------
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Title of Securities to Be Registered: Common Stock, par value $.10 per share
No filing fee is required because of reliance on Section 24(f) of the
Investment Company Act of 1940. The notice required for such Rule for the
Registrant's most recent fiscal year end was filed on August 25, 1997.
Pursuant to Rule 429, this Registration Statement relates to shares previously
registered on Form N-1A (File No. 2-57354).
This amendment consists of the following:
(1) Facing Sheet of the Registration Statement.
(2) Part C to the Registration Statement (including signature page).
Parts A and B are incorporated by reference from Pre-Effective Amendment
No. 1 to this Registration Statement (File No. 333-37349) filed on November
24, 1997.
This amendment is being filed solely to file as Exhibit No. 12 to this
Registration Statement the private letter ruling received from the Internal
Revenue Service and to revise Item 15 of Part C.
Part C
Other Information
Item 15. Indemnification.
Reference is made to Article VI of the Registrant's Articles of
Incorporation, Article VI of the Registrant's By-laws, Section 2-418 of the
Maryland General Corporation Law and Section 9 of the Class A, Class B, Class
C and Class D Distribution Agreements.
Insofar as the conditional advancing of indemnification moneys for
actions based on the Investment Company Act of 1940, as amended, may be
concerned, Article VI of the Registrant's By-laws provides that such payments
will be made only on the following conditions: (i) advances may be made only
on receipt of a written affirmation of such person's good faith belief that
the standard of conduct necessary for indemnification has been met and a
written undertaking to repay any such advance if it is ultimately determined
that the standard of conduct has not been met; and (ii)(a) such promise must
be secured by a security for the undertaking in form and amount acceptable to
the Registrant, (b) the Registrant is insured against losses arising by reason
of the advance, or (c) a majority of a quorum of the Registrant's
disinterested non-party Directors, or an independent legal counsel in a
written opinion, shall determine, based upon a review of readily available
facts, that at the time the advance is proposed to be made, there is reason to
believe that the person seeking indemnification will ultimately be found to be
entitled to indemnification.
In Section 9 of the Class A, Class B, Class C and Class D Shares
Distribution Agreements relating to the securities being offered hereby, the
Registrant agrees to indemnify the Distributor and each person, if any, who
controls the Distributor within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), against certain types of civil liabilities
arising in connection with the Registration Statement or Prospectus and
Statement of Additional Information.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to Directors, officers and controlling persons
of the Registrant and the principal underwriter pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a Director, officer, or controlling person of the Registrant and the
principal underwriter in connection with the successful defense of any action,
suit or proceeding) is asserted by such Director, officer or controlling
person or the principal underwriter in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
Item 16. Exhibits
(1)(a) - Articles of Incorporation (incorporated by reference to Exhibit 1
to Post-Effective Amendment No. 4 to Registrant's Registration
Statement on Form N-1, filed October 31, 1980 ("Post-Effective
Amendment No.
4")).
(1)(b) - Articles of Amendment (incorporated by reference to Exhibit 1 to
Post-Effective Amendment No. 13 to Registrant's Registration
Statement on Form N-1A, filed October 12, 1988 ("Post-Effective
Amendment No.
13")).
(1)(c) - Articles Supplementary to the Articles of Incorporation increasing
the authorized capital stock of the Insured Portfolio (incorporated
by reference to Exhibit 1(c) to Post-Effective Amendment No. 15 to
Registrant's Registration Statement on Form N-1A, filed October 29,
1990).
(1)(d) - Articles Supplementary to the Articles of Incorporation
establishing Class B Common Stock of Limited Maturity Portfolio
(incorporated by reference to Exhibit 1(d) to Post-Effective
Amendment No. 16 to Registrant's Registration Statement on Form N-1A,
filed September 1, 1992).
(2) - By-Laws of the Registrant (incorporated by reference to Exhibit 2
to Post-Effective Amendment No. 13).
(3) - Not applicable.
(4) - Form of Agreement and Plan of Reorganization between the
Registrant and Merrill Lynch Multi-State Limited Maturity Municipal
Series Trust(a).
(5) - Specimen certificates for Class A shares of Limited Maturity
Portfolio Series Common Stock of Registrant (incorporated by
reference to Exhibit 4 to Post-Effective Amendment No. 4).
(6) - Advisory Agreement between the Registrant and Fund Asset
Management, Inc. (incorporated by reference to Exhibit 5 to
Post-Effective Amendment No. 4).
(7)(a) - Form of Amended Class A Shares Distribution Agreement between the
Registrant and Merrill Lynch Funds Distributor, Inc. (including Form
of Selected Dealers Agreement)(incorporated by reference to Exhibit
6 to Post-Effective Amendment No. 20 to the Registrant's
Registration Statement on Form N-1A, filed October 31, 1995
("Post-Effective Amendment No. 20")).
(7)(b) - Form of Class B Shares Distribution Agreement between the
Registrant and Merrill Lynch Funds Distributor, Inc. (including Form
of Selected Dealers Agreement)(incorporated by reference to Exhibit
6 to Post-Effective Amendment No. 20).
(7)(c) - Form of Class C Shares Distribution Agreement between Registrant
and Merrill Lynch Funds Distributor, Inc. (incorporated by reference
to Exhibit 6 to Post-Effective Amendment No. 20).
(7)(d) - Form of Class D Shares Distribution Agreement between Registrant
and Merrill Lynch Funds Distributor, Inc. (incorporated by reference
to Exhibit 6 to Post-Effective Amendment No. 20).
(8) - None.
(9) - Custodian Agreement between the Registrant and The Bank of New
York (incorporated by reference to Exhibit 8 to Post-Effective
amendment No. 13).
(10)(a) - Amended and Restated Class B Shares Distribution Plan of Registrant
(including Class B shares Distribution Plan Sub-Agreement of the
Registrant) (incorporated by reference to Exhibit 15 to
Post-Effective Amendment No. 20).
(10)(b) - Form of Class C Shares Distribution Plan of Registrant (including
Class C Shares Distribution Plan Sub-Agreement) (incorporated by
reference to Exhibit 15 to Post-Effective Amendment No. 20).
(10)(c) - Form of Class D Shares Distribution Plan of Registrant (including
Class D Shares Distribution Plan Sub-Agreement) (incorporated by
reference to Exhibit 15 to Post-Effective Amendment No. 20).
(11) - Opinion and Consent of Rogers & Wells, counsel for the
Registrant (c).
(12) - Private Letter Ruling from the Internal Revenue Service (b).
(13) - Not applicable.
(14)(a) - Consent of Deloitte & Touche LLP, independent auditors for the
Registrant, as to Merrill Lynch Municipal Bond Fund, Inc. (c)
(14)(b) - Consent of Deloitte & Touche LLP, independent auditors for the
Registrant, as to Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust. (c)
(15) - Not applicable.
(16) - Power of Attorney (Included on the signature page of the
Registration Statement).
(17)(a) - Declaration pursuant to Rule 24f-2 under the Investment Company Act
of 1940 of the Registrant (incorporated by reference to the
Registrant's Registration Statement on Form N-1, filed September 16,
1977).
(17)(b) - Prospectus dated October 7, 1997, and Statement of Additional
Information dated October 7, 1997, of the Registrant. (c)
(17)(c) - Prospectus dated November 27, 1996, and Statement of Additional
Information dated November 27, 1996, of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust. (c)
(17)(d) - Annual Report to Stockholders of Merrill Lynch Multi-State Limited
Maturity Municipal Series Trust for the fiscal year ended July 31,
1997. (d)
(17)(e) - Annual Report to Stockholders of Merrill Lynch Municipal Bond
Fund, Inc. for the fiscal year ended June 30, 1997. (c)
- -----------------
(a) Included in Exhibit I to the Proxy Statement and Prospectus
contained in the Registration Statement.
(b) Filed with this Post-Effective Amendment.
(c) Filed with Pre-Effective Amendment No. 1 to this Registration Statement.
Item 17. Undertakings
(a) The Registrant undertakes to suspend offering of the shares of
Common Stock covered hereby until it amends its Prospectus contained
herein if (1) subsequent to the effective date of this Registration
Statement, its net asset value per share of Common Stock declines
more than 10 percent from its net asset value per share of Common
Stock as of the effective date of this Registration Statement, or (2)
its net asset value per share of Common Stock increases to an amount
greater than its net proceeds as stated in the Prospectus contained
herein.
(b) The Registrant undertakes that:
(1) For the purpose of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of a registration statement in reliance
upon Rule 430A and contained in the form of prospectus filed by
the Registrant pursuant to Rule 497(h) under the Securities Act
shall be deemed to be a part of the registration statement as of
the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that tine shall be deemed to be
the initial bona fide offering thereof.
(3) Registrant undertakes to file, by post-effective amendment,
a copy of the Internal Revenue Service private letter ruling
applied for, within a reasonable time after receipt of such
ruling.
SIGNATURES
As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed on behalf of the Registrant, in the
Township of Plainsboro and State of New Jersey, on the 23rd day of March,
1998.
MERRILL LYNCH MUNICIPAL BOND FUND, INC.
(Registrant)
/s/ Arthur Zeikel
-------------------------------------------
(Arthur Zeikel, President)
As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
ARTHUR ZEIKEL*
- ----------------------------- President (Principal
(Arthur Zeikel) Executive Officer)
and Director
GERALD M. RICHARD* Treasurer (Principal
- ------------------------------ Financial and Accounting
(Gerald M. Richard) Officer)
RONALD W. FORBES*
- ------------------------------- Director
(Ronald W. Forbes)
CYNTHIA MONTGOMERY*
- ------------------------------- Director
(Cynthia Montgomery)
CHARLES C. REILLY*
- ------------------------------- Director
(Charles C. Reilly)
KEVIN A. RYAN*
- ------------------------------- Director
(Kevin A. Ryan)
RICHARD R. WEST*
- ------------------------------- Director
(Richard R. West)
* By: /s/Arthur Zeikel
- -------------------------------
(Arthur Zeikel, Attorney-in-Fact) March 23, 1998
Internal Revenue Service Department of the Treasury
Index No.: 368.00-00 P.O. Box 7604
368.13-00 Ben Franklin Station
Washington, DC 20044
Person to Contact:
Michael J. Wilder
Thomas W. Avent, Jr. Telephone Number:
Rogers & Wells (202) 622-7770
200 Park Avenue Refer Reply To:
New York, NY 10166 CC:DOM:CORP:2 PLR-120390-97
Date: March 5, 1998
In Re: Limited Maturity Portfolio, a series of Merrill Lynch
Municipal Bond Fund, Inc.
800 Scudder Mill Road
Plainsboro, New Jersey 08536
Company = Merrill Lynch Municipal Bond Fund
Acquiring = Limited Maturity Portfolio
EIN: 22-2758215
Trust = Merrill Lynch Multi-State Limited
Maturity Municipal Series Trust
Target I = Merrill Lynch Arizona Limited Maturity
Municipal Bond Fund
EIN: 22-3267347
Target 2 = Merrill Lynch Massachusetts Limited
Maturity Municipal Bond Fund
EIN: 22-3267368
Target 3 = Merrill Lynch Michigan Limited Maturity
Municipal Bond Fund
EIN: 22-3267376
Target 4 = Merrill Lynch New Jersey Limited
Maturity Municipal Bond Fund
EIN: 22-3267351
Target 5 = Merrill Lynch New York Limited Maturity
Municipal Bond Fund
EIN: 22-6533789
Target 6 = Merrill Lynch Pennsylvania Limited
Maturity Municipal Bond Fund
EIN: 22-3267367
Date A = November 24, 1997
Date B = February 12, 1998
Date C = March 25, 1998
Date D = March 23, 1998
Dear Mr. Avent:
This letter replies to your letter dated October 30, 1997, in which
rulings were requested as to the federal income tax consequences of a proposed
transaction that has subsequently been consummated. Additional information was
submitted on February 12, 1998 and February 25, 1998. The information
submitted for consideration is summarized below.
Company is organized under the laws of Maryland and registered under
the Investment Company Act of 1940 (the "1940 Act") as a diversified, open-end
management investment company. Acquiring is a non-diversified open-end
management investment company, which is a fund in a series of funds managed by
Company. Acquiring is treated as a separate corporation for federal income tax
purposes pursuant to section 851(g) of the Internal Revenue Code (the "Code"),
and has elected to be taxed as a regulated investment company ("RIC") under
sections 851-855. Acquiring's investment objective is to seek high total
investment return by investing in a diversified portfolio of short-term
investment grade municipal bonds. Acquiring has outstanding four classes of
stock -- Class A, Class B, Class C, and Class D -- each of which is voting
common stock. Each of these classes of stock share equally in the assets,
income and expenses of Acquiring, but each class has a different arrangement
regarding sales charges contingent deferred sales charges, distribution fees,
and account maintenance fees.
Target 1, Target 2, Target 3, Target 4, Target 5, and Target 6 are
each diversified open-end management investment companies. Each Target is one
fund in a series of funds of Trust, a Massachusetts business trust. Each
Target is treated as a separate corporation for federal income tax purposes
pursuant to section 851(g) and has elected to be taxed as a RIC under section
851855. Each Target's investment objective is to seek high total investment
return by investing in a diversified portfolio of intermediate-term,
investment-grade municipal bonds. Each Target has outstanding four classes of
stock -- Class A, Class B, Class C, and Class D, -- each of which is voting
common stock. Each of these classes of stock share equally in the assets,
income and expenses of the respective Target, and each are subject to
substantially the same sales charges, contingent deferred sales charges,
distribution fees, and account maintenance fees as the corresponding class of
shares issued by Acquiring.
Acquiring has agreed to acquire substantially all of the assets and
substantially all of the liabilities of Target 1, Target 2, Target 3, Target
4, Target 5, and Target 6 (individually, with respect to each Target, a
"Reorganization," and collectively, the "Reorganizations") pursuant to the
Agreement and Plan of Reorganization (the "Agreement") executed on Date A. On
Date A, Fund filed a Registration Statement with the Securities and Exchange
Commission regarding the Reorganizations. Shareholders of Target 2, Target 4
and Target 6 holding a majority of these Targets' shares approved the
Agreement at a special meeting of the shareholders on Date B. The
Reorganizations of Target 2, Target 4 and Target 6 will be effected pursuant
to the Agreement on Date D (the "First Closing Date"). Shareholders of Target
1, Target 3 and Target 5 are scheduled to vote on the Agreement on Date C. The
Reorganizations of Target 1, Target 3 and Target 5 will be effected pursuant
to the Agreement as soon as possible thereafter (the "Second Closing Date"
referred to collectively with the First Closing Date as the "Closing Dates").
Pursuant to the Agreement, and for what are represented to be valid
business purposes, the Reorganizations consist of the following steps: (i) the
transfer of substantially all of the assets of each Target to Acquiring in
exchange solely for the assumption by Acquiring of each Target's liabilities
as stated in the Agreement and the issuance to each Target of shares of
Acquiring Class A and Class D voting stock; (ii) the distribution, promptly
after the Closing Dates, of the Acquiring Class A voting stock to shareholders
of each Target holding Target Class A voting stock, in exchange for their
shares of Target Class A voting stock; or the distribution of Acquiring Class
D voting stock to shareholders of each Target holding Target Class B, Class C
or Class D voting stock, in exchange for their shares of Target Class B, Class
C or Class D voting stock; and (iii) the termination of each Target as a
series of the Trust.
Prior to the Reorganizations, each Target will sell, to unrelated
purchasers, certain of its assets that are permissible investments under the
Target's investment policies, but are impermissible investments under the
investment policies of Acquiring. The proceeds from these sales will be
transferred by the Targets to Acquiring in the Reorganizations and reinvested
by Acquiring in a manner consistent with its investment policies.
The taxpayers have made the following representations with respect to
the transactions described above:
(a) The fair market value of the Acquiring stock received by each
Target shareholder will approximately equal the fair market value of
each Target's stock surrendered in the exchange.
(b) There is no plan or intention by the shareholders of any Target
who own five percent or more of any Target's stock, and to the best
knowledge of the management of each Target, there is no plan or
intention on the part of any remaining Target shareholders to sell,
exchange or otherwise dispose of a number of shares of Acquiring
stock received in the transaction that would reduce the ownership by
the shareholders of Target of the stock of Acquiring to a number of
shares having a value, as of the date of the transaction, of less
than 50 percent of the value of all of the formerly outstanding stock
of such Target, as of the same date. For purposes of this
representation, shares of each Target's stock exchanged for cash or
other property, surrendered by the dissenters, or in exchange for
cash in lieu of fractional shares of Acquiring stock, will be treated
as outstanding shares of such Target's stock on the date of the
transaction. Moreover, shares of a Target's stock and shares of
Acquiring stock held by such Target's shareholders and otherwise
sold, redeemed or disposed of prior or subsequent to the transaction
will be considered in making this representation, except for shares
which are required to be redeemed at the demand of shareholders by
such Target or by Acquiring in the ordinary course of their
businesses as open-end investment companies (or series thereof)
pursuant to Section 22(e) of the 1940 Act.
(c) Acquiring will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market
value of the gross assets held by each Target immediately prior to
the transaction. For purposes of this representation, amounts used by
Target to pay its reorganization expenses, amounts paid by Target to
shareholders who receive cash or other property, and all redemptions
and distributions (except for redemptions in the ordinary course of
the Target's business as an open-end investment company as required
by Section 22(e) of the 1940 Act pursuant to a demand of a
shareholder and regular, normal dividends) made by the Target
immediately preceding the transfer will be included as assets of the
Target held immediately prior to the reorganization.
(d) Acquiring has no plan or intention to reacquire any of its stock
issued in each Reorganization, except in connection with its legal
obligations under Section 22(e) of the 1940 Act.
(e) After each Reorganization, Acquiring will use the assets acquired
from the respective Target in Acquiring's business, except that all
or a portion of those assets may be sold or otherwise disposed of in
the ordinary course of Acquiring's business, or may mature, and in
either case the proceeds will be reinvested in accordance with
Acquiring's investment objectives. Acquiring has no plan or intention
to sell or otherwise dispose of the assets received in the
Reorganizations from the Targets, except for dispositions made in the
ordinary course of business.
(f) Each Target will distribute the stock, securities and other
property of Acquiring that it receives in the respective
Reorganization, and its other properties, pursuant to the plan of
reorganization.
(g) The liabilities of each Target assumed by Acquiring and the
liabilities to which the transferred assets are subject were incurred
by such Target in the ordinary course of business.
(h) The fair market value of the assets of each Target transferred to
Acquiring will equal or exceed the sum of the liabilities assumed by
Acquiring, plus the amount of liabilities, if any, to which the
transferred assets are subject.
(i) Following each Reorganization, Acquiring will continue the
historic business of each Target or use a significant portion of the
historic assets of such Target in a business.
(j) Acquiring, each Target, and the shareholders of each Target will
pay their respective expenses, if any, incurred in connection with
the Reorganizations.
(k) There is no intercorporate indebtedness existing between
Acquiring and any Target that was issued, acquired, or will be
settled at a discount.
(l) Acquiring and each Target qualifies as a RIC under section 851
and thus should be treated as a regulated RIC for purposes of
sections 368(a)(2)(F)(i) and (iii).
(m) Acquiring does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any stock of any
Target.
(n) Cash distributed to shareholders of any Target in lieu of
fractional shares of Acquiring is solely to save Acquiring the
expense and inconvenience of issuing and transferring fractional
shares, and such cash does not represent separately bargained for
consideration in the respective Reorganization. The total cash
consideration that will be paid to a Target's shareholders instead of
issuing fractional shares of Acquiring stock will not exceed one
percent of the total consideration that will be issued to such
Target's shareholders in exchange for their shares of such Target's
stock. The fractional share interests of each Target's shareholders
will be aggregated and no Target shareholder will receive cash in an
amount equal to or greater than the value of one full share of
Acquiring stock.
(o) Each of Acquiring and each Target has elected to be taxed as a
RIC under section 851 and, for all of its taxable periods, (including
the last short taxable period ending on the date of the respective
Reorganization, for each Target) has qualified for the special tax
treatment afforded regulated investment companies under the Code, and
after the transaction, Acquiring intends to continue to so qualify.
(p) None of the Targets is under the jurisdiction of a court in a
Title 11 or similar case within the meaning of section 368(a)(3)(A).
Based solely upon the information and representations set forth
above, we hold as follows:
(1) The acquisition by Acquiring of substantially all of the assets
of each Target, solely in exchange for Acquiring voting stock and the
assumption by Acquiring of the respective Target's liabilities,
followed by the distribution by each Target of Acquiring voting stock
to its shareholders in complete liquidation of Target will in each
instance constitute a reorganization within the meaning of
section 368(a)(1)(C) (Rev. Rul. 88-48, 1988-1 C.B. 117). For purposes
of this ruling, "substantially all" the assets means at least 90% of
the fair market value of the net assets and at least 70% of the fair
market value of the gross assets held by the respective Target
immediately prior to the transaction. For each Reorganization,
Acquiring and the respective Target will each be "a party to a
reorganization" within the meaning of Section 368(b).
(2) Each Target in each Reorganization will recognize no gain or loss
on its transfer of substantially all of its assets to Acquiring in
exchange solely for Acquiring voting stock or on the distribution of
such Acquiring stock to its shareholders (section 361(a) and (c)).
(3) Acquiring will recognize no gain or loss on its receipt of
substantially all of the assets of each Target in exchange solely for
Acquiring voting stock (section 1032(a)).
(4) Acquiring's basis in the assets received from each Target in the
Reorganizations will equal the basis of such assets in the hands of
the respective Target immediately prior to the Reorganizations
(section 362(b)).
(5) Acquiring's holding period for the assets received in the
Reorganizations will include the period during which each Target held
such assets (section 1223(2)).
(6) The shareholders of each Target will recognize no gain or loss on
the receipt of voting stock of Acquiring stock (including any
fractional share interests to which they may be entitled) solely in
exchange for their Target stock (section 354(a)(1)).
(7) The basis of the Acquiring stock received by each Target's
shareholders in the Reorganizations (including fractional shares to
which they may be entitled) will equal the basis of the Target stock
surrendered in exchange therefor (section 358(a)(1)).
(8) The holding period of the Acquiring stock received by each
Target's shareholders in exchange for their Target stock (including
fractional shares to which they may be entitled) will include the
period that the shareholder held the Target stock exchanged therefor,
provided that the shareholder held such stock as a capital asset on
the date of the exchange (section 1223(l)).
(9) The payment of cash to each Target's shareholders in lieu of
fractional shares of Acquiring will be treated as though the
fractional shares were distributed as part of the Reorganizations and
then redeemed by Acquiring. The cash payments will be treated as
distributions in full payment for the fractional shares deemed
redeemed under section 302(a), with the result that such Target
shareholders will have short-term or long-term capital gain or loss
to the extent that the cash they receive differs from the basis
allocable to such fractional shares (Rev. Rul. 66-365, 1966-2 C.B.
116, and Rev. Proc. 77-41, 1977-2 C.B. 574).
(10) The taxable year of each Target will end on the effective date
of the respective Reorganization, and Acquiring will succeed to and
take into account the items of each respective Target described in
section 381(c), subject to the conditions and limitations specified
in sections 381, 382, 383, and 384 and the regulations thereunder
(section 381(a) and section 1.381(a)-l of the Income Tax Regulations).
We express no opinion about the tax treatment of the transactions
described above under other provisions of the Code and regulations or about
the tax treatment of any conditions existing at the time of, or effects
resulting from, the above transactions that are not specifically covered by
the above rulings. Specifically, no opinion was requested, and none is
expressed, about whether Acquiring or any Target qualified as a RIC that is
taxable under Subchapter M, Part I of the Code.
This ruling is directed only to the taxpayer who requested it.
Section 6110(j)(3) provides that it may not be used or cited as precedent.
A Copy of this letter should be attached to the applicable federal
income tax return of the taxpayers.
Sincerely,
Assistant Chief Counsel
(Corporate)
By /s/ Richard L. Osborne
_______________________
Richard L. Osborne
Senior Technician Reviewer,
Branch 2
cc: D.D. Newark, N.J.
Chief, Examinations
Division
