Read the article below. prepare a memorandum to your manager addressing the following issues:

1. Does it appear that the $8.8 billion payment to Seagram is a dividend or redemption?

2. Would Seagram prefer for this to be treated as a dividend or as a redemption?

Read the article below. Prepare a memorandum to your manager addressing the following issues: 1. Does it appear that the $8.8 billion payment to Seagram is a dividend or redemption? 2. Would Seagram prefer for this to be treated as a dividend or as a redemption? Seagram deal saves $1.5 billion in taxes By Phiulp Florin USA TODAY Seagram CEO Edgar Bronf- man Jr. Is touting the tax bene AB of selling 13 8.8 billion Du- Pont stake back to DuPont And it's casy to see why. purchase of 80% of egtertain ment plant MCA Thunday Songram rold -156 milton DC Poat hires back to DuPont fr $56.25 a share. DuPont paid for it with $1 billion in cash, 67.3 billion in 90-day DuPodt notes and $440 million worth of war- rents. Seagram still owns 8 mil- Non Du Poat thares The warrants entite Soa- gram to buy back 156 million DuPont bares in 1997, "98 or *99 at much higher prices To the IRS, tax experts say. See gram owns as many shares as It did before How? In 1981, DuPont and Montreal besed Seagram were locked in a takeover battle to buy oul company Conoco. Du- Pont won and exchanged its own stock for Conoco stock. But through its Conoco shares Seagram got about 158 million DuPont shares valued at about $18.20 a share. Later, Soagram boughat more shares directly from DuPont at varl. ous prices, boosting its DuPont ownership to 23%. To Onance its $5.6 billion Astune THS STATEMEG IS True Fon TAX purpox3 Seagram deal saves ! $1.5 billion in taxes By Phillip Florini purchase of 80% of entertain USA TODAY ment plant MCA Thunday Seagram CEO Edgar Brons- Pont sbares back to DuPont fr man Jr. is touting the tax bene $56.25 a share DuPont paid for Abs of selling its $8.8 bfillon Du it with $1 billion in cast, $7.3 Pont stake back to DuPont. billion in 90-day DuPoat notes And it's easy to see why. and $440 million worth of war- rant. Seagram still owns 8 ml Von DuPont shares. The warrants entide Sea- gram to buy back 158 millon DuPont shares in 1997, 98 or How? In 1981, DuPont and "99 at much higher prices. To Montreal-based Seagram were the IRS, tax experts say. Soe- locked in a takeover battle to gram owns as many shares as buy oul company Conoco. Du It did before. Pont won and exchanged its own stock for Conoco stock. But through its Conoce shares, Seagram got about 156 million Du Pont shares valued ASSUME THIS STATEMENT at about $18.20 a share. Later, Spagram bought more shares Fon TAX directly from DuPont at varl. olis prices, boosting Its DuPont ownership to 23%. TO Onance its $5.6 billion IS True PURPOSES