The following article is adapted from reprinted from the M&A Tax Report, Vol. 7, No. 7, February 1999, Panel Publishers, New York, NY.
By Robert W. Wood, San Francisco
In recent weeks, a couple of notable spinoffs have been discussed. Hilton Hotels' long-awaited spinoff of its Casino operations was in the news, not for an IRS ruling (which it already received), but because of problems with state gaming commissions. Although originally scheduled for December 31, 1998, there was talk that despite the favorable IRS ruling and SEC rulings, state gaming commissions might hold up at least a portion of the transaction. See "Hilton Doesn't Expect Two States' Approval Before Spinoff Deadline," Wall Street Journal, Dec. 21, 1998, p. A6.
Elsewhere, Melcor, which was to be spun off from Fedders Corp., will no longer become an independent company. The planned spinoff of Melcor was reportedly canceled because of valuation considerations. See "Melcor Spinoff Canceled as Market Factors Shift," Wall Street Journal, Dec. 24, 1998, p. B6.
On the positive side, Columbia/HCA Healthcare Corp. has outlined plans to spinoff dozens of its facilities to two new hospital companies. The news came with filings before the Securities and Exchange Commission. As disclosed, the spinoffs are expected to be completed by the end of the first quarter in 1999, pending approval by the IRS and an SEC review. See "Columbia/HCA Plan to Spin Off Hospitals is Outlined in Filing," Wall Street Journal, Dec. 15, 1998, p. B13.
Spin Update, Vol. 7, No. 7, The M&A Tax Report (February 1999), p. 1.