Exhibit 12
December 29, 2006
Multi-Strategy Series M
Multi-Strategy Series G
Citigroup Alternative Investments Multi-Advisor Hedge Fund Portfolios
(Series M) LLC
Board of Directors
Citigroup Alternative Investments Multi-Advisor Hedge Fund Portfolios LLC
c/o Citigroup Alternative Investments LLC
731 Lexington Avenue
New York, NY 10022
Ladies and Gentlemen:
We are acting as counsel to Citigroup Alternative Investments Multi-Advisor
Hedge Fund Portfolios LLC (the "Company"), Multi-Strategy Series M,
Multi-Strategy Series G and Citigroup Alternative Investments Multi-Advisor
Hedge Fund Portfolios (Series M) LLC, a newly formed limited liability company
("New Multi-Strategy Series M") in connection with (i) the transfer of the
assets of Multi-Strategy Series M to New Multi-Strategy Series M, in exchange
for shares of New Multi-Strategy Series M and the assumption by New
Multi-Strategy Series M of the liabilities of Multi-Strategy Series M,
immediately followed by the distribution of the New Multi-Strategy Series M
shares held by Multi-Strategy Series M to the shareholders of Multi-Strategy
Series M in liquidation of Multi-Strategy Series M (the "Reorganization") and
(ii) the merger of New Multi-Strategy Series M with and into Multi-Strategy
Series G in a statutory merger in accordance with Delaware statutory law,
whereby the separate existence of New Multi-Strategy Series M shall cease and
Multi-Strategy Series G shall be the surviving entity (the "Merger," and
together with the Reorganization, the "Reorganization and Merger"), pursuant to
the proposed Agreement and Plan of Reorganization and Merger, filed as an
exhibit to the Prospectus (as defined below), by the Company on behalf of
Multi-Strategy Series M, Multi-Strategy Series G and New Multi-Strategy Series M
(the "Plan").
All capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Plan. Unless otherwise specifically indicated, all
"Section" references are to the Internal Revenue Code of 1986, as amended and
currently in effect (the "Code"). In connection with the filing by the Company
of the Registration Statement on Form N-14 (the "Registration Statement"), you
have asked for our opinion regarding certain United States federal income tax
consequences of the Reorganization and Merger.
We have participated in the preparation of the Registration Statement relating,
among other things, to the Merger, and containing the Proxy Statement and
Prospectus relating to the Reorganization and Merger (the "Prospectus"), filed
with the Securities and Exchange Commission (the "Commission") on July 28, 2006
pursuant to the provisions of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations of the Commission thereunder.
In addition, in connection with rendering the opinion expressed herein, we have
examined originals or copies of such other documents, records and instruments as
we have deemed necessary or appropriate for the purpose of rendering this
opinion, including the form of the Plan attached as an exhibit to the
Prospectus.
In our examination of the foregoing documents, we have assumed the genuineness
of all signatures, the authority of each signatory, the due execution and
delivery of all documents by all parties, the authenticity of all agreements,
documents, certificates and instruments submitted to us as originals, the
conformity of the Plan as executed and delivered by the parties with the form of
the Plan attached as an exhibit to the Prospectus, and the conformity with
originals of all agreements, documents, certificates and instruments submitted
to us as copies.
In connection with rendering our opinion, we have further assumed that the
transactions contemplated by the Plan will be consummated in accordance
therewith and as described in the Prospectus and that the information in the
Prospectus is true, correct and complete. We have relied on the representations
made on behalf of Multi-Strategy Series M, Multi-Strategy Series G and New
Multi-Strategy Series M in an officer's certificate, dated December 29, 2006,
and we have assumed that such representations are, and will continue to be,
true, correct and complete.
Based upon the foregoing, in reliance thereon and subject thereto, and based
upon the Code, the Treasury regulations promulgated thereunder, judicial
decisions, revenue rulings and revenue procedures of the Internal Revenue
Service (the "IRS"), and other administrative pronouncements, all as in effect
on the date hereof, we are of the opinion that, with respect to the
Reorganization:
1. The Reorganization will constitute a "reorganization" within the
meaning of Section 368(a) and Multi-Strategy Series M and New
Multi-Strategy Series M each will be a "party to a reorganization"
within the meaning of Section 368(b);
2. In accordance with Section 354(a)(1), the Shareholders of
Multi-Strategy Series M will not recognize gain or loss upon the
exchange of all of their Shares of Multi-Strategy Series M solely for
shares of New Multi-Strategy Series M as described in the Prospectus
and the Plan;
3. In accordance with Sections 357 and 361, no gain or loss will be
recognized by Multi-Strategy Series M upon the transfer of its assets
to New Multi-Strategy Series M in exchange for all the shares of New
Multi-Strategy Series M and the assumption by New Multi-Strategy
Series M of the liabilities of Multi-Strategy Series M, if any, or
upon the distribution of the New Multi-Strategy Series M shares to the
Multi-Strategy Series M Shareholders;
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4. In accordance with Section 1032, no gain or loss will be recognized
by New Multi-Strategy Series M upon the acquisition of the assets of
Multi-Strategy Series M in exchange solely for voting shares of New
Multi-Strategy Series M and the assumption of the liabilities, if any,
of Multi-Strategy Series M;
5. In accordance with Section 362(b), New Multi-Strategy Series M's
tax basis for the assets of Multi-Strategy Series M will be the same
as the tax basis of these assets when held by Multi-Strategy Series M
immediately before the Reorganization, and, in accordance with Section
1223, the holding period of such assets acquired by New Multi-Strategy
Series M will include the holding period of such assets when held by
Multi-Strategy Series M;
6. In accordance with Section 358, each Multi-Strategy Series M
Shareholder's tax basis for the New Multi-Strategy Series M shares
received by such shareholder pursuant to the Reorganization will be
the same, in the aggregate, as such shareholder's tax basis in the
Multi-Strategy Series M shares exchanged therefor;
7. In accordance with Section 1223, the holding period of the New
Multi-Strategy Series M shares received by the Multi-Strategy Series M
Shareholders will include the holding period of their Multi-Strategy
Series M Shares exchanged therefor, provided that the Multi-Strategy
Series M shares were held as capital assets on the date of the
Reorganization; and
8. The taxable year of Multi-Strategy Series M will not end on the
effective date of the Reorganization, and pursuant to Section 381(a)
and the regulations thereunder, New Multi-Strategy Series M will
succeed to and take into account, subject to applicable limitations,
certain tax attributes of Multi-Strategy Series M, such as earnings
and profits, capital loss carryovers and method of accounting.
and, with respect to the Merger:
1. The Merger will constitute a "reorganization" within the meaning of
Section 368(a) and Multi-Strategy Series G and New Multi-Strategy
Series M each will be a "party to a reorganization" within the meaning
of Section 368(b);
2. In accordance with Section 354(a)(1), the shareholders of New
Multi-Strategy Series M (formerly, the Multi-Strategy Series M
Shareholders) will not recognize gain or loss upon the exchange of all
of their shares of New Multi-Strategy Series M solely for shares of
Multi-Strategy Series G as described in the Prospectus and the Plan;
3. In accordance with Sections 357 and 361, no gain or loss will be
recognized by New Multi-Strategy Series M upon the transfer of its
assets to Multi-Strategy Series G and the assumption by Multi-Strategy
Series G of the liabilities of New Multi-Strategy Series M, if any, or
upon the distribution of the Multi-Strategy Series G shares to the New
Multi-Strategy Series M shareholders;
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4. In accordance with Section 1032, no gain or loss will be recognized
by Multi-Strategy Series G upon the acquisition of the assets of New
Multi-Strategy Series M (i.e., the assets formerly held by
Multi-Strategy Series M) and the assumption of the liabilities, if
any, of New Multi-Strategy Series M in the Merger;
5. In accordance with Section 362(b), Multi-Strategy Series G's tax
basis for the assets held by New Multi-Strategy Series M will be the
same as the tax basis of these assets when held by New Multi-Strategy
Series M immediately before the Merger, and in accordance with Section
1223, the holding period of such assets acquired by Multi-Strategy
Series G will include the holding period of such assets when held by
New Multi-Strategy Series M;
6. In accordance with Section 358, each New Multi-Strategy Series M
shareholder's tax basis for the Multi-Strategy Series G shares
received by such shareholder pursuant to the Merger will be the same,
in the aggregate, as such shareholder's tax basis in the New
Multi-Strategy Series M shares exchanged therefor;
7. In accordance with Section 1223, the holding period of the
Multi-Strategy Series G Shares received by the shareholders of New
Multi-Strategy Series M will include the holding period of their New
Multi-Strategy Series M shares exchanged therefor, provided that the
New Multi-Strategy Series M shares were held as capital assets on the
date of the Merger;
8. The shareholders of Multi-Strategy Series G will not recognize any
gain or loss as a result of the Merger; and
9. The taxable year of New Multi-Strategy Series M will end on the
effective date of the Merger, and, pursuant to Section 381(a) and the
regulations thereunder, Multi-Strategy Series G will succeed to and
take into account, subject to applicable limitations, certain tax
attributes of New Multi-Strategy Series M, such as earnings and
profits, capital loss carryovers and method of accounting.
No opinion is expressed as to any other matter, including the accuracy of the
representations or the reasonableness of the assumptions relied upon by us in
rendering the opinion set forth above. Our opinion is based on current United
States federal income tax law and administrative practice and we do not
undertake to advise you as to any future changes in such law or practice that
may affect our opinion unless we are specifically retained to do so. Our opinion
is not binding upon the IRS or a court and will not preclude the IRS or a court
from adopting a contrary conclusion.
Our opinion is being furnished to you solely for your benefit and may not be
relied upon by any other person, except Citigroup Alternative Investments LLC,
Citigroup Global Markets Inc., Smith Barney, Citibank N.A. and their successors,
or for any other purpose without our prior written consent.
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We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and to any reference to our
firm in the Registration Statement or in the Prospectus constituting a part
thereof. In giving such consent, we do not hereby admit that we are the category
of persons whose consent is required under Section 7 of the Securities Act or
the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Shearman & Sterling LLP
RJB/MG
LMB
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