- 33 -
construction work.5 Moreover, while the Washington cellular
telephone business was appraised to be worth in excess of $8.25
million, BMCT, in late 1990, had contracted to purchase this
business for approximately $3.6 million following arm's-length
negotiations between BMCT and the seller, an unrelated party.
See note 3, supra p. 26. The record does not show that the
Washington cellular telephone business appreciated greatly in
value shortly after BMCT purchased it in late 1990.
Additionally, as indicated above, Kyle sold 46-percent stock
interests in BMCT and FiberComm, the two corporations that owned
the two businesses, to Rhys for $61,000 apiece in late December
1991. Kyle testified that the price paid to him by Rhys for the
FiberComm shares represented "what a willing buyer would have
paid a willing seller".
5An explanatory note to the Dec. 31, 1991, financial
statements of BMCT, L.P., stated, in pertinent part:
Operations
BMCT, L.P. is principally engaged in the ownership and
operation of cellular telephone systems. The Company
has been in a start-up phase in which its activities
have primarily concentrated on the acquisition of
cellular licenses and the construction and initial
operation of cellular systems. As a result, the
Company has experienced substantial net losses and has
had insufficient internally generated funds to cover
capital and operating expenditures and debt service.
Management anticipates that it will continue to incur
substantial losses and will not be able to generate
sufficient cash from operations to meet expenditure
requirements over the next few years.
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