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business was worth approximately $4.2 million ($832,000 x 5);
allowing for the liquidation and dividend preferences of the
preferred stocks the common stock had a value of roughly $3.5
million ($4.2 million - $700,000), and IRA's 51.3 shares of
common stock had a value of roughly $1.6 million ($3.1 million x
47.5 percent).46 The Court notes, however, that around the end of
1979 or early 1980, Schnitzer discussed the sale of Schnitzer-PMS
to Minneapolis Honeywell for a price between $12 million and $13
million.47 Although Honeywell decided not to purchase Schnitzer-
PMS, we think that when Schnitzer agreed to repurchase the
Schnitzer-PMS stock from IRA, he thought the stock was worth $3.1
million. Otherwise, he would have sold Century's stock to IRA.
Schnitzer's primary objective in selling the 47.5-percent
Schnitzer-PMS interest to IRA was to acquire business from Hyatt
which he felt could be obtained through Kanter's influence.
Apparently, when Schnitzer negotiated the reacquisition of the
stock, he was unaware of the assistance from Ballard or Lisle for
46
Roland Burrows, chief office and president of Schnitzer-PMS
during the years at issue, testified that the business of the
corporation grew at about 25 percent each year until about 1976.
The rate of growth slowed substantially after that time because
of the size of the corporation.
47
Under the stock agreement entered into by Century and IRA
when IRA purchased the Schnitzer-PMS stock, the purchase price
for IRA’s stock was an amount in excess of 8 times Schnitzer-
PMS’s average pretax income. Eight times Schnitzer-PMS pretax
income from 1976 to 1978 ($533,500) is more than $4.2 million.
Based on that value all of the stock in the corporation was worth
more than $8 million.
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