- 14 -
4. Risk of Litigation and Environmental Remediation
Johnson and Fuller substantially agreed about the potential
effects of products liability litigation and environmental claims
on the value of Green Light stock. Johnson reduced his estimate
of the value of Green Light by $921,000 on the basis of the
$252,000 cost to Green Light of increasing its products liability
insurance and John Klauss’ estimate that it would have cost Green
Light about $250,000 in 1993 to pay fines and remediation costs,
such as excavation, transportation, and capping costs, and lab
analysis, disposal, and environmental engineer’s and attorney’s
fees to resolve the TNRCC enforcement action. In contrast,
Fuller discounted his estimate by 10 percent, which had the
effect of reducing the stock value by $1,130,000, in part because
counsel for Green Light stated that its maximum liability for the
litigation claims would be 10 percent. We agree with Johnson’s
approach because we believe he more accurately accounted for the
effects on the value of Green Light of the litigation and
environmental claims.
5. Conclusion
We conclude that Johnson’s analysis was more persuasive than
Fuller’s, except for his use of a 15-percent growth rate for
American Vanguard.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011