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In the Pennzoil transaction, Mr. Steele’s entity was
attempting to purchase a controlling (at least 80 percent) or
complete interest in the Pennzoil property. Purchases of
Pennzoil fractional interests were initially subjected to
discounts for the fractional interests in amounts generally
around 60 percent. When the buyer had acquired sufficient
partial interests to hold at least 80 percent, the discounts
precipitously dropped to just over 14 percent.
This discount pattern confirms the estates’ argument.
Partial interests that do not constitute or result in a
controlling interest are subject to substantially greater
discounts than partial interests acquired by a controlling
interest holder or which result in control of the fee.
In his report, Mr. Steele concluded that a discount of at
least 55 percent would be appropriate for the purchase of partial
interests in Louisiana timberland. During his trial testimony
Mr. Steele opined that the value of the partial interests should
be discounted 90 percent from the fair market value of the full
fee interest.
The Court found Mr. Steele’s testimony helpful and germane
to the valuation of partial interests in Louisiana timberland.
Although there are sales of fractional interests in timberland in
Louisiana, such activity is relatively infrequent, and only
limited information about such sales is available. Mr. Steele
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