- 36 -
information he received (the need to retain funds for a number of
contingencies) on interviewing Mr. Heck. On the basis of his
testimony, we find that there was no nonoperating asset
consisting of excess cash.
6. Decrease in Korbel’s Value by Amount of
Long-Term Debt
Putting aside Drs. Bajaj and Spiro’s disagreement over the
treatment of the KFTY receivable, see supra p. 35, the remaining
disagreement is over whether the current portion of long-term
bank borrowings is a component of working capital or a long-term
liability. On brief, respondent states that any resulting
difference in the value of the shares is immaterial, and the
choice of treatment is “a valid choice of the appraiser”. We
shall treat such current portion as a long-term liability.
7. Discounts
a. The Expert Testimony
Dr. Bajaj determined that the shares were subject to a 25-
percent basic marketability discount. Dr. Bajaj then added an
additional 10 percent to his basic marketability discount, which
addition was attributable to both the right of first refusal
(ROFR) held by Brown-Forman and what he refers to as “agency
problems”, the fact that the shares represented a minority
interest unable to influence the majority shareholder’s control
over cash distributions. The addition of those two discounts
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