Estate of George C. Blount, Deceased, Fred B. Aftergut, Executor - Page 62

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          value should be negligible if the * * * [repurchase] transaction            
          occurs at fair market value”, id. at 713, because the percentage            
          ownership of all the remaining shareholders increases as a result           
          of the redemption and cancellation of the retiree’s shares, id.             
          Mr. Fodor has failed to take into account the proportionate                 
          increase in the ownership interest of decedent’s shares, which              
          would be produced by the redemption of the ESOP’s shares, when              
          considering the impact of the ESOP repurchase obligation on the             
          fair market value of decedent’s BCC shares.31  Nor has he                   
          demonstrated that the projected annual ESOP repurchase obligation           
          (as opposed to the present value figure he discussed) would                 
          adversely affect BCC’s liquidity, thus potentially affecting fair           
          market value.32                                                             
               Alternatively, if it were assumed that BCC employed a                  
          “recycling” method, Mr. Fodor has not explained whether or how              

               31 A simplified example will illustrate this point.  If a              
          corporation has $100 in assets and two shareholders (A and B),              
          with A owning 80 percent of the stock and B, an ESOP, owning the            
          remaining 20 percent, a willing buyer of A’s shares would pay $80           
          for those shares, regardless of whether the corporation is                  
          obligated to redeem B’s shares at their fair market value.                  
               32 While Mr. Truono testified that he and decedent were                
          concerned when creating Pro Forma 15 that BCC have enough cash              
          available after the purchase of decedent’s shares to redeem                 
          shares held by ESOP participants, this analysis was in the                  
          context of determining how much cash the company could afford to            
          pay decedent’s estate to repurchase decedent’s BCC shares.  Their           
          concerns do not suggest that the ESOP repurchase obligation would           
          have a significant impact on the fair market value of decedent’s            

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