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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
shares.
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