-81-
valuation date. The T-bill rate was 2.954 for the week of
September 14, 1992, and it was 2.9740 for the week of
September 21, 1992. The annualized inflation rate was 2.99
percent for September 1992.
As to the risk that Sterling would not meet its contractual
obligation to redeem its series A preferred stock, we believe
that a hypothetical buyer would have demanded minimal additional
compensation to accept such a risk under the facts herein.
Pursuant to the certificate of designation, the hypothetical
buyer was already entitled to compensation for that risk in that,
in the event of a default, dividends would continue to accrue
daily at the annual rate of 12.5 percent on any share of series A
preferred stock that was not redeemed. The hypothetical buyer
also was deemed to know on the applicable valuation date that
Sterling and its subsidiaries, with the consent of their
creditors, had recently restructured certain of their debt and
had issued additional equity so as not to default on debt and so
that Sterling could redeem some of its other shares of stock.51
Specifically, on June 29, 1989, Sterling replaced $1.5 million of
51 Sterling’s consolidated group included itself and its
wholly owned subsidiaries Trompeter Electronics, Inc. (TEI),
Quality Components, Inc. (QCI), and TQ Management Company (TQM).
TEI, QCI, and Sterling were incorporated on Nov. 22, 1988, to
facilitate the March 1989 leveraged transaction described in
Trompeter I. TQM was formed on Apr. 25, 1989, to perform
managerial services for Sterling in relation to the operations of
TEI and QCI.
Page: Previous 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 NextLast modified: May 25, 2011