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Reliance shares DLJ apparently suggested to Reliance management a
discount range of 10 to 15 percent; (2) Hannah told Nunes, and
also testified, that if on the valuation date the estate had
asked Reliance to repurchase some of the estate’s Reliance
shares, and if Reliance at that time was interested in
repurchasing the shares, Reliance management would have sought
and relied on DLJ’s advice; and (3) Reliance’s financial and
business position did not appear materially to change between the
June 2000 valuation date and the actual October 2000 repurchase
date. Based on the foregoing, Nunes assumes that on the June 5,
2000, valuation date DLJ would have suggested to Reliance the
same 10- to 15-percent discount range DLJ suggested in October of
2000. Nunes then chooses the 12.5-percent midpoint of the above
range for his repurchase price discount from the valuation date
trading price.
Nunes’ second step in his valuation of the 50 percent of the
estate’s Reliance shares that he treats as repurchased by
Reliance involves discounting the estimated sales proceeds that
would be realized on the repurchase to account for holding costs
and the time value of money during the estimated 3-month period
after the valuation date to complete the repurchase. Nunes
calculates that the discount adjustment relating to this 3-month
period increased the repurchase discount from 12.5 percent to
13.9 percent.
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