- 25 - estate’s Reliance shares). Nunes calculates $37,475,695 in gross sales proceeds on the estate’s 1,800,364 dribble-out shares (1,800,634 shares times $20.8125). In calculating a discount under the dribble-out method, Nunes concludes that, in order to protect against the risk that the price of Reliance stock might decrease during the extended dribble-out period, a hypothetical investor would enter into hedging contracts such as “cashless collars” or “prepaid variable forward contracts,” which hedging contracts Nunes estimates would cost $1,885,005. From the $37,475,685 estimated sales proceeds for the estate’s 1,800,364 Reliance shares to be dribbled out, Nunes subtracts the $1,885,005 estimated cost for the hedging contracts, resulting in $35,590,680 in net sales proceeds to be realized on the estate’s 1,800,364 dribble-out Reliance shares, reflecting a 5-percent discount from the valuation date trading value. Nunes’ 13.9-percent discount applied to the 1,800,363 repurchased shares and the 5-percent discount applied to the 1,800,364 dribble-out shares reflect a combined 9.5-percent overall discount from the valuation date trading value for all of the estate’s 3,601,267 Reliance shares. After reviewing the experts’ reports and the evidence at trial, we conclude that the hedging contracts used by Range and Nunes likely would not have been available for a block of stock such as the estate’s Reliance shares.Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Next
Last modified: May 25, 2011