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John Moffat.
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aamir2111
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Dear John,
In requirement C of the subject question, BPP’s kit states that the amount the MBO funds need to pay shareholders is $60m, which I presume they have calculated it as SC($40M) + Reserves ($10M) + 20% premium.
My question is, shouldn’t the payment done by MBO be based on the market value of $2.83 per share? Or is it because it is an MBO, we do it based on the book value?
John Moffat
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The payment is based on the market value.
However the last line of the first paragraph states that $2.83 was the value three years ago and that the current market value is $0.50 per share.
Therefore they will be paid 0.50 + 20% = $0.60 per share.
aamir2111
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