COURT OF CHANCERY

OF THE

STATE OF DELAWARE

J OHN W. N OBLE 417 S OUTH S TATE S TREET

V ICE C HANCELLOR D OVER

, D ELAWARE 19901

T ELEPHONE : (302) 739

- 4397

F ACSIMILE : (302) 739

- 6179

November 28, 2014

Stephen P. Lamb, Esquire Kevin G. Abrams, Esquire

Paul, Weiss, Rifkind , Wharton Abrams & Bayliss LLP

& Garrison LLP 20 Montchanin Road, Suite 200

500 Delaware Avenue, Suite 200 Wilmington, DE 19807

Wilmington, DE 19801

Re: AM General H

oldings LLC v. The Renco Group , Inc.

C.A. No. 7639

- VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

C.A. No. 7668

- VCN

Date s Submitted: July 31, 2014 and November 21, 2014

Dear Counsel:

The Renco Group, Inc. (“Renco”) and MacAndrew s AMG Holdings LLC

(“MacAndrews AMG”) debate the value of AM General Holdings LLC

(“Holdco”). They have reached an impasse in their efforts to agree upon the T hird

A ppraiser to determine the appraised value as provided in Section 15.12 of

Holdco’s Limited Liability Company Agreement (the “Holdco Agreement”).AM General Holdi ngs LLC v. The Renco Group, Inc.

C.A. No. 7639

- VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

C.A. No. 7668

- VCN

November 28, 2014

Page 2

Selection of a valuation expert in this context is difficult for two principal

reasons. First, the valuation is challenging because Holdco involves an operating

company in the global defense indust ry. Second, because of the wide

- ranging

activities of the parties and their affiliates, finding a qualified appraiser without any

conflicts presents an obstacle bordering on insurmountable. 1 Conflicts, some more

significant than others, appear to have fr ustrated selection from among the larger

,

nationally respected firms whose qualifications could not be otherwise debated.

Each side has proposed two appraisal firms. The Court will choose from

among them. Each firm undoubtedly has personnel qualified to perform the job.

The parties agreed to select a “firm,” not an individual. Perhaps the concern was

depth and breadth of experience or the extent of the resources that could be

assigned to the task. Yet, some of the “firms” seem essentially to be oper ations of

their individual leaders who are former heads of the valuation practice at “ B ig

1 The Court is designating a Qualified Appraiser as the Third Appraiser in

accordance with the Holdco Agreement. If the parties d ecide to reevaluate their

firm and

, perhaps, unforgiving positions on conflicts, a change that I do not

anticipate, they are free to pursue that course and select a different Third Appraiser

based on agreement and a mutual understanding of its im plications.AM General Holdi ngs LLC v. The Renco Group, Inc.

C.A. No. 7639

- VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

C.A. No. 7668

- VCN

November 28, 2014

Page 3

F our” accounting firm s . But, with the difficulties in avoiding conflicts generally,

retention of a smaller “firm” which may not have the “caliber” of larger

, but

una vailable, firms seems unavoidable.

Valuation Research Corporation (“Valuation Research”)

, proposed by

MacAndrews AMG

, subject to a conflicts check, appears to be the firm most

closely meeting the standards agreed to by the parties. It has eight offices in the

United States and has conducted valuations in the United States and international

business communities for more than three decades. For example, its international

experience includes valuing the Panama Canal with its power generation activities

an d transmission lines, the water utility system, the lock system, and the railroad

assets.

An order designating Valuation Research will be entered.

* * *

In addition, MacAndrews AMG contends that Renco’s Alternate Appraisal’s

critique of its Initial App raisal is beyond the scope allowed in the valuationAM General Holdi ngs LLC v. The Renco Group, Inc.

C.A. No. 7639

- VCN

The Renco Group, Inc. v. MacAndrews AMG Holdings LLC

C.A. No. 7668

- VCN

November 28, 2014

Page 4

provisions of the Holdco Agreement. 2 Pa rt of an appraiser’s (in this context

,

essentially an “arbitrator’s”) function is determining what may properly be

considered (and the weight to be given to it). T he risk that the Third Appraiser

would be misled or that MacAndrews AMG would be prejudiced appears minimal.

Thus, an order denying MacAndrews AMG’s motion to exclude or to redact

portions of Renco’s Alternate Appraisal will be entered.

Very truly yours,

/s/ John W. Noble

JWN/cap

cc: Thad J. Bracegirdle, Esquire

Joel E. Friedlander, Esquire

Register in Chancery

- K

2 See MacAndrews AMG Hldgs. LLC ’s Br. in Opp’n to The Renco Gp., Inc.’s

Appl. for Appt. of a Third [Appraiser] and in Supp. of its Cross

- Mot. to Exclude

Inappropriate Material from the Alternate Appraisal at 13

- 15.