COURT OF CHANCERY

OF THE 

STATE OF DELAWARE

 JOHN W. NOBLE 417 SOUTH STATE STREET

VICE CHANCELLOR DOVER, DELAWARE 19901

 TELEPHONE: (302) 739-4397

 FACSIMILE: (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 Holdings 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

Dates Submitted: July 31, 2014 and November 21, 2014

Dear Counsel:

The Renco Group, Inc. (“Renco”) and MacAndrews 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 Third 

Appraiser to determine the appraised value as provided in Section 15.12 of 

Holdco’s Limited Liability Company Agreement (the “Holdco Agreement”). 
AM General Holdings 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 industry. 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 frustrated 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 operations of 

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

 

1

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

accordance with the Holdco Agreement. If the parties decide 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 implications.
AM General Holdings 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

Four” accounting firms. But, with the difficulties in avoiding conflicts generally, 

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

unavailable, 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 

and 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 Appraisal is beyond the scope allowed in the valuation 
AM General Holdings 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 Part 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). The 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.