Case No. RS20D03594

32.I heard the Pre-Trial Review on 28 January 2022. The valuation of Property J was agreed at $35 million, which is significantly less than its cost, if the refurbishment works are included, and the property in the private island at $20 million. The valuation of DEF Inc and the husband’s other start-up business by ABCD Advisory had still not been received. I made various directions including a polite request for information from Mr F of the PE Company and a suggestion that Mr F meet Mr I of ABCD Advisory. As it transpired, it proved impossible to make the arrangements for the meeting with both sides blaming the other for the failure to agree dates. As already noted, I directed redaction of various parts of the Husband’s statement on the Pre-Nuptial Agreement. 33.The valuation of Mr I of ABCD Advisory in relation to DEF Inc and the other company is dated 27 February 2022. It is, fortunately, agreed, save in relation to the treatment of interest on loan notes. In relation to DEF Inc, Mr I assessed future maintainable earnings at c. $13 million per annum and an EBITDA multiple of 9. This valued the business at c. $120 million, less liabilities of (c. $40 million), giving a net valuation of c. $80 million. There should be no discount for lack of control as the PE Company wish to maximise value by sale. The value to the family is therefore c. $40 million on the basis of a shareholding of 46.55%, the balance to 50% being owned by management. In addition, the preference shares are entitled to interest totalling c. $30 million as shown in the accounts of DEF Inc. There is no indication of any diminution in valuation caused by the Side Deed following the defaults, as the interest of the PE Company is merely in securing an exit. Turning to the detail, there are now more than 30 stores, with a revenue of c.$160 million. I note that revenue was only c. $90 million before the advent of Covid-19 and the acquisition of another business a few years ago, which is a factory outlet, warehouse and online store. DEF Inc has a market share of 5% and is the third largest store in its field in Country X. The Gross Profit margin is currently 43.2%. A net loss of (c. $20 million) in 2017 became a profit of c. $5 million in 2021, with a budget for 2022 forecasting a profit of c. $10 m. The overall result is a share price of $1.39 per share, which compares favourably to the price at which shares were brought back from minority shareholders a few years ago of $1 per share. An issue has arisen as to the treatment of the interest owed on the preference shares as it appears that this interest has been written off as irrecoverable by the Husband’s accountants in the trust accounts. 34.Mr I then turns to the husband’s other start-up business. The business has generated losses of (c. $10m). The forecast losses for 2022 are (c. $2million). The business has no revenue and there is a net tangible asset deficiency of (c. $10 million). The value of the shares is therefore nil and the loan notes may not be repaid.