Preliminary Discussion Materials │ August 2010 CRA/LA
MS Capital INVESTMENT BANKING
YORK I NLOS V E ANGELES S T M E N T • BNEW ANK I N G • CHICAGO • PHILADELPHIA • ST LOUIS • TAMPA
MS Capital, LLC
CRA/LA
Table of Contents
Introduction and Credentials
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a. Introduction to MS Capital
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b. Our Services
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c. New Markets Tax Credits
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Proposed Process Overview a. Transaction Timeline
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b. Sample Investor Contact Log
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Summary Conclusions – Why MS Capital? a. Focus and Commitment
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b. Competitive Advantages
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c. Real Estate, Merger and Acquisition Transaction Experience
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d. Deal Team
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Introduction and Credentials
INVESTMENT BANKING
MS Capital, LLC
CRA/LA
Introduction to MS Capital
Overview MS Capital is a wholly-owned subsidiary of Marshall & Stevens, Inc. Marshall & Stevens is one of the largest independent valuation and financial consulting firms in the U.S. with 6 offices and over 75 years of experience. Building on Marshall & Stevens’ 75 year history of enduring client relationships, MS Capital has leveraged our resources, breadth of industry experience, and market intelligence to deliver innovative, comprehensive investment banking services to our clients.
Investment Banking MS Capital Investment Banking serves a diverse client base that includes corporations, financial institutions, financial sponsors, hedge funds, and private equity groups. Our presence is focused in the Americas but has recently expanded to serve international clients. Whether it’s raising capital to meet growth objectives or identifying strategic business partners, MS Capital offers our clients M&A advisory, capital markets, and corporate finance services.
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Our Services
CRA/LA
MS Capital has extensive experience advising on mergers and acquisitions, corporate finance and capital raising, and corporate restructurings and recapitalizations. Mergers & Acquisitions
KEY SERVICES
INDUSTRY EXPERTISE
Corporate Finance & Capital Raising
Exclusive Sales & Divestitures Management & Leverage Buyouts Spin-Offs Special Committee Assignments Joint Venture Structuring Distressed Transactions Tax Credits Acquisition Advisory Fairness Opinions
Automotive Chemicals Construction Electronics Energy Financial Services Food and Beverage Healthcare Machinery and Equipment
Senior Debt Arranging High Yield Debt Placements Equity Placements Solvency Opinions Financial Restructurings Financial Recapitalizations
Mining & Minerals Nutritional and Food Ingredients Oil and Gas Pharmaceutical Railroad Real Estate Telecommunications
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CRA/LA
New Markets Tax Credits
Overview The NMTC Program is a community development lending tool designed to stimulate the flow of investment in underserved communities by creating new jobs and accelerating economic revitalization. The program was created as part of the Community Renewal Tax Relief Act of 2000 which encourages private capital investment in low income communities by providing a 39 percent federal tax credit to investors. NMTC investments have supported a wide variety of projects, including coal companies, schools, health-care facilities, condominiums, timberlands, religious institutions, child-care providers, supermar-kets, restaurants, museums, hotels, performing arts centers, pharmacies, convenience stores, manufactur-ers, processors, distributors, trucking companies, printing companies, waste management companies, sporting goods stores, business incubators, office buildings, shopping centers, substance abuse treatment facilities, car dealerships, florists, and recording studios (CDFI Fund 2007b).
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CRA/LA
New Markets Tax Credits
The Credit: 39% of investment, claimed over 7 years from date of QEI
– Ex: $10mm QEI * .39% = $3.9mm in credits 5% of QEI in years 1-3 each; and 6% of QEI in years 4-7 each. Equity investor’s basis is reduced by NMTCs claimed Under certain circumstances, the NMTCs are subject to recapture
Monetizing the Credit: Tax equity is placed prior to the accrual of tax credits which will occur over a period of time (e.g., a seven year period for NMTC) and, therefore, are priced on a discounted cash flow basis and result in cash up front to the client in the range of 18 to 22% of qualified project costs
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New Markets Tax Credits
NMTC Structure The funds from bonds received by the Lender will, in turn, be loaned to the Investment Fund LLC (“Fund”) which is wholly-owned by an NMTC investor. The NMTC investor will use the funds to make an equity investment in an entity established by the “community development entity” that provides the tax credit allocation (the "sub-CDE"). The primary security for the leverage loan is a pledge of the Fund's membership interest in the sub-CDE.
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Proposed Process Overview
INVESTMENT BANKING
MS Capital, LLC
CRA/LA
Transaction Timeline
Optimal Process Overview & Timing Phase
Company Evaluation
Marketing Preparation
Execution Process
Conduct thorough company and industry due diligence Company valuation Align the Company’s fit with potential buyers
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Marketing Stage 1
Marketing Stage 2
Evaluate preliminary proposals of interest Select Stage 2 investors Coordinate visits for select investors Distribute supplemental data
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Evaluation
Develop positioning of the Company Prepare Private Placement Memorandum and CA Prepare management presentation for the Company Prepare target investor list
Contact prospective investors Negotiate confidentiality agreement Distribute PPM Provide periodic status reports to the Company
Execution & Close
Week
Marketing Prep
Stage 1
Stage 2
Final Investors
Select final investors Prepare & populate virtual data room Investor due diligence Negotiate definitive agreement Closing
Closing
Please note, this represents an optimal timeline according to past transactions and does not constitute a guarantee of closing within sixteen weeks.
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Sample Investor Contact Log
CRA/LA
MS Capital is able to deliver a focused list of credible investors. MS Capital maintains long-term working relationships with many high profile private equity groups, high net worth individuals, family investment offices , commercial banking institutions, and hedge funds, among others. Below is an example of a tracking report that will be sent to you at the end of each week. It will include MS Capital’s weekly activity as well as a list of potential investors that have been contacted along with a brief profile on each. MS Capital Weekly Report - EXAMPLE
Company Name
Contact Name Contact Title
1 - Initial Contact 2 - Teaser Sent 3 - NDA Sent 4 - OM Sent
Contact Email
Contact Phone
Stage
Last Contact Days Since Last Contact (6/7 - 6/12)
Status
Comments
Industry
Website
Week 1 Weekly Activity A thorough explanation detailing the previous weeks activity and goals accomplished. This will also include a quick profile (company description, business model & previous investments) of interested investment firms, funds & companies. John Smith CEO johnsmith@comp1.com 888-888-8888 PEG Company 1 4/14/10 Decline John mentioned that he would have to pass. 1 50 www.comp1.com REIT Company 2 5/25/10 Decline 2 9 HNW Individual Company 3 5/30/10 Active 3 4 PEG Company 4 6/3/10 Active Serious about investing. Should come on line shortly. 4 0
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Summary Conclusions – Why MS Capital?
INVESTMENT BANKING
MS Capital, LLC
CRA/LA
Focus and Commitment
Across six offices and numerous dedicated industry groups, MS Capital is united in a single purpose: furnishing investment banking services that are tailored to the specific needs of our clients. Whether we are advising on M&A transactions, raising capital, rendering valuation opinions or representing creditors in restructurings, our clients count on our ability to get the job done anywhere in the world. MS Capital senior management does not just “pitch” the engagement, it leads the process from initial stages to successful completion A dedicated project team is formed for each engagement we undertake Unparalleled focus on the client’s specific goals The highest level of confidentiality and professionalism is brought to each engagement
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Competitive Advantages
Worldwide Reach Through our six offices, MS Capital is one of the few middle-market investment banks that offers international coverage and capabilities. This ensures that our M&A process will indentify all your alternatives, regardless of location, in an effort to bring about the most favorable possible outcome. Reputation Financial and strategic buyers regard MS Capital as a source of quality assignments handled with superb execution capabilities. Market Focus Our investment bankers use extensive market knowledge to maximize purchase price and negotiate the most favorable terms for our clients. Senior-level Commitment Our market leadership is attributed to senior-level commitment and dedication, sentiments supported by each member of our staff. MS Capital’s senior professionals stay involved in each transaction – from the first meeting with a new or prospective client through the entire sale process until the transaction is closed.
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CRA/LA
Competitive Advantages (cont’d)
Dedicated Industry Experience MS Capital, leveraging Marshall & Stevens, has professionals who are well-versed in virtually every major industry group. This enables the firm to assign appropriate industry experts in support of each transaction. Strong Relationships with Key Sources of Capital We have in-depth knowledge of thousands of client companies and hundreds of buyout groups, including their acquisition and divestiture objectives, portfolio companies and financial wherewithal. This enables us to focus quickly on the most likely buyers for a given transaction and assess the ability of each to close. We have created key relationships with private equity firms with which we continuously share relevant transaction opportunities. FullMS Capital one of the few investment banks offering a full range of M&A advisory and private placement services Range of isAdvisory Services to middle-market clients. We strive to ensure that each client receives objective advice regarding all alternatives, whether an engagement involves a sale, an acquisition or a recapitalization.
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Sample Real Estate Transactions
$276,600,000 First Mortgage and Mezzanine Financing for the Acquisition and Renovation of the has announced the pending sale of 100% of Portfolio its shares ofRT common stock for $97.00 per 3,005 share inUnits cash to
Cameron Palms, Florida Park Place at Turtle Run, Florida Woodbine, Florida Saybrooke, Maryland Maryland $2.1Verandahs, billion Transaction Value Cranes Landing, Florida Post Park, Georgia
On behalf of a Private Investor Placed with CS First Boston and Lehman Brothers
$126,000,000 Equity Fund For the the Acquisition has announced pending sale of of 100% of its shares of common stock for $97.00 per share in cash to Commercial and Residential Properties Throughout the United States
On $2.1 behalf of Transaction a Private Investor billion Value Arranged Through German and Mideastern Pension Fund Advisors
$85,000,000
$144,000,000
Workout Consulting and Reorganization Assignment forof has announced the pending sale of 100%
Mezzanine and Renovation Financing for the Acquisition of the
its shares of common stock for $97.00 per share in Mills cash to Malden
Lawrence, Massachusetts 1,500,000 Square Foot Manufacturing Plant and Equipment $2.1 billion Transaction Value On behalf of Aaron Feuerstein, Chairman
has announced the pending sale of 100% of its shares of common stock for $97.00 per MDshare Portfolio in cash to
16 Multifamily Properties North Carolina, South Carolina, Virginia and Georgia $2.1 billion Transaction Value
By Alliance Holdings L.L.C. Placed with Lehman Brothers
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$56,132,000 First Mortgage and Mezzanine Financing for the Acquisition and has announced the pending sale of 100% of Renovation of the its shares of common stock for $97.00 per share in cash to
FQ Portfolio 1,324 Units Chasewood Apartments, Texas Wallingford Apartments, Texas $2.1 billion Transaction Value Waterford Apartments, Texas On behalf of a Private Investor Placed with CS First Boston and Lehman Brothers
$33,500,000 Homebuilder Program Arranged has announcedLot the pending sale of 100% of its shares for of common stockof for $97.00 per the Sale share in cash to
800 Developed Lots in a Private Golf Course Community Naples, Florida Value $2.1 billion Transaction For a Private Developer
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CRA/LA
Select M&A Transaction Experience
The MS Capital team brings to bear large, complex transaction experience with the personalized service of a boutique firm.
has announced the pending sale of 100% of its shares of common stock for $97.00 per share in cash to
has sold its Surface Specialties Division for â‚Ź1.415 billion to $2.1 billion Transaction Value
has announced the pending sale of 100% of its shares of common stock for $97.00 per share in cash to
has been acquired for $900 million by $2.1 billion Transaction Value
has announced the pending sale of 100% of its shares of common stock for $97.00 per share in cash to
has acquired for $655 million $2.1 billion Transaction Value
has announced the pending sale of 100% of its shares of common stock for $97.00 per share in cash to
has announced the pending sale of 100% of its shares of common stock for $97.00 per share in cash to
has sold a minority stake for $126 million to $2.1 billion Transaction Value
has announced the pending sale of 100% of its shares of common stock for $97.00 per share in cash to
has acquired for $763 million
has been acquired for $1.5 billion by $2.1 billion Transaction Value
Investor Group
$2.1 billion Transaction Value
Refinery Catalysts
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CRA/LA
Select M&A Transaction Experience (cont’d)
Our transaction experience encompasses both strategic and financial sponsor clients.
has announced the pending sale of 100% of its shares of common stock for $97.00 per share in cash to
has acquired the automotive catalyst business of Delphi $2.1 billion Transaction Value
has announced the pending sale of 100% of its shares of common stock for $97.00 per share in cash to
has sold its bioproducts & biopharma activities to $2.1 billion Transaction Value
has announced the pending sale of 100% of its shares of common stock for $97.00 per share in cash to
has acquired for $160 million
Phenol, HCI, and Soda Ash from $2.1 billion Transaction Value
has announced the pending sale of 100% of its shares of common stock for $97.00 per share in cash to
has acquired Rhein Chemie for â‚Ź200 million from $2.1 billion Transaction Value
has announced the pending sale of 100% of its shares of common stock for $97.00 per share in cash to
has been acquired for $644 million by $2.1 billion Transaction Value
Lightweight Pallet Company
has announced the pending sale of 100% of its shares of common stock for $97.00 per share in cash to
$2.1 billion Transaction Value
PENDING SALE
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CRA/LA
Deal Team Experience
Team Member
20+ years of direct transaction experience Led Societe Generale de Surveillance acquisition team Worked on various M&A and valuation transactions for clients in sectors including Manufacturing and Service
Joined MS in 1987 Previously with two CPA firms
Reading Entertainment, Inc. 15 years with Gibson, Dunn & Crutcher Fidelity Federal Bank President of NYSE listed Co.
Joined MS in 2008 12 years with Bear, Stearns & Co. Inc. as Managing Director United States Navy
10 years with A.G. Edwards, Financial Institutions Group as Managing Director Associate Director with Bear Stearns
KPMG since 1988 in U.S. and Japan Founded KPMG’s Tax Credit Practice in 1994 Co-founder of a boutique firm affiliated with Hambros Bank Practiced law in New York City for two years before beginning his investment banking career
Mark. W. Santarsiero President and Chief Executive Officer 213.612.8000
Craig Tompkins Executive Chairman 213.612.8000
Douglas Pugliese Executive Managing Director 212.425.4300
A. Kendall Raine, III Executive Managing Director 213.612.8000
Barry Hacker Managing Director 213.233.1503
Albert Macchioni Managing Director 212.425.4300
Jeffrey Dahl Senior Associate 213.612.8000
M.B.A. University of Southern California B.S. University of Scranton CPA
Harvard Law School B.A. Claremont McKenna College
13+ years of investment banking experience Worked on over 200 M&A advisory and financing transactions Experience with Pharmaceutical, Oil and Gas, Chemical and Food Ingredients clients
M.B.A. New York University B.A. University of Pennsylvania Series 24, 7 & 63
Originated over 80 transactions for such clients as BofA, Citibank, Wells Fargo, GMAC, MCG Capital, and Redwood Trust while with A.G. Edwards Advised banks and non-banks throughout career on M&A and capital market transactions
20+ years of transaction experience Broad background in both M&A and capital raising transactions
B.S. University of Memphis
25 years of investment banking experience Focused on the middle market, advising on buy and sell side M&A, capital raising, venture and private equity investing.
Yale Law School B.A. Yale College London School of Economics
3+ years of investment banking experience Broad background in both M&A and capital raising transactions
Joined MS in 2008 Analyst Eastdil Secured Somera Capital Goldman Sachs
Education
Transaction Experience
30+ years’ experience as a corporate attorney dealing with a variety of M&A, financial and corporate governance matters, including assisting in the restructuring of more than $3 billion in assets
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M.B.A. University of California Los Angeles B.A. Denison University
B.A. University of California Santa Barbara (Economics) Series 7 & 63 (pending)
MS Capital
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