Question
From: (redacted)
Sent: Tuesday, September 23, 2008 12:11 PM
To: Verne, B. Michael
Cc: (redacted)
Subject:Acquisition Price
Attachments: (redacted)
We are writing tosee if you agree with our view concerning how we calculated the size of the transactionregarding the below described transaction which is technically arecapitalization, but which has the effect of transferring the majority of thelimited liability interests of an acquired person to the acquiring person.
In accordance withthe terms of a Recapitalization Agreement, approximately 84% of the existingmembership interests in (redacted) (the acquired person) will be redeemed fromthe proceeds of (i) an equity investment by (redacted) ("(redacted)"), a majority owned subsidiary of (redacted) (the acquiring person)and (ii) a debt financing by (redacted).
You will note fromthe Estimated Uses and Sources of Funds Chart (attached below), morespecifically the left side column, that approximately $80.1 million of purchaseconsideration is to be used to payoff third party debt obligations of theacquired person or its subsidiaries (or in certain instances debt or capitallease obligations of the acquired person will remain in place). .
In determining thesize of the transaction for purposes of determining the appropriate filingfee, it is our view that the amount of third party debt of the acquiredperson being paid off would not be included in the valuation of the LibertyTire Services, LLC nor would amounts attributable to third party debt andcapital leases that will remain in place.
Do you agree withour view?
ConsolidatedSources and Uses: Assumes (redacted)
Estimated Uses and Sources of Funds ($ in millions)
Cash Proceeds to Sellers
90.9
Revolver
0.0
Management Rollover
13.6
Senior Debt -First Lien
80.5
Total Equity Value
104.5
NC Municipal Bonds
23.7
NC Restricted Cash
(6.7)
Purchase Price Paid to (redacted)
24.2
Subtotal: Net NC Bond Debt
17.0
Assumed Capital Lease
2.5
Purchase Price Paid to Auburndale
5.5
Acquisition Line
4.7
Capital Leases
5.2
NC Municipal Bonds
23.7
Total Net Debt
107.4
Restricted Cash for NC Bonds
(6.7)
Subtotal: Net NC Bond Debt
17.0
(redacted)
105.2
Repay Comerica Debt
43.2
Management Equity
13.6
(redacted)
5.1
Total Equity
118.7
Repay Seller Debt (redacted)
6.0
Repay Mezzanine Debt
4.8
Repay Equipment Debt
0.6
Assumed Capital Leases
2.8
Pay Accrued lnterest
0.6
Total Net Debt
80.1
Refinance Preferred Stock
0.0
Transaction Fees
9.4
Total Uses
226.1
Total Sources
226.1