Skip to main content
Date
Rule
801.10
Staff
Michael Verne
Response/Comments
Agree.

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

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

Learn more about Informal Interpretations.