Presentation for AIF - October 2006 Structuring Joseph V. Rizzi Amsterdam Institute of Finance November, 2012

Transaction Framework Strategic Issues Do I make the acquisition? Valuation How much do I pay? Tactics How do I make the offer? Financing How do I pay? Integration Implementation of acquisition Amsterdam Institute of Finance November, 2012

Transaction and Structuring Overview Transaction Environment Creditors Rights Regulatory and Antitrust Contract Structuring Environment Business Plan Market Conditions Deal Securities Accounting Transaction Characteristics Financial Preferences Tax Corporate Law Competing Bidders Amsterdam Institute of Finance November, 2012

Structuring Environment Business Considerations: Strategic Plans Growth Plans Management Business Risk (Cash Flow Volatility) Financial Characteristics: Sources and Uses Operating Cash Flows Leverage Liquidity Seasonality Timing Deal Maturity Amortization Seniority Security Covenants Prepayment Cost Liquidity Size Financial Preferences: Dilution Control Risk Tolerance Flexibility Exit Needs Market Conditions: Depth Pricing Requirements Structural Needs Cycle Liquidity How to get what you need! What do you want? What can you get? Amsterdam Institute of Finance November, 2012

Different Menus As the credit curve shifts, the menu that is available to Issuers / Arrangers changes Bull Market Menu Bear Market Menu Holding Company PIK Tranche Term Loans Covenant Light High Yield Debt Bridge Loans Second Lien Hybrid Preferred Cross Lien Facilities Asset Carve-outs OPCO/PROPCO Recapitalizations Stretch Senior Seller Notes Senior Notes Private Placements Equity R/C Lite Mezzanine Smaller Covenants Grids Prepayment Penalty Issuer Friendly Investor Friendly Amsterdam Institute of Finance November, 2012

LBO Market Indicators: 1H12 To access the data points underlying the chart, double-click on the chart. Copyright© 2012 by Standard & Poor’s Financial Services LLC (S&P) a subsidiary of The McGraw-Hill Companies, Inc. Amsterdam Institute of Finance November, 2012

Amsterdam Institute of Finance Financing Approaches Left Hand Side Financing Right Hand Side Financing Based on the cash flow of a specific asset pool. Some examples include: Asset Based Lending Factoring Leasing Project Finance Securitization Based on the cash flow of the entire company. Some examples include: Bank Debt Public Bonds Mezzanine Preferred Stock Common Stock Amsterdam Institute of Finance November, 2012

Critical Path & Decision Framework Floating- Rate Bank Financing Credit Rating Asset Carveout Securitization \ Prop Co Determine Capital Structure Acquisition Bridge Takedown Fixed- Fixed Income Rate Refinance Bridge Hedge No Action Target Credit Rating Financial Flexibility Bank Funding Equity / Near Equity Advisory / Origination Underwriting Product Execution Amsterdam Institute of Finance November, 2012

Amsterdam Institute of Finance Mechanics Purchase/Sale Nondisclosure Agreement Offering Memorandum Data Room Letter of Intent Sale and Purchase Agreement Financing Commitment Letter Term Sheet Credit Agreements Intercreditor Agreements Amsterdam Institute of Finance November, 2012

Legal issues Involved in Finance the Transaction Commitment Letters Mac Due Diligence Syndication Flex Marketing Periods Fraudulent transfers Loan Documentation Intercreditor Covenants Amsterdam Institute of Finance November, 2012

Creating the Capital Structure Rule of Thumb Measures Balance Sheet Model Cash Flow Model Detailed Model Matching markets to the need Reverse inquiry Projections (amortization capability) Amsterdam Institute of Finance November, 2012

Deal Financial Arithmetic Amsterdam Institute of Finance November, 2012

Financing Need As a Starting Point Purchase Price Minimum/Maximum Recapitalization Dividend Debt Refinancing Callability Premiums Tax Issues Expenses Other Uses Amsterdam Institute of Finance November, 2012