2002 Capital Update Buying and Selling a Company in a Tough Economy July 17, 2002 Anderson School at UCLA Los Angeles, CA

Debt Structure and Funding Typical Capital Structure: EBITDA$ 25 million Purchase price - 7 times EBITDA$175 million ABL or Cash Flow Financing$ 50 million Tranche B Lenders$ 25 million Equity or Mezzanine$100 million

Debt Structure & Funding Lack of access to senior debt on a cash flow basis. Cash flow lenders are offering 2 to 3 times EBITDA. Sellers seeking 6 to 8 times EBITDA. ABL lenders: Aggressively offering financing Often financing ends up at 2-3 times EBITDA. Financial sponsors are forced to invest 4-6 times EBITDA

Capital Summary Senior Debt Leverage is Down Senior Debt Pricing is Up Equity Investments are Up High Yield Market is Red Hot Distressed Debt Market is Red Hot Due Diligence is Critical

Vicky Balmot Executive Vice President Congress Financial Corporation a Wachovia Company Presented By: