ms capital - cra/la

I N V E S T M E N T B A N K I N G MS Capital, LLC

Preliminary Discussion Materials │ August 2010

CRA/LAMS CapitalINVESTMENT BANKING

LOS ANGELES • NEW YORK • CHICAGO • PHILADELPHIA • ST LOUIS • TAMPA

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Table of Contents

Introduction and Credentials Page

a. Introduction to MS Capital 4

b. Our Services 5

c. New Markets Tax Credits 6

Proposed Process Overview

a. Transaction Timeline 10

b. Sample Investor Contact Log 11

Summary Conclusions – Why MS Capital?

a. Focus and Commitment 13

b. Competitive Advantages 14

c. Real Estate, Merger and Acquisition Transaction Experience 16

d. Deal Team 19


Introduction and Credentials

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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.

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.

Introduction to MS Capital

Investment Banking

Overview

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MS Capital has extensive experience advising on mergers and acquisitions, corporate finance and capital raising, and corporate restructurings and recapitalizations.

Our Services

KEYSERVICES

Mergers & Acquisitions 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

Senior Debt Arranging High Yield Debt Placements Equity Placements Solvency Opinions Financial Restructurings Financial Recapitalizations

INDUSTRY EXPERTISE

Automotive Chemicals Construction Electronics Energy Financial Services Food and Beverage Healthcare Machinery and Equipment

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

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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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The Credit:39% of investment, claimed over 7 years from date of QEI

– Ex: $10mm QEI * .39% = $3.9mm in credits5% 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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NMTC StructureThe 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

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Transaction Timeline

Optimal Process Overview & Timing

Phase Execution Process Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Company Evaluation

Conduct thorough company and industry due diligence Company valuationAlign the Company’s fit with potential buyers

Marketing Preparation

Marketing Stage 1

Marketing Stage 2

Execution & Close

Develop positioning of the CompanyPrepare Private Placement Memorandum and CAPrepare management presentation for the CompanyPrepare target investor list

Contact prospective investorsNegotiate confidentiality agreementDistribute PPMProvide periodic status reports to the Company

Evaluate preliminary proposals of interestSelect Stage 2 investorsCoordinate visits for select investorsDistribute supplemental data

Select final investorsPrepare & populate virtual data roomInvestor due diligenceNegotiate definitive agreementClosing

Evaluation

Marketing Prep

Stage 1

Please note, this represents an optimal timeline according to past transactions and does not constitute a guarantee of closing within sixteen weeks.

Closing

Final Investors

Stage 2

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Sample Investor Contact Log

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 CapitalWeekly Report - EXAMPLE 1 - Initial Contact

2 - Teaser Sent3 - NDA Sent4 - OM Sent

Company Name Contact Name Contact Title Contact Email Contact Phone Stage Last Contact Days Since Last

Contact

Status Comments Industry Website

Weekly Activity

Company 1 John Smith CEO [email protected] 888-888-8888 1 4/14/10 50 Decline John mentioned that he would have to pass. PEG www.comp1.com

Company 2 2 5/25/10 9 Decline REIT

Company 3 3 5/30/10 4 Active HNW Individual

Company 4 4 6/3/10 0 Active Serious about investing. Should come on line shortly. PEG

Week 1 (6/7 - 6/12)

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.


Summary Conclusions – Why MS Capital?

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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

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.

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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.

Financial and strategic buyers regard MS Capital as a source of quality assignments handled with superb execution capabilities.

Our investment bankers use extensive market knowledge to maximize purchase price and negotiate the most favorable terms for our clients.

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.

Competitive Advantages

Worldwide Reach

Reputation

Market Focus

Senior-level Commitment

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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.

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.

MS Capital is one of the few investment banks offering a full range of M&A advisory and private placement 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.

Competitive Advantages (cont’d)

Dedicated Industry Experience

Strong Relationships with Key Sources of Capital

Full Range of Advisory Services

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CRA/LA Sample Real Estate Transactions

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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


share in cash to



share in cash to


$276,600,000

First Mortgage and Mezzanine Financing for the Acquisition and

Renovation of the

RT Portfolio3,005 Units

Cameron Palms, FloridaPark Place at Turtle Run, Florida

Woodbine, FloridaSaybrooke, MarylandVerandahs, Maryland

Cranes Landing, FloridaPost Park, Georgia

On behalf of a Private InvestorPlaced with

CS First Boston and Lehman Brothers


share in cash to



share in cash to



share in cash to


$126,000,000

Equity FundFor the Acquisition of

Commercial and Residential Properties Throughout the United

States

On behalf of a Private InvestorArranged Through

German and MideasternPension Fund Advisors


share in cash to



share in cash to



share in cash to


$56,132,000

First Mortgage and Mezzanine Financing for the Acquisition and

Renovation of the

FQ Portfolio1,324 Units

Chasewood Apartments, TexasWallingford Apartments, TexasWaterford Apartments, Texas

On behalf of a Private InvestorPlaced with CS First Boston and

Lehman Brothers


share in cash to



share in cash to



share in cash to


$33,500,000

Homebuilder Lot Program Arranged for the Sale of

800 Developed Lots in a Private Golf Course Community

Naples, FloridaFor a Private Developer


share in cash to



share in cash to



share in cash to


$144,000,000

Mezzanine and Renovation Financing for the Acquisition of the

MD Portfolio16 Multifamily Properties

North Carolina, South Carolina, Virginia and Georgia

ByAlliance Holdings L.L.C.

Placed withLehman Brothers


share in cash to



share in cash to



share in cash to


$85,000,000

Workout Consulting and Reorganization Assignment for

Malden MillsLawrence, Massachusetts

1,500,000 Square Foot Manufacturing Plant and

Equipment

On behalf of Aaron Feuerstein, Chairman

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Select M&A Transaction Experience


share in cash to



share in cash to



share in cash to


has sold its Surface Specialties Division for €1.415 billion to


share in cash to



share in cash to



share in cash to


has acquired for $655 million


share in cash to



share in cash to



share in cash to


has sold a minority stake for $126 million to


share in cash to



share in cash to



share in cash to


has been acquired for

$900 million by

Investor Group


share in cash to



share in cash to



share in cash to


has been acquired for $1.5 billion by


share in cash to



share in cash to



share in cash to



Refinery Catalysts

The MS Capital team brings to bear large, complex transaction experience with the personalized service of a boutique firm.

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Select M&A Transaction Experience (cont’d)


share in cash to



share in cash to



share in cash to


has acquired the automotive catalyst business of Delphi


share in cash to



share in cash to



share in cash to



Phenol, HCI, and Soda Ash from


share in cash to



share in cash to



share in cash to


has been acquired for$644 million by


share in cash to



share in cash to



share in cash to


has sold its bioproducts & biopharma activities to


share in cash to



share in cash to



share in cash to


has acquired Rhein Chemie for €200 million from


share in cash to



share in cash to



share in cash to


Lightweight Pallet

Company

PENDING SALE

Our transaction experience encompasses both strategic and financial sponsor clients.

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Deal Team

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

Joined MS in 2008 Analyst Eastdil Secured Somera Capital Goldman Sachs

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

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

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

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

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.

3+ years of investment banking experience Broad background in both M&A and capital raising

transactions

Team Member EducationTransaction ExperienceExperience

M.B.A. University of Southern California

B.S. University of Scranton CPA

Harvard Law School B.A. Claremont McKenna

College

M.B.A. New York University B.A. University of Pennsylvania Series 24, 7 & 63

M.B.A. University of California Los Angeles

B.A. Denison University

B.S. University of Memphis

Yale Law School B.A. Yale College London School of Economics

B.A. University of California Santa Barbara (Economics)

Series 7 & 63 (pending)

Mark. W. SantarsieroPresident and Chief Executive Officer213.612.8000

Craig TompkinsExecutive Chairman213.612.8000

Douglas PuglieseExecutive Managing Director212.425.4300

A. Kendall Raine, IIIExecutive Managing Director213.612.8000

Barry HackerManaging Director213.233.1503

Albert MacchioniManaging Director212.425.4300

Jeffrey DahlSenior Associate213.612.8000

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