Financial Restructuring Quarterly Update

Transcription

1 Restructuring Quarterly Newsletter: 2Q 1Q 2012 Financial Restructuring Mergers & Acquisitions Capital Markets Private Placements Dedicated Industry Experience James D. Decker Managing Director Financial Restructuring Quarterly Update Third Quarter 2012 Alex C. Fisch Director Jay C. Jacquin Director James S. Hadfield Vice President Please contact any of the above Morgan Joseph Financial Restructuring Professionals for commentary and detail on the information provided in this newsletter. Morgan Joseph s Financial Restructuring Group provides comprehensive financial advice, capital solutions and investment banking services to financially stressed entities and their creditors. We are pleased to share with you our observations from the third quarter of 2012 capital and restructuring markets, which include: Driven by M&A and Dividend Recapitalizations, Leverage Loan and High Yield Volumes Rise, Pushing Down Yields and Improving Terms for Borrowers The Tight Market for Widely Syndicated Facilities Has Led Some Distressed Debt Buyers to Seek Yield in Previously Illiquid Markets Restructuring Activity Has Slowed As Default Rates Hover at Historical Lows but Does Rising New Issuance Volume Suggest Busier Days Are Ahead? Strong Demand for Asset Based Loans and High Yields Are Driving Down Required Equity Contributions, Except in the Middle Market Page 0 Morgan Joseph TriArtisan 600 Fifth Avenue, 14 th Floor, New York, NY Telephone:

2 Dedicated Industry Groups and Sector Level Expertise Consumer, Retail & Leisure Healthcare Industrials Technology, Media & Telecommunications Business Services Combined With the Capabilities of a Full Service Investment Bank Equity Capital Markets Equity (Privates, RDs, CMPOs and PIPEs) IPOs & Follow-on Issues Mergers & Acquisitions General Advisory Exclusive Sales Buy-side Advisory Fairness Opinions Takeover Defense Special Committees Going Private SPAC Reverse Mergers Debt Private Placements High Yield 144A Second Lien Financings Mezzanine Bridge Financing Financial Restructuring Companies and Creditors Raising New Capital M&A Solutions Exchange Offers Recapitalizations/ Restructurings Workouts i

3 Restructuring Quarterly Newsletter: 3Q 2012 Contents Third Quarter Highlights 4 Recent Financing and Restructuring Trends 5 When Will the Restructuring World Get Busy? 6 DIP Financing Survey 7 Financing Market Snapshot 8 Sampling of Financial Restructuring Group Engagements 10 About Morgan Joseph Headquartered in New York City, Morgan Joseph TriArtisan LLC ( Morgan Joseph ) is an investment banking firm with over 70 employees and four offices across the United States dedicated to serving middle market companies. The firm s primary focus is on providing financial advisory and capital raising services in the U.S., Asia and Europe. Our services include mergers and acquisitions advice, restructuring advice, private placements and public offerings of debt and equity. We differentiate ourselves by the depth and breadth of experience of our senior bankers. Taken together with the firm s range of capabilities, Morgan Joseph is committed to delivering the highest standard of service available to middle market companies. Commitment to our clients is the cornerstone of our firm and our goal is to establish long-term relationships that help our clients reach new plateaus. ii

4 Legal Disclosure This newsletter is a periodic compilation of certain economic and corporate information, as well as completed and announced restructuring, capital markets, and bankruptcy activity. Information contained in this newsletter should not be construed as a recommendation to sell or buy any security. Any reference to or omission of any reference to any company in this newsletter should not be construed as a recommendation to buy, sell or take any other action with respect to any security of any such company. We are not soliciting any action with respect to any security or company based on this newsletter. This newsletter is published solely for the general information of clients and friends of Morgan Joseph. It does not take into account the particular investment objectives, financial situation, or needs of individual recipients. Certain transactions, including those involving early stage companies, give rise to substantial risk and are not suitable for all investors. Financial Restructuring Group transactions noted herein were led by current Morgan Joseph Restructuring professionals either at Morgan Joseph or while at their former employers. This newsletter is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Prediction of future events is inherently subject to both known and unknown risks, and other factors that may cause actual results to vary materially. We are under no obligation to update the information contained in this newsletter. We and our affiliates and related entities, partners, principals, directors, and employees, including persons involved in the preparation or issuance of this newsletter, may from time to time have long and short positions in, and buy and sell, the securities, derivatives (including options) thereof, of companies mentioned herein. The companies mentioned in this newsletter may be clients of Morgan Joseph. The decision to include any company in this newsletter is unrelated in all respects to any service Morgan Joseph may provide to such company. This newsletter may not be copied or reproduced in any form, or redistributed without the prior written consent of Morgan Joseph. The information contained herein should not be construed as legal advice. Circular 230 Disclosure: To insure compliance with US Treasury regulations, nothing contained in this communication (including any attachments) is intended to constitute tax advice nor is anything contained in this communication intended or written to be used, and it cannot be used, for the purpose of (a) avoiding or reducing penalties that may by imposed by the Internal Revenue Service or any other governmental authority, or (b) promoting, marketing or recommending to another party any transaction or matter addressed herein. Page 3 iii

5 Third Quarter Highlights Loan Volume Rose, Driven by Increased Leveraged M&A and Recap Demand... $160B $140B Primary Loan Volume M&A Other $18B $16B Leveraged Loan PE-Backed Dividend Volume Institutional bank debt Pro rata bank debt $120B $100B $80B $60B $40B $14B $12B $10B $8B $6B $4B $20B $2B 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 But a Robust High Yield Market Allowed for Loan Demand to Outpace Supply $120B Quarterly High-Yield Volume $20B Change in Outstanding Loans and Inflows $100B $15B $10B $80B $5B $60B -$5B $40B -$10B $20B 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 -$15B -$20B 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Total flows into institutional accounts Change in Outstandings Providing the Technical Conditions for Borrower Friendly Pricing and Terms 8.50% 8.00% Average First Lien Clearing Yield $30B $25B Volume Covenant-Lite Volume Percent 35% 30% 7.50% 7.00% 6.50% $20B $15B $10B 25% 20% 15% 10% 6.00% $5B 5% 5.50% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 0% Source: S&P LCD Page 4

6 Recent Financing and Restructuring Trends The Hunt For Yield Drives Trading Funds Towards Illiquid Loan Purchases, Providing a New Potential Exit for Holders of Distressed Bank Loans With the recovery of both the capital markets and underlying borrowers, the universe of widely syndicated sub-par debt has shrunk materially. Distressed debt traders that bought during the trough have benefitted, but it leaves them now with the challenge of how to repeat those extraordinary returns. Adding further pressure for a repeat performance is the capital raised by many funds off those superior 2010 and returns. As these institutions search for yield, some have looked to the illiquid bank and club loan market, a sector once dominated by opportunity funds. However, the distressed debt trading funds tend to lack the relationship focus necessary to source opportunities in this illiquid arena. Additionally, traders tend to seek hold positions that often exceed a single holder s position in a clubbed up bank loan. We have begun to witness instances where all of the participants in a bank loan have sold to a trading fund via an intermediary. Although examples are antidotal at this point, holders of underperforming club loans now have the alternative of exploring a sale of their hold or potentially the entire loan. Final Tax Regulations Issued on Publicly Traded Debt Increases Likelihood of Cancellation of Indebtedness Income In September, the IRS issued final regulations concerning the definition of publicly traded for purposes of determining the issue price of a debt instrument. This significantly expands the previous definition of publicly traded, and is relevant as it may trigger increased cancellation of indebtedness income ( CODI ) for issuers of new debt in debtfor-debt exchanges and similar restructurings. In the instance where either the old security, the new security, or both are publicly traded, the market price will determine fair market value. However, if neither debt instrument is publicly traded, then the issue price of the new debt security will generally equal its stated principal amount, provided that it has adequate stated interest. The final regulations also did away with certain safe harbors but did establish a new small issue safe harbor, in which a debt instrument would not be considered publicly traded if the outstanding principal amount does not exceed $100 million. Ultimately, under the newly enlarged definition of publicly traded, it is more likely that the issue price of a new debt instrument in a debt-for-debt exchange will be based on its fair market value, generating CODI for issuers since most of these transactions occur when the existing debt is trading at a discount. Depending on the situational dynamics and the ability to preserve any NOLs, this additional tax burden could materially impact potential restructuring transactions. Stock Buybacks Increase Via Incremental Leverage Numerous large cap companies are utilizing the competitive and low-cost debt markets as an opportunity to repurchase shares on the open market and lower their overall cost of capital. S&P 500 stock buybacks totaled almost $112 billion during the second quarter of 2012, an increase of 32% and this trend continued during the third quarter. The popular belief during the Great Recession was that large companies would focus on de-levering, lower dividend payouts, decrease share buyback programs and hoard cash. Now that the recession is over (at least statistically speaking it has ended), some businesses are reversing course. This current trend in financing buybacks through leverage suggests large cap companies are, on the one hand, finding it difficult to say no to low cost debt, while on the other hand, are short on compelling growth opportunities and view a buyback as the best use of capital. While this strategy allows businesses to maximize shareholder value in the short term, increasing leverage in the face of limited growth may, over the longer term, be a recipe for more restructurings % 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% Average Bid of Leveraged Loans All Loans First-Lien Loans Second-Lien Loans Average YTM for Leveraged Loans New-issue Secondary 5.0% May-11 Sep-11 Dec-11 Mar-12 Jul-12 Oct-12 Source: S&P LCD, Internal Revenue Service, FactSet Page 5

7 Aggregate Transaction Value ($ billions) MORGAN JOSEPH When Will the Restructuring World Get Busy? When speaking with acquaintances who live outside of the restructuring world, a frequent comment is man, you must be busy given the state of the economy. While our group has remained active on special situation financings and distressed M&A, many bankruptcy professionals have had a decent, but not great, year and the data proves it. The U.S. M&A market rebounded from the troughs of 2009 & 2010 with a solid, but YTD 2012 volume is down materially. Default rates on leveraged loans remain extremely low from a historical perspective and the number of businesses filing Chapter 11 in 2012 is anticipated to be flat to down when compared to. U.S. M&A Transaction Volume Loan Default Rate $2,000 11,878 11,173 12, % 1,500 1, ,107 $590 9,158 $947 9,844 $1,691 $1,269 10,042 8,384 $1,767 $1,152 $788 8,640 $898 8,852 $1,053 6,734 $922 5,799 $554 9,000 6,000 3,000 Number of Transactions 10.0% 8.0% 6.0% 4.0% 2.0% YTD YTD 2012 Value # Transactions - So, where is all of the deal flow the restructuring world seems to have been waiting for since the Great Recession hit four years ago? The answer may lie in the volume of new debt issuances. A 2000 study by Edward Altman and Heather Suggitt, which examined default rates in the corporate bank loan market found that syndicated bank loans behave similarly to high yield debt in that most defaults will occur two to three years after issuance. Another Altman study in 2007 analyzed corporate loan and bond default rates during the 1989 to 2006 time period and again found that defaults more than likely occur two to three years following issuance. S&P Capital IQ data is consistent with Altman s conclusions in that the average time to default on institutional loans of public filing corporations from 1999 to 2010 is in a relatively consistent ban of approximately two to three years. Further, the likelihood of default is relatively consistent, regardless of the issuer s initial rating, industry, amount of debt, business size, total leverage or coverage ratio. The charts below should warm the heart of all restructuring professionals the defaults are coming (and the numbers mean it this time)! New debt issuances have risen sharply since 2008 and 2012 s pace is nearing 2006/2007 levels. When comparing issuance volumes with the movement in the default rate, optimism about 2013 and 2014 grows. Overall debt volumes peaked and the default rate spiked two years later in (helped by the Great Recession). A historically low level of issuances in resulted in extremely low default rates in If this relationship continues to hold, the ongoing rise in loan volume suggests that default rates will rise as we move into % $700B $600B $500B $400B $300B $200B $100B New Leveraged Loan & High Yield Issuances $700B $600B $500B $400B $300B $200B $100B Overall Default Rate and Total Debt Issuances 12% 10% 8% 6% 4% 2% 0% YTD - 10/4/11 YTD - 10/4/12 Pro Rata Institutional High-Yield Total Debt Issuance Default Rate Source: S&P LCD, Thomson Reuters SDC Platinum Page 6

8 DIP Financing Survey The third quarter saw a number of smaller sized DIP financings intended to provide debtors with sufficient liquidity to implement an expeditious transaction. Also seen during the quarter was a bankruptcy motion seeking approval of one of. the more interesting DIP facilities in recent years - Arcapita Bank BSC s $150 million DIP financing. Arcapita Bank BSC, which is a manager of Islamic-compliant investments with $7 billion under management, filed for Chapter 11 protection earlier this year and in September, sought bankruptcy court approval for a $150 million DIP facility to provide additional liquidity as it finalizes its reorganization plans. The incremental liquidity should enable the debtor to avoid a quick, forced sale of any of its investments at below market value. The DIP was structured in the form of a Murabaha in order to comply with Shari ah, the Islamic religious law, which prohibits interest. The facility was effectively a sale transaction whereby the financial institution purchases the collateral and is repaid on a cost-plus basis by the borrower. Subsequent to the quarter end, a competing $150 million DIP facility on improved terms was approved, making it the first-ever Shari ah-compliant debtor-in-possession credit facility. Fifteen Most Recently Analyzed DIP Facilities ($ in millions) LIBOR + Base + Same as State Effective Spread Spread Prepetition Company Name Filed In Tranche Date Amount (bps) (bps) Agent? Southern Air Holdings Inc. DE Term Loan 9/28/2012 $ NA No Big Sandy Holding Co. CO Term Loan 9/27/ % Fixed 0 No Arcapita Bank BSC NY Term Loan 9/25/ ,050 NA No Richfield Equities LLC MI Revolver 9/18/ NA Yes Piccadilly Restaurants LLC LA Revolver 9/12/ % Fixed NA No Digital Domain Media Group Inc. DE Term Loan 9/11/ % Fixed NA Yes Journal Register Co. NY Revolver 9/5/ Yes CHL Ltd. DE Revolver 8/29/ Yes Valence Technology TX Revolver 8/23/ % Fixed NA No Broadview Network Holdings Inc. TX Revolver 8/22/ Yes Gamma Medica-Ideas Inc. CA Term Loan 8/20/ % Fixed NA No ATP Oil & Gas Corp. TX Term Loan 8/17/ NA Yes Fillpoint LLC NY Revolver 8/14/ NA Yes GameTech International Inc. DE Revolver 8/10/ % Fixed NA No Tri-Valley Corp. DE Term Loan 8/7/ % Fixed NA Yes Pre-petition lenders became the DIP provider in a majority of recent cases during the third quarter of This has continued to allow pre-petition lenders to provide new capital as well as reprioritize a portion of their pre-petition debt in order to drive a plan of reorganization or sale pursuant to 363 of the U.S. Bankruptcy Code. The size premium shrank between the second and third quarter as the spread between middle sized facilities ($101MM- $500MM) and smaller facilities (<$100MM) decreased from 300bps to 200 bps. DIP Statistics By Size in 2012 LIBOR + Base + Unused DIP Amount Spread Spread Line Fee LC Fee Size ($mm) (bps) (bps) (bps) (bps) DIP Statistics By Year LIBOR + Base + Unused Amount Spread Spread Line Fee LC Fee Year ($mm) (bps) (bps) (bps) (bps) <$100m Mean: <$100m Median: $101m-$500m Mean: $101m-$500m Median: >$500m Mean: >$500m Median: Mean: Median: Mean: Median: Mean: Median: Mean: Median: Source: S&P LCD, PACER, and Company websites Page Mean: Median:

9 Financing Market Snapshot The robust third quarter debt capital markets allowed not only for a boost in M&A volumes, but also served to decrease the equity check sizes funding those deals. The third quarter marked a post-lehman low water mark for equity contribution to leverage buyouts on whole, with the average deal requiring 38 percent of capitalization from equity versus the 40 to 50 percent levels experience in 2008 through. Thought not at the low 30 s percent of total capitalization for leverage buyouts experienced in 2004 through 2007, the decrease in equity check sizes stands as yet another measure of the rebound in the debt capital markets. However, middle market sponsors have not felt the same lift implied by the overall statistics. Cash flow 60% 50% 40% 30% 20% 10% 0% Average LBO Equity Contribution 42.6% 40.6% 40.0% 39.5% 35.1% 32.1% 33.6% 32.9% Total Equity Rollover Equity 50.8% 43.8% 41.5% 40.1% 38.0% 5.5% 2.7% 4.7% 2.7% 2.3% 2.5% 2.1% 3.8% 5.1% 2.4% 3.6% 1.7% 1.7% Q1-Q3 Q Note: excludes media, telecom, energy and utility transactions lending in the lower end of the middle market remains scarce and businesses without sizeable collateral bases suited for asset based loans are having difficultly finding leverage to reach even fifty percent of enterprise value. To quote one sponsor, its been frustrating, we ve been struggling to get three times leverage for lower middle market deals, bidding six times and then watching businesses sell for seven to eight times. That s just too large an equity check to make our model work without hockey stick projections, so we ve been reluctantly on the sideline for much of Asset Based Loans Competition for loans remains fierce in the ABL market. However, a number of market participants claim that both structures and pricing seem to have stabilized at current levels, despite the fact that most lenders are well behind their 2012 goals. Indeed, pricing of ABL loans floated slightly higher in the third quarter to an average spread to LIBOR of just north of 200 bps. Some of the increase in pricing of ABL loans can be explained by a growing willingness of lenders to offer term facilities, which are often priced at a premium to the revolving working capital component. So long as liquidity is sufficient, ABL term facilities, secured with once toxic real estate collateral, have even been offered in situations where borrowers are currently unable to cover fixed charges. ABL lenders are also showing a willingness to stretch against more nontraditional collateral or even offer airballs, so long as the non-collateral supported piece is both a small percentage of the overall facility and can be amortized quickly. L + 500bps L + 400bps L + 300bps L + 200bps L + 100bps L + 0bps Average Pro Rata Spreads for ABL Loans Commitment Fees of ABL Revolving Credits 125bps 100bps 75bps 50bps 25bps 0bps Source: S&P LCD Page 8

10 Financing Market Snapshot (continued) Pro Rata Cash Flow, Uni-Tranche and Second Lien Markets For middle market borrowers with a minimum EBITDA in the $15 to $20 million range and strong operating trends, cash flow senior lending has become generally available at leverage levels as high as the 3 to 4 times range. 10.0% 8.0% However, borrowers with sub-$15 million of EBITDA remain largely un-covered by senior lenders. These borrowers may find senior leverage, but often must turn to second lien lenders that can opportunistically lend to smaller or storied borrowers on a senior basis. We have seen numerous funds willing to provide sub $15 million EBITDA companies with uni-tranche facilities that are highly competitive with the more traditional ABL plus second lien structure. A thorough placement process is needed to fully access this capital and to achieve optimal terms. Second Liens as a Percent of Loan Volume 7.9% 8.9%8.8% 7.7% 1,500bps 1,200bps Newly Issued Second Lien Spreads 6.0% 4.0% 3.4% 4.6% 3.9% 3.0%3.0% 5.6% 5.0% 5.6% 5.8% 4.5% 900bps 600bps 2.0% 0.0% 0.3%0.2% 1.1% 1.1% 1.3% 300bps 0bps Q12 2Q12 3Q12 Mezzanine and Other Junior Capital Middle market opportunities for mezzanine and other junior capital lenders persist so long as a second lien revival remains muted and, as borrowers recall from the past cycle, that more patient but higher-yielding capital can have benefits. Competition remains as there is no shortage of mezzanine focused lenders or capital. More rare though is the mezzanine provider willing to look at turnarounds. However, as time goes on and funds season, we see more and more providers willing to dip their toe in the market. High Yield Market Year to date high yield volume has already surpassed full year levels, and appears on track to threaten record high levels set in Retail inflows to high yield funds remained strong and have helped drive down pricing even as new issue leverage increases and ratings decline. With QE3 supplying additional capital to the market place and public investors thirsty for yield, it is likely this trend will continue near term. High Yield New Issue Volume LIBOR Floor Upfront Fee Spread High Yield Loan Pricing $350B $300B $250B $200B $150B $100B $50B $133 $94 $144 $140 $66 $165 $293 $218 $183 $ % 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% Source: S&P LCD Page 9

11 Sampling of Recent and Ongoing Morgan Joseph Financial Restructuring Group Engagements Morgan Joseph s Financial Restructuring Group is actively engaged on a number of financing, distressed M&A, creditor advisory and restructuring advisory assignments. These engagements span a wide variety of industries and involve companies with capitalizations ranging between $20 million to over $1 billion. Below is sample of our recently completed and ongoing transactions. Please feel free to contact any of the Morgan Joseph financial restructuring professionals for more details on these or other engagements. Company Business Description Advisory Role Undisclosed Energy Equipment Manufacturer Manufacturer and supplier of mission critical equipment to the utility industry Advising the company on a financing transaction Altec Lansing, LLC Undisclosed Aluminum Products Manufacturer Designer and marketer of audio solutions and related technology Manufacturer and marketer of aluminum and industrial products Advising the company on an M&A transaction Advising the company on an M&A transaction Potomac Supply Corporation Lumber product manufacturer Advising the company on an M&A transaction pursuant to 363 of the U.S. Bankruptcy Code CDC Corporation Integrated enterprise and application software provider Advising the Official Committee of Equity Holders of CDC Corporation Civitas Media, LLC Publisher of community newspapers Advised the private equity-owned company in a $62.5 million debt financing transaction Paxton Media Group Publisher of multiple periodical newspapers Advised the company regarding the out-of-court restructuring of $192 million of debt obligations SSI Group Holdings Inc. Operator and franchisor of two branded restaurant chains Advised the Company in multiple asset sales pursuant to 363 of the U.S. Bankruptcy Code Palm Harbor Homes, Inc. Dairy Production Systems, LLC Manufacturer of factory-built and modular homes Manager of multiple dairy farms and milk processing operations Page 10 Advised the Official Committee of Unsecured Creditors of Palm Harbor Homes, Inc. Advised the Company on strategic alternatives for restructuring its capital structure and exiting bankruptcy

12 Morgan Joseph Financial Restructuring Group Working together during the past decade, the principals who manage the Financial Restructuring Group have completed more than 100 company and creditor transactions and restructured approximately $30 billion of debt pursuant to both incourt and out-of-court transactions. Financing Company Advisory Distressed M&A Distressed M&A Civitas Media, LLC Advised the Company in a debt financing transaction $62.5 million Paxton Media Group Advised the Company in an out of court restructuring of its debt obligations $192 million SSI Group Holdings Inc. Advised the Company in multiple asset sales pursuant to Section 363 of the U.S. Bankruptcy Code $10 million Vitro America, LLC Advised the Company in a DIP financing and sale pursuant to Section 363 of the U.S. Bankruptcy Code $64 million Civitas Media, LLC Distressed M&A Distressed M&A Restructuring Financing Emivest Aerospace Corporation Advised the Company in a DIP financing and a sale pursuant to 363 of the U.S. Bankruptcy Code $40 million The Merit Group, Inc. Financial Advisor to the Company in a sale of substantially all of its assets pursuant to Section 363 of the United States Bankruptcy Code $46 million The Reybold Group Financial Advisor to the Company in an out of court recapitalization of the Company s balance sheet $117 million Power Partners, Inc. Financial Advisor to the Company in a debt refinancing transaction $30 million Creditor Advisory Restructuring Financing Creditor Advisory Palm Harbor Homes, Inc. Financial Advisor to the Official Unsecured Creditors Committee during the Company s Chapter 11 bankruptcy $106 million GPM Holdings, Inc. Advised the Company in an out-of-court restructuring transaction $90 million Predators Holdings, LLC Financial Advisor to the Company in a debt refinancing transaction $75 million Muzak Holdings LLC Acted as financial advisor to the Represented Lenders of Muzak Holdings LLC $102 million Company Advisory Creditor Company Advisory Distressed M&A Company Advisory Champion Enterprises, Inc. Financial Advisor to the Company in the assessment of its restructuring alternatives and in a sale of the business pursuant to Section 363 of the United States Bankruptcy Code $240 million Tropicana Entertainment, LLC Served as the exclusive financial advisor to the Senior Secured Lenders to Tropicana Entertainment, LLC $1.3 billion Consolidated Resorts, Inc. Advised the Trustee in the sale of certain timeshare assets pursuant to Section 363 of the United States Bankruptcy Code $338 Million Comcar Industries, Inc. Financial Advisor to the Company in a restructuring of its debt obligations $210 million (1) Current Morgan Joseph professionals completed these transactions while at their former employers.