Exhibit D Liquidation Analysis

Transcription

1 Case MFW Doc 16-4 Filed 03/03/14 Page 1 of 5 Exhibit D Liquidation Analysis

2 Case MFW Doc 16-4 Filed 03/03/14 Page 2 of 5 Liquidation Analysis The Liquidation Analysis has been prepared by MACH Gen in connection with the Disclosure Statement 1 to which this Liquidation Analysis is attached as an exhibit, with assistance from its financial and other advisors, and represents MACH Gen s estimate of the proceeds that would be realized if its Chapter 11 Cases were converted to cases under chapter 7 of the Bankruptcy Code ( Chapter 7 ) and its estates liquidated thereunder. The Liquidation Analysis is not intended and may not be used for any other purpose. MACH Gen s management does not believe that including more historical information or projected information beyond what has been disclosed in the analysis would cause the result of this analysis to vary significantly. The Liquidation Analysis, however, is subject to any changes due to MACH Gen s continued operation subsequent to the Petition Date. Section 1129(a)(7) of the Bankruptcy Code requires that each holder of an Impaired Allowed Claim or Interest either (a) accept the Plan or (b) receive or retain under the Plan on account of such Claim or Interest property of a value, as of the Effective Date, that is not less than the amount such holder would receive or retain if the applicable MACH Gen Entity were liquidated under Chapter 7. This requirement is referred to as the best interests test. To make these findings, the Bankruptcy Court must: (a) estimate the proceeds that a trustee appointed under Chapter 7 (the Chapter 7 Trustee ) would be likely to generate if the Estate of the applicable MACH Gen Entity were liquidated pursuant to Chapter 7, net of any liquidation-related costs; (b) determine the liquidation distribution that each non-accepting holder of a Claim or an Interest would likely receive from such liquidation proceeds under the priority scheme dictated in Chapter 7; and (c) compare the holder s liquidation distribution to the distribution that such holder would likely receive if the Plan were confirmed and consummated. If the probable distribution to a holder in Chapter 7 has a value greater than the value of the probable distribution under the Plan, the Plan is not in the best interests of creditors or interest holders (as the case may be), and cannot be confirmed by the Bankruptcy Court. To demonstrate compliance with the best interests test, MACH Gen estimated a range of proceeds that would be generated from a hypothetical Chapter 7 liquidation of MACH Gen, as set forth in this Liquidation Analysis. The underlying financial information was not compiled or examined by any independent accountants, and no independent appraisals were conducted in preparing the Liquidation Analysis. The Liquidation Analysis is premised upon a number of estimates and assumptions that, although developed and believed to be reasonable by MACH Gen in its business judgment, are inherently subject to significant business, economic, and competitive uncertainties beyond the control of MACH Gen, and, as discussed below, the estimates and assumptions may prove to be incorrect. Thus, there can be no assurance that the values reflected in the Liquidation Analysis would be realized if MACH Gen were, in fact, to undergo liquidation. In addition, any liquidation ultimately undertaken may be affected by unanticipated events and circumstances. Accordingly, although the Liquidation Analysis that follows is presented with numerical specificity, if MACH Gen s estates were in fact liquidated as described herein, the actual proceeds from such liquidation could vary from the amounts set forth in the Liquidation Analysis. The actual liquidation proceeds could be higher or lower than the amounts set forth in the Liquidation Analysis, and no representation or warranty can be or is being made with respect to the actual proceeds that would be generated from the liquidation of MACH Gen s assets under Chapter 7. The Liquidation Analysis has been prepared solely for the purposes of estimating in good faith the proceeds that would be available if MACH Gen liquidated under Chapter 7 for purposes of the best interests test and does not represent values that may be appropriate for any other purpose, including the values applicable in the context of the Plan. Nothing contained in the Liquidation Analysis is intended as or constitutes a concession or admission for any purpose other than the presentation of a hypothetical liquidation analysis, as required by the best interests test set forth in Section 1129(a)(7) of the Bankruptcy Code. 1 All capitalized terms used but not otherwise defined in this Liquidation Analysis have the meaning ascribed to them in the Disclosure Statement.

3 Case MFW Doc 16-4 Filed 03/03/14 Page 3 of 5 General Assumptions In Chapter 7, a Chapter 7 Trustee is appointed to manage the debtor s affairs and conduct liquidation. Accordingly, the Liquidation Analysis assumes that MACH Gen would be forced to liquidate and would do so on an expedited but orderly basis under the supervision of the Chapter 7 Trustee. MACH Gen would be forced to cease substantially all operations in an orderly manner after the conversion of its Chapter 11 Cases and use its cash position to liquidate its assets and pay claims in accordance with the priority scheme set forth in Chapter 7. The likely consequences of the conversion of MACH Gen s cases from Chapter 11 to Chapter 7 of the Bankruptcy Code include the following: MACH Gen s workforce consists of specialized consultants who are crucial to the operations of the business. With MACH Gen facing certain liquidation, the workforce would likely quickly leave MACH Gen to the extent there are employment opportunities elsewhere. The loss of its workforce would render the possibility of continuing MACH Gen s operations in an effort to complete a going concern sale highly remote, if not impossible, and make an orderly liquidation significantly more difficult. Additionally, there may be additional restrictions imposed on MACH Gen by regulatory agencies associated with the orderly liquidation of the assets. This liquidation analysis does not contemplate additional costs and time associated with these potential regulatory restrictions. MACH Gen assumes an expedited but orderly wind-down of its businesses to maximize recovery values. While MACH Gen assumes the majority of the wind-down would be accomplished in 6 months, the liquidation would be expected to take 9 months to complete fully. The book value of the assets presented is based on the latest balance sheet, which is unaudited, dated September 30, 2013 unless otherwise noted. Management estimates the book value of these assets will be substantially unchanged as of December 31, The Liquidation Analysis assumes that proceeds realized from a Chapter 7 liquidation would further be reduced by administrative expenses and priority claims allowed in Chapter 7, including the costs and expenses of the wind-down of operations, the stabilization and protection of the assets, the disposition of assets and the reconciliation of claims. These costs include professional fees, compensation of the Chapter 7 Trustee, asset disposition expenses, applicable taxes, litigation costs, and all unpaid administrative expenses incurred by MACH Gen in the Chapter 11 Cases that are allowed in Chapter 7, such as compensation of MACH Gen s professionals and claims arising from MACH Gen s operations during the pendency of the Chapter 11 Cases. The Liquidation Analysis assumes that net proceeds from the sale of the assets will be distributed in accordance with the priority scheme set forth in Chapter 7. Proceeds would be reduced by, first, the Claims of secured creditors to the extent of the value of their collateral and, second, the administrative expenses and priority claims allowed in Chapter 7, as described above, before any amounts would be available for distribution to holders of unsecured Claims. In Chapter 7, no distributions may be made to a junior class of creditors or interest holders until all senior classes have been paid in full. Section 510(a) provides that subordination agreements are enforceable in bankruptcy to the same extent under applicable non-bankruptcy law, and the Liquidation Analysis thus assumes no contractually subordinated Claim or Interest would receive any payment until the contractually senior Claim or Interest is paid in full. Upon conversion of the Chapter 11 Cases to Chapter 7 liquidation, it is assumed that the Chapter 7 Trustee will be permitted the use of cash collateral and sale proceeds for the purposes of managing a wind-down and liquidation of assets. While the Liquidation Analysis assumes liquidation over a 9-month period, it is possible that the disposition and recovery from certain assets could take shorter or longer to realize. The potential impact of litigation and actions by other creditors could increase the amount of time required to realize recoveries assumed in this analysis.

4 Case MFW Doc 16-4 Filed 03/03/14 Page 4 of 5 Additionally, the Chapter 7 Trustee may not be able to obtain the regulatory approval to operate MACH Gen s power generating assets for the period of time necessary to find a buyer for MACH Gen s assets, which would likely decrease potential sale proceeds. Such events could also add costs to the liquidation in the form of higher legal and other professional fees to resolve these potential events. This Liquidation Analysis includes estimates for Claims not currently asserted, but which could be asserted and allowed in a Chapter 7 liquidation, including certain administrative claims, wind-down costs, trustee fees, and professional fees. The estimate of Allowed Claims set forth in the Liquidation Analysis should not be relied on for any other purpose, including determining the value of any distribution to be made on account of Allowed Claims or Interests under the Plan. The Liquidation Analysis assumes that there are no recoveries from the pursuit of any potential preferences, fraudulent conveyances, or other Causes of Action and does not include the estimated costs of pursuing those actions. The table below summarizes the estimated proceeds that would be available for distribution to MACH Gen s creditors in a hypothetical liquidation of MACH Gen s estates under Chapter 7 of the Bankruptcy Code, assuming a Petition Date and a conversion to Chapter 7 on December 31, Additional assumptions with respect to the Liquidation Analysis are provided below.

5 Case MFW Doc 16-4 Filed 03/03/14 Page 5 of 5 Liquidation Analysis of MACH Gen, LLC ($ in millions) Book Estimated Recovery Estimated Liquidation Value Notes Value¹ Low (% ) High (% ) Midpoint ($) Assets: Cash A $ % 100% $4.6 Restricted cash and cash equivalents B Trade accounts receivable C % 100% 8.3 Inventory D % 66% 1.3 Prepaid expenses E % 15% 1.4 Other current assets F Total Current Assets $ % 59% $15.6 Spare parts G % 66% $6.5 Property, plant, and equipment H N/A Other long term assets I Total Non-Current Assets $855.5 Total Estimated Proceeds from Liquidation of MACH Gen, LLC $871.1 Liquidation Costs Corporate Wind Down J $3.3 Chapter 7 Trustee K 26.1 Professionals & Other L 2.5 Total Liquidation Costs $31.9 Total Estimated Proceeds from Liquidation after Admin Expenses $839.2 Secured Claims - As of Petition Date Claim Term B Revolving Credit Facility M $89.0 Term B Revolving Letters of Credit 30.4 Super-Priority Debtor-In-Possession Financing $119.4 $119.4 Recovery 100% Term Loan B N $ st Lien Claims $460.1 $460.1 Recovery 100% Term C Loan O $1, nd Lien Claims $1,017.8 $259.7 Recovery 26% Total Secured Claims $1,597.2 $839.2 Total Estimated Proceeds from Liquidation after Secured Claims Recovery -- Unsecured Claims - As of Petition Date Unsecured Claims P $ Recovery 0% Total Unsecured Claims $15.0 $0.0 Residual Value Available for Distribution Figures as of 9/30/2013 unless otherwise stated in accompanying notes