- CONFIDENTIAL - December 16, 2012 Special Committee of the Board of Directors of Collie Exhibit (c)(7) Project Canine Confidential Discussion Materials for the |
1 - CONFIDENTIAL - Disclaimer This presentation has been prepared by Centerview Partners LLC ( “Centerview”) for use solely by the Special Committee of the Board of Directors (the “Special Committee”) of Collie (the “Company”) and the Audit Committee of the Board of Directors of the Company (the “Audit Committee”) in connection with its evaluation of the proposed transaction and the Company’s strategic alternatives and for no other purpose. The information contained herein is based upon information supplied by the Company and publicly-available information, and portions of the information contained herein may be based upon statements, estimates and forecasts provided by the Company. We have relied upon the accuracy and completeness of the foregoing information, and have not assumed any responsibility for any independent verification of such information or for any independent evaluation or appraisal of any of the assets or liabilities (contingent or otherwise) of the Company or any other entity, or concerning solvency or fair value of the Company, its assets or any other entity. With respect to financial forecasts, we have assumed that such forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of the Company as to the future financial performance of the Company, and at your direction we have relied upon such forecasts, as provided by the Company’s management, with respect to the Company and Shepherd. We assume no responsibility for and express no view as to such forecasts or the assumptions on which they are based. The information set forth herein is based upon economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof, unless indicated otherwise. The financial analysis in this presentation is complex and is not necessarily susceptible to a partial analysis or summary description. In performing this financial analysis, Centerview has considered the results of its analysis as a whole and did not necessarily attribute a particular weight to any particular portion of the analysis considered. Furthermore, selecting any portion of Centerview's analysis, without considering the analysis as a whole, would create an incomplete view of the process underlying its financial analysis. Centerview may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analysis described above should not be taken to be Centerview’s view of the actual value of the Company. These materials and the information contained herein are confidential, were not prepared with a view toward public disclosure, and may not be disclosed publicly or made available to third parties without the prior written consent of Centerview. These materials and any other advice, written or oral, rendered by Centerview is intended solely for the benefit and use of the Special Committee and the Audit Committee (in their capacity as such) in their consideration of the proposed transaction, and are not for the benefit of, and do not convey any rights or remedies for any holder of securities of the Company or any other person. Centerview will not be responsible for and has not provided any tax, accounting, actuarial, legal or other specialist advice. This presentation is not a fairness opinion, recommendation, valuation or opinion of any kind, and is necessarily incomplete and should be viewed solely in conjunction with the oral presentation provided by Centerview. |
2 - CONFIDENTIAL - Overview of Shepherd Proposal Consideration Conditions to Sign - General $2.97/share in cash for 100% of equity interests it does not already own Approval of Collie and Shepherd Boards of Directors Approval of St. Bernard Structure Reverse triangular merger Conditions to Sign - SIGs Significant Conditions to Close Termination / Termination Payment(s) Board can change its recommendation if required to do so pursuant to its fiduciary duties, subject to (i) no fiduciary termination right and (ii) force-the-vote provision If merger agreement is terminated because (i) the Shepherd/St. Bernard transaction is terminated (other than for a replacement transaction) or (ii) the outside date is reached and the Shepherd/St. Bernard transaction has not closed and Collie is not in breach of its reps or covenants, Shepherd must (a) make a $100mm prepayment against accelerated network buildout (1) and (b) forgive $120mm of interim financing (1) Prepayment payable in January 2014 assuming network milestones have been satisfied. $21mm basket for retention payments to non-management employees Other Key Terms – Merger Agreement Collie shareholder vote Closing of Shepherd/St. Bernard transaction (or closing of a replacement transaction) No MAE on Collie Regulatory approval (Shepherd required actions limited to actions that would not have an MAE measured against Collie) and other standard closing conditions Voting agreements in favor of the transaction Equityholders’ Agreement terminated at closing SIG put right to Shepherd at deal price (pursuant to RoFO) if Collie shareholders do not approve merger |
3 - CONFIDENTIAL - Overview of Shepherd Proposal Availabilities Amount / Coupon / Other Conversion (1) Collie shareholder vote will be required to issue shares beyond (i) Nasdaq 20% rule and (ii) current authorized shares of 360mm. Vote on share issuance and vote on merger will be cross-contingent . Key Terms – Interim Financing Up to $800mm 1.00% Senior Exchangeable Notes Due 2018 NCL $1.50/share (principal subject to adjustment – see below) Convertible at Collie’s option if merger agreement is terminated because the Shepherd/St. Bernard transaction does not close Otherwise always convertible at Shepherd’s option $80mm per month, subject to caps on principal at: – $400mm if shareholders have not approved issuance of additional shares (1) – $560mm if network milestones are not mutually-agreed within 45 days Forgiveness of Principal Shepherd will forgive $120mm of principal if merger agreement is terminated because (i) the Shepherd/St. Bernard is terminated (other than for a replacement transaction) or (ii) the outside date is reached and the Shepherd/St. Bernard transaction has not closed and Collie is not in breach of its reps or covenants |
4 - CONFIDENTIAL - Overview of Shepherd Proposal Source: Collie management, Company filings and FactSet, as of December 14, 2012. Note: U.S. dollars in millions, except per MHz-pop and per share amounts. Date ranges reflect calendar ranges. (1) Based on fully-diluted shares outstanding. (2) Based on projected December 31, 2012 net debt balance of $5.5bn, including $1.8bn NPV of spectrum leases. (3) Based on 47.0bn MHz-pops. (4) Based on closing prices prior to December 11, 2012 “leak.” Key Financial Statistics (4) (4) Day Prior to Shepherd / Prelim. St. Bernard Proposal "Leak" Current Proposal Price $1.30 $2.12 $2.40 $3.37 $2.97 Date 10/10/12 11/20/12 12/10/12 12/14/12 Aggregate Equity Value (1) $1,942 $3,168 $3,587 $5,039 $4,440 Aggregate Enterprise Value (2) 7,400 8,625 9,044 10,496 9,897 EV / MHz-pop (3) $0.157 $0.184 $0.192 $0.223 $0.211 Transaction Highlights Increase vs. Preliminary Proposal $280 / 14.2% Value of Non-Shepherd Equity 2,245 Premia vs. Spot Prices Current ($3.37) (11.9%) 52-Wk. High ($2.69) 10.4% 1-Day Prior to "Leak" ($2.40) 23.8% 1-Day Prior to Preliminary Proposal ($2.12) 40.1% 1-Day Prior to Shepherd Acknolwedgement of St. Bernard Discussions ($1.30) 128.5% 52-Wk. Low ($0.90) 230.0% vs. Trading Averages (4) 4-Weeks ($2.27) 30.8% 3-Mos. ($1.93) 54.1% 6-Mos. ($1.63) 82.7% |
5 - CONFIDENTIAL - Overview of Valuation Methodologies Employed Comments Observations Historical Trading Ranges Reflects Collie trading levels both before and since the announcement of the Shepherd/St. Bernard transaction $0.90 - $2.69 Closed 12/11/12 at $2.68 See page 7 Precedent Transactions All cash transactions Minority squeeze-outs Each transaction is situation-specific Median of both cash transactions overall and minority squeeze-outs is in the ~30%-40% range See pages 10-11 Analyst Price Targets Wide range of expectations and assumptions Generally based on per-MHz-pop valuations and DCF $2.00 - $4.00 See page 8 Precedent Spectrum Acquisitions Recent strategic acquisitions of material spectrum blocks – Based on transactions involving MSS, WCS and 2.5GHz spectrum bands Each transaction is situation-specific with valuations affected by a number of factors Most-similar spectrum has traded in the range of $0.18 - $0.26 (2) / MHz-pop See page 9 Discounted Cash Flow Analysis Illustrative intrinsic value based on projected FCF Based on two Management cases, one assuming additional wholesale customer(s) and another assuming Shepherd remains only customer DCF less significant to analysis given (i) Management’s view of continuing challenge in attracting additional wholesale customer(s) and (ii) requirement of significant additional funding, which may not be available Does not reflect proceeds from divestiture of excess spectrum; indicative Dalmatian proposal implies additional value of ~$1.40 per share. See page 12-14 (1) Based on closing prices prior to December 11, 2012 “leak.” (2) Price/MHz-pop for AT&T acquisition of Nextwave spectrum includes C/D blocks not immediately usable due to requirement for “guard bands.” Excluding guard bands yields implied price of $0.37/MHz-pop. Trading Comparables We have considered and reviewed potential trading comparables, but not included in our analysis due to lack of meaningful comparability to Collie Centerview’s valuation analysis includes a number of different valuation methodologies, each with its own particular considerations range (excluding high/low) 52-week range (based on closing prices) (1) |
6 - CONFIDENTIAL - Pre-Leak Historical Trading Ranges 52-Week Closing Low - 7/25/12 52-Week Closing High - 10/15/12 Analyst Price Targets (1) Precedent Spectrum Acquisitions (2) $0.176 - $0.255 / MHz-POP Precedent Cash Transactions ~32% Premium to 1-Day Pre-Shepherd / St. Bernard ($1.30) ~32% Premium to 1-Day Prior to Preliminary Offer ($2.12) ~38% Premium to 12/10/12 Close ($2.40) Precedent Minority Squeeze-Outs ~30% Premium to 1-Day Pre-Shepherd / St. Bernard ($1.30) ~30% Premium to 1-Day Prior to Preliminary Offer ($2.12) ~30% Premium to 12/10/12 Close ($2.40) DCF - Single-Customer Case (3) 10.0% - 17.5% WACC 1.0% - 3.0% Perpetuity Growth Rate DCF - Multi-Customer Case 10.0% - 17.5% WACC 1.0% - 3.0% Perpetuity Growth Rate $3.45 $1.70 $1.70 $1.90 $2.00 $0.90 $0.75 $3.10 $3.30 $4.35 $4.00 $2.69 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 Note: Figures rounded to nearest $0.05, except historical trading ranges. (1) Excludes high and low price targets. (2) Based on transactions involving MSS, WCS and 2.5GHz spectrum bands. Price/MHz-pop for AT&T acquisition of Nextwave spectrum includes C/D blocks not immediately usable due to requirement for “guard bands.” Excluding guard bands yields implied price of $0.37/MHz-pop. (3) Negative equity values expressed as $0.00. Does not reflect proceeds from divestiture of excess spectrum; indicative Dalmatian proposal implies additional value of ~$1.40 per share. $15.50 $0.00 $2.97 Valuation Summary $2.80 $2.75 |
7 - CONFIDENTIAL - – 50 100 150 200 250 300 350 400 450 500 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Recent Share Price Performance and Trading Volume Source: FactSet, as of December 14, 2012. Note: Trading volume in millions of shares. (1) Based on closing prices prior to December 11, 2012 “leak.” Shepherd Proposal: $2.97 Shepherd / St. Bernard (10/11/12) Shepherd / Collie Leak (12/11/12) Shepherd 13D Filed (12/13/12) Preliminary Shepherd Offer (11/21/12) Shepherd / English Setter Transaction (10/18/12) (1) Collie Price History Spot Prices Current $3.37 52-Wk. High (1) 2.69 1-Day Prior to "Leak" 2.40 1-Day Prior to Preliminary Proposal 2.12 1-Day Prior to Shepherd Acknowledgement of St. Bernard Discussions 1.30 52-Wk. Low 0.90 Trading Averages (1) 4-Weeks $2.27 3-Months 1.93 6-Months 1.63 |
8 - CONFIDENTIAL - Source: Wall Street research and FactSet. Excludes analysts for whom price target is not available. Note: Reflects price targets prior to December 11, 2012 “leak.” (1) Reflects standardized text, as per ThomsonOne. (2) Reflects near-term price target, as per analyst research. Analyst Price Targets Price Report Valuation Analyst Rating (1) Target (2) Date Methodology Zachary Buy $5.00 Oct-12 not provided BofA Merrill Lynch Buy 4.00 Oct-12 $0.15-$0.30 / MHz-pop JPMorgan Hold 4.00 Dec-12 $0.28 / MHz-pop Wells Fargo Buy 3.75 Jul-12 $0.17-$0.19 / MHz-pop Davidson Buy 3.00 Oct-12 not provided Guggenheim Buy 3.00 Oct-12 not provided JANCO Buy 2.75 Aug-12 not provided Macquarie Hold 2.75 Nov-12 DCF "Scenario Analysis" RBC Hold 2.50 Nov-12 $0.25 / MHz-pop Jefferies Hold 2.00 Oct-12 DCF / Spectrum-based Evercore Hold 1.75 Oct-12 Spectrum-based UBS Hold 1.75 Oct-12 DCF-based |
9 - CONFIDENTIAL - Precedent Spectrum Acquisitions Source: Company filings, FCC reports and Wall Street research. Note: Figures in millions, except $ / MHz-pop. (1) Reflects total transaction size at headline “target” price of $20 / share (price after post-closing adjustments to be within $17-$23 range). (2) Reflects Shepherd spectrum to be contributed, as of 4/30/08. Merger agreement specifies a minimum of 27,540 MHz-pop at closing. (3) Transaction was primarily WCS but also included AWS spectrum. (4) Includes C/D blocks not immediately usable due to requirement for “guard bands.” 1,607 MHz-pop excluding C/D blocks. (5) Final closing prices as per Q1’12 10-Q. (6) Divestiture included both 10 and 20 MHz blocks; assumes average of 15 MHz, as per Wall Street research. (3) (4) (2) (5) (5) (1) (6) Precedent spectrum valuations are influenced by a number of factors including: situational context (e.g., distressed sale), immediately deployable vs. requiring regulatory approval, strategic value to acquiror, portfolio size, geographic coverage, useable spectrum as a percentage of total portfolio, etc. Date Txn Total Acquiror Target $ / MHz-pop Annc. Value MHz-pop Comment Collie Shepherd Spectrum 5/7/08 7,400 28,989 Reflects price for spectrum contributed by Shepherd for stake in Collie Dalmatian Collie NA 2,460 11,367 Preliminary Dalmatian proposal to Collie Shepherd English Setter 10/18/12 9,897 47,000 Based on $2.97/share Collie BellSouth 2/15/07 300 1,700 Regulatory divestiture in connection with AT&T/BellSouth AT&T NextWave 8/2/12 600 2,846 Price includes guard bands; ex. yields $0.37 / MHz-pop Subject to FCC approval of AT&T / Sirius plan Harbinger (LightSquared SkyTerra 9/23/09 1,849 7,500 Regulatory requirement for significant build-out Dalmatian DBSD 2/1/11 1,364 6,000 Transactions included satellites Required $114mm payment to Shepherd Dalmatian Terrestar 6/14/11 1,382 6,600 FCC approval required prior to terrestrial use Distressed sale Verizon SpectrumCo 12/2/11 3,600 5,180 Contiguous with holdings / able to immediately deploy Part of larger agreement with Cable Companies Verizon Cox 12/16/11 315 560 Contiguous with holdings / able to immediately deploy Complementary to SpectrumCo Acquisition Various Nextwave Spectrum 7/17/08 150 593 $0.253 $0.563 $0.695 $0.209 $0.227 $0.247 $0.211 $0.176 $0.211 $0.216 $0.255 |
10 - CONFIDENTIAL - Precedent Premiums Paid in Recent Cash Transactions Source: Thomson SDC. (1) Includes 108 cash-only transactions announced since January 1, 2009 with non-financial, non-real estate public U.S. targets. 25 Percentile Median Mean 75 Percentile Shepherd Proposal Selected Cash Transactions with Equity Values between $1.0-$5.0 billion Pre-Leak Prior to St. Bernard-Shepherd Announcement Prior to Preliminary Proposal 20% 32% 38% 45% 24% 40% 128% 23% 35% 39% 44% 20% 38% 123% 26% 37% 46% 52% 34% 59% 84% 1- Day 1- Wk 4- Wks - Day 1- Wk 4- Wks 1- Day 1- Wk 4- Wks 1- Day 1-Wk 4- Wks 1- Day 1- Wk 4- Wks 1- Day 1- Wk 4- Wks -Day 1- Wk 4- Wks 1 1 (1) th th |
Preliminary Offer Final Offer Date Ownership Txn Premium Price Annc. Closed Target Acquiror % Prior % Acq. % PF Value (1) Price Prem. (2) Price 1-Day 1-Week 4-Week Increase (3) 6/2/10 8/30/10 Gerdau Ameristeel Gerdau Steel N. America 66.3% 33.7% 100.0% $1.6 $11.00 53.4% $11.00 53.4% 57.1% 56.9% - 9/4/09 10/28/09 Odyssey Re Holdings Fairfax Financial Holdings 72.6% 27.4% 100.0% 1.0 60.00 20.0% 65.00 30.0% 29.9% 39.9% 8.3% 8/12/08 11/5/08 UnionBanCal Bank of Tokyo- MUFJ 65.4% 34.6% 100.0% 3.7 63.00 9.1% 73.50 27.2% 29.5% 104.4% 16.7% 7/21/08 3/26/09 Genentech Roche Holdings AG 55.7% 44.3% 100.0% 46.8 89.00 8.8% 95.00 16.1% 26.0% 28.1% 6.7% 3/10/08 1/2/09 Nationwide Financial Nationwide Mutual Insurance 66.3% 33.7% 100.0% 2.5 47.20 26.7% 52.25 40.2% 31.0% 31.0% 10.7% 11/20/06 4/20/07 TD Banknorth TD Bank Financial Group 57.0% 43.0% 100.0% 3.2 32.33 7.3% 32.33 7.3% 9.1% 8.6% - 2/6/06 5/16/06 Lafarge North America Lafarge S.A. 53.2% 46.8% 100.0% 2.9 75.00 17.4% 85.50 33.8% 34.4% 40.5% 14.0% 9/1/05 11/8/05 7-Eleven Seven & I Holdings 72.7% 27.3% 100.0% 1.3 32.50 14.7% 37.50 32.3% 31.0% 14.1% 15.4% 8/2/04 12/8/04 Cox Communications Cox Enterprises 62.2% 37.8% 100.0% 8.5 32.00 16.0% 34.75 26.0% 24.6% 25.2% 8.6% Min 7.3% 7.3% 9.1% 8.6% - Mean 19.3% 29.6% 30.3% 38.8% 8.9% Median 16.0% 30.0% 29.9% 31.0% 8.6% Max 53.4% 53.4% 57.1% 104.4% 16.7% Mean 11.5% Median 10.7% Precedent Minority Squeeze-Out Transactions Selected Cash Transactions Greater than $1.0 billion Source: Company filings, Thomson SDC, Bloomberg and Capital IQ. Note: Date ranges reflect calendar ranges (e.g., 4 weeks days reflects 28 calendar days). (1) Reflects value of equity acquired. U.S. dollars in billions. (2) Premium to target’s stock price 1-day prior to preliminary announcement. (3) Initial to final. All Transactions Transactions with Price Increases 11 - CONFIDENTIAL - |
12 - CONFIDENTIAL - Management has provided Centerview with two sets of financial projections, differing primarily with respect to the Company’s assumed wholesale customer base: – Single-Customer Case (“SCC”) assumes Shepherd remains Collie’s only wholesale customer – Multi-Customer Case (“MCC”) assumes substantial non-Shepherd LTE network traffic beginning in 2014 (~70% of total revenue by 2015) Both cases assume ongoing LTE upgrades and retail strategy consistent with announced plans We have also reviewed a “Modified SCC,” prepared by Collie management, which reflects a slightly-faster network buildout; results are immaterially different from SCC In evaluating the feasibility and value of these plans, we note the following: – Despite a concerted effort over the past several years, Collie has yet to attract another meaningful wholesale customer other than Shepherd • Given an estimated nine-month lead time to put traffic on-net, the MCC implies one or more very significant new-customer win(s) in the immediate future – Both the SCC and the MCC contemplate substantial funding gaps (~$4bn and ~$2bn, respectively) to reach free cash flow positive • Potential sources of funds include capital markets solutions and/or spectrum sales, but uncertainty around the timing and amount of available funding impacts the feasibility of these plans Management Plan Overview Centerview Observations Source: Collie management. (1) Analysis does not reflect proceeds from divestiture of excess spectrum; indicative Dalmatian proposal implies additional value of ~$1.40 per share. (1) |
13 - CONFIDENTIAL - 12 -'20 2011A 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E CAGR SCC Revenue $1,253 $1,262 $1,191 $839 $1,211 $1,714 $2,101 $2,434 $2,749 $2,904 11.0% Adjusted EBITDA (1) ($305) ($168) ($267) ($717) ($387) $106 $745 $1,287 $1,554 $1,640 NM % Margin -24.3% -13.3% -22.4% -85.4% -32.0% 6.2% 35.5% 52.9% 56.5% 56.5% Capital Expenditures (220) (157) (293) (317) (154) (171) (238) (243) (279) (298) 8.4% Interest Expense (477) (514) (512) (511) (511) (510) (510) (510) (510) (510) -0.1% Free Cash Flow (1,368) (624) (1,065) (1,545) (1,267) (641) (57) 487 725 812 NM Cash Balance / (Deficit) $1,108 $828 ($301) ($1,882) ($3,181) ($3,845) ($3,481) ($2,794) ($2,021) MCC Revenue $1,253 $1,262 $1,207 $1,082 $2,351 $3,905 $5,098 $6,145 $7,141 $7,447 24.8% Adjusted EBITDA (1) ($305) ($168) ($280) ($482) $748 $2,275 $3,696 $4,871 $5,763 $5,940 NM % Margin -24.3% -13.3% -23.2% -44.5% 31.8% 58.3% 72.5% 79.3% 80.7% 79.8% Capital Expenditures (220) (157) (327) (294) (235) (390) (510) (614) (714) (745) 21.5% Interest Expense (477) (514) (512) (511) (511) (510) (510) (510) (510) (510) -0.1% Free Cash Flow (1,368) (624) (1,113) (1,269) (389) 1,200 2,524 2,184 2,600 2,768 NM Cash Balance / (Deficit) $1,108 $828 ($350) ($1,654) ($2,075) ($898) $1,596 $3,743 $6,306 $9,036 ($3,932) Management Plan Overview Source: Financial projections per Collie management. Note: U.S. dollars in millions. (1) Adjusted EBITDA excludes non-cash charges per Collie management calculation. Financial Summary Indicates Maximum Funding Gap |
14 - CONFIDENTIAL - Illustrative DCF Value Plan requires ~$2.0 billion additional funding to achieve forecast Plan requires ~$4.0 billion additional funding to achieve forecast Source: Financial projections per Collie management. Note: Includes present value of NOLs per management. SCC – Equity Value / Share MCC – Equity Value / Share SCC – Implied Terminal Value Multiple MCC – Implied Terminal Value Multiple Perpetuity Growth Rate e ($1.4) 1% 2% 3% 10.0% ($0.09) $0.28 $0.76 15.0% (1.81) (1.70) (1.58) Perpetuity Growth Rate e $6.7 1% 2% 3% 10.0% $12.20 $13.64 $15.50 15.0% 5.25 5.67 6.15 Perpetuity Growth Rate 4.5x 1% 2% 3% 10.0% 5.4x 6.1x 7.0x 12.5% 4.2 4.7 5.2 15.0% 3.5 3.8 4.1 17.5% 2.9 3.2 3.4 Perpetuity Growth Rate 4.8x 1% 2% 3% 10.0% 5.7x 6.5x 7.5x 12.5% 4.5 5.0 5.5 15.0% 3.7 4.0 4.4 17.5% 3.1 3.4 3.6 12.5% (1.16) (0.97) (0.74) 17.5% (2.23) (2.16) (2.09) 12.5% 7.92 8.65 9.54 17.5% 3.45 3.71 4.00 |
15 - CONFIDENTIAL - Source: Bloomberg, Ibbotson and Advantage Data. (1) Based on yield-to-worst of currently outstanding traded notes. Illustrative WACC Over Time Max Debt Yields Prior to St. B. Pre-Leak (10/11/11) (10/10/12) (12/10/12) Cost of Equity 14.3% 14.5% 12.9% Cost of Debt – At Par Wtd Avg. Cost of Debt (Incl. Leases) – At Par 11.1% 11.1% 11.1% (Less): Taxes @ 38% (4.2%) (4.2%) (4.2%) After-Tax Cost of Debt – At Par 6.9% 6.9% 6.9% WACC – At Par 9.1% 9.2% 9.6% Cost of Debt – Based on Traded Notes Yield-to-Worst Weighted Avg. Yield-to-Worst 27.4% 12.5% 9.2% (Less): Taxes @ 38% (10.4%) (4.8%) (3.5%) After-Tax Cost of Debt – At Yield-to-Worst 17.0% 7.8% 5.7% WACC – At Yield-to-Worst 16.2% 9.8% 8.9% (1) Illustrative WACC Analysis |