EXHIBIT 1
RESTRUCTURING OVERVIEW
* Accounts payable: 100% assumed
* Bank debt: 100% assumed or refinanced
* $18.1 million capitalized lease obligations (non-EDS): 100% assumed
* $24.0 million lease obligations (EDS): 100% assumed, with extended payment
terms
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RESTRUCTURING OVERVIEW (CONT'D)
* $177.2/(1)/ million Senior Discount Notes due 2001: $75 million New Senior
Discount Notes due 2003 and 50% of the primary common stock
* $307.2/(1)/ million Senior Subordinated Reset Notes due 2002: 35% of the
primary common stock
* $33.9 million EDS Unsecured Claim: 15.0% of the primary common stock/(2)/
* CVRs: warrants to purchase 1.0% of the fully-diluted common stock/(3)/
* Common Stock: warrants to purchase 3.5% (combined total for both A & B
classes) of the fully-diluted common stock/(3)/
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(1) Estimated accreted amount at March 31, 1995.
(2) In conjunction with and as partial consideration for providing a capital
lease facility to deploy STARPATH technology.
(3) Warrants assumed to be struck at market
2
CAPITALIZATION
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($ in millions)
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AT MARCH 31, 1995
(UNAUDITED)
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ESTIMATED PRO FORMA
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EDS Unsecured Payable $ 33.9 $ 0.0
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Bank Credit Facility............... $ 19.9 $ 19.9
11.5% Senior Discount Notes........ 177.2 0.0
11.65% Senior Subordinated
Reset Notes..................... 307.2 0.0
New 11.5% Senior Discount Notes.... 0.0 75.0
Non-EDS Capital Leases............. 18.1 18.1
EDS Leases......................... 24.0 24.0
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Total Long-Term Debt........... $546.4 $137.0
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1994 EBITDA........................ $ 19.1 $ 19.1
Normalized EBITDA.................. 30.0 30.0
Debt/1994 EBITDA................... 28.6X 7.2X
Debt/Normalized EBITDA............. 18.2 4.6
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3
PRO FORMA CREDIT SUMMARY
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($ in millions)
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PROJECTED AT DECEMBER 31,/(1)/
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1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- --------
EBITDA........................................ $ 24.2 $ 30.5 $ 37.4 $ 41.3 $ 47.7 $ 54.2
Capital Expenditures.......................... 41.6 32.9 28.3 25.8 19.6 17.7
Capital Lease Amortization.................... 10.2 9.1 8.7 8.7 6.5 0.0
Interest Expense.............................. 15.7 20.9 24.0 26.2 27.0 25.9
Cash Interest Expense......................... 6.9 11.0 12.9 13.8 13.1 25.9
Bank Debt and Capital Lease Balance........... 99.3 112.7 116.5 114.8 99.8 89.1
Total Debt.................................... 183.2 206.5 221.4 232.1 231.0 220.3
EBITDA/Interim Expense........................ 1.5x 1.5x 1.6x 1.6x 1.8x 2.1x
EBITDA/Cash Interest Expense.................. 3.5x 2.8x 2.9x 3.0x 3.6x 2.1x
EBITDA-CapEx/Interest Expense................. NM* NM 0.4x 0.6x 1.0x 1.4x
EBITDA-CapEx/Cash Interest Expense............ NM NM 0.7x 1.1x 2.1x 1.4x
EBITDA-CapEx-Cap. Lease Amort./Int. Exp....... NM NM NM 0.3x 0.8x 1.4x
EBITDA-CapEx-Cap. Lease Amort./Cash Int. Exp.. NM NM NM 0.5x 1.6x 1.4x
Debt/EBITDA................................... 7.6x 6.8x 5.9x 5.6x 4.8x 4.1x
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(1) Projections assume issuance of the new $75 million 11.5% Senior Discount
Notes on January 1, 1995
* NM means not material
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NEW SENIOR DISCOUNT NOTES
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SUMMARY OF TERMS
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ISSUER: SpectraVision (the "Company")
ISSUE: Senior Discount Notes (the "Notes")
MATURITY: 2003 (8 years)
COUPON RATE: 11.50% payable semi-annually. Interest on the Notes
will be non-cash for five years. Thereafter, interest
will be paid semi-annually in cash based on the fully
accreted principal amount.
ACCRETED VALUE
AT ISSUANCE: $75.0 million
PRINCIPAL AMOUNT: $131.2 million
GUARANTEE: The Notes will be guaranteed on a senior unsecured
basis by Spectradyne.
SECURITY: Secured by the stock of Spectradyne.
OPTIONAL REDEMPTION: The Notes will be non-callable for five years.
Thereafter, the Company will have the option
to redeem the Notes, in whole or in part, at a
premium to fully-accreted value plus accrued
and unpaid interest, declining to par
at maturity.
MANDATORY REDEMPTION: None
COVENANTS: * Limitations on Additional Debt
* Limitations on Mergers and Asset Sales
* Put Upon Change of Control
* Limitations on Restricted Payments
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CALCULATION OF "NORMALIZED" EBITDA
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($ in millions)
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1994 Reported EBITDA............................ $19.1
Plus:
Reduction in Technical Adjustments/(1)//(2)/.. $ 5.7
Reduction in Non-Operating Rooms/(1)//(3)/.... 3.0
Nonrecurring Expenses-Net..................... 2.2
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1994 Normalized EBITDA..................... $30.0
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(1) Based on combined hotel share and studio share of approximately 29.3%.
(2) Assumes a reduction in the percentage of technical adjustments from
13.9% to 7.0% due to the implementation of STARPATH technology.
(3) Assumes a decrease in the percentage of non-operating rooms from 8.0% to
4.0% because the Company will be resuming field service responsibilities.
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EQUITY VALUES BASED ON "NORMALIZED" EBITDA
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($ in millions)
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AT MARCH 31, 1995
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LodgeNet EBITDA Multiple....... 8.4x 8.4x 8.4x
Discount Factor................ 25.0% 10.0% 0.0%
Adjusted Multiple............ 6.3x 7.6x 8.4x
Normalized Annual EBITDA....... $ 30.0 $ 30.0 $ 30.0
------ ------ ------
Total Enterprise Value....... $190.1 $228.1 $253.5
Less: Pro Forma Debt Outstanding
Bank Credit Facility......... (19.9) (19.9) (19.9)
New Senior Discount Notes.... (75.0) (75.0) (75.0)
Leases
EDS........................ (24.0) (24.0) (24.0)
Other...................... (18.1) (18.1) (18.1)
------ ------ ------
Total Debt................... (137.0) (137.0) (137.0)
Less: Restructuring Expenses... (10.0) (10.0) (10.0)
Plus: Cash..................... 1.3 1.3 1.3
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Net Equity Value............. $ 44.5 $ 82.5 $107.8
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RECOVERIES BASED ON "NORMALIZED" EBITDA
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($ in millions)
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AT MARCH 31, 1995
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Adjusted Multiple/(1)/........................... 6.3x 7.6x 8.4x
Implied Net Equity Value......................... $44.5 $82.5 $107.8
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RECOVERY TO 11.5% SENIOR DISCOUNT NOTEHOLDERS
New Senior Discount Notes........................ $75.0 $75.0 $ 75.0
Equity Value (50.0% Split)....................... 22.2 41.2 53.9
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Total.......................................... $97.2 $116.2 $128.9
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Recovery as a Percent of Claim/(2)/.............. 54.9% 65.6% 72.8%
RECOVERY TO 11.65% SENIOR SUBORDINATED NOTEHOLDERS
Equity Value (35.0% Split)....................... $15.6 $28.9 $37.7
===== ===== =====
Recovery as a Percent of Claim/(2)/.............. 5.1% 9.4% 12.3%
Relative Recovery................................ 10.8x 7.0x 5.9x
RECOVERY TO EDS UNSECURED CLAIM
Equity Value (15.0% Split)....................... $ 6.7 $12.4 $16.2
===== ===== =====
Recovery as a Percent of Claim................... 19.7% 36.5% 47.8%
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(1) Based on a 25.0%, 10.0%, and 0% discount, respectively, to LodgeNet's
multiple.
(2) Includes accrued interest to March 31, 1995. Recovery to 11.5% Senior
Discount Noteholders and 11.65% Senior Subordinated Noteholders based
on principal amounts of $177.2 million and $307.2 million, respectively.
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