1
EXHIBIT (b)(9)
PROJECT ORANGE
BOARD OF DIRECTORS MEETING
February 25, 1997
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PROJECT ORANGE
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TABLE OF CONTENTS
February 25, 1997
SECTION I TRANSACTION OVERVIEW
SECTION II PRELIMINARY VALUATION
SECTION III TRANSACTION ANALYSES
SECTION IV TRANSACTION ISSUES/NEXT STEPS
3
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TRANSACTION OVERVIEW
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4
PROJECT ORANGE
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OVERVIEW OF PROPOSED TRANSACTION
* Repurchase 100% of minority interest outstanding (4.4MM shares)
* Propose transaction as a negotiated merger to be approved by shareholders
- Tender offer structure (direct proposal to shareholders) contemplated
should merger negotiations fail
* Choice of cash or stock offered to shareholders
- Pure shares offered will be listed on the NYSE
* Transaction timeframe estimated to last 150 days
- Initiate transaction as soon as possible to allow time for
negotiations
- If tender offer structure is ultimately used, timeframe should last
approximately 100 days
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PRELIMINARY VALUATION
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6
PROJECT ORANGE
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FRESH CLOSING SHARE PRICE AND VOLUME ANALYSIS - LAST YEAR
--------------------------------------------------------------------
FRESH'S SHARE PRICE REMAINED FLAT IN 1996, TRADING NEAR $50 ALL YEAR
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[GRAPHIC]
Graph depicts daily trading volume and per share prices for Fina from 2/21/96 to
2/21/97. Share price is initially approximately $48 per share, ranging from
approximately $46 to approximately $55 per share and ending at approximately $50
per share.
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PROJECT ORANGE
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FRESH CLOSING SHARE PRICE AND VOLUME ANALYSIS - 5 YEARS(1)
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FRESH'S SHARE PRICE APPRECIATED SIGNIFICANTLY IN 1995
AFTER 3 YEARS OF FLAT PERFORMANCE
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[GRAPHIC]
Graph depicts daily trading volume and per share prices for Fina from 2/21/92 to
2/21/97. Share price is initially approximately $38 per share, ranging from
approximately $30 to approximately $55 per share and ending at approximately $50
per share.
Note: (1)Historical prices adjusted for 2-for-1 stock split as of 05/02/95.
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PROJECT ORANGE
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FRESH RELATIVE STOCK PRICE PERFORMANCE - LAST YEAR
IN THE LAST YEAR, FRESH HAS UNDERPERFORMED ITS PEERS AND THE MARKET
[GRAPHIC]
Graph depicts indexed trading prices for Fina, S&P 500, and three indices
comprised of diversified refining and marketing companies, commodity chemical
companies and exploration and production companies.
Graph depicts share prices for Fina, S&P 500 and three indices from 2/19/96 to
2/14/97.
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PROJECT ORANGE
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FRESH RELATIVE STOCK PRICE PERFORMANCE - LAST FIVE YEARS
OVER THE LAST 5 YEARS, FRESH HAS TRADED IN LINE WITH THE COMMODITY CHEMICALS
PEER GROUP
[GRAPHIC]
Graph depicts indexed trading prices for Fina, S&P 500, and three indices
comprised of diversified refining and marketing companies, commodity chemical
companies and exploration and production companies.
Graph depicts share prices for Fina, S&P 500 and three indices from 2/19/92 to
2/14/97.
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PROJECT ORANGE
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TRADING ANALYSIS
* Fresh trading volume is very thin
- Average trading volume as a percentage of total shares is
significantly lower than that of its peer group
- Only 525,000 shares traded in 1996
- Minor changes in volume move the stock price
* Fresh is not followed by the research analyst community
- Only 2 analysts from small firms write research on Fresh, compared to
39 for Phillips Petroleum
* Fresh's dividend yield is significantly higher than that of its peer group
- 1996 dividend yield of 5.5% is nearly twice the yield of Phillips
Petroleum (2.8%) and above the average S&P 500 dividend of 1.9%
- High dividend yield on the stock provides price support
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ANALYSIS OF FINANCIAL PERFORMANCE
* Segment EBIT has been volatile over the last two years with significant
variance to Plan
* Downstream has consistently underperformed Plan; Chemicals has met or
exceeded Plan
* In depth due diligence is required to assess viability of projected
earnings growth
* As a result of the above factors, two projection cases have been prepared:
- Management Case - based on Fresh 1997 Corporate Plan
- Adjusted Case - based on Management Case with adjustments to reflect
historical operating performance and past results vs. Plan
1995 1996 ACTUAL
------------------------------------------ ------------------------------------------
PLAN ACTUAL DIFFERENCE % DIFFERENCE PLAN ACTUAL DIFFERENCE % DIFFERENCE
------- ------- ---------- ------------ ------- ------- ---------- ------------
($MM) ($MM) ($MM) ($MM) ($MM) ($MM)
EBIT by Segment:
Upstream $18.4 ($14.4) ($32.8) -178% ($10.1) $69.3 $79.4 786%
Downstream 59.6 1.5 (58.1) -97% 60.3 (16.8) (77.1) -128%
Chemicals 220.5 290.6 70.1 32% 221.5 231.2 9.7 4%
------ ------ ------ ------ ------ -----
Total EBIT $298.5 $277.7 ($20.8) -7% $271.7 $283.7 $12.0 4%
Net Income $142.1 $104.4 ($37.7) -27% $140.1 $153.2 $13.1 9%
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FRESH HISTORICAL AND PROJECTED FINANCIAL PERFORMANCE(1)
($MM)
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FRESH'S OPERATING PERFORMANCE HAS IMPROVED SIGNIFICANTLY OVER THE LAST 5 YEARS
AND IS EXPECTED TO CONTINUE TO GROW
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EBIT = OPERATING INCOME
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CAGR(4)
----
`92-`96: 40.5%
`96-`99: 19.1%
`96-`99: 10.1%
- --------------
ACTUAL ($ MILLIONS)
- ------
1992(2) $68.0
1993 $48.0
1994 $181.0
1995(3) $274.0
1996 $265.1
PROJECTED
- ---------
1997 $271.3
$265.5
1998 $363.9
$332.5
1999 $447.5
$354.1
EBITDA = OPERATING INCOME + BOOK CHARGES
- --------------
CAGR(4)
----
`92-`96: 14.4%
`96-`99: 15.9%
`96-`99: 10.4%
- --------------
ACTUAL ($ MILLIONS)
- ------
1992(2) $255.0
1993 $246.0
1994 $367.0
1995(3) $429.0
1996 $436.4
PROJECTED
- ---------
1997 $456.2
$450.4
1998 $569.6
$538.3
1999 $679.9
$586.5
NET INCOME
- --------------
CAGR(4)
----
`92-`96: 58.8%
`96-`99: 18.6%
`96-`99: 8.7%
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ACTUAL ($ MILLIONS)
- ------
1992(2) $24.1
1993 $28.4
1994 $86.0
1995(3) $142.6
1996 $153.2
PROJECTED
- ---------
1997 $155.1
$151.2
1998 $209.9
$189.6
1999 $255.5
$196.5
Notes: (1) For fiscal years ending December 31, adjusted to exclude
extraordinary items.
(2) Excludes charge for adoption of FASB 106 of $52.0MM pretax,
$34.3MM after-tax.
(3) Excludes charge for adoption of SFAS 121 of $58.7MM pretax,
$38.2MM after-tax.
(4) Compound Annual Growth Rate.
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PROJECT ORANGE
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FRESH HISTORICAL AND PROJECTED EBITDA BY SEGMENT
($MM)
------------------------------------------------------------------------
* CHEMICALS BUSINESS EXPECTED TO GROW SLOWLY
* UPSTREAM PERFORMANCE REBOUNDS IN 1999
* DOWNSTREAM PROJECTIONS EXPECT TURNAROUND
------------------------------------------------------------------------
CHEMICALS
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CAGR(2)
----
`92-`96: 21.0%
`96-`99: 5.5%
`96-`99: 3.7%
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ACTUAL ($ MILLIONS)
- ------
1992 $120.7
1993 $73.2
1994 $183.3
1995(1) $309.8
1996 $258.6
PROJECTED
- ---------
1997 $225.8
$225.8
1998 $270.3
$270.3
1999 $303.9
$288.5
UPSTREAM
- ---------------
CAGR(2)
----
`92-`96: (1.1)%
`96-`99: 12.7%
`96-`99: 3.5%
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ACTUAL ($ MILLIONS)
- ------
1992 $148.2
1993 $227.5
1994 $83.1
1995(1) $50.0
1996 $141.3
PROJECTED
- ---------
1997 $118.2
$118.2
1998 $147.8
$136.6
1999 $202.4
$156.6
DOWNSTREAM
- --------------
CAGR(2)
----
`92-`96: 34.0%
`96-`99: 54.8%
`96-`99: 45.4%
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ACTUAL ($ MILLIONS)
- ------
1992 $15.7
1993 $71.1
1994 $127.7
1995(1) $70.8
1996 $50.6
PROJECTED
- ---------
1997 $125.2
$119.4
1998 $165.1
$145.0
1999 $187.6
$155.4
Notes: (1) Adjusted for SFAS 121 charge allocation of $52.7MM to upstream and
$6.2MM to downstream.
(2) Compound Annual Growth Rate.
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SUMMARY OF VALUATION APPROACHES
Current(1)
Price
TRADING VALUE $52 $60
PRECEDENT INDUSTRY TRANSACTIONS $58 $70
PRECEDENT MINORITY SQUEEZEOUTS(2) $60 $62
DISCOUNTED CASH FLOW
- Management Case $64 $71
- Adjusted Case $49 $56
Notes: (1) Based on closing price of $49.88 as of February 21, 1997.
(2) Based on a 20-25% premium to current price.
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PROJECT ORANGE
----------------------------------------------
FRESH PUBLIC MARKET TRADING VALUATION ANALYSIS
COMPANY PRICE PER
CRITERIA STATISTIC(1) TRADING MULTIPLE RANGE IMPLIED EQUITY VALUE(2)(3) FULLY DILUTED SHARES(2)
- -------- ----------- ---------------------- ------------------------- -----------------------
1996
EBITDA $436 5.5 x - 5.75 x $1,704 - $1,813 $54.52 - $58.01
EBIT 265 8.0 - 9.5 1,425 - 1,822 45.58 - 58.30
Cash Flow(4) 325 5.0 - 6.0 1,623 - 1,948 51.93 - 62.32
1997E
Net Income 155 11.0 - 12.0 1,705 - 1,860 54.54 - 59.50
----- ----- ----- -----
IMPLIED MEAN VALUE: $1,614 - $1,861 $51.64 - $59.53
IMPLIED MEDIAN VALUES: 1,664 - 1,841 53.22 - 58.90
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CURRENT MARKET PRICE(5): $49.88
MEDIAN VALUE PREMIUM (DISCOUNT) TO MARKET: 6.7% 18.1%
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MEDIAN TRADING MULTIPLES
--------------------------------------------------------------
EBITDA EBIT 1997E NET INCOME CASH FLOW
------ ---- ---------------- ---------
Large Cap. Energy Companies 5.9 x 11.9 x 15.8 x 5.8 x
Commodity Chemicals Companies 6.3 8.5 13.1 6.9
Large Cap. Exploration & Production
Companies 8.8 NA 20.9 6.6
Refining & Marketing Companies 6.5 NA 16.1 5.6
Phillips Petroleum 5.2 8.0 12.7 5.3
Kerr-McGee 5.7 13.2 15.6 5.0
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Chosen Fresh Multiplies 5.5 - 5.75 8.0 - 9.5 11.0 - 12.0 5.0 - 6.0
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Notes: (1) Adjusted for extraordinary items.
(2) 31.257MM fully diluted shares outstanding. Assumes 29.216MM
Class A and 2.000MM Class B common shares outstanding as
of 10/21/96 from the 9/30/96 10-Q and 0.041MM options
outstanding at an average exercise price of $35.25 as of
12/31/95 from the 12/31/95 10-K.
(3) Assumes debt of $696.2 MM and cash & equivalents of $1.6 MM, as of
12/31/96.
(4) Cash flow defined as net income plus depreciation, depletion and
amortization.
(5) Closing share price as of 2/21/97.
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PROJECT ORANGE
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FRESH PRECEDENT TRANSACTION TRADING VALUATION ANALYSIS
COMPANY PRICE PER
CRITERIA STATISTIC(1) TRADING MULTIPLE RANGE IMPLIED EQUITY VALUE(2)(3) FULLY DILUTED SHARE(2)
- -------------- -------------- ------------------------ ---------------------------- ------------------------
1996
EBITDA $436 5.5 x - 6.5 x $1,704 - $2,141 $54.52 - $68.48
Cash Flow(4) 325 6.0 - 7.0 1,948 - 2,273 62.32 - 72.71
------- ------- ------- -------
IMPLIED MEAN VALUES: $1,826 - $2,207 $58.42 - $70.60
IMPLIED MEDIAN VALUES: 1,826 - 2,207 58.42 - 70.60
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CURRENT MARKET PRICE(5): $49.88
MEDIAN VALUE PREMIUM (DISCOUNT) TO MARKET: 17.1% - 41.5%
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REPRESENTATIVE PRECENDENT
TRANSACTION MULTIPLES
-------------------------
EBITDA CASH FLOW
------ ---------
Energy Companies 6-7 x 7-8 x
Commodity Chemicals Companies 5-6 5-7
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Chosen Fresh Multiples 5.5 - 6.5 x 6.0 - 7.0 x
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Notes: (1) Adjusted for extraordinary items.
(2) 31.257MM fully diluted shares outstanding. Assumes 29.216MM Class A
and 2.000MM Class B common shares outstanding as of 10/21/96 from the
09/30/96 10-Q and 0.041MM options outstanding at an average exercise
price of $35.25 as of 12/31/95 from the 12/31/95 10-K.
(3) Assumes debt of $696.2 MM and cash & equivalents of $1.6 MM, as of
12/31/96.
(4) Cash flow defined as net income plus depreciation, depletion and
amortization.
(5) Closing share price as of 2/21/97.
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PROJECT ORANGE
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DISCOUNTED CASH FLOW ANALYSIS - CONSOLIDATED
MANAGEMENT CASE
($MM, EXCEPT PER SHARE DATA)
EBITDA MULTIPLE 5.00x 5.25x 5.50x
---------------------- ---------------------- ----------------------
DISCOUNT RATE 10.0% 11.0% 12.0% 10.0% 11.0% 12.0% 10.0% 11.0% 12.0%
------ ------ ------ ------ ------ ------ ------ ------ ------
Present Value of
Cash Flows - Year 1 $101 $100 $100 $101 $100 $100 $101 $100 $100
Cash Flows - Years 2-5 419 406 394 419 406 394 419 406 394
Terminus 2,293 2,191 2,095 2,407 2,301 2,200 2,522 2,410 2,305
------ ------ ------ ------ ------ ------ ------ ------ ------
AGGREGATE VALUE $2,813 $2,698 $2,589 $2,927 $2,807 $2,694 $3,042 $2,917 $2,799
Cash $2 $2 $2 $2 $2 $2 $2 $2 $2
Preferred Stock 0 0 0 0 0 0 0 0 0
Total Debt(1) (696) (696) (696) (696) (696) (696) (696) (696) (696)
------ ------ ------ ------ ------ ------ ------ ------ ------
EQUITY VALUE $2,118 $2,003 $1,894 $2,233 $2,113 $1,999 $2,347 $2,222 $2,104
====== ====== ====== ====== ====== ====== ====== ====== ======
PRICE PER SHARE(2) $67.76 $64.09 $60.61 $71.42 $67.59 $63.96 $75.09 $71.10 $67.31
Premium (Discount) to Market(3) 35.9% 28.5 21.5% 43.2% 35.5% 28.2% 50.6% 42.6% 35.0%
1997E P/E Implied 13.7 x 12.9 x 12.2 x 14.4 x 13.6 x 12.9 x 15.1 x 14.3 x 13.6 x
TERMINAL VALUE ANALYSIS
% Value Terminus 81.5% 81.2% 80.9% 82.2% 82.0% 81.7% 82.9% 82.6% 82.4%
% Value in Cash Flows 18.5% 18.8% 19.1% 17.8% 18.0% 18.3% 17.1% 17.4% 17.6%
Implied Terminal P/E 12.3 x 12.3 x 12.3 x 12.9 x 12.9 x 12.9 x 13.5 x 13.5 x 13.5 x
Notes: (1) Debt as of December 31, 1996.
(2) Based on 31.3MM common shares outstanding on 09/30/96 from the
09/30/96 10-Q and 0.04MM options outstanding at an average exercise
price of $35.25 on 12/31/95 from the 12/31/95 10-K.
(3) Based on the closing share price of $49.88 on 2/21/97.
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PROJECT ORANGE
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DISCOUNTED CASH FLOW ANALYSIS - CONSOLIDATED
ADJUSTED CASE
($MM, EXCEPT PER SHARE DATA)
EBITDA MULTIPLE 5.00x 5.25x 5.50x
---------------------------- -------------------------- --------------------------
DISCOUNT RATE 10.0% 11.0% 12.0% 10.0% 11.0% 12.0% 10.0% 11.0% 12.0%
------- -------- -------- ------- -------- -------- ------- -------- --------
Present Value of
Cash Flows - Year 1 $97 $97 $96 $97 $97 $96 $97 $97 $96
Cash Flows - Years 2-5 264 256 248 264 256 248 264 256 248
Terminus 1,973 1,886 1,803 2,072 1,980 1,893 2,171 2,075 1,984
------- -------- -------- ------- -------- -------- ------- -------- --------
AGGREGATE VALUE $2,335 $2,239 $2,148 $2,433 $2,333 $2,238 $2,532 $2,427 $2,328
Cash $2 $2 $2 $2 $2 $2 $2 $2 $2
Preferred Stock 0 0 0 0 0 0 0 0 0
Total Debt (1) (696) (696) (696) (696) (696) (696) (696) (696) (696)
------- -------- -------- ------- -------- -------- ------- -------- --------
EQUITY VALUE $1,640 $1,544 $1,453 $1,739 $1,638 $1,543 $1,837 $1,733 $1,633
======= ======== ======== ======= ======== ======== ======= ======== ========
PRICE PER SHARE (2) $52.47 $49.40 $46.48 $55.63 $52.42 $49.37 $58.78 $55.43 $52.25
Premium (Discount) to Market (3) 5.2% -1.0% -6.8% 11.5% 5.1% -1.0% 17.9% 11.1% 4.8%
1997 P/E Implied 10.6 x 10.0 x 9.4 x 11.2 x 10.6 x 9.9 x 11.8 x 11.2 x 10.5 x
TERMINAL VALUE ANALYSIS
% Value in Terminus 84.5% 84.2% 84.0% 85.1% 84.9% 84.6% 85.7% 85.5% 85.2%
% Value in Cash Flows 15.5% 15.8% 16.0% 14.9% 15.1% 15.4% 14.3% 14.5% 14.8%
Implied Terminal P/E 13.6 x 13.6 x 13.6 x 14.2 x 14.2 x 14.2 x 14.9 x 14.9 x 14.9 x
Notes: (1) Debt as of December 31, 1996.
(2) Based on 31.3MM common shares outstanding on 09/30/96 from the
09/30/96 10-Q and 0.04MM options outstanding at an average
exercise price of $35.25 on 12/31/95 from the 12/31/95 10-K.
(3) Based on the closing share price of $49.88 on 2/21/97.
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TRANSACTION ANALYSIS
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PREMIUMS PAID IN PRECEDENT MINORITY SQUEEZE-OUT TRANSACTIONS
% OWNERSHIP VS. PREMIUM*
1987 TO PRESENT
[GRAPHIC]
Chart depicts premiums paid based on percent owned by parent company, with such
premiums ranging from approximately -10% to approximately 65%
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PROJECT ORANGE
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PREMIUMS PAID IN PRECEDENT MINORITY SQUEEZE-OUT TRANSACTIONS
YEAR VS. PREMIUM*
1987 TO PRESENT
[GRAPHIC]
Chart depicts premiums paid from 1987 to 1997, ranging from approximately -20%
to 65%
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PROJECT ORANGE
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FRESH ACQUISITION MATRIX (1)
($MM, EXCEPT PER SHARE DATA)
EQUITY VALUE/
PURCHASE -----------------------------
OFFER EQUITY AGGREGATE VALUE OF 1996 1996 BOOK
PRICE VALUE (2) VALUE (3) MINORITY (4) EARNINGS CF (5) VALUE
--------- ------------ ------------- ---------------- -------- --------- --------
$154 $325 $1,247
$44.00 $1,374 $2,068 $195 8.9 x 4.2 x 1.1 x
46.00 1,436 2,131 204 9.4 4.4 1.2
48.00 1,499 2,194 213 9.8 4.6 1.2
49.88 1,558 2,252 221 10.1 4.8 1.2
50.00 1,561 2,256 222 10.2 4.8 1.3
52.00 1,624 2,319 231 10.6 5.0 1.3
54.00 1,686 2,381 239 11.0 5.2 1.4
56.00 1,749 2,444 248 11.4 5.4 1.4
58.00 1,811 2,506 257 11.8 5.6 1.5
60.00 1,874 2,569 266 12.2 5.8 1.5
62.00 1,936 2,631 275 12.6 6.0 1.6
64.00 1,999 2,694 284 13.0 6.2 1.6
66.00 2,062 2,756 293 13.4 6.3 1.7
68.00 2,124 2,819 302 13.8 6.5 1.7
70.00 2,187 2,881 311 14.2 6.7 1.8
PREMIUM TO
AGGREGATE VALUE / 1996 -----------------------------
---------------------------- CURRENT L12M ALL TIME
SALES EBITDA EBIT PRICE (6) AVG (6) HIGH (7)
--------- ------- -------- --------- -------- ---------
$4,965 $436 $265 $49.88 $51.13 $55.50
0.4 x 4.7 x 7.8 x -11.8% -13.9% -20.7%
0.4 4.9 8.0 -7.8% -10.0% -17.1%
0.4 5.0 8.3 -3.8% -6.1% -13.5%
0.5 5.2 8.5 0.0% -2.5% -10.1%
0.5 5.2 8.5 0.3% -2.2% -9.9%
0.5 5.3 8.7 4.3% 1.7% -6.3%
0.5 5.5 9.0 8.3% 5.6% -2.7%
0.5 5.6 9.2 12.3 9.5% 0.9%
0.5 5.7 9.5 16.3 13.4% 4.5%
0.5 5.9 9.7 20.3 17.3% 8.1%
0.5 6.0 9.9 24.3 21.3% 11.7%
0.5 6.2 10.2 28.3 25.2% 15.3%
0.6 6.3 10.4 32.3 29.1% 18.9%
0.6 6.5 10.6 36.3 33.0% 22.5%
0.6 6.6 10.9 40.4 36.9% 26.1%
Notes: (1)Fresh financial information adjusted to exclude extraordinary items.
(2)Based on 29.2MM Class A and 2.0MM Class B common shares
outstanding on 10/21/96 from the 09/30/96 10-Q and 0.041MM options
outstanding with an average exercise price of $35.25 on 12/31/95
from the 12/31/95 10-K.
(3)Includes total debt of $696.2MM less cash of $1.6MM.
(4)Based on public float of 4.420MM Class A shares, 0.041MM options and
options proceeds of $1.4MM.
(5)Cash flow defined as net income plus depreciation, depletion and
amortization.
(6)Based on market information as of 02/21/97.
(7)All time high stock price achieved on 07/01/96.
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PROJECT ORANGE
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ANALYSIS OF CLASS A PUBLICLY FLOATED SHAREHOLDINGS - FRESH
CUMULATIVE CUMULATIVE
CURRENT % OF % OF % OF
SHAREHOLDERS HOLDINGS PUBLIC FLOAT PUBLIC FLOAT CLASS A (5)
- ------------------------------- ------------ ------------ ------------ -----------
Employee Investment Plan (1)(2) 1,538,142 34.8% 34.8% 90.1%
All Directors and Officers (1) 31,463 0.7% 35.5% 90.2%
Bearer Deposit Receipts (1)(3) 992,225 22.4% 58.0% 93.6%
30 Institutional Holders (4) 963,472 21.8% 79.8% 96.9%
Other Holdings 894,758 20.2% 100.0% 100.0%
------------ ------------
TOTAL PUBLICLY FLOATED CLASS A
SHARES 4,420,060 100.0%
============ ============
Notes: (1)As of 03/06/96 from the 03/13/96 proxy.
(2)Shares held by Boston Safe Deposit and Trust Company as Trustee for
the Fresh Capital Accumulation Plan and Anidel Inc. Employee
Investment Plan.
(3)Shares against which there are outstanding, publicly-held bearer
deposit receipts. These shares are voted according to the
instructions of various beneficial owners. In the absence of such
instructions, Pure will vote the shares at its discretion.
(4)Based on most recent 13-F filings.
(5)Based on 29.2MM Class A common shares, 84.9% owned by Pure.
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PROJECT ORANGE
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FRESH PRICE/VOLUME ANALYSIS - LAST 4 YEARS
Cumulative
% of Stock Traded CURRENT PRICE(1)
at or Below $49.88
100%
75% of stock
traded below
$48.25
75%
50% of stock
traded below
$35.75
50%
25%
0%
$30 $35 $40 $45 $50 $55
Stock Price
- ------------------------------------------------------------
4 YEAR AVERAGE/YEAR
---------- ----------------
Total Volume 2,906,800 716,925
% of Public Float(2) 65.8% 16.2%
% of Traded Shares(3) 100.9% 24.9%
- ------------------------------------------------------------
Notes: (1) Closing price as of February 21, 1997.
(2) Based on 4.420MM class A shares not held by Pure.
(3) Based on 2.882MM of the 4.420MM publicly floated class A shares.
Excludes 1.538MM shares held by Employee Investment Plan.
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PROJECT ORANGE
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PRO FORMA IMPACT ON PURE
------------------------------------------------------------------------
A TRANSACTION WOULD LIKELY BE SLIGHTLY ACCRETIVE TO PURE'S E.P.S.
------------------------------------------------------------------------
1996 ACTUAL
------------------------
EXAMPLE: $60 OFFER PRICE 50% CASH/
(19% PREMIUM) 100% CASH 50% STOCK
- ---------------------------- ----------- ---------
(MM) (MM)
Pure Net Income (BEF) 16,000 16,000
Pure Net Income (US$)(1) $470.6 $470.6
Pure EPS (2) $20.24 $20.24
Plus: Fresh Minority Interest(3) 21.7 21.7
Less: Goodwill(4) (6.0) (6.0)
Less: A/T Interest Expense(5) (12.1) (6.1)
---------- -----------
Pro Forma Net Income (US$) $474.2 $480.3
Shares(6) 23,252,863 23,615,646
PRO FORMA EPS $20.39 $20.34
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% ACCRETION / (DILUTION) 0.8% 0.5%
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Notes: (1) Assumes an exchange rate of 34.00 BEF/$US.
(2) Based on 23,252,863 Pure shares outstanding as of 12/31/96.
(3) Based on Fresh net income of $153.2 and minority interest of 14.2%.
(4) Purchase accounting assumed for pro rata portion of Fresh.
Goodwill is amortized over 15 years.
(5) Assumes a cost of debt of 7.0% and a tax of 35%. Total funding
equals $266MM.
(6) In 50% cash/50% stock case, assumes shares issued at Pure share
price of 12,475 BEF (US $366.91) as of 2/18/97.
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TRANSACTION ISSUES / NEXT STEPS
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27
PROJECT ORANGE
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LEGAL ISSUES
* Fairness issues
- Transaction structure and process
- Valuation
* Creation of Independent Committee of target's Board to review transaction
- Will hire own advisors
* Potential shareholder lawsuits
- Are typical but rarely become a material obstacle to a transaction
* Level of approval required to approve transaction
* Voting issues
- Employee investment plans (trustee)
- Bearer deposit receipts
* Disclosure requirements
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PROJECT ORANGE
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RATIONALE FOR ACCELERATED TIMETABLE
* Minimize the impact of information leaking to the market
- Avoid increase in Fresh stock price in reaction to leaks
- Avoid investor expectations should deal be terminated
* Minimize pricing risk of transaction
- Recent favorable news has been moving stock upward on light trading
volume
- More upside than downside in stock given strong dividend yield
* Maximize negotiating leverage by moving quickly
* Minimize disruption of Fresh's management and operations
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PROJECT ORANGE
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ILLUSTRATIVE CHRONOLOGY OF EVENTS POST BOARD MEETING
SIGNIFICANT EVENTS
Day 1: Pure makes a
merger proposal
- - Public Day 10: Fresh
announcement appoints special
- - Fresh Directors committee, retains
alerted prior to banker and law firm
announcement
- Special committee Day 20: Fresh responds
meets to consider to merger proposal
issues; prepares - Shareholders'
for proposal - Ongoing negotiations Day 45: Pure and Meeting/Closing
- Request eligibility - Prepare for tender Fresh sign a - NYSE
for NYSE listing offer, if necessary merger agreement Listing Effective
- Pure and Fresh Day 75:
prepare proxy/ Proxy/prospectus
prospectus filed with SEC
- If merger fails,
launch tender - Receive SEC Day 120: SEC
offer comments review complete;
- NYSE listing proxy mailed
eligibility
cleared - File definitive
listing application
with NYSE
DAYS 1 10 20 45 75 120 150
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