1
SCHEDULE 2.1 (to EXHIBIT 10.11)
REVOLVING LOAN
LENDER COMMITMENT PRO RATA SHARE
------ ------------- --------------
BT Commercial Corporation $25,000,000 100%
2
SCHEDULE 4.1C (to EXHIBIT 10.11)
CAPITALIZATION
Prior to Transaction:
Capitalization:
JURISDICTION SHARES AUTHORIZED/
ENTITY ORGANIZATION OUTSTANDING
- ------ ------------ -----------
FWT, Inc. Texas Common $10.00 par value:
1000 Authorized/
372 Outstanding
Ownership:
NAME NUMBER OF SHARES PERCENTAGE OF CLASS
- ---- ---------------- -------------------
T.W. Moore 93.93 25.25%
Betty Moore 93.93 25.25%
Thomas F. Moore 61.38 16.5%
Carl R. Moore 61.38 16.5%
Roy J. Moore 61.38 16.5%
TOTAL 372 100%
3
Following the Transaction:
Capitalization:
JURISDICTION SHARES AUTHORIZED/
ENTITY ORGANIZATION OUTSTANDING
- ------ ------------ -----------
FWT, Inc. Texas Common $10.00 par value:
1000 Authorized/
136.22 Outstanding
Ownership:
NAME NUMBER OF SHARES PERCENTAGE OF CLASS
- ---- ---------------- -------------------
FWT Acquisition, Inc. 108.9135 80.00004407%
Thomas F. Moore 9.0761 6.66665198%
Carl R. Moore 9.0761 6.66665198%
Roy J. Moore 9.0761 6.66665198%
TOTAL 136.1418 100%
4
SCHEDULE 5.1 (to EXHIBIT 10.11)
SUBSIDIARIES
None
5
SCHEDULE 5.5 (to EXHIBIT 10.11)
REAL PROPERTY ASSETS
FORT WORTH PLANT AND OFFICE (OWNED)
1901 East Loop 820 South
Fort Worth, Texas
KENNEDALE (OWNED)
5650 Interstate 20 East
Kennedale, Texas
DELTA STEEL (LEASED)
9217 South Freeway
Fort Worth, Texas
6
SCHEDULE 5.6 (to EXHIBIT 10.11)
LITIGATION
None
7
SCHEDULE 5.12 (to EXHIBIT 10.11)
FEES
None
8
SCHEDULE 5.13 (to EXHIBIT 10.11)
ENVIRONMENTAL PROTECTION
The underground storage tanks which are or have been located on the Real
Property are described or referred to in the Environmental Assessment Report
prepared for Baker Capital Corporation prepared by Entrix, Inc., Dallas, Texas
(Project No. 271201).
9
SCHEDULE 7.3 (to EXHIBIT 10.11)
EXISTING INVESTMENTS
None
10
EXHIBIT C
(to Exhibit VI
to Exhibit 10.11)
[HOULIHAN LOKEY HOWARD & ZUKIN LOGO]
November 12, 1997
The Board of Directors and the Shareholders of
FWT, Inc.
1901 East Loop 820 South
Ft. Worth, Texas 76112-7899
Banker's Trust NY Corporation
Swiss Bank Corporation, Stamford Branch
Smith Barney Funding Corporation
c/o Banker's Trust NY Corporation
130 Liberty Street
New York, NY 10005
BT Commercial Corporation
300 South Grand Avenue, Suite 4100
Los Angeles, CA 90071
Attention: Albert Sun
The Board of Directors
FWT Acquisition, Inc.
c/o Baker Communications Fund L.P.
575 Madison Avenue, 10th Floor
New York, NY 10022
Dear Ladies and Gentlemen:
We understand that FWT Acquisition, Inc. ("Newco" hereinafter), a company
formed by an investment group led by Baker Communications Fund L.P. (the
"Sponsor" hereinafter), is recapitalizing FWT, Inc. (the "Company" hereinafter)
for approximately $145 million (U.S.) including the repayment in full of all
outstanding indebtedness for borrowed money of the Company. Furthermore, we
understand that Newco, the Company, and T.W. Moore, Betty Moore, Roy J. Moore,
Thomas F. Moore and Carl R. Moore (the "Existing Shareholders" hereinafter)
entered into a Stock Purchase and Redemption Agreement (collectively, the
"Transaction Agreements"). The
[HOULIHAN LOKEY HOWARD & ZUKIN FINANCIAL ADVISORS LETTERHEAD]
11
The Board of Directors and the Shareholders of FWT, Inc.
Banker's Trust NY Corporation
BT Commercial Corporation
The Board of Directors of FWT Acquisition, Inc.
November 12, 1997 -2-
Transaction Agreements and related documents effect or contemplate two primary
transactions. The first transaction includes: (i) the incurrence by the Company
of $100.0 million senior secured indebtedness (the "Senior Credit Facility"),
(ii) the redemption by the Company from the Existing Shareholders of an
aggregate 235.78 shares of the Company's common stock, par value $10.00 per
share (the "Common Stock"), for aggregate consideration of approximately $77.9
million, (iii) the repayment of all the outstanding funded indebtedness of the
Company in an aggregate amount of approximately $22.1 million, and (iv) the
distribution of selected assets to certain Existing Shareholders (such
transactions are collectively referred to as the "Recapitalization"). The
second transaction contemplated by the Transaction Agreements includes the
purchase by Newco of an aggregate of 108.98 shares of the Common Stock from
Existing Shareholders for aggregate consideration of approximately $36.0
million (the "Stock Purchase" hereinafter). At closing, Newco will hold
approximately 80.0% of the issued and outstanding shares of Common Stock, and
Roy J. Moore, Thomas F. Moore and Carl R. Moore (collectively, the "Roll-over
Shareholders") will hold in the aggregate approximately 20.0% of the issued and
outstanding shares of the Common Stock. The Stock Purchase, together with the
Recapitalization and other related transactions disclosed to Houlihan Lokey, are
referred to collectively herein as the "Transaction." It is our understanding
that a significant part of the financing for the Transaction will be obtained by
the Company from one or more institutional lenders (the "Lenders").
You have requested our written opinion (the "Opinion") as to the matters set
forth below. This Opinion values the Company as a going-concern (including
goodwill), on a pro forma basis, immediately after and giving effect to the
Transaction and the associated indebtedness. For purposes of this Opinion, "fair
value" shall be defined as the amount at which the Company would change hands
between a willing buyer and a willing seller, each having reasonable knowledge
of the relevant facts, neither being under any compulsion to act, with equity to
both; and "present fair saleable value" shall be defined as the amount that may
be realized if the Company's aggregate assets are sold as an entirety with
reasonable promptness in an arm's length transaction under present conditions
for the sale of comparable aggregation of assets, as such conditions can be
reasonably evaluated by Houlihan Lokey. These definitions do not contemplate a
distressed sale or piecemeal disposition. We have used the same valuation
methodologies in determining fair value and present fair saleable value for
purposes of rendering this Opinion. The term "identified contingent liabilities"
shall mean the stated amount of contingent liabilities identified to us and
explained by responsible officers, employees and agents of the Company, upon
whom we have relied upon without independent verification, including liabilities
that may result from pending litigation, asserted claims and assessments,
guaranties, environmental conditions, uninsured risks, and any other contingent
liabilities identified and explained. Being "able to pay its debts as they
become absolute and mature" shall mean that, assuming the Transaction has been
consummated as proposed, the financial forecasts for the Company for the period
1997 to 2002 indicate positive cash flow for such period, including (and after
giving effect to) the payment of installments due under loans made pursuant to
the indebtedness incurred in the Transaction, as such installments are scheduled
at the close of the Transaction. It is Houlihan Lokey's understanding, upon
which it is relying, that the Company's Board of Directors
12
The Board of Directors and the Shareholders of FWT, Inc.
Banker's Trust NY Corporation
BT Commercial Corporation
The Board of Directors of FWT Acquisition, Inc.
November 12, 1997 -3-
and the Lenders and any other recipient of the Opinion will consult with and
rely solely upon their own legal counsel with respect to said definitions. No
representation is made herein, or directly or indirectly by the Opinion, as to
any legal matter or as to the sufficiency of said definitions for any purpose
other than setting forth the scope of Houlihan Lokey's Opinion hereunder.
Notwithstanding the use of the defined terms "fair value" and "present fair
saleable value," we have not been engaged to identify prospective purchasers or
to ascertain the actual prices at which and terms on which the Company can
currently be sold, and we know of no such efforts by others. Because the sale
of any business enterprise involves numerous assumptions and uncertainties, not
all of which can be quantified or ascertained prior to engaging in an actual
selling effort, we express no opinion as to whether the Company would actually
be sold for the amount we believe to be its fair value and present fair
saleable value.
In connection with this Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:
1. reviewed the Company's unaudited financial statements for fiscal
years ended April 30, 1993 and April 30, 1994, the Company's audited
financial statements for the fiscal years ended April 30, 1995 through
April 30, 1997, and Company's unaudited interim financial statements
for the period ended July 31, 1997;
2. reviewed copies of relevant documents including, but not limited to,
the following:
o Preliminary Offering Memorandum, dated October 31, 1997, for the
$100,000,000 Senior Subordinated Notes due 2007 (the "Senior
Subordinated Notes")
o Master Agreement draft dated October 24, 1997 by and among FWT
Acquisition, Inc., FWT, Inc., T.W. Moore, Betty Moore, Carl
Moore, Thomas F. Moore, and Roy J. Moore
o Memorandum of Understanding addressed to FWT, Inc. and its
Stockholders dated September 26, 1997
o Preliminary Draft of the Senior Secured Credit Agreement (the
"Credit Agreement") among FWT, Inc., As Borrower, The Lenders,
and Bankers Trust Company (November 2, 1997)
o Preliminary Draft of the $25,000,000 Credit Agreement among FWT,
Inc., The Lenders and BT Commercial Corporation ("Revolving
Credit Facilities")
3. met with certain members of the senior management of the Company to
discuss the operations, financial condition, future prospects and
projected operations and performance of the Company and held
conversations with representatives of the Company's independent
accounting firm and counsel to discuss certain matters;
13
The Board of Directors and the Shareholders of FWT, Inc.
Banker's Trust NY Corporation
BT Commercial Corporation
The Board of Directors of FWT Acquisition, Inc.
November 12, 1997 -4-
4. visited the production facilities and business offices of the Company;
5. reviewed forecasts and projections prepared by the Sponsor with
respect to the Company for the fiscal year ended April 30, 1998
through 2002;
6. reviewed other publicly available financial data for the Company and
certain companies that we deem comparable to the Company; and
7. conducted such other studies, analyses and investigations as we have
deemed appropriate.
We have relied upon and assumed, without independent verification, that the
financial forecasts and projections provided to us have been reasonably
prepared and reflect the best currently available estimates of the future
financial results and condition of the Company, and that there has been no
material adverse change in the assets, financial condition, business or
prospects of the Company since the date of the most recent financial statements
made available to us.
We have not independently verified the accuracy and completeness of the
information supplied to us with respect to the Company and do not assume any
responsibility with respect to it. We have not made any physical inspection or
independent appraisal of any of the properties or assets of the Company. Our
opinion is necessarily based on business, economic, market and other conditions
as they exist and can be evaluated by us at the date of this letter. We have
assumed that the Revolving Credit Facilities will be refinanced on or before
maturity having material terms and conditions no less favorable taken as a
whole, than those entered into the Credit Agreement, which assumptions are
incorporated in the projections provided to us by the Sponsor.
Based upon the foregoing, and in reliance thereon, it is our opinion as of the
date of this letter that, assuming the Transaction is consummated as proposed,
immediately after and giving effect to the Transaction:
(a) on a pro forma basis, the fair value and present fair saleable value
of the Company's assets would exceed the aggregate of its respective
stated liabilities and identified contingent liabilities by at least
twenty million dollars;
(b) the Company should be able to pay its debts as they become due,
absolute, and mature in the usual course of its business as proposed
following the consummation of the Transaction;
(c) the Company will have sufficient capital to engage in its business,
as management has indicated it is now conducted and is proposed to be
conducted following the consummation of the Transaction; and
14
The Board of Directors and the Shareholders of FWT, Inc.
Banker's Trust NY Corporation
BT Commercial Corporation
The Board of Directors of FWT Acquisition, Inc.
November 12, 1997 -5-
(d) for purposes of determining that the amount paid by the Company to
redeem shares of Common Stock from existing shareholders in the
Transaction does not exceed the amount of the Company's surplus, as
defined in the Texas Business Corporation Act, the fair value and
present fair saleable value of the Company's total assets will exceed
the total of the Company's stated liabilities and identified
contingent liabilities by an amount greater than the stated value of
its issued capital stock.
This Opinion is furnished solely for your benefit and may not be relied upon by
any other person without our express, prior written consent. This Opinion is
delivered to each recipient subject to the conditions, scope of engagement,
limitations and understandings set forth in this Opinion, and subject to the
understanding that the obligations of Houlihan Lokey in the Transaction are
solely corporate obligations, and no officer, director, employee, agent,
shareholder or controlling person of Houlihan Lokey shall be subjected to any
personal liability whatsoever to any person, nor will any such claim be
asserted by or on behalf of you or your affiliates.
HOULIHAN, LOKEY, HOWARD & ZUKIN FINANCIAL ADVISORS, INC.
/s/ HOULIHAN, LOKEY, HOWARD & ZUKIN FINANCIAL ADVISORS, INC.