1
EXHIBIT 5
[LETTERHEAD OF CIBC WORLD MARKETS]
SEPTEMBER 22, 1999
CONFIDENTIAL
The Board of Directors
Litchfield Financial Corporation
430 Main Street
Williamstown, MA 01267
Members of the Board:
You have asked CIBC World Markets Corp. ("CIBC World Markets") to render a
written opinion (the "Opinion") to the Board of Directors (the "Board of
Directors") of Litchfield Financial Corporation ("Litchfield" or the "Company")
as to the fairness to the holders of the common stock of Litchfield other than
Textron Inc. ("Textron") and its affiliates, from a financial point of view, of
the consideration to be received pursuant to an Agreement and Plan of Merger
(the "Merger Agreement") to be entered into among Textron, Textron Financial
Corp. ("Merger Sub") and Litchfield. The Merger Agreement provides for, among
other things, an offer to purchase any and all outstanding shares of common
stock other than those owned by Textron or its affiliates (the "Common Stock")
of Litchfield by Merger Sub at $24.50 per share, to be followed by the merger of
Merger Sub with and into the Company (the "Merger") pursuant to which each
outstanding share of Common Stock not owned by Textron or its affiliates will be
converted into the right to receive $24.50 per share. The cash consideration to
be paid to the holders of Common Stock in the offer to purchase and the Merger
is referred to as the "Consideration".
In arriving at our Opinion, we:
(a) reviewed a draft of the Merger Agreement dated September 22, 1999
and certain related documents;
(b) reviewed Litchfield's audited financial statements for the fiscal
years ended December 31, 1996 through December 31, 1998;
(c) reviewed the unaudited financial statements of Litchfield for the
six months ended June 30, 1999 and the unaudited financial statements for
the months of July and August 1999;
(d) reviewed the financial projections of Litchfield prepared by the
management of Litchfield; and held discussions with the senior management
of Litchfield with respect to the business, capital requirements and
prospects for future growth of Litchfield;
(e) reviewed certain publicly available information concerning
Litchfield including the historical market prices and trading volumes for
the Common Stock;
(f) reviewed and analyzed certain publicly available financial data
for certain companies we deemed comparable to Litchfield;
(g) reviewed and analyzed certain publicly available information for
transactions that we deemed comparable to the Merger;
(h) performed a discounted cash flow analysis of Litchfield using
certain assumptions of future performance provided to and discussed with us
by the management of Litchfield;
Ex-5-1
2
The Board of Directors of the Board of Directors
Litchfield Corporation CIBC WORLD MARKETS CORP.
September 22, 1999
Page 2
(i) at the request of the Board of Directors, approached and held
discussions with certain third parties to solicit indications of interest
in the possible acquisition of Litchfield; and
(j) performed such other analyses and reviewed such other information
as we deemed appropriate.
In rendering our Opinion, we relied upon and assumed, without independent
verification or investigation, the accuracy and completeness of all of the
financial and other information provided to or discussed with us by Litchfield
and its employees, representatives and affiliates. With respect to forecasts of
future financial condition and operating results of Litchfield provided to or
discussed with us, we assumed, at the direction of Litchfield's management,
without independent verification or investigation, that such forecasts were
reasonably prepared on bases reflecting the best available information,
estimates and judgments of Litchfield's management. We also have assumed, at the
direction of the Board of Directors of Litchfield, that the final terms of the
Merger will not vary materially from those set forth in the draft of the Merger
Agreement reviewed by us. We have neither made nor obtained any independent
evaluations or appraisals of the assets or the liabilities of Litchfield,
contingent or otherwise. We are not expressing any opinion as to the underlying
valuation, future performance or long-term viability of Litchfield. Our Opinion
is necessarily based on the information available to us and general economic,
financial and stock market conditions and circumstances as they exist and can be
evaluated by us on the date hereof. It should be understood that, although
subsequent developments may affect this Opinion, we do not have any obligation
to update, revise or reaffirm the Opinion. Our Opinion does not address the
relative merits of the Merger and the other business strategies being considered
by the Board of Directors, nor does it address the Board of Directors' decision
to proceed with the Merger.
As part of our investment banking business, we are regularly engaged in
valuations of businesses and securities in connection with acquisitions and
mergers, underwritings, secondary distributions of securities, private
placements and valuations for other purposes.
We have acted as financial advisor to the Board of Directors in connection
with the Merger in rendering this Opinion and will receive a fee for our
services, a significant portion of which is contingent upon consummation of the
Merger. We have in the past provided financial services to Litchfield unrelated
to the proposed Merger, for which services we have received customary
compensation. In the ordinary course of business, CIBC World Markets and its
affiliates may actively trade securities of Litchfield and its affiliates for
their own account and for the accounts of customers and, accordingly, may at any
time hold a long or short position in such securities.
Based upon and subject to the foregoing, and such other factors as we
deemed relevant, it is our opinion that, as of the date hereof, the
Consideration to be received by the holders of Common Stock (other than Textron
and its affiliates) in the offer to purchase and the Merger is fair to such
holders from a financial point of view. This Opinion is for the use of the Board
of Directors of Litchfield in its evaluation of the Merger, and does not
constitute a recommendation to any shareholders as to whether or not such
shareholder should vote on any matters related to the Merger. This Opinion may
be included in its entirety in proxy/registration statements with respect to the
Merger, but it may not be summarized, excerpted or otherwise publicly referred
to without the prior written consent of CIBC World Markets.
Very truly yours,
/s/ CIBC World Markets
CIBC WORLD MARKETS CORP.
Ex-5-2