J.P.Morgan Investment Banking
APPENDIX
Leveraged buyout analysis - Adjusted Upside Case, 67% leverage
Assumptions
Entry assumptions
Date
Purchase price per share
Cost of debt
Full-year 2006E EBITDA
Exit ass um ptions
Date
Management promote
Exit FV/EBITDA multiple
Terminal year EBITDA
Sources & us es
Sources
New LBO debt
New equity
Total sources
Us es
Equity purchase price
Refinanced debt
Transaction value
Transaction fees
Totaluses
6/30/06
$75.00
7.50%
$258
6/30/11
15.0%
12.5x
$367
$2,399
1,281
$3,680
$2,918
662
$3,580
100
$3,680
Projections
Adjusted cash EBITDA¹
Plus: Cost synergies
Less: Recurring equity earnings
Less: Depreciatio
EBIT
Plus: Cash interest income
Less: Cash interest expense
Plus: Capitalized interest adj
Pre-tax income
Less: Tax expens e
Net income
Plus: Depreciation
Plus: Reethi Rah notes monetization
Plus: Cape Town notes monetization
Plus: Kanahura notes monetization
Plus: Land sale
Less: Capex
Less: Dev. Proj. Investments
Less: Project advances
Less: Lux (repayments)/issuances
Plus: CF from AC land sale
Less: Increases in NWC
Plus: Palmilla dividend
Plus: Dividend income
Available CF for paydown
Internal rate of return
Credit statistics
$108
2006E 2007E 2008E 2009E 2010E
$306 $365 $397 $424
5
5
5
5
(10) (17) (22) (27)
(90) (98) (99) (100)
$255 $281 $302
1
(36
$69 $210
0
1
1
(96) (207)
26
($1)
0
($1)
32
$35
0
$35
1
(201)
18
$72
0
$72
(184) (151)
0
$152 $198
0
$152
100
0
$98
0
$98
99
0
$198
99
36
90
98
76
0
0
0
0
0
0
0
(88)
0
0
0
0
0
13
Total debt/EBITDA
Total debt/Purchase price
3
(6)
0
0
0
0
(263)
(97)
0
(1)
0
7
0
14
($304)
22.5%
0
0
0
0
(192)
(28)
(20)
(12)
0
1
0
47
($ 78)
6/30/06
9.3x
67%
EBITDA/interest
NA
Note: Valuation date 6/30/06; 2006E adjusted to reflect only Q3-Q4 stub period
¹ Differs from EBITDA in that it includes non-recurring equity earnings and land sales per K-2 model
JPMorgan
2006E
2007E
9.2x
10.6x
76%
1.12x 1.48x
78%
0
0
0
(75)
0
5
1
(0)
1
8
65
$250
10
2
0
(80)
0
10
2
40
(2)
9
0
467
(85)
0
10
3
0
(3)
13
20
4
$208 $661
2008E 2009E
2010E
7.0x
5.9x
4.0x
71%
65%
47%
1.82x
2.16x 2.81x
2011E
$437
5
(28)
(99)
$315
1
(118)
0
4
$226
2011E
3.3x
41%
3.71x
Exit EBITDA adjustment
2011E EBITDA
Less: Mohegan 2011E CF
Adjusted exit EBITDA
Equity value per share
IRR:
Price
18.0%
20.0%
22.0%
Internal rate of return
$75.00
$80.00
$85.00
IRR:
Exit FVIEBITDA multiple
11.5x
$78.01
74.49
72.13
18.0%
20.0%
22.0%
12.5x
$81.15
78.70
76.08
Debt to cap on entry
65.0%
21.8%
19.6
17.3
62.3%
21.0%
18.8
16.6
Implied entry FV/EBITDA multiple
Exit FV/EBITDA multiple
11.5x
14.4x
13.9
13.5
12.5x
14.9x
14.4
14.0
$437
(43)
$394
13.5x
$84.30
81.43
78.58
67.0%
22.5%
20.2
17.9
13.5x
15.4x
14.9
14.4
PROJECT PLATO
23View entire presentation