Baird Investment Banking Pitch Book
SUMMARY TERMS OF WATER EARN-OUT AND MVCS
AR is considering a proposal whereby AM would accelerate the earn-out payment associated with the
2015 water drop-down
In September 2015, AR sold its integrated water business to AM for $1.05 billion, plus an additional $250 million
subject to the following Earn-Out provisions:
Payment of $125 million at year-end 2019 upon AM delivering 161 Mbbld of average volume from 2017-2019
Payment of $125 million at year-end 2020 upon AM livering 200 Mbbld of average volume from 2018 - 2020
Ear-Out Period
36-month Period Ending 12/31/19
36-month Period Ending 12/31/20
Payment
to AR
(SMM)
2016
2017
2018
2019
$125
$125
MVC
(Mbbld)
Earn-out
Threshold
(Mbbld)
90
100
120
120
161
200
As of Sept. 2015
Projected
123
153
Avg. Volumes
(Mbbld)
179
222
Projected
Volumes
(Mbbld)
178
204
Earn-Out
% of Proj.
Volumes
Source: Management Base Case projections as of March 23.
Represents Management Base Case projections as of August 2015 used in conjunction with Baird's engagement with AR Special Committee.
90%
90%
Confidentiat
■ In addition to the Earn-Out provisions, AR also agreed to the following minimum volume commitments ("MVCs"):
Actual
Volumes
(Mbbld)
MVC
% of
Volumes
73%
65%
67%
59%
Current
Projected
Avg. Volumes
(Mbbld)
178
201
Earn-Out
% of Proj.
Volumes
90%
100%
BAIRD
Project Bronco
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