Baird Investment Banking Pitch Book
PRO FORMA AMGP WEIGHTED AVERAGE COST OF
CAPITAL ANALYSIS
H
($ in millions)
3西西安市西西园 室
(1)
[2]
(3)
(4)
Cost of
Equity
(6)
Cost of
Debt
(7)
Cost of Capital Components
Risk-free Interest Rate
Levered Beta (2)
Market Premium
Size Premium
Cost of Equity
Cost of Debt
(9)
(5)
(3)
Revolving Credit Facility
5.375% Senior Notes Due 2024
(8)
Tax Rate
After Tax Cost of Debt
Amount
Outstanding
(6)
$1,396
650
$2,046
3.3%
1.43
6.9%
0.9%
14.0%
Interest
(2)
Rate
3.3%
5.2%
3.9%
25.3%
2.9%
Source: AM & AMGP filings and Bloomberg.
Represents estimated 20-year treasury rate as of October 5, 2018
Represents midpoint of AM & AMGP two-year levered equity betas as of February 23, 2018, the date prior to the announcement of the Special Committee Formation,
Large company stock total returns minus long-term government bond income returns as computed by Duff & Phelps LLC.
Source: Duff & Phelps LLC size premium based on pro forma AMGP's equity market value as of October 5, 2018.
PF AMGP Market Value of Equity
PF AMGP Net Debt Outstanding
Total PF AMGP Firm Value
Implied Weighted Average Cost of Capital ("WACC")
PF AMGP Equity Market Value / Firm Value
x Cost of Equity
Cost of Equity Contribution
Preliminary Graft
PF AMGP Net Debt / Firm Value
x Cost of Debt
Cost of Debt Contribution
Total Implied WACC
■
(5) Cost of equity is calculated using CAPM (e.g. cost of equity risk-free interest rate levered equity beta" market risk premium size premium).
Reflects debt outstanding as of June 30, 2018, the most recent public disclosure, unless otherwise noted.
BAIRD
Interest rate for publicly traded senior notes represents the yield-to-worst as of October 5, 2018.
Includes $626 million in cash issued to AM unitholders: $3.00/unit to all AM common unitholders plus a $0.41 / unit special dividend to unaffiliated AM common unitholders,
and estimated transaction fees.
Estimated pro forma AMGP corporate tax rate.
Project Bronco
$8,893
2,046
$10,938
81.3%
14.0%
As a result of its weighted average cost of capital
analysis, Baird utilized 12.0% for purposes of
discounting tax and G&A savings
11.4%
18.7%
2.9%
0.5%
12.0%
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