Agenda Packets - 1992/07/27 - Laserfiche WebLink

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BERNICK AND LIFSON A PROFESSIONAL ASSOCIATION The objectives of the financial analysis as explained in the attached report were to assess: The financial strength of the proposed buyer The reasonableness of the proposed financing arrangement The reasonableness of financial projections for the system The ability of the buyer to meet debt obligations Other financial issues that may arise in the course of the analysis Public Knowledge arrived at the following conclusions regarding the financial analysis: The proposed purchase price of about $2, 136 per subscriber is consistent with the market range in the past few years. The initial debt-to-equity ratio of 1. 12 under the proposed ownership is less leveraged than the industry average of 3 .0. Because Meredith/New Heritage Strategic Partners L.P. (the buyer) is recently formed, audited financial statements are not available for the partnership, and therefore its historical financial condition cannot be assessed. The North Central system currently performs slightly below norms for certain selected financial indicators, and slightly better for others. The buyer's financial projections for the North Central system —appear—opt imistic;but—achievable. Sensitivity analysis of the buyer's projections suggests that the buyer can service the acquisition debt even if certain conditions materialize somewhat less favorably than assumed. However, there are unlikely to be sufficient funds for any significant plant rebuild or upgrade before the year 2000 unless there is a significant amount of additional borrowing or an equity infusion; debt service and normal capital expenditures will consume most of the operating cash flow. ** 8