Initial Balance Sheet:

$ in thousands

ASSETS LIABILITIES
Operating assets 950 1st lien loan 100
2nd lien loan 400

EQUITY
Common 450

Balance Sheet: w/AP and $50k new equity

$ in thousands

ASSETS LIABILITIES
Cash 50 Accounts payable 20
Operating assets 1st lien loan 100
Property 950 2nd lien loan 400
Flooring 20 Total liabilities 520
Total Assets 1,020
EQUITY
Common 500

Total liabilities + equity 1,020

Balance Sheet: w/AP and $50k new equity

$ in thousands

ASSETS LIABILITIES
Cash 90 Accounts payable 20
Operating assets 1st lien loan 100
Property 950 2nd lien loan 400
Flooring 20 Total liabilities 520
Total Assets 1,060
EQUITY
Common 500
Retained earnings 40
Total equity 540

Total liabilities + equity 1,060

Balance Sheet: Post stock offering - GAAP

$ in thousands
ASSETS LIABILITIES
Cash 240 Accounts payable 20
Operating assets 1st lien loan 100
Property 950 2nd lien loan 400
Flooring 20 Total liabilities 520
Total Assets 1,210
EQUITY
Common 650
Retained earnings 40
Total equity 690

Total liabilities + equity 1,210

Balance Sheet: Propsects more bullish - GAAP

$ in thousands

ASSETS LIABILITIES
Cash 240 Accounts payable 20
Operating assets 1st lien loan 100
Property 950 2nd lien loan 400
Flooring 20 Total liabilities 520
Total Assets 1,210
EQUITY
Common 650
Retained earnings 40
Total equity 690

Total liabilities + equity 1,210

Balance Sheet: Better credit terms, more A/P - GAAP

$ in thousands

ASSETS LIABILITIES
Cash 240 Accounts payable 110
Operating assets 1st lien loan 100
Property 950 2nd lien loan 400
Flooring 110 Total liabilities 610
Total Assets 1,300
EQUITY
Common 650
Retained earnings 40
Total equity 690

Total liabilities + equity 1,300

Balance Sheet: Post acquisition - GAAP
$ in thousands

ASSETS LIABILITIES
Cash 240 Accounts payable 110
Operating assets 1st lien loan 100
Property 970 2nd lien loan 400
Flooring 110 Unsecured note 200
Goodwill 180 Total liabilities 810
Total Assets 1,500
EQUITY
Common 650
Retained earnings 40
Total equity 690

Total liabilities + equity 1,500

Balance Sheet: Distress - GAAP

$ in thousands

ASSETS LIABILITIES
Cash 240 Accounts payable 110
Operating assets 1st lien loan 100
Property 970 2nd lien loan 400
Flooring 110 Unsecured note 200
Goodwill 180 Total liabilities 810
Total Assets 1,500
EQUITY
Common 650
Retained earnings 40
Total equity 690

Total liabilities + equity 1,500

Balance Sheet: Post stock offering - Market
$ in thousands
ASSETS LIABILITIES
Cash 240 Accounts payable 20
Operating assets 1,180 1st lien loan 100
Total assets 1,420 2nd lien loan 400
Total liabilities 520

EQUITY
Total equity 900

Total liabilities + equity 1,420

Balance Sheet: Prospects more bullish - Market

$ in thousands

ASSETS LIABILITIES
Cash 240 Accounts payable 20
Operating assets 1,480 1st lien loan 100
Total assets 1,720 2nd lien loan 400 No impact on GA
Total liabilities 520

EQUITY
Total equity 1,200

Total liabilities + equity 1,720

Balance Sheet: Better credit terms, more A/P - Market

$ in thousands

ASSETS LIABILITIES
Cash 240 Accounts payable 110
Operating assets 1,570 1st lien loan 100
Total assets 1,810 2nd lien loan 400
Total liabilities 610

EQUITY
Total equity 1,200

Total liabilities + equity 1,810

Balance Sheet: Post acquisition - Market
$ in thousands

ASSETS LIABILITIES
Cash 240 Accounts payable 110
Operating assets 2,370 1st lien loan 100
Total assets 2,610 2nd lien loan 400
Unsecured note 200
Total liabilities 810

EQUITY
Total equity 1,800

Total liabilities + equity 2,610

Balance Sheet: Distress - Market

$ in thousands

ASSETS LIABILITIES
Cash 240 Accounts payable 110 % of par
Operating assets 212 1st lien loan 90 90%
Total assets 452 2nd lien loan 200 50%
Unsecured note 40 20%
Total liabilities 440

EQUITY
Total equity 12

Total liabilities + equity 452

Asset values scenarios
1 212
2 300
No impact on GAAP balance sheet
Balance Sheet: Distress - Blend
$ in thousands

ASSETS LIABILITIES
Cash 240 Accounts payable 110
Operating assets 212 1st lien loan 100
Total assets 452 2nd lien loan 400
Unsecured note 200
Total liabilities 810

EQUITY
Total equity (358)

Total liabilities + equity 452

Balance Sheet: Out of court restructuring proposal

$ in thousands

ASSETS LIABILITIES
Cash 240 Accounts payable 55
Operating assets 212 1st lien loan 60
Total assets 452 2nd lien loan 160
Unsecured note 80
Total liabilities 355
 EQUITY
Total equity 97

Total liabilities + equity 452

Equity owners
You

Equity value 97
Net debt 60
Enterprise value 157
Net debt / EV 38%

Balance Sheet: Out of court proposal altered to reflect absoulte priority rule (w/5% owner
$ in thousands

ASSETS LIABILITIES
Cash 240 Accounts payable 44
Operating assets 212 1st lien loan 100
Total assets 452 2nd lien loan 115
Unsecured note 81
Total liabilities 340

EQUITY
Total equity 112

Total liabilities + equity 452

Equity value 112

Net debt 56
Enterprise value 168
Net debt / EV 33%

Total shares 2,400

 0.5345

Discount to Aggregate Equity %

Claim Equity (shares) recovery ownership
50% 50% 0% Equity ownership (%)
40% 60% 0% 2nd lien loan
60% 400 53% 55.6% Unsecured note
60% 200 53% 27.8% Original Equity
 Chart Title
NM 120 NM 17%
Total shares
720 $26.94
$/share
$0.13

2nd l i en l oan Uns ecured note

Ori gi nal Equi ty

rule (w/5% owner equity)

Discount to Aggregate Equity %

Claim Equity (shares) recovery ownership Secured vs unsecured claims
60% 0 40.4% 0% Secured 1st lien
0% 0 100.0% 0% Secured 2nd lien
71% 2,280 55.3% 95.0% General unsecured claims
60% 0 40.4% 0% Total

GUCs
Discount to Aggregate Equity %
Claim Equity (shares) recovery ownership Unsecured 2nd lien
NM 120 NM 5% Accounts payable
Unsecured note
Total

Aggregate Recoveries
1st lien
2nd lien
Accounts payable
Unsecured note
Total

Max liabilities post restructuring

Equity value post restructuring
Owners
Claims

Note: A/P, 1st lien and unsecured don't want stock

56%
28%
17%
Title

Uns ecured note

Claims Recovery $ Value available Recovery %

100 100 452 100.0%
100 100 352 100.0%
610 252 252 41.3%
810 452

Claim Recovery $ Tip to ownersRecov. % after tip

300 121 3 40.4%

110 44 1 40.4%
200 81 2 40.4%
610 246 6

Aggregate
Claim Recovery $ Liabilities Equity % Equity Recovery %
100 100 100 0 0% 100.0%
400 221 115 106 95% 55.3%
110 44 44 0 0% 40.4%
200 81 81 0 0% 40.4%
810 446 340 106

340
112
6 5%
106 95%

nsecured don't want stock

DCF Model
Forecasts
$ in thousands 2017 2018 2019 2020 2021
Revenue 221.0 251.0 289.7 311.1 377.6
EBIT 66.3 75.3 86.9 93.3 113.3
D&A and other noncash items 11.1 12.6 14.5 15.6 18.9
Unlevered free cash flow 54.1 61.5 71.0 76.2 92.5

Revenue growth (%) 14% 15% 7% 21%

EBIT margin 30% 30% 30% 30% 30%
Tax rate 35% 35% 35% 35% 35%

Discount rate (WACC) 10% PV of FCFs

Terminal EBITDA multiple 8.00 PV of terminal value

Enterprise value 1,160.5

Net debt 260
Equity value 900.5

DCF Model
Forecasts
$ in thousands 2017 2018 2019 2020 2021
Revenue 221.0 260.8 307.7 363.1 428.5
EBIT 75.1 88.7 104.6 123.5 145.7
D&A and other noncash items 11.1 13.0 15.4 18.2 21.4
Unlevered free cash flow 59.9 70.7 83.4 98.4 116.1

Revenue growth (%) 18% 18% 18% 18%

EBIT margin 34% 34% 34% 34% 34%
Tax rate 35% 35% 35% 35% 35%

Discount rate (WACC) 10% PV of FCFs

Terminal EBITDA multiple 8.00 PV of terminal value

Enterprise value 1,469.6

Net debt 260
Equity value 1,209.6

DCF Model
Forecasts
$ in thousands 2017 2018 2019 2020 2021
Revenue 221.0 223.2 225.4 227.7 230.0
EBIT 9.9 10.0 10.1 10.2 10.3
D&A and other noncash items 11.1 11.2 11.3 11.4 11.5
Unlevered free cash flow 17.5 17.7 17.9 18.0 18.2

Revenue growth (%) 1% 1% 1% 1%

EBIT margin 5% 5% 5% 5% 5%
Tax rate 35% 35% 35% 35% 35%

Discount rate (WACC) 20% PV of FCFs

Terminal EBITDA multiple 4.00 PV of terminal value

Enterprise value 102.0

Net debt 460
Equity value -358.0
 2022
437.7
131.3
21.9
107.2

16%
30%
35%

323.4
837.1

2022
505.6
171.9
25.3
137.0

18%
34%
35%

392.2
1,077.4

2022
232.3
10.5
11.6
18.4

1%
5%
35%

59.4
42.6