0901005 Informal Interpretation

From: (redacted)
Sent: Thursday, January 15, 2009 8:54 AM
To: Verne, B. Michael
Cc: (redacted)
Subject: valuation question re liabilities

Importance: High

Mike, I'd like tobe sure we are correctly assessing the value of certain assets being acquiredout of bankruptcy. Could you please confirm/correct my analysis below.

The Proposed Sale -Seller will sell substantially all of its assets to an unrelated acquisition entity(Buyer).

-Buyer will assumea substantial portion of Sellers liabilities.

-The cash purchaseprice is the sum of three amounts:

(i)Seller's senior secured debt

(ii)the Administrative Expenses to be retained by Seller

(iii) the CureAmounts to be paid in the bankruptcy The cash purchase price is capped at $51.7million. Assume that a full cash payment of $51.7 million will be paid.

- In addition,Seller has about $11 million of letter of credit liabilities (almost all of theLCs have been issued under the senior secured credit facility). The Buyer willeither assume those liabilities, or replace a portion of them with their ownLCs (so that the LC liabilities will be discharged).

- Beyond this,Seller has a large amount (approx $34 million) of liabilities that the Buyer isassuming. Much of this is for ordinary course accounts payable.

- All of Seller'sother indebtedness will be wiped out in the bankruptcy.

I have concludedthat since the purchase from bankruptcy is treated as an asset deal, it wouldbe necessary to include the value of liabilities being assumed by Buyer indetermining the deal value. Assuming the size of the person test is met, I haveconcluded that the transaction would be reportable. Can you confirm that theliabilities would be included in the valuation for HSR purposes? thanks