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					                                                                          Capital Markets Week In Review – March 30, 2009

Dough Dough                                                                                                                     Base Case
Last Thursday’s WSJ had a photo of a man holding a 13-inch tall egg, apparently the largest                                                                Government stimulus programs will
                                                                                                                                             4,500                                                                                                    AMLF
in the world, which was on auction at London’s Chelsea Antiques Fair. The egg had been                                                                       balloon the US monetary base
laid by a ten-foot high creature called a Great Elephant Bird in Madagascar in the 1600’s.                                                   4,000                                                                                                    PDCF
Treasury officials hope they will not break that ‘largest egg ever laid’ record, after unveiling                                                                                                                                                      Maiden Lane
the Public-Private Investment Plan (PPIP) last week. There was certainly criticism that                                                      3,500
taxpayers, via FDIC guarantees, were bearing the brunt of the risk, with uncertain reward.                                                                                                                                                            Discount Window
                                                                                                                                             3,000
But the proposal was aimed squarely at the heart of the problem: how to clear toxic assets                                                                                                                                                            AIG




                                                                                                                                $ Billions
off banks’ balance sheets by creating a market (and market prices) for investors without                                                     2,500
having the government being the whole solution, thus setting the stage for renewed lending.                                                                                                                                                           Agency

Institutional investors are sidelined today with at least $1.3 trillion in cash. Geithner & Co are                                           2,000                                                                                                    CPFF
hoping to entice them under the program to buy so-called legacy loans with 94% financing,
                                                                                                                                                                                                                                                      Treasuries
or 100% financing, if they purchase legacy securities. But how about enticing the sellers?                                                   1,500

If banks have written down some of their bad mortgage-backed securities to lower levels by                                                                                                                                                            TAF
                                                                                                                                             1,000
now, selling at anything higher might be attractive. But dumping loans at distressed prices,                                                                                                                                                          TALF
especially given pressures to meet pending stress tests, may be tough for banks to swallow.
                                                                                                                                              500
                                                                                                                                                                                                                                                      MBS
At a minimum, PPIP gives market players a chance to avoid the fate of certain extinct birds.
                                                                                                                                                0                                                                                                     Adj. Monetary Base ex-
Quote of the Week – “Greed got us into this mess, and it’s clear that greed will have to get                                                                  Aug-08                   Mar-09                Future Possibility                       Liquidity Facilities
us out of it.” – Jason Trennert, Chief Investment Strategist, Strategas Research Partners.                                       Source: Federal Research and Banc of America Securities – Merrill Lynch (“Situation Room – March 24, 2009”)



Churchill PE Client Spotlight: Huntsman Gay Global Capital                                                                      Select Deals in the Market                                                                (1)             (2)                 (3)            (4)
                                                                                                                                  New Issue                              Arranger           Sponsor            Facility         EBITDA           Leverage           Spread           OID
This week we speak with Richard Lawson, Managing Director, Huntsman Gay Global Capital:                                           Grande Communications                  SocGen              ABRY                $128              $42               2.8x             675            97
                                                                                                                                  Fairview Outdoor                       CIT, GE        Boston Ventures           $60              $22               2.7x             650            90
OTL: First of all, congrats on your fundraising.
                                                                                                                                  Roskam Baking                          CIT, GE           Wind Point            $114              $38               2.5x             650           N/A
Thanks. We have over $1B in committed capital now, and that’s a nice size for a first-time fund.                                  TNS                                   SunTrust        Non-sponsored            $250             $173               2.5x             600            90
                                                                                                                                                                                                                          (1)              (5)
                                                                                                                                  Buybacks                              Arranger            Sponsor            Facility         Buyback            Industry          Bid/Ask
OTL: And an interesting time to be investing private equity.                                                                      Attachmate
                                                                                                                                                     (6)
                                                                                                                                                                           Citi           Golden Gate            $685              $60            Electronics       Below par
                                                                                                                                  BCBG Max Azria                           GS           Non-sponsored             $30              $10             Apparel           35-45
We think the timing is good. It’s the ultimate “back-to-basics” market. If you drive value, you’ll drive
                                                                                                                                  Berry Plastics                          CSFB              Apollo               $580              $75            Chemicals         Below par
earnings. The days of financially engineered, zero-growth LBO’s, are over. There’ll be many mid-                                                              (7)
                                                                                                                                  Deluxe Entertainment                    CSFB               Mafco               $720              $38              Media           Below par
sized firms needing capital and operational support to seize opportunities and reach their potential.                             Education Management                     GS         Providence Ventures       $1,185            $400            Education         Below par
OTL: How’s the pipeline looking?                                                                                                  Hertz                                    DB         Clayton Dublier Rice      $1,650            $500             Leasing          Below par
                                                                                                                                  Polymer Group                            Citi         Non-sponsored            $410              $70              Textile          77-80
We’re actually busier today than a year ago. The gap between sellers’ expectations and buyers’                                    Amendments                             Arranger           Purpose             Facility        Old Spread New Spread                 Fee          Libor Fl.
ability to finance a deal is shrinking. Deal flow is increasingly event-driven. Business owners of                                CB Richard Ellis                         CS           Lev and Int Cov         $949               150              400               50           2.00%
companies doing $25–75MM in EBITDA want to diversify risk and take some chips off the table now.                                  Education Media & Pub.                   CS          1st Lien Lev Cov        $4,350              400           Add 3% PIK           25            N/A
                                                                                                                                  Ferro Corp                           Nat City, CS    Lev and FCC Cov          $593               200              600              100            N/A
OTL: Are you fine-tuning your strategy, given this environment?
                                                                                                                                  Refinancings                           Arranger          New Loan             Spread           Industry         Est. Rating
                                                                                                                                                                                                    (8)
Our operationally-intense style allows us to grow companies of all sizes and industries into market                               Eastman Kodak                            Citi             $500                  400           Electronics         B-/B3
leaders, regardless of cycle. We may be a debut fund, but our partners have done over 200 deals.                                  SunGard Data Systems                   GECC                 $350                450           Computers           B+/B2
                                                                                                                                  Tribune Receivables                   Barclays              $225                600           Print & Pub          Aa2
With our global relationships, vision and experience, our portfolio companies become top performers.
                                                                                                                                  DIPs                                   Arranger          Sponsors             Facility          Spread             Fee
OTL: I guess, being a first-time fund, I don’t have to ask you how your portfolio is doing.                                       Sportsman Warehouse                    GECC                 N/A                $85               450               N/A
                                                                                                                                  BI-LO LLC                              GECC                 N/A               $100              475                N/A
That’s one advantage of a first-time fund – you start with a clean slate. Our first deal, Turner Bros., is
                                                                                                                                 Source: LCD News - (1) New/Increased Sr. facility (2) PF EBITDA for Acquisition (3) TNS - 2.5x Sr. Leverage through new $250MM
in the energy service space and conservatively leveraged. Those are both good things right now.                                  Amortizing TL (4) Grande - 3.0% LIBOR Floor; TNS – 3.5% LIBOR Floor (5) Cap limited to “Cash on Hand” (6) $430MM 1st Lien TL /
                                                                                                                                 $255MM 2nd Lien TL (7) $610MM 1st Lien TL / $110MM 2nd Lien TL (8) ABL RC refinance existing bank debt
This publication is a service to our clients and friends. It is designed only to give general information on the market developments actually covered.                                   Randy Schwimmer             (212) 763 4646 rschwimmer@churchillnet.com
It is not intended to be a comprehensive summary of recent developments or to suggest parameters for any prospective financing opportunity.                                              George Parry                (212) 763 4671 gparry@churchillnet.com

				
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