Fairness Opinion - Financial Reporting Purposes

Stout was engaged to render an opinion to the board of directors of a financially distressed food manufacturer and distributor with respect to the fairness, from a financial point of view, of a proposed transaction in which the company would obtain rescue financing by entering into a line of credit agreement and issuing warrants for one-third of its equity.

Stout’s analysis relied on pre-transaction and post-transaction equity valuations to assess the valuation impact of the transaction on the company’s existing equity owners. In addition, Stout performed an analysis to assess the lender’s internal rate of return on the transaction relative to observable market rates of return.

We issued an opinion that the financial terms of the transaction were fair, from a financial point of view, to the company and its owners. This enabled the board of directors to recommend the transaction with confidence and the company subsequently executed the transaction.

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