EFTA01378334.pdf

INTERNAL USE ONLY DO NOT DISTRIBUTE IN PART OR IN WHOLE Corporate Credit > U.S. High Yield ADT Corp. (ADT) Updated: Oct 1, 2015 Trade Idea: 0 Buy ADT Corp. 6.25% Senior Unsecured Notes due 2021. Investment Rationale: 0 Largest provider of residential security monitoring services in North America with a 25% market share and 6.5 million customers. o Solid, stable, recurring free cash flow generator with 50+% EBITDA margins industry average customer attrition rates. o Moderate leverage at 2.9x total debt/EBITDA, with management's targeted leverage ratio not to exceed 3.0x. 0 Publicly traded company with a $5Bn equity market capitalization, providing a 50% total debt/Enterprise Value ratio. o The ADT 6.25% senior unsecured notes due 2021, at the current offer price of $103.25, provide a 5.6% YTW, 410 bps OAS, and a 6.0% Current Yield for a solid BB- rated credit with a meaningful potential for an M&A take-out by an investment grade strategic acquirer. Recommendation(s): Cat, View iris& No, ccn S&P Weedy c S4Ze OM PI:(e. [SIN •1 12 Months ACT 6.250% 10/1S/2021 Be Bat uso 1000 S.60% 410 103.250 US001011AK2S Levels as of 10/01/2015 De..;tsc:!v 1.,siser CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0075503 CONFIDENTIAL SDNY_GM_00221687 EFTA01378334