EFTA00308995.pdf

PSE ACQUISITIONS, LLC TARGET TEASER Capital Requirement: $25 million Investment Vehicle: SPV Investment Type: Common Stock Investment Objective Acquire -10% of tar- get's common stock Time Horizon: 12-36 months Fee Terms 1% + 2096* * If returns are greater than 100% in a fiscal year, the incentive allocation in- creases by 10% to 30%. EFTA00308995  PSE AcQU1SITIONS, LLC Transitory regulatory 0% problems have peaked; the stock and 50% industry are poised to 75% revert to more normal valuations. Price tar- 48% get is greater than 5 x current price. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Target Profile Comparable Companies Analysis tEV/EBITDA Sector: Conswner services EV/EBITDA: <3 Company *EWEIIITDA LTM (Norm. Period) Enterprise value: <S200 million Priccibook. <0.25 Target Revenue: S1 billion Price/replacement 0.16 Comparable Co. 1 8.0 10.5 Financial leverage: Low Comparable Co. 2 6.4 18.2 Target Summary: Comparable Co. 10 7.7 14.7 The Target is a leader in an industry that is crucial to our Comparable Co. 12 3.7 13.9 economy but has been the focus of regulators along with Average 6.0 12.8 its peers. We believe that most of the regulatory head- winds are temporary, and the continued expansion of val- •Financials are calendarized and normalized. Fully diluted shares are uation multiples within the industry is expected. We an- calculated using TSM. ticipate the Target will follow many of its peers by begin- tEV and unadjusted EBITDA are from FlO0DS to FY20011. ning to revert to a more normal valuation. The only congressional bill recently introduced with provisions intended to inhibit aspects of the industry's business model was 'dead-on-arrival' and we believe no further legislative attempts, if any, will be successful. The stock prices of many of the Target's peers have increased several fold off their lows as an end to the government attacks have come into sight. However, the Target has lagged behind and trades at less than 3 x EBITDA while its peers trade at over 6 x EBITDA. The Target has received greater regulatory scrutiny than most of its peers. After a careful review of the Target and industry, we believe that relatively all the bad news is out and we are at an inflection point where the Target begins to return to a more normal valuation level. Investment Objective: We seek to raise S25 million from investors to acquire a substantial position in the Target. We will utilize proven strategies to maximize our investor's returns, including activism. It is our belief that as valuations nor- malize and the government's scrutiny lessens, the Target should generate a 500-1000% retum over the next 12-36 months. The investment managers are leading turnaround activists and have successfully targeted companies with similar profiles in order to unlock shareholder value. 2 EFTA00308996  PSE ACQUISITIONS, LLC I PAST PICKS I MARCH 2014 Manager's selected positions disclosed October, 2013 YRC Worldwide Inc. (YRCW US) Return since Oct. 2013: 55%+ Investment Targets: Company "A" hl A fortune 500 company which opecas in the transporution 5yr Share rotorr Performance An industry leader in pmcidimt supply-chain sathitions. Its network lus local. regional. national and international capabilities ..tad I ...wt.,' %Icon, Market Cap: liSS209 nullion Annual Revenue: ---USS 5.0 billion Cash: > USS150 million PE Ratio: WA is Cc MI 5.1 Div. Yield: 0.0% Down from 5yr High: 99% Ina • • • New inanagement team Restructuring of labor canon., Return to profitability _II Tarp-1 Return 3% Holding Period 24 nxxnh 24 Pacific Ethanol, Inc. (PEIX US) Return since Oct. 2013: 35096+ Investment Targets: Company "B" Company Profile: A leachng pro.,", or renewable 5yr Share fuels that primarily operates in the Western US Performance Wnically integrated operations spanning production, storage and delivery IA/W-con ptoviticr while demand growth Is worpa‘sng supply Sc!Arto.I1-ir_nn :al Mew,. Market Cap: < USS100 million Annual Revenue: sUSS 1.0 billion • RE Ratio: WA • Div. Yield: 0.0% • Down from 5yr High: 99i. • Forced selling and hyper-dilutive financing has run its noun. • Turning cash flow positive Target Return: 5x • Improving industry dynamics I holding Period: 24 months 25 3 EFTA00308997  PSE ACQUISITIONS, LLC I PAST PICKS I MARCH 2014 Manager's selected positions disclosed October, 2013 DHT Holdings, Inc. (DHT US) Return since Oct. 2013: 10096+ Investment Targets: Company "C" A leading provider of marine 5yr Share uampowiem iCTNICCS hued on NYSE Performance The company has operation. around the world Selected Financial Sletrice: 'darker ( USS l00 million • Annual Revenue: S USSIO0 million Amer Value: S U55.550 million a • NE Ratio: N/A Div. Yield:0.0% PM hi v et• it: le N Yn u ed Mt) Ar II CP et, be A Down from Syr High: 95% Y I 11::101011•1 Ins,:sa -a art, I lighly leveraged to global economic growth Improving industry dynamics Return to positive cash flow olEdoillui Illm RePtcui?.a151-1 n 26 Oclaro, Inc (OCLR US) Return since Oct. 2013: 9096+ Investment Targets: Company "E" Company Prattle Uoi_:u end minaIa.:tures optical Syr Share eomixiiiiinis. lawn and commomkmems equipment Performance The convarry's products span both the industrial and consumer markets worldwide. Its products are used in a wide any of applications including binimedical inaaging, mbdies. laser printing and telecom network. Marled Cap: USS200 million Annual Revenue: s CS5.500 million a.. lad ..r ler lei *Sill kr r mat: it. *a wan ia Ratio: WA Dist Yield: 0.0% anon from 5yr Disk 90%. I tai ataa its Inscsameni I • • • Turning cash now pntitive Rollout of new product. =opportunities /•••••• ••••••••••••••.1}1••••••••••/•ry. lainet Return: 10x I biding Period: 36 months 28 4 EFTA00308998  PSE ACQUISITIONS, LLC I MANAGEMENT I MARCH 2014 Bruce R. Galloway Managing Member Mr. Galloway is a leading turnaround activist and a small/micro-cap deep value investor. He has gen- erated annual returns in excess of 20% for the past 15 years. As the founder and managing director of the Galloway Capital Division at Burnham Securities from 1994 to 2005, he managed up to $100 mil- lion in assets and developed the Strategic Turnaround Equity Program (STEP) model for analyzing distressed companies based on the Altman Z-score. He served as Chairman of the Equity Committee of Seitel, Inc.'s bankruptcy proceedings where he executed the recapitalization that resulted in a 1500% return to the equity holders. Mr. Galloway was the Managing Member of Galloway Capital Management, LLC, which was focused on undervalued publicly traded equities. He has held seats on the boards of Arthur Treachers, Inc., , Inc., Digital Creative Development Corpora- tion, Datametrics Corp., Forward Industries, Inc., Miami Subs, Inc., United American Healthcare Cor- poration and GVI Security, Inc., as well as serving as co-chairman of Command Security Corporation. Mr. Galloway held various positions at Rausher Pierce & Refsnes, Inc., Morgan Keegan & Co., L.F. Rothschild & Co. and Oppenheimer, Inc. Mr. Galloway holds a B.A. in Economics from Hobart Col- lege and an MBA in Finance from New York University's Stem Graduate School of Business. Gary L. Herman Managing Member Mr. Herman is a co-founder and a Managing Member of the Investment Manager. From 2005 to the present has managed several investment funds primarily focused on deep value investments. From 1997 to 2002 Mr. Herman was an Associate Managing Director with Burnham Securities, Inc., Prior to joining Burnham, he was the Managing Partner of Kingshill Group, Inc., a merchant banking and fi- nancial firm with offices in New York and Tokyo. Mr. Herman has a B.S. from the State University of New York at Albany. Mr. Herman has sat on the boards of many companies including Digital Creative Development Corp. (Chairman), International Microcomputer Software, Inc., DataMetrics Corpora- tion, Shells Seafood Restaurants, Inc., and Miami Subs Capital Partners, Inc. In addition, Mr. Herman was a member of the board of the University at Albany Foundation and a former board member of the New York City Industrial Development Agency, to which he was appointed by the former Mayor of New York City, Rudolph Giuliani. SI EFTA00308999