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MI
<br />.DERNICK AMD LIFSON
<br />A PRO, FES S, 00+4^4. ^SSOCIATVION
<br />The objectives of the financial, analysis as, explained in the
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<br />attached, report were to assess,
<br />Other financial issues, that may arise 'in the course of the
<br />anaivsis,
<br />M
<br />Public Knowledge arrived at the following conclusions
<br />regarding the financial analysis,:
<br />i
<br />The p,roplosied, purchase priice, of about $2,1361 per, subscriber 'is
<br />clonsisteint with the, market range in, the past few years.,
<br />The initial, diebt�to�-equity ratio of 1,. 12 under the propose
<br />ownership is, less leveraged than, the industry average of 3.01
<br />Because Meredith/New Heritage Strategic Partners L.P,, (the
<br />�% 111 0
<br />buyer) is recently formed, audited f inianc,ial statements are
<br />not available for the partnersh ip, and therefore 'It's
<br />h
<br />i a,
<br />storicial financial. condition cannot be assessed.
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<br />The North, Cientral system currently performs slightly below
<br />I
<br />noirms for certain selected f inancial indicators, and sli"ghtly
<br />better for, others,,
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<br />The buyer Is f inan,cial pro:) e�cti,ons for the, North Central system
<br />a, #
<br />,appear optim,lstlic,, but achievable.
<br />Sensilotivity analysis of the buyer'�si projections, suggests that
<br />a
<br />the buyier can service the acquisition debt, eiven if certain
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<br />londit,ioln,s, materialize somewhat less, favorably' than assumed.
<br />However, there are unlikely to be sufficient funds for any
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<br />silgnificant plant rebuild or uio�ctriad,e before the year'' 2000
<br />unless there, is a significant amounti of additional borrowing
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<br />or an equity infusion; debt servi
<br />ice and normal capital
<br />expenditures will, consume most of' the operating cash flow.**
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