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I
<br />KEVIN. Pi. CTTR
<br />FINANCIAL COMMUNICATIONS CONSULTANT
<br />2224 73rd COURT N'O'RTH
<br />M'IN' NEAPOUS, MNi U54"i
<br />Bm. (61211070-06MI
<br />Res. (612).5.5294
<br />TO: DiLrectors of the North Suburban
<br />Cable Commission
<br />FROM Kevin Pi., Clattoor,, Financial Communications Consultant
<br />DATE: September 18, 1986
<br />411
<br />RI Analysis olf Group, W Transfer
<br />0, W,
<br />I have been engaged by your Commission to perf orm a fi-
<br />nancial analysi s, of the f inancil al pro f ormas submitted by the
<br />North Central Cable Communi cations Corporation Mort h Central)
<br />for the purpose, of purchasing the six Group W cable systems
<br />in, the Mi,nneapolis/St. Paul metro area The purpose of per-
<br />far e. the f 1 nancial ana lysi s on North Central 's pro f ormas
<br />is to determine whether the assump tic ns, used in preparing
<br />the financial pro, formas are reasionable in comparison with
<br />current industry explerience. Additionally,, It is 'important
<br />to, assure that the asisumptioins, made in the pro form as are icon-
<br />6. 01
<br />sistent with the informa -lition presented in the Request For
<br />Information,. This is particularly *important as it relates
<br />to the documents, supporting the financing commitments.
<br />To, date, the financial analysis, has surfaced two major
<br />concerns.
<br />First,, North Central has proillecited that the cash on hand
<br />necessary to finance system acqu,isition and subsequent operation
<br />goes into a negative $2.9 million in the year 19193,, Review of
<br />the Request For In ormation in icated the ex i stence4 of no other
<br />f inane g commitments that would cover this shortage,, Addition-,
<br />allyp-North Central as assumed that $8.5 million of additional
<br />senior debit ►oluld be obtained in the year 1992. There is no
<br />e 'dence lo� this commitment "in 1L. Information,
<br />v't f the Request For
<br />Second, review of the loan commitment letter from the
<br />Bank of Boston for the $50,0100,000 senior debt calls for cer,-
<br />tain, financial ratiols to, be met in order for North Central
<br />to maintain its loan balance with the Bank of Boston. the
<br />loan commitment letter indicates that the total debt to oper-
<br />ating clash flow ratio 'in each of the, years, one and two mu,st
<br />be no higher than 61.5 to, 1 and 5.,75 to 1 respectively. In
<br />performing theise, calculat-ions on North Central's pro formal
<br />included in the Request For Information,, it is noted that
<br />ratios of 8,610 to 1 in year one and 5. 8,7 tic 1 in year two
<br />
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