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SECURITIES EXCHANGE COMMISSION
Securities Exchange Act of 1934
Filed by a Party other than the Registranto
Check the appropriate box:
þ Preliminary Proxy Statement
1) | Title of each class of securities to which transaction applies: | ||
Common stock, par value $0.001 per share, of Mobile Office Acquisition Corp. |
2) | Aggregate number of securities to which transaction applies: | ||
Acquisition of all outstanding common stock of Mobile Office Acquisition Corp. |
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
$48,000,000 (Holders of Mobile Office Acquisition Corp. common stock will receive an aggregate of (1) up to $21.5 million in cash, (2) 4,000,000 shares of common stock of General Finance Corporation valued at an aggregate of $25 million as of July 31, 2008 and (3) a subordinated promissory note in the amount of $1.5 million) |
4) | Proposed maximum aggregate value of transaction: | ||
$48,000,000 |
5) | Total fee paid: | ||
$1,866.40 |
x | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
1) | Amount Previously Paid: $5,189.66 |
2) | Form, Schedule or Registration Statement No.: Preliminary Proxy Statement (PREM 14A) |
3) | Filing Party: General Finance Corporation |
4) | Date Filed: October 20, 2006 |
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Pasadena, California 91103
Chief Operating Officer
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39 East Union Street
Pasadena, California 91103
TO BE HELD ON , 2008
Chief Operating Officer
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39 East Union Street
Pasadena, California 91103
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• | General Finance Corporation, or General Finance or we, will acquire Mobile Office Acquisition Corp., or MOAC, and its wholly-owned subsidiary Pac-Van, Inc. pursuant to an agreement and plan of merger, or Merger Agreement. MOAC and Pac-Van, Inc. are referred to collectively in this proxy as Pac-Van. For more information about the acquisition, see the section entitled “The Agreement and Plan of Merger” beginning on page 45 and the Merger Agreement that is attached as Annex A to this proxy statement. | |
• | At the special meeting of stockholders to be held on , 2008, you will be asked to approve the acquisition and the issuance of 4,000,000 shares of restricted General Finance common stock, or the Shares, pursuant to the Merger Agreement. For more information about the special meeting, see the section entitled “The Special Meeting” beginning on page 27. | |
• | Pac-Van, Inc. leases and sells modular buildings, mobile offices and storage containers in 31 states across the United States. For more information about Pac-Van, see the sections entitled “Unaudited Pro Forma Condensed Combined Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Pac-Van” and “Information About Pac-Van,” beginning on pages 58, 68 and 79, respectively. Also see Pac-Van’s financial statements beginning onpage F-2. | |
• | At the closing of the acquisition, we will acquire MOAC through a merger of GFN North America Corp. or GFNA, and MOAC in which GFNA is the surviving corporation. GFNA is a wholly owned direct subsidiary of General Finance formed for the purpose of acquiring Pac-Van. As a result of the acquisition, Pac-Van, Inc. will become a direct, wholly owned subsidiary of GFNA. The purchase price for the MOAC shares will be approximately $158.8 million. The purchase price for the MOAC shares will consist of up to $21.5 million in cash, a $1.5 million unsecured senior subordinated note of GFNA, or the Note, $30 million in restricted common stock of General Finance, which is valued at $7.50 per share for the purposes of the acquisition, and the assumption of indebtedness. The amount of cash paid for the MOAC shares will depend on the amount of indebtedness but will not exceed $21.5 million in any event. The indebtedness assumed will consist of borrowings under Pac-Van’s existing senior secured credit facility, or Credit Facility, with LaSalle Bank National Association, or LaSalle, and other lenders and the senior subordinated secured note, or Subordinated Debt, originally issued to Laminar Direct Capital L.P., which subsequently assigned such Subordinated Debt to its affiliate, SPV Capital Funding, L.L.C., or collectively, Laminar. There was principal as of June 30, 2008 of approximately $80.4 million and $25 million outstanding under the Credit Facility and Subordinated Debt, respectively. The actual amount of indebtedness outstanding as of the closing will be different, but will in no event exceed $86 million of principal under the Credit Facility and $25 million of principal under the Subordinated Debt. For more information about the acquisition consideration, see the Agreement and Plan of Merger — Merger Consideration” beginning on page 45. | |
• | Certain MOAC stockholders will pledge $8.5 million of stock received pursuant to the Merger Agreement and the $1.5 million Note to secure the satisfaction of the indemnification obligations of such MOAC stockholders under the Merger Agreement. The Note’s maturity is 20 months after the closing of the Merger. Interest at the rate of 8% per annum will be paid on the Note semi-annually prior to its maturity. | |
• | Subject to certain exceptions, Mr. Valenta and Mr. Havner will agree not to acquire any additional shares of our common stock (except via the exercise of warrants held as of the closing of the acquisition) until June 30, 2009. | |
• | The stock acquired by Mr. Valenta, Mr. Havner and D. E. Shaw Laminar Portfolios, L.L.C., or D. E. Shaw, in the Merger, will be valued at $7.50 per share, representing a premium of approximately 23.5% to the $6.07 per share closing price of our common stock as of July 28, 2008. The stock will also be restricted stock which will generally not be eligible for sale or hypothecation until June 30, 2009. |
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• | Upon the closing of the acquisition of Pac-Van, Ronald L. Havner, Jr. will join the board of directors and Theodore M. Mourouzis will continue as the president of Pac-Van, Inc. Pac-Van will continue to be managed largely by its existing officers. For more information about management, see the section entitled ‘‘The Merger — Management of General Finance After the Merger” on page 42. | |
• | Our special committee and management considered various factors in determining whether to acquire Pac-Van and to sign the Merger Agreement. For more information about the decision-making process of our special committee and management, see the section entitled “The Merger — Background of the Merger” beginning on page 31. | |
• | Our acquisition of Pac-Van involves numerous risks. For more information about these risks, see the section entitled “Risk Factors” beginning on page 21. |
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AND THE SPECIAL MEETING
Q. | Why am I receiving this proxy statement? | |
A. | We have agreed to acquire Pac-Van in a “merger” under Delaware law. The acquisition and the issuance of shares of restricted General Finance common stock pursuant to the Merger Agreement must be approved by our stockholders, which is the purpose of the special meeting. This proxy statement contains important information about the acquisition, the issuance of shares of restricted General Finance common stock and the special meeting of our stockholders. | |
Q. | What vote is required in order to approve the acquisition? | |
A. | Under Delaware law, we can complete the Merger and issuance of shares of restricted General Finance common stock only if it is approved by the affirmative vote of the holders of a majority of the shares of our common stock present and entitled to vote with respect to the acquisition. | |
Q. | Are we being asked to consider any other matter? | |
A. | Yes. We are asking our stockholders to approve the issuance of restricted General Finance common stock in connection with the Merger and to grant our board of directors discretionary authority to adjourn the special meeting to solicit additional votes for approval of the acquisition in the event that there are insufficient votes for its approval at the special meeting. | |
Q. | What will happen in the proposed acquisition? | |
A. | GFNA will acquire all of the capital stock of MOAC, and we will own directly through GFNA, our wholly owned subsidiary, 100% of Pac-Van, Inc. and carry on Pac-Van’s business and operations following the acquisition. |
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Q. | What is the consideration for the Pac-Van acquisition? | |
A. | The purchase price for the MOAC shares will be up to $21.5 million in cash, a $1.5 million senior subordinated note of GFNA, or the Note, $30 million of restricted General Finance common stock, which is valued at $7.50 per share for the purposes of the acquisition, or the Shares and the assumption of Pac-Van indebtedness. The amount of cash paid for the MOAC shares will depend on the amount of indebtedness assumed but will not exceed $21.5 million in any event. The Pac-Van indebtedness assumed consists of borrowings under Pac-Van’s existing Credit Facility with LaSalle Bank National Association, or LaSalle, and the senior subordinated secured note, or Subordinated Debt, held by Laminar. There was principal as of June 30, 2008 of approximately $80.4 million and $25 million outstanding under the Credit Facility and Subordinated Debt, respectively. The actual amount of indebtedness outstanding as of the closing will be different, but will in no event exceed $86 million of principal under the Credit Facility and $25 million of original principal under the Subordinated Debt. For more information about the acquisition consideration, see the “Agreement and Plan of Merger — Merger Consideration” beginning on page 45. As a result of the acquisition, Pac-Van, Inc. will become a direct, wholly owned subsidiary of GFNA. | |
Q. | Will financing be used to acquire Pac-Van? | |
A. | Yes. We will finance a portion of the purchase price of the MOAC shares payable by us at the closing through GNFA’s issuance to the sellers of a $1.5 million senior subordinated unsecured promissory note. As described above, we will acquire Pac-Van subject to the indebtedness under Pac-Van’s Credit Facility and Pac-Van’s Subordinated Debt. The material terms of Pac-Van’s Credit Facility and Subordinated Debt are described under the caption “The Merger — Financing” beginning on page 43 of this proxy statement. | |
Q. | Is the consideration subject to change? | |
A. | No. | |
Q. | Why are you proposing the acquisition? | |
A. | The acquisition of Pac-Van will meet our strategic goals of acquiring a growing business in the North American portable storage and modular building industries, diversifying our business across multiple continents and improving our access to the capital markets. Pac-Van is a lessor and seller of modular buildings, mobile offices and storage containers in 31 states across the United States. We believe Pac-Van has a strong management team and is well-positioned for growth in North America. The acquisition of Pac-Van will provide the opportunity to expand Pac-Van’s business and enhance stockholder value. | |
Q. | Are there risks involved in the acquisition? | |
A. | Yes. There are risks related to the acquisition, including the following: | |
• Ronald F. Valenta, one of our directors and our President and Chief Executive Officer, owns common stock of MOAC and has interests in the acquisition that are different from yours. | ||
• We will issue to D. E. Shaw a $1.5 million senior unsecured subordinated promissory note of GFNA at the closing of the acquisition and will acquire Pac-Van subject to the indebtedness under Pac-Van’s existing Credit Facility and Subordinated Debt. As of June 30, 2008, there was principal of approximately $80.4 million outstanding under Pac-Van’s existing Credit Facility and approximately $25 million of Subordinated Debt, respectively. The actual amount outstanding under the Credit Facility and under Subordinated Debt as of the closing may differ from those amounts, but will in no event exceed $86 million of principal under the Credit Facility and $25 million of original principal under the Subordinated Debt. Any adverse change in the results of operations of Pac-Van may make it difficult for us to repay or refinance this indebtedness. | ||
• The proposed acquisition of Pac-Van may result in additional costs under the Sarbanes-Oxley Act of 2002, as amended, and as a result of the adoption of additional control procedures of our combined reporting company. | ||
• We may have difficulty establishing adequate management, legal and financial controls over Pac-Van. |
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Following the acquisition, we will be subject to all of the risks related to ownership of Pac-Van’s business and operations, including the following: | ||
• General or localized economic downturns or weakness may adversely affect Pac-Van’s customers, which may cause the demand for Pac-Van’s products and services to decline and therefore harm our future revenues and results of operations. | ||
• We may need additional debt or equity financing to sustain Pac-Van’s growth, but we have no commitments or arrangements to obtain such financing, other than the already committed $30 million increase in the existing Pac-Van Credit Facility up to $120 million. | ||
• Pac-Van faces significant competition. If Pac-Van is unable to compete successfully, it could lose customers and our future revenues and results of operations could be adversely affected. | ||
• Pac-Van depends in part on the sales of its modular buildings, mobile offices and storage containers, which sales may fluctuate significantly in the future. | ||
• Pac-Van’s leasing revenues, which constituted approximately 69.9% of its total revenues for the year ended December 31, 2007, depend upon Pac-Van’s ability to re-lease modular buildings, mobile offices and storage containers. The failure of Pac-Van to effectively and quickly re-lease modular buildings, mobile offices and storage containers could materially and adversely affect our future results of operations. | ||
• Governmental regulations could impose substantial costs or restrictions on Pac-Van’s operations that could harm our future results of operations. | ||
• We may not be able to indentify and complete attractive acquisitions which could impair our growth strategy for Pac-Van. | ||
• Our failure to retain key Pac-Van personnel could adversely affect our operations and could impede our ability to execute our business plan and growth strategy. | ||
• Significant increases in Pac-Van’s raw material costs could increase our operating costs and adversely affect our results of operations. | ||
• A failure of Pac-Van’s manufacturers and suppliers to sell and deliver products to Pac-Van in a timely fashion may harm our reputation and our financial condition. | ||
Q. | Does the special committee of the board of directors of General Finance recommend voting for the acquisition? | |
A. | Yes. After careful consideration of the business and operations of Pac-Van and the terms and provisions of the Merger Agreement, the special committee of our board of directors has determined that the acquisition is in the best interests of General Finance and its stockholders. The special committee of our board of directors has determined that the acquisition is fair to us and our stockholders. The special committee of our board of directors unanimously recommends that our stockholders vote “FOR” approval of the acquisition. | |
Q. | Why was a special committee of the board of directors of General Finance formed? | |
A. | A special committee of our board of directors was formed because Ronald F. Valenta, one of our directors and our President and Chief Executive Officer owns common stock of MOAC. The terms of the acquisition were negotiated between the special committee of the General Finance board of directors and stockholders of MOAC, with the assistance of their respective legal and financial advisors. | |
Q. | Do the directors and officers of General Finance have interests in the acquisition that are different from mine? | |
A. | Yes. Ronald F. Valenta, our Chief Executive Officer and a member of our board of directors beneficially owns approximately 18.1% of the outstanding common stock of General Finance. Mr. Valenta owns approximately 34.5% of the voting common stock of MOAC. Mr. Valenta is therefore an interested director under Delaware law because he has a financial interest in MOAC, the company General Finance proposes to acquire. A special committee comprised of only independent directors of General Finance was created to formulate an |
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independent determination as to whether the acquisition of Pac-Van would achieve our strategic goals and enhance stockholder value. If the acquisition of Pac-Van is completed, Mr. Valenta would receive approximately $17.5 million upon the consummation of the Merger consisting of approximately $3.7 million in cash and approximately $13.8 million of shares of restricted General Finance common stock, valued at $7.50 per share for purposes of the Merger. | ||
All of our current officers and directors will continue to serve as such following the acquisition. In addition, Theodore M. Mourouzis, the President of Pac-Van, Inc., will continue to serve as the President of Pac-Van, Inc. Mr. Mourouzis receives a base annual salary of $250,000 and, if the Merger is completed, will be eligible to receive an annual performance bonus based upon the achievement of performance indicators as well as receive grants of options to acquire General Finance common stock. | ||
Q. | What is the legal structure of the acquisition? | |
A. | The acquisition will be accomplished by GFNA’s acquisition of all of the capital stock of MOAC through a Merger between GFNA and MOAC in which GFNA will be the surviving entity. GFNA is a direct, wholly owned subsidiary of General Finance. In connection with the acquisition GFNA will issue a $1.5 million senior unsecured subordinated note, and GFN will issue the Shares valued at $7.50 per share and approximately $30 million in the aggregate. | |
A copy of the acquisition agreement, which is referred to as the Merger Agreement, is attached to this proxy statement as Annex A. We encourage you to read the Merger Agreement in its entirety, because it, and not this proxy statement, is the legal contract that governs the acquisition. | ||
Q. | Does the acquisition require any change in the certificate of incorporation of General Finance? | |
A. | No. Our certificate of incorporation need not be amended and will remain in effect, without change, following the acquisition. | |
Q. | Are there contractual conditions to completion of the acquisition? | |
A. | Yes. The respective obligations of sellers and us to complete the acquisition are subject to the satisfaction or waiver of a number of conditions. These include, among others, the following: | |
• The approval of the acquisition by our stockholders; | ||
• The delivery to General Finance of resolutions of the MOAC board of directors and stockholders approving the Merger; | ||
• The parties shall reasonably believe that the Merger shall qualify as a tax-free “reorganization” as described in Section 368 of the Internal Revenue Code of 1986, as amended; | ||
• All representations and warranties of all the parties to the Merger Agreement shall be true and accurate in all material respects as of the closing date; | ||
• No occurrence of events that would have a material adverse effect on Pac-Van’s financial condition, operating profits, back log, assets, liabilities, operations, business prospects, applicable regulations, employee relations, or customer or supplier relations; | ||
• Pac-Van and LaSalle Bank shall have entered into an amendment to the Credit Facility of Pac-Van under terms and conditions set forth in La Salle’s commitment letter; | ||
• Pac-Van and Laminar shall have entered into an amendment to the Investment Agreement and amendments to certain related documents governing the Subordinated Debt of Pac-Van held by Laminar; and | ||
• Pac-Van will have a working capital deficit not in excess of $4 million. | ||
Q. | Can the Merger Agreement be terminated? | |
A. | Yes. The Merger Agreement can be terminated prior to completion of the acquisition in some circumstances, including the following: |
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• By mutual consent of General Finance and MOAC; and | ||
• By any party after November 1, 2008 if any of the other conditions to the closing of the acquisition has not been satisfied and the terminating party has used reasonable efforts to satisfy the conditions. | ||
Q. | Will any finder’s fee be paid in connection with the acquisition? | |
A. | No. | |
Q. | Could payment of termination fees be required? | |
A. | No. There is no termination or breakup fee payable in connection with the termination of the Merger Agreement. | |
Q. | Is the acquisition subject to any regulatory requirements? | |
A. | We do not believe the acquisition is subject to regulatory approvals in the United States. | |
Q. | How do the General Finance insiders intend to vote their shares? | |
A. | Our officers and directors hold shares of our common stock that represent approximately 30.6% of our outstanding shares. Our officers and directors will vote all of their shares of common stock in favor of the acquisition. | |
Q. | How will the acquisition affect my securities of General Finance? | |
A. | Following the acquisition, you will continue to hold the shares of our common stock that you owned prior to the acquisition. If the acquisition is approved by the requisite vote of our stockholders and all the other conditions to closing in the Merger Agreement are satisfied or waived, the number of shares of our common stock outstanding immediately after the acquisition will increase by 4,000,000 shares, representing an increase of approximately 28.9% in the number of issued and outstanding shares of General Finance common stock. Your percentage ownership of our common stock will decrease as additional shares of common stock will be issued pursuant to the Merger. | |
If the acquisition is completed, our outstanding warrants to purchase common stock will not be exercisable into shares of our common stock until a post-effective amendment to our registration statement onForm S-1 is declared effective by the Securities and Exchange Commission, or SEC. Otherwise, the acquisition will have no affect on any of our warrants that you may own. | ||
Q. | If I object to the proposed acquisition, do I have appraisal rights? | |
A. | No. You have no appraisal rights in connection with the acquisition under Delaware law or otherwise. | |
Q. | Who will manage General Finance and Pac-Van after the acquisition? | |
A. | After the acquisition, all of our current directors and officers will continue to serve in the capacities described under “The Merger — Management of General Finance After the Merger” on page 42 of this proxy statement. In connection with the acquisition, Ronald L. Havner, Jr. will be appointed as a member of the board of directors of General Finance. | |
Pac-Van also will continue to be managed by its existing management team, including Theodore M. Mourouzis, its President, and six other senior managers. Mr. Mourouzis and his senior management team have served at Pac-Van for an average of ten years. Mr. Mourouzis is party to an employment agreement which is terminable upon advance notice by either party. | ||
Q. | Will our business plan change as a result of the acquisition of Pac-Van? | |
A. | No. Our business plan and strategy will remain the same. Our strategy is to identify, acquire and consolidate under our holding company specialty finance businesses in North America, Europe and Asia. Ronald F. Valenta, our Chief Executive Officer, successfully executed a similar strategy as the Chief Executive Officer and later the Chairman of the Board of Mobile Storage Group. We believe Pac-Van has a strong management team and is well-positioned for growth in the North America, Europe and Asia-Pacific. If we complete the Pac-Van |
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acquisition, our present strategy is to continue to acquire other specialty finance and portable services businesses in North America, Europe and Asia-Pacific, to grow our operating company subsidiaries, Royal Wolf and Pac-Van, and to acquire modular building and portable storage businesses in selected markets in North America, Europe and Asia-Pacific. There is no assurance that we or Pac-Van will be able to identify, negotiate or complete any future acquisitions, or, if completed, that any such acquisitions will be successful. | ||
Q. | What happens if the acquisition is not completed? | |
A. | If the acquisition is not completed, we will bear substantial costs incurred in connection with the acquisition. | |
Q. | When do you expect the acquisition to be completed? | |
A. | We presently expect the acquisition to close by October 31, 2008, assuming the acquisition is approved at the special meeting of General Finance stockholders on , 2008. | |
Q. | What do I need to do now? | |
A. | We urge you to read carefully and consider all of the information contained in this proxy statement, including Annexes A, B and C, to fully understand how the acquisition will affect you as a stockholder of General Finance. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card. | |
Q. | How do I vote? | |
A. | If you are a holder of record of our common stock, you may vote in person at the special meeting or by submitting the proxy card included in this statement for the special meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you must provide the record holder of your shares with instructions on how to vote them by completing the enclosed voting instruction form and returning it in the postage-paid envelope included. “Street Name” holders may also vote via telephone or internet by following the instruction on your enclosed voting instruction form. | |
Q. | Is there a deadline for submitting my proxy? | |
A. | Yes. Proxies must be received prior to the voting at the special meeting. Any proxies or other votes received after this time will not be counted in determining whether the acquisition and issuance of shares of restricted General Finance common stock has been approved. | |
Q. | If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me? | |
A. | No. Your broker, bank or nominee cannot vote your shares unless you provide voting instructions in accordance with the information and procedures provided to you by your broker, bank or nominee. | |
Q. | What will happen if I abstain from voting or fail to vote? | |
A. | Under Delaware law, we are allowed to complete the Pac-Van acquisition if it is approved by the affirmative vote of the holders of a majority of the shares of our common stock present and entitled to vote with respect to the acquisition. Abstentions and broker non-votes will have the same effect as a vote against approval of the acquisition. | |
Q. | Can I change my vote or revoke my proxy after I have mailed my signed proxy form. | |
A. | Yes. To change your vote, you may send a later-dated, signed proxy card to our address set forth in this proxy statement so that it is received prior to the voting at the special meeting or, if you are a record holder, attend the special meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to us prior to the voting at the special meeting. | |
Q. | What should I do if I receive more than one set of proxy materials? |
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A. | You may receive more than one set of proxy materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to vote all of your shares. | |
Q. | Who can help answer my questions? | |
A. | If you have questions about the acquisition, or if you need additional copies of this proxy statement or the enclosed proxy card, you should contact: |
John O. Johnson Chief Operating Officer General Finance Corporation 39 East Union Street Pasadena, California 91103 Telephone:(626) 584-9722 extension 1009 | OR | MacKenzie Partners, Inc. 105 Madison Avenue New York, New York 10016 Telephone: (800) 322-2885 or (212) 929-5500 (call collect) |
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• | pay up to $21.5 million in cash; | |
• | assume approximately $107 million of Pac-Van’s outstanding indebtedness; | |
• | issue a $1.5 million senior unsecured subordinated note; and | |
• | issue the Shares. |
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• | reviewed certain internal financial information relating to the business and financial prospects of Pac-Van, including financial projections provided by Pac-Van’s management that were not publicly available; | |
• | received a presentation from Theodore M. Mourouzis, the President of Pac-Van, concerning its business and financial prospects; | |
• | reviewed drafts of the Merger Agreement and certain other agreements related thereto; and | |
• | considered such other information as our special committee and management deemed appropriate. |
• | the inclusion of customary representations and warranties of the sellers for our benefit; | |
• | the maximum amount of indebtedness that General Finance and its subsidiaries would be required to assume under the Merger Agreement; | |
• | the value of the shares of restricted General Finance common stock that would be issued pursuant to the Merger Agreement; and | |
• | the amount of working capital of Pac-Van at the closing of the Merger. |
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• | approval of the Merger by the holders of a majority of the outstanding shares of General Finance common stock; | |
• | Pac-Van and the lenders whose consents are sufficient to amend Pac-Van’s Credit Facility shall have entered into amendments to the Credit Facility which consent to the Merger, increase the amount of the annual management fee to $1.5 million that may be paid by Pac-Van to General Finance and increase the amount of lender’s commitments by $30 million under the Credit Facility; | |
• | Pac-Van and Laminar shall have entered into an amendment and a consent which permits the Merger, the revised terms of the Credit Facility and, subject to customary restrictions and subordination provisions, the payment of the $1.5 million annual management fee by Pac-Van to General Finance; | |
• | the representations and warranties of Pac-Van shall be true and correct in all material respects, subject to certain exceptions for litigation and compliance with law; and | |
• | since December 31, 2007 there shall not have been any material adverse change in the financial condition, operating, profits, backlog, assets, liabilities, operations, business prospects, applicable regulations, employee relations, or customer or supplier relations of Pac-Van. |
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• | Ronald F. Valenta, our President, Chief Executive Officer, and a member of our board of directors, beneficially owns approximately 18.1% of the outstanding common stock of General Finance. Mr. Valenta owns approximately 34.5% of the voting common stock of MOAC. | |
• | If the acquisition of Pac-Van is completed, Mr. Valenta would receive approximately $17.5 million upon the consummation of the Merger consisting of approximately $3.7 million in cash and approximately $13.8 million of shares or 1,026,700 shares of restricted General Finance common stock, valued at $7.50 per share for purposes of the Merger. | |
• | Ronald L. Havner, Jr. will be appointed as a director of General Finance. | |
• | All of our current officers and directors will continue to serve as such following the acquisition. In addition, Theodore M. Mourouzis, the President of Pac-Van, will continue to serve as the President of Pac-Van, Inc. |
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Mr. Mourouzis receives a base salary of $250,000 and is eligible to receive an annual bonus based upon the achievement of certain performance indicators. |
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Predecessor | Successor | |||||||||||||||||||||||||||||||
Six | Nine | |||||||||||||||||||||||||||||||
Months | Months | Period from | Nine Months | |||||||||||||||||||||||||||||
Year Ended | Ended | Year Ended | Ended | July 1, to | Ended | |||||||||||||||||||||||||||
December 31, | June 30, | March 31, | September 13, | March 31, | ||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2007 | 2007 | 2008 | |||||||||||||||||||||||||
(In thousands of dollars) | (Unaudited) | |||||||||||||||||||||||||||||||
Sale of containers | $ | 16,947 | $ | 26,141 | $ | 13,563 | $ | 34,473 | $ | 52,929 | $ | 37,441 | $ | 10,944 | $ | 45,277 | ||||||||||||||||
Leasing of containers | 8,540 | 12,351 | 7,224 | 15,921 | 21,483 | 15,995 | 4,915 | 17,624 | ||||||||||||||||||||||||
25,487 | 38,492 | 20,787 | 50,394 | 74,412 | 53,436 | 15,859 | 62,901 | |||||||||||||||||||||||||
Operating income | 1,447 | 2,926 | 560 | 2,412 | 4,672 | 1,694 | 1,530 | 6,715 | ||||||||||||||||||||||||
Other income (expense), net | 1,596 | (2,242 | ) | (662 | ) | (2,626 | ) | (3,870 | ) | (2,756 | ) | (1,062 | ) | (971 | ) | |||||||||||||||||
Income (loss) before provision for income taxes and minority interest | 3,043 | 684 | (102 | ) | (214 | ) | 802 | (1,062 | ) | 468 | 5,744 | |||||||||||||||||||||
Net income (loss) | 2,244 | 284 | (177 | ) | (428 | ) | 312 | (1,923 | ) | 288 | 3,553 |
Predecessor | Successor | |||||||||||||||||||||||
December 31, | June 30, | March 31, | ||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||||||||||||||||||
(In thousands of dollars) | (Unaudited) | |||||||||||||||||||||||
Trade and other receivables, net | $ | 3,901 | $ | 5,479 | $ | 6,002 | $ | 7,451 | $ | 13,322 | $ | 20,088 | ||||||||||||
Inventories | 2,908 | 1,669 | 3,066 | 5,460 | 5,472 | 20,660 | ||||||||||||||||||
Container for lease fleet, net | 13,080 | 17,511 | 19,644 | 27,773 | 40,928 | 71,986 | ||||||||||||||||||
Total assets | 24,953 | 30,728 | 35,930 | 47,903 | 68,788 | 179,982 | ||||||||||||||||||
Total current liabilities | 9,009 | 11,070 | 8,997 | 16,580 | 20,859 | 30,159 | ||||||||||||||||||
Long-term debt and obligations, net | 11,432 | 16,081 | 22,993 | 27,155 | 33,811 | 70,968 | ||||||||||||||||||
Net assets | 4,322 | 3,165 | 3,586 | 3,018 | 13,040 | 68,855 |
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Predecessor | Successor | |||||||||||||||||||||||||||||||
January 1, | August 2, | |||||||||||||||||||||||||||||||
2006 to | 2006 to | Year Ended | Three Months | |||||||||||||||||||||||||||||
Year Ended December 31, | August 1, | December 31, | December 31, | Ended March 31, | ||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2006 | 2007 | 2007 | 2008 | |||||||||||||||||||||||||
(In thousands of dollars) | (Unaudited) | |||||||||||||||||||||||||||||||
Sales of equipment | $ | 9,498 | $ | 14,682 | $ | 18,848 | $ | 11,053 | $ | 11,262 | $ | 20,220 | $ | 4,648 | $ | 4,124 | ||||||||||||||||
Leasing revenues | 25,943 | 26,769 | 32,158 | 22,270 | 17,605 | 47,035 | 10,337 | 11,996 | ||||||||||||||||||||||||
35,441 | 41,451 | 51,006 | 33,323 | 28,867 | 67,255 | 14,985 | 16,120 | |||||||||||||||||||||||||
Operating income | 4,632 | 4,975 | 7,906 | 6,705 | 5,292 | 15,721 | 3,463 | 3,570 | ||||||||||||||||||||||||
Other expense, net | (2,721 | ) | (2,478 | ) | (2,672 | ) | (1,761 | ) | (3,164 | ) | (8,425 | ) | (2,001 | ) | (2,090 | ) | ||||||||||||||||
Income before provision for income taxes | 1,911 | 2,497 | 5,234 | 4,944 | 2,128 | 7,296 | 1,462 | 1,480 | ||||||||||||||||||||||||
Net income | 1,141 | 1,499 | 3,155 | 2,987 | 1,297 | 4,030 | 831 | 895 |
Predecessor | Successor | |||||||||||||||||||||||
December 31, | March 31, | |||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||||||||||||||||||
(In thousands of dollars) | (Unaudited) | |||||||||||||||||||||||
Accounts receivables, net | $ | 4,809 | $ | 6,379 | $ | 8,544 | $ | 9,409 | $ | 11,846 | $ | 10,565 | ||||||||||||
Rental inventory and fleet, net | 60,491 | 54,102 | 59,115 | 73,668 | 94,709 | 100,773 | ||||||||||||||||||
Total assets | 58,942 | 61,816 | 69,385 | 128,985 | 151,061 | 156,305 | ||||||||||||||||||
Total current liabilities | 5,934 | 7,026 | 10,016 | 13,373 | 14,999 | 14,473 | ||||||||||||||||||
Long-term debt and | ||||||||||||||||||||||||
obligations, net | 38,922 | 38,272 | 37,622 | 80,071 | 93,239 | 97,538 | ||||||||||||||||||
Net assets | 9,002 | 10,728 | 13,976 | 23,977 | 28,006 | 28,901 |
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Year Ended | Nine Months Ended | |||||||
June 30, 2007 | March 31, 2008 | |||||||
(In thousands, except per share data) | ||||||||
Pro Forma Statement of Operations Data: | ||||||||
Revenues | $ | 140,268 | $ | 130,826 | ||||
Total operating expenses | 127,955 | 111,110 | ||||||
Operating income | 12,313 | 19,716 | ||||||
Net income (loss) | (2,811 | ) | 4,994 | |||||
Earnings (loss) per share: | ||||||||
Basic | $ | (0.16 | ) | $ | 0.28 | |||
Diluted | (0.16 | ) | 0.26 | |||||
As of | ||||
March 31, 2008 | ||||
(In thousands, except | ||||
per share data) | ||||
Pro Forma Balance Sheet Data: | ||||
Lease fleet, net | $ | 170,224 | ||
Total assets | 367,628 | |||
Total long-term debt and obligations | 187,745 | |||
Minority interest | 8,762 | |||
Stockholders’ equity | 118,237 | |||
Book value per share | $ | 6.63 | ||
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RELATED STOCKHOLDER MATTERS
Units | Common Stock | Warrants | ||||||||||||||||||||||
High | Low | High | Low | High | Low | |||||||||||||||||||
FY 2009: | ||||||||||||||||||||||||
First Quarter (through August 1, 2008) | $ | 7.35 | $ | 5.90 | $ | 6.40 | $ | 4.90 | $ | 1.05 | $ | 0.82 | ||||||||||||
FY 2008: | ||||||||||||||||||||||||
Fourth Quarter | $ | 9.05 | $ | 6.15 | $ | 7.54 | $ | 5.44 | $ | 1.90 | $ | 0.91 | ||||||||||||
Third Quarter | $ | 12.15 | $ | 8.50 | $ | 9.05 | $ | 7.00 | $ | 3.24 | $ | 1.55 | ||||||||||||
Second Quarter | $ | 13.70 | $ | 10.00 | $ | 9.89 | $ | 7.90 | $ | 4.05 | $ | 2.20 | ||||||||||||
First Quarter | $ | 10.05 | $ | 8.80 | $ | 8.00 | $ | 7.43 | $ | 2.20 | $ | 1.60 | ||||||||||||
FY 2007: | ||||||||||||||||||||||||
Fourth Quarter | $ | 9.75 | $ | 9.00 | $ | 7.95 | $ | 7.56 | $ | 1.96 | $ | 1.45 | ||||||||||||
Third Quarter | $ | 9.60 | $ | 8.50 | $ | 7.95 | $ | 7.46 | $ | 1.80 | $ | 1.10 | ||||||||||||
Second Quarter | $ | 8.00 | $ | 7.81 | $ | 7.70 | $ | 7.22 | $ | 1.15 | $ | 0.62 | ||||||||||||
First Quarter | $ | 8.45 | $ | 7.75 | $ | 7.36 | $ | 7.22 | $ | 0.85 | $ | 0.63 |
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March 31, 2008 | ||||||||
Actual | Pro Forma | |||||||
(Unaudited - in thousands) | ||||||||
Cash and cash equivalents | $ | 1,169 | $ | 1,512 | ||||
Long-term debt and obligations: | ||||||||
ANZ senior secured credit facility(d) | $ | 63,932 | $ | 75,030 | ||||
Pac-Van Credit Facility(a) | — | 82,000 | ||||||
Capital lease obligations | 478 | 478 | ||||||
13.5% secured subordinated promissory note(d) | 15,637 | 21,137 | ||||||
13.0% Subordinated Debt(a) | — | 25,000 | ||||||
8.0% Note(b) | — | 1,500 | ||||||
Total long-term debt and obligations | 80,047 | 205,145 | ||||||
Minority interest | 8,762 | 8,762 | ||||||
Stockholders’ equity(c)(e) | 68,855 | 118,237 | ||||||
Total capitalization | $ | 157,664 | $ | 332,144 | ||||
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• | dividends on, and redemptions and repurchases of, capital stock, | |
• | liens and sale-leaseback transactions, | |
• | loans and investments, | |
• | debt and hedging arrangements, |
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• | mergers, acquisitions and asset sales, | |
• | transactions with affiliates, and | |
• | changes in business activities conducted by us and our subsidiaries. |
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• | unanimously determined the Merger Agreements, the Merger and the issuance of the Shares is fair to, and in the best interests of, General Finance and its stockholders; | |
• | has unanimously approved the Merger Agreement, the Merger and the issuance of Shares; and | |
• | recommends that our common stockholders vote “FOR” approval of the acquisition. |
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• | You can vote by completing, dating, signing and returning the enclosed proxy card. If you vote by proxy card, the proxy holders whose names are listed on the proxy card will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by our board of directors “FOR” the approval of the acquisition and the other proposal described in this proxy statement; and | |
• | You can attend the special meeting and vote in person. We will give you a ballot when you arrive. However, if your shares are held in the name of your broker, bank or another nominee, you must get a proxy from the broker, bank or other nominee. That is the only way we can be sure that the broker, bank or nominee has not already voted your shares. |
• | You may send us another proxy card with a later date; | |
• | You may notify John O. Johnson, our Chief Operating Officer, in writing before the special meeting that you revoke your proxy; or | |
• | You may attend the special meeting, revoke your proxy and vote in person, as indicated above. |
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GENERAL FINANCE CORPORATION COMMON STOCK AT THE SPECIAL MEETING
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• | The opportunity to enter and participate in the growth of the largest portable services market in the world with an experienced management team while expanding into the mobile office and modular building sales and leasing businesses. | |
• | The Merger leverages the existing General Finance holding company overhead cost structure; | |
• | The increased size of General Finance following the completion of the Merger should provide better access for General Finance to the capital markets; | |
• | The Merger may improve the predictability of future results because the overall General Finance revenue mix of leasing versus sales will be positively changed by the addition of Pac-Van; | |
• | The Merger will reduce the exposure of General Finance to fluctuations in the Australian Dollar; | |
• | The addition of a highly qualified new board member with extensive public company experience would enhance the development of General Finance’s strategic planning; | |
• | The Merger is expected to be accretive to General Finance’s earnings per share in 2009, relative to publicly available research analysts’ consensus earnings per share estimates for this year, excluding synergies and integration costs; | |
• | The Merger was structured to maintain a strong balance sheet with sufficient liquidity; | |
• | General Finance’s expected post-merger debt would be manageable. The Board of Directors based this conclusion on an analysis of the expected post merger debt and the expected EBITDA for the combined post merger company as reflected in the financial forecasts it considered in evaluating the merger; and | |
• | The opinion of RBC to the special committee dated July 24, 2008 as to the fairness, from a financial point of view and as of such date, to General Finance of the aggregate merger consideration (which representatives of General Finance directed RBC to assume was $52.6 million) to be paid by General Finance (the full text of RBC’s written opinion is set forth in Annex B to this Proxy Statement), as well as the financial analyses performed by RBC in connection with its opinion and reviewed with the special committee, as more fully described in “The Merger-Opinion of the Special Committee’s Financial Advisor,” beginning on Page 36. |
• | the risks and costs to us if the Merger is not completed, including the diversion of management and employee attention and the loss of business opportunities that might otherwise have been pursued; | |
• | the risk that holders of General Finance common stock may fail to approve the Merger and the issuance of the restricted stock; |
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• | the risk that we may fail to realize the anticipated benefits of the Merger; | |
• | the risk that the integration process could adversely impact our ongoing operations; | |
• | the risk of a downturn in the U.S. economy and the impact on the results of operations of Pac-Van; | |
• | the risk of weakening U.S. credit markets and the impact on the ability of Pac-Van to secure adequate credit facilities and borrowings; | |
• | the risks and costs associated with the additional indebtedness incurred in connection with the Merger and the adverse impact such additional indebtedness could have on our ability to operate our business; | |
• | The risks that the Merger would not qualify as a tax-free “reorganization” and that General Finance would be required to pay the taxes resulting from the consummation of the Merger, as provided under the Merger Agreement; | |
• | The risks associated with the concentration of ownership of General Finance common stock in Messrs. Havner and Valenta; and | |
• | the fees and expenses associated with completing the Merger in an amount of at least $1 million. |
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• | reviewing financial terms of a draft dated July 24, 2008 of the Merger Agreement; | |
• | reviewing and analyzing publicly available financial and other data with respect to General Finance and other relevant historical operating data relating to General Finance and Pac-Van made available to RBC from published sources in the case of General Finance or from internal records of General Finance and Pac-Van, respectively; | |
• | reviewing financial projections and forecasts of General Finance prepared by General Finance’s management and financial projections and forecasts of Pac-Van prepared byPac-Van’s management; | |
• | conducting discussions with members of the senior managements of General Finance and Pac-Van with respect to the business prospects and financial outlook of General Finance and Pac-Van as standalone entities as well as the strategic rationale and potential benefits of the Merger; | |
• | reviewing the reported prices and trading activity for General Finance common stock; and | |
• | performing other studies and analyses as RBC deemed appropriate. |
• | RBC performed a financial analysis of each of General Finance and Pac-Van as a standalone entity using selected companies analyses and, in the case of Pac-Van, a selected precedent transactions analysis; and | |
• | RBC performed a pro forma combination analysis, determining the potential financial impact of the merger on the projected 2009 earnings per share, as well as other selected historical and projected metrics, of General Finance. |
• | the aggregate cash consideration payable by General Finance in the Merger of $21.1 million; | |
• | the implied aggregate value of the 4,000,000 shares of General Finance common stock issuable in the merger of $30.0 million based on the $7.50 stated value per share of General Finance common stock provided for in the Merger Agreement; and | |
• | the principal amount of the promissory note of $1.5 million. |
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• | Cavco Industries, Inc. | |
• | Champion Enterprises, Inc. | |
• | McGrath RentCorp | |
• | Mobile Mini, Inc. | |
• | Nobility Homes, Inc. | |
• | Nomad Building Solutions Limited |
Implied Equity Reference | Implied Aggregate Merger | |||
Ranges for Pac-Van | Consideration Value | |||
LTM (3/31/08) EBITDA | $29.4 million - $129.3 million | $52.6 million | ||
LTM (6/30/08) EBITDA | $23.7 million - $164.8 million | |||
FTM (6/30/09) EBITDA | $0.0 - $56.7 million |
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Date Announced | Acquiror | Target | ||
• 2/2008 | • Mobile Mini, Inc. | • Mobile Storage Group, Inc. | ||
• 11/2007 | • First Atlantic Capital, Ltd. | • Sprint Industrial Holdings LLC | ||
• 7/2007 | • Ristretto Group S.a.r.l | • Williams Scotsman International, Inc. | ||
• 4/2007 | • Odyssey Investment Partners, LLC | • NES Rentals Holdings Inc. (Tank Rental Division) | ||
• 3/2007 | • Williams Scotsman International, Inc. | • Hawaii Modular Space, Inc. | ||
• 1/2007 | • Kungsleden AB | • Skanska AB (Nordic Modular Group) | ||
• 9/2006 | • General Finance Corporation | • Royal Wolf Trading Australia Pty Ltd | ||
• 8/2006 | • Williams Scotsman International, Inc. | • Wiron Construcciones Modulares, SA | ||
• 7/2006 | • Welsh, Carson, Anderson & Stowe X, L.P. | • Mobile Storage Group, Inc. | ||
• 3/2006 | • Mobile Mini, Inc. | • Royal Wolf Portable Storage, Inc. | ||
• 1/2006 | • J.P. Morgan Partners Asia | • Waco International Limited | ||
• 11/2005 | • 3i Group Plc | • Skanska Modul AB (Nordic Modular Group) | ||
• 10/2005 | • Mobile Mini, Inc. | • A-One Storage, LLC |
Implied Equity Reference | Implied Aggregate Merger | |
Range for Pac-Van | Consideration Value | |
$65.1 million - $136.0 million | $52.6 million |
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Stated Value of | ||||
Implied per Share Equity Reference | General Finance Common | |||
Ranges for General Finance | Stock in Merger Agreement | |||
FYE (6/30/08) EBITDA | $4.74 - $15.12 | $7.50 | ||
FYE (6/30/09) EBITDA | $4.80 - $10.67 |
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• | corporate authorization to execute, deliver and perform the Merger Agreement, and the enforceability of the Merger Agreement; | |
• | absence of conflicts with, or violations of, organizational documents, applicable law or other obligations as a result of the execution, delivery and consummation of the transactions contemplated by the Merger Agreement; | |
• | due organization and good standing; | |
• | capitalization; | |
• | due organization, good standing and capitalization of MOAC and Pac-Van, Inc.; | |
• | accuracy of information to be provided by Pac-Van for inclusion in this proxy statement; | |
• | accuracy of selected financial statements; | |
• | absence of certain undisclosed liabilities; | |
• | accuracy of minute books; |
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• | title and condition of tangible personal property; | |
• | owned and leased real properties; | |
• | material contracts; | |
• | litigation; | |
• | tax matters; | |
• | insurance; | |
• | intellectual property matters; | |
• | compliance with laws; | |
• | relationship with customers; | |
• | labor and employment relations; | |
• | employee benefit plan matters; | |
• | environmental matters; | |
• | affiliate transactions; | |
• | obtaining of and compliance with permits; | |
• | absence of any material adverse effect and certain other changes or events; | |
• | brokers’ or finders’ fees; | |
• | absence of certain changes in the business; and | |
• | scope of representations and warranties and disclaimer of implied and other representations and warranties in the Merger Agreement and related documents. |
• | corporate authorization to execute, deliver and perform the Merger Agreement, and the enforceability of the Merger Agreement; | |
• | absence of conflicts with, or violations of, organizational documents, applicable law or other obligations as a result of the execution, delivery and consummation of the transactions contemplated by the Merger Agreement; | |
• | due organization and good standing; | |
• | capitalization; | |
• | due organization and good standing of General Finance and GFNA; | |
• | accuracy of information to be provided by General Finance for inclusion in this proxy statement; | |
• | accuracy of selected financial statements; | |
• | absence of certain undisclosed liabilities; | |
• | litigation; | |
• | tax matters; | |
• | valid issuance of the Shares in the Merger; | |
• | compliance with laws; | |
• | employee benefit plan matters; |
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• | absence of certain changes in the business; | |
• | brokers’ or finders’ fees; and | |
• | scope of representations and warranties and disclaimer of implied and other representations and warranties in the Merger Agreement and related documents. |
• | amending the certificate of incorporation or bylaws of MOAC or Pac-Van, Inc.; | |
• | declaring, paying or setting aside any dividend or other distribution; |
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• | increasing the compensation payable (including wages, salaries and bonuses or any other renumeration) or to become payable to any employee in excess of increases consistent with past practice which shall not exceed 4% in any event, other than pursuant to existing contracts or applicable law; | |
• | adopt or enter into any new, or amend or otherwise increase or terminate, or accelerate the payment or vesting of the amounts payable or to become payable under any existing, bonus, incentive compensation, deferred compensation, severance, profit sharing, stock option, stock purchase, insurance, pension, retirement or other employee benefit plan, agreement or arrangement, provided that MOAC may accelerate the vesting of any stock options granted in 2006; | |
• | hire any new officers, executives or employees at or above the level of vice president (except to replace an officer, executive or employee) or terminate the employment of any officers, executives or employees at or above the level of vice president (except for cause), or promote any officers, executives or employees to, or at or above the level of, vice president (except to replace an officer, executive or employee); | |
• | incurring, assuming or modifying any indebtedness (other than revolving indebtedness incurred pursuant to the existing Credit Facility of Pac-Van up to $86 million or the Subordinated Debt up to $25 million original principal), in each case, in the ordinary course of business consistent with past practice; | |
• | subjecting any material property or assets or any capital stock, or other equity or voting interests to any lien other than permitted liens; | |
• | selling transfering, leasing, licensing or otherwise disposing any assets or properties other than sales of assets in the ordinary course of business consistent with past practice; | |
• | acquire or merge or consolidate with any business or entity, by merger or consolidation, or purchase of assets or equity interests of any person or persons with a purchase price in excess of $10 million, or by any other manner, in a single transaction or a series of related transactions; | |
• | making of any capital expenditure or commitment thereto other than in the ordinary course of business consistent with past practice and in accordance with expenditures contemplated by the Pac-Van 2008 capital expenditures budget; | |
• | writing-off as uncollectible any notes or accounts receivable, except write-offs in the ordinary course of business consistent with past practice; | |
• | canceling or waiving any claims or rights of substantial value; | |
• | making any change any elections with respect to taxes, amend any tax returns, change any annual tax accounting period or adopt or change any tax accounting method or any other similar action other than those required by GAAP or by applicable laws; | |
• | paying, discharging, settling or satisfying any claims, liabilities or obligations other than in the ordinary course consistent with past practices; | |
• | adopting a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or material reorganization, other than the Merger; | |
• | entering into any joint venture, partnership or other similar arrangement; | |
• | entering into a “Company Material Contract,” as defined in the Merger Agreement, which includes contracts with an obligation in excess of $25,000 and that is not cancellable without penalty on 180 days’ or less notice or any contract with a restriction onPac-Van’s ability to compete or provide products and services; | |
• | settling or compromising any claim, legal action or other similar matter; or | |
• | entering into any material transaction with any officer, director, stockholder or affiliate of MOAC. |
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• | no action before any governmental authority shall have been commenced, no governmental authority shall have issued any order, decree or ruling and no action by any governmental authority or any other person shall have been filed which seeks to restrain, enjoin or rescind the Merger or which seeks damages in connection with the Merger; | |
• | the parties shall reasonably believe that the Merger shall qualify as a “tax-free reorganization” under Section 368 of the Internal Revenue Code of 1986, as amended, and that the Merger Agreement shall constitute a “plan of reorganization” within the meaning of the regulations promulgated under Section 368; | |
• | Pac-Van and the lenders under the Credit Facility shall have entered into amendments to the agreements governing the Credit Facility which (i) consent to the Merger, (ii) consent to the “change of control” |
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contemplated by the Merger and the transactions contemplated by the Merger Agreement, (iii) increase the “permitted payments” to permit the payment of an annual management fee of $1.5 million to General Finance and to permit the payment of all sums owed under the Note, (iv) provide for a $30 million increase in commitments from the lenders under the Credit Facility, (v) establish June 30 as the fiscal year end ofPac-Van and its affiliates, (vi) shall not require Pac-Van or any other party to pay to the lenders under the Credit Facility or any other party fees, costs or expenses except as agreed in writing by Pac-Van and such lenders prior to the date of the Merger Agreement and (vii) other than amendments described above, shall not amend or alter the terms and conditions governing the Credit Facility as of the date of the Merger Agreement; |
• | All of the parties to the agreements governing the Pac-Van Subordinated Debt shall have entered into amendments to such agreements which (i) permit the increase of the lenders’ commitments under the Credit Facility described above, (ii) consent to the “change of control” contemplated by the Merger and the transactions contemplated by the Merger Agreement, (iii) permit the payment of an annual management fee of $1.5 million to General Finance and of all sums owed under the Note, (iv) establish June 30 as the fiscal year end of Pac-Van and the Affiliates of Pac-Van, (v) shall not require Pac-Van or any other party to pay to Laminar or any other party fees, costs or expenses except as agreed in writing by Pac-Van and Laminar prior to the date of this Agreement and (vi) other than changes set forth above, shall not amend or alter the terms and conditions governing the Subordinated Debt. |
• | subject to certain exceptions, the representations and warranties of Pac-Van shall be true and correct in all respects on and as of the closing date with the same effect as though such representations and warranties had been made on and as of such date; | |
• | Pac-Van shall have performed in all material respects its obligations under the Merger Agreement prior to the consummation of the Merger; | |
• | Pac-Van shall have furnished General Finance with a certificate dated on the effective date of the Merger to the effect that certain conditions of General Finance to consummate the Merger have been satisfied; | |
• | any filing with, or consent of, any governmental authority or third party necessary to complete the Merger in compliance with applicable law and all contracts of Pac-Van shall have been made or obtained; | |
• | at a meeting of the stockholders of General Finance duly called and held for such purpose, the holders of a majority of the General Finance common stock present and entitled to vote at such meeting shall have approved by affirmative vote the proposals set forth in this proxy; | |
• | the ratio (expressed as a percentage) equal to the aggregate number of MOAC common stock held by persons who have perfected their appraisal rights pursuant to Delaware General Corporation Law divided by the aggregate number of issued and outstanding shares of MOAC common stock immediately prior to the closing of the Merger shall not be greater than 10%; | |
• | Pac-Van shall have delivered to General Finance evidence reasonably satisfactory to General Finance of the resignation of all Pac-Van directors effective as of the closing of the Merger; | |
• | since December 31, 2007, there shall not have been any material adverse change in the financial condition, operating profits, backlog, assets, liabilities, operations, business prospects, applicable regulations, employee relations or customer or supplier relations of Pac-Van; | |
• | Pac-Van shall have delivered to General Finance a copy of the resolutions adopted by the board of directors of MOAC and Pac-Van, Inc. approving this Merger Agreement and the Merger, certified by their respective secretaries; | |
• | At the closing of the Merger, neither MOAC nor Pac-Van, Inc. shall have any indebtedness except as disclosed pursuant to or permitted by the Merger Agreement; |
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• | General Finance shall have received amendments, satisfactory to General Finance, of any agreements between Pac-Van and the employees of Pac-Van which contains provisions triggered by the consummation of the Merger or which would terminate upon the consummation of the Merger; | |
• | Each MOAC stockholder who will receive the Shares as part of the Merger Consideration and General Finance shall have executed and delivered the stockholders agreement in the form of Annex A attached hereto; | |
• | Theodore M. Mourouzis and Pac-Van, Inc. shall have entered into an amendment to his employment agreement which extends its term by one year to July 31, 2010; | |
• | All MOAC stock options shall have been exercised or terminated pursuant to this Agreement; and | |
• | Pac-Van shall have current assets, including cash, minus current liabilities, including unearned revenue upon the closing of the Merger, not more negative than $4 million less the amount of accounts payable associated with each modular building project sale greater than $500,000 that has not been invoiced as of the Closing. |
• | subject to certain exceptions, the representations and warranties of General Finance and GFNA shall be true and accurate as of the date of the Merger Agreement and the closing of the Merger as if made at and as of such time; | |
• | each of General Finance and GFNA shall have performed in all material respects all of the respective obligations hereunder required to be performed by General Finance and GFNA, as the case may be, at or prior to the closing of the Merger; | |
• | General Finance shall have furnished Pac-Van with a certificate dated as of the closing of the Merger signed on its behalf by an officer to the effect that certain conditions of the closing of the Merger have been satisfied; | |
• | The board of directors of General Finance shall have elected Ronald L. Havner, Jr. to serve on the board of directors of General Finance as a class C director (who would stand for reelection at the General Finance annual stockholder meeting in 2009) effective immediately after the closing of the Merger and General Finance shall have entered into an indemnification agreement with Mr. Havner substantially similar to the agreements with existing directors of General Finance; | |
• | the lenders under the Subordinated Debt shall agree that no consent, closing or similar fees shall be payable from Pac-Van or General Finance to such lenders in connection with the Merger and Pac-Van shall be responsible for reimbursing the lenders for reasonable legal fees and expenses incurred by lenders in connection with the Merger in an amount not to exceed $50,000; | |
• | each stockholder who will receive shares of General Finance as part of the Merger Consideration and General Finance shall have entered into a stockholders agreement in the form of Annex B attached hereto; | |
• | since December 31, 2007, there shall not have been any material adverse change in the financial condition or results of operations, assets or liabilities of General Finance; and | |
• | General Finance and GFNA shall have delivered to MOAC stockholders an excerpt of the resolutions adopted by the Board of Directors of GFNA and the special committee of the board of directors of General Finance approving the Merger Agreement and the Merger, certified by their respective secretaries. |
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• | by mutual written consent of General Finance and Pac-Van; | |
• | by either General Finance or Pac-Van, if |
• | the merger does not occur on or before November 1, 2008, provided that the right to terminate the Merger Agreement shall not be available to either General Finance or Pac-Van, as the case may be, if its failure to fulfill any obligation under the Merger Agreement shall be the cause of the failure of the closing to occur on or before such date; | |
• | there has been a breach of any representations and warranties or any covenant to be performed by either General Finance or Pac-Van in a manner such that the closing conditions described in “— Conditions to Each Party’s Obligations” and “— Conditions to Obligations of General Finance” or “— Conditions to Obligations of Pac-Van” or, as the case may be, would not be satisfied; | |
• | there shall be any order of any competent authority prohibiting such transactions, which has been entered and become final and non-appealable; or | |
• | by General Finance if a material adverse change in the financial condition of Pac-Van has occurred since December 31, 2007; |
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• | by MOAC if a material adverse change in the financial condition of General Finance has occurred since December 31, 2007; | |
• | the approval of the Merger Agreement, the Merger and the issuance of the Shares to the MOAC stockholders in connection with the Merger by the affirmative vote of the holders of a majority of the outstanding shares of General Finance common stock are not obtained. |
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• | any transfer following such stockholder’s death, to such stockholder’s legal representative, heir or legatee, or any gift during such stockholder’s lifetime to such stockholder’s spouse, children, grandchildren or to a trust or other legal entity for the exclusive benefit of such stockholder or any one or more of the foregoing; and | |
• | any transfer to any affiliate of such stockholder (as long as the permitted transferee agrees in writing to be bound by all the provisions of the stockholders agreement). |
• | acquiring, announcing an intention to acquire, offering or proposing to acquire, soliciting an offer to sell or agree to acquire, or entering into any arrangement or undertaking to acquire, directly or indirectly, by purchase, or otherwise, record or direct or indirect beneficial ownership interest in any equity or debt securities of General Finance or any assets (other than purchases of assets in the ordinary course of business) or other securities of General Finance or any of its subsidiaries; | |
• | making, effecting, initiating, curing or participating in any take-over bid, tender offer, exchange offer, merger, consolidation, business combination, recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction involving General Finance or any of its subsidiaries; | |
• | soliciting, making, effecting, initiating, causing, or participating in any way in, directly or indirectly, any solicitation of proxies or consents from any holders of any securities of the General Finance or any of its subsidiaries or calling or seeking to have called any meeting of stockholders of General Finance or any of its subsidiaries; | |
• | forming, joining or participating in, or otherwise encouraging the formation of, any “group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, or the Exchange Act) with respect to any securities that are not equity securities and debt securities of General Finance or any of its subsidiaries; | |
• | arranging, facilitating, or in any way participating, directly or indirectly, in any financing for the purchase of any securities or assets of General Finance or any of its subsidiaries that are not equity securities and debt securities of General Finance or any of its subsidiaries; or |
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• | acting, directly or indirectly, to seek control or direct the board of directors, stockholders, policies or affairs of General Finance or any of its subsidiaries; soliciting, proposing, seeking to effect or negotiating with any other person with respect to any form of business combination transaction involving General Finance or other extraordinary transaction involving General Finance or any of its subsidiaries; or disclosing an intent, purpose, plan or proposal with respect to General Finance, or any securities or assets of General Finance or any of its subsidiaries that are not equity securities (other than the preferred stock of General Finance and common stock of General Finance issued upon conversion thereof) and debt securities of General Finance or any of its subsidiaries. |
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Cash consideration paid | $ | 20,300 | ||
Fair value of our shares of common stock issued | 28,280 | (1) | ||
Issuance of the Note | 1,500 | |||
Assumption of long-term debt: | ||||
Credit Facility | 82,000 | |||
Subordinated Debt | 25,000 | |||
Total purchase value | $ | 157,080 | ||
(1) | Represents 4,000,000 of our shares of common stock at $7.07 per share at March 31, 2008 |
Current assets | $ | 14,523 | ||
Rental inventory and fleet | 98,238 | |||
Property plant and equipment | 2,151 | |||
Other assets, including intangibles | 8,668 | |||
Goodwill | 64,066 | |||
Current and other liabilities (not including the Note issued and long-term debt assumed) | (30,566 | ) | ||
Total purchase consideration | $ | 157,080 | ||
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At March 31, 2008
Pro Forma | Pro Forma | |||||||||||||||
General Finance | Pac-Van | Adjustments | Combined | |||||||||||||
(In thousands except share data) | ||||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and equivalents | $ | 1,169 | $ | 343 | $ | — | $ | 1,512 | ||||||||
Trade and other receivables | 20,088 | 10,565 | — | 30,653 | ||||||||||||
Inventories | 20,660 | 3,615 | 24,275 | |||||||||||||
Other current assets | — | — | — | — | ||||||||||||
Total current assets | 41,917 | 14,523 | 56,440 | |||||||||||||
Lease fleet, net | 71,986 | 97,158 | 1,080 | (d) | 170,224 | |||||||||||
Property and equipment, net | 4,616 | 2,151 | — | 6,767 | ||||||||||||
Goodwill and intangible assets, net | 59,821 | 41,909 | 5,700 | (d) | 131,991 | |||||||||||
24,561 | (e) | |||||||||||||||
Other assets | 1,642 | 564 | — | 2,206 | ||||||||||||
Total assets | $ | 179,982 | $ | 156,305 | $ | 31,341 | $ | 367,628 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Trade payables and accruals | $ | 19,845 | $ | 7,700 | $ | 700 | (d) | $ | 28,245 | |||||||
Current portion of long-term debt and obligations | 9,079 | — | — | 9,079 | ||||||||||||
Other current liabilities | 1,235 | 6,773 | — | 8,008 | ||||||||||||
Total current liabilities | 30,159 | 14,473 | 700 | 45,332 | ||||||||||||
Long-term debt and obligations, net of current portion | 70,968 | 97,538 | (21,102 | )(a) | 178,666 | |||||||||||
20,300 | (c) | |||||||||||||||
1,500 | (c) | |||||||||||||||
9,462 | (c) | |||||||||||||||
Other long term liabilities and deferred credits | 1,238 | 15,393 | — | 16,631 | ||||||||||||
Total long term liabilities | 72,206 | 112,931 | 10,160 | 195,297 | ||||||||||||
Minority interest | 8,762 | — | — | 8,762 | ||||||||||||
Stockholders’ equity: | ||||||||||||||||
Common stock | 1 | — | — | 1 | ||||||||||||
Additional paid-in capital | 60,344 | 22,680 | 21,102 | (a) | 109,726 | |||||||||||
(22,680 | (b) | |||||||||||||||
28,280 | (c) | |||||||||||||||
Accumulated other comprehensive income | 3,808 | — | — | 3,808 | ||||||||||||
Retained earnings | 4,702 | 6,221 | (6,221 | )(b) | 4,702 | |||||||||||
Total stockholders’ equity | 68,855 | 28,901 | 20,481 | 118,237 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 179,982 | $ | 156,305 | $ | 31,341 | $ | 367,628 | ||||||||
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Nine Months Ended March 31, 2008
Pro Forma | ||||||||||||||||
General | Pro Forma | Pro Forma | ||||||||||||||
Finance | Pac-Van | Adjustments | Combined | |||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
Revenues | $ | 78,760 | $ | 52,066 | $ | — | $ | 130,826 | ||||||||
Costs and expenses | ||||||||||||||||
Cost of sales | 47,223 | 10,451 | — | 57,674 | ||||||||||||
Leasing, selling and general expenses | 17,864 | 25,417 | — | 43,281 | ||||||||||||
Depreciation and amortization | 5,949 | 3,661 | 439 | (b) | 10,155 | |||||||||||
106 | (c) | |||||||||||||||
Operating income (loss) | 7,724 | 12,537 | (545 | ) | 19,716 | |||||||||||
Interest income | 440 | — | — | 440 | ||||||||||||
Interest expense | (5,788 | ) | (6,894 | ) | (659 | )(a) | (13,385 | ) | ||||||||
(44 | )(d) | |||||||||||||||
Other, net | 2,091 | — | — | 2,091 | ||||||||||||
(3,257 | ) | (6,894 | ) | (703 | ) | (10,854 | ) | |||||||||
Income before provision for income taxes and minority interest | 4,467 | 5,643 | (1,248 | ) | 8,862 | |||||||||||
Provision (credit) for income taxes | 1,281 | 2,582 | (281 | )(e) | 3,582 | |||||||||||
Minority interest | 286 | — | — | 286 | ||||||||||||
Net income | $ | 2,900 | $ | 3,061 | $ | (967 | ) | $ | 4,994 | |||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.28 | ||||||||||||||
Diluted | $ | 0.26 | ||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 17,826,052 | (f) | ||||||||||||||
Diluted | 19,219,652 | (f) | ||||||||||||||
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Year Ended June 30, 2007
Pro Forma | ||||||||||||||||
General | Pro Forma | Pro Forma | ||||||||||||||
Finance | Pac-Van | Adjustments | Combined | |||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
Revenues | $ | 74,412 | $ | 65,856 | $ | — | $ | 140,268 | ||||||||
Costs and expenses | ||||||||||||||||
Cost of sales | 46,402 | 16,156 | — | 62,558 | ||||||||||||
Leasing, selling and general expenses | 22,178 | 31,662 | — | 53,840 | ||||||||||||
Depreciation and amortization | 6,558 | 4,355 | 586 | (b) | 11,557 | |||||||||||
58 | (c) | |||||||||||||||
Operating income (loss) | (726 | ) | 13,683 | (644 | ) | 12,313 | ||||||||||
Interest income | 585 | — | — | 585 | ||||||||||||
Interest expense | (7,651 | ) | (7,282 | ) | (2,871 | )(a) | (17,853 | ) | ||||||||
(49 | )(d) | |||||||||||||||
Other, net | 88 | — | — | 88 | ||||||||||||
(6,978 | ) | (7,282 | ) | (2,920 | ) | (17,180 | ) | |||||||||
Income (loss) before provision for income taxes and minority interest | (7,704 | ) | 6,401 | (3,564 | ) | (4,867 | ) | |||||||||
Provision (credit) for income taxes | (2,890 | ) | 2,550 | (913 | )(e) | (1,253 | ) | |||||||||
Minority interest | (803 | ) | — | — | (803 | ) | ||||||||||
Net income (loss) | $ | (4,011 | ) | $ | 3,851 | $ | (2,651 | ) | $ | (2,811 | ) | |||||
Net loss per share: | ||||||||||||||||
Basic | $ | (0.16 | ) | |||||||||||||
Diluted | $ | (0.16 | ) | |||||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 17,826,052 | (f) | ||||||||||||||
Diluted | 17,826,052 | (f) | ||||||||||||||
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(In thousands, except per share data)
For the Nine Months Ended | For the Year Ended | |||||||||||||||
March 31, 2008 | June 30, 2007 | |||||||||||||||
Basic | Diluted | Basic | Diluted | |||||||||||||
Common stock assumed outstanding at beginning of period | 9,690,099 | 9,690,099 | 9,690,099 | 9,690,099 | ||||||||||||
Common stock issued in connection with warrant exercise program | 4,135,953 | 4,135,953 | 4,135,953 | 4,135,953 | ||||||||||||
Common stock issued in connection with the business combination | 4,000,000 | 4,000,000 | 4,000,000 | 4,000,000 | ||||||||||||
Assumed exercise of warrants and stock options | — | 1,393,600 | — | — | (1) | |||||||||||
17,826,052 | 19,219,652 | 17,826,052 | 17,826,052 | |||||||||||||
(1) | As a result of the net loss reflected in the unaudited pro forma condensed combined statement of operations for the year ended June 30, 2007, basic and diluted shares used are the same. |
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GENERAL FINANCE CORPORATION AND ROYAL WOLF
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Nine Months Ended March 31, 2008
General | Pro Forma | Pro Forma | ||||||||||||||
Finance | Royal Wolf | Adjustments | Combined | |||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
Revenues | $ | — | $ | 78,760 | $ | — | $ | 78,760 | ||||||||
Costs and expenses | ||||||||||||||||
Cost of sales | — | 47,223 | — | 47,223 | ||||||||||||
Leasing, selling and general expenses | 1,625 | 16,180 | 59 | (h) | 17,864 | |||||||||||
Depreciation and amortization | 4 | 5,483 | 65 | (b) | 5,949 | |||||||||||
355 | (c) | |||||||||||||||
42 | (d) | |||||||||||||||
Operating income (loss) | (1,629 | ) | 9,874 | (521 | ) | 7,724 | ||||||||||
Interest income | 963 | 245 | (768 | )(f) | 440 | |||||||||||
Interest expense | (45 | ) | (5,287 | ) | (341 | )(a) | (5,788 | ) | ||||||||
(32 | )(e) | |||||||||||||||
(83 | )(g) | |||||||||||||||
Other, net | 1,682 | 409 | — | 2,091 | ||||||||||||
2,600 | (4,633 | ) | (1,224 | ) | (3,257 | ) | ||||||||||
Income before provision for income taxes and minority interest | 971 | 5,241 | (1,745 | ) | 4,467 | |||||||||||
Provision (credit) for income taxes | (370 | ) | 2,387 | (736 | )(i) | 1,281 | ||||||||||
Minority interest | 354 | — | (68 | )(j) | 286 | |||||||||||
Net income | $ | 987 | $ | 2,854 | $ | (941 | ) | $ | 2,900 | |||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.29 | ||||||||||||||
Diluted | $ | 0.26 | ||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 9,690,100 | (k) | ||||||||||||||
Diluted | 11,083,700 | (k) | ||||||||||||||
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Year Ended June 30, 2007
General | Pro Forma | Pro Forma | ||||||||||||||
Finance | Royal Wolf | Adjustments | Combined | |||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
Revenues | $ | — | $ | 74,412 | $ | — | $ | 74,412 | ||||||||
Costs and expenses | ||||||||||||||||
Cost of sales | — | 46,402 | — | 46,402 | ||||||||||||
Leasing, selling and general expenses | 1,125 | 20,761 | 292 | (h) | 22,178 | |||||||||||
Depreciation and amortization | 1 | 2,577 | 1,467 | (b) | 6,558 | |||||||||||
2,031 | (c) | |||||||||||||||
482 | (d) | |||||||||||||||
Operating income (loss) | (1,126 | ) | 4,672 | (4,272 | ) | (726 | ) | |||||||||
Interest income | 2,646 | 413 | (2,474 | )(f) | 585 | |||||||||||
Interest expense | (93 | ) | (4,378 | ) | (2,639 | )(a) | (7,651 | ) | ||||||||
(143 | )(e) | |||||||||||||||
(398 | )(g) | |||||||||||||||
Other, net | (7 | ) | 95 | — | 88 | |||||||||||
2,546 | (3,870 | ) | (5,654 | ) | (6,978 | ) | ||||||||||
Income (loss) before provision for income taxes and minority interest | 1,420 | 802 | (9,926 | ) | (7,704 | ) | ||||||||||
Provision (credit) for income taxes | 565 | 490 | (3,945 | )(i) | (2,890 | ) | ||||||||||
Minority interest | — | — | (803 | )(j) | (803 | ) | ||||||||||
Net income (loss) | $ | 855 | $ | 312 | $ | (5,178 | ) | $ | (4,011 | ) | ||||||
Net loss per share: | ||||||||||||||||
Basic | $ | (0.41 | ) | |||||||||||||
Diluted | $ | (0.41 | ) | |||||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 9,690,100 | (k) | ||||||||||||||
Diluted | 9,690,100 | (k) | ||||||||||||||
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(In thousands, except per share data)
For the Nine Months Ended | For the Year Ended | |||||||||||||||
March 31, 2008 | June 30, 2007 | |||||||||||||||
Basic | Diluted | Basic | Diluted | |||||||||||||
Common stock issued to initial stockholder | 1,875,000 | 1,875,000 | 1,875,000 | 1,875,000 | ||||||||||||
Common stock issued in connection with the IPO | 7,500,000 | 7,500,000 | 7,500,000 | 7,500,000 | ||||||||||||
Common stock issued in connection with underwriters’ over-allotment option | 1,125,000 | 1,125,000 | 1,125,000 | 1,125,000 | ||||||||||||
Common stock converted to cash | (809,900 | ) | (809,900 | ) | (809,900 | ) | (809,900 | ) | ||||||||
Assumed exercise of warrants and stock options | — | 1,393,600 | — | — | ||||||||||||
9,690,100 | 11,083,700 | 9,690,100 | 9,690,100 | |||||||||||||
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF PAC-VAN
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Successor | ||||||||
Three Months Ended | ||||||||
March 31 | ||||||||
2007 | 2008 | |||||||
(In thousands) | ||||||||
Revenues | ||||||||
Sales of equipment | $ | 4,648 | $ | 4,124 | ||||
Leasing | 10,337 | 11,996 | ||||||
14,985 | 16,120 | |||||||
Costs and Expenses | ||||||||
Cost of sales | 3,047 | 2,876 | ||||||
Leasing, selling and general expenses | 7,359 | 8,548 | ||||||
Depreciation and amortization | 1,116 | 1,126 | ||||||
Income from operations | 3,463 | 3,570 | ||||||
Interest expense | 2,001 | 2,090 | ||||||
Income before provision for income taxes | 1,462 | 1,480 | ||||||
Provision for income taxes | 631 | 585 | ||||||
Net income | $ | 831 | $ | 895 | ||||
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Combined | Successor | |||||||
Year Ended | ||||||||
December 31, | ||||||||
2006 | 2007 | |||||||
(In thousands) | ||||||||
Revenues | ||||||||
Sales of equipment | $ | 22,315 | $ | 20,220 | ||||
Leasing | 39,875 | 47,035 | ||||||
62,190 | 67,255 | |||||||
Costs and Expenses | ||||||||
Cost of sales | 16,090 | 13,647 | ||||||
Leasing, selling and general expenses | 30,755 | 32,838 | ||||||
Depreciation and amortization | 3,348 | 5,049 | ||||||
Income from operations | 11,997 | 15,721 | ||||||
Interest expense | 4,925 | 8,425 | ||||||
Income before provision for income taxes | 7,072 | 7,296 | ||||||
Provision for income taxes | 2,788 | 3,266 | ||||||
Net income | $ | 4,284 | $ | 4,030 | ||||
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Predecessor | Combined | |||||||
Year Ended | ||||||||
December 31 | ||||||||
2005 | 2006 | |||||||
(In thousands) | ||||||||
Revenues | ||||||||
Sales of equipment | $ | 18,848 | $ | 22,315 | ||||
Leasing | 32,158 | 39,875 | ||||||
51,006 | 62,190 | |||||||
Costs and Expenses | ||||||||
Cost of sales | 13,832 | 16,090 | ||||||
Leasing, selling and general expenses | 26,894 | 30,755 | ||||||
Depreciation and amortization | 2,374 | 3,348 | ||||||
Income from operations | 7,906 | 11,997 | ||||||
Interest expense | 2,672 | 4,925 | ||||||
Income before provision for income taxes | 5,234 | 7,072 | ||||||
Provision for income taxes | 2,079 | 2,788 | ||||||
Net income | $ | 3,155 | $ | 4,284 | ||||
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Successor | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2007 | 2008 | |||||||
(Unaudited - in thousands) | ||||||||
Income from operations | $ | 3,463 | $ | 3,570 | ||||
Add — depreciation and amortization | 1,116 | 1,126 | ||||||
EBITDA | 4,579 | 4,696 | ||||||
Add — | ||||||||
Stock-based compensation | 39 | 39 | ||||||
Payments to former owners of Pac-Van (predecessor) | 47 | 47 | ||||||
Advisory fee paid to chairman of the board of MOAC | 45 | 45 | ||||||
One-time strategic expenses | — | — | ||||||
Adjusted EBITDA | $ | 4,710 | $ | 4,827 | ||||
Predecessor | Combined | Successor | ||||||||||
Year Ended December 31, | ||||||||||||
2005 | 2006 | 2007 | ||||||||||
(In thousands) | ||||||||||||
Income from operations | $ | 7,906 | $ | 11,997 | $ | 15,721 | ||||||
Add — depreciation and amortization | 2,374 | 3,348 | 5,049 | |||||||||
EBITDA | 10,280 | 15,345 | 20,770 | |||||||||
Add — | ||||||||||||
Stock-based compensation | — | 25 | 154 | |||||||||
Payments to former owners of Pac-Van (predecessor) | 1,372 | 1,016 | 186 | |||||||||
Advisory fee paid to chairman of the board of MOAC | — | 75 | 180 | |||||||||
One-time strategic expenses | 156 | — | — | |||||||||
Adjusted EBITDA | $ | 11,808 | $ | 16,461 | $ | 21,290 | ||||||
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Year Ended | Three Months | |||||||||||||||
December 31, | Ended March 31, | |||||||||||||||
Predecessor | Combined | Successor | ||||||||||||||
2005 | 2006 | 2007 | 2008 | |||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands) | ||||||||||||||||
Net cash provided by operating activities | $ | 8,563 | $ | 12,605 | $ | 12,475 | $ | 3,538 | ||||||||
Net cash used by investing activities | $ | (7,876 | ) | $ | (17,562 | ) | $ | (24,858 | ) | $ | (7,399 | ) | ||||
Net cash provided (used) by financing activities | $ | (650 | ) | $ | (4,443 | ) | $ | 12,371 | $ | 4,150 | ||||||
At December 31, | At March 31, | |||||||||||||||
Predecessor | Combined | Successor | ||||||||||||||
2005 | 2006 | 2007 | 2008 | |||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands) | ||||||||||||||||
Cash | $ | 76 | $ | 65 | $ | 53 | $ | 343 | ||||||||
Long-term debt and obligations | $ | 37,622 | $ | 80,071 | $ | 93,239 | $ | 97,538 | ||||||||
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Payments Due by Period | ||||||||||||||||||||
Less Than | 1-3 | 3-5 | More Than | |||||||||||||||||
Total | 1 Year | Years | Years | 5 Years | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Long-term debt(1) | $ | 92,600 | $ | — | $ | — | $ | 67,600 | $ | 25,000 | ||||||||||
Interest(2) | 38,857 | 8,036 | 16,072 | 14,343 | 406 | |||||||||||||||
Operating leases | 2,352 | 1,010 | 1,295 | 47 | — | |||||||||||||||
Total | $ | 133,809 | $ | 9,046 | $ | 17,367 | $ | 81,990 | $ | 25,406 | ||||||||||
(1) | Principal payments are reflected when contractually required and no early pay-downs are assumed. Long-term debt includes $67.6 million associated with the Credit Facility and $25.0 million related to the Subordinated Debt, but does not include the warrant obligation. | |
(2) | Estimated interest is calculated using the interest rate effective as of December 31, 2007 of (i) 7.08% weighted average interest rate on borrowings under the senior bank credit agreement and (ii) 13.0% on the subordinated note payable. |
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• | Branch Management — 22; | |
• | Sales and Marketing — 38; | |
• | Branch Operations and Administration — 125; | |
• | Corporate Staff — 22; and | |
• | Senior Management — 7. |
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Beneficial Ownership | ||||||||
Number of | Percent of | |||||||
Name | Shares(1) | Class(1) | ||||||
Ronald F. Valenta(2)(3) | 2,605,466 | 18.1 | % | |||||
John O. Johnson(2)(4) | 665,617 | 4.7 | % | |||||
James B. Roszak(2) | 22,500 | (* | ) | |||||
Lawrence Glascott(2) | 22,500 | (* | ) | |||||
Manuel Marrero(2) | 22,500 | (* | ) | |||||
David M. Connell(2) | 22,500 | (* | ) | |||||
Charles E. Barrantes(2)(5) | 90,000 | (* | ) | |||||
Christopher Wilson(2) | 2,000 | (* | ) | |||||
Robert Allan(6) | 800 | (* | ) | |||||
Gilder, Gagnon, Howe & Co. LLC(7) | 2,294,424 | 16.6 | % | |||||
Olowalu Holdings, LLC(8) | 1,076,514 | 7.8 | % | |||||
2863 S. Western Avenue Palos Verdes, California 90275 | ||||||||
Ronald L. Havner, Jr.(9) | 718,500 | 5.2 | % | |||||
LeeAnn R. Havner The Havner Family Trust | ||||||||
c/o Karl Swaidan Hahn & Hahn LLP 301 East Colorado Boulevard, Suite 900 Pasadena, California 91101 | ||||||||
Jonathan Gallen(10) | 1,905,000 | 13.2 | % | |||||
299 Park Avenue, 17th Floor New York, New York 10171 | ||||||||
Neil Gagnon(11) | 1,797,012 | 12.6 | % | |||||
1370 Avenue of the Americas, Suite 2400 New York, New York 10019 | ||||||||
Jack Silver(12) | 2,503,200 | 15.3 | % | |||||
SIAR Capital LLC 660 Madison Avenue New York, New York 10021 | ||||||||
Brencourt Advisors, LLC(13) | 691,200 | 5.0 | % | |||||
600 Lexington Avenue 8th Floor New York, NY 10022 | ||||||||
All executive officers and directors as a group (nine persons) | 3,453,883 | 23.5 | % |
(1) | Based on 13,826,052 shares of common stock outstanding. In accordance with the rules of the SEC, person is deemed to be the beneficial owner of shares that the person may acquire within the following 60 days (such as upon exercise of options or warrants or conversion of convertible securities). These shares are deemed to be outstanding for purposes of computing the percentage ownership of the person beneficially owning such shares but not for purposes of computing the percentage of any other holder. | |
(2) | Business address isc/o General Finance Corporation, 39 East Union Street, Pasadena, California 91103. |
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(3) | Includes: (i) 13,500 shares owned by Mr. Valenta’s wife and minor children, as to which Mr. Valenta’s shares voting and investment power with his wife; and (ii) 540,013 shares that may be acquired upon exercise of warrants. The shares shown exclude the shares referred to in note (8), below. | |
(4) | Includes 260,348 shares that may be acquired upon exercise of warrants. | |
(5) | Represents shares that may be acquired upon exercise of options. | |
(6) | Business address is Suite 201, Level 2,22-28 Edgeworth David Avenue, Hornsby, New South Wales, Australia 2077 | |
(7) | Information is based upon a Schedule 13G filed on June 10, 2008. Gilder, Gagnon, Howe & Co. LLC is a New York limited liability and broker or dealer registered under the Securities Exchange Act of 1934. The shares shown include 60,599 shares as to which Gilder, Gagnon, Howe & Co. LLC has sole voting power and 2,233,825 shares as to which it shares voting and investment power. Of these 2,294,424 shares, 2,087,126 shares are held in customer accounts under which partners or employees of Gilder, Gagnon, Howe & Co. LLC have discretionary authority to dispose or direct the disposition of the shares, 146,749 shares are held in accounts of its partners and 60,599 shares are held in its profit-sharing plan. | |
(8) | Information is based upon a Schedule l3G filed on June 27, 2008. Olawalu Holdings, LLC (“Olawalu”), is a Hawaiian limited liability company, of which Rick Pielago is the manager. Olawalu shares voting and investment power as to all of the shares shown with Lighthouse Capital Insurance Company, a Cayman Islands exempted limited company, and the Ronald Valenta Irrevocable Life Insurance Trust No. 1, a California trust, of which Mr. Pielago is trustee. The Ronald Valenta Irrevocable Life Insurance Trust No. 1 is an irrevocable family trust established by Ronald F. Valenta in December 1999 for the benefit of his wife at the time, any future wife, and their descendants. Mr. Valenta, himself, is not a beneficiary of the Trust, and neither he nor his wife or their descendants has voting or investment power, or any other legal authority, with respect to the shares shown. Mr. Valenta disclaims beneficial ownership of our shares held by the Trust. Mr. Pielago may be deemed to be the control person of Olawalu and the Ronald Valenta Irrevocable Life Insurance Trust No. 1. | |
(9) | Information is based upon a Schedule 13D Amendment filed on June 6, 2008. The shares shown include 12,000 shares as to which Ronald L. Havner has sole voting power and 3,000 shares as to which his wife, LeeAnn R. Havner, has sole voting power. Mr. and Mrs. Havner are Co-Trustees of The Havner Family Trust. The Trust owns 676,750 shares and warrants to purchase 39,750 shares. As Co-Trustees of the Trust, Mr. and Mrs. Havner may he deemed to beneficially own all of the shares held by the Trust. | |
(10) | Information is based upon a Schedule 13G filed on February 14, 2008. The shares shown are held by Ahab Partners, L.P., Ahab International, Ltd., Queequeg Partners, L.P., Queequeg, Ltd. and one or more other private funds managed by Mr. Gallen. The shares shown include 655,000 shares that may be acquired upon exercise of warrants. | |
(11) | Information is based upon a Schedule 13G filed on February 13, 2008. The shares shown include: (i) 244,008 shares beneficially owned by Mr. Gagnon; (ii) 39,520 shares beneficially owned by Mr. Gagnon over which he has sole voting power and shared dispositive power; (iii) 162,443 shares beneficially owned by Lois Gagnon, Mr. Gagnon’s wife, over which he has shared voting power and shared dispositive power; (iv) 3,510 shares beneficially owned by Mr. Gagnon and Mrs. Gagnon as joint tenants with rights of survivorship, over which he has shared voting power and shared dispositive power; (v) 38,888 shares held by the Lois E. and Neil E. Gagnon Foundation, of which Mr. Gagnon is a trustee and over which he has shared voting power and shared dispositive power; (vi) 60,163 shares held by the Gagnon Family Limited Partnership, of which Mr. Gagnon is a partner and over which lie has shared voting power and shared dispositive power; (vii) 48,320 shares held by the Gagnon Grandchildren Trust over which Mr. Gagnon has shared dispositive power but no voting power; (viii) 530,549 shares held by four hedge funds, of which Mr. Gagnon is either the principal executive officer of the manager or the managing member of a member of the general partner or the managing member: (ix) 1,605 shares held by the Gagnon Securities LLC Profit Sharing Plan and Trust, of which Mr. Gagnon is a trustee; (x) 4,175 shares held by the Gagnon Securities LLC Profit Sharing Plan and Trust; and (xi) 663,831 shares held for certain customers of Gagnon Securities LLC, of which Mr. Gagnon is the managing member and the principal owner and over which he has shared dispositive power but no voting power. The shares shown include 465,279 shares that may be acquired upon exercise of warrants. |
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(12) | Information is based upon a schedule 13G filed February 12, 2008 and upon subsequent filings on Form 4. The shares shown include: (i) 345,500 shares that may be acquired upon exercise of warrants held by Sherleigh Associates Inc. Defined Benefit Pension Plan, a trust of which Mr. Silver is the trustee; (ii) 2,157,700 shares, including 2,141,200 that may be acquired upon exercise of warrants held by Sherleigh Associates Inc. Profit Sharing Plan, a trust of which Mr. Silver is the trustee. | |
(13) | Information is based upon a Schedule 13G filed on February 14, 2008 as an Investment Advisor with the Sole dispositive and power to vote or to direct the vote of 691,200 shares. |
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John O. Johnson | OR | MacKenzie Partners, Inc. | ||
Chief Operating Officer | 105 Madison Avenue | |||
General Finance Corporation | New York, New York 10016 | |||
39 East Union Street | Telephone: (800) 322-2885 or | |||
Pasadena, California 91103 | (212) 929-5500 (call collect) | |||
Telephone:(626) 584-9722 |
Chief Operating Officer
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New York, New York 10016
proxy@mackenziepartners.com
Call Collect:(212) 929-5500
or
Page | ||||
Mobile Office Acquisition Corp. and Subsidiary d/b/a Pac-Van, Inc. (“Successor”) | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
Pac-Van, Inc (“Predecessor”) | ||||
F-14 | ||||
F-15 | ||||
Statements of Income — Period from January 1, 2006 to August 1, 2006 and Year Ended December 31, 2005 | F-16 | |||
F-17 | ||||
F-18 | ||||
F-19 | ||||
Mobile Office Acquisition Corp. and Subsidiary d/b/a Pac-Van, Inc. (“Successor”) | ||||
F-26 | ||||
F-27 | ||||
F-28 | ||||
F-29 |
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d/b/a PAC-VAN, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2007 and 2006
2007 | 2006 | |||||||
ASSETS | ||||||||
ASSETS | ||||||||
Cash | $ | 53,325 | $ | 64,682 | ||||
Accounts receivable, net of allowances of $1,175,000 in 2007 and $975,000 in 2006 | 11,845,950 | 9,409,029 | ||||||
Net investment in sales-type leases | 117,650 | 287,416 | ||||||
Rental inventory, net | 94,708,614 | 73,668,242 | ||||||
Note receivable-related party | 260,000 | 350,000 | ||||||
Property and equipment, net | 2,048,374 | 1,463,001 | ||||||
Other assets | 202,114 | 373,832 | ||||||
Intangible assets, net | 2,663,219 | 4,206,698 | ||||||
Goodwill | 39,161,675 | 39,161,675 | ||||||
TOTAL ASSETS | $ | 151,060,921 | $ | 128,984,575 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
LIABILITIES | ||||||||
Accounts payable | $ | 4,903,664 | $ | 5,330,808 | ||||
Accrued liabilities | 4,003,683 | 3,481,831 | ||||||
Unearned revenue and advance payments | 6,091,843 | 4,560,261 | ||||||
Senior bank debt | 67,600,000 | 55,000,000 | ||||||
Subordinated note payable | 24,303,977 | 24,133,523 | ||||||
Deferred income taxes | 14,815,956 | 11,563,897 | ||||||
Warrant obligation | 1,335,500 | 937,500 | ||||||
Total Liabilities | 123,054,623 | 105,007,820 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, Class A, $0.001 par value; 300,000 shares authorized, 225,000 shares issued and outstanding | 225 | 225 | ||||||
Common stock, Class B, $0.001 par value; 50,000 shares authorized, 1,800 shares issued and outstanding | 2 | 2 | ||||||
Additional paid-in capital | 22,679,773 | 22,679,773 | ||||||
Retained earnings | 5,326,298 | 1,296,755 | ||||||
Total Stockholders’ Equity | 28,006,298 | 23,976,755 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 151,060,921 | $ | 128,984,575 | ||||
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d/b/a PAC-VAN, INC.
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31, 2007 and
Period from August 2, 2006 to December 31, 2006
(Five Months) | ||||||||
2007 | 2006 | |||||||
REVENUES | ||||||||
Leasing revenue | $ | 47,035,305 | $ | 17,604,933 | ||||
Sales of equipment and services | 20,220,120 | 11,261,618 | ||||||
Total Revenues | 67,255,425 | 28,866,551 | ||||||
COSTS AND EXPENSES | ||||||||
Cost of sales of equipment and services | 13,647,118 | 8,274,005 | ||||||
Leasing, selling and general | 32,837,661 | 13,347,747 | ||||||
Depreciation and amortization | 5,049,378 | 1,952,596 | ||||||
Total Costs and Expenses | 51,534,157 | 23,574,348 | ||||||
Income from Operations | 15,721,268 | 5,292,203 | ||||||
INTEREST EXPENSE | 8,425,166 | 3,163,747 | ||||||
Net Income before Provision for Income Taxes | 7,296,102 | 2,128,456 | ||||||
PROVISION FOR INCOME TAXES | 3,266,559 | 831,701 | ||||||
NET INCOME | $ | 4,029,543 | $ | 1,296,755 | ||||
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d/b/a PAC-VAN, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Year Ended December 31, 2007 and
Period from August 2, 2006 to December 31, 2006
Additional | Total | |||||||||||||||||||
Common Stock | Paid-in | Retained | Stockholders’ | |||||||||||||||||
Class A | Class B | Capital | Earnings | Equity | ||||||||||||||||
BALANCE AT AUGUST 2, 2006 | $ | 225 | $ | — | $ | 22,499,775 | $ | — | $ | 22,500,000 | ||||||||||
Issuance of Class B common stock | — | 2 | 179,998 | — | 180,000 | |||||||||||||||
Net income | — | — | — | 1,296,755 | 1,296,755 | |||||||||||||||
BALANCE AT DECEMBER 31, 2006 | 225 | 2 | 22,679,773 | 1,296,755 | 23,976,755 | |||||||||||||||
Net income | — | — | — | 4,029,543 | 4,029,543 | |||||||||||||||
BALANCE AT DECEMBER 31, 2007 | $ | 225 | $ | 2 | $ | 22,679,773 | $ | 5,326,298 | $ | 28,006,298 | ||||||||||
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d/b/a PAC-VAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31, 2007 and
Period from August 2, 2006 to December 31, 2006
(Five Months) | ||||||||
2007 | 2006 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 4,029,543 | $ | 1,296,755 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Deferred income taxes | 3,252,059 | 830,202 | ||||||
Depreciation of property and equipment and rental inventory | 3,447,753 | 1,268,688 | ||||||
Amortization of intangible assets | 1,772,079 | 754,931 | ||||||
Increase in value of warrant obligation | 398,000 | |||||||
Loss on disposals of property and equipment | 44,503 | 16,588 | ||||||
(Increase) decrease in certain assets: | ||||||||
Accounts receivable | (2,436,921 | ) | (385,563 | ) | ||||
Net investment in sales-type leases | 169,766 | 59,463 | ||||||
Other assets | 171,718 | (156,269 | ) | |||||
Increase (decrease) in certain liabilities: | ||||||||
Accounts payable | (427,144 | ) | 80,578 | |||||
Accrued liabilities | 521,852 | 1,912,103 | ||||||
Unearned revenue and advance payments | 1,531,582 | (682,416 | ) | |||||
Net Cash Provided by Operating Activities | 12,474,790 | 4,995,060 | ||||||
INVESTING ACTIVITIES | ||||||||
Purchases of rental inventory, net | (23,753,427 | ) | (6,986,718 | ) | ||||
Payments received on note receivable-related party | 90,000 | 50,000 | ||||||
Purchases of property and equipment | (1,194,120 | ) | (278,045 | ) | ||||
Net Cash (Used) by Investing Activities | (24,857,547 | ) | (7,214,763 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Net increase in senior bank debt | 12,600,000 | 1,300,000 | ||||||
Financing costs | (228,600 | ) | ||||||
Proceeds from issuance of Class B common stock | 180,000 | |||||||
Net Cash Provided by Financing Activities | 12,371,400 | 1,480,000 | ||||||
NET DECREASE IN CASH | (11,357 | ) | (739,703 | ) | ||||
CASH | ||||||||
Beginning of Period | 64,682 | 804,385 | ||||||
End of Period | $ | 53,325 | $ | 64,682 | ||||
SUPPLEMENTAL DISCLOSURES | ||||||||
Interest paid | $ | 7,901,339 | $ | 1,649,426 | ||||
Noncash investing and financing activities: | ||||||||
Interest expense related to valuation of warrant obligation | 398,000 | |||||||
Issuance of note receivable-related party for stock | 400,000 |
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d/b/a PAC-VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-7
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d/b/a PAC-VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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d/b/a PAC-VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 2 — | RENTAL INVENTORY |
2007 | 2006 | |||||||
Mobile offices, modular buildings and storage units | $ | 96,525,406 | $ | 73,589,195 | ||||
Steps | 1,641,864 | 1,040,233 | ||||||
98,167,270 | 74,629,428 | |||||||
Less: Accumulated depreciation | (3,458,656 | ) | (961,186 | ) | ||||
Total Rental Inventory | $ | 94,708,614 | $ | 73,668,242 | ||||
NOTE 3 — | PROPERTY AND EQUIPMENT |
2007 | 2006 | |||||||
Equipment | $ | 368,876 | $ | 186,381 | ||||
Vehicles | 1,873,943 | 970,928 | ||||||
Leasehold improvements | 559,020 | 494,913 | ||||||
2,801,839 | 1,652,222 | |||||||
Less: Accumulated depreciation | (753,465 | ) | (189,221 | ) | ||||
Total Property and Equipment | $ | 2,048,374 | $ | 1,463,001 | ||||
NOTE 4 — | AMORTIZABLE INTANGIBLE ASSETS |
2007 | 2006 | |||||||||||||||
Gross | Accumulated | Gross | Accumulated | |||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||
Customer base | $ | 4,547,400 | $ | 2,263,009 | $ | 4,526,000 | $ | 754,348 | ||||||||
Deferred financing costs | 679,695 | 300,867 | 472,495 | 37,449 | ||||||||||||
$ | 5,227,095 | $ | 2,563,876 | $ | 4,998,495 | $ | 791,797 | |||||||||
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d/b/a PAC-VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 5 — | NET INVESTMENT IN SALES-TYPE LEASES |
Future Minimum | ||||
Receivable In | Lease Payments | |||
2008 | $ | 138,285 | ||
2009 | 10,575 | |||
2010 | 7,080 | |||
2011 | 4,130 | |||
160,070 | ||||
Less: Amount representing interest | 42,420 | |||
Net Investment in Sales-type Leases | $ | 117,650 | ||
NOTE 6 — | DEBT |
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d/b/a PAC-VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 7 — | INCOME TAXES |
(Five Months) | ||||||||
2007 | 2006 | |||||||
Deferred tax expense: | ||||||||
Federal | $ | 2,776,148 | $ | 708,709 | ||||
State | 475,911 | 121,493 | ||||||
Total | 3,252,059 | 830,202 | ||||||
Current state tax expense | 14,500 | 1,499 | ||||||
Provision for Income Taxes | $ | 3,266,559 | $ | 831,701 | ||||
2007 | 2006 | |||||||
Rental inventory | $ | 23,905,985 | $ | 20,250,897 | ||||
Net operating loss carryforwards | (8,607,254 | ) | (8,492,000 | ) | ||||
Accounts receivable | (246,000 | ) | (195,000 | ) | ||||
Other | (236,775 | ) | — | |||||
Net Deferred Income Tax Liability | $ | 14,815,956 | $ | 11,563,897 | ||||
NOTE 8 — | OPERATING LEASE COMMITMENTS |
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d/b/a PAC-VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Rental | ||||||||
Payable In | Payments | |||||||
2008 | $ | 1,010,052 | ||||||
2009 | 775,509 | |||||||
2010 | 519,455 | |||||||
2011 | 47,038 | |||||||
$ | 2,352,054 | |||||||
NOTE 9 — | EMPLOYEE BENEFIT PLAN |
NOTE 10 — | STOCK OPTION PLAN |
Risk-free interest rate | 4.0% | |
Dividend yield | 0% | |
Expected life of the options | 10 years | |
Volatility | 30% |
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d/b/a PAC-VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 11 — | RELATED PARTY TRANSACTIONS |
NOTE 12 — | SUBSEQUENT EVENT |
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F-14
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August 1, 2006 and December 31, 2005
August 1, | December 31, | |||||||
2006 | 2005 | |||||||
ASSETS | ||||||||
ASSETS | ||||||||
Cash | $ | 301,395 | $ | 76,490 | ||||
Accounts receivable, net of allowance for doubtful accounts of $750,000 at August 1, 2006 and $700,000 at December 31, 2005 | 9,123,466 | 8,543,955 | ||||||
Net investment in sales-type leases | 346,878 | 215,580 | ||||||
Rental inventory, net | 67,800,680 | 59,114,953 | ||||||
Property and equipment, net | 1,410,160 | 1,155,984 | ||||||
Other assets | 217,563 | 277,862 | ||||||
TOTAL ASSETS | $ | 79,200,142 | $ | 69,384,824 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
LIABILITIES | ||||||||
Accounts payable | $ | 4,906,502 | $ | 4,389,222 | ||||
Accrued liabilities | 1,782,236 | 1,786,095 | ||||||
Unearned revenue and advance payments | 5,242,676 | 3,835,235 | ||||||
Senior bank debt | 36,062,500 | 33,100,000 | ||||||
Derivative obligation | 6,180 | |||||||
Subordinated notes payable | 4,522,000 | 4,522,000 | ||||||
Deferred income taxes | 9,718,142 | 7,770,526 | ||||||
Total Liabilities | 62,234,056 | 55,409,258 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Preferred stock, $0.01 par value; 5,000,000 shares authorized, no shares issued and outstanding | ||||||||
Common stock, Series A, $0.01 par value; 9,500,000 shares authorized, 2,000,000 shares issued and outstanding | 20,000 | 20,000 | ||||||
Common stock, Series B, $0.01 par value; 500,000 shares authorized, 231,525 shares issued and outstanding | 2,315 | 2,315 | ||||||
Additional paid-in capital | 2,273,735 | 2,273,735 | ||||||
Stock options outstanding | 360,000 | 360,000 | ||||||
Retained earnings | 14,310,036 | 11,322,842 | ||||||
Accumulated other comprehensive loss | (3,326 | ) | ||||||
Total Stockholders’ Equity | 16,966,086 | 13,975,566 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 79,200,142 | $ | 69,384,824 | ||||
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Period from January 1, 2006 to August 1, 2006
and Year Ended December 31, 2005
(Seven Months) | ||||||||
2006 | 2005 | |||||||
REVENUES | ||||||||
Leasing revenue | $ | 22,270,519 | $ | 32,158,208 | ||||
Sales of equipment and services | 11,052,995 | 18,847,929 | ||||||
Total Revenues | 33,323,514 | 51,006,137 | ||||||
COSTS AND EXPENSES | ||||||||
Cost of sales of equipment and services | 7,816,428 | 13,831,804 | ||||||
Leasing, selling and general | 17,406,712 | 26,893,859 | ||||||
Depreciation and amortization | 1,395,231 | 2,374,005 | ||||||
Total Costs and Expenses | 26,618,371 | 43,099,668 | ||||||
Income from Operations | 6,705,143 | 7,906,469 | ||||||
INTEREST EXPENSE | 1,760,688 | 2,671,668 | ||||||
Net Income before Provision for Income Taxes | 4,944,455 | 5,234,801 | ||||||
PROVISION FOR INCOME TAXES | 1,957,261 | 2,079,585 | ||||||
NET INCOME | $ | 2,987,194 | $ | 3,155,216 | ||||
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Period from January 1, 2006 to August 1, 2006
and Year Ended December 31, 2005
Accumulated | ||||||||||||||||||||||||||||
Additional | Stock | Other | Total | |||||||||||||||||||||||||
Common Stock | Paid-in | Options | Retained | Comprehensive | Stockholders’ | |||||||||||||||||||||||
Series A | Series B | Capital | Outstanding | Earnings | Loss | Equity | ||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2004 | $ | 20,000 | $ | 2,315 | $ | 2,273,735 | $ | 360,000 | $ | 8,167,626 | $ | (96,000 | ) | $ | 10,727,676 | |||||||||||||
Comprehensive Income: | ||||||||||||||||||||||||||||
Net income | — | — | — | — | 3,155,216 | — | 3,155,216 | |||||||||||||||||||||
Reclassification adjustment for cash flow hedges, net of taxes of $61,146 | — | — | — | — | — | 92,674 | 92,674 | |||||||||||||||||||||
Total Comprehensive Income | — | — | — | — | — | — | 3,247,890 | |||||||||||||||||||||
BALANCE AT DECEMBER 31, 2005 | 20,000 | 2,315 | 2,273,735 | 360,000 | 11,322,842 | (3,326 | ) | 13,975,566 | ||||||||||||||||||||
Comprehensive Income: | ||||||||||||||||||||||||||||
Net income | — | — | — | — | 2,987,194 | — | 2,987,194 | |||||||||||||||||||||
Reclassification adjustment for cash flow hedges, net of taxes of $2,854 | — | — | — | — | — | 3,326 | 3,326 | |||||||||||||||||||||
Total Comprehensive Income | — | — | — | — | — | — | 2,990,520 | |||||||||||||||||||||
BALANCE AT AUGUST 1, 2006 | $ | 20,000 | $ | 2,315 | $ | 2,273,735 | $ | 360,000 | $ | 14,310,036 | $ | — | $ | 16,966,086 | ||||||||||||||
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Period from January 1, 2006 to August 1, 2006
and Year Ended December 31, 2005
(Seven Months) | ||||||||
2006 | 2005 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 2,987,194 | $ | 3,155,216 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Deferred income taxes | 1,957,261 | 2,079,585 | ||||||
Depreciation and amortization | 1,395,231 | 2,374,005 | ||||||
(Increase) decrease in certain assets: | ||||||||
Accounts receivable | (579,511 | ) | (2,165,388 | ) | ||||
Net investment in sales-type leases | (131,298 | ) | 127,299 | |||||
Other assets | 60,299 | 8,118 | ||||||
Increase (decrease) in certain liabilities: | ||||||||
Accounts payable | 517,280 | 1,445,811 | ||||||
Accrued liabilities | (3,859 | ) | 677,626 | |||||
Unearned revenue and advance payments | 1,407,441 | 861,018 | ||||||
Net Cash Provided by Operating Activities | 7,610,038 | 8,563,290 | ||||||
INVESTING ACTIVITIES | ||||||||
Purchases of rental inventory, net | (9,874,246 | ) | (7,192,441 | ) | ||||
Purchases of property and equipment | (473,387 | ) | (683,555 | ) | ||||
Net Cash (Used) by Investing Activities | (10,347,633 | ) | (7,875,996 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Payments of subordinated notes payable | (250,000 | ) | ||||||
Net increase (decrease) in senior bank debt | 2,962,500 | (400,000 | ) | |||||
Net Cash Provided (Used) by Financing Activities | 2,962,500 | (650,000 | ) | |||||
NET INCREASE IN CASH | 224,905 | 37,294 | ||||||
CASH | ||||||||
Beginning of Year | 76,490 | 39,196 | ||||||
End of Year | $ | 301,395 | $ | 76,490 | ||||
F-18
Table of Contents
NOTE 1 — | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-19
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F-20
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NOTE 2 — | RENTAL INVENTORY |
August 1, | December 31, | |||||||||||
2006 | 2005 | |||||||||||
Mobile offices, modular buildings and storage units | $ | 76,562,853 | $ | 67,624,270 | ||||||||
Steps | 1,877,929 | 1,442,733 | ||||||||||
78,440,782 | 69,067,003 | |||||||||||
Less: Accumulated depreciation | (10,640,102 | ) | (9,952,050 | ) | ||||||||
Total Rental Inventory | $ | 67,800,680 | $ | 59,144,953 | ||||||||
NOTE 3 — | PROPERTY AND EQUIPMENT |
August 1, | December 31, | |||||||
2006 | 2005 | |||||||
Equipment | $ | 1,313,512 | $ | 1,237,222 | ||||
Vehicles | 1,853,932 | 1,594,942 | ||||||
Leasehold improvements | 442,304 | 342,138 | ||||||
3,609,748 | 3,174,302 | |||||||
Less: Accumulated depreciation | (2,199,588 | ) | (2,018,318 | ) | ||||
Total Property and Equipment | $ | 1,410,160 | $ | 1,155,984 | ||||
NOTE 4 — | NET INVESTMENT IN SALES-TYPE LEASES |
Receivable in | ||||
Year Ending | Future Minimum | |||
August 1, | Lease Payments | |||
2007 | $ | 308,043 | ||
2008 | 124,019 | |||
2009 | 3,135 | |||
435,197 | ||||
Less: Amount representing interest | 88,319 | |||
Net Investment in Sales-type Leases | $ | 346,878 | ||
NOTE 5 — | DEBT |
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August 1, | December 31, | |||||||
2006 | 2005 | |||||||
12.5% notes payable due various dates in 2009 | $ | 4,247,000 | $ | 4,247,000 | ||||
12.0% note payable due January, 2009 | 275,000 | 275,000 | ||||||
$ | 4,522,000 | $ | 4,522,000 | |||||
Payable in | ||||
Year Ending | ||||
August 1, | ||||
2007 | $ | 750,000 | ||
2008 | 35,312,500 | |||
2009 | 4,522,000 | |||
$ | 40,584,500 | |||
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NOTE 6 — | INCOME TAXES |
(Seven Months) | ||||||||
2006 | 2005 | |||||||
Deferred tax expense: | ||||||||
Federal | $ | 1,663,672 | $ | 1,767,647 | ||||
State | 293,589 | 311,938 | ||||||
Provision for Income Taxes | $ | 1,957,261 | $ | 2,079,585 | ||||
August 1, | December 31, | |||||||
2006 | 2005 | |||||||
Rental inventory | $ | 17,374,000 | $ | 16,640,000 | ||||
Net operating loss carry forwards | (7,450,000 | ) | (8,466,000 | ) | ||||
Accounts receivable | (170,000 | ) | (160,000 | ) | ||||
Derivative obligation | — | (2,854 | ) | |||||
Stock option compensation | (142,000 | ) | (142,000 | ) | ||||
Other | 106,142 | (98,620 | ) | |||||
Net Deferred Income Tax Liability | $ | 9,718,142 | $ | 7,770,526 | ||||
NOTE 7 — | OPERATING LEASE COMMITMENTS |
Payable in | ||||
Year Ending | Rental | |||
August 1, | Payments | |||
2007 | $ | 748,194 | ||
2008 | 759,215 | |||
2009 | 612,502 | |||
2010 | 739,683 | |||
2011 | 235,108 | |||
$ | 3,094,702 | |||
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NOTE 8 — | EMPLOYEE BENEFIT PLAN |
NOTE 9 — | CAPITAL STOCK |
NOTE 10 — | STOCK OPTION PLAN |
Risk-free interest rate | 4.0 | % | ||
Dividend yield | 0 | % | ||
Expected life of the options (years) | 4 |
F-24
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NOTE 11 — | SUBSEQUENT EVENT |
F-25
Table of Contents
d/b/a PAC-VAN, INC.
March 31, 2008 and 2007
2008 | 2007 | |||||||
ASSETS | ||||||||
ASSETS | ||||||||
Cash | $ | 343,126 | $ | 246,884 | ||||
Accounts receivable, net of allowances of $1,184,000 in 2008 and $973,000 in 2007 | 10,564,821 | 8,877,760 | ||||||
Net investment in sales-type leases | 85,718 | 261,834 | ||||||
Rental inventory, net | 100,773,326 | 76,367,983 | ||||||
Note receivable-related party | 210,000 | 295,000 | ||||||
Property and equipment, net | 2,150,528 | 1,652,008 | ||||||
Other assets | 267,824 | 318,798 | ||||||
Intangible assets, net | 2,404,372 | 3,807,064 | ||||||
Goodwill | 39,504,975 | 39,161,675 | ||||||
TOTAL ASSETS | $ | 156,304,690 | $ | 130,989,006 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
LIABILITIES | ||||||||
Accounts payable | $ | 5,246,298 | $ | 5,935,935 | ||||
Accrued liabilities | 2,453,370 | 2,025,907 | ||||||
Unearned revenue and advance payments | 6,773,357 | 5,341,101 | ||||||
Senior bank debt | 71,750,000 | 55,500,000 | ||||||
Subordinated note payable | 24,346,591 | 24,176,136 | ||||||
Deferred income taxes | 15,392,790 | 12,165,663 | ||||||
Warrant obligation | 1,441,000 | 1,037,000 | ||||||
Total Liabilities | 127,403,406 | 106,181,742 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, Class A, $0.001 par value; 300,000 shares authorized, 225,000 shares issued and outstanding | 225 | 225 | ||||||
Common stock, Class B, $0.001 par value; 50,000 shares authorized, 1,800 shares issued and outstanding | 2 | 2 | ||||||
Additional paid-in capital | 22,679,773 | 22,679,773 | ||||||
Retained earnings | 6,221,284 | 2,127,264 | ||||||
Total Stockholders’ Equity | 28,901,284 | 24,807,264 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 156,304,690 | $ | 130,989,006 | ||||
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d/b/a PAC-VAN, INC.
AND RETAINED EARNINGS
Three Months Ended March 31, 2008 and 2007
2008 | 2007 | |||||||
REVENUES | ||||||||
Leasing revenue | $ | 11,995,664 | $ | 10,337,328 | ||||
Sales of equipment and services | 4,124,049 | 4,648,129 | ||||||
Total Revenues | 16,119,713 | 14,985,457 | ||||||
COSTS AND EXPENSES | ||||||||
Cost of sales of equipment and services | 2,876,142 | 3,047,103 | ||||||
Leasing, selling and general | 8,548,427 | 7,359,287 | ||||||
Depreciation and amortization | 1,125,425 | 1,116,459 | ||||||
Total Costs and Expenses | 12,549,994 | 11,522,849 | ||||||
Income from Operations | 3,569,719 | 3,462,608 | ||||||
INTEREST EXPENSE | 2,090,399 | 2,000,833 | ||||||
Net Income before Provision for Income Taxes | 1,479,320 | 1,461,775 | ||||||
PROVISION FOR INCOME TAXES | 584,334 | 631,266 | ||||||
NET INCOME | 894,986 | 830,509 | ||||||
RETAINED EARNINGS | ||||||||
Beginning of Period | 5,326,298 | 1,296,755 | ||||||
End of Period | $ | 6,221,284 | $ | 2,127,264 | ||||
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d/b/a PAC-VAN, INC.
Three Months Ended March 31, 2008 and 2007
2008 | 2007 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 894,986 | $ | 830,509 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Deferred income taxes | 576,834 | 601,766 | ||||||
Depreciation of property and equipment and rental inventory | 909,191 | 759,438 | ||||||
Proceeds from the sale of property and equipment | 13,153 | |||||||
Amortization of intangible assets | 258,847 | 399,634 | ||||||
Increase in value of warrant obligation | 105,500 | 99,500 | ||||||
Loss on disposals of property and equipment | 17,268 | |||||||
(Increase) decrease in certain assets: | ||||||||
Accounts receivable | 1,342,597 | 531,269 | ||||||
Net investment in sales-type leases | 31,932 | 25,582 | ||||||
Other assets | (65,710 | ) | 55,034 | |||||
Increase (decrease) in certain liabilities: | ||||||||
Accounts payable | 342,634 | 605,127 | ||||||
Accrued liabilities | (1,550,313 | ) | (1,455,924 | ) | ||||
Unearned revenue and advance payments | 661,568 | 780,840 | ||||||
Net Cash Provided by Operating Activities | 3,538,487 | 3,232,775 | ||||||
INVESTING ACTIVITIES | ||||||||
Purchases of rental inventory, net | (3,283,264 | ) | (3,285,508 | ) | ||||
Cash paid for assets of business acquired | (3,871,522 | ) | ||||||
Payments received on note receivable-related party | 50,000 | 55,000 | ||||||
Purchases of property and equipment | (293,900 | ) | (320,065 | ) | ||||
Net Cash (Used) by Investing Activities | (7,398,686 | ) | (3,550,573 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Net increase in senior bank debt | 4,150,000 | 500,000 | ||||||
Net Cash Provided by Financing Activities | 4,150,000 | 500,000 | ||||||
NET INCREASE IN CASH | 289,801 | 182,202 | ||||||
CASH | ||||||||
Beginning of Period | 53,325 | 64,682 | ||||||
End of Period | $ | 343,126 | $ | 246,884 | ||||
SUPPLEMENTAL DISCLOSURES | ||||||||
Interest paid | $ | 2,927,793 | $ | 2,710,141 | ||||
Noncash financing activities: | ||||||||
Interest expense related to valuation of warrant obligation | 105,500 | 99,500 |
F-28
Table of Contents
d/b/a PAC-VAN, INC.
NOTE 1 — | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-29
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d/b/a PAC-VAN, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-30
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d/b/a PAC-VAN, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 2 — | RENTAL INVENTORY |
2008 | 2007 | |||||||
Mobile offices, modular buildings and storage units | $ | 103,105,747 | $ | 76,743,138 | ||||
Steps | 1,785,535 | 1,120,864 | ||||||
104,891,282 | 77,864,002 | |||||||
Less: Accumulated depreciation | (4,117,956 | ) | (1,496,019 | ) | ||||
Total Rental Inventory | $ | 100,773,326 | $ | 76,367,983 | ||||
NOTE 3 — | PROPERTY AND EQUIPMENT |
2008 | 2007 | |||||||
Equipment | $ | 447,967 | $ | 213,524 | ||||
Vehicles | 2,017,800 | 1,252,475 | ||||||
Leasehold improvements | 581,046 | 506,288 | ||||||
3,046,813 | 1,972,287 | |||||||
Less: Accumulated depreciation | (896,285 | ) | (320,279 | ) | ||||
Total Property and Equipment | $ | 2,150,528 | $ | 1,652,008 | ||||
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d/b/a PAC-VAN, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 4 — | AMORTIZABLE INTANGIBLE ASSETS |
2008 | 2007 | |||||||||||||||
Gross | Accumulated | Gross | Accumulated | |||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||
Customer base | $ | 4,547,400 | $ | 2,500,008 | $ | 4,526,000 | $ | 1,131,513 | ||||||||
Deferred financing costs | 679,695 | 322,715 | 472,495 | 59,917 | ||||||||||||
$ | 5,227,095 | $ | 2,822,723 | $ | 4,998,495 | $ | 1,191,430 | |||||||||
NOTE 5 — | DEBT |
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d/b/a PAC-VAN, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 6 — | INCOME TAXES |
2008 | 2007 | |||||||
Deferred tax expense: | ||||||||
Federal | $ | 486,089 | $ | 513,703 | ||||
State | 90,745 | 88,063 | ||||||
Total | 576,834 | 601,766 | ||||||
Current state tax expense | 7,500 | 29,500 | ||||||
Provision for Income Taxes | $ | 584,334 | $ | 631,266 | ||||
2008 | 2007 | |||||||
Rental inventory | $ | 25,122,779 | $ | 21,463,828 | ||||
Net operating loss carryforwards | (9,174,272 | ) | (9,103,165 | ) | ||||
Accounts receivable | (246,000 | ) | (195,000 | ) | ||||
Other | (309,717 | ) | — | |||||
Net Deferred Income Tax Liability | $ | 15,392,790 | $ | 12,165,663 | ||||
NOTE 7 — | OPERATING LEASE COMMITMENTS |
Payable in | ||||
Year Ended | Rental | |||
March 31, | Payments | |||
2009 | $ | 1,332,899 | ||
2010 | 1,327,157 | |||
2011 | 926,423 | |||
2012 | 363,724 | |||
2013 | 286,003 | |||
Thereafter | 6,200 | |||
$ | 4,242,406 | |||
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d/b/a PAC-VAN, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 8 — | STOCK OPTION PLAN |
NOTE 9 — | RELATED PARTY TRANSACTIONS |
NOTE 10 — | SUBSEQUENT EVENTS |
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Table of Contents
Page | ||||||||
ARTICLE 1 THE MERGER | ||||||||
Section 1.1 | The Merger | A-1 | ||||||
Section 1.2 | Closing | A-1 | ||||||
Section 1.3 | Effective Time | A-1 | ||||||
Section 1.4 | Effects of the Merger | A-2 | ||||||
Section 1.5 | Certificate of Incorporation; Bylaws | A-2 | ||||||
Section 1.6 | Directors and Officers | A-2 | ||||||
ARTICLE 2 CONVERSION OF SHARES; STOCKHOLDERS MEETING | ||||||||
Section 2.1 | Merger Consideration | A-2 | ||||||
Section 2.2 | Conversion of Securities | A-3 | ||||||
Section 2.3 | Treatment of MOAC Stock Options and Warrants | A-3 | ||||||
Section 2.4 | Surrender of Shares; Distribution of Merger Consideration; Stock Transfer Books | A-3 | ||||||
Section 2.5 | Dissenting Shares | A-4 | ||||||
Section 2.6 | No Further Ownership Rights in MOAC Stock | A-4 | ||||||
Section 2.7 | Withholding Taxes | A-4 | ||||||
Section 2.8 | Further Action | A-5 | ||||||
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND MOAC STOCKHOLDERS | ||||||||
Section 3.1 | Organization; Charter Documents | A-5 | ||||||
Section 3.2 | Capitalization of the Companies | A-5 | ||||||
Section 3.3 | Corporate Authorization; Board Approval | A-7 | ||||||
Section 3.4 | Governmental Approvals | A-7 | ||||||
Section 3.5 | Non-Contravention | A-7 | ||||||
Section 3.6 | Financial Statements; No Undisclosed Liabilities; Internal and Disclosure Controls | A-8 | ||||||
Section 3.7 | Absence of Certain Changes | A-8 | ||||||
Section 3.8 | Insurance | A-8 | ||||||
Section 3.9 | Real Property; Title to Assets | A-9 | ||||||
Section 3.10 | Company Intellectual Property | A-9 | ||||||
Section 3.11 | Litigation | A-10 | ||||||
Section 3.12 | Taxes | A-10 | ||||||
Section 3.13 | Employee Benefit Plans | A-11 | ||||||
Section 3.14 | Compliance with Laws; Permits | A-13 | ||||||
Section 3.15 | Environmental Matters | A-13 | ||||||
Section 3.16 | Companies Material Contracts | A-13 | ||||||
Section 3.17 | Finders’ Fees | A-14 | ||||||
Section 3.18 | Takeover Statutes | A-14 | ||||||
Section 3.19 | Transactions with Affiliates | A-15 | ||||||
Section 3.20 | Labor Matters | A-15 |
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Page | ||||||||
Section 3.21 | Payments | A-15 | ||||||
Section 3.22 | Disclosure | A-15 | ||||||
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB | ||||||||
Section 4.1 | Organization and Power | A-15 | ||||||
Section 4.2 | Corporate Authorization | A-15 | ||||||
Section 4.3 | Governmental Authorization | A-16 | ||||||
Section 4.4 | Non-Contravention | A-16 | ||||||
Section 4.5 | Information Supplied | A-16 | ||||||
Section 4.6 | Litigation | A-16 | ||||||
Section 4.7 | Finder’s Fees | A-16 | ||||||
Section 4.8 | Sub | A-16 | ||||||
Section 4.9 | Public Filings | A-16 | ||||||
Section 4.7 | Valid Issuance | A-16 | ||||||
Section 4.8 | Disclosure | A-16 | ||||||
ARTICLE 5 COVENANTS | ||||||||
Section 5.1 | Interim Operations of the Companies | A-17 | ||||||
Section 5.2 | Access to Information | A-19 | ||||||
Section 5.3 | Regulatory and Consent Matters | A-19 | ||||||
Section 5.4 | Employee Matters | A-20 | ||||||
Section 5.5 | Stockholders Meeting | A-20 | ||||||
Section 5.6 | Additional Agreements | A-20 | ||||||
Section 5.7 | Publicity | A-20 | ||||||
Section 5.8 | Notification of Certain Matters | A-20 | ||||||
Section 5.9 | Proxy Statement | A-21 | ||||||
Section 5.10 | Cooperation | A-21 | ||||||
Section 5.11 | Appraisal Rights Expenses | A-22 | ||||||
Section 5.12 | Confidentiality | A-22 | ||||||
Section 5.13 | No Shop | A-22 | ||||||
Section 5.14 | MOAC Stockholder Approval | A-22 | ||||||
ARTICLE 6 CONDITIONS | ||||||||
Section 6.1 | Conditions to the Obligations of Each Party | A-23 | ||||||
Section 6.2 | Conditions to the Obligations of Parent and Sub | A-24 | ||||||
Section 6.3 | Conditions to the Obligations of the Companies and MOAC Stockholders | A-25 | ||||||
ARTICLE 7 SURVIVAL; INDEMNIFICATION | ||||||||
Section 7.1 | Survival | A-26 | ||||||
Section 7.2 | Post-Closing Indemnification | A-26 | ||||||
Section 7.3 | Payments under Holdback Note | A-28 | ||||||
Section 7.4 | Procedures | A-29 |
A-ii
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Page | ||||||||
Section 7.5 | Exclusive Post-Closing Remedy | A-30 | ||||||
Section 7.6 | Liability Limitations | A-30 | ||||||
ARTICLE 8 TERMINATION | ||||||||
Section 8.1 | Termination | A-30 | ||||||
Section 8.2 | Notice of Termination; Effect of Termination | A-31 | ||||||
Section 8.3 | Expenses; Termination Fees | A-31 | ||||||
ARTICLE 9 MISCELLANEOUS | ||||||||
Section 9.1 | Definitions | A-32 | ||||||
Section 9.2 | Amendment and Modification | A-34 | ||||||
Section 9.3 | Notices | A-34 | ||||||
Section 9.4 | Interpretation | A-35 | ||||||
Section 9.5 | Counterparts | A-35 | ||||||
Section 9.6 | Entire Agreement; No Third Party Beneficiaries | A-35 | ||||||
Section 9.7 | Severability | A-35 | ||||||
Section 9.8 | Specific Performance | A-35 | ||||||
Section 9.9 | Governing Law | A-36 | ||||||
Section 9.10 | Assignment | A-36 | ||||||
Section 9.11 | Reliance | A-36 | ||||||
Section 9.12 | Knowledge | A-36 | ||||||
Section 9.13 | Waiver of Jury Trial | A-36 | ||||||
Section 9.14 | Waiver | A-36 | ||||||
Section 9.15 | Attorney’s Fees | A-36 | ||||||
Section 9.16 | Arbitration | A-36 | ||||||
List of Exhibits | ||||||||
Exhibit A | MOAC Stockholders | |||||||
Exhibit B | Pledge Agreement | |||||||
Exhibit C | Holdback Note | |||||||
Exhibit D | Stockholders Agreement | |||||||
Exhibit E | First Amendment to Employment Agreement of Theodore Mourouzis | |||||||
Exhibit F | General Release |
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A-2
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A-3
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A-4
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A-5
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A-6
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A-7
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A-8
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A-9
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A-10
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A-11
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A-12
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A-13
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A-14
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A-15
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A-16
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A-17
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A-18
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A-19
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A-20
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A-21
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A-22
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A-23
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A-24
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A-25
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A-26
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A-27
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A-28
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A-29
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A-30
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A-31
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AAA | 9.16(a) | |
Actions | 3.11 | |
Affiliate | 3.19 | |
Agreement Preamble Benefit Plans | 3.13(a) | |
Business Employees | 3.13(a) | |
Cash | 2.1(a)(i) | |
Certificate of Merger | 1.3 | |
Claim Notice | 7.4(a) | |
Class A MOAC | ||
Common Stock | Recitals | |
Class B MOAC | ||
Common Stock | Recitals | |
Closing | 1.2 |
A-32
Table of Contents
Closing Date | 1.2 | |
Code | 2.3(b) | |
Companies | Preamble | |
Companies Disclosure Schedule | 3.1(a) | |
Companies Intellectual Property | 3.10 | |
Company | Preamble | |
Company Balance Sheet | 3.6(a) | |
Company Balance Sheet Date | 3.6(a) | |
Company Charter Documents | 3.1(c) | |
Company Excluded Representations | 7.1(b) | |
Company Financials | 3.6(a) | |
Company Indemnified Person | 7.2(c) | |
Company Indemnified Persons | 7.2(c) | |
Company Material Contract | 3.16(a) | |
Company Permits | 3.14(b) | |
Company Securities | 3.2(b) | |
Confidential Information | 5.12 | |
Contract | 3.2(c) | |
Credit Facility | 2.1(a) | |
Deductible | 7.2(b)(i) | |
Demand Notice | 9.16(b)(i) | |
Disputed Claim | 7.4(a) | |
Dissenting Shares | 2.5(a) | |
DGCL | 1.1 | |
Effective Time | 1.3 | |
Eligible Stockholder | 2.4(a) | |
Eligible Stock Option Holder | 2.1(a) | |
Environmental Laws | 3.15 | |
Environmental Liabilities | 3.15 | |
ERISA | 3.13(a) | |
ERISA Affiliate | 3.13(a) | |
Exchange Act | 2.4(b) | |
GAAP | 3.6(a) | |
Governmental Authority | 3.4 | |
Hazardous Substances | 3.15 | |
Havner | 5.2(b) | |
Holdback Note | 2.1(a)(iv) | |
Indebtedness | 3.2(c) | |
Indemnified Person | 7.4(a) | |
Indemnifying Person | 7.4(a) | |
Interim Acquisitions | 2.1(a) | |
LaSalle Bank | 2.1(a) | |
Law | 2.7 | |
Liens | 3.5 |
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Losses | 7.2(a) | |
Material Adverse Effect | 3.1(a) | |
Merger | Recitals | |
Merger Consideration | 2.1(a) | |
MOAC | Preamble | |
MOAC Certificate | 2.4(a) | |
MOAC Common Stock | Recitals | |
MOAC Securities | 3.2(a) | |
MOAC Stockholders | Preamble | |
MOAC Stock Options | 2.3(a) | |
MOAC Stock Option Plan | 2.3(a) | |
Non-Recommendation Determination | 5.5(b) | |
Order | 3.5 | |
Outside Date | 8.1(b)(i) | |
Pac-Van | Preamble | |
Pac-Van Securities | 3.2(b) | |
Parent | Preamble | |
Parent Common Stock | 2.1(a)(ii) | |
Parent Excluded Representations | 7.1(a) | |
Parent Indemnified Person | 7.2(a) | |
Parent Indemnified Persons | 7.2(a) | |
PBGC | 3.13(b) | |
Per Share Merger Consideration | 2.4(a) | |
Person | 2.4(b) | |
Personal Property | 3.9(c) | |
Pledge Agreement | 2.1(a)(iii) | |
Pledged Shares | 2.1(a)(iii) | |
Proposal | 5.9(a) | |
Proxy Statement | 5.9(b) | |
Real Property Leases | 3.9(b) | |
Representatives | 5.12 | |
Requesting Party | 9.16(b)(i) | |
Responding Party | 9.16(b)(i) | |
Revised Companies Disclosure Schedule | 6.2(a) | |
Senior Subordinated Loan | 2.1(a) | |
SPV Capital | 2.1(a) | |
Stockholders Meeting | 5.5(a) | |
Shares | Recitals | |
Stock Option Consideration | 2.3(a) | |
Sub | Preamble | |
Subordinated Note | 2.1(a) | |
Subsidiary | 3.1(b) | |
Superior Proposal | 5.5(b) | |
Surviving Corporation | 1.1 |
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Tax Return | 3.12 | |
Taxes | 3.12 | |
Taxing Authority | 3.12 | |
Third Party Claim | 7.4(a) | |
Unsolicited Offer | 5.13 | |
WARN Act | 3.20(b) | |
Warrants | 3.2(a) | |
Working Capital | 6.2(s) | |
Written Consent | 5.14 |
Attention: Alan Spatz, Esq.
1801 Century Park East
Facsimile:(310) 789-1431
Indianapolis, IN 46225
Attention: Theodore Mourouzis
Telephone:(317) 489-4778
Facsimile:(317) 791-2029
1900 Avenue of the Stars, 7th Floor
Los Angeles, CA 90067
Attn: Frederick W. Gartside
Telephone:(310) 203-8080
Telecopy:(310) 203-0567
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[PLEDGOR] , | ||
a | ||
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$1,500,000.00 | Los Angeles, California , 2008 |
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Name of Stockholder | Number of Shares | Notice Address | ||
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Extracts from Quarterly Report on Form 10-Q | |||
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þ | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. | |
For the quarterly period ended March 31, 2008 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. | |
For the transition period from to . |
Delaware | 32-0163571 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
Pasadena, CA 91103
(Address of Principal Executive Offices)
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Item 1. | Financial Statements |
Predecessor | Successor (Note 1) | |||||||||||
June 30, | June 30, | March 31, | ||||||||||
2007 | 2007 | 2008 | ||||||||||
(Unaudited) | ||||||||||||
Assets | ||||||||||||
Cash and cash equivalents, including $68,218 held in trust account at June 30, 2007 (successor) | $ | 886 | $ | 68,277 | $ | 1,169 | ||||||
Trade and other receivables, net of allowance for doubtful accounts of $237 and $452 at June 30, 2007 and March 31, 2008, respectively | 13,322 | — | 20,088 | |||||||||
Inventories | 5,472 | — | 20,660 | |||||||||
Prepaid expenses | — | 111 | — | |||||||||
Total current assets | 19,680 | 68,388 | 41,917 | |||||||||
Lease receivables | 1,364 | — | 1,619 | |||||||||
Property, plant and equipment, net | 2,737 | 2 | 4,616 | |||||||||
Container for lease fleet, net | 40,928 | — | 71,986 | |||||||||
Intangible assets, net | 4,079 | — | 59,821 | |||||||||
Deferred tax assets | — | 132 | — | |||||||||
Other assets (including $1,548 of deferred acquisition costs at June 30, 2007) | — | 2,556 | 23 | |||||||||
Total non-current assets | 49,108 | 2,690 | 138,065 | |||||||||
Total assets | $ | 68,788 | $ | 71,078 | $ | 179,982 | ||||||
Current liabilities | ||||||||||||
Trade payables and accrued liabilities | $ | 8,641 | $ | 893 | $ | 19,845 | ||||||
Current portion of long-term debt and obligations, including borrowings from related party of $2,350 at June 30, 2007 (successor) | 10,359 | 2,350 | 9,079 | |||||||||
Income tax payable | 245 | 177 | 140 | |||||||||
Employee benefits | 1,614 | 12 | 1,095 | |||||||||
Deferred underwriting fees | — | 1,380 | — | |||||||||
Total current liabilities | 20,859 | 4,812 | 30,159 | |||||||||
Non-current liabilities | ||||||||||||
Long-term debt and obligations, net of current portion | 33,811 | — | 70,968 | |||||||||
Deferred tax liabilities | 881 | — | 1,032 | |||||||||
Employee benefits and other non-current liabilities | 197 | — | 206 | |||||||||
Common stock, subject to possible conversion | — | 13,339 | — | |||||||||
Total non-current liabilities | 34,889 | 13,339 | 72,206 | |||||||||
Commitments and contingencies | — | — | — | |||||||||
Minority Interest | — | — | 8,762 | |||||||||
Stockholders’ equity | ||||||||||||
Preferred stock, $.0001 par value: 1,000,000 shares authorized; no shares outstanding (successor) | — | — | — | |||||||||
Common stock, $.0001 par value: 100,000,000 shares authorized; 10,500,000 shares and 9,690,099 shares outstanding at June 30, 2007 and March 31, 2008, | ||||||||||||
respectively (successor) | — | 1 | 1 | |||||||||
Class D and common stock (predecessor) | 12,187 | — | — | |||||||||
Additional paid-in capital | — | 51,777 | 60,344 | |||||||||
Accumulated other comprehensive income | 862 | — | 3,808 | |||||||||
Retained earnings (accumulated deficit) | (9 | ) | 1,149 | 4,702 | ||||||||
Total stockholders’ equity | 13,040 | 52,927 | 68,855 | |||||||||
Total liabilities and stockholders’ equity | $ | 68,788 | $ | 71,078 | $ | 179,982 | ||||||
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Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Predecessor | Successor (Note 1) | |||||||
Quarter Ended | Quarter Ended | |||||||
March 31, | March 31, | |||||||
2007 | 2008 | |||||||
Revenues | ||||||||
Sales of containers | $ | 14,133 | $ | 19,801 | ||||
Leasing of containers | 5,761 | 8,849 | ||||||
19,894 | 28,650 | |||||||
Costs and expenses | ||||||||
Cost of sales | 12,713 | 16,356 | ||||||
Leasing, selling and general expenses | 4,626 | 6,473 | ||||||
Depreciation and amortization | 1,058 | 2,251 | ||||||
Operating income | 1,497 | 3,570 | ||||||
Interest income | 44 | 91 | ||||||
Interest expense | (1,254 | ) | (2,426 | ) | ||||
Foreign currency exchange gain and other | 183 | 115 | ||||||
(1,027 | ) | (2,220 | ) | |||||
Income before provision for income taxes and minority interest | 470 | 1,350 | ||||||
Provision for income taxes | 244 | 376 | ||||||
Minority interest | — | 140 | ||||||
Net income | $ | 226 | $ | 834 | ||||
Net income per share: | ||||||||
Basic | $ | 0.09 | ||||||
Diluted | 0.08 | |||||||
Weighted average shares outstanding | ||||||||
Basic | 9,690,099 | |||||||
Diluted | 11,083,722 | |||||||
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Successor | ||||||||||||
Predecessor | (Note 1) | |||||||||||
Nine Months | Period from | Nine Months | ||||||||||
Ended | July 1 to | Ended | ||||||||||
March 31, | September 13, | March 31, | ||||||||||
2007 | 2007 | 2008 | ||||||||||
Revenues | ||||||||||||
Sales of containers | $ | 37,441 | $ | 10,944 | $ | 45,277 | ||||||
Leasing of containers | 15,995 | 4,915 | 17,624 | |||||||||
53,436 | 15,859 | 62,901 | ||||||||||
Costs and expenses | ||||||||||||
Cost of sales | 33,094 | 9,466 | 37,757 | |||||||||
Leasing, selling and general expenses | 16,066 | 4,210 | 13,595 | |||||||||
Depreciation and amortization | 2,582 | 653 | 4,834 | |||||||||
Operating income | 1,694 | 1,530 | 6,715 | |||||||||
Interest income | 83 | 14 | 1,194 | |||||||||
Interest expense | (3,069 | ) | (947 | ) | (4,385 | ) | ||||||
Foreign currency exchange gain (loss) and other | 230 | (129 | ) | 2,220 | ||||||||
(2,756 | ) | (1,062 | ) | (971 | ) | |||||||
Income (loss) before provision for income taxes and minority interest | (1,062 | ) | 468 | 5,744 | ||||||||
Provision for income taxes | 861 | 180 | 1,837 | |||||||||
Minority interest | — | — | 354 | |||||||||
Net income (loss) | $ | (1,923 | ) | $ | 288 | $ | 3,553 | |||||
Net income per share: | ||||||||||||
Basic | $ | 0.36 | ||||||||||
Diluted | 0.31 | |||||||||||
Weighted average shares outstanding | ||||||||||||
Basic | 9,910,981 | |||||||||||
Diluted | 11,304,604 | |||||||||||
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Condensed Consolidated Statement of Stockholders’ Equity
(In thousands, except share and per share data)
(Unaudited)
Successor | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||
Common Stock | Paid-In | Comprehensive | Retained | Total Stockholders’ | ||||||||||||||||||||
Shares | Amount | Capital | Income | Earnings | Equity | |||||||||||||||||||
Balance at June 30, 2007 | 10,500,000 | $ | 1 | $ | 51,777 | $ | — | $ | 1,149 | $ | 52,927 | |||||||||||||
Reversal of common stock subject to possible conversion | — | — | 12,858 | — | — | 12,858 | ||||||||||||||||||
Conversion of common stock into cash | (809,901 | ) | — | (6,042 | ) | — | — | (6,042 | ) | |||||||||||||||
Issuance of warrants | — | — | 1,309 | — | — | 1,309 | ||||||||||||||||||
Share-based compensation | — | — | 282 | — | — | 282 | ||||||||||||||||||
Contributed services | — | — | 160 | — | — | 160 | ||||||||||||||||||
Net income | — | — | — | — | 3,553 | 3,553 | ||||||||||||||||||
Cumulative translation adjustment | — | — | — | 3,808 | — | 3,808 | ||||||||||||||||||
Balance at March 31, 2008 | 9,690,099 | $ | 1 | $ | 60,344 | $ | 3,808 | $ | 4,702 | $ | 68,855 | |||||||||||||
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Successor | ||||||||||||
Predecessor | (Note 1) | |||||||||||
Nine Months | Period from | Nine Months | ||||||||||
Ended | July 1 to | Ended | ||||||||||
March 31, | September 13, | March 31, | ||||||||||
2007 | 2007 | 2008 | ||||||||||
(In thousands) | ||||||||||||
(Unaudited) | ||||||||||||
Net cash provided (used) by operating activities | $ | 3,476 | $ | 4,294 | $ | (6,889 | ) | |||||
Cash flows from investing activities: | ||||||||||||
Proceeds from sale of property, plant and equipment | 75 | 28 | 16 | |||||||||
Acquisitions (including deferred financing costs ), net of cash acquired | — | — | (90,954 | ) | ||||||||
Purchases of property, plant and equipment | (653 | ) | — | (310 | ) | |||||||
Purchases of container lease fleet | (15,198 | ) | (3,106 | ) | (5,764 | ) | ||||||
Purchases of intangible assets | (508 | ) | — | (285 | ) | |||||||
Payment of deferred purchase consideration | (151 | ) | — | — | ||||||||
Net cash used by investing activities | (16,435 | ) | (3,078 | ) | (97,297 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Leasing activities | (216 | ) | (7,921 | ) | (282 | ) | ||||||
Proceeds from long-term borrowings | 5,207 | 1,124 | 36,601 | |||||||||
Proceeds from issuances of capital | 8,923 | 4,990 | — | |||||||||
Payments to converting stockholders, net | — | — | (6,426 | ) | ||||||||
Minority interest capital contributions | — | — | 8,278 | |||||||||
Repayment of borrowings from related party | — | — | (2,350 | ) | ||||||||
Net cash provided (used) by financing activities | 13,914 | (1,807 | ) | 35,821 | ||||||||
Net decrease in cash | 955 | (591 | ) | (68,365 | ) | |||||||
Cash at beginning of period | 567 | 886 | 68,277 | |||||||||
Translation adjustment | (983 | ) | (5 | ) | 1,257 | |||||||
Cash at end of period | $ | 539 | $ | 290 | $ | 1,169 | ||||||
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September 13, 2007 | ||||||||
Fair value of the net tangible assets acquired and liabilities assumed: | ||||||||
Cash and cash equivalents | $ | 290 | ||||||
Trade and other receivables | 11,203 | |||||||
Inventories (primarily containers) | 9,224 | |||||||
Lease receivables | 2,008 | |||||||
Property, plant and equipment | 4,346 | |||||||
Container for lease fleet | 51,362 | |||||||
Trade and other payables | (15,082 | ) | ||||||
Income tax payable | (85 | ) | ||||||
Other current liabilities | (3,712 | ) | ||||||
Long-term debt and obligations | (37,029 | ) | ||||||
Total net tangible assets acquired and liabilities assumed | $ | 22,525 | ||||||
Fair value of intangible assets acquired: | ||||||||
Customer lists | 21,722 | |||||||
Non-compete agreement | 3,139 | |||||||
Software and other (including deferred financing costs of $1,187) | 1,521 | |||||||
Goodwill | 23,241 | |||||||
Total intangible assets acquired | 49,623 | |||||||
Total purchase consideration | $ | 72,148 | ||||||
Three Months Ended | Nine Months Ended | |||||||||||
March 31, | March 31, | |||||||||||
2007 | 2007 | 2008 | ||||||||||
Revenues | $ | 19,894 | $ | 53,436 | $ | 78,760 | ||||||
Net income (loss) | $ | (349 | ) | $ | (1,979 | ) | $ | 2,900 | ||||
Pro forma net income (loss) per share — | ||||||||||||
Basic | $ | (0.04 | ) | $ | (0.20 | ) | $ | 0.29 | ||||
Diluted | (0.04 | ) | (0.20 | ) | 0.26 | |||||||
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Predecessor | Successor | |||||||
June 30, | March 31, | |||||||
2007 | 2008 | |||||||
Finished goods | $ | 4,113 | $ | 18,371 | ||||
Work in progress | 1,359 | 2,289 | ||||||
$ | 5,472 | $ | 20,660 | |||||
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Quarter Ended | Nine Months Ended | |||||||
March 31, 2008 | ||||||||
Basic | 9,690,099 | 9,910,981 | ||||||
Assumed exercise of warrants | 1,393,623 | 1,393,623 | ||||||
Assumed exercise of stock options | — | — | ||||||
Diluted | 11,083,722 | 11,304,604 | ||||||
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Note 3. | Initial Public Offering (“IPO”) |
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Note 4. | Acquisitions |
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GE SeaCo | CHS | |||||||
November 14, 2007 | February 29, 2008 | |||||||
Fair value of the net tangible assets acquired and liabilities assumed: | ||||||||
Inventories (primarily containers) | $ | 1,746 | $ | — | ||||
Property, plant and equipment | 28 | 108 | ||||||
Container for lease fleet | 9,952 | 1,435 | ||||||
Trade and other payables | (229 | ) | 4 | |||||
Total net tangible assets acquired and liabilities assumed | 11,497 | 1,547 | ||||||
Fair value of intangible assets acquired: | ||||||||
Non-compete agreement | 1,999 | — | ||||||
Deferred financing costs | 84 | 472 | ||||||
Goodwill | 4,270 | 1,753 | ||||||
Total intangible assets acquired | 6,353 | 2,225 | ||||||
Total purchase consideration | $ | 17,850 | $ | 3,772 | ||||
Note 5. | Long-term Debt and Obligations |
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Minimum | ||||||||||||
lease payments | Interest | Principal | ||||||||||
Less than one year | $ | 381 | $ | 27 | $ | 354 | ||||||
Between one and five years | 141 | 17 | 124 | |||||||||
More than five years | — | — | — | |||||||||
$ | 522 | $ | 44 | $ | 478 | |||||||
Note 6. | Financial Instruments |
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Note 7. | Limited Recourse Revolving Line of Credit |
Note 8. | Related Party Transactions |
Note 9. | Stock Option Plans |
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Note 10. | Commitments and Contingencies |
Less than one year | $ | 2,774 | ||
One-two years | 1,413 | |||
Two-three years | 1,046 | |||
Three-four years | 470 | |||
Four-five years | 253 | |||
Thereafter | 315 | |||
$ | 6,271 | |||
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Note 11. | Cash Flows From Operating Activities |
Predecessor | Successor | |||||||||||
Nine Months | Period from | Nine Months | ||||||||||
Ended | July 1 to | Ended | ||||||||||
March 31, | September 13, | March 31, | ||||||||||
2007 | 2007 | 2008 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) | $ | (1,923 | ) | $ | 288 | $ | 3,553 | |||||
Loss (gain) on sales and disposals of fixed assets | (12 | ) | 11 | 3 | ||||||||
Unrealized foreign exchange loss (gain) | (243 | ) | 58 | (376 | ) | |||||||
Unrealized loss (gain) on forward exchange contracts | 72 | 72 | 393 | |||||||||
Unrealized loss on interest rate swaps | (85 | ) | 90 | (13 | ) | |||||||
Depreciation and amortization | 2,582 | 653 | 4,834 | |||||||||
Amortization of deferred financing costs | — | — | 125 | |||||||||
Accretion of interest on subordinated debt | 1,394 | 32 | 129 | |||||||||
Share-based compensation expense | — | — | 282 | |||||||||
Contributed services | — | — | 160 | |||||||||
Interest deferred for common stock subject to possible conversion, net of income tax effect | — | — | (226 | ) | ||||||||
Deferred income taxes | 860 | 180 | 2,281 | |||||||||
Minority interest | — | — | 354 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Trade and other receivables, net | (4,706 | ) | 1,090 | (7,814 | ) | |||||||
Inventories | 1,129 | (3,822 | ) | (10,016 | ) | |||||||
Other | — | — | (993 | ) | ||||||||
Accounts payable and accrued liabilities | 4,408 | 5,642 | 827 | |||||||||
Income taxes payable | — | — | (392 | ) | ||||||||
Net cash provided (used) by operating activities | $ | 3,476 | $ | 4,294 | $ | (6,889 | ) | |||||
12. | Subsequent Events |
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Quarter Ended | ||||||||
March 31, | ||||||||
2007 | 2008 | |||||||
(In millions) | ||||||||
Salaries, wages and related | $ | 2.8 | $ | 3.3 | ||||
Rent | 0.1 | 0.1 | ||||||
Customer service center (“CSC”) operating costs | 0.7 | 1.1 | ||||||
Business promotion | 0.2 | 0.2 | ||||||
Travel and meals | 0.1 | 0.2 | ||||||
IT and telecommunications | 0.1 | 0.2 | ||||||
Professional costs | 0.4 | 0.4 | ||||||
Other | 0.2 | 0.4 | ||||||
$ | 4.6 | $ | 5.9 | |||||
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Predecessor | Successor | Combined | ||||||||||||||
Nine Months | Period from | Nine Months | Nine Months | |||||||||||||
Ended | July 1 to | Ended | Ended | |||||||||||||
March 31, | September 13, | March 31, | March 31, | |||||||||||||
2007 | 2007 | 2008 | 2008 | |||||||||||||
(In thousands) | ||||||||||||||||
Revenues | ||||||||||||||||
Sale of containers | $ | 37,441 | $ | 10,944 | $ | 45,277 | $ | 56,221 | ||||||||
Leasing of containers | 15,995 | 4,915 | 17,624 | 22,539 | ||||||||||||
53,436 | 15,859 | 62,901 | 78,760 | |||||||||||||
Costs and expenses | ||||||||||||||||
Cost of sales | 33,094 | 9,466 | 37,757 | 47,223 | ||||||||||||
Leasing, selling and general expenses | 16,066 | 4,210 | 13,595 | 17,805 | ||||||||||||
Depreciation and amortization | 2,582 | 653 | 4,834 | 5,487 | ||||||||||||
Operating income | 1,694 | 1,530 | 6,715 | 8,245 | ||||||||||||
Interest income | 83 | 14 | 1,194 | 1,208 | ||||||||||||
Interest expense | (3,069 | ) | (947 | ) | (4,385 | ) | (5,332 | ) | ||||||||
Foreign currency exchange gain (loss) and other | 230 | (129 | ) | 2,220 | 2,091 | |||||||||||
(2,756 | ) | (1,062 | ) | (971 | ) | (2,033 | ) | |||||||||
Income (loss) before provision for income taxes and minority interest | (1,062 | ) | 468 | 5,744 | 6,212 | |||||||||||
Provision for income taxes | 861 | 180 | 1,837 | 2,017 | ||||||||||||
Minority interest | — | — | 354 | 354 | ||||||||||||
Net income (loss) | $ | (1,923 | ) | $ | 288 | $ | 3,553 | $ | 3,841 | |||||||
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Nine Months Ended March 31, | ||||||||
2007 | 2008 | |||||||
(In millions) | ||||||||
Salaries, wages and related | $ | 10.6 | $ | 9.2 | ||||
Rent | 0.3 | 0.3 | ||||||
CSC operating costs | 1.9 | 2.8 | ||||||
Business promotion | 0.6 | 0.7 | ||||||
Travel and meals | 0.5 | 0.7 | ||||||
IT and telecommunications | 0.3 | 0.6 | ||||||
Professional costs | 1.1 | 1.2 | ||||||
Other | 0.8 | 0.7 | ||||||
$ | 16.1 | $ | 16.2 | |||||
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Predecessor | Successor | |||||||
Quarter Ended | Quarter Ended | |||||||
March 31, | March 31, | |||||||
2007 | 2008 | |||||||
(In thousands) | ||||||||
Operating income | $ | 1,497 | $ | 3,570 | ||||
Add — depreciation and amortization | 1,058 | 2,251 | ||||||
EBITDA | 2,555 | 5,821 | ||||||
Add — | ||||||||
Stock-based compensation | — | 206 | ||||||
Contributed services | — | 73 | ||||||
Adjusted EBITDA | $ | 2,555 | $ | 6,100 | ||||
Predecessor | Successor | Combined | ||||||||||||||
Nine Months | Period from | Nine Months | Nine Months | |||||||||||||
Ended | July 1 to | Ended | Ended | |||||||||||||
March 31, | September 13, | March 31, | March 31, | |||||||||||||
2007 | 2007 | 2008 | 2008 | |||||||||||||
(In thousands) | ||||||||||||||||
Operating income | $ | 1,694 | $ | 1,530 | $ | 6,715 | $ | 8,245 | ||||||||
Add — depreciation and amortization | 2,582 | 653 | 4,834 | 5,487 | ||||||||||||
EBITDA | 4,276 | 2,183 | 11,549 | 13,732 | ||||||||||||
Add — | ||||||||||||||||
Stock-based compensation | — | — | 282 | 282 | ||||||||||||
Contributed services | — | — | 160 | 160 | ||||||||||||
Adjusted EBITDA | $ | 4,276 | $ | 2,183 | $ | 11,991 | $ | 14,174 | ||||||||
Predecessor | Successor | Combined | ||||||||||||||
Nine Months | Period from | Nine Months | Nine Months | |||||||||||||
Ended | July 1 to | Ended | Ended | |||||||||||||
March 31, | September 13, | March 31, | March 31, | |||||||||||||
2007 | 2007 | 2008 | 2008 | |||||||||||||
(In thousands) | ||||||||||||||||
Net cash provided (used) by operating activities | $ | 3,476 | $ | 4,294 | $ | (6,889 | ) | $ | (2,595 | ) | ||||||
Net cash used by investing activities | $ | (16,435 | ) | $ | (3,078 | ) | $ | (97,297 | ) | $ | (100,375 | ) | ||||
Net cash provided (used) by financing activities | $ | 13,914 | $ | (1,807 | ) | $ | 35,821 | $ | 34,014 | |||||||
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. | Controls and Procedures |
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Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item. 3. | Defaults Upon Senior Securities |
Item 4. | Submission of Matters to a Vote of Security Holders |
Item 5. | Other Information |
Item 6. | Exhibits |
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By: | /s/ Ronald F. Valenta |
By: | /s/ Charles E. Barrantes |
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Exhibit | ||||
Number | Exhibit Description | |||
10 | .33 | Variation Letter between Australia and New Zealand Banking Group Limited and Royal Wolf Australia Group (incorporated by reference to Exhibit 10.4 of Registrant’s Post-Effective Amendment No. 1 toForm S-1 filed March 20, 2008). | ||
31 | .1 | Certification of Chief Executive Officer Pursuant to SECRule 13a-14(a)/15d-14(a) | ||
31 | .2 | Certification of Chief Financial Officer Pursuant to SECRule 13a-14(a)/15d-14(a) | ||
32 | .1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. §1350 | ||
32 | .2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. §1350 |
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18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
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18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
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1. | To authorize and approve the Merger Agreement, pursuant to which Mobile Office Acquisition Corp. will merge with and into GFN North America Corp., or GFNA, with GFNA as the surviving corporation, and to approve and adopt the Merger. | FOR o | AGAINST o | ABSTAIN o | ||||||
2. | To approve the issuance of 4,000,000 shares of restricted General Finance common stock pursuant to the Merger Agreement. | FOR o | AGAINST o | ABSTAIN o | ||||||
o | ||||||||||
3. | If there are insufficient votes present at the special meeting for approval of the acquisition, to grant our board of directors discretionary authority to postpone or adjourn the special meeting to solicit additional votes for the acquisition. | FOR o | AGAINST o | ABSTAIN o | ||||||
MARK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT | o |
Signature | Signature | Date | ||
Proxies must be received prior to the voting at the special meeting. Any proxies or other votes received after this time will not be counted in determining whether the acquisition has been approved.