© 2003 Dechert LLP

Rights Offerings: Pay To Play?

Is the Right to Participate in the Acquisition Of Your Obligor a Recovery on Your Claim?

Seventh Annual East Distressed Debt Investing ForumJune 29, 2004, 9:45 - 10:30 a.m.Roosevelt Hotel 45 East 45th Street New York, NY 10017

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 2

© 2003 Dechert LLP

Panelists

Panelists: William Q. Derrough

Jefferies & Company, Inc.New York, NY

James K. SchaefferPPM America Inc.Chicago, IL

Glenn E. SiegelDechert LLPNew York, NY

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 3

© 2003 Dechert LLP

Getting Out of Bankruptcy

Management Doesn’t Want to Sell to Strategic Buyers

Private Equity is Competing With Existing Investors

Large Potential Upside

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 4

© 2003 Dechert LLP

Existing Investors to the Rescue

Allow Other Creditors to Participate in a Rights Offering on the Same Basis

Go Private

Preserve Long Term Upside of Business

Contribute Cash and Claims to Acquire Debtor

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 5

© 2003 Dechert LLP

Is This A Good Deal?

Chance to Preserve Your Upside Chance to Make A Good Investment in a Company You Know Don’t Need to Write Off Your Investment

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 6

© 2003 Dechert LLP

What If You Can’t Invest?

No Available Funds Existing Fund Can’t Take Equity Existing Fund Can’t Buy Into a Private Company Can You Put It in Through Another Fund?

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 7

© 2003 Dechert LLP

Is This Even A Recovery? You Have to Pay Something to Get Anything You Don’t Get Any Credit for Your Existing Investment You Can’t Transfer the Right to Participate You Don’t Like the New Investment Anyway

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 8

© 2003 Dechert LLP

Can You Find Another Bidder?

Sell Your Position to Someone Who Can Participate Find an Equity Sponsor With a Better Deal Find a Strategic Buyer

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 9

© 2003 Dechert LLP

Confirmation Fight

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 10

© 2003 Dechert LLP

Vote Against the Plan

They Can’t Vote, They’re an Interested Party You Vote No Since You Have to Pay to Play Force Valuation and Cramdown

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 11

© 2003 Dechert LLP

Valuation

We’re in the Money

The Bidding Was Rigged

This Is Undervalued

You Can’t Buy This for Less Than What It’s Worth, Even If No One Else Wants It

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 12

© 2003 Dechert LLP

Unfair Discrimination They Are

Using Their Blocking Position As Debtholders to Buy the Company

The Deal Actually Gives Them Credit for Their Claims

They Get Something for Their Claims and We Don’t

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 13

© 2003 Dechert LLP

Absolute Priority

The Secured Creditors Have Received More Than They Are Owed

Management Can’t Get Anything If We Don’t

Trade Can’t Get Anything If We Don’t

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 14

© 2003 Dechert LLP

Best Interests

We Might As Well Liquidate

The Company Is Worth More in Pieces Than As a Going Concern

If You Liquidated, We Would Get More

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 15

© 2003 Dechert LLP

Can You Win? The Right to Participate is of limited duration and non-transferable

Force Valuation of the right to buy in and create a cash alternative

Get Equity For Your Existing Investment

Pay to Play: Are Rights Offerings A Recovery on Your Claim? 16

© 2003 Dechert LLP

Can You Avoid the Problem? Is It the Only Way to Do a Deal? If You Can’t Pay, Maybe You Shouldn’t Get Anything Maybe Your Investment Isn’t Worth Anything Anymore