1. How do the companies fit? What are the expected synergies?
2. What is your stand-alone valuation of Carter?
3. Should there be concerns about losing its investment-grade rating? How do the company's financial ratios compare with those of other industrial firms in 2002? How would those ratios change if the company borrowed $800Million, for example, to purchase a company?
4. If company decides to go forward with the acquisition, how should they offer to structure the deal? Are they likely to want a cash deal or a stock-for-stock deal, in your opinion?

CASE 49 Carter International Chris Smith had only joined the corporate financeicam of the prestigious hotel concem Carter lutensational (Carter) four weeks ago in early 2016, but was alcacy advising the CEO in critical matters. Just that morning he had icceived a como request (Exhibit 49,11 to provide analysis related to a possible acquisition af Hope Einlerprises (Tapel at a change in capital structure. With some reassurance that he knew the basics of mancial iramayement, it was line to get locirk. EXHIBIT 49.1 l E-mail Message from June Scarrello Chris Smith TO Chris Smith FROM: Jong Scarrot SUBJECT: Hope Enterprises DATE: February 1, 2016 As we discussed yesterday, the operating committee will be meeting tomorrow to consideran acquisition offer for Hope Enterprises. Please draft a recommendation covering the issues below. Thanks for doing this. I look forward to your thoughta Jane Top of mind questions 1. Hope's stock price is down substantially. Do you think $15 represents an abnormal buy ing opportunity? Please use the seven-year forecast we discussed yesterday as a base Sen your won (Exhibit 49.6 2 Quantify the value that Carter brings to Hope. The purpose of your valuation is to educate the beam on figures that will be helpful in developing a bidding strategy. There is a con- sensus shat Hope would get a healthy bump in both revenue growth and opening gin. The viow is that an acquired Hope would achieve Annual revenue growth expansion of the percentage points starting in 2017 (0.9. revenue growth in 2017 expending from 7% in the base caseto 12% in the morgon scenari. Future years would get similar bumps in over growth A 30% to 50% reduction in Hope's general and administrative asperses starting in 2017. There is some discussion about whether these gains should be included beyond 2021. We would appreciate your perspective on the value implications of this decision. Also how important is the realization of each of these two gains in the value of the morger? 3 Assuming we make an alkohoffer, we will have to do some external runcing. How should the team think about the choice of debt versus equity financing! Should we rethink Carter's capital structure mix? 4 Nilos Bordsley talked to our investment bankers who suggested we fund the deal with five-year U.S. dolar bonds at 4.7%. As an intriguing alternative, the bankers said that the five-year borrowing rate would be less in British pounds at 4.3%. I generally don't.com side financing operations in currencies other than US dollars, but I'd like you to consider whether you find British pound debt to be advantageous Carter International Carter had a long lastery in the hotel business. The Carter name was recognized internatically as synonymous with quality accommodations. Its lagslup hotels vezeibe Carter-Plaza il New Yoxs. the Carter-Bewerly in Los Alleeles, Califoxia, and the Carter-Ashelwoch and Carter Westminster in London. Carter med and created additional hotel properties in Australia, Great Trilin, New Zealanul, Turkey, and the United States, and two casino properties in Las Vegas, Nevada. In total. Carter maintained 79.000 nxim with an average occupancy of 715 Management had previously sought to sell off Carter's gambling segment, but the new management team was now prishing to increase Carter's participation in this growth segment Carter's new president and CEO Jane Scarret, had recently taken over Crocoglime CEO Francis Carter-Hellman, a member of one of Carter's founding l'anilies. Carler-Hellman remained the chair, and 256 of Carter's 15 million shares of stock was owned by oficers and directors (some of whom were family members). Scarlet was well repanded in the financial community. According to one analyst, Scaret brught the reputation of an astute finance person who would he able to create value enhancing initiatives for the company." Carter's recent directors some of whom were family members. Scatter was well regarded in the financial community According to one analyst, Scorretoraght "the regulation of an astute inance person who would be able to create value-enhancing initiatives for the company," Carter's recent skate price of S100 seemed to reflect this market contaden in Scalet. The hotel industry has experienced strong performance as of late. All equity analyst summarized the state at the industry in the limiti States: Page 66 Destand for noen stateside are apt to remain favorable in 2016, as economic expansion and high employment alguns well for lessure and corporate travel. Although companies will be hard pressed to continue to increase average daily rates at a pace comparable to those of recent years, high occupancy levels should give lodgers more pricing power. There is a cascat. Six straight years of auspicious operating conditions have resulted in arcator lotel construction activity, with sector behemoths Marriott International and Hilton Worldwide accounting for a significant portion of the sector's development pipeline. ! Scome acquisition activity in the industry was in progress. Marriott had recently announced an offer to purchase rival Starwx llotels for $12 billion, representing an enterprise value to EDITDA ratia of about 95 times. The Gaming Industry The worldwide gaming industry has experienced spectacular growth over the past years, hut its future was less certain. The ongoing aging of the population in developed markets meant that a growing portion of the pulation was looking for relatively passive activities with attractivamentas Increasingly the publie foond casino gambling to be an acceptable form of cutetium.cat. In the United States, ss to legnized gambling bad increased greatly since the 1980s as states and localities looked to stimulate borbe business and tax exces. There was solte concern abcul saluration in the gaming markets, and that increased competition would bring margin cipression. Some evidence showed that iewer casinos Bisu been tailing linancially. Internet gambling had grown dramatically in popularity over the past 20 years. The US government regulated Internet gambling, and both interstare and international transactions remained illegal. Garrhling activity in gaming ventures in Las Vegas continued to be strong, Internatically, Loic boca massive investiment and success Il Macao and currently most of the world's largest casts were located in that special achitative Region of Clance. Wichte scattigsteile of Cheese government regulat, it was clear that gaming dead in Macacas solltening. The reduced attendance was particularly evilent among the high roller gamnihlers. The market contraction in Macachal had a particularly strong effect on these firms that were heavily invested there. Stock prices for yamuing companies that were heavily invested in Maco (e.Las Vegas Sands and Wynn Resorts were down 20% 50% in the past year. Exhibit 49.2 provides cancial sucmary dnta on the participants in both the hotel and gaming industries EXHIBIT 49.21 Frercis &ummer, Dore on Companies in the Hatch and Comng Iraustry innancal statement data as of 2015 in milians Hotel Room Gaming Space Company (thousands (thousands of soft) Operations ( Las Vegas Sands 20 1.900 Casino resorts in Macno, Singapore, and United States MGM Resorts 52 2.200 15 casino resorts in the United States and a stake In a casino in Maco Pern National 3 NA 26 gaming facilities in United States Company Gaming facilities toature 26.000 gaming machines Wynn Resorts 1 300 Casino resorts in the United States and Macao Choice Hotels Hotels under the Comfort Inn Comfort Suites Quality, Clarion, Sleep Inn, Econo Lodge, Hodowy Inn, Main Stay Suites Hilton Worldwide 715 Hotel and resorts worldwide under the Hiton, Conrad, Embassy Suites, Hilton Garden Inn Hampton Inn and Homewood Suites Hyatt Hotels 155 Hotel, resort, and vacation housing worldwide Marcus NA Operates hotels, resorts, and movie Theatres in the Ured Sutes. 714 Operates or franchise hotel and resorts world International wide under the Marriott Courtyard Residence Inn, Ritz Carton, and Ronaissance names. Starwood Hotels 390 Hotels under the Sheraton Le Meridien, Wein St. Regis, and W names. Wyndham NA Hotels under the Wyndham, Ramade, Days Inn, and Worldwide Supornomes. Also a major operator of vacation time-share properties the one who Hope Enterprise 3 and 44.A prowicz financial internation in Iloque. Accrining komme EXHIBIT 49311 Statement terko Erreiset lectors in millore, except gersary tours 2014 2015 di Belarus Bes. lix Hupe Eulapius: Solution Duc 2013 Dec 2015 16.4 14.8 71.1 12.5 126.3 138.4 Construction payables Accrued expenses Current portion of long-term dobe Total current abilities Long-term doo Other liabilities Deferred income laces Total liabilities Common stock Additional paid in capital Retained camings Total stockholders'equity Total liabilities and stockholders' equity Carter 202.9 18.2 12.9 860.3 32. 214.4 1263 373.5 1.233.8 693.5 22. 14.4 869.0 32. 214.4 185.6 432.7 1.301.7 Ilipe is considered a prime acquisition taryel because of the strategic location of its holdings and the kind of customers il il tracts. The company calls casinos in Atlantic City, a market that was igncned by some major gambling cries for years but IS HOW booming.mpting a scrarile to acquire key locations there. Hope als controls a Las Vegas casino and its properties servedimarket garnkalas usually companie high-roller casinos such as Carter's Las Vegas Palace. Increasingly analysts suggested that independent casino businesses like lope needed to partner with larger hotel concerns to remain viable. Deal Considerations From early ca, Scauet bad made it very evident that she wanted Carter to be an aportant player in the casino business. The question was Cher Carter would make a ganning acquisition bot rather when and who. Although Hope represcated an active deal candidate, South know that there we gets under omsiderwili. Yestenisy a team hadi huyun investigating the comics of Ilipe anul how the merged entities might back. Overall, the view of the group was that yrwwth in the industry would continue to keep each of bademic ynth for the next five years and then ease clywn to prace with the general economy in the years beyond. A contracting of economic expectations was a theme for the beginning of 2016. World stock markets were down as investors processed the economic uncertainty associared with depressed commodity prices (oil prices were at a 10- year low), a slowing of the Chinese economy (Chiocese GDP growth was at a five-year low), and a volntile U.S. presidential cloction Exhibit 49.5 provides informatica e financial market conditions GBP EXHIBIT 49.51 Finavia Market Conditions Market Band Yield-January 2016 USD Maturity Government Bond Yields 1 year 0.47% a 235 2 year 0.67% 0349 3 year 0.78% 0479 4 year 0.98% 0.55% 5 year 1.16 0.77% 30 year 2.75% 2.37% AN A A Corporate Bond Yields 3.07% 4.16% 4.38% 5.46% 6.10% 6.90% Market Risk Premium Consensus premium used within Carter 50 Foreign Exchange Rates US Dollar to British Pound (USDIGEP 144 Economic Indikators for the United States Five Year Forecast Annual GDP growth 2.9% Arnul GOP Dell Inflation 2.7% National Unemployment Rate 5.03. BussBloody Were Trata The motivations for the deal were several. First, Tispe locked like a bargain. The stock price ha continued to drift during the past year and now trade at a price lo camins ratio of under 10 times. Secom, Ilogie was well run. Clope management as well respected in the indlustry. An acquisition would allow Carter to retain a talented management team. But this would not be ausiness-rumaround acquisition. Third, Hope was small. Hope's small size meant that Carter could add value by providing scale opportunities math the cost and revenue sides. The team thoocht Hope's margins would be substantially improved by taking advantage of Cance's existing expertise in the industry and exploiting exeral scale economics. It also believed that revenue would be accelerated for the next few years by leveraging Carter's Law. als loyalty progra, and its reservasyscale alcat cu voluene, although not necessarily higher prices. The cruce was capcelo to keep Hope's lance sheet langely unalloted. Hope's call balance, while laryc, was about al lui a well-curling company and was oil expected to be allered. The team didn't expect to see any material meryer eliciencies actes lope's assels. There was some debate regarding whether unter should use deht or equity to finance the SI billion of cash that was expected to be newslet for the acquisition. Sikim Nilsen, il longtime member of the company's measury staff, noted that there was significant pride borrowing-cost advantage in Carter's credit rating Camer's Amring was the highest credit rating among all the major US hotel companies and Pearson was concerned that the credit rating would be compromised if the $1 billion payment was made using debt financing On the other hand, Thishtala Shankar, ic newest and youngest netter of the treasury staff argued Lar Carter was tal too Conservative and its use of debt capital and claimed that all acquisition provided an excellent opportunity for Carter to better le rage its balance shot Initial discussions with Carter's investment has provided a sense of the towing terms for a live gear SI billion Carler boom. The bank expected the oliering would be issued al paril the coupon was seal either 4.7% in U.S. dollars er 1.35 in British pounds. Shankar believed strongly enough about the need to use mare debt capital that she recommended that, even if the Hoge acquisition fell through. Carter proceed with the deht issuance and use the proceeds to repurchase shares. Her primary argument was hased on the ability of deht to shield the company from its high 40 tax rata, The team recognized that act suitors for Hope might appear, and that Carter would need to be thought in its bidding strategy. It was thought there were other potential quiers for which the syncray gains with Hope were expected to be exeu larger than what might be achieved with Carter. Maybe the lack of bidding activity suggested that Hope was in lacl overpriced. Alternatively, Hope la red for an S30 a stare a lew years before the recent slide this led to the cuten. SiS price. Could Hope's slock price rebound il Carler didn't act now! With 65 million shares ciutstamuling for Tepe, such a change in price represented a large swing in value.? To be successful and with such an important decision on the line. Chris Smith knew that he needed more than hone Page 4 0.58 EXHIBIT 49.6 Final Proccion lori lope Crlerprices (Uulare in mounts 2016 2017 2018 2019 2020 Revenue grow % 79 73 7% 7% 6% Cost of goods sold revenue 050 051 0.52 053 0.54 General and adminravenue 0.20 0.20 0.20 0.20 0.20 0.20 NWC turnover 555 58.8 62.5 66.5 66.5 PPE tumover 0.86 0.90 0.95 0.97 0.97 Revenue 843 902 965 1,033 1,095 Cost of goods sold 422 460 502 547 591 Depreciation expense 51 54 52 -52 58 Gross promet 388 406 460 General and an 160 180 193 207 210 Operating profit 202 203 213 222 227 2021 2022 5% 3% 0.56 0.20 0.20 66.5 66.5 0.97 0.97 1.150 1.184 544 687 60 446 230 237 216 198 CASE 49 Carter International Chris Smith had only joined the corporate financeicam of the prestigious hotel concem Carter lutensational (Carter) four weeks ago in early 2016, but was alcacy advising the CEO in critical matters. Just that morning he had icceived a como request (Exhibit 49,11 to provide analysis related to a possible acquisition af Hope Einlerprises (Tapel at a change in capital structure. With some reassurance that he knew the basics of mancial iramayement, it was line to get locirk. EXHIBIT 49.1 l E-mail Message from June Scarrello Chris Smith TO Chris Smith FROM: Jong Scarrot SUBJECT: Hope Enterprises DATE: February 1, 2016 As we discussed yesterday, the operating committee will be meeting tomorrow to consideran acquisition offer for Hope Enterprises. Please draft a recommendation covering the issues below. Thanks for doing this. I look forward to your thoughta Jane Top of mind questions 1. Hope's stock price is down substantially. Do you think $15 represents an abnormal buy ing opportunity? Please use the seven-year forecast we discussed yesterday as a base Sen your won (Exhibit 49.6 2 Quantify the value that Carter brings to Hope. The purpose of your valuation is to educate the beam on figures that will be helpful in developing a bidding strategy. There is a con- sensus shat Hope would get a healthy bump in both revenue growth and opening gin. The viow is that an acquired Hope would achieve Annual revenue growth expansion of the percentage points starting in 2017 (0.9. revenue growth in 2017 expending from 7% in the base caseto 12% in the morgon scenari. Future years would get similar bumps in over growth A 30% to 50% reduction in Hope's general and administrative asperses starting in 2017. There is some discussion about whether these gains should be included beyond 2021. We would appreciate your perspective on the value implications of this decision. Also how important is the realization of each of these two gains in the value of the morger? 3 Assuming we make an alkohoffer, we will have to do some external runcing. How should the team think about the choice of debt versus equity financing! Should we rethink Carter's capital structure mix? 4 Nilos Bordsley talked to our investment bankers who suggested we fund the deal with five-year U.S. dolar bonds at 4.7%. As an intriguing alternative, the bankers said that the five-year borrowing rate would be less in British pounds at 4.3%. I generally don't.com side financing operations in currencies other than US dollars, but I'd like you to consider whether you find British pound debt to be advantageous Carter International Carter had a long lastery in the hotel business. The Carter name was recognized internatically as synonymous with quality accommodations. Its lagslup hotels vezeibe Carter-Plaza il New Yoxs. the Carter-Bewerly in Los Alleeles, Califoxia, and the Carter-Ashelwoch and Carter Westminster in London. Carter med and created additional hotel properties in Australia, Great Trilin, New Zealanul, Turkey, and the United States, and two casino properties in Las Vegas, Nevada. In total. Carter maintained 79.000 nxim with an average occupancy of 715 Management had previously sought to sell off Carter's gambling segment, but the new management team was now prishing to increase Carter's participation in this growth segment Carter's new president and CEO Jane Scarret, had recently taken over Crocoglime CEO Francis Carter-Hellman, a member of one of Carter's founding l'anilies. Carler-Hellman remained the chair, and 256 of Carter's 15 million shares of stock was owned by oficers and directors (some of whom were family members). Scarlet was well repanded in the financial community. According to one analyst, Scaret brught the reputation of an astute finance person who would he able to create value enhancing initiatives for the company." Carter's recent directors some of whom were family members. Scatter was well regarded in the financial community According to one analyst, Scorretoraght "the regulation of an astute inance person who would be able to create value-enhancing initiatives for the company," Carter's recent skate price of S100 seemed to reflect this market contaden in Scalet. The hotel industry has experienced strong performance as of late. All equity analyst summarized the state at the industry in the limiti States: Page 66 Destand for noen stateside are apt to remain favorable in 2016, as economic expansion and high employment alguns well for lessure and corporate travel. Although companies will be hard pressed to continue to increase average daily rates at a pace comparable to those of recent years, high occupancy levels should give lodgers more pricing power. There is a cascat. Six straight years of auspicious operating conditions have resulted in arcator lotel construction activity, with sector behemoths Marriott International and Hilton Worldwide accounting for a significant portion of the sector's development pipeline. ! Scome acquisition activity in the industry was in progress. Marriott had recently announced an offer to purchase rival Starwx llotels for $12 billion, representing an enterprise value to EDITDA ratia of about 95 times. The Gaming Industry The worldwide gaming industry has experienced spectacular growth over the past years, hut its future was less certain. The ongoing aging of the population in developed markets meant that a growing portion of the pulation was looking for relatively passive activities with attractivamentas Increasingly the publie foond casino gambling to be an acceptable form of cutetium.cat. In the United States, ss to legnized gambling bad increased greatly since the 1980s as states and localities looked to stimulate borbe business and tax exces. There was solte concern abcul saluration in the gaming markets, and that increased competition would bring margin cipression. Some evidence showed that iewer casinos Bisu been tailing linancially. Internet gambling had grown dramatically in popularity over the past 20 years. The US government regulated Internet gambling, and both interstare and international transactions remained illegal. Garrhling activity in gaming ventures in Las Vegas continued to be strong, Internatically, Loic boca massive investiment and success Il Macao and currently most of the world's largest casts were located in that special achitative Region of Clance. Wichte scattigsteile of Cheese government regulat, it was clear that gaming dead in Macacas solltening. The reduced attendance was particularly evilent among the high roller gamnihlers. The market contraction in Macachal had a particularly strong effect on these firms that were heavily invested there. Stock prices for yamuing companies that were heavily invested in Maco (e.Las Vegas Sands and Wynn Resorts were down 20% 50% in the past year. Exhibit 49.2 provides cancial sucmary dnta on the participants in both the hotel and gaming industries EXHIBIT 49.21 Frercis &ummer, Dore on Companies in the Hatch and Comng Iraustry innancal statement data as of 2015 in milians Hotel Room Gaming Space Company (thousands (thousands of soft) Operations ( Las Vegas Sands 20 1.900 Casino resorts in Macno, Singapore, and United States MGM Resorts 52 2.200 15 casino resorts in the United States and a stake In a casino in Maco Pern National 3 NA 26 gaming facilities in United States Company Gaming facilities toature 26.000 gaming machines Wynn Resorts 1 300 Casino resorts in the United States and Macao Choice Hotels Hotels under the Comfort Inn Comfort Suites Quality, Clarion, Sleep Inn, Econo Lodge, Hodowy Inn, Main Stay Suites Hilton Worldwide 715 Hotel and resorts worldwide under the Hiton, Conrad, Embassy Suites, Hilton Garden Inn Hampton Inn and Homewood Suites Hyatt Hotels 155 Hotel, resort, and vacation housing worldwide Marcus NA Operates hotels, resorts, and movie Theatres in the Ured Sutes. 714 Operates or franchise hotel and resorts world International wide under the Marriott Courtyard Residence Inn, Ritz Carton, and Ronaissance names. Starwood Hotels 390 Hotels under the Sheraton Le Meridien, Wein St. Regis, and W names. Wyndham NA Hotels under the Wyndham, Ramade, Days Inn, and Worldwide Supornomes. Also a major operator of vacation time-share properties the one who Hope Enterprise 3 and 44.A prowicz financial internation in Iloque. Accrining komme EXHIBIT 49311 Statement terko Erreiset lectors in millore, except gersary tours 2014 2015 di Belarus Bes. lix Hupe Eulapius: Solution Duc 2013 Dec 2015 16.4 14.8 71.1 12.5 126.3 138.4 Construction payables Accrued expenses Current portion of long-term dobe Total current abilities Long-term doo Other liabilities Deferred income laces Total liabilities Common stock Additional paid in capital Retained camings Total stockholders'equity Total liabilities and stockholders' equity Carter 202.9 18.2 12.9 860.3 32. 214.4 1263 373.5 1.233.8 693.5 22. 14.4 869.0 32. 214.4 185.6 432.7 1.301.7 Ilipe is considered a prime acquisition taryel because of the strategic location of its holdings and the kind of customers il il tracts. The company calls casinos in Atlantic City, a market that was igncned by some major gambling cries for years but IS HOW booming.mpting a scrarile to acquire key locations there. Hope als controls a Las Vegas casino and its properties servedimarket garnkalas usually companie high-roller casinos such as Carter's Las Vegas Palace. Increasingly analysts suggested that independent casino businesses like lope needed to partner with larger hotel concerns to remain viable. Deal Considerations From early ca, Scauet bad made it very evident that she wanted Carter to be an aportant player in the casino business. The question was Cher Carter would make a ganning acquisition bot rather when and who. Although Hope represcated an active deal candidate, South know that there we gets under omsiderwili. Yestenisy a team hadi huyun investigating the comics of Ilipe anul how the merged entities might back. Overall, the view of the group was that yrwwth in the industry would continue to keep each of bademic ynth for the next five years and then ease clywn to prace with the general economy in the years beyond. A contracting of economic expectations was a theme for the beginning of 2016. World stock markets were down as investors processed the economic uncertainty associared with depressed commodity prices (oil prices were at a 10- year low), a slowing of the Chinese economy (Chiocese GDP growth was at a five-year low), and a volntile U.S. presidential cloction Exhibit 49.5 provides informatica e financial market conditions GBP EXHIBIT 49.51 Finavia Market Conditions Market Band Yield-January 2016 USD Maturity Government Bond Yields 1 year 0.47% a 235 2 year 0.67% 0349 3 year 0.78% 0479 4 year 0.98% 0.55% 5 year 1.16 0.77% 30 year 2.75% 2.37% AN A A Corporate Bond Yields 3.07% 4.16% 4.38% 5.46% 6.10% 6.90% Market Risk Premium Consensus premium used within Carter 50 Foreign Exchange Rates US Dollar to British Pound (USDIGEP 144 Economic Indikators for the United States Five Year Forecast Annual GDP growth 2.9% Arnul GOP Dell Inflation 2.7% National Unemployment Rate 5.03. BussBloody Were Trata The motivations for the deal were several. First, Tispe locked like a bargain. The stock price ha continued to drift during the past year and now trade at a price lo camins ratio of under 10 times. Secom, Ilogie was well run. Clope management as well respected in the indlustry. An acquisition would allow Carter to retain a talented management team. But this would not be ausiness-rumaround acquisition. Third, Hope was small. Hope's small size meant that Carter could add value by providing scale opportunities math the cost and revenue sides. The team thoocht Hope's margins would be substantially improved by taking advantage of Cance's existing expertise in the industry and exploiting exeral scale economics. It also believed that revenue would be accelerated for the next few years by leveraging Carter's Law. als loyalty progra, and its reservasyscale alcat cu voluene, although not necessarily higher prices. The cruce was capcelo to keep Hope's lance sheet langely unalloted. Hope's call balance, while laryc, was about al lui a well-curling company and was oil expected to be allered. The team didn't expect to see any material meryer eliciencies actes lope's assels. There was some debate regarding whether unter should use deht or equity to finance the SI billion of cash that was expected to be newslet for the acquisition. Sikim Nilsen, il longtime member of the company's measury staff, noted that there was significant pride borrowing-cost advantage in Carter's credit rating Camer's Amring was the highest credit rating among all the major US hotel companies and Pearson was concerned that the credit rating would be compromised if the $1 billion payment was made using debt financing On the other hand, Thishtala Shankar, ic newest and youngest netter of the treasury staff argued Lar Carter was tal too Conservative and its use of debt capital and claimed that all acquisition provided an excellent opportunity for Carter to better le rage its balance shot Initial discussions with Carter's investment has provided a sense of the towing terms for a live gear SI billion Carler boom. The bank expected the oliering would be issued al paril the coupon was seal either 4.7% in U.S. dollars er 1.35 in British pounds. Shankar believed strongly enough about the need to use mare debt capital that she recommended that, even if the Hoge acquisition fell through. Carter proceed with the deht issuance and use the proceeds to repurchase shares. Her primary argument was hased on the ability of deht to shield the company from its high 40 tax rata, The team recognized that act suitors for Hope might appear, and that Carter would need to be thought in its bidding strategy. It was thought there were other potential quiers for which the syncray gains with Hope were expected to be exeu larger than what might be achieved with Carter. Maybe the lack of bidding activity suggested that Hope was in lacl overpriced. Alternatively, Hope la red for an S30 a stare a lew years before the recent slide this led to the cuten. SiS price. Could Hope's slock price rebound il Carler didn't act now! With 65 million shares ciutstamuling for Tepe, such a change in price represented a large swing in value.? To be successful and with such an important decision on the line. Chris Smith knew that he needed more than hone Page 4 0.58 EXHIBIT 49.6 Final Proccion lori lope Crlerprices (Uulare in mounts 2016 2017 2018 2019 2020 Revenue grow % 79 73 7% 7% 6% Cost of goods sold revenue 050 051 0.52 053 0.54 General and adminravenue 0.20 0.20 0.20 0.20 0.20 0.20 NWC turnover 555 58.8 62.5 66.5 66.5 PPE tumover 0.86 0.90 0.95 0.97 0.97 Revenue 843 902 965 1,033 1,095 Cost of goods sold 422 460 502 547 591 Depreciation expense 51 54 52 -52 58 Gross promet 388 406 460 General and an 160 180 193 207 210 Operating profit 202 203 213 222 227 2021 2022 5% 3% 0.56 0.20 0.20 66.5 66.5 0.97 0.97 1.150 1.184 544 687 60 446 230 237 216 198