Impact of Repurchase Obligation on Value

1
Impact of Repurchase Obligation on Value
Presented by Radd Riebe
Ohio Employee Ownership Center 20th Annual
Conference

• April 21, 2006

2
Impact on Value

• Redeem vs. Recycle
• Assumptions
• Enterprise Value 10,000,000
• Debt 0
• Equity Value 10,000,000
• Shares Outstanding 1,000,000
• Value per Share 10.00
• 100 ESOP

• Assume Repurchase of 50,000 Shares from
  corporate funds

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Impact on Value
Recycle 10,000,000 500,000 9,500,000 1,00
0,000 9.50
Redeem 10,000,000 500,000 9,500,000 950,0
00 10.00
Equity Value Stock Purchased Post-Repurchase
Equity Value Shares Outstanding Value Per Share
4
Impact on Value

• Impact of Sinking Fund or Cash Surrender Value of
  Life Insurance
• 1,000,000 sinking fund on companys balance
  sheet

Redeem Recycle Equity
Value 10,000,000 10,000,000 Sinking Fund
1,000,000 1,000,000 Total Equity
Value 11,000,000 11,000,000 Stock Purchased
550,000 550,000 Post Repurchase
Equity Value 10,450,000 10,450,000 Shares
Outstanding 950,000 1,000,000 Value
Per Share 11.00
10.45
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Impact on Value

• Impact of Debt to Repurchase Shares
• Repurchase 50 of the ESOP stock for 5,000,000
  using debt

Redeem Recycle Equity
Value 10,000,000 10,000,000 Debt
5,000,000 5,000,000 Post-Repurchase
Equity Value 5,000,000
5,000,000 Outstanding Shares 500,000
1,000,000 Value Per Share
10.00
5.00