Here's a except from the Sec docs filed on Oct 25th, 2000. Also Paul Allen's
recent investment and attendant warrant options are exercisable at $5.00.
Interesting valuation:
Research Analyst Estimates. Lehman Brothers compiled and analyzed
current third party research analyst estimates for HSA's future share price from
various investment banks published reports. Specifically, Lehman Brothers
analyzed the reports from CIBC World Markets dated August 10, 2000, JP Morgan
dated August 10, 2000 and Bank of America dated August 10, 2000. After
eliminating one report as an outlier, the research estimates ranged from $16.00
to $17.00 and were discounted to October 1, 2000 at an assumed weighted average
cost of capital of 22.5%. The resulting implied share price for HSA ranges from
$15.21 to $16.16. Lehman Brothers also notes that since the research was
published, the Nasdaq has fallen 15.6%, the comparable universe has fallen 22.1%
and HSA has fallen 65.8%.
Discounted Cash Flow Analysis. The discounted cash flow analysis
provides a net present valuation of management projections of the projected
after-tax unlevered free cash flows (defined as operating cash flow available
after working capital, capital spending, tax and other operating requirements)
based upon HSA's financial projections. Assuming a free cash flow growth rate of
4.0% and 6.0%, a weighted average cost of capital of 22.5% and a private to
public market discount of 30%, the analysis discounted to the date thereof
indicates an implied per share valuation for HSA of $6.46 - $6.85.
Lehman Brothers is an internationally recognized investment banking
firm and, as part of its investment banking services, is regularly engaged in
the valuation of businesses and securities in connection with mergers,
acquisitions, underwritings, sales and distributions of listed an unlisted
securities, private placements and for estate, corporate and other purposes.
HSA's Board of Directors selected Lehman Brothers because of its expertise,
reputation and familiarity with HSA and the telecommunications industry
generally and because its investment banking professionals have substantial
experience in transactions comparable to this transaction. |
