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Moody’s Global Special Comment Corporate Finance

November 2009

Table of Contents: $640 Billion & 640 Days Later Introduction 2 Private-equity deals default at similar rates 2 How Companies Sponsored by Big Private Equity Biggest LBOs more likely to default 3 Have Performed During the U.S. Recession About our study 3 Some ‘Large Club’ deals perform better than others 4  On average, companies owned by the largest private equity firms have Dividends less risky than they appear 4 defaulted at roughly the same rate as similarly rated companies, but Distress more common among 1 private-equity deals 4 have shown higher rates of distress. Capital infusions prove elusive 5  “Mega-deals”—the top 10 private equity-sponsored leveraged buy-outs Refinancing risk set to re-emerge 5 (LBOs) by transaction value—have performed much worse than other Private equity, public differences 6 private equity deals or similarly rated companies. Conclusion 8 Appendix A: The Top 10 Mega-Deals 9  Capital infusions have been rare during the past two years, and have Appendix B: Summary Results 10 been used mainly to help companies avoid covenant violations, not to Appendix C: Detail on Distressed reduce leverage. Exchanges 11 Appendix D: Companies Owned by Large  Companies that paid out dividends to their private equity sponsors Private Equity Firms 12 during the first year of ownership have defaulted at rates similar to other Appendix E: List of Companies by Private deals that have not paid dividends during the first year, and to similarly Equity Firm 18 rated companies. Moody’s Related Research 27  With many LBOs already in distress—rated B3 (negative outlook) or lower—we believe the wave of debt maturing in the next 1-3 years will increase refinancing risk, and could prompt additional defaults. Analyst Contacts:  LBOs by Cerberus and Apollo are performing much worse than other private equity deals, while deals by KKR, JP Morgan and Welsh Carson New York 1.212.553.1653 have seen better performance. John Rogers

Senior Vice President

Tom Marshella Group Managing Director

Moody's Teleconference To discuss this report, Moody's will hold a teleconference on Friday, November 6 beginning at 11:00 AM EST/16:00 GMT/17:00 CET. To register for the live event or to access the replay, please visit http://www.moodys.com/events.

1 Since private equity-sponsored firms generally have lower ratings than most other High Yield companies, Moody’s published indices are not appropriate for this type of comparison. See box, page 3, for further detail about how we generated our data for this analysis.

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later Introduction

A little over a year after the collapse of Lehman Brothers, many U.S. non-financial industries appear to have reached the bottom of this dismal economic cycle. But as the year-old economic crisis has progressed, private equity firms have drawn attention in the controversy over the financial community’s culpability in the meltdown. Some observers saw private equity firms as white knights, rescuing addled companies and returning them to health, while others viewed them as predators taking advantage of lax credit markets to saddle healthy companies with too much leverage in order to generate big returns, and then walking away once these companies become distressed.

The actual record is far more complicated, with companies that private equity firms have bought in recent years posting mixed results. This special comment is part of a series of publications that Moody’s has written to give investors additional data and analysis on private equity-sponsored transactions. This report offers a closer look at the performances of companies owned by the top 14 private equity firms. We also analyze some of the clear differences among these firms based on nearly 200 private equity leveraged buy-out deals (LBOs) worth roughly $640 billion2 that we have monitored throughout the ongoing downturn.3

In early 2008, we published a report on the behavior of these firms amid the lax credit-market conditions before the start of the credit crisis, arguing that the behavior of these firms at the bottom of the cycle would be much more important to debt-holders than at the top.4 This new special comment studies the behavior of these firms and the performance of their companies over the 21 months since then, from January 1, 2008 to October 1, 2009.5 Strikingly, we found that companies owned by private equity firms had higher rates of distress—that is, a rating of B3 (negative outlook) or lower—than other companies. And while default rates were similar between private equity-owned companies and others with similar ratings, we believe the private equity-owned companies could experience a further rise in defaults.

This report also looks at recent private equity “mega-deals”—the largest 10 LBOs by acquisition value—and draws distinctions among the different firms we have studied. Our study also revealed some counter-intuitive, and even surprising, trends concerning equity infusions and dividends. This report takes a closer look at these and other findings.

Private-equity deals default at similar rates

Companies affiliated with the 14 largest private equity firms have experienced similar rates of default to other companies over the course of the January 2008-September 2009 period of our study—a 19.4% rate of default among private equity firms, compared to a rate of roughly 18.6% for similarly rated companies. (See box, page 3, for an explanation of how we made this comparison).

Distressed exchanges accounted for almost half of the defaults—the largest single cause. Roughly 70% of the distressed exchanges that we studied were triggered by the purchase or exchange of less than 15% (and usually less than 10%) of the company’s total debt at distressed prices. These companies could purchase or exchange debt, largely because of the lax terms in their secured credit facilities or additional liquidity provided by the sponsor. This type of distressed exchange represents only 38% of the total number of distressed exchanges among non-private equity firms. (We have provided the detail on these distressed exchanges, so investors can adjust our data if they have a different definition of default.)

Interestingly, these private equity firms exited roughly 40 transactions in 2007 as the economy weakened and credit markets tightened. Therefore, this study does not represent all the deals that big private equity financed during the recent time of lax credit markets. Still, it does accurately reflect their actions during the current downturn, compared to similarly rated companies.

2 This was the initial transaction value of all deals included in this study. 3 All the rated transactions by these firms were funded or structured before the July-August 2007 start of the credit crisis. 4 See our special comment, “Private Equity: Tracking the Largest Sponsors,” February 2008. 5 This timeframe also provides more clarity on private equity firms’ behavior, due to the large number of companies that these firms divested (or exited) before 2008.

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$640 Billion & 640 Days Later Biggest LBOs more likely to default

Recent mega-deals have fared badly on average.6 Four of the 10 have already defaulted, and a fifth, Energy Future Holdings Corp. (EFH), is likely to be in default shortly. Among the remaining mega-deals, Clear Channel Communications, Freescale Semiconductor and Harrah’s Entertainment have undergone distressed exchanges to address their unsustainable capital structures, while Chrysler Automotive has gone into bankruptcy. EFH, the former TXU Corp., is now conducting a $3.0 billion debt exchange that would constitute a default under our guidelines. One other mega-deal, Univision Communications, is distressed but has not defaulted.

Two mega-deals have performed relatively well since their buyouts, despite their low initial ratings. HCA sold for $35.3 billion in November 2006 to a consortium made up of Bain Capital Partners, Kohlberg Kravis & Roberts and Merrill Lynch Global Private Equity. Today, HCA has a stable outlook, with decent liquidity and a steady B2 rating, unchanged since the buyout. First Data, bought out in September 2007 by a KKR-led consortium, also has good liquidity today. We attributed its one-notch downgrade to B3 in May 2009 to the global economic crisis and a slowdown in consumer spending levels.

See Appendix A, page 9, for further details about these 10 mega-deals.

About our study What is a default?

Moody’s defines a default as the non-payment of principal or interest on a timely basis. This also includes various types of distressed exchanges, including debt-for-debt and debt-for-equity swaps, as well as the repurchase of a significant portion of the company’s debt through open-market repurchases, or a tender offer, at distressed prices (often significantly less than 50% of face value).

Since not all investors would consider repurchases of less than 20% of a company’s total debt at a distressed price a default, we provided additional data on all of the distressed exchanges so that investors can adjust our default data if they use different criteria.

How we calculated our default rates

Our study compared default rates for rated non-financial corporate issuers during the January 2008- September 2009 period, with defaults among these private equity deals over the same period.

Over our period of study, non-investment-grade corporate issuers defaulted at an average rate of 13.7%. But an exact comparison was impossible, since most of the private equity deals that we studied involved much lower-rated companies, with a high proportion of B2 and B3 Corporate Family Rating issuers.

To generate a comparable default rate, we determined the average default rate for each rating category during our 21-month study. Then we constructed a weighted average default rate by using the January 1, 2008 rating for each of these LBO deals. In this report, we refer to this weighted average default rate as the default rate for “similarly rated companies.”

6 All but one of the mega-deals we studied here were initiated after 2005.

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Some ‘Large Club’ deals perform better than others

“Large Club” deals—transactions involving at least two of the top 14 private equity firms—have generated a default rate of 15.6%, modestly lower than the 18.6% rate for similarly rated companies. Three of the five defaults among this study’s 32 Large Club deals came from the eight of the mega-deals cited in the previous section. Excluding these mega-deals, Large Club deals had a default rate of 8.3% (two of the remaining 24 deals)—significantly lower than for similarly rated companies.

We saw a default rate of roughly 22% for all 72 club deals in this study (which also included LBOs involving one of the 14 largest private equity firms, plus at least one smaller private equity firm). This rate is moderately higher than for similarly rated companies. Roughly 27.5% of club deals involving one of these 14 largest firms plus at least one smaller firm go into default. We saw no common denominator among these smaller deals that would explain this substantially higher default rate, but we did see that the largest 14 firms exited far fewer of these deals in 2007 as a subset of all the deals we studied.

One clear lesson from this analysis: when two or more of the largest firms collaborate on a deal (other than a mega-deal), they behave less financially aggressively over the life of the deal than when teaming up with smaller firms. These Large Club deals tend to have a lower default rate than the other deals we studied—even though these Large Club deals took dividends during the first year of ownership at nearly twice the rate of the rest of our study group (14.6% compared to 7.5%).

Dividends less risky than they appear

LBOs have developed a reputation as deals motivated principally by the prospect of dividend windfalls for their private equity sponsors. Indeed, dividend payouts are only as successful as their timing, and can be highly risky for the acquired company, which stands to lose cash or incur additional debt without necessarily seeing any material gains or business benefits.

Among the 186 private equity deals in this study, sponsors took out dividends on 44 LBOs. Yet this group of deals actually boasted only six defaults—a 13.6% rate, lower than the rates for the entire 186-LBO study (19.4%) or for other, similarly rated companies (18.6%). These differences may not be tremendous, but they suggest that these private equity firms did not put the companies they bought at greater risk of default—at least not during our period of study.

Distress more common among private-equity deals

While the default rate is not appreciably higher among private equity-sponsored companies, distress is much more common. About one-fifth of the deals we tracked—38 out of 186—have a rating of B3 (negative outlook) or lower, compared with about 14% of similarly rated issuers.

Distress offers a rough indication of future default rates, since a lower credit rating translates into a higher likelihood of default. But these private equity deals have one large weapon against distress—“covenant lite” loan agreements. Many private equity firms were able to secure cov-lite credit facilities for their leveraged buy- out acquisitions in 2005 through 2007, on both the strength of their own financial backing and the intense competition among lenders to be involved in these deals.

Virtually all of these covenant-lite agreements allow the private equity owners to conduct equity cures—the infusion of additional equity that increases the company’s EBITDA enough so that it avoids a covenant violation. Equity cure clauses were common in lending agreements with private equity deals during the credit market bubble (2004-2007), and uncommon otherwise. We expect to see more private equity-owned companies use equity cures in coming months.

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$640 Billion & 640 Days Later Capital infusions prove elusive

We saw few significant capital infusions during our 21-month study. In theory, a private equity sponsor could help a company sidestep bankruptcy and preserve the original equity invested in the company with an outright injection of capital. In practice, this has been exceedingly rare during the current downturn, with only one instance out of 186 in which a private equity sponsor saved a company—Frontier Drilling—from bankruptcy without forcing debt-holders to make concessions as well. In one other case, the sponsor put in additional cash when debt-holders agreed to make concessions; in another case, the equity infusion was to address specific circumstances unrelated to the initial buy-out.

The lack of additional equity among these deals seems to stem from the fact that leveraged deals that go sour do so because of bad timing (such as a recession), an initial misunderstanding of the company’s market, or a misjudgment of the company’s ability to make improvements. In such situations, it is generally clear that a modest amount of additional capital will not prevent a default, nor reduce the risk of a future default, but it can have a further negative impact on the fund’s or firm’s equity returns.

Frontier Drilling (Caa1, positive), an oilfield services company, faced a period of negative cash flow in mid- 2008, at a time when it could no longer push off certain capital investments. Frontier’s private equity sponsors—Carlyle/Riverstone, Avista Capital Holdings, Highbridge Capital Management, and Global Energy Capital—more than doubled their investment, injecting some $175 million into the company in the form of redeemable PIK preferred stock. The emergency financing allowed the capital spending program to proceed, and helped pave the way for a renegotiation of bank covenants in its revolver and term loan. Today Frontier’s credit rating is still poor, but its outlook is positive, as it is generating cash flow and its spending program is complete.

IAP Worldwide (ratings withdrawn), a provider of facilities management and support for U.S. military and government agencies, received a modest capital injection—less than $50 million—to make a payment to IAP’s lenders. In exchange, the lenders agreed to amend covenants in the company’s bank agreement and term loan; to allow a limited increase in the spread on the loans; and to provide the company with the option not to pay interest in cash (payment-in-kind or PIK toggle debt).

Meanwhile, another capital infusion was directed to solve a legal dispute between Hexion Specialty Chemicals and Huntsman Corporation, another chemical company and the subject of a botched $10.5 billion takeover agreement in June 2007. As the economic outlook soured, Apollo tried to exit the deal by claiming that the combined company would be insolvent. After losing a high-profile legal dispute, Apollo agreed to pay Huntsman roughly $1 billion, of which $325 million was to come from Hexion.7 As part of the settlement, Apollo also agreed to invest $200 million in Hexion in order to safeguard against a breach of financial covenants, since Huntsman’s settlement award could be clawed back by bankruptcy courts, if Hexion were to declare or be forced into bankruptcy.

Refinancing risk set to re-emerge

One of the most jarring lessons of the major economic crisis that began in late 2008 was the realization that the credit market can actually run dry. It took almost a year and significant government intervention to convince debt-holders and lenders to start providing meaningful funds to leveraged companies. Today we see no signs that lending will disappear as it did, but chief financial officers will be nursing memories of a frozen credit market for some time.

Unfortunately, even with the credit markets operating fairly normally again, the deep recession in the U.S. has crippled the financial performance of many of the companies we tracked in our study. Additionally, we foresee a very slow recovery for many industrial companies in particular.

Meanwhile, liquidity is set to become a front-burner concern for many private equity-owned firms: some 37 of the 186 companies in our study have credit revolvers that expire before the end of 2011, and a significant level

7 The $1 billion settlement included a $250 million convertible note. Huntsman also settled for $632 million from Credit Suisse Group and Deutsche Bank, which had originally committed to cover $15.4 billion of debt in the deal. (Wall Street Journal Online, June 24, 2009)

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of term-loan debt comes due during 2010-2012.8 During the quarter following the expiration of a secured revolver, the amortization on the vast majority of first lien term loans steps up significantly—typically at a rate of 23.75% per quarter. So these companies will have to address the refinancing of these term loans at the same time as the revolver.

The next graph shows the size of the refinancing requirements for these companies, with and without the acceleration of the term loans. The acceleration of terms loans more than doubles the refinancing requirement in 2010 and increases the refunding requirements for 2011-2013 by 50%-80%.

Debt Maturities $160

$140 $120

$100

$80 $60 US $(Billions) $40 $20

$0 2010 2011 2012 2013 2014

Matur ities Accelerated Maturities

Much will depend on a further improvement over the next two years in the high-yield bond and leveraged loan markets, and on a recovery in the global economy. Current market conditions, while greatly improved over the past six months, could not support the magnitude of debt that must be refinanced over the next five years. So without a substantial improvement in the high-yield markets, many companies could have trouble refinancing their debt, and those that manage to do so may be forced to pay significantly higher interest rates, which may compromise their financial viability.

Private equity, public differences

Lastly, it is crucial to remember that private equity firms are not all alike, and that their philosophies differ to some extent. Some are more mindful of the potential impact that distressed debt holders could have on future financings, while others focus primarily on equity returns. While some firms have proved careful overall, we have found that each of these firms has made decisions that have negatively impacted debt holders.

Rated LBOs sponsored by Cerberus and Apollo have seen particularly high instances of default and distress. Four of Cerberus’s six LBOs are either in distress or default, as are roughly two-thirds of Apollo’s. In fact, Apollo and Goldman have the largest number of defaults (eight and six, respectively), while Thomas H Lee currently has the highest default rate, at 45% (5 of 11 deals). Companies sponsored by Carlyle and Bain also performed poorly during our study.

Five private equity firms sponsored five or more deals that defaulted during our study, but these defaults came about for different reasons. Carlyle and Bain each had five defaults. Carlyle had three bankruptcies9 and two distressed exchanges (both related to the repurchase of less than 10% of the outstanding debt). Bain, by contrast, has had one restructuring, four distressed exchanges, and no bankruptcies. Some investors may feel that Bain has a better track record due to the absence of bankruptcies, but our definition of default treats them similarly.

8 See our special comment, “U.S. Non-Financial Issuers’ Debt Maturities Soar in 2012,” September 2009. 9 Hawaiian Telecom, SemGroup and Stallion Oilfield Services.

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KKR, meanwhile, had an impressive distress-and-default rate of just 15%. Additionally, JP Morgan and Welsh Carson were the only firms we studied that experienced no defaults during this period, while two firms—KKR and Warburg Pincus—had only one default each. Yet even the best firm in our study, KKR, arguably overreached, and now finds itself trying to execute a distressed exchange (at the former TXU) that would wipe out less than $2 billion of debt—-costing investors more than all of Madison Dearborn’s defaults put together.

We have ranked these firms by the combined rate of their defaulted and distressed companies, because this provides a greater differentiation between the firms, and a clearer picture of the ultimate outcome of their deals, with a majority of their companies rated Caa1 or below. Carlyle had the greatest rate of distressed companies, with 35% (11 out of 31). (Appendix B, page 10, provides further detail.)

Performance of Large Private Equity Firms Summary Data on Sponsored Companies Deals Initiated Prior to 1/1/08

Distress In Default (B3 Neg & Lower) Default & Distress

Total % of % of % of PE Firm Deals Deals Total Deals Total Deals Total KKR 20 1 5% 2 10% 3 15% Madison Dearborn 12 2 17% 1 8% 3 25% Blackstone 22 3 14% 3 14% 6 27% JP Morgan 7 - 0% 2 29% 2 29% Welsh Carson 13 - 0% 4 31% 4 31% TPG 19 3 16% 3 16% 6 32% Providence Equity 12 2 17% 2 17% 4 33% Warburg Pincus 14 1 7% 4 29% 5 36% Goldman Sachs 21 6 29% 2 10% 8 38% Bain 22 5 23% 5 23% 10 45% Carlyle 31 5 16% 11 35% 16 52% TH Lee 11 5 45% 1 9% 6 55% Apollo 20 8 40% 5 25% 13 65% Cerberus 6 2 33% 2 33% 4 67% Sub Total 229 43 19% 47 21% 90 39% Adj. for Club Deals (44) (7) (9) (16) Total 186 36 19% 38 21% 74 40%

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Conclusion

Private equity firms have shouldered some criticism for some corporate defaults over the past year, but our analysis of deals dating from January 2008 reveals that this blame is at least partly misplaced. Defaults have been roughly as common among 186 LBO deals that we studied as among similarly rated companies. We also found that even large dividend payouts did not significantly raise the likelihood of default.

The largest private equity buy-outs were another matter, however. Six of the 10 biggest LBO deals over the past 21 months either are distressed today, or have defaulted. We are also pessimistic about the increased likelihood of default among our study group of 186 companies: refinancing risk is growing, with most revolvers set to expire in 2011 and 2012.

So far, private-equity takeovers have not looked much more risky or prone to default than ordinary issuers. But this could change as more debt comes due over the next 1-3 years, unless the market becomes more willing to refinance highly levered companies, or these private equity firms become more prepared to provide equity infusions to help their sponsored companies avoid default.

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Appendix A: The Top 10 Mega-Deals

Mega-Deals Top 10 Rated Transactions by Value Initial Last Rating Action Transaction Company Private Equity Firm Value $B Date Rating Date Rating Status Comments Alltel Communications TPG & Goldman Sachs $39.6 Nov 20 2007 B2 Jan 7 2009 WR Business sold to Verizon Hertz Carlyle, Clayton Dubilier & $15.0 Dec 21 2005 Ba3 Jul 14 2009 B1 Negative outlook due to declining Rice, Merrill Lynch financial performance; good liquidity HCA Inc Bain, KKR, Merrill Lynch $35.3 Nov 20 2006 B2 Nov 20 2006 B2 Stable outlook, good liquidity. First Data Corp Goldman Sachs, KKR, $29.0 Sept 17 2007 B2 May 7 2009 B3 Stable outlook; good liquidity; declining Citigroup, Credit Suisse, financial performance. Deutsche Bank & HSBC Univision Madison Dearborn, Providence, $13.7 Jan 23 2007 B1 Dec 10 2008 B3 Distressed 14.6x leverage; negative outlook. Communications TPG, TH Lee Energy Future Holdings Goldman Sachs, KKR & TPG $42.0 Feb 27 2007 B2 Aug 3 2009 Caa1 Distressed; Negative outlook; proposed debt Corp. DE shortly exchange would constitute a Default as it would lower the principal amount of debt outstanding by roughly $2 billion Harrah's Entertainment Apollo & TPG $31.0 Feb 25 2008 B2 Mar 4 2009 Caa3 Distressed Multiple distressed exchanges utilizing Exchange 2nd lien debt to take out unsecured & sub debt; capital structure appears unsustainable Clear Channel Bain & THL $26.7 Jun 24 2008 B2 Sep 3 2009 Caa3 Distressed Distressed Exchange: two events 12/08 Communications Exchange & 9/09 took out roughly 5% of total debt. Despite DE, likely candidate for restructuring or bankruptcy Freescale Blackstone, Carlyle, TPG & $19.0 Nov 3 2006 Ba3 Mar 27 2009 Caa1/LD Distressed Distressed Exchange: Incremental $1B of Semiconductor Inc. Permira Exchange 1st lien debt used to buy $2.8B of Unsec & Sub notes at a discount of 64- 75%; highly leveraged capital structure likely unsustainable Chrysler Automotive Cerberus $25.0 Jul 2 2007 B3 Apr 30 2009 D Bankruptcy Filed Chapter 11

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$640 Billion & 640 Days Later Appendix B: Summary Results

Performance of Large Private Equity Firms Summary Data on Sponsored Companies Deals Initiated Prior to 1/1/08 Default Detail

Distress In Default (B3 Neg & Lower) Default & Distress Total Payment Distressed PE Firm Deals Deals % of Total Deals % of Total Deals % of Total Bankruptcy Default Restructuring Exchange Apollo 20 8 40% 5 25% 13 65% 1 - - 7 Bain 22 5 23% 5 23% 10 45% - - 1 4 Blackstone 22 3 14% 3 14% 6 27% - 1 - 2 Carlyle 31 5 16% 11 35% 16 52% 3 - - 2 Cerberus 6 2 33% 2 33% 4 67% 1 - 1 - Goldman Sachs 21 6 29% 2 10% 8 38% 2 1 - 3 KKR 20 1 5% 2 10% 3 15% 1 - - - Madison Dearborn 12 2 17% 1 8% 3 25% 1 - 1 - JP Morgan 7 - 0% 2 29% 2 29% - - - - Providence Equity 12 2 17% 2 17% 4 33% - 1 - 1 TH Lee 11 5 45% 1 9% 6 55% 1 1 - 3 TPG 19 3 16% 3 16% 6 32% 1 - - 2 Warburg Pincus 14 1 7% 4 29% 5 36% 1 - - - Welsh Carson 13 - 0% 4 31% 4 31% - - - - Sub Total 230 43 19% 47 21% 90 39% 12 4 3 24 Adj. for Club Deals (44) (7) (9) (16) - (1) (6) Total 186 36 19% 38 21% 74 40% 12 3 3 18

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Appendix C: Detail on Distressed Exchanges

Distressed Exchanges Corporate Family Ratings

Company At 1/1/08 Latest Comment 1. 3217920 Nova Scotia B2 WR All debt repurchased at a substantial discount to par Company 2. Berry Plastics Corporation B3 B3 8.9% of debt eliminated for cash 3. Clear Channel B2 Caa3 Two events 12/08 & 9/09 took out roughly 5% of total debt. Communications, Inc. 4. CMP Susquehanna Corp B2 Caa3 2nd lien notes used to take out unsecured and sub notes (19% of total debt). 5. Freescale Semiconductor, B1 Caa1 $2.8B (25% of total debt) taken out at less than 30% of par; issued 1st Inc. lien notes; pending litigation 6. Harrah's Entertainment, Inc. B2 Caa3 40% of total debt taken out at distressed prices 7. Hawker Beechcraft B2 Caa2 Purchased $222mm (9% of total debt) unsec & sub notes for cash at a Acquisition Company LLC significant discount 8. Hexion Specialty Chemicals B2 B3 Repurchased unsecured and sub notes at steep discount; debt Inc. declines by 5% 9. IAP Worldwide Services, Inc. Caa1 WR Cerberus kicks in ~$40mm of equity to get loans amended and interest on debt can be PIK 10. LifeCare Holdings, Inc. Caa1 Caa1 Repurchased 4.5% of outstanding debt at distressed prices (39% of face value) 11. Momentive Performance B3 Caa1 Issued $200mm of 2nd lien notes to take out $349mm of unsec & sub Materials Inc. notes; 9% of total debt 12. Newport Television Holdings B2 Caa2 Purchased $50mm of the term loan at a distressed price (5% of total LLC debt). May purchase more. 13. Noranda Aluminum B2 Caa1 Purchased $249mm of outstanding debt for $71mm (18% of total Acquisition Corporation debt). Possibly purchasing more. 14. NTK Holdings, Inc.(Nortek) B2 WR Purchased roughly 5% of OpCo debt at distressed prices and then filed for Bankruptcy five months later. 15. OSI Restaurant Partners, B2 Caa1 Dutch tender for unsecured notes - $240mm (13% of total debt) for Inc. $73 cash 16. RBS Global, Inc. B2 Caa1 Purchased $150mm of HoldCo notes for $70mm & exchanged $315mm of HoldCo & OpCo debt for $200mm of new unsec notes. 15% of total debt taken out at distressed prices. 17. Realogy Corporation B3 Caa3 Buyout of Icahn's PIK notes - $515mm with $220mm 2nd lien notes plus cash (4% of total debt affected) 18. Sensata Technologies B.V. B2 Caa2 Cash tender - $41mm for $110mm unsec notes and $10mm for Euro43mm notes (roughly 8% of total debt repurchased)

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Appendix D: Companies Owned by Large Private Equity Firms

CFR

Company 01/01/08 10/01/09 Comment 1. 3217920 Nova Scotia Company B2 WR Distressed Exchange. All debt repurchased at a substantial discount to par. 2. Accellent Inc. Caa1 B3 Stable outlook. 3. Affinion Group Holdings, Inc. B2 B2 4. AGA Medical Corporation B2 B3 In Distress 5. AGY Holding Corp. B2 B3 In Distress 6. Aleris International Inc. B2 WR Bankruptcy 7. Alliance Imaging, Inc. B1 B1 8. Allison Transmission, Inc. B2 B3 In Distress 9. Alltel Communications, Inc. B2 WR Buyout by Verizon 10. Alpha Natural Resources, Inc Ba2 Ba2 11. Altegrity, Inc. B3 B3 12. ARAMARK Corporation B1 B1 13. Arinc Incorporated B3 Caa1 In Distress 14. Astoria Generating Company B1 B1 15. Avago Technologies Finance Pte. Ltd. B2 Ba3 16. Avaya, Inc. B2 B2 17. Axcan Intermediate Holdings, Inc. B1 B1 18. AxleTech International B2 B2 Acquired by General Dynamics 19. Bausch & Lomb Incorporated B2 B2 20. Berry Plastics Corporation B3 B3 Distressed Exchange; 8.9% of debt eliminated for cash. 21. Biomet, Inc. B2 B2 22. Boise Cascade, LLC Ba3 B2 23. Bombardier Rec Products, Inc. B1 Caa1 In Distress 24. Bresnan Communications, LLC B2 B1 25. Broder Bros., Co. B3 WR Restructuring - Note holders get new notes with a 58% reduction in principle and 96% of common stock 26. Burlington Coat Factory Warehouse Corp B2 B3 27. Caribe Media Inc. B2 B3 In Distress 28. Catalent Pharma Solutions, Inc. B2 B2 29. CCS Corporation B2 B3 In Distress 30. CCS Medical Inc B3 WR Bankruptcy 31. CDW Corporation B3 B3 32. Centennial Communications Corp. B2 B2 33. Cequel Communications, LLC B1 Ba3 34. Ceridian Corp. B3 B3 35. Chrysler LLC B3 WR Bankruptcy 36. Cinemark, Inc. B1 B1 37. Claire's Stores, Inc. B3 Caa3 In Distress

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CFR

Company 01/01/08 10/01/09 Comment 38. Clear Channel Communications, Inc. B2 Caa3 Distressed Exchange: two events 12/08 & 9/09 took out roughly 5% of total debt. Despite DE, likely candidate for restructuring or bankruptcy 39. CMP Susquehanna Corp B2 Caa3 Distressed Exchange: 2nd lien notes used to take out unsecured and sub notes (19% of total debt). 40. Concentra Inc. B2 B2 41. Cooper Standard Automotive Inc. B2 WR Payment default, then bankruptcy on 8/3/09 42. CorpSource Finance Holdings, LLC B2 Caa1 In Distress 43. CRC Health Corporation B2 B2 44. CVR Energy Inc. B2 B2 45. CW Media Holdings Inc. B1 Caa2 Payment Default 6/09; restructuring or default likely. 46. DJO Finance LLC B2 47. Dollar General Corporation B3 B2 48. Dollarama Group Holdings L.P. B1 B1 49. Education Management LLC B2 B1 50. Energy Future Holdings Corp. B2 Caa1 In distress. Proposed debt exchange would constitute a Default as it would lower the principal amount of debt outstanding by roughly $2 billion (more than 5% of total debt) 51. Euramax International, Inc. B2 WR Restructuring: 40% reduction in debt & 2nd lien gets equity. 52. First Data Corporation B2 B3 53. Foamex L.P. B2 WR Bankruptcy 54. Freedom Communications, Inc. Ba3 WR Payment Default (Sponsors owns 40% of equity) 55. Freescale Semiconductor, Inc. B1 Caa1 Distressed Exchange; $2.8B (25% of total debt) taken out at less than 30% of par; issued 1st lien notes; pending litigation 56. Frontier Drilling ASA B3 Caa1 In Distress 57. Gabriel Communications Finance B2 B2 Company 58. Genoa Healthcare Group, LLC B2 B2 59. Global Tel*Link Corporation B2 B2 Goldman owns 30% of common, 24% of preferred & has board representation 60. Gold Toe Moretz Holdings Corp. B2 Caa2 In Distress 61. Graham Packaging Company, L.P. B2 B2 62. Graphic Packaging International Inc. B1 B1 63. Great Lakes Dredge & Dock Corporation B3 B3 64. Guitar Center Holdings, Inc. B3 Caa1 In Distress 65. Hanley Wood LLC B2 Caa1 In Distress 66. Harrah's Entertainment, Inc. B2 Caa3 Multiple Distressed Exchanges utilizing 2nd lien debt to take out unsecured & sub debt; capital structure appears unsustainable 67. Hawaiian Telcom Communications, Inc. B2 WR Bankruptcy 68. Hawker Beechcraft Acquisition Company B2 Caa2 Distressed Exchange: purchased $222mm (9% of total debt) LLC unsec & sub notes for cash at a significant discount 69. HCA, Inc. B2 B2 70. HCR Healthcare LLC B2 B2 71. HD Supply, Inc. B2 Caa1 In Distress

13 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later

CFR

Company 01/01/08 10/01/09 Comment 72. Hertz Corporation (The) Ba3 B1 73. Hexion Specialty Chemicals Inc. B2 B3 Distressed Exchange: repurchased unsecured and sub notes at steep discount; debt declines by 5%. 74. Hines Nurseries, Inc. Caa2 WR Restructuring; 2/08 75. Hughes Network Systems, LLC B1 B1 76. IAP Worldwide Services, Inc. Caa1 WR Distressed Exchange: Cerberus kicks in <$50mm of equity to get loans amended and interest on debt can be PIK 77. IASIS Healthcare Corporation B2 B2 78. Innophos Holdings, Inc. B1 Ba3 79. Insight Midwest Holdings, LLC B1 B1 80. Insignia Vessel Acquisition, LLC B2 B3 81. Integra Telecom, Inc. Caa1 In Distress 82. Intergraph Corporation B2 B1 83. ITC^DeltaCom, Inc. B3 B3 84. J. Crew Operating Corp. Ba2 Ba2 85. Jacuzzi Brands Corp. B2 Caa2 In Distress 86. John Maneely Company B2 B2 Noviolipetsk Steel acquires company 87. KAR Holdings, Inc. B2 B2 88. Kerasotes Showplace Theatres, LLC B2 B2 89. Keystone Automotive Operations, Inc. B3 Caa2 In Distress 90. Kraton Polymers LLC B1 B2 91. Laureate Education, Inc. B2 B2 92. LifeCare Holdings, Inc. Caa1 Caa1 Distressed Exchange: Repurchased 4.5% of outstanding debt at distressed prices (39% of face value). 93. Linens 'N Things, Inc. B3 WR Bankruptcy 94. Local Insight Regatta Holdings, Inc. B1 Caa1 In Distress 95. Marquee Holdings, Inc. B1 B2 96. Masonite Corporation B2 WR Bankruptcy 97. McJunkin Red Man Holding Corporation B1 B1 98. Metals USA Holdings Corp. B2 B3 In Distress 99. Metavante Corporation Ba2 Ba1 WP owned 25% of equity at spinoff (9/07) and had board seats; divests equity by 10/09. 100. MetoKote Corporation B2 Caa1 In Distress 101. MetroPCS Wireless, Inc. B2 B2 MD owned 14% of equity and had a board seat. 102. Michaels Stores, Inc. B2 Caa1 In Distress 103. Mobile Mini, Inc. B2 B1 WCAS largely exits in 6/08. 104. Momentive Performance Materials Inc. B3 Caa1 Distressed Exchange: Issued $200mm of 2nd lien notes to take out $349mm of unsec. & sub notes; 9% of total debt 105. Multiplan, Inc. B2 B2 106. NCL Corporation Limited B2 B3 107. NCO Group, Inc. B2 B2 108. Neiman Marcus Group, Inc.(The) B1 Caa1 In Distress

14 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later

CFR

Company 01/01/08 10/01/09 Comment 109. NewPage Corporation B1 Caa1 In Distress 110. Newport Television Holdings LLC B2 Caa2 Distressed Exchange: purchased $50mm of the term loan at a distressed price (5% of total debt). Possibly tendering for more 111. Niska Gas Storage Ba3 Ba3 112. Noranda Aluminum Acquisition B2 Caa1 Distressed Exchange: purchased $249mm of outstanding debt Corporation for $71mm (18% of total debt). Possibly purchasing more 113. NTK Holdings, Inc.(Nortek) B2 WR Distressed Exchange: Purchased roughly 5% of OpCo debt at distressed prices (5/09) and then filed for Bankruptcy five months later (10/09). 114. Nuance Communications, Inc. B1 B1 115. Open Solutions, Inc. B2 B3 116. Orbitz Worldwide, Inc. B2 B2 117. Oriental Trading Company, Inc. B3 Caa3 In Distress 118. OSI Restaurant Partners, Inc. B2 Caa1 Distressed Exchange: dutch tender for unsec notes - $240mm (13% of total debt) for $73 cash. 119. Ozburn-Hessey Holding Company, LLC B2 B3 In Distress 120. Packaging Dynamics Corporation B1 B2 121. Philosophy Acquisition Company, Inc. B2 B2 122. Pierre Foods, Inc. (Old) B3 WR Bankruptcy 123. Pinnacle Foods Finance LLC B3 B3 124. Polypore International, Inc. B3 B2 125. PQ Corporation B2 B3 In Distress 126. PRIMEDIA Inc. Ba3 Ba3 127. Quality Distribution, LLC B3 Caa1 In Distress 128. Quintiles Transnational Corp. B1 B1 129. Rafaella Apparel Group, Inc. B1 Caa1 In Distress 130. RBS Global, Inc. B2 Caa1 Distressed Exchange: purchased $150mm of HoldCo notes for $70mm & exchanged $315mm of HoldCo & OpCo debt for $200mm of new unsec notes. 15% of total debt taken out at distressed prices. 131. Realogy Corporation B3 Caa3 Distressed Exchange: Buyout of Icahn's PIK notes ($515mm) with $220mm 2nd lien notes plus cash (4% of total debt) 132. Remington Arms Company, Inc. B2 B2 133. RGIS Holdings LLC B2 B3 134. Rockwood Specialties Group, Inc. B1 B1 135. Sabre Holdings Corporation B2 B2 136. Sealy Mattress Company Ba3 B2 137. Secure Computing Corporation B2 WR Buyout by McAfee 138. Select Medical Holdings Corporation B2 B2 139. SemGroup, L.P. Ba3 WR Bankruptcy; suspected fraud by CEO & CFO 140. Sensata Technologies B.V. B2 Caa2 Distressed Exchange: cash tender - paid $41mm for $110mm unsec notes and $10mm for Euro43mm notes (roughly 8% of totoal debt repurchased) 141. Sensus Metering Systems Inc. B2 B2

15 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

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CFR

Company 01/01/08 10/01/09 Comment 142. Sequa Corporation B3 Caa1 In Distress 143. Simmons Company B2 Caa3 Payment Default; will likely file for bankruptcy if debt holders approve plan. 144. Smart & Final Holdings Corp. B1 B3 145. Sonitrol Corporation B2 WR Buyout by Stanley Works 146. Spheris Inc. B3 B3 In Distress 147. SS&C Technologies, Inc. B2 B2 148. Stallion Oilfield Services, Ltd. B3 WR Payment Default (9/09) then Bankruptcy (10/09) 149. Stiefel Laboratories, Inc. B1 WR Bought by GlaxoSmithKline (7/09); Blackstone owned $500mm of preferred stock and had a board seat. 150. Sungard Data Systems Inc. B2 B2 151. Surgical Care Affiliates B2 B2 152. Synagro Technologies, Inc. B2 Caa1 In Distress 153. Talecris Biotherapeutics, Inc. B2 Ba3 154. Targa Resources, Inc. B1 B1 155. Team Finance LLC/Team Health B2 B2 156. Telcordia Technologies Inc. B3 B3 In Distress 157. Toys 'R' US, Inc. B2 B2 158. TransDigm Inc. B1 B1 159. TransFirst Holdings, Inc. B3 B3 160. Travelport LLC B2 B2 161. TRW Automotive Inc. Ba2 Caa1 In Distress. Sponsor owns 58% of equity. 162. TSI Acquisition, LLC B3 Caa1 In Distress 163. UCI Holdco, Inc. B3 Caa1 In Distress 164. United Rentals (North America), Inc. B1 B2 Apollo effectively exits on 6/12/08; Apollo had owned roughly 20% of equity and had disproportionate board representation & voting rights 165. United Surgical Partners International, B2 B2 Inc. 166. Universal City Florida Holding Co. II B1 B2 167. Univision Communications, Inc. B1 B3 In Distress 168. US Foodservice Inc. B3 B3 169. US Oncology Holdings, Inc. B2 170. Vanguard Health Holding Company I, LLC B2 B2 171. Verso Paper Finance Holdings LLC B2 B2 172. Vertis, Inc. (Old) Caa1 WR Bankruptcy 173. Vertrue Incorporated B2 B2 174. Veyance Technologies Inc. B2 Caa1 In Distress 175. Viant Holdings, Inc. B2 B2 176. Visant Holding Corp. B1 B1 177. Vistar Corporation B2 WR Merged with another Blackstone company all bank debt repaid 178. Vought Aircraft Industries, Inc. B2 B2

16 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

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CFR

Company 01/01/08 10/01/09 Comment 179. VWR Funding, Inc. B3 B3 180. Warner Chilcott Corporation B2 B1 181. Water Pik, Inc. B3 B2 182. Wesco Aircraft Hardware Corp. B2 B2 183. West Corporation B2 B2 184. Wm. Bolthouse Farms, Inc. B2 B2 185. WMG Holdings Corp. Ba3 Ba3 186. Yankee Candle Company, Inc, The B2 B2

17 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later Appendix E: List of Companies by Private Equity Firm

Company Sponsor Comment

Apollo 1. Affinion Group Holdings, Inc. Apollo 2. Hexion Specialty Chemicals Inc. Apollo Distressed Exchange: repurchased unsecured and sub notes at steep discount; debt declines by 5%. 3. Hughes Network Systems, LLC Apollo 4. Insignia Vessel Acquisition, LLC Apollo 5. Noranda Aluminum Acquisition Apollo Distressed Exchange: purchased $249mm of outstanding debt Corporation for $71mm (18% of total debt). Possibly purchasing more 6. Smart & Final Holdings Corp. Apollo 7. Claire's Stores, Inc. Apollo In Distress 8. CorpSource Finance Holdings, Apollo In Distress LLC 9. Jacuzzi Brands Corp. Apollo In Distress 10. Metals USA Holdings Corp. Apollo In Distress 11. Momentive Performance Apollo Distressed Exchange: Issued $200mm of 2nd lien notes to take Materials Inc. out $349mm of unsec. & sub notes; 9% of total debt 12. NCL Corporation Limited Apollo 13. Quality Distribution, LLC Apollo In Distress 14. RBS Global, Inc. Apollo Distressed Exchange: purchased $150mm of HoldCo notes for $70mm & exchanged $315mm of HoldCo & OpCo debt for $200mm of new unsec notes. 15% of total debt taken out at distressed prices. 15. Realogy Corporation Apollo Distressed Exchange: Buyout of Icahn's PIK notes ($515mm) with $220mm 2nd lien notes plus cash (4% of total debt) 16. United Rentals (North America), Apollo Apollo effectively exits on 6/12/08; Apollo had owned Inc. roughly 20% of equity and had disproportionate board representation & voting rights 17. Verso Paper Finance Holdings LLC Apollo 18. Berry Plastics Corporation Apollo, Graham Distressed Exchange; 8.9% of debt eliminated for cash. 19. Linens 'N Things, Inc. Apollo, NRDC Bankruptcy 20. Harrah's Entertainment, Inc. Apollo, TPG Multiple Distressed Exchanges utilizing 2nd lien debt to take out unsecured & sub debt; capital structure appears unsustainable

18 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later

Company Sponsor Comment

Bain 1. Dollarama Group Holdings L.P. Bain 2. Guitar Center Holdings, Inc. Bain In Distress 3. Keystone Automotive Operations, Bain In Distress Inc. 4. Broder Bros., Co. Bain Restructuring - Note holders get new notes with a 58% reduction in principle and 96% of common stock 5. Burlington Coat Factory Bain Warehouse Corp 6. CRC Health Corporation Bain 7. Innophos Holdings, Inc. Bain 8. Sensata Technologies B.V. Bain Distressed Exchange: cash tender - paid $41mm for $110mm unsec notes and $10mm for Euro43mm notes (roughly 8% of total debt repurchased) 9. OSI Restaurant Partners, Inc. Bain Distressed Exchange: dutch tender for unsec notes - $240mm (13% of total debt) for $73 cash. 10. Sungard Data Systems Inc. Bain(15%), KKR(15%), Blackstone(15%), Silver Lake(15%), TPG(15%), GS(15%), Providence(10%) 11. Michaels Stores, Inc. Bain, Blackstone In Distress 12. CMP Susquehanna Corp Bain, Blackstone, TH Lee Distressed Exchange: 2nd lien notes used to take out unsecured and sub notes (19% of total debt). 13. Bombardier Rec Products, Inc. Bain, Bombardier Family In Distress 14. Marquee Holdings, Inc. Bain, Carlyle, Spectrum 15. Warner Chilcott Corporation Bain, DLJ, JP Morgan, TH Lee 16. HCA, Inc. Bain, KKR, Merrill Lynch 17. Toys 'R' US, Inc. Bain, KKR, Vornado 18. WMG Holdings Corp. Bain, Providence, TH Lee 19. Clear Channel Communications, Bain, TH Lee Distressed Exchange: two events 12/08 & 9/09 took out Inc. roughly 5% of total debt. Despite DE, likely candidate for restructuring or bankruptcy 20. Quintiles Transnational Corp. Bain, TPG, 3i 21. HD Supply, Inc. Carlyle, Bain, Clayton, Dubilier & In Distress Rice 22. Accellent Inc. KKR, Bain

19 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later

Company Sponsor Comment

Blackstone 1. Gold Toe Moretz Holdings Corp. Blackstone In Distress 2. Stiefel Laboratories, Inc. Blackstone Bought by GlaxoSmithKline (7/09); Blackstone owned $500mm of preferred stock and had a board seat. 3. Catalent Pharma Solutions, Inc. Blackstone 4. DJO Finance LLC Blackstone 5. Graham Packaging Company, L.P. Blackstone 6. Orbitz Worldwide, Inc. Blackstone 7. Pinnacle Foods Finance LLC Blackstone 8. Team Finance LLC Blackstone 9. Travelport LLC Blackstone 10. TRW Automotive Inc. Blackstone In Distress 11. Vanguard Health Holding Blackstone Company I, LLC 12. Freescale Semiconductor, Inc. Blackstone, Carlyle, Permira, TPG Distressed Exchange; $2.8B (25% of total debt) taken out at less than 30% of par; issued 1st lien notes; pending litigation 13. Alpha Natural Resources, Inc Blackstone, First Reserve, Amer. Metals & Coal Int'l 14. RGIS Holdings LLC Blackstone, Goldman Sachs 15. Biomet, Inc. Blackstone, GS, KKR, TPG 16. Universal City Florida Holding Co. Blackstone, NBC II 17. Freedom Communications, Inc. Blackstone, Providence Payment Default (Sponsors owns 40% of equity) 18. Centennial Communications Blackstone, WCA&S Corp. 19. Vistar Corporation Blackstone, Wellspring Merged with another Blackstone company all bank debt repaid 20. Sungard Data Systems Inc. Bain(15%), KKR(15%), Blackstone(15%), Silver Lake(15%), TPG(15%), GS(15%), Providence(10%) 21. Michaels Stores, Inc. Bain, Blackstone In Distress 22. CMP Susquehanna Corp Bain, Blackstone, TH Lee Distressed Exchange: 2nd lien notes used to take out unsecured and sub notes (19% of total debt).

20 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later

Company Sponsor Comment

Carlyle 1. Oriental Trading Company, Inc. Carlyle In Distress 2. Philosophy Acquisition Company, Carlyle Inc. 3. PQ Corporation Carlyle In Distress 4. Sequa Corporation Carlyle In Distress 5. Arinc Incorporated Carlyle In Distress 6. Insight Midwest Holdings, LLC Carlyle 7. John Maneely Company Carlyle 8. LifeCare Holdings, Inc. Carlyle Distressed Exchange: Repurchased 4.5% of outstanding debt at distressed prices (39% of face value). 9. Multiplan, Inc. Carlyle 10. SS&C Technologies, Inc. Carlyle 11. Synagro Technologies, Inc. Carlyle In Distress 12. UCI Holdco, Inc. Carlyle In Distress 13. Veyance Technologies Inc. Carlyle In Distress 14. Vought Aircraft Industries, Inc. Carlyle 15. Wesco Aircraft Hardware Corp. Carlyle 16. AxleTech International Carlyle Group Acquired by General Dynamics 17. Hawaiian Telcom Carlyle Group Bankruptcy Communications, Inc. 18. HCR Healthcare LLC Carlyle Group 19. Hertz Corporation (The) Carlyle Group, Clayton Dubilier & Rice, Merrill Lynch 20. HD Supply, Inc. Carlyle, Bain, Clayton, Dubilier & In Distress Rice 21. Water Pik, Inc. Carlyle, EG Caital 22. Allison Transmission, Inc. Carlyle, Onex In Distress 23. Open Solutions, Inc. Carlyle, Providence 24. Sonitrol Corporation Carlyle, Spire, Wachovia Buyout by Stanley Works 25. Frontier Drilling ASA Carlyle/ Riverstone, DLJ In Distress 26. Stallion Oilfield Services, Ltd. Carlyle/Riverstone Payment Default (9/09) then Bankruptcy (10/09) 27. TSI Acquisition, LLC Carlyle/Riverstone In Distress 28. Niska Gas Storage Carlyle/Riverstone 29. SemGroup, L.P. Carlyle/Riverstone Bankruptcy 30. Marquee Holdings, Inc. Bain, Carlyle, Spectrum 31. Freescale Semiconductor, Inc. Blackstone, Carlyle, Permira, TPG Distressed Exchange; $2.8B (25% of total debt) taken out at less than 30% of par; issued 1st lien notes; pending litigation

21 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later

Company Sponsor Comment

Cerberus 1. Chrysler LLC Cerberus Bankruptcy 2. IAP Worldwide Services, Inc. Cerberus Distressed Exchange: Cerberus kicks in <$50mm of equity to get loans amended and interest on debt can be PIK 3. Rafaella Apparel Group, Inc. Cerberus In Distress 4. Remington Arms Company, Inc. Cerberus 5. NewPage Corporation Cerberus In Distress 6. Talecris Biotherapeutics, Inc. Cerberus

Goldman Sachs 1. Global Tel*Link Corporation Goldman Sachs 2. McJunkin Red Man Holding Goldman Sachs Corporation 3. Euramax International, Inc. Goldman Sachs Restructuring; 40% reduction in debt. 2nd lien gets equity 4. CCS Corporation Goldman Sachs, CAI, Kelso, Vestar, In Distress Alberta & British Columbia Invest. Mgt, O.S.S. 5. CW Media Holdings Inc. Goldman Sachs, CanWest Media Payment Default 6. Cooper Standard Automotive Inc. Goldman Sachs, Cypress Payment default, then bankruptcy on 8/3/09 7. Foamex L.P. Goldman Sachs, DE Shaw & Sigma Bankruptcy 8. 3217920 Nova Scotia Company Goldman Sachs, EdgeStone DE; All debt repurchased at a substantial discount to par 9. Sensus Metering Systems Inc. Goldman Sachs, Jordan Company 10. CVR Energy Inc. Goldman Sachs, Kelso 11. KAR Holdings, Inc. Goldman Sachs, Kelso, Parthenon, ValueAct 12. Education Management LLC Goldman Sachs, Leeds, Providence 13. Cequel Communications, LLC Goldman Sachs, Oaktree 14. Hawker Beechcraft Acquisition Goldman Sachs, Onex Distressed Exchange: purchased $222mm (9% of total debt) Company LLC unsec & sub notes for cash at a significant discount 15. ARAMARK Corporation GS, JP Morgan, TH Lee, Warburg Pincus 16. First Data Corporation GS, KKR, Citigroup, Credit Suisse, Deutsche Bank, HSBC 17. Sungard Data Systems Inc. Bain(15%), KKR(15%), Blackstone(15%), Silver Lake(15%), TPG(15%), GS(15%), Providence(10%) 18. RGIS Holdings LLC Blackstone, Goldman Sachs 19. Biomet, Inc. Blackstone, GS, KKR, TPG 20. Alltel Communications, Inc. TPG, Goldman Sachs Buyout by Verizon 21. Energy Future Holdings Corp. KKR, TPG, GS In distress. Proposed debt exchange would constitute a Default as it would lower the principal amount of debt outstanding by roughly $2 billion (more than 5% of total debt)

22 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later

Company Sponsor Comment

JP Morgan 1. MetoKote Corporation JP Morgan In Distress 2. NCO Group, Inc. JP Morgan (One Equity Partners) 3. Vertrue Incorporated JP Morgan (One Equity Partners), Oak, Rho Ventures 4. Hanley Wood LLC JP Morgan, Wasserstein In Distress 5. Warner Chilcott Corporation Bain, DLJ, JP Morgan, TH Lee 6. ARAMARK Corporation GS, JP Morgan, TH Lee, Warburg Pincus 7. Kraton Polymers LLC TPG, JP Morgan

KKR 1. AGY Holding Corp. KKR In Distress 2. Alliance Imaging, Inc. KKR 3. Gabriel Communications Finance KKR Company 4. Masonite Corporation KKR Bankruptcy 5. PRIMEDIA Inc. KKR 6. Sealy Mattress Company KKR 7. Dollar General Corporation KKR 8. Packaging Dynamics Corporation KKR 9. Rockwood Specialties Group, Inc. KKR 10. Laureate Education, Inc. KKR . 11. Accellent Inc. KKR, Bain 12. US Foodservice Inc. KKR, Clayton, Dubilier, & Rice 13. Visant Holding Corp. KKR, DLJ 14. Avago Technologies Finance Pte. KKR, Silver Lake Ltd. 15. Energy Future Holdings Corp. KKR, TPG, GS In Distress 16. Sungard Data Systems Inc. Bain(15%), KKR(15%), Blackstone(15%), Silver Lake(15%), TPG(15%), GS(15%), Providence(10%) 17. HCA, Inc. Bain, KKR, Merrill Lynch 18. Toys 'R' US, Inc. Bain, KKR, Vornado 19. Biomet, Inc. Blackstone, GS, KKR, TPG 20. First Data Corporation GS, KKR, Citigroup, Credit Suisse, Deutsche Bank, HSBC

23 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later

Company Sponsor Comment

Madison Dearborn 1. Hines Nurseries, Inc. Madison Dearborn Restructuring; 2/08 2. Wm. Bolthouse Farms, Inc. Madison Dearborn 3. Cinemark, Inc. Madison Dearborn 4. Great Lakes Dredge & Dock Madison Dearborn Corporation 5. MetroPCS Wireless, Inc. Madison Dearborn 6. Pierre Foods, Inc. (Old) Madison Dearborn Bankruptcy 7. VWR Funding, Inc. Madison Dearborn 8. Yankee Candle Company, Inc, Madison Dearborn The 9. Boise Cascade, LLC Madison Dearborn, OfficeMax 10. CDW Corporation Madison Dearborn, Providence 11. Univision Communications, Inc. Madison Dearborn, Providence, TPG, In Distress TH Lee 12. Astoria Generating Company Madison Dearborn, US Power Acquisitions, LLC

Providence 1. Kerasotes Showplace Theatres, Providence LLC 2. Newport Television Holdings LLC Providence Distressed Exchange: purchased $50mm of the term loan at a distressed price (5% of total debt). Possibly tendering for more 3. Altegrity, Inc. Providence 4. Bresnan Communications, LLC Providence, Quadrangle 5. Telcordia Technologies Inc. Providence, Warburg Pincus In Distress 6. Sungard Data Systems Inc. Bain(15%), KKR(15%), Blackstone(15%), Silver Lake(15%), TPG(15%), GS(15%), Providence(10%) 7. WMG Holdings Corp. Bain, Providence, TH Lee 8. Freedom Communications, Inc. Blackstone, Providence Payment Default (Sponsors owns 40% of equity) 9. Open Solutions, Inc. Carlyle, Providence 10. Education Management LLC Goldman Sachs, Leeds, Providence 11. CDW Corporation Madison Dearborn, Providence 12. Univision Communications, Inc. Madison Dearborn, Providence, TPG, In Distress TH Lee

24 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later

Company Sponsor Comment

TH Lee 1. Simmons Company TH Lee Payment Default; will likely file for bankruptcy if debt holders approve plan. 2. NTK Holdings, Inc.(Nortek) TH Lee Distressed Exchange: Purchased roughly 5% of OpCo debt at distressed prices (5/09) and then filed for Bankruptcy five months later (10/09). 3. Vertis, Inc. TH Lee Bankruptcy 4. West Corporation TH Lee & Quadrangle Group 5. Ceridian Corp. TH Lee, Fidelity National 6. CMP Susquehanna Corp Bain, Blackstone, TH Lee Distressed Exchange: 2nd lien notes used to take out unsecured and sub notes (19% of total debt). 7. Warner Chilcott Corporation Bain, DLJ, JP Morgan, TH Lee 8. WMG Holdings Corp. Bain, Providence, TH Lee 9. Clear Channel Communications, Bain, TH Lee Distressed Exchange: two events 12/08 & 9/09 took out Inc. roughly 5% of total debt. Despite DE, likely candidate for restructuring or bankruptcy 10. Univision Communications, Inc. Madison Dearborn, Providence, TPG, In Distress TH Lee 11. ARAMARK Corporation GS, JP Morgan, TH Lee, Warburg Pincus

TPG 1. Aleris International Inc. TPG Bankruptcy 2. Axcan Intermediate Holdings, TPG Inc. 3. Graphic Packaging International TPG Inc. 4. J. Crew Operating Corp. TPG 5. Surgical Care Affiliates TPG 6. IASIS Healthcare Corporation TPG Inc. 7. Alltel Communications, Inc. TPG, Goldman Sachs Buyout by Verizon 8. Intergraph Corporation TPG, Hellman & Friedman, JMI 9. Kraton Polymers LLC TPG, JP Morgan 10. Avaya, Inc. TPG, Silver Lake 11. Sabre Holdings Corporation TPG, Silver Lake 12. Neiman Marcus Group, Inc.(The) TPG, Warburg Pincus In Distress 13. Harrah's Entertainment, Inc. Apollo, TPG Multiple Distressed Exchanges utilizing 2nd lien debt to take out unsecured & sub debt; capital structure appears unsustainable 14. Sungard Data Systems Inc. Bain(15%), KKR(15%), Blackstone(15%), Silver Lake(15%), TPG(15%), GS(15%), Providence(10%) 15. Freescale Semiconductor, Inc. Blackstone, Carlyle, Permira, TPG Distressed Exchange; $2.8B (25% of total debt) taken out at less than 30% of par; issued 1st lien notes; pending litigation 16. Biomet, Inc. Blackstone, GS, KKR, TPG 17. Quintiles Transnational Corp. Bain, TPG, 3i

25 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later

Company Sponsor Comment 18. Energy Future Holdings Corp. KKR, TPG, GS In Distress 19. Univision Communications, Inc. Madison Dearborn, Providence, TPG, In Distress TH Lee

Warburg Pincus 1. CCS Medical Inc Warburg Pincus Bankruptcy 2. Genoa Healthcare Group, LLC Warburg Pincus 3. Nuance Communications, Inc. Warburg Pincus 4. Polypore International, Inc. Warburg Pincus 5. Targa Resources, Inc. Warburg Pincus 6. TransDigm Inc. Warburg Pincus 7. Bausch & Lomb Incorporated Warburg Pincus 8. Integra Telecom, Inc. Warburg Pincus In Distress 9. Metavante Corporation Warburg Pincus WP owned 25% of equity at spinoff (9/07) and had board seats; divests equity by 10/09. 10. Secure Computing Corporation Warburg Pincus Buyout by McAffee 11. Spheris Inc. Warburg Pincus, Soros In Distress 12. ARAMARK Corporation GS, JP Morgan, TH Lee, Warburg Pincus 13. Neiman Marcus Group, Inc.(The) TPG, Warburg Pincus In Distress 14. Telcordia Technologies Inc. Providence, Warburg Pincus In Distress

WCA&S 1. AGA Medical Corporation WCA&S In Distress 2. Caribe Media Inc. WCA&S In Distress 3. Concentra Inc. WCA&S 4. ITC^DeltaCom, Inc. WCA&S 5. Local Insight Regatta Holdings, WCA&S In Distress Inc. 6. Mobile Mini, Inc. WCA&S WCAS largely exits in 6/08. 7. Ozburn-Hessey Holding Company, WCA&S In Distress LLC 8. TransFirst Holdings, Inc. WCA&S 9. United Surgical Partners WCA&S International, Inc. 10. US Oncology Holdings, Inc. WCA&S 11. Viant Holdings, Inc. WCA&S 12. Select Medical Holdings Corp. WCA&S, Thomas Cressey 13. Centennial Communications Blackstone, WCA&S Corp.

26 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later Moody’s Related Research

Special Comments:

 Private Equity: Tracking the Largest Sponsors, February 2008 (104486)

 Safeguards for Lenders When Private Equity Layers on Debt, September 2009 (120167)

 U.S. Non-Financial Issuers’ Debt Maturities Soar in 2012, September 2009 (119781)

 Turning the Corner? Ratings Suggest an Upturn, August 2009 (119980)

 Moody’s B3 Negative and Lower Corporate Ratings List, Third Quarter 2009 (120098)

 Recoveries on Defaulted Debt in an Era of Black Swans, June 2009 (117573)

 Refunding Risk and Needs for U.S. Investment-Grade Corporate Bond Issuers, 2009-2011, March 2009 (115107)

 Refunding Risk and Needs for U.S. Speculative Grade Corporate Issuers, 2009-2011, February 2009 (114653)

 Probability of Default Ratings and Loss Given Default Assessments for Low Rated Non-Financial Companies in the U.S., Canada and EMEA Regions, June 2009 (114187)

To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of this report and that more recent reports may be available. All research may not be available to all clients.

27 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later

Special Comment Moody’s Global Corporate Finance

$640 Billion & 640 Days Later

Report Number: 121005

Author Associate Analyst Editor Senior Production Associate John Rogers Lori Harris Jeff Pruzan Wing Chan

CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE, INC.'S (MIS) CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT—LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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28 November 2009  Special Comment  Moody’s Global Corporate Finance – $640 Billion & 640 Days Later