EFTA00605877.pdf
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Recognition of Tufts Gain in Exchanges
► Provided that the $1B of debt remains outstanding as structured currently (i.e., no
personal guarantees by individuals, no guarantee by AGM, etc.), the $800M of gain deferred
from the 2007 distribution will be recognized over time as founders exchange APP interests.
As that gain is recognized, additional basis step-up will be delivered to APO Corp., resulting
in additional future TRA benefits payable to founders.
► The following examples were prepared using certain assumptions, including:
► No changes in current law corporate or individual tax rates
► Blended tax rate for individuals of 35% (portion ordinary, portion
subject to 3.8% NIl tax, etc.)
► Combined federal and state corporate tax rate of 40%
► Discount rate of 7.5%
► Net sales price per unit of $22 on all sales (and excludes future
dividends)
► Assumes APO Corp. has income to currently utilize deductions
attributes on a current basis
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Page 1
EFTA00605877
Recognition of Tufts Gain in Exchanges
Sale of 7.5% of Interests and Recognition of 7.5% of Tufts Gain
LB
(Amounts in Millions)
MR
JH
Total
Equity Cash Proceeds ($22/unit)
$152.0
$96.7
$96.7
$345.4
Cash Taxes on Equity Proceeds (35% effective rate)
53.2
33.9
33.9
120.9
Gain Recognized - Tufts Gain
26.4
16.8
16.8
60.0
Cash Taxes on Tufts Gain (35% effective rate)
9.2
5.9
5.9
21.0
Total Cash Taxes
62.4
39.7
39.7
141.9
Net After-Tax Equity Cash Proceeds
$89.5
$57.0
$57.0
$203.5
Effective Tax Rate (Equity + Tufts Gain)
41.1%
41.1%
41.1%
41.1%
NPV of After-Tax TRA Payments (i 7.5% Discount Rate)
NPV of After-Tax TRA Payments - Cash Equity Sales
$18.3
$11.7
$11.7
$41.7
NPV of After-Tax TRA Payments - Tufts Gain
$4.9
$3.1
$3.1
$11.1
NPV Total After-Tax TRA Payments
$23.2
$14.8
$14.8
$52.8
NPV Value (After-Tax Proceeds + TRA Value)
$112.8
$71.8
$71.8
$256.3
(1) Excludes future dividends; assumes $22 per share net price only.
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Page 2
EFTA00605878
Recognition of Tufts Gain in Exchanges
Sale of 7.5% of Interests Annually From 2013 Through 2016 and Sale of Remaining 70% in 2017 With Tufts Gain Recognized
Ratably
LB
(Amounts in Millions)
MR
JH
Total
Total Equity Cash Proceeds ($22/unit) (1)
$2,026.4
$1,289.5
$1,289.5
$4,605.5
Total Cash Taxes on Equity (35% effective rate)
709.2
451.3
451.3
1,611.9
Total Gain Recognized - Tufts Gain
352.0
224.0
224.0
800.0
Total Cash Taxes on Tufts Gain (35% effective rate)
123.2
78.4
78.4
280.0
Total Cash Taxes
832.4
529.7
529.7
1,891.9
Net After-Tax Equity Cash Proceeds
$1,194.0
$759.8
$759.8
$2,713.5
Effective Tax Rate (Equity + Tufts Gain)
41.1%
41.1%
41.1%
41.1%
NPV Summary @ 7.5% Discount Rate
Total Equity Cash Proceeds (@ 7.5% Disc.) (1)
$1,609.1
$1,024.0
$1,024.0
$3,657.1
Total Cash Taxes on Equity Proceeds
563.2
358.4
358.4
1,280.0
Total Gain Recognized - Tufts Gain
279.5
177.9
177.9
635.3
Total Cash Taxes on Tufts Gain (35% effective rate)
97.8
62.3
62.3
222.3
Total Cash Taxes
661.0
420.7
420.7
1,502.3
NPV of Net After-Tax Equity Cash Proceeds
$948.1
$603.3
$603.3
$2,154.8
NPV of After-Tax TRA Payments (@ 7.5% Discount Rate)
NPV of After-Tax TRA Payments - Cash Equity Sales
$194.1
$123.5
$123.5
$441.1
NPV of After-Tax TRA Payments - Tufts Gain
51.8
33.0
33.0
117.8
NPV Total After-Tax TRA Payments
$245.9
$156.5
$156.5
$558.9
Total NPV Value (After-Tax Proceeds + TRA Value)
1.194.0
759.8
759.8
2.713.7
(1) Excludes future dividends; assumes $22 per share net price only.
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Page 3
EFTA00605879
Deferral of Tufts Gain Through Guarantees
► A personal guarantee of the debt by the founders will avoid recognition of any Tufts gain on annual
exchanges and defer such gain until the guarantee is eliminated. This deferral of gain will also defer
any TRA benefits associated with the Tufts gain, and may result in an elimination of those TRA benefits
altogether based on the current TRA agreement (although consideration should be given to amending
the TRA agreement to avoid this result).
► Even in the worst case scenario, where all TRA benefits related to the Tufts gain are lost, the NPV of
the deferral of taxes on the Tufts gain may exceed the NPV of the lost TRA benefits, depending on the
period over which the Tufts gain is deferred and the discount rate used.
► The following examples were computed using assumptions consistent with previous examples,
modified by the following:
► Assumes personal guarantee of debt (and, therefore, no recognition of Tufts gain) until sale of
final interest in APP.
► Assumes worst case scenario — that TRA agreement is not amended and that no TRA benefits
are paid to the founders for basis step-up to APO Corp. related to the Tufts gain
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Page 4
EFTA00605880
Deferral of Tufts Gain Through Guarantees
Sale of 7.5% of Interests and Deferral of 7.5% of Tufts Gain for 20 Years
LB
(Amounts in Millions)
MR
JH
Total
Total Equity Cash Proceeds ($22/unit) (1)
$152.0
$96.7
$96.7
$345.4
Total Cash Taxes on Equity (35% effective rate)
53.2
33.9
33.9
120.9
Total Gain Recognized - Tufts Gain (In 2032)
26.4
16.8
16.8
60.0
Total Cash Taxes on Tufts Gain (35% effective rate)
9.2
5.9
5.9
21.0
Total Cash Taxes
62.4
39.7
39.7
141.9
Net After-Tax Equity Cash Proceeds
$89.5
$57.0
$57.0
$203.5
Effective Tax Rate (Equity + Tufts Gain)
41.1%
41.1%
41.1%
41.1%
NPV Summary @ 7.5% Discount Rate
Total Equity Cash Proceeds (@ 7.5% Disc.) (1)
$152.0
$96.7
$96.7
$345.4
Total Cash Taxes on Equity Proceeds
53.2
33.9
33.9
120.9
Total Gain Recognized - Tufts Gain
6.7
4.2
4.2
15.2
Total Cash Taxes on Tufts Gain (35% effective rate)
2.3
1.5
1.5
5.3
Total Cash Taxes
55.5
35.3
35.3
126.2
NPV of Net After-Tax Equity Cash Proceeds
$96.5
$61.4
$61.4
$219.2
NPV of After-Tax TRA Payments (@ 7.5% Discount Rate)
NPV of After-Tax TRA Payments - Cash Equity Sales
$18.3
$11.7
$11.7
$41.7
NPV of After-Tax TRA Payments - Tufts Gain
0.0
0.0
0.0
0.0
NPV Total After-Tax TRA Payments
$18.3
$11.7
$11.7
$41.7
Total NPV Value (After-Tax Proceeds + TRA Value) w/Guarantee
114.8
73.1
73.1
260.9
Total NPV Value (After-Tax Proceeds + TRA Value) No Guarantee
112.8
71.8
71.8
256.3
Benefit/Detriment of Guarantee
2.0
1.3
1.3
4.6
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Page 5
EFTA00605881
Deferral of Tufts Gain Through Guarantees
Sale of 7.5% of Interests and Deferral of 7.5% of Tufts Gain for 5 Years
LB
(Amounts in Millions)
MR
JH
Total
Total Equity Cash Proceeds ($22/unit) (1)
$152.0
$96.7
$96.7
$345.4
Total Cash Taxes on Equity (35% effective rate)
53.2
33.9
33.9
120.9
Total Gain Recognized - Tufts Gain (In 2017)
26.4
16.8
16.8
60.0
Total Cash Taxes on Tufts Gain (35% effective rate)
9.2
5.9
5.9
21.0
Total Cash Taxes
62.4
39.7
39.7
141.9
Net After-Tax Equity Cash Proceeds
$89.5
$57.0
$57.0
$203.5
Effective Tax Rate (Equity + Tufts Gain)
41.1%
41.1%
41.1%
41.1%
NPV Summary @ 7.5% Discount Rate
Total Equity Cash Proceeds (@ 7.5% Disc.) (1)
$152.0
$96.7
$96.7
$345.4
Total Cash Taxes on Equity Proceeds
53.2
33.9
33.9
120.9
Total Gain Recognized - Tufts Gain
19.8
12.6
12.6
44.9
Total Cash Taxes on Tufts Gain (35% effective rate)
6.9
4.4
4.4
15.7
Total Cash Taxes
60.1
38.3
38.3
136.6
NPV of Net After-Tax Equity Cash Proceeds
$91.9
$58.5
$58.5
$208.8
NPV of After-Tax TRA Payments (@ 7.5% Discount Rate)
NPV of After-Tax TRA Payments - Cash Equity Sales
$18.3
$11.7
$11.7
$41.7
NPV of After-Tax TRA Payments - Tufts Gain
0.0
0.0
0.0
0.0
NPV Total After-Tax TRA Payments
$18.3
$11.7
$11.7
$41.7
Total NPV Value (After-Tax Proceeds + TRA Value) w/Guarantee
110.2
70.1
70.1
250.5
Total NPV Value (After-Tax Proceeds + TRA Value) No Guarantee
112.8
71.8
71.8
256.3
Benefit/Detriment of Guarantee
(2.6)
(1.6)
(1.6)
(5.8)
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Page 6
EFTA00605882
Deferral of Tufts Gain Through Guarantees
Sale of 7.5% of Interests Annually From 2013 Through 2016 and Sale of Remaining 70% in 2017 With Tufts Gain Recognized
Entirely in 2017 (5 Year Deferral)
LB
(Amounts in Millions)
MR
JH
Total
Total Equity Cash Proceeds ($22/unit) (1)
$2,026.4
$1,289.5
$1,289.5
$4,605.5
Total Cash Taxes on Equity (35% effective rate)
709.2
451.3
451.3
1,611.9
Total Gain Recognized - Tufts Gain (In 2017)
352.0
224.0
224.0
800.0
Total Cash Taxes on Tufts Gain (35% effective rate)
123.2
78.4
78.4
280.0
Total Cash Taxes
832.4
529.7
529.7
1.891.9
Net After-Tax Equity Cash Proceeds
$1,194.0
$759.8
$759.8
$2,713.5
Effective Tax Rate (Equity + Tufts Gain)
41.1%
41.1%
41.1%
41.1%
NPV Summary @ 7.5% Discount Rate
Total Equity Cash Proceeds (@ 7.5% Disc.) (1)
$1,609.1
$1,024.0
$1,024.0
$3,657.1
Total Cash Taxes on Equity Proceeds
563.2
358.4
358.4
1,280.0
Total Gain Recognized - Tufts Gain
264.4
168.3
168.3
600.9
Total Cash Taxes on Tufts Gain (35% effective rate)
92.5
58.9
58.9
210.3
Total Cash Taxes
655.7
417.3
417.3
1,490.3
NPV of Net After-Tax Equity Cash Proceeds
$953.4
$606.7
$606.7
$2,166.8
NPV of After-Tax TRA Payments (@ 7.5% Discount Rate)
NPV of After-Tax TRA Payments - Cash Equity Sales
$194.1
$123.5
$123.5
$441.1
NPV of After-Tax TRA Payments - Tufts Gain
0.0
0.0
0.0
0.0
NPV Total After-Tax TRA Payments
$194.1
$123.5
$123.5
$441.1
Total NPV Value (After-Tax Proceeds + TRA Value) w/Guarantee
1,147.5
730.2
730.2
2,607.9
Total NPV Value (After-Tax Proceeds + TRA Value) No Guarantee
1,194.0
759.8
759.8
2,713.7
Benefit/Detriment of Guarantee
(46.6)
(29.6)
(29.6)
(105.8)
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Page 7
EFTA00605883
Deferral of Tufts Gain Through Guarantees
Sale of 7.5% of Interests Annually From 2013 Through 2016, Sale of 69% in 2017 and Sale of Remaining 1% in 2032 With Tufts
Gain Recognized Entirely in 2032 (20 Year Deferral)
LB
(Amounts in Millions)
MR
JH
Total
Total Equity Cash Proceeds ($22/unit) (1)
$2,026.4
$1,289.5
$1,289.5
$4,605.5
Total Cash Taxes on Equity (35% effective rate)
709.2
451.3
451.3
1,611.9
Total Gain Recognized - Tufts Gain (In 2032)
352.0
224.0
224.0
800.0
Total Cash Taxes on Tufts Gain (35% effective rate)
123.2
78.4
78.4
280.0
Total Cash Taxes
832.4
529.7
529.7
1.891.9
Net After-Tax Equity Cash Proceeds
$1,194.0
$759.8
$759.8
$2,713.5
Effective Tax Rate (Equity + Tufts Gain)
41.1%
41.1%
41.1%
41.1%
NPV Summary @ 7.5% Discount Rate
Total Equity Cash Proceeds (@ 7.5% Disc.) (1)
$1,599.1
$1,017.6
$1,017.6
$3,634.3
Total Cash Taxes on Equity Proceeds
559.7
356.2
356.2
1,272.0
Total Gain Recognized - Tufts Gain
89.0
56.6
56.6
202.3
Total Cash Taxes on Tufts Gain (35% effective rate)
31.1
19.8
19.8
70.8
Total Cash Taxes
590.8
376.0
376.0
1,342.8
NPV of Net After-Tax Equity Cash Proceeds
$1,008.3
$641.6
$641.6
$2,291.5
NPV of After-Tax TRA Payments (@ 7.5% Discount Rate)
NPV of After-Tax TRA Payments - Cash Equity Sales
$192.9
$122.7
$122.7
$438.3
NPV of After-Tax TRA Payments - Tufts Gain
0.0
0.0
0.0
0.0
NPV Total After-Tax TRA Payments
$192.9
$122.7
$122.7
$438.3
Total NPV Value (After-Tax Proceeds + TRA Value) w/Guarantee
1,201.1
764.3
764.3
2,729.8
Total NPV Value (After-Tax Proceeds + TRA Value) No Guarantee
1,194.0
759.8
759.8
2.713.7
Benefit/Detriment of Guarantee
7.1
4.5
4.5
16.1
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Page 8
EFTA00605884
Deferral of Tufts Gain Through Guarantees
Summary of Scenarios
7.5% Discount Rate
Net After-Tax Equity Cash Proceeds
Plus: NPV of After-Tax TRA - Cash Equity Sales
Plus: NPV of After-Tax TRA - Tufts Gain
Less: NPV of Future Tax - Tufts Gain
NPV Value (After-Tax Proceeds + TRA Value)
Difference versus No Deferral
Net After-Tax Equity Cash Proceeds
Plus: NPV of After-Tax TRA - Cash Equity Sales
Plus: NPV of After-Tax TRA - Tufts Gain
Less: NPV of Future Tax - Tufts Gain
NPV Value (After-Tax Proceeds + TRA Value)
Difference versus No Deferral
Net After-Tax Equity Cash Proceeds
Plus: NPV of After-Tax TRA - Cash Equity Sales
Plus: NPV of After-Tax TRA - Tufts Gain
Less: NPV of Future Tax - Tufts Gain
NPV Value (After-Tax Proceeds + TRA Value)
Difference versus No Deferral
Leon Black
7.5% Sale
NPV of Total Sale
No Deferral
5 yr Def.
20 yr Def.
No Deferral
5 yr Def.
20 yr Def.
$89.5
$98.8
$98.8
$948.1
$1,045.9
$1,039.4
18.3
18.3
18.3
194.1
194.1
192.9
4.9
-
-
51.8
-
-
-
(6.9)
(2.3)
-
(92.5)
(31.1)
$112.8
$110.2
$114.8
$1,194.0
$1,147.5
$1,201.1
($2.6)
$2.0
($46.6)
$7.1
Marc Rowan
7.5% Sale
NPV of Total Sale
No Deferral
5 yr Def.
20 yr Def.
No Deferral
5 yr Def.
20 yr Def.
$57.0
$62.9
$62.9
$603.3
$665.6
$661.4
11.7
11.7
11.7
123.5
123.5
122.7
3.1
-
-
33.0
-
-
-
(4.4)
(1.5)
-
(58.9)
(19.8)
$71.8
$70.1
$73.1
$759.8
$730.2
$764.3
($1.6)
$1.3
($29.6)
$4.5
Josh Harris
7.5% Sale
NPV of Total Sale
No Deferral
5 yr Def.
20 yr Def.
No Deferral
5 yr Def.
20 yr Def.
$57.0
$62.9
$62.9
$603.3
$665.6
$661.4
11.7
11.7
11.7
123.5
123.5
122.7
3.1
-
-
33.0
-
-
-
(4.4)
(1.5)
-
(58.9)
(19.8)
$71.8
$70.1
$73.1
$759.8
$730.2
$764.3
($1.6)
$1.3
($29.6)
$4.5
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Page 9
EFTA00605885
Blocker Tax Rate
40.0%
Individual Tax Rate
35.0%
Discount Rate
7.5%
JOAN Share of Value
65.0%
Gross Tax Liability for Cash Received
4,605
Tax Liability Per Annum Run-Off
73%
Gross Asset
1,018
Asset Per Annum Run-Off
7.5%
Run-Off Period
15 Yrs
% of 'IRA Benefits Following Amendment
0.0%
EFTA00605886
Tax Deferral Analysis
m mmx,m. unless <Attune noted)
clatarceden
Vtruita • IlautneeelA,frili iNsiodo
= Alrosilin aI Mont)
!Wake Tax Rate
40%
I raleadual T2,. Rale
39%
redivide's'
Manta Rate
Dtweam Raw
R%
Tax Raft
5.0%
73%
100%
119%
ISA%
17.5%
201%
Tax Ran
ANIII Shut at Vain
650%
250%
(5110)
($59)
(523)
171
512
522
$211
2.9.0%
Gaon Tn. Landow itt Cash ReCt1“11
4005
273%
(101)
(0 0
(16)
S
20
29
36
27.5%
Tax I 'able* per Annum Run01
7.9%
MO%
(91)
(0 0
(8)
14
28
37
43
30.0%
323%
0511
(11)
1
11
16
45
SI
32.5%
Gloss Awl
1118
330%
(LIZ
(781)
(526)
31
45
53
511
33.0%
Ann pet Annum Runt Iff
7.9/*
373%
001
( 13)
19
40
53
61
66
37.5%
Run{ HT Penal
15 Yes
4120%
(52)
(31
26
48
61
69
73
40.0%
2
3
4
3
6
7
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9
10
11
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3.739
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3.079
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4.419
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4.662
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5.139
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12/31/13 %Inane
1
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0.000
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3374
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3.739
3.879
4.036
4.214
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3
11/31/15 Vniage
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3.374
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4.612
4
11/31/16 Vniage
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1030
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8.798
12.019
31.971
45.762
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53.017
55092
58.144
Nei Cash Flows
(110.964)
(113.390)
(112.093)
(103.431)
(1.030.241)
43.762
47.417
50.942
53.017
55332
50.144
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NPV or Cash Taxes
04274
NPV o(TRA Bend*.
5419
NPV or Nei Cash Flows
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Model • Cash (20 Year Et°
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(34)
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| Filename | EFTA00605877.pdf |
| File Size | 1183.5 KB |
| OCR Confidence | 85.0% |
| Has Readable Text | Yes |
| Text Length | 66,601 characters |
| Indexed | 2026-02-11T23:00:41.205925 |