services Consulting Certified Public Accounts and Certified Fraud Examiners

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1 Certified Public Accounts and Certified Fraud Examiners Consulting Types of Engagements: Transaction Advising Forensic Accounting Due Diligence Portfolio Review Fraud Investigation Collateral Preservation Critical Closure Overview: Our Consulting group advises one, both, or all parties through complex business and financial transactions. We formulate strategy, innovate financial structures, and negotiate favorable terms. Our executive consulting teams also specialize in rapid salvage of distressed transactions through forensic accounting, investigation, and relationship buffering. Transaction Advising: Our experience leads clients safely through the nuances of complex dealmaking. Complimenting your legal counsel or CPA, we strategize successful term negotiations, smart payout structures, and streetwise lender/ borrower strategies. Forensic Accounting: Bluewater forensic investigators are Certified Fraud Examiners (CFEs), experts in financial evidence reconstruction. We serve legal counsel with comprehensive litigation support and expert witness testimony. Due Diligence: Bluewater due diligence combines granular data analysis with experienced intuition to sniff out opportunity and expose lurking surprises. It doesn t stop there. When important discoveries are made, we generate quick strategies to convert those relations into occasions for a more profitable transaction. Portfolio Review: Bluewater senior advisors have developed the Portfolio Review program to give executives quick insights and actionable data toward reduced risk and maximized profit. Fraud Investigation: Our on-staff Certified Fraud Examiners (CFEs), are equipped for rapid deployment to unravel complex transactions and reconstruct paper trails. Collateral Preservation: Asset-based collateral can have a funny way of disappearing. We call it the collateral lateral. Bluewater investigators know how to follow the ball. And, we re pretty savvy at forcing a fumble that results in a nice recovery for the lender. Critical Closure: Through relationship buffering and on-the-ground oversight, we optimize exit strategies during the wind-down stage of failing loans or transactions.

2 Acquisition Price True-Up Buyer: DriveTrain International, LLC Seller: Raytech, LLC Bluewater was engaged to perform a working capital purchase price true-up to assist the buyer of a manufacturing company in determining the final purchase price based on a complex working capital calculation. Five months Bluewater worked directly with the DriveTrain CEO, CFO, and financial staff in both the United States and Germany in the valuation of all working capital assets and liabilities for the purpose of establishing a properly adjusted purchase price. In addition, Bluewater provided critical insight and industry experience for consultants Grant Thorton and Crowe Chizek who were also engaged by the company. Analysis was performed on all assets and liabilities for all eight divisions, operating in both the United States and Germany. Bluewater also provided all supporting documentation for each of the general ledger accounts that were evaluated. This information was used in negotiations that resulted in favorable results for the buyer. In one finding, Bluewater determined the seller was representing $500,000 of working capital assets improperly. These were later reclassified correctly as non-working capital assets. Through this and other due diligence performed by Bluewater, the buyer s purchase price was significantly and favorably reduced.

3 On Site Representation Lender: Citizens Bank Business Finance Borrower: A tier one and tier two automotive supplier with annual revenues of $50 million and $300 million, respectively. Citizens Bank Business Finance extended these two automotive suppliers Debtor in Possession (DIP) financing for working capital purposes. Bluewater was engaged to review the borrower s post-petition collateral used to support the DIP working capital loan balance. Bluewater also represented the lender on site until the DIP loan was paid. Fifteen months over three years The borrowers did not have the capacity to adequately track the collateral supporting the loan, nor distinguish between its customers supporting guarantees and those not participating in guarantees. The issue related to both accounts receivable and inventory collateral as well as the appropriate segregation and tracking of this collateral. An initial borrowing base certificate was established by the lender, which included daily tracking of the accounts receivable and inventory collateral by participating and non-participating customers. Citizens Bank retained Bluewater to monitor and track this collateral with a complete review of each borrowing base certificate issued. Bluewater consultants, expertly skilled in inventory analysis and valuation, worked with the borrowers and its consultants to perform periodic inventory counts, physicals, and costing valuations. At the end of the liquidation, Bluewater worked to compile a timeline of customer payments and a forecast of loan repayments. The lender implemented Bluewater s recommended reserves, resulting in a full collection of its outstanding loan balances, fees and interest within the projected time frame.

4 Relationship Mending Lender: GMAC Commercial Finance (GMAC CF) Borrower: A rug importer with annual revenues in excess of $50 million. GMAC CF and the borrower decided not to renew the working capital line of credit. The borrower needed a collateral expert to assess their inventory and lead the due diligence of refinancing. Bluewater was retained by the borrower and GMAC Commercial Finance in a three-party agreement to aid the borrower in refinancing their working capital line of credit. Six months The borrower engaged Bluewater to act as liaison between it and its current lender, to help organize its accounting and financial reporting, and to vett new lenders, ensuring a smooth transition with the new financiers. Bluewater worked for six months with the borrower and helped to mediate over $1 million in disputes between the borrower and GMAC CF for a settlement agreement. Bluewater also worked with the borrower s CFO and accounting department to help organize records for the upcoming due diligence for refinancing. Bluewater assisted the borrower in properly valuing assets that would be used as collateral under a new lender arrangement. Both the borrower and Bluewater vetted several potential lenders before settling on the lender of choice. Bluewater worked closely with the borrower and the lender s due diligence team to evaluate assets, cash flows, and potential loan discounting, which resulted in a successful refinancing of the working capital line of credit. GMAC CF and the borrower were very satisfied with the financing arrangement. Bluewater due diligence resulted in an agreeable settlement resolving several previously irreconcilable differences between the two parties.

5 Restructured Liquidation Customer: Aviation Restructuring Transaction, LLC (ART) ART was incorporated as a liquidating entity whose sole purpose was to liquidate aircraft and aircraft related parts. Several lending institutions pooled their assets in order to maximize the liquidation value. Bluewater was retained by the Bank Group prior to the formation of ART and then later by ART to assist in the valuation of lease stream revenues and the assets that supported the warehouse line of credit. The Bank Group formed ART after it was determined that this would the best way to maximize the liquidation value of the aircraft and aircraft parts. 27 months over 3 years Bluewater conducted an analysis of the aircraft and aircraft parts that supported the original warehouse line of credit provided by the Bank Group. As a result of the industry-altering events of September 11, 2001, lease stream cash flows were reduced significantly and the servicing agent could not service the line of credit. Bluewater analyzed the previous lease streams, the expected future lease streams, the physical assets, and worked closely with the Bank Group to determine the best strategy for maximizing the line of credit payoff. After ART was formed, Bluewater worked directly for the Board of Managers to optimize the sale of aircraft and engine assets by analyzing cash flows, auditing the existing servicer, and performing lease stream analysis and discounted cash flow analysis. Bluewater also compiled financial statements for the purposes of tax reporting. Bluewater advanced the successful liquidation of the majority of ART assets and the final sale of remaining assets, which took place at the end of 2008.

6 Mitigated Losses Lender: GMAC Commercial Finance (GMAC CF) Borrower: A domestic tier one / tier two automotive supplier with annual revenues in excess of $50 million. Borrower executive management allegedly misrepresented collateral by $4 million. The collateral supported a $20 million working capital loan. The borrower hired turnaround professionals to execute a turnaround plan. Bluewater was engaged by the lender to investigate working capital over-advanced through alleged misrepresentation of collateralized assets by borrower executives. Five months Bluewater reviewed daily borrowing base certificates and performed collateral analysis as well as review of cash flow projections to provide GMAC CF with the necessary information in providing working capital financing. Bluewater representatives identified significant weaknesses in daily reporting procedures as well as cash flow analysis. These cash flow forecasts were utilized to support funding of operations. Bluewater investigators uncovered significant inventory concealments, whereby the borrower had manufactured defective parts and included them as finished goods inventory to collateralize their working capital line of credit. Bluewater also worked with the assignee to assess collateral liquidation throughout a month-long process. Bluewater consultants provided analysis that was utilized by both the lender and the assignee, in some cases disagreeing with the assignee s approach during the liquidation of assets. All of this resulted in significant value to the secured lender and the assignee.