Growth and Risk: Financing Alternatives

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1 Growth and Risk: Financing Alternatives

2 Agenda Introductions Financing Overview Debt Private Equity 2

3 3PL Why we are here: Strong growth attributes Some capital intensity Specialization and value creation are rewarded 3

4 Capital Continuum 3PL draws investment across the spectrum Debt Operating Line Term Debt/Mortgage ABL Equipment Finance Mezzanine Other (i.e., factoring / SR&D / Etc) Senior Secured Debt Subordinated Debt Subordinated Debt + Participation Convertible Debenture Preferred Shares Common Shares Equity risk Equity 4

factoring / SR&D / Etc) Senior Secured Debt Subordinated Debt Subordinated

5 Financing Alternatives Investment needs and goals remain different Equity Mezzanine Debt Senior Debt COST 20-25% 12-20% 3-9% FLEXIBLE HIGH MEDIUM LOW TIME 5-8 YEARS 3-5 YEARS 1-5 YEARS DECISIONS BOARD REP BOARD OBSERVER COVENANTS 5

12-20% 3-9% FLEXIBLE HIGH MEDIUM LOW TIME 5-8 YEARS 3-5

6 Debt Debt is the most common third-party capital Day to Day Finance: Working Capital Capital Expenditures Equipment Finance Event Finance: MBO / Succession Geographic Expansion Platform Acquisition M&A Activity Low Leverage Level High 6

Equipment Finance Event Finance: MBO / Succession

7 3 PL Lending Characteristics Leverage is subject to Diligence and Market Industry Company Management Large and Growing Fragmented Value-Add vs. Non-Value Add Capital Intensive vs. Asset Light Growth Customer Concentration Capital Intensity FX / Seasonality / Commodity Gross Margins Purpose & Type of Credit Strategic Rationale / Financial Forecast Systems & Controls Management Capacity 7

Asset Light Growth Customer Concentration Capital Intensity FX / Seasonality / Commodity Gross

8 3 PL Lending Characteristics Leverage is subject to Diligence and Market Representative Senior Metrics (Enterprise Value Diversified LBO): Sr. Debt/Capitalization: 40% - 50% Sr. Debt Funding Levels: up to 3.50x Pricing (BB/BB-): Unused Fees: Commitment Fee: Underwriting Fee: Structures: BAs +275 to +350 bps (5 year committed) 25 bps of drawn BA spreads bps per year (new capital) bps and full structural and pricing flex month terms Bullet payments: 3 year: 45% - 65% 4 year: 25% - 50% 5 year: 0 40% Representative Sub Debt Metrics (Enterprise Value Diversified LBO): Total Debt/Capitalization: 50% - 65% Total Debt Funding Levels: Up to 3.50x to 4.50x Coupon: 13.5% to 15.5% Commitment Fees: 200 bps 8

50x Pricing (BB/BB-): Unused Fees: Commitment Fee: Underwriting Fee: Structures: BAs +275 to +350 bps (5 year committed) 25 bps of drawn BA spreads 15-20 bps per year (new capital)

9 Private Equity Mechanics Raise Funds Identify Domains Private Equity Attributes High autonomy High accountability Sell Build (Organic, M&A) Invest Focused on medium term business plans To achieve long term value creation 9

accountability Sell Build (Organic, M&A) Invest Focused

10 Private Equity State of the Union Post-recession normalization of our industry 10

11 Private Equity Overview U.S LBO Deal Value Value Creation Strategies Change Buy and Break Up Buy and Roll Up Buy on credit Buy to grow Source: Bain & Co. 11

12 Private Equity Overview Successful Investments: Strong Management Senior leaders help identify required upgrades Ensure Managers are materially invested Domain Knowledge Investors continuous engagement with the industry and company Value Creation Plan Agree on a plan with top management Close collaboration between Board and Management Experience Lessons learned: acquisitions, financing, people

engagement with the industry and company Value Creation Plan Agree on a plan with top management

13 Benefits of Private Equity Partnerships Access Capital to: Accelerate Growth Plan Succession Reduce Leverage Increase Efficiency 13

14 What Private Equity Investors Look For Strong & Invested Management Team Attractive Industry Sector Well Positioned for Growth Strong Unit Economics Plan for Eventual Sale Appropriate Governance and Liquidity Contingency Planning 14

Positioned for Growth Strong Unit Economics Plan for

15 Being Prepared Financial Audited F/S Regular KPI Reporting Detailed budgets/ 5 years forecast Legal Incorporation Docs. Business licences Supply contracts Major customer agreements Regulatory approvals Employee agreements (especially senior staff) Corp. Governance Documented policies for: Bonuses Benefits Pension plans Safety Board of directors/ advisors 15

Business licences Supply contracts Major customer agreements Regulatory approvals

16 Clairvest Group Inc. Clairvest Group was founded in 1987 by entrepreneurs for entrepreneurs Seasoned Board of Directors 37 investments to date Co-CEOs lead the firm for 18 years Management team together for 10 years Clairvest Group is listed on the Toronto Stock Exchange (TSX: CVG) Clairvest is owned 88% by its board and management We invest our own money, at least 25% of each fund comes from Clairvest * Companies that members of Clairvest board led 16

to date Co-CEOs lead the firm for 18 years Management team together for 10 years Clairvest Group is listed on the

17 Clairvest - Distinguishing Characteristics Industry Focused Alignment of Interest Ownership Flexibility Acquisition Experience Patient Growth Capital Our Distinguishing Characteristics We dedicate substantial resources to our chosen domains We invest our own money; at least 25% of each fund from CVG Over 88% of Clairvest owned by management and the board We do not insist on a control position We back in place owner-operators We have supported 15 regional consolidation strategies We assisted portfolio companies with over 190 acquisitions We provide capital to facilitate growth We hold our investments longer to build leading businesses We focus on value creation as opposed to financial engineering 17

and the board We do not insist on a control position We back in place owner-operators We have supported 15 regional consolidation strategies We assisted portfolio companies

18 CIBC $393 billion 2012 Total Assets CIBC was established in 1867 and is one of the leading financial institutions in Canada with a market capitalization of over C$30.0 billion The firm s three major businesses, Retail and Business Banking, Wealth Management, and Wholesale Banking, provide a full range of financial products and services to 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world Headquartered in Toronto, Ontario, Canada, CIBC is listed on the Toronto Stock Exchange (TSX) under TSX:CM $13 billion 2012 Revenue 1st Strongest Bank in Canada 3rd Strongest Bank in the World #1 in total syndicated loan deals (2012 Bloomberg League Tables) 13.8% Tier 1 Capital Ratio 42,000 Employees Worldwide Best Commercial Bank in Canada Maclean s Magazine-50 Most Socially Responsible Corporations in Canada Promotes green procurement, requiring suppliers to show continuous improvement in environmental performance for CO2 emissions reduction and energy efficiency Contact Name: Telephone: James Logan [email protected] (416) Senior Director and Team Leader CIBC Leveraged Finance 18

small business, commercial, corporate and institutional clients in Canada and around the world Headquartered in Toronto, Ontario, Canada, CIBC is listed on the Toronto Stock Exchange (TSX) under

19 Clairvest Group Inc. Clairvest Group Inc. 22 St. Clair Avenue East, Suite 1700 Toronto, Ontario, Canada, M4T 2S3 Phone: Mitch Green Principal Adrian Pasricha Vice President

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