December 13, 2016Gordian Group 2016 UpdateTo Our Colleagues and Friends of the Firm, 2016 has been a fine year for us, which is humbling and pleasing. We continue to deliver great results for our clients in our core business of advising boards and private equity firm, raising capital, effecting financial restructurings and merger transactions, providing opinions and rendering expert opinion/litigation support services in complex matters. The sectors that are red-hot for us include healthcare and energy, but our book of business is broadly based across industry lines. We continue our focus on complex insurance product remediation. Certain highlights and new initiatives we want to share with you include: Unique Expertise Advising Boards and Shareholders Lack of creditor conflicts matter. Our historic success lies in no small measure to our long-ago decision not to represent financial creditor constituencies. Burnishing our credentials as the nation’s leading investment bank solving complicated, distressed and/or “story” challenges for boards of directors and shareholders, we advised the Board of Trans Energy (ticker: TENG), a small public pure natural gas play in the Marcellus Shale in West Virginia. With the stock languishing around a dollar during our 18 month engagement, and with Trans Energy insolvent and in continuous default on its senior secured credit facility, we advised the Board as to how to keep creditors at bay while taking advantage of the volatility in energy markets that eventually led to a turn in industry fundamentals. We were successful in not only keeping the creditors at bay, but also wresting a discount from the senior secured creditor if we could take them out by year-end 2016. We also negotiated to leap old equity higher in the valuation waterfall – to make it pari passu with more than 40% of the senior secured debt. In the fall of 2016, after our orchestration of a “bake-off” amongst competing interested bidders, TENG announced – at a time when the thinly-traded stock was $1 – a merger at $3.58 per share, or more than a 250% premium to the traded share price. The aggregate consideration was in excess of $200 million, while the market cap before the transaction was announced was but $16 million. The transaction closed December 2016. Net net, this was a “Gordian Classic” – a creative financial restructuring coupled with a very superior value-enhancing transaction. Expert Witness We have formed a subsidiary called Expert Witness Consulting Services (“EWCS”, website www.ewcsllc.com). We formed EWCS as an extension of our long-established expert witness/litigation support services. EWCS will enable us to assist litigators in broader ways, as it covers enterprise and securities valuation, intellectual property, board-level liabilities, cross-border litigations, debt capacity and forensics. Please let us know if you would like to learn more about EWCS; we are excited about it. Principal Activities We are seeking to raise capital through Gordian Group Asset Management, in order to take advantage of our unique expertise in advantaging junior securities in tough capital structure situations. And we also are considering raising more money in the winery space, potentially in conjunction with our affiliate Bacchus Capital. We welcome sharing further thoughts if you are interested. Conclusion We wish all of our friends a wonderful holiday season, and that 2017 will bring a continuation of the increasing opportunities we have been seeing in our marketplace. Call on us any time if we can be of assistance in any way, including any gratis “noodling” or introductions we may be in a position to provide. Kind Regards, The Partners of Gordian Group
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