Baird Investment Banking Pitch Book
2) AMGP WEIGHTED AVERAGE COST OF CAPITAL ANALYSIS
(2)
(3)
Cost of
Equity
(4)
(5)
Cost of
Debt
Cost of Capital Components
Risk-free Interest Rate (¹)
Levered Beta (2)
Market Premium
Size Premium
Cost of Equity (5)
AMGP has no outstanding debt
3.3%
1.61
6.9%
1.4%
15.8%
reliminary Pratt
Implied Weighted Average Cost of Capital ("WACC")
AMGP Market Value of Equity
AMGP Net Debt Outstanding
Total AMGP Firm Value
AMGP Equity Market Value / Firm Value
x Cost of Equity
Cost of Equity Contribution
AMGP Net Debt / Firm Value
x Cost of Debt
Cost of Debt Contribution
Total Implied WACC
Source: AMGP filings and Bloomberg.
(1) Represents estimated 20-year treasury rate as of October 5, 2018.
Represents two-year levered equity beta as of February 23, 2018, the date prior to the announcement of the Special Committee Formation.
Large company stock total returns minus long-term government bond income returns as computed by Duff & Phelps LLC.
Source: Duff & Phelps LLC size premium based on AMGP'sequity market value as of October 5, 2018.
Cost of equity is calculated using CAPM (e.g. cost of equity risk-free interest rate levered equity beta market risk premium+ size premium).
BAIRD
$3,261
ΝΑ
$3,261
100.0%
15.8%
15.8%
0.0%
0.0%
0.0%
15.8%
Based on AMGP's capital structure, which includes no
debt, its weighted average cost of capital is equal to its
cost of equity of 15.8%
■ As a result of its weighted average cost of capital
analysis, Baird utilized a range of 14.5% -16.5% for
purposes of its discounted cash flow analysis herein
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