Cannondale to file Ch 11 - Page 2

> Can one of our finance experts explain what is meant by "Pegasus has agreed to act as the
> 'stalking horse' in a Section 363 sale of substantially all of the Company's assets on a going
> concern basis"?

It might mean they have the right to outbid any offer that comes in; essentially, a preferential
treatment based upon their position in the company ($$$ invested).

--Mike-- Chain Reaction Bicycles http://www.ChainReactionBicycles.com

garyyoung3@hotmail.com (Gary Young) wrote in message
news:<bfbe6ed3.0301310911.62076edf@posting.google.com>...
> Can one of our finance experts explain what is meant by "Pegasus has agreed to act as the
> 'stalking horse' in a Section 363 sale of substantially all of the Company's assets on a going
> concern basis"?

http://www.investopedia.com/terms/s/...nghorsebid.asp

>>Stalking Horse Bid: A strategy used by bankrupt companies where they
obtain an initial bid on their assets from an interested buyer of their choosing.

A stalking horse is a company chosen from a pool of bidding companies to perform the first bid on a
bankrupt company. This method allows the distressed company to avoid low bids on their assets. Once
the stalking horse bidder has made their bid, other potential buyers may submit competing bids for
the company's assets. In essence the stalking horse sets the bar, so that other bidders can't
"low-ball" the purchase price. <<

garyyoung3@hotmail.com (Gary Young) wrote in message
news:<bfbe6ed3.0301310911.62076edf@posting.google.com>...
> Can one of our finance experts explain what is meant by "Pegasus has agreed to act as the
> 'stalking horse' in a Section 363 sale of substantially all of the Company's assets on a going
> concern basis"?

I don't know much about bankruptcy workouts, but Googled further in response to an e-mail inquiry.

A stalking horse bidder has somewhat of an inside track due to familiarity and relationships with
the company, but it's disadvantageous to spend time and money making an initial bid which gets
shopped around. To compensate for this, the bidding process can be structured to compensate the
stalking horse in various ways. It's pretty complicated, with lots of ethical issues and potential
conflicts of interest. A couple of good references are:

http://www.turnaround.org/print/arti...?objectID=1386

http://www.turnaround.org/print/arti...?objectID=1279