ABC Beverage Corp., f.k.a. Beverage America, Inc. - Page 8

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          act quickly to complete the deal and to avoid further escalations           
          of rent.                                                                    
          The Purchase                                                                
               The management group formed an unrelated entity called                 
          Mid-Con Properties, Inc. (Properties) as a short-term solution to           
          buy the bottling facilities from CPA7 in 1994.  The management              
          group owned 100 percent of Properties.                                      
               To fund the purchase, Bottlers obtained a loan from one of             
          its original LBO investors, the Prudential Life Insurance Company           
          (Prudential).  Bottlers lent the loan proceeds to Properties (the           
          Properties loan) on the same terms Bottlers had with Prudential.            
          Properties then used the proceeds to buy the facilities from CPA7           
          and assumed the lease.  The bottling facilities collateralized              
          the loan from Bottlers.                                                     
               Properties and Bottlers amended the lease to remove the rent           
          escalators and implemented a rent payment structure equaling the            
          amounts due on the Properties loan.  Accordingly, Bottlers                  
          periodically paid Properties rent payments, and Properties paid             
          Bottlers loan payments at the same times.  Bottlers’ rent                   
          payments equaled Properties’ loan payments.  No cash needed to be           
          transferred between Properties and Bottlers for them to satisfy             
          their respective loan and lease obligations to each other.  This            
          zero net cashflow effect was an essential part of the deal to               
          satisfy Prudential that the payments Bottlers made to Properties            

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Last modified: May 25, 2011