<PAGE> 1
EXHIBIT (c)(4)
CONFIDENTIAL
Presentation to:
PROJECT TRUEBLUE
SPECIAL COMMITTEE MATERIALS
December 11, 2000
[SALOMON SMITH BARNEY LOGO]
<PAGE> 2
PROJECT TRUEBLUE / DECEMBER 8, 2000
IMPORTANT NOTICE
The following pages contain material provided to the Special Committee of
the Board of Trueblue ("Trueblue" or the "Company") by Salomon Smith Barney
Inc. ("SSB") in connection with the potential acquisition of the Company.
The accompanying material was compiled or prepared on a confidential basis
for use by the Special Committee of the Board of Trueblue (the "Special
Committee") and not with a view toward public disclosure except as may be
required by federal securities laws. The information used in preparing this
material was obtained from the management of the Company ("Management") and
public sources. Any estimates and projections for the Company contained
herein have been prepared by the Management, or are based upon such
estimates and projections, and involve numerous and significant subjective
determinations, which may or may not prove to be correct. No representation
or warranty, expressed or implied, is made as to the accuracy or
completeness of such information and nothing contained herein is, or shall
be relied upon as, a representation, whether as to the past or the future.
Because this material was prepared for use in the context of an oral
presentation to the Special Committee, which is familiar with the business
and the affairs of the Company, neither SSB nor any of its respective legal
or financial advisors or accountants take any responsibility for the
accuracy or completeness of any of the material. SSB does not undertake any
obligation to update or otherwise revise the accompanying materials.
[SALOMON SMITH BARNEY LOGO]
<PAGE> 3
PROJECT TRUEBLUE / DECEMBER 8, 2000
TABLE OF CONTENTS
1 TRANSACTION SUMMARY
2 HISTORY OF TRUEBLUE
3 POTENTIAL PARTNER PROCESS
4 VALUATION ANALYSIS
5 ADDITIONAL INFORMATION
A. Liquidity Analysis
B. Squeeze-Out Precedents
C. Possible Courses of Action
Appendix
[SALOMON SMITH BARNEY LOGO]
<PAGE> 4
PROJECT TRUEBLUE / DECEMBER 8, 2000
1 TRANSACTION SUMMARY
[SALOMON SMITH BARNEY LOGO]
<PAGE> 5
PROJECT TRUEBLUE / DECEMBER 8, 2000
SCOPE OF WORK
IN FORMULATING OUR OPINION, SALOMON SMITH BARNEY REVIEWED:
* A draft of the Merger Agreement and the Support Agreement, dated
December 7, 2000
* Certain publicly available financial information regarding Trueblue
* Internal financial forecasts and 2001 budget for Trueblue, prepared by
management
o In addition, SSB held discussions with senior management and
selected operating management members
* Publicly available information regarding the trading of, and the
trading market for, Trueblue common stock and for certain other
companies we deemed to be comparable to Trueblue's business
* Publicly available information regarding the terms of other
transactions we considered relevant
* Other economic, financial and market information we deemed relevant
THE SPECIAL COMMITTEE OF THE BOARD HAS ASKED SALOMON SMITH BARNEY TO RENDER
AN OPINION AS TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE
CONSIDERATION TO BE RECEIVED BY THE TRUEBLUE SHAREHOLDERS, OTHER THAN
PARENT AND AWT, IN THE MERGER.
1 [SALOMON SMITH BARNEY LOGO]
<PAGE> 6
PROJECT TRUEBLUE / DECEMBER 8, 2000
ACTIVITY SINCE DECEMBER 4TH MEETING
* On December 5, the advisors met with Parent
o Pursuant to the Special Committee's instructions, the advisors
made an oral presentation to Parent as to the justification for a
higher value for Trueblue
o Concurrently, counsel discussed terms contained in the draft
Merger Agreement
o Late that day, further discussions were held among counsel, the
advisors and Parent regarding the merger agreement
* On December 6, the advisors updated the Special Committee on the
December 5 discussions
o The Special Committee instructed the advisors and counsel to try
to make progress on the merger agreement
o The Merger Agreement was discussed further between the parties
* On December 7, a revised draft of the Merger Agreement and a proposed
term sheet for conversion of Parent's revolving credit facility into
new PIK preferred stock were received
* On December 8, discussion with counsel on planned changes to the
December 7 draft of the Merger Agreement and an update from the
Chairman of the Special Committee on his conversation with Parent
management
2 [SALOMON SMITH BARNEY LOGO]
<PAGE> 7
PROJECT TRUEBLUE / DECEMBER 8, 2000
TERMS OF PARENT'S OFFER
* Proposed offer price of $7.00 per Trueblue share held by public
shareholders
o The Special Committee and the advisors believe the offer could be
improved to the $8.00 - $8.50 range
* Consideration offered in the form of cash
* Draft Agreement and Plan of Merger dated December 7 and, as we
understand, planned subsequent modifications, propose the following
elements
o Requires:
- unanimous recommendation by Special Committee that the Board
approve the Merger Agreement
- fairness opinions from both financial advisors, and
- approval by stockholders in accordance with Delaware law and
a majority of the votes cast by the public stockholders
o All shares other than those held by AW Trust will receive a right
to fractional shares which will be cashed out in the merger so
that in effect each public stockholder receives the offer price
in cash per share held prior to the Merger
o Parent and Merger Sub will fund the acquisition of all fractional
shares (i.e., all shares held by the public)
o Termination rights under the Agreement (pending negotiation):
- For both parties on or after March 31, 2001
- For Trueblue if its Board approves, or the Special Committee
recommends, a superior proposal (as defined in the
Agreement) with no topping fee payable to Parent or Merger
Sub
- For Trueblue, if the public shareholders do not vote in
favor of the transaction
o Resolution of Indenture incurrence test to allow the merger
ON OCTOBER 27TH, PARENT PUBLICLY PROPOSED TO FUND THE ACQUISITION OF THE
PUBLICLY-HELD SHARES OF TRUEBLUE FOR $7.00 PER SHARE.
3 [SALOMON SMITH BARNEY LOGO]
<PAGE> 8
PROJECT TRUEBLUE / DECEMBER 8, 2000
IMPLIED MULTIPLES AT VARIOUS PREMIUMS
<TABLE>
<CAPTION>
TRADING MULTIPLES FOR
ASSUMED PRICE PER SHARE COMPARABLE COMPANIES(a)
10/26/00 ------------------------------------------- ----------------------
(Dollars in millions, Except per Share Data) $3.56 $7.00 $8.00 $8.25 $8.50 LOW HIGH
-------------------------------------------- -------- ------- ------- ------ ----- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C>
MARKET PRICES PREMIUM (DISCOUNT)
Offer $ 3.56 0.0% 96.5% 124.6% 131.6% 138.6%
52-Week High 11.06 (67.8) (36.7) (27.7) (25.4) (23.2)
52-Week Low 3.44 3.6 103.5 132.6 139.8 147.1
Equity Value $ 418 $ 821 $ 939 $ 968 $ 997
Firm Value 2,201 2,604 2,722 2,751 2,780
-------------------------------------------- -------- ------- ------- ------- --------- ---- ------
EBITDA FIRM VALUE / EBITDA
LTM (b) $ 276 8.0x 9.4x 9.9x 10.0x 10.1x 6.5x 8.4x
2000E 259 8.5 10.1 10.5 10.6 10.7 6.9 10.5
2001E 299 7.4 8.7 9.1 9.2 9.3 6.5 9.4
EBIT FIRM VALUE / EBIT
LTM (b) $ 150 14.6x 17.3x 18.1x 18.3x 18.5x 9.6x 10.2x
2000E 127 17.3 20.5 21.4 21.6 21.9 10.7 17.7
2001E 162 13.6 16.1 16.9 17.0 17.2 10.3 15.4
-------------------------------------------- -------- ------- ------- ------- --------- ---- ------
RAB (c) $ 1,800 91.5% 113.9% 120.4% 122.0% 123.6%
-------------------------------------------- -------- ------- ------- ------- --------- ---- ------
</TABLE>
----------
Source: Draft 2001 Budget dated 12/6/00, adjusted to remove the potential RDM
business financial contribution.
LTM: Latest twelve months ending September 30, 2000.
Note: Equity value reflects 117.3 million shares outstanding as of 9/30/00, 3.69
million options outstanding with a strike price of $7.98 and 6.56 million
options outstanding with a strike price of $17.10.
(a) Comparable companies are Kelda Group, United Utilities, Anglian Water,
Pennon Group, Severn Trent, Thames Water, Suez Lyonnaise and Vivendi
Environment.
(b) LTM data as of 9/30/00.
(c) Assumes $560 million value for non-Wessex assets.
4 [SALOMON SMITH BARNEY LOGO]
<PAGE> 9
PROJECT TRUEBLUE / DECEMBER 8, 2000
IMPLIED PREMIUMS AT VARIOUS PRICES
<TABLE>
<CAPTION>
% PREMIUM /
DATE PRICE (DISCOUNT) TO OFFER
------------ -------------- -------------------
<S> <C> <C> <C>
Parent Offer $ 7.00
Current Price 11/29/00 6.06 15%
------------ -------------- ----------
One Day Prior to Offer 10/26/00 $ 3.56 96%
One Week Prior to Offer 10/20/00 3.56 96
One Month Prior to Offer 9/27/00 4.31 62
------------ -------------- ----------
52-Week High 1/21/00 $ 11.06 (37%)
52-Week Low 10/23/00 3.44 104
------------ -------------- ----------
One Month Average to 12/8/00 $ 6.11 15%
Three Month Average to 12/8/00 5.04 39
One Year Average to 12/8/00 6.89 2
------------ -------------- ----------
</TABLE>
----------
(a) Represents initial Parent offer.
5 [SALOMON SMITH BARNEY LOGO]
<PAGE> 10
PROJECT TRUEBLUE / DECEMBER 8, 2000
2 HISTORY OF TRUEBLUE
[SALOMON SMITH BARNEY LOGO]
<PAGE> 11
PROJECT TRUEBLUE / DECEMBER 8, 2000
CORPORATE TIMELINE
<TABLE>
<S> <C> <C>
-----------
IPO
($695 MM)
---------- ----------- -----------
TRUEBLUE - BOND
FORMED ----------- - OFFERING
---------- REFINANCE - ($600 MM)
- AEL DEBT - -----------
- ----------- - -
- - - -
1998 KEY EVENTS - - 1999 - 2000
------------------------------ -------------------------------------------------------------------- -------------------
MAY SEP OCT MAR MAY JUN JUL SEP OCT FEB JUL
------------------------------ -------------------------------------------------------------------- -------------------
- - - - - - - - - -
- - - - - - - - - -
- - KEY - - - ------------- - - - -
- - ACQUISI-- - - - AGOSBA - - ------------- -------------
- - TIONS - - - ACQUISITION - - MADERA BAKER HUGHES
- - - - - ($439 MM) - - RANCH INDUSTRIAL
- - - - - ------------- - - ACQUISITION SERVICES
- - - - - - - ($32 MM) ACQUISITION
- - - - - - - ------------- ($8 MM)
- - - - - - - - - - -------------
------------- - ------------- - ------------- - -
MENDOZA - CANCUN - IASA - -------------
ACQUISITION - ACQUISITION - ACQUISITION - LURGI
BY ENRON - ($14 MM) - ($23 MM) - BAMAG
($72 MM) - ------------- - ------------- - ACQUISITION
------------- - - - ($32 MM)
------------- --------------- - -------------
WESSEX TRUEBLUE -
ACQUISITION NORTH AMERICA -------------
($2,543 MM) ACQUISITION TRUEBLUE
------------- ($118 MM) BRAZIL
--------------- ACQUISITION
($57 MM)
-------------
</TABLE>
6 [SALOMON SMITH BARNEY LOGO]
<PAGE> 12
PROJECT TRUEBLUE / DECEMBER 8, 2000
MARKET OPPORTUNITY FOR TRUEBLUE AT TIME OF IPO
* "Governments around the world are increasingly outsourcing the ownership,
operation and management of their water and wastewater assets and services
to the private sector." - Prospectus p.43
* "...we believe that significant opportunities exist for private sector
participation in the water and wastewater industry." - Prospectus p.48
* Selected upcoming water and wastewater privatizations:
<TABLE>
<CAPTION>
REGION NUMBER OF OPPORTUNITIES
------ -----------------------
<S> <C>
Europe (p.49) 17
North America (p.50) 11
Latin America and the Caribbean (p.51) 25
Middle East and Africa (p.52) 7
Asia and the Pacific Rim (p.52) 8
----
Total 68
</TABLE>
THE PROSPECTUS DESCRIBES THE MARKET OPPORTUNITY FOR TRUEBLUE AT THE TIME OF
INITIAL PUBLIC OFFERING (JUNE 9, 1999).
7 [SALOMON SMITH BARNEY LOGO]
<PAGE> 13
PROJECT TRUEBLUE / DECEMBER 8, 2000
INITIAL RESEARCH COMMENTS ON TRUEBLUE
ANALYST COMMENTARY
MERRILL LYNCH Trueblue is a company with unparalleled
William Genco operating capabilities and large scale
July 6, 1999 project management experience ... We expect
Trueblue to generate average annual EPS
growth approaching 30% over the next few
years ... By July 6, 1999 any comparable
benchmark, Trueblue stock appears very
reasonably priced to any entity considered to
be its peer.
CREDIT SUISSE Trueblue is the only pure play in global
Michael Hoffman water privatization and outsourcing ... by
July 6, 1999 leveraging [Parent's] Michael Hoffman
expertise in global power development,
Trueblue gains the benefit of an impressive
track record in infrastructure intensive
projects and innumerable contracts worldwide.
Trueblue already has strong water
credentials. Its UK water business is one of
the world's premier water operators.
PAINEWEBBER We believe that the world is in the early
Walter Krichberger stages of a major shift toward privatization
July 6, 1999 of water and wastewater services, and that
Trueblue is well positioned to be a leader in
what we believe may be the last major,
worldwide privatization opportunity.
DLJ As the only large-cap, pure-play water
Marc Sulam company, we believe that Trueblue offers an
July 6, 1999 attractive way to participate in the
accelerating trend towards privatization of
municipal and industrial water and waste
water systems and the consolidation of the
fast-growing highly fragmented global water
and wastewater industry.
DEUTSCHE BANC We believe Trueblue is well positioned to
David Manlowe capitalize on this growth because [it] has
July 6, 2000 demonstrated superior skills at profitably
operating newly privatized water systems ...
management has demonstrated skill at
successfully targeting and executing large
project privatizations in the past. Trueblue
is conservatively forecast to generate
earnings growth in excess of 20% per year
over the next few years.
BANK OF AMERICA Trueblue is the right company with the right
Dan Tulis management at the right time to capitalize on
August 18, 1999 the burgeoning opportunities in the global
water and wastewater business.
A.G. EDWARDS Over the long term, we believe Trueblue will
Timothy Winter become a formidable player in the relatively
September 2, 1999 inefficient global industry. We further
believe, the company's progressive and
creative approach will allow them to
profitably capitalize on the industry.
8 [SALOMON SMITH BARNEY LOGO]
<PAGE> 14
PROJECT TRUEBLUE / DECEMBER 8, 2000
SHARE PRICE PERFORMANCE TO DATE
<TABLE>
<CAPTION>
AZX AZURIX CORP COM
DATE CLOSING PRICE VOLUME
----------- ------------- ------
<S> <C> <C>
6/10/1999 19.125
6/11/1999 19.0625
6/14/1999 19.0625
6/15/1999 19.1875
6/16/1999 19
6/17/1999 19
6/18/1999 19
6/21/1999 19.125
6/22/1999 19
6/23/1999 19
6/24/1999 19.5625
6/25/1999 19.625
6/28/1999 19.125
6/29/1999 19.3125
6/30/1999 20
7/1/1999 19.9375
7/2/1999 20.5
7/6/1999 21.25
7/7/1999 20.9375
7/8/1999 23
7/9/1999 23.875
7/12/1999 23.375
7/13/1999 22.75
7/14/1999 23
7/15/1999 22.75
7/16/1999 22.25
7/19/1999 23
7/20/1999 21.5
7/21/1999 21.75
7/22/1999 22.6875
7/23/1999 22.375
7/26/1999 21.3125
7/27/1999 21.625
7/28/1999 22.625
7/29/1999 23.375
7/30/1999 23.75
8/2/1999 23.5625
8/3/1999 23.4375
8/4/1999 23.1875
8/5/1999 22.375
8/6/1999 21.9375
8/9/1999 21.5625
8/10/1999 20.3125
8/11/1999 20.5
8/12/1999 20.5
8/13/1999 19.3125
8/16/1999 19.625
8/17/1999 19.5
8/18/1999 18.25
8/19/1999 18.5
8/20/1999 19.5
8/23/1999 19.9375
8/24/1999 19.75
8/25/1999 19.6875
8/26/1999 19.6875
8/27/1999 19.5
8/30/1999 18.6875
8/31/1999 18.5625
9/1/1999 18.5
9/2/1999 18.4375
9/3/1999 18.5
9/7/1999 18.5625
9/8/1999 18.4375
9/9/1999 18.5
9/10/1999 18.25
9/13/1999 15.625
9/14/1999 15.375
9/15/1999 15
9/16/1999 15.6875
9/17/1999 16.625
9/20/1999 17
9/21/1999 17.5
9/22/1999 17.9375
9/23/1999 18.5
9/24/1999 17.375
9/27/1999 17.375
9/28/1999 17.4375
9/29/1999 17.25
9/30/1999 17.1875
10/1/1999 16.9375
10/4/1999 16.25
10/5/1999 15.25
10/6/1999 14.375
10/7/1999 14
10/8/1999 13.875
10/11/1999 14.25
10/12/1999 14.5
10/13/1999 14.4375
10/14/1999 14.5
10/15/1999 13.9375
10/18/1999 13.875
10/19/1999 13.75
10/20/1999 12
10/21/1999 11.375
10/22/1999 12.875
10/25/1999 13
10/26/1999 13
10/27/1999 13.5625
10/28/1999 13.9375
10/29/1999 14.0625
11/1/1999 13.9375
11/2/1999 13.3125
11/3/1999 12.8125
11/4/1999 7.75
11/5/1999 8.375
11/8/1999 8.125
11/9/1999 8
11/10/1999 8.0625
11/11/1999 7.9375
11/12/1999 8.0625
11/15/1999 8.1875
11/16/1999 7.9375
11/17/1999 7.75
11/18/1999 7.375
11/19/1999 7.25
11/22/1999 7.8125
11/23/1999 8.1875
11/24/1999 7.5
11/26/1999 7.625
11/29/1999 7
11/30/1999 7.125
12/1/1999 7.25
12/2/1999 7.125
12/3/1999 7.8125
12/6/1999 7.5
12/7/1999 7.4375
12/8/1999 7.0625 413800
12/9/1999 7.125 329200
12/10/1999 7.3125 898500
12/13/1999 7.0625 422600
12/14/1999 7.0625 560700
12/15/1999 7.4375 343600
12/16/1999 7.1875 220900
12/17/1999 6.9375 401000
12/20/1999 6.9375 650000
12/21/1999 6.8125 245900
12/22/1999 6.875 322200
12/23/1999 7.6875 577200
12/27/1999 7.5 271100
12/28/1999 7.625 277400
12/29/1999 7.6875 237200
12/30/1999 7.875 367700
12/31/1999 8.9375 458900
1/3/2000 8.375 338900
1/4/2000 8 248300
1/5/2000 7.4375 392800
1/6/2000 7.8125 334500
1/7/2000 7.8125 231500
1/10/2000 8.25 351900
1/11/2000 8.125 228600
1/12/2000 8.375 130700
1/13/2000 9 662900
1/14/2000 9.875 430200
1/18/2000 9.5625 266200
1/19/2000 9.625 204800
1/20/2000 10.0625 299000
1/21/2000 11 505600
1/24/2000 10.5625 335100
1/25/2000 10.5625 126400
1/26/2000 10.375 113000
1/27/2000 10.5 126600
1/28/2000 10.375 132800
1/31/2000 10.0625 246900
2/1/2000 10.375 281700
2/2/2000 9.875 159000
2/3/2000 9.9375 175800
2/4/2000 9 140300
2/7/2000 8.25 267200
2/8/2000 7.875 311500
2/9/2000 8.625 757900
2/10/2000 9.375 567600
2/11/2000 9.125 243200
2/14/2000 8.9375 128300
2/15/2000 8.4375 255000
2/16/2000 8.4375 170800
2/17/2000 8.1875 119400
2/18/2000 8.0625 187800
2/22/2000 7.5625 232200
2/23/2000 7.25 146800
2/24/2000 7.625 97500
2/25/2000 7.8125 327500
2/28/2000 7.9375 254000
2/29/2000 7.5 204900
3/1/2000 7.3125 291000
3/2/2000 7.1875 214400
3/3/2000 7.125 236500
3/6/2000 6.875 562500
3/7/2000 6.9375 164600
3/8/2000 7 151700
3/9/2000 7.125 88900
3/10/2000 7.8125 338400
3/13/2000 8.0625 348700
3/14/2000 8.1875 222700
3/15/2000 8.3125 124800
3/16/2000 8.4375 113000
3/17/2000 8.125 274600
3/20/2000 7.9375 131300
3/21/2000 7.9375 117200
3/22/2000 7.75 94400
3/23/2000 7.5625 199700
3/24/2000 7.5 218400
3/27/2000 7.5625 110200
3/28/2000 7.1875 146800
3/29/2000 7.3125 169600
3/30/2000 7.375 177400
3/31/2000 7.5 146500
4/3/2000 7.0625 214500
4/4/2000 7.0625 101100
4/5/2000 7.125 76400
4/6/2000 7.0625 127900
4/7/2000 7.625 728400
4/10/2000 7.5 97100
4/11/2000 7.625 172800
4/12/2000 7.625 131600
4/13/2000 7.375 206200
4/14/2000 7.0625 277600
4/17/2000 8 168300
4/18/2000 7.5 73600
4/19/2000 7.5 112000
4/20/2000 7.5625 70300
4/24/2000 7.25 63000
4/25/2000 7.5625 148800
4/26/2000 7.1875 81800
4/27/2000 7.25 130400
4/28/2000 7 160400
5/1/2000 7 133100
5/2/2000 6.8125 141100
5/3/2000 7.4375 118500
5/4/2000 7.25 99700
5/5/2000 7.75 171800
5/8/2000 7.25 198800
5/9/2000 7.5 136900
5/10/2000 7.4375 118500
5/11/2000 7.5 124000
5/12/2000 7.125 221400
5/15/2000 7.25 105100
5/16/2000 7.125 116600
5/17/2000 6.9375 155900
5/18/2000 7 119000
5/19/2000 7 56700
5/22/2000 6.75 97200
5/23/2000 6.625 102000
5/24/2000 6.1875 149400
5/25/2000 6.25 82100
5/26/2000 6.4375 56400
5/30/2000 6.875 92200
5/31/2000 6.75 71900
6/1/2000 6.8125 88900
6/2/2000 6.9375 78000
6/5/2000 6.9375 181800
6/6/2000 6.75 125300
6/7/2000 6.875 91300
6/8/2000 6.8125 90000
6/9/2000 7.4375 296100
6/12/2000 7.5 106800
6/13/2000 7.625 183200
6/14/2000 7.5625 41000
6/15/2000 7.625 89700
6/16/2000 7.4375 90700
6/19/2000 7.375 118200
6/20/2000 7.0625 105200
6/21/2000 7.5 113200
6/22/2000 7.1875 77600
6/23/2000 7.375 86000
6/26/2000 7.6875 138200
6/27/2000 7.875 210100
6/28/2000 8.5 305500
6/29/2000 8.1875 218000
6/30/2000 7 870600
7/3/2000 7.5 249000
7/5/2000 8.0625 225200
7/6/2000 8.0625 104400
7/7/2000 7.6875 238000
7/10/2000 7.6875 73200
7/11/2000 7.75 117200
7/12/2000 7.875 60600
7/13/2000 7.9375 109500
7/14/2000 8 54100
7/17/2000 8.125 66000
7/18/2000 8.125 70900
7/19/2000 8.125 51900
7/20/2000 8 40100
7/21/2000 7.9375 47600
7/24/2000 7.9375 62900
7/25/2000 8.0625 82500
7/26/2000 8.75 116100
7/27/2000 9 295500
7/28/2000 8.5625 54600
7/31/2000 8.5 207900
8/1/2000 8.3125 79100
8/2/2000 8.3125 31200
8/3/2000 8.25 154600
8/4/2000 8.1875 53800
8/7/2000 8.3125 73700
8/8/2000 6.5625 531700
8/9/2000 5.625 746700
8/10/2000 5.5625 614600
8/11/2000 5.5 360100
8/14/2000 5.625 235900
8/15/2000 5.375 199700
8/16/2000 5.375 102600
8/17/2000 5.125 334000
8/18/2000 5.125 172400
8/21/2000 4.9375 152100
8/22/2000 5.1875 182300
8/23/2000 5.3125 76500
8/24/2000 5.5625 97700
8/25/2000 4.9375 630600
8/28/2000 4.9375 791500
8/29/2000 4.8125 399700
8/30/2000 4.625 334500
8/31/2000 4.75 201500
9/1/2000 4.625 102100
9/5/2000 4.8125 200400
9/6/2000 4.8125 213300
9/7/2000 4.5625 173100
9/8/2000 4.6875 237900
9/11/2000 4.375 312500
9/12/2000 4.4375 127800
9/13/2000 4.0625 142600
9/14/2000 4.375 139700
9/15/2000 4.375 285500
9/18/2000 4.25 100400
9/19/2000 4.1875 100300
9/20/2000 4.0625 119200
9/21/2000 4.0625 253500
9/22/2000 4.625 985300
9/25/2000 4.5 147400
9/26/2000 4.4375 106600
9/27/2000 4.3125 122000
9/28/2000 4.1875 94100
9/29/2000 3.5625 524100
10/2/2000 4.125 602700
10/3/2000 4.1875 332800
10/4/2000 4.25 319500
10/5/2000 4.125 73900
10/6/2000 4.0625 79900
10/9/2000 4 125100
10/10/2000 4.3125 475700
10/11/2000 4.25 228900
10/12/2000 4.0625 84100
10/13/2000 4 82100
10/16/2000 4.0625 76400
10/17/2000 3.875 70900
10/18/2000 3.75 205600
10/19/2000 3.625099897 122100
10/20/2000 3.5625 204600
10/23/2000 3.4375 180200
10/24/2000 3.625 321600
10/25/2000 3.5 189000
10/26/2000 3.5625 102400
10/27/2000 6.5625 2836900
10/30/2000 6.25 4006400
10/31/2000 6.25 756900
11/1/2000 6.0625 285100
11/2/2000 6.3125 247600
11/3/2000 6.25 184100
11/6/2000 6.375 198000
11/7/2000 6 570500
11/8/2000 5.9375 227600
11/9/2000 6.0625 612600
11/10/2000 6 368700
11/13/2000 6.0625 208600
11/14/2000 6.0625 232400
11/15/2000 6.0625 147100
11/16/2000 6.1875 116300
11/17/2000 6.1875 133900
11/20/2000 6.25 152000
11/21/2000 6.3125 106500
11/22/2000 6.1875 513300
11/24/2000 6.1875 71900
11/27/2000 6.1875 88700
11/28/2000 6.0625 236400
11/29/2000 6.125 132500
11/30/2000 6 266100
12/1/2000 6.0625 563800
12/4/2000 6.125 351700
12/5/2000 6.125 128000
12/6/2000 5.9375 221000
12/7/2000 6.125 194600
12/8/2000 6.125 83600
</TABLE>
a) Nov 4, 1999 - Profit warning for Q4/1999: Shares slide nearly 40% on the
announcement that 4th quarter results (ca. 9 to 11 cents per share) would
fall significantly below expectations (ca. 17 cents per share).
b) Aug 7, 2000 - Profit warning for Q2/2000: Shares drop after Trueblue
reports sharply lower second quarter earnings of net 5 cents a share versus
19 cents the year before.
c) Aug 24, 2000 - Resignation of CEO Rebecca Mark.
d) Oct 26, 2000 - Parent announces a proposal to buy back Trueblue shares.
Class action lawsuits filed against Trueblue.
9 [SALOMON SMITH BARNEY LOGO]
<PAGE> 15
PROJECT TRUEBLUE / DECEMBER 8, 2000
DEVELOPMENT OF VALUE COMPONENTS
<TABLE>
<CAPTION>
DATE PERCENT
---- -------
<S> <C>
JUN-99 64.5%
SEP-99 57.7%
DEC-99 31.0%
MAR-00 30.2%
JUN-00 11.8%
SEP-00 (10.2)%
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
MARKET CAPITALIZATION 2,013 1,047 864 864 821 411
VALUE PER SHARE 17.20 8.90 7.40 7.40 7.00 3.50
</TABLE>
----------
Note: Percentages shown in the chart above are the difference between equity
value and value of Wessex plus non-Wessex (net of debt) expressed as a
proportion of the value of Wessex plus non-Wessex (net of debt).
(a) Equity value of Wessex based on comparable RAB multiples of UK water
companies; non-Wessex equity value based on acquisition costs.
10 [SALOMON SMITH BARNEY LOGO]
<PAGE> 16
PROJECT TRUEBLUE / DECEMBER 8, 2000
OWNERSHIP AND FINANCIAL CONTRIBUTION
<TABLE>
<S> <C>
------------
FINANCIAL
INSTITUTIONS
------------
-
-
------------ ------------
PARENT MW TRUST
------------ ------------
50% VOTING - - 50% VOTING
INTEREST - - INTEREST
- -
-
------------ ---------------
AW TRUST PUBLIC FLOAT
------------ (NO HOLDER >5%)
- ---------------
- -
- 67% - 33%
- Common - Common
- Stock - Stock
- -
------------
TRUEBLUE
------------
-
-
-
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - 100% - 100% - - -
---------------- ---------------- ---------------- ---------------- ----------------- ---------------
TRUEBLUE TRUEBLUE AGOSBA IASA/CANCUN OTHER INVESTMENTS MENDOZA
NORTH AMERICA EUROPE LTD. (ARGENTINA) (MEXICO) (BRAZIL, GERMANY) (ARGENTINA)
(CANADA & USA) (ENGLAND)
$20 '01 EBITDA $249 '01 EBITDA $36 '01 EBITDA $24 '01 EBITDA $31 '01 EBITDA $6 '01 EBITDA
---------------- ---------------- ---------------- ---------------- ----------------- ---------------
</TABLE>
Source: Draft 2001 Budget dated 12/6/00; excludes G&A.
* Parent and MW Trust each may appoint 50% of AW Trust board and 50% of the
Trueblue board
* Currently, MW Trust has not exercised power to appoint directors, and Parent
executives have appointed all directors
----------
Source: Draft 2001 Budget dated 12/6/00; excludes G&A.
11
[SALOMON SMITH BARNEY LOGO]
<PAGE> 17
PROJECT TRUEBLUE / DECEMBER 8, 2000
3 POTENTIAL PARTNER PROCESS
[SALOMON SMITH BARNEY LOGO]
<PAGE> 18
PROJECT TRUEBLUE / DECEMBER 8, 2000
POTENTIAL PARTNER PROCESS
THE STRATEGIC PARTNER PROCESS
* Trueblue's objective in the process was to find a partner with capital
strength and development skill to further its business objectives. The
relationship with the partner could have taken on of several forms,
including the purchase by the partner of all of Trueblue's shares.
* The advisors (Schroders ("SSSB") and ML) and Trueblue management
initially identified 4 parties; the number was based on screening the
universe of potential investors for parties potentially willing to pay
for a strategic step into the water industry with sufficient capital
to support Trueblue's business plan; two others were added during the
process
* Each party was contacted on a confidential basis by one or the other
of Merrill Lynch or SSSB
* If there was interest following the bankers' presentation, subject
to a confidentiality agreement, the parties were given a management
presentation
* Following a suitable value indication, extensive due diligence would
be provided
OTHER INFORMAL CONTACTS
* During the strategic partner process, informal discussions occurred
with several parties regarding a transaction with Trueblue
o In each case, an indication of interest was requested prior to
providing information or engaging in substantive discussions; no
party expressed meaningful interest
12 [SALOMON SMITH BARNEY LOGO]
<PAGE> 19
PROJECT TRUEBLUE / DECEMBER 8, 2000
SUMMARY OF KEY CONTACTS MADE BY ADVISORS
<TABLE>
<CAPTION>
LEVEL OF
NAME TIME OF APPROACH INTEREST COMMENTS
------------ ------------------ ----------- ---------------------------------------------------------------
<S> <C> <C> <C>
* Initial contact by SSSB prior to start of process but showed
limited interest
Company A March 2000 No * No interest to receive management presentation
* Regarded Trueblue as having insufficient critical mass
* Announced acquisition of competitor in September 2000
------------ ------------------ ----------- ---------------------------------------------------------------
* Showed initially cautious interest; considering water due to
local privatization opportunities, but not a priority given
telecom and European electricity opportunities
* Took 3 months to sign CA
Company B Initial approach in No * Declined opportunity following management presentation March
2000 due to geographic spread outside core area; indicated
potential interest in Wessex alone
* Following early October press speculation on future of
Trueblue, contacted Parent regarding Wessex and potentially
Lurgi; nothing further was heard
------------ ------------------ ----------- ---------------------------------------------------------------
* Received management presentation after signing of CA
Initial approach in * Only interest in UK assets but did not meet return
Company C March 2000 No criteria; no interest in North and Latin America
* Declined opportunity
</TABLE>
13 [SALOMON SMITH BARNEY LOGO]
<PAGE> 20
PROJECT TRUEBLUE / DECEMBER 8, 2000
SUMMARY OF KEY CONTACTS MADE BY ADVISORS
<TABLE>
<CAPTION>
LEVEL OF
NAME TIME OF APPROACH INTEREST COMMENTS
------------ ------------------ ----------- ---------------------------------------------------------------
<S> <C> <C> <C>
* Strategy review of enlarged group following recent merger
identified water as core growth area
* Stop / start interest until August when indicative offer of
$7 was made subject to extensive conditions
Initial JV discussion Initially
Company D in Summer 1999 High * Undertook full due diligence in September 2000 but declined
opportunity due to Trueblue's corporate issues
* Expressed potential interest through their financial advisor
in acquiring Wessex
------------ ------------------ ----------- ---------------------------------------------------------------
* Previous comments by company management to Trueblue
Company E April 2000 No suggested potential interest
* Contact confirmed no interest in water management
------------ ------------------ ----------- ---------------------------------------------------------------
Company F July/August No * Explored opportunity to effect reverse stock merger
* Trueblue had limited interest in equity deal
</TABLE>
14 [SALOMON SMITH BARNEY LOGO]
<PAGE> 21
PROJECT TRUEBLUE / DECEMBER 8, 2000
4 VALUATION ANALYSIS
[SALOMON SMITH BARNEY LOGO]
<PAGE> 22
PROJECT TRUEBLUE / DECEMBER 8, 2000
CONSOLIDATED HISTORICAL FINANCIALS AND MANAGEMENT FORECAST
(Dollars in millions)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------ CAGR
1998(a) 1999 2000E(c) 2001F 2002F 2003F 2004F 2005F '00 - '05
-------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Revenue $ 120 $ 618 $ 764 $ 865 $ 955 $ 1,127 $ 1,307 $ 1,467 13.9%
EBITDA 66 278 269 302 358 405 463 506 13.5
EBIT(b) 46 137 141 165 207 240 286 320 17.8
Net Income 10 38 8 4 21 33 55 69 54.0
Capital Expenditures 63 287 330 348 388 396 386 297 (2.1)
-------- -------- -------- -------- -------- -------- -------- -------- ---------
BALANCE SHEET DATA
Cash (net of restricted amount) $ 5 $ 27 $ 30 $ 32 $ 43 $ 41 $ 56 $ 113 --
Total Assets 3,358 4,850 4,653 4,932 5,293 5,615 5,937 6,201 5.9%
Total Debt (including affiliates) 1,061 2,119 1,914 2,146 2,396 2,604 2,774 2,868 8.4
-------- -------- -------- -------- -------- -------- -------- -------- ---------
KEY RATIOS
Net Debt / EBITDA 16.0x 7.5x 6.7x 6.7x 6.3x 6.1x 5.6x 5.2x --
Net Debt / Total Capitalization 39% 52% 48% 51% 52% 53% 53% 51% --
</TABLE>
----------
Source: Management forecast, adjusted to reduce ongoing SG&A beyond 2001 to $2
million and to remove the potential RDM business financial contribution.
(a) From January 29, 1998 (date of inception) until December 31, 1998.
(b) 1999 EBIT reflects $34.2 million restructuring charge.
(c) Reflects three quarters of actual data and one quarter of projected data.
15 [SALOMON SMITH BARNEY LOGO]
<PAGE> 23
PROJECT TRUEBLUE / DECEMBER 8, 2000
COMPARISON OF MANAGEMENT FORECAST AND DRAFT 2001 BUDGET
(Dollars in millions)
<TABLE>
<CAPTION>
DRAFT 2001 BUDGET(a)
MANAGEMENT --------------------------------------------
FORECAST RISK CASE BUDGET OPPORTUNITY CASE
---------- ----------- -------- ------------------
<S> <C> <C> <C> <C>
EBITDA
Wessex $248.7 $243.3 $246.3 $249.3
Buenos Aires 36.0 5.0 35.1 47.4
Cancun 3.9 3.0 4.0 4.5
Mendoza 1.4 1.2 1.4 2.0
North America 19.6 13.8 18.1 21.3
Mexico 12.2 11.0 12.6 13.5
Brazil 10.7 6.3 8.3 9.9
Lurgi (0.2) (2.3) (0.8) 2.7
RDM 1.8 (2.4) (0.4) 3.0
Corporate G&A (30.0) (30.0) (28.7) (25.3)
---------- ----------- -------- ------------------
TOTAL $304.1 $248.9 $295.9 $328.3
========== =========== ======== ==================
ADJUSTED(b) $302.3 $251.3 $296.3 $325.3
MANAGEMENT CONFIDENCE 90% 40% 5%
</TABLE>
----------
(a) Draft 2001 budget dated December 6, 2000.
(b) Adjusted to remove potential RDM business financial contribution.
MANAGEMENT HAS PROVIDED UPDATED 2001 BUDGET INFORMATION BUT HAS NOT UPDATED ITS
FULL FINANCIAL PROJECTIONS.
16 [SALOMON SMITH BARNEY LOGO]
<PAGE> 24
PROJECT TRUEBLUE / DECEMBER 8, 2000
SUMMARY OF VALUATION ANALYSIS
SUM-OF-THE-PARTS APPROACH
VALUE PER SHARE
<TABLE>
<CAPTION>
INITIAL OFFER PRICE $7.00
10/27/00
-------------------------
<S> <C> <C>
Comparable Publicly-Traded Companies $3.75 - $7.50
Discounted Cash Flow $3.50 - $7.25
Precedent Transactions $4.25 - $9.00
</TABLE>
----------
Note: Trading range for 12 months ended December 8, 2000 was $3.44 to $11.06.
17 [SALOMON SMITH BARNEY LOGO]
<PAGE> 25
PROJECT TRUEBLUE / DECEMBER 8, 2000
SUM-OF-THE-PARTS COMPARABLE COMPANIES ANALYSIS
<TABLE>
<CAPTION>
(Dollars in millions)
STATISTIC METHODOLOGY MULTIPLES IMPLIED FIRM VALUE
--------- ----------- --------- -----------------------
<S> <C> <C> <C> <C>
Wessex Water (Regulated) $1,800.0 (a) RAB 0.91x -- 0.97x $ 1,638 -- $ 1,746
Other Assets (b) $ 89.1 2001 EBITDA 6.5x -- 9.5x $ 589 -- $ 857
Madera Water Bank Acquisition cost -
Estimated Disposition Proceeds (a) $ 32 -- $ 112
Corporate (c) $ (2.0) 2001 Budget plus Post-2001 Cost 8.0x -- 8.0x $ (45) -- $ (45)
------- -------
ENTERPRISE VALUE $ 2,214 $ 2,670
------- -------
Net Debt and Minority Interest as of 9/30/00 (d) $(1,783) -- $(1,783)
Equity Value $ 431 -- $ 887
------- -------
COMPARABLE COMPANY ANALYSIS REFERENCE RANGE (e) $ 3.75 -- $ 7.50
------- -------
</TABLE>
--------
Note: This analysis is based on market trading multiples and does not reflect
control premiums that may be available in acquisitions of the comparable
companies. Counsel advises that as such, this analysis should not be understood
to reflect a reference range of values for assessing the fairness of an
acquisition of Azurix.
(a) Management estimate as of September 30, 2000.
(b) Other Assets include Wessex Water unregulated, Lurgi Bamag, AGOSBA, Mendoza
(equity interest), AMX Brazil, Cancun (equity interest), IASA and North
America. Based on Draft 2001 Budget dated 12/6/00.
(c) Implied value from corporate includes $28.7 million of projected G&A
expense for 2001 Budget and $2 million thereafter.
(d) Includes $1,911 million of debt and $6 million of minority interest, less
$134 million of cash.
(e) Based upon 117.3 million shares outstanding.
18 [SALOMON SMITH BARNEY LOGO]
<PAGE> 26
PROJECT TRUEBLUE / DECEMBER 8, 2000
SUM-OF-THE-PARTS DCF ANALYSIS(a)
<TABLE>
<CAPTION>
(Dollars in millions)
DISCOUNT RATE EXIT MULTIPLE IMPLIED FIRM VALUE
------------- ------------- ------- ---- -----
EUROPE
<S> <C> <C> <C> <C>
Wessex Water 7.0%-7.5% (b) $ 1,713 - $ 1,936
Lurgi Bamag 7.5%-8.5% 7.0x-8.5x 14 - 18
------- -------
$ 1,727 $ 1,954
NORTH AMERICA
Azurix North America 9.5%-10.5% 7.0x-8.5x $ 202 - $ 264
Madera Water Bank (c) (c) 32 - 112
------- -------
$ 234 $ 376
CENTRAL AND SOUTH AMERICA
AGOSBA, Argentina 14.5%-15.5% (d) $ 112 - $ 139
Mendoza, Argentina 14.5%-15.5% 4.75x-5.25x 25 - 28
AMX, Brazil 14.5%-15.5% 4.75x-5.25x 43 - 60
Cancun, Mexico 12.5%-13.5% (d) 56 - 58
IASA, Mexico 12.5%-13.5% (e) 49 - 52
------- -------
$ 285 $ 338
Corporate (f) (f) (45) - (45)
------- -------
ENTERPRISE VALUE $ 2,201 $ 2,623
Net Debt and Minority Interest as of 12/31/00 (g) $(1,783) - $(1,783)
------- -------
Equity Value $ 417 - $ 840
SUM-OF-THE-PARTS DCF REFERENCE RANGE (h) $ 3.50 - $ 7.25
------- -------
</TABLE>
----------
(a) Financial information, where available, has been updated from the
Management Forecast based upon detailed operating company models provided
during due diligence. Differences with the Management Forecast are not, in
the aggregate, material to this analysis.
(b) Reflects 0.95x - 1.05x RAB exit multiple for regulated business and 5.5x -
6.5x EBITDA multiple for unregulated business.
(c) Valuation based on acquisition costs and Management's estimated disposition
proceeds.
(d) AGOSBA and Cancun based on 29-year and 20-year forecasts, respectively,
representing the entire life of the concessions.
(e) IASA based on IASA 13-year forecast, Leon 10-year forecast and Torreon
20-year forecast, representing the entire life of the concessions plus a
10-year extension for IASA concession.
(f) Implied value from corporate includes $28.7 million of projected G&A
expense for 2001 budget and $2 million thereafter.
(g) Includes $1,911 million of debt and $6 million of minority interest, less
$134 million of cash.
(h) Based on 117.3 million shares outstanding.
19 [SALOMON SMITH BARNEY LOGO]
<PAGE> 27
PROJECT TRUEBLUE / DECEMBER 8, 2000
SUM-OF-THE-PARTS PRECEDENT TRANSACTIONS ANALYSIS
<TABLE>
<CAPTION>
(Dollars in millions)
STATISTIC METHODOLOGY MULTIPLES
--------- ----------- ---------
<S> <C> <C> <C>
Wessex Water $1,800.0 (a) RAB 1.00x-1.20x
Other Assets (b) DCF Value (see p. 20)
Madera Water Bank Acquisition cost - Estimated Disposition Proceeds(a)
Corporate (c) (2.0) 2001 Budget plus Post-2001 Cost 8.0x-8.0x
ENTERPRISE VALUE
Net Debt and Minority Interest as of 9/30/00 (d)
Equity Value
SUM-OF-THE-PARTS PRECEDENT TRANSACTION REFERENCE RANGE
<CAPTION>
(Dollars in millions)
IMPLIED FIRM VALUE
-------------------
<S> <C>
Wessex Water $ 1,800 - $ 2,160
Other Assets (b) 501 - 620
Madera Water Bank 32 - 112
Corporate (c) $ (45) - $ ($45)
------- -------
ENTERPRISE VALUE $ 2,288 $ 2,847
Net Debt and Minority Interest as of 9/30/00(d) $(1,783) - $(1,783)
------- -------
Equity Value 505 - 1,064
SUM-OF-THE-PARTS PRECEDENT TRANSACTION REFERENCE RANGE $ 4.25 - $ 9.00
------- -------
</TABLE>
------------
(a) Management estimate as of September 30, 2000.
(b) Other Assets include Wessex Water unregulated, Lurgi Bamag, AGOSBA, Mendoza
(equity interest), AMX Brazil, Cancun (equity interest), IASA and North
America. Based on Draft 2001 Budget dated 12/6/00.
(c) Implied value from corporate includes $28.7 million of projected G&A
expense for 2001 Budget and $2 million thereafter.
(d) Includes $1,911 million of debt and $6 million of minority interest, less
$134 million of cash.
(e) Based upon 117.3 million shares outstanding.
20 [SALOMON SMITH BARNEY LOGO]
<PAGE> 28
PROJECT TRUEBLUE / DECEMBER 8, 2000
5 ADDITIONAL INFORMATION
[SALOMON SMITH BARNEY LOGO]
<PAGE> 29
PROJECT TRUEBLUE / DECEMBER 8, 2000
A. LIQUIDITY ANALYSIS
[SALOMON SMITH BARNEY LOGO]
<PAGE> 30
PROJECT TRUEBLUE / DECEMBER 8, 2000
LIQUIDITY ANALYSIS
* Trueblue currently forecasts that it will fail the debt incurrence test
(which is based upon maintaining a fixed charge ratio above 2.0x) prior to
the effective date of the proposed transaction
o Such failure will need to be cured prior to completing the merger
o A consent could be solicited from bondholders
o Alternatively, the conversion of the Parent Revolving Credit to PIK
Preferred stock coupled with restricting certain subsidiaries should
be sufficient to maintain compliance
* Failure of the debt incurrence test prohibits Trueblue from raising new
debt, but allows it to continue to use its existing revolving credit
availability
* Without the proposed transaction or a substantial restructuring of the
capital structure, projections indicate that Trueblue will have no debt
capacity under its revolving credit facilities in early 2002
[SALOMON SMITH BARNEY LOGO]
<PAGE> 31
PROJECT TRUEBLUE / DECEMBER 8, 2000
B. SQUEEZE-OUT PRECEDENTS
[SALOMON SMITH BARNEY LOGO]
<PAGE> 32
PROJECT TRUEBLUE / DECEMBER 8, 2000
PRECEDENT MINORITY SQUEEZE-OUTS GENERALLY
<TABLE>
<CAPTION>
Premium to Market
Acquiror's Holdings at Number of ----------------------------------
Time of Offer Transactions One Month Prior One Day Prior
------------------------ ------------ --------------- -------------
<S> <C> <C> <C> <C>
50.1% - 79.9% 48 High 107.4% 106.7%
Mean 39.5 32.6
Median 32.8 24.6
Low 2.8 (11.1)
80.0% + 22 High 77.8% 60.0%
Mean 32.7 18.1
Median 28.3 18.1
Low 2.5 (1.1)
------------------------ ------------ --------------- -------------
All Transactions 70 High 107.4% 106.7%
Mean 37.4 28.0
Median 29.3 21.0
Low 2.5 (11.1)
Trueblue Price $4.31 $3.56
------------------------ ------------ --------------- -------------
Trueblue Premium at:
$7.00 per share(a) 62.3% 96.5%
$8.00 per share 85.5 124.6
$8.25 per share 91.3 131.6
$8.50 per share 97.1 138.6
------------------------ ------------ --------------- -------------
</TABLE>
----------
Source: Securities Data Company, November 2000. Includes cash acquisitions
of US targets, greater than $100 million since 1988 where acquiror owned
more than 50% of target before transaction. These transactions cover many
different industries and a range of business prospects and capital
structures. The facts and circumstances of each transaction are unique to
the companies and may have affected the particular premium obtained in any
particular situation.
(a) Represents initial parent offer.
22 [SALOMON SMITH BARNEY LOGO]
<PAGE> 33
PROJECT TRUEBLUE / DECEMBER 8, 2000
C. SUBSEQUENT CONTACTS
[SALOMON SMITH BARNEY LOGO]
<PAGE> 34
PROJECT TRUEBLUE / DECEMBER 8, 2000
CONTACTS SUBSEQUENT TO THE PARENT OFFER
COMPANY D
* During the week of November 20, Company D's financial advisor contacted SSB
& WP to indicate potential interest
* SSB & WP attempted to contact Company D's advisor on November 30 to follow
up, but have been unsuccessful
COMPANY G
* A private investment firm indicated in a letter to Trueblue its potential
interest in acquiring Wessex at an indicative value of 95% of RAB
(approximately $1.7 billion)
* SSB & WP contacted Company G to discuss the indicative valuation
* Company G indicated it was unwilling / unable to pay any strategic premium
to acquire Wessex
COMPANY H
* Trueblue received a letter dated November 29 indicating the possible
interest in some or all of the Company's Mexican assets
23 [SALOMON SMITH BARNEY LOGO]
<PAGE> 35
PROJECT TRUEBLUE / DECEMBER 8, 2000
APPENDIX
[SALOMON SMITH BARNEY LOGO]
<PAGE> 36
PROJECT TRUEBLUE / DECEMBER 8, 2000
COMPARABLE PUBLICLY-TRADED COMPANIES
Trading Statistics - Firm Valuations
(L.MM except per share amounts, ratios or as otherwise indicated)
<TABLE>
<CAPTION>
FIRM VALUE FIRM VALUE
--------------- ----------------
EBIT(c) EBIT(c) PRICE / EARNINGS(d)
SHARE MARKET FIRM --------------- ---------------- -------------------
COMPANY PRICE (a) CAPITALIZATION VALUE (b) 2000E 2001E 2000E 2001E 2000E 2001E
------- --------- -------------- --------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Local GBP GBP
Kelda Group 3.77 1,479 2,768 7.1 6.8 11.9 11.5 11.0 10.8
United Utilities 6.85 3,771 6,525 8.2 7.9 11.6 11.2 12.5 12.5
Anglian Water 5.88 1,607 3,206 7.4 7.1 10.7 10.3 12.0 11.4
Pennon Group 6.71 915 1,576 7.8 7.5 12.6 12.2 12.0 13.5
Severn Trent 7.09 2,426 4,344 6.9 6.5 11.9 11.3 11.6 11.1
Suez Lyonnaise Tractebel 189.40 23,288 34,797 8.8 8.2 15.9 14.2 24.4 21.5
Vivendi Environment 45.90 9,850 24,084 10.5 9.4 17.7 15.4 22.8 18.0
HIGH 10.5X 9.4X 17.7X 15.4X 24.4X 21.5X
MEAN 8.1 7.6 13.2 12.3 15.2 14.1
MEDIAN 7.8 7.5 11.9 11.5 12.0 12.5
LOW 6.9 6.5 10.7 10.3 11.0 10.8
<CAPTION>
2000 VALUE OF PM/(DISC)
RAB UNREGULATED TO RAB
COMPANY BUSINESS
------- ----- -------- ---------
<S> <C> <C> <C>
Kelda Group 2,420 700 (9.4)%
United Utilities 4,714 2,362 (10.0)%
Anglian Water 3,296 250 (10.3)%
Pennon Group 1,489 320 (15.9)%
Severn Trent 3,965 900 (12.6)%
Suez Lyonnaise Tractebel
Vivendi Environment
HIGH (9.4)%
MEAN (11.6)%
MEDIAN (10.3)%
LOW (15.9)%
</TABLE>
<TABLE>
<CAPTION>
FIRM VALUE FIRM VALUE
--------------- ----------------
EBITDA(c) EBIT(c) PRICE / EARNINGS(d)
MARKET FIRM --------------- ---------------- -------------------
PRECENDENT TRANSACTION CAPITALIZATION VALUE (b) 2000E 2001E 2000E 2001E 2000E 2001E
---------------------- -------------- --------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Thames Water (RWE Bid) 12.15 4,341 5,951 9.0 8.4 12.4 12.0 18.9 15.7
<CAPTION>
2000 VALUE OF PM/(DISC)
RAB UNREGULATED TO RAB
PRECENDENT TRANSACTION BUSINESS
---------------------- ----- ----------- ---------
<S> <C> <C> <C>
Thames Water (RWE Bid) 4,264 957 21.8%
</TABLE>
(a) As of December 6, 2000 in local currency
(b) Total interest-bearing debt less cash, marketable securities, minority
interest, and investments in unconsolidated affiliates.
(c) Firm Value equals equity value (all fully diluted shares at the stock
price less any option proceeds) plus straight debt, minority interest,
straight preferred stock, all out-of-the-money convertibles, less
investments in unconsolidated affiliates and cash.
(d) Source: Salomon Smith Barney research and Brokers' reports.
(e) Source: I/B/E/S as of December 6, 2000
[SALOMON SMITH BARNEY LOGO]
<PAGE> 37
PROJECT TRUEBLUE / DECEMBER 8, 2000
SUMMARY OF PRECEDENT WATER TRANSACTIONS
<TABLE>
<CAPTION>
(Dollars in Millions)
Aggregate Value / Forward Premium / Mkt Price
Date Target/ Equity Aggregate ------------------------- RAB -------------------
Announced Acquiror Value Value EBIT EBITDA Multiple 1-day 1-month
---------- -------- --------- --------- -------- ------------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11-Aug-00 Hyder Plc $ 816 $3,544 10.7x 6.9x 0.95x 89.0% 75.0%
WPD Holdings
25-Sep-00 Thames Water 6,294 8,629 10.9x 7.9x 1.22x 32.8% 39.8%
RWE AG
</TABLE>
25 [SALOMON SMITH BARNEY LOGO]
