<PAGE> 1
Exhibit (c)(1)
SCHEDULE III
OPINION OF FIRST SECURITY VAN KASPER
December 13, 2000
Board of Directors
Lindal Cedar Homes, Inc.
4300 South 104th Place
Seattle, Washington 98124
Gentlemen:
You have requested that we render our opinion as to the fairness, from a
financial point of view, to the shareholders of Lindal Cedar Homes, Inc. (the
"Company"), a Delaware corporation, of the consideration (the "Purchase Price")
which is proposed to be paid to purchase all of the Company's outstanding shares
common stock other than a portion of such shares held by certain shareholders of
the Company making the proposal (the "Lindal Family Members") who will retain
their equity interest in the Company (the "Offer"). The Lindal Family Members
are comprised of Sir Walter Lindal, Mr. Robert Lindal, Mr. Douglas Lindal and
Mr. Martin Lindal, each of whom is an existing shareholder of the Company and
together own an aggregate of 44.9% of the Company's fully diluted outstanding
shares at the date hereof. Each of the Lindal Family Members is also a director
and an executive officer of the Company.
Pursuant to the draft of the Offer To Purchase dated December 12, 2000, the
Lindal Family Members propose that the Company make a fixed price self tender
offer for up to all of the outstanding shares of common stock of the Company not
held by the Lindal Family Members, followed by a "cleanup" merger with a company
formed by the Lindal Family Members. We have also been advised by the Company
that upon commencement of the Tender Offer, all outstanding options to purchase
Common Shares, except those held by the Lindal Family Members, where the
Purchase Price exceeds the applicable exercise price of such options, will be
exercised and have based our analysis and opinion assuming full exercise of such
options. The Purchase Price to be paid to the unaffiliated shareholders in the
Tender Offer is $4.55 cash per share.
In connection with the preparation of our opinion, among other things, we:
(i) reviewed certain financial information relating to the Company
including publicly available historical financial and operating statements
as well as internal financial and operating projections prepared by the
management of the Company;
(ii) held discussions with certain members of the Company's management
concerning the business, past and current business operations, financial
condition and future prospects of the Company as an independent company as
wells as views regarding the rational for the Transaction;
(iii) reviewed the financial terms and conditions set forth in the
Offer To Purchase, which has been represented to us to be the terms and
conditions agreed to between the Special Committee of the Board of
Directors and the Lindal Family Members;
(iv) reviewed the stock price and trading history of the Company;
(v) reviewed publicly-available data, information and valuations of
publicly-traded companies that we deemed generally comparable to the
Company;
(vi) compared the financial terms of the Purchase Price with the
financial terms, to the extent publicly available, of other business
combinations that we deemed relevant; and
(vii) made other studies, inquiries and analysis and reviewed other
data, as we deemed relevant and appropriate, based on our judgment as
investment bankers, for the purpose of this opinion.
III-1
<PAGE> 2
Board of Directors
Lindal Cedar Homes, Inc.
December 13, 2000
Page 2
We also reviewed a liquidation appraisal on five real estate properties
prepared by Shorett Kidder Mathews & Segner Valuation Advisory Group which the
Company made available to us and management's estimate of the liquidation value
of the other assets and liabilities of the Company. We have not reviewed the
methodology or the basis for such estimates of liquidation value. We also
solicited on behalf of the Company third party indications of interest in
acquiring all or any part of the Company from both strategic and financial
buyers. Two potential financial buyers submitted letters of interest in
acquiring the Company, one proposing $4.50 per share and the other a range of
values between $4.20 and $4.75 per share. Such letters of interest were
conditioned on due diligence, meeting with management, and meeting with some of
the Company's dealers.
In our review we have assumed, with your permission, that the documents to
be prepared, used and signed by the Company and the Lindal Family Members to
formally effect the Offer, including any disclosure materials to be delivered to
the shareholders of the Company, will effect the Offer on the terms set forth in
the draft of the Offer To Purchase without material alteration and that the
Offer To Purchase and other such documents and materials, comply and will comply
with all applicable federal, state and foreign securities laws and other
applicable laws. We have not provided any legal or tax advice with respect to
the Offer or its structure and have not made an independent evaluation or
appraisal of any of the assets or liabilities (contingent or otherwise) of the
Company nor have we made a physical inspection of any of the properties or
assets of the Company.
In rendering this opinion, we relied, without independent verification, on
the accuracy and completeness of all of the financial and other information that
was publicly available, furnished, or otherwise communicated to us by the
Company and relied upon and assumed without independent verification that there
has been no material change in the assets, financial condition and business
prospects of the Company since the date that the most recent financial
statements were made available to us.
With respect to financial projections provided to us by the Company, we
reviewed the projections and have been advised by certain members of management
of the Company, and have relied upon and assumed without independent
verification, that the projections (i) were reasonably prepared; (ii) are based
upon assumptions reflecting the best currently available estimates and good
faith judgments of management as to the future performance of the Company as an
independent company; and (iii) are believed to be realizable in the amounts and
time periods contemplated thereby. Management of the Company has also advised us
that it does not presently have any information or belief that would make the
projections incomplete or misleading.
Our opinion is based upon analysis of the foregoing factors in light of our
assessment of general economic, financial and market conditions as they exist
and as they can be evaluated by us as of the date hereof and on information made
available to us as of the date hereof. Although events occurring after the date
hereof could materially affect the assumptions relied upon in preparing this
opinion, we do not have any obligation to update, revise or reaffirm this
opinion.
This opinion is for the benefit and use of the Board of Directors of
Lindal Cedar Homes, Inc. in its consideration of the Transaction and is not a
recommendation to any shareholder as to whether such shareholder should tender
his shares or how such shareholder should vote or otherwise act with respect to
the Transaction. Further, this opinion addresses only the financial fairness of
the Purchase Price to be paid by the Lindal Family Members and does not address
the relative merits of the Offer, any alternatives to the Offer, the Company's
underlying decision to proceed with or effect the Offer or any other aspect of
the Offer. This opinion may not be used or referred to, or quoted or disclosed
to any person in any manner, without our prior written consent in each instance.
In furnishing this opinion, we do not admit that we are experts within the
meaning of the term "experts" as used in the Securities Act of 1933, as amended,
and the rules and
III-2
<PAGE> 3
Board of Directors
Lindal Cedar Homes, Inc.
December 13, 2000
Page 3
regulations promulgated thereunder, nor do we admit that this opinion
constitutes a report or valuation within the meaning of Section 11 of the
Securities Act.
First Security Van Kasper, Inc., as part of its investment banking
business, is regularly engaged to provide fairness opinions in connection with
mergers and acquisitions. We have received a fee from the Company for rendering
this opinion and were paid a retainer fee when we were engaged by the Company to
render financial advisory and investment banking services. The Company has also
agreed to indemnify us for certain liabilities that may arise in rendering this
opinion.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Purchase Price is fair to the shareholders of the Company
(other than the Lindal Family Members, as to which we express no opinion) from a
financial point of view.
Very truly yours,
FIRST SECURITY VAN KASPER, INC.
III-3
