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As filed with the Securities and Exchange Commission on October 10, 2007

Securities Act File No. 333-142625



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Amendment No. 3
to
FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933


ATLAS INDUSTRIES HOLDINGS LLC
(Exact name of Registrant as specified in charter)

Delaware   2670   20-8100498
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

One Sound Shore Drive, Suite 302
Greenwich, CT 06830
(203) 983-7933
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Andrew M. Bursky
Chief Executive Officer
Atlas Industries Holdings LLC
One Sound Shore Drive, Suite 302
Greenwich, CT 06830
(203) 983-7933
(Name, address, including zip code, and telephone number, including area code, of agent for service)


Copies to:

Christopher M. Zochowski
McDermott Will & Emery LLP
600 Thirteenth Street, N.W.
Washington, DC 20005
(202) 756-8000
(202) 756-8087 – Facsimile
  Stephen C. Mahon
Timothy L. Coyle
Squire, Sanders & Dempsey L.L.P.
312 Walnut Street, Suite 3500
Cincinnati, OH 45202
(513) 361-1200
(513) 361-1201 – Facsimile

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement

        If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: o

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

CALCULATION OF REGISTRATION FEE


Title of Each Class of
Securities to be Registered

  Amount to
be Registered

  Proposed Maximum
Offering Price
Per Share

  Proposed Maximum
Aggregate
Offering Price(1)

  Amount of
Registration Fee(2)


Common Stock of Atlas Industries Holdings LLC           $230,000,000   $7,061

Total           $230,000,000   $7,061

(1)
Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)
$6,708 was previously paid.

        The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.




Subject to Completion, dated October 10, 2007

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS

13,333,333 Common Shares

GRAPHIC

        We are making an initial public offering of 13,333,333 common shares representing limited liability company interests in Atlas Industries Holdings LLC, which we refer to as the company.

        Various accredited investors including certain institutions have agreed to purchase, in separate private placement transactions to close in conjunction with the closing of this offering, a number of common shares in the company having an aggregate purchase price of approximately $35.0 million, at a per share price equal to the initial public offering price (which will be approximately 2,333,339 common shares, assuming an initial public offering price per share of $15.00 and that our initial businesses are acquired for the purchase prices disclosed in this prospectus).

        The underwriters have reserved up to 10% of the common shares of this offering for sale pursuant to a directed share program. Currently, no public market exists for our common shares. We expect the initial public offering price to be between $14.00 and $16.00 per share. We have applied to list our common shares on the Nasdaq Global Market under the symbol "AAAA".

        Investing in the common shares involves risks. See the section entitled "Risk Factors" beginning on page 17 of this prospectus for a discussion of the risks and other information that you should consider before making an investment in our securities.

 
  Per Share
  Total
Public offering price        
Underwriting discount and commissions*        
Proceeds, before expenses, to us        

*
Includes the financial advisory fee payable solely to Ferris, Baker Watts, Incorporated of 0.5% of the total offering price.

        The underwriters may also purchase up to an additional 2,000,000 common shares from us at the public offering price, less the underwriting discount and commissions (including the financial advisory fee) within 30 days from the date of this prospectus to cover overallotments.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

        We expect to deliver the common shares to the underwriters for delivery to investors on or about            , 2007.


Ferris, Baker Watts
Incorporated
  JMP Securities   Oppenheimer & Co.

J.J.B. Hilliard, W.L. Lyons, Inc.       SMH CAPITAL Inc.

The date of this prospectus is                        , 2007


GRAPHIC



PROSPECTUS SUMMARY

        This summary highlights selected information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read this entire prospectus carefully, including the "Risk Factors" section and the pro forma condensed combined financial statements, the financial statements of our initial businesses and the notes relating thereto and the related "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

        All information and transactions discussed in this prospectus relating to the initial public offering assume an initial public offering of 13,333,333 million of our common shares at $15.00 per share (which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus) and that the initial businesses are acquired for the purchase prices set forth in this prospectus. However, the actual initial public offering size, price per share and purchase prices may be higher or lower than these assumed amounts. In addition, the information and transactions discussed in this prospectus relating to the initial public offering assume that the underwriters have not exercised their overallotment option.

        Certain terms frequently used in this prospectus are discussed in more detail following the section entitled "—Overview of Our Business".

Overview of Our Business

        We have been formed to acquire and manage a group of small to middle market businesses. Through our structure, we offer investors an opportunity to participate in the ownership and growth of a portfolio of businesses that traditionally have been owned and managed by private equity firms, private individuals or families, financial institutions or large conglomerates. The acquisitions of our initial businesses will provide our investors with an immediate opportunity to participate in the ongoing cash flows of a diversified portfolio of businesses through the receipt of regular quarterly distributions. Further, we believe that our management and acquisition strategies will allow us to achieve our goals of growing distributions to our shareholders and increasing shareholder value over time.

        We will seek to acquire controlling interests in small to middle market businesses that operate primarily in commercial and industrial sectors in which members of our management team have historically invested and operated businesses, or in which our management team will develop expertise or experience. In addition, we expect to focus on complex acquisitions in which we believe the value of the underlying business is masked, depressed or not otherwise apparent to other potential buyers due to legal, financial or operational issues. We will also seek to acquire under-managed or under-performing businesses that we believe can be improved under the guidance of our management team and the management teams of the businesses that we own. We expect to improve our businesses over the long term through organic growth opportunities, add-on acquisitions and operational improvements.

        Approximately $233.4 million, comprised of cash and preferred stock of our acquisition subsidiaries, will be used to acquire the equity interests in, and provide debt financing to, the following initial businesses:

    Metal, a manufacturer of highly customized, seamless pressure and mechanical steel tubes for the power generation, oil and natural gas extraction and non-automotive industrial markets;

    Forest, a diversified paper and specialty packaging company serving primarily industrial markets;

    CanAmPac, a manufacturer of paperboard and paperboard packaging used for the packaging of food, beverages and other consumer goods; and

    Pangborn, a designer and marketer of surface preparation equipment and related aftermarket parts and services used in metal manufacturing processes within a diverse range of industries.

        Importantly, we believe that our initial businesses alone will produce sufficient positive cash flows to enable us to make regular quarterly distributions to our shareholders over the long term, regardless of future acquisitions or operational improvements. In addition, immediately following this offering, we anticipate that we will have approximately $100.0 million available for borrowing under our proposed third-party credit facility of $150.0 million and approximately $31.8 million of cash on hand.

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Frequently Used Terms

        Throughout this prospectus we use certain terms repeatedly. To assist you in reading and understanding the disclosure contained in this prospectus, please note the following frequently used terms, which, except as otherwise specified, have the meanings set forth below:

    "Atlas," "we," "us" and "our" refer to the company and our initial businesses together;

    "Metal" refers to Metal Resources LLC and its consolidated subsidiary prior to their acquisition as contemplated herein and refers to Atlas Metal Acquisition Corp. and its consolidated subsidiaries, including Metal Resources LLC, following such acquisition;

    "Forest" refers to Forest Resources LLC and its consolidated subsidiaries, other than CanAmPac, prior to their acquisition as contemplated herein and refers to Atlas Forest Acquisition Corp. and its consolidated subsidiaries, including Forest Resources LLC, following such acquisition;

    "CanAmPac" refers to CanAmPac ULC and its consolidated subsidiaries prior to their acquisition as contemplated herein and refers to Atlas CanAmPac Acquisition Corp. and its consolidated subsidiaries, including CanAmPac ULC, following such acquisition;

    "Pangborn" refers to Capital Equipment Resources LLC and its consolidated subsidiaries prior to their acquisition as contemplated herein and refers to Atlas Pangborn Acquisition Corp. and its consolidated subsidiaries, including Capital Equipment Resources LLC, following such acquisition;

    "acquisition subsidiaries" refers, collectively, to Atlas Metal Acquisition Corp., Atlas Forest Acquisition Corp., Atlas CanAmPac Acquisition Corp. and Atlas Pangborn Acquisition Corp.;

    "our initial businesses" refers, collectively, to Metal, Forest, CanAmPac and Pangborn;

    "our businesses" refers, collectively, to the businesses in which we may own a controlling interest from time to time; and

    "our shareholders" refers to holders of our common shares.

Our Manager

        The company will engage Atlas Industries Management LLC, which we refer to as our manager, to manage the day-to-day operations and affairs of the company, oversee the management and operations of our businesses and perform certain other services on our behalf, subject to the oversight of our board of directors. We believe our manager's expertise and experience will be a critical factor in executing our strategy to meet the goals of growing distributions to our shareholders and increasing shareholder value. Effective January 1, 2008, all of the employees of Atlas FRM LLC (d/b/a Atlas Holdings LLC), which we refer to as Atlas Holdings, will become employees of our manager. Andrew M. Bursky, our Chief Executive Officer, and Timothy J. Fazio, our President, are the managing members of our manager and, as a result, our manager is and will be an affiliate of Messrs. Bursky and Fazio and the other entities controlled by Messrs. Bursky and Fazio, including Atlas Holdings. We refer to Messrs. Bursky and Fazio together with their affiliated entities, including our manager, as the AH Group.

        Initially, our manager will employ or engage eight experienced professionals, whom we refer to collectively as our management team. The senior members of our management team are Andrew M. Bursky, Timothy J. Fazio, David I. J. Wang, Daniel E. Cromie, Edward J. Fletcher and Philip E. Schuch. A majority of the senior members of our management team have worked together for over seven years, and some have worked together for over 14 years. The senior members of our management team, their affiliates and certain members of our board of directors, through Atlas Titan Management Investments LLC, which we refer to as AT Management, have agreed to purchase approximately $14.7 million of common shares in a separate private placement transaction to close in conjunction with this offering at a per share price equal to the initial public offering price. See the

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section entitled "Our Manager" for more information about our manager, our management team and our relationship with our manager and our management team.

        Since 2002, our management team has developed and grown multiple sector-specific platform businesses, through the consummation of 11 acquisitions. The revenue of the platform businesses grown and developed by our management team grew, due to a combination of acquisitions, organic growth and operational improvements, from approximately $45.4 million for the year ended December 31, 2002 to approximately $588.7 million for the year ended December 31, 2006. During the six months ended June 30, 2007, our management team completed another acquisition of a business with revenues of approximately $250.2 million for the year ended December 31, 2006. Collectively, our management team has approximately 100 years of combined experience in acquiring and managing small and middle market businesses and has overseen the acquisitions of over 100 businesses.

        The company and our manager will enter into a management services agreement pursuant to which we will pay our manager a quarterly management fee equal to 0.5% (2.0% annualized) of the company's adjusted net assets for services performed. The management fee will be subject to offset pursuant to fees paid to our manager by our businesses under separate management services agreements that our manager will enter into with our initial businesses, which we refer to as offsetting management services agreements. In addition, a portion of the management fee will be paid in the form of common shares for the first eight quarterly payments, which will have the effect of enhancing our liquidity. See the sections entitled "Management Services Agreement" and "Our Manager—Our Relationship with Our Manager—Our Manager as a Service Provider" for more information about the terms of the management services agreement and the calculation of the management fee, respectively.

        Our Chief Executive Officer, President, Chief Financial Officer and Chief Accounting Officer will be employees of our manager and will be seconded to the company, which means that these employees will be assigned by our manager to work for the company during the term of the management services agreement. Although these executive officers will be employees of our manager, they will report directly to our board of directors.

        The company will not reimburse our manager for any of our manager's overhead expenses related to the services performed by our manager pursuant to the management services agreement, including the compensation of our executive officers and other seconded personnel providing services to us, which are encompassed by the management fee. However, pursuant to the management services agreement, our manager has the right to seek reimbursement relating to compensation paid to the Chief Financial Officer and seconded personnel serving on the staff of the Chief Financial Officer, including the Chief Accounting Officer; however, our manager currently does not intend to seek any reimbursement relating to our Chief Financial Officer and Chief Accounting Officer.

        Our manager will bear all expenses incurred, which can be significant, in the identification, evaluation, management, performance of due diligence on, negotiation and oversight of a potential acquisition if our board of directors does not resolve to pursue such acquisition. These expenses may also include expenses related to travel, marketing and attendance at industry events and the retention of outside service providers. However, the company generally will otherwise be responsible for paying costs and expenses relating to its business and operations, including all costs and expenses incurred by our manager or its affiliates on behalf of the company during the term of the management services agreement. The compensation committee of our board of directors will review, on an annual basis, all costs and expenses reimbursed to our manager. See the sections entitled "Management—Executive Officers of the Company" and "Management Services Agreement" for more information about the secondment of our executive officers and "Our Manager—Our Relationship with Our Manager—Our Manager as a Service Provider—Reimbursement of Expenses" for more information about the reimbursement of expenses to our manager.

        Our manager owns 100% of the allocation shares of the company, which are a separate class of limited liability company interests that, together with the common shares, will comprise all of the

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classes of equity interests of the company. Our manager received the allocation shares with its initial capitalization of the company. The allocation shares generally will entitle our manager to receive a 20% profit allocation as a form of incentive designed to align the interests of our manager with those of our shareholders. Profit allocation has two components: an equity-based component and a distribution-based component. The equity-based component will be paid when the market for our shares appreciates, subject to certain conditions and adjustments. The distribution-based component will be paid when the distributions we pay to our shareholders exceed an annual hurdle rate of 8.0%, subject to certain conditions and adjustments. While the equity-based component and distribution-based component are interrelated in certain respects, each component may independently result in a payment of profit allocation if the relevant conditions to payment are satisfied. There will be no payments of profit allocation prior to December 31, 2010. Our board of directors has the right to elect to make any payment of profit allocation in the form of securities of the company. See the section entitled "Our Manager—Our Relationship with Our Manager—Our Manager as an Equity Holder—Manager's Profit Allocation" for more information about the calculation and payment of profit allocation.

        In addition, we intend to enter into a supplemental put agreement with our manager pursuant to which our manager will have the right, subject to certain conditions, to cause the company to purchase the allocation shares then owned by our manager following the termination of the management services agreement for a price to be determined in accordance with the supplemental put agreement, which we refer to as the put price. See the section entitled "Our Manager—Our Relationship with Our Manager—Our Manager as an Equity Holder—Supplemental Put Agreement" for more information about the supplemental put agreement.

        In general, the management fee, put price and profit allocation will be, or will create, payment obligations of the company and, as a result, will be senior in right to the payment of distributions to our shareholders.

Our Strategy

        Our goals are to grow distributions to our shareholders and to increase shareholder value over the long term. We intend to do this by focusing on increasing the cash flows of our businesses as well as seeking to acquire and manage other small to middle market businesses. We believe we can increase the cash flows of our businesses by applying our intellectual capital to continually improve and grow our businesses.

Management Strategy

        Our management strategy is to operate our businesses in a manner that leverages our "intellectual capital"—the knowledge base built upon the combined years of operating experience, expertise and strategic relationships developed by our management team.

        In executing our management strategy, our manager intends to work with operating advisors, whom we refer to as our manager's operating partners, who are seasoned managers of operating companies in business sectors in which we have focused or intend to focus in the future. Our manager's operating partners provide our manager and our businesses with additional intellectual capital, independent technical assistance and advice with respect to acquiring and operating businesses in particular sectors on a level that is not otherwise achievable without expending significant time and expense. See the section entitled "Our Manager—Operating Partners" for more information about our manager's operating partners.

        Our management strategy of applying our intellectual capital to our businesses provides us with certain advantages, including the ability to:

    identify, analyze and pursue prudent organic growth strategies, including selective capital investments to increase capacity or reduce operating costs;

    identify attractive external growth and acquisition opportunities;

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    identify and execute operational improvements and integration opportunities that will lead to lower operating costs and operational optimization;

    instill financial discipline by monitoring financial and operational performance from an operator's perspective;

    implement structured incentive compensation programs, including management equity ownership, tailored to each of our businesses to attract and retain talented personnel; and

    provide the management teams of our businesses the opportunity to leverage our experience and expertise to develop and implement business and operational strategies.

        We also believe that our long-term perspective provides us with certain additional advantages, including the ability to:

    recruit and develop talented management teams for our businesses that are familiar with the industries in which our businesses operate and will generally seek to manage and operate our businesses with a long-term focus, rather than a short-term investment objective;

    focus on developing and implementing business and operational strategies to build and sustain shareholder value over the long term;

    create sector-specific platform businesses enabling us to take advantage of vertical and horizontal acquisition opportunities within a given sector;

    achieve exposure in certain industries in order to create opportunities for future acquisitions; and

    develop and maintain long-term collaborative relationships with customers and suppliers.

        We intend to continually increase our intellectual capital as we operate our businesses and acquire new businesses and as our manager identifies and recruits qualified operating partners and managers for our businesses.

Acquisition Strategy

        Our acquisition strategy is to identify attractive horizontal and vertical small and middle market acquisition opportunities with purchase prices between $20 million and $100 million in the industry sectors in which we own businesses or in which we have or will develop intellectual capital. In particular, we intend to pursue complex transactions where, we believe, the value of the underlying businesses is masked, depressed or not otherwise apparent to other potential buyers due to legal, financial or operational issues. In addition, we intend to pursue acquisitions of under-managed or under-performing businesses that, we believe, can be improved pursuant to our management strategy. We believe that our intellectual capital offers us an advantage in identifying opportunities and acquiring target businesses at attractive prices and on favorable terms.

        We believe that the merger and acquisition market for small to middle market businesses is highly fragmented and provides opportunities to purchase businesses at attractive prices relative to larger market transactions. For example, according to Mergerstat, during the twelve-month period ended September 30, 2007, businesses that sold for less than $100 million were sold for a median of approximately 7.9x the trailing twelve months of earnings before interest, taxes, depreciation and amortization as compared to a median of approximately 9.9x for businesses that sold for between $100 million and $300 million and 12.3x for businesses that sold for over $300 million. In addition, we believe that our management team's understanding of the merger and acquisition market for small to middle market businesses facing legal, financial or operational issues provides us with certain competitive advantages.

        Our acquisition strategy is predicated on the following guiding principles:

    investing primarily in business sectors and industries in which we have, or will develop, operating experience or expertise;

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    seeking opportunities in sectors and industries where entrepreneurial businesses with capable management teams, acting under the guidance and support of our management team and our manager's operating partners, can achieve attractive financial results;

    acquiring under-managed and under-performing businesses where implementation and application of our management strategy can improve financial and operational performance;

    pursuing complex transactions where value is masked, depressed or not otherwise apparent to other potential buyers due to legal, financial or operational issues; and

    acquiring and integrating businesses that are complementary to our businesses or the products that our businesses produce and sell.

        We expect the process of acquiring new businesses to be time-consuming and complex. Our management team has historically taken from 3 to 18 months to perform due diligence on, negotiate and close acquisitions. We intend to raise capital for additional acquisitions primarily through debt financing at the company level such as our proposed third-party credit facility, additional equity offerings, the sale of all or a part of our businesses or by undertaking a combination of any of the above.

Overview of this Offering and the Related Transactions

This Offering and the Private Placements

        We are making an initial public offering of 13,333,333 common shares and expect to receive net proceeds of approximately $186.0 million. In addition, upon closing the initial public offering, we will sell 2,333,339 common shares for approximately $35.0 million in connection with private placement transactions. Specifically, Atlas Titan Investments LLC, which we refer to as AT Investments, and AT Management have each agreed to purchase approximately $15.0 million and $14.7 million of our common shares, respectively, at a per share price equal to the initial public offering price, pursuant to private placement transactions to close in conjunction with the closing of this offering. Further, each of Allstate Life Insurance Company, Hancock Mezzanine Partners III, L.P., John Hancock Life Insurance Company and John Hancock Variable Life Insurance Company have collectively agreed to purchase an aggregate of $5.3 million of our common shares, at a per share price equal to the initial public offering price, pursuant to private placement transactions to close in conjunction with the closing of this offering. We refer to these institutional investors together with AT Management and AT Investments as the private placement participants.

External and Internal Debt Financings

        We intend to enter into a third-party credit facility allowing for the borrowing of up to $150.0 million of which we intend to draw approximately $50.0 million in conjunction with the closing of this offering.

        We also intend to enter into the following internal credit facilities with our acquisition subsidiaries, which will, in turn, make loans to our initial businesses as follows:

    We intend to provide Atlas Metal Acquisition Corp. with term loans of approximately $56.0 million and a $20.0 million financing commitment pursuant to a revolving credit facility. The full amount of the term loans and approximately $350,000 of the revolving loan commitment, totaling approximately $56.4 million, will be funded in conjunction with the closing of this offering. Atlas Metal Acquisition Corp. will loan approximately $56.0 million to Metal in conjunction with the closing of this offering.

    We intend to provide Atlas Forest Acquisition Corp. with term loans of approximately $46.5 million and a $21.0 million financing commitment pursuant to a revolving credit facility. The full amount of the term loans and approximately $1.0 million of the revolving loan commitment, totaling approximately $47.5 million, will be funded in conjunction with the closing

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      of this offering. Atlas Forest Acquisition Corp. will loan approximately $46.5 million to Forest in conjunction with the closing of this offering.

    We intend to provide Atlas CanAmPac Acquisition Corp. with term loans of approximately $35.0 million and a $16.5 million financing commitment pursuant to a revolving credit facility. The full amount of the term loans and approximately $763,000 of the revolving loan commitment, totaling approximately $35.8 million, will be funded in conjunction with the closing of this offering. Atlas CanAmPac Acquisition Corp. will loan approximately $35.0 million to CanAmPac in conjunction with the closing of this offering.

    We intend to provide Atlas Pangborn Acquisition Corp. with terms loans of approximately $13.0 million and a $5.0 million financing commitment pursuant to a revolving credit facility. The full amount of the term loans and approximately $294,000 of the revolving loan commitment, totaling approximately $13.3 million, will be funded in conjunction with the closing of this offering. Atlas Pangborn Acquisition Corp. will loan approximately $13.0 million to Pangborn in conjunction with the closing of this offering.

Acquisition of Our Initial Businesses

        We will use approximately $230.6 million of the net proceeds from this offering, the private placement transactions and the initial borrowing under our third-party credit facility to capitalize and make the loans described above to our acquisition subsidiaries. Our acquisition subsidiaries will use these proceeds, together with $2.8 million of preferred stock, to acquire and make the loans described above to our initial businesses as follows:

    Atlas Metal Acquisition Corp. will use approximately $81.9 million of cash and $900,000 of preferred stock to make the above described loans and acquire Metal from a group of private investors, including affiliates of our manager that are controlled by Messrs. Bursky and Fazio, certain

    members of management of Metal and Forest and certain members of the company's board of directors. We refer to this group of sellers as the Metal selling group.

    Atlas Forest Acquisition Corp. will use approximately $70.0 million of cash and $1.0 million of preferred stock to make the above described loans and acquire Forest from a group of private investors, including affiliates of our manager that are controlled by Messrs. Bursky and Fazio, certain members of management of Forest and the subsidiaries of Forest, certain members of the company's board of directors and certain other private investors in Forest. We refer to this group of sellers as the Forest selling group.

    Atlas CanAmPac Acquisition Corp. will use approximately $58.7 million of cash and $600,000 of preferred stock to make the above described loans and acquire CanAmPac from Forest and an institutional investor unaffiliated with our manager and any other selling group. We refer to this group of sellers as the CanAmPac selling group. While CanAmPac is a subsidiary of Forest, the two businesses are currently operated and managed, and following such acquisition will continue to be operated and managed, separately as two distinct entities. As a result, the company intends to acquire these two businesses in two separate acquisitions so as to give effect to the method by which the company intends to operate and manage these businesses following such acquisitions.

    Atlas Pangborn Acquisition Corp. will use approximately $20.0 million of cash and $300,000 of preferred stock to make the above described loans and acquire Pangborn from a group of private investors, including affiliates of our manager that are controlled by Messrs. Bursky and Fazio, certain members of management of Pangborn, Forest, the subsidiaries of Forest and Metal, certain members of the company's board of directors and certain other private investors in Pangborn. We refer to this group of sellers as the Pangborn selling group, and we refer to all of the above-described selling groups collectively as the selling groups.

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See the section entitled "Principal Shareholders/Share Ownership of Directors and Executive Officers—Our Initial Businesses" for more information about the interests in our initial businesses that we will acquire from our directors and executive officers.

Transactions with Related Parties

        Upon consummation of the acquisitions of our initial businesses, the selling groups will receive approximately $126.1 million, comprised of $123.3 million in cash and $2.8 million of preferred stock of our acquisition subsidiaries. Members of the AH Group will receive approximately $33.9 million in connection with the sale of their interests in our initial businesses. Our management team (other than members of the AH Group) will receive approximately $5.9 million in connection with the sale of their interests in our initial businesses. Our directors (other than members of the AH Group and our management team) will receive approximately $1.5 million in connection with the sale of their interests in our initial businesses. The officers and directors of our initial businesses (who are not encompassed by any of the foregoing categories) will receive approximately $50.2 million in connection with the sale of their interests in our initial businesses.

Summary of Our Initial Businesses

        A summary of our initial businesses is as follows:

Metal

        Metal, headquartered in South Lyon, Michigan, manufactures highly customized, precision-tolerance cold drawn seamless pressure and mechanical steel tubes in a wide range of alloy and carbon grades. Metal's products are used for niche applications in the power generation, oil and natural gas extraction and non-automotive industrial markets. Metal sells its products to an account base of over 600 customers around the world.

Forest

        Forest, headquartered in Bridgeview, Illinois, is a producer of recycled paper and specialty packaging products. Forest operates from 10 manufacturing facilities located throughout North America, including seven packaging plants in Illinois, California, Pennsylvania, Missouri, Georgia, Ontario and Quebec and three paper mills located in Indiana and Illinois. Forest serves approximately 2,500 customers who operate in diverse industrial and consumer markets on a local, regional and national basis in North America.

CanAmPac

        CanAmPac, headquartered in Toronto, Ontario, operates from two facilities in Ontario and is an integrated manufacturer of recycled paperboard and paperboard packaging used in the consumer packaged goods industry. CanAmPac paperboard products package a wide range of consumer items including frozen and dry foods, beverages, pet products, diverse household products and hardware. CanAmPac has over 250 customers including many of the leading consumer packaged goods manufacturers in the world.

Pangborn

        Pangborn, headquartered in Hagerstown, Maryland, designs and markets surface preparation equipment and related aftermarket parts and services used in metal manufacturing processes within a diverse range of industries. The equipment and aftermarket parts Pangborn produces are used in shot-blasting, a process by which the surfaces of targeted objects are cleaned through the controlled propulsion of shot or other abrasive particles at such objects. Pangborn has been in operation for over 100 years serving customers in the automotive, building and infrastructure, heavy duty trucking,

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national defense, construction, petroleum and aerospace industries. Pangborn has approximately 1,500 customers in these and other markets and has sold its products throughout the world.

Corporate Structure

        The company is a recently formed Delaware limited liability company. Your rights as a holder of common shares, and the fiduciary duties of our board of directors and executive officers, and any limitations relating thereto, are set forth in the operating agreement governing the company, which we refer to as the LLC agreement, and may differ from those applying to a Delaware corporation. However, subject to certain exceptions, the documents governing the company specify that the duties of its directors and officers will be generally consistent with the duties of directors and officers of a Delaware corporation. See the section entitled "Description of Shares" for more information about the LLC agreement.

        In addition, investors in this offering will be shareholders in the company, which is a limited liability company, and, as such, will be subject to tax under partnership income tax provisions. Under the partnership income tax provisions, the company will not incur any U.S. federal income tax liability; rather, each of our shareholders will be required to take into account his or her allocable share of company income, gain, loss, and deduction. As a holder of common shares, you may not receive cash distributions sufficient in amount to cover taxes in respect of your allocable share of the company's net taxable income. The company will file a partnership return with the Internal Revenue Service, or IRS, and will issue tax information, including a Schedule K-1, to you that describes your allocable share of the company's income, gain, loss, deduction, and other items. The U.S. federal income tax rules that apply to partnerships are complex, and complying with the reporting requirements may require significant time and expense. See the section entitled "Material U.S. Federal Income Tax Considerations" for more information.

        The company will have two classes of limited liability company interests following this offering - the common shares, which are being offered in this offering, and the allocation shares, all of which have been and will continue to be held by our manager. See the section entitled "Description of Shares" for more information about the common shares and the allocation shares.

        Our board of directors will oversee the management of the company, our businesses and the performance of our manager. Initially, our board of directors will be comprised of eight directors, all of whom have been appointed by our manager, as holder of the allocation shares, and at least five of whom are independent directors. Following this initial appointment, six of the directors will be elected by our shareholders.

        As holder of the allocation shares, our manager will have the continuing right to appoint two directors to our board of directors, subject to adjustment. Appointed directors will not be required to stand for election by our shareholders. See the section entitled "Description of Shares—Voting and Consent Rights—Appointed Directors" for more information about our manager's right to appoint a director.

Corporate Information

        Our principal executive offices are located at One Sound Shore Drive, Suite 302, Greenwich, Connecticut 06830, and our telephone number is 203-983-7933. We have applied to list the common shares on the Nasdaq Global Market under the symbol "AAAA". The company's website is located at www.AtlasLLC.com.

9



Our Proposed Organizational Structure(1)

GRAPHIC


(1)
All percentages are approximate and assume that we sell all of the common shares offered in this offering and the separate private placement transactions and that the underwriters do not exercise their overallotment option. The supplemental put agreement, offsetting management services agreements, transaction services agreements, our proposed third-party credit facility and the inter-company loans and certain other elements of the transactions are not shown. You should read this entire prospectus for a complete understanding of all the transactions being undertaken, including their participants, in connection with this offering.
(2)
See the sections entitled "—Overview of this Offering and the Related Transactions" and "Certain Relationships and Related Persons Transactions" for further information regarding the private placement transactions.
(3)
The allocation shares, which carry the right to receive a profit allocation, will represent less than a 0.1% equity interest in the company upon closing of this offering assuming that we sell all of the common shares offered in this offering and the separate private placement transactions.
(4)
Includes Messrs. Bursky and Fazio who serve as its managing members and Atlas Titan Carry I LLC and Atlas Titan Carry II LLC as its limited members. Messrs. Bursky and Fazio are the managing members of Atlas Titan Carry I LLC and TRAL Carry LLC is its limited member. Messrs. Bursky and Fazio are the non-economic managing members of Atlas Titan Carry II LLC and certain members of our management team are its limited members.
(5)
Acquired through our subsidiary, Atlas Metal Acquisition Corp.
(6)
Acquired through our subsidiary, Atlas Forest Acquisition Corp.
(7)
Acquired through our subsidiary, Atlas CanAmPac Acquisition Corp.
(8)
Acquired through our subsidiary, Atlas Pangborn Acquisition Corp.
(9)
Other than the preferred stock issued in connection with the acquisition of each initial business, all other equity interests of our acquisition subsidiaries will be owned by the company.

10



The Offering

Common shares offered by us in this offering   13,333,333 common shares (represents approximately 85% of common shares and voting power to be outstanding following this offering)

Common shares offered by us in the separate private placement transactions

 

2,333,339 common shares (represents approximately 15% of common shares and voting power to be outstanding following this offering)

Common shares outstanding after this offering and the separate private placement transactions

 

15,666,672 common shares

Use of proceeds

 

We estimate that our net proceeds from the sale of common shares in this offering will be approximately $186.0 million (or approximately $213.9 million if the underwriters' overallotment option is exercised in full) after deducting underwriting discounts and commissions (including a financial advisory fee) of approximately $14.0 million (or approximately $16.1 million if the underwriters' overallotment is exercised in full), but without giving effect to the payment of fees, costs and expenses for this offering of approximately $6.6 million. We intend to use the net proceeds from this offering, the approximately $35.0 million of proceeds from the separate private placement transactions and the approximately $50.0 million of proceeds from the initial borrowing under our proposed third-party credit facility, each of which are to close in conjunction with this offering, to:

 

 

  •

 

use approximately $230.6 million to capitalize and make loans to our acquisition subsidiaries, which will, in turn, use such amount together with $2.8 million of preferred stock of our acquisition subsidiaries, to acquire the equity interests of our initial businesses on a debt free basis, with the exception of a financing lease obligation of approximately $11.1 million at Forest at June 30, 2007;

 

 

  •

 

pay approximately $6.6 million in fees, costs and expenses we incur in connection with this offering;

 

 

  •

 

pay approximately $3.5 million in fees associated with our proposed third-party credit facility; and

 

 

  •

 

provide funds of approximately $30.3 million for general corporate purposes.

 

 

See the section entitled "The Acquisitions of and Loans to Our Initial Businesses" for further information, and see the section entitled "Use of Proceeds" for more information about the use of the proceeds of this offering.

Nasdaq Global Market symbol

 

AAAA
         

11



Dividend and distribution policy

 

Our board of directors intends to declare and pay regular quarterly cash distributions on all outstanding common shares. Our board of directors intends to declare and pay an initial quarterly distribution for the quarter ending March 31, 2008 of $0.29 per share. Our board of directors also intends to declare an initial distribution equal to the amount of the initial quarterly distribution, but pro rated for the period from the completion of this offering to December 31, 2007, which will be paid at the same time as such initial quarterly distribution. The declaration and payment of our initial distribution, initial quarterly distribution and, if declared, the amount of any future distribution will be subject to the approval of our board of directors, which will include a majority of independent directors, and will be based on the results of operations of our businesses and the desire to provide sustainable levels of distributions to our shareholders.

 

 

See the sections entitled "Dividend and Distribution Policy" for a discussion of our intended distribution rate and "Material U.S. Federal Income Tax Considerations" for more information about the tax treatment of distributions by the company.

Management fee

 

We will pay our manager a quarterly management fee equal to 0.5% (2.0% annualized) of adjusted net assets, as defined in the management services agreement, subject to certain adjustments. The company's compensation committee, which is comprised solely of independent directors, will review the calculation of the management fee on an annual basis. Based on the pro forma condensed combined financial statements set forth in this prospectus as of and for the year ended December 31, 2006 and as of and for the six month period ended June 30, 2007, and assuming no changes in the quarterly financial information, the management fee for the year ended December 31, 2006 and the six month period ended June 30, 2007 would have been approximately $4.9 million and approximately $2.5 million, respectively, on a pro forma basis. A portion of the management fee will be paid in the form of common shares for the first eight quarterly payments.

 

 

See the section entitled "Our Manager—Our Relationship with Our Manager—Our Manager as a Service Provider—Management Fee" for more information about the calculation and payment of the management fee and the specific definitions of the terms used in such calculation, as well as an example of the quarterly calculation of the management fee.

Profit allocation

 

Our manager owns 100% of the allocation shares of the company that generally will entitle our manager to receive a 20% profit allocation as a form of incentive, calculated by reference to our market appreciation and distributions to our shareholders, when considered together with distributions so paid to our manager, subject to an annual hurdle rate of 8.0% with respect to distributions to our shareholders.
         

12



 

 

The amount of profit allocation that will be payable in the future cannot be estimated with any certainty or reliability as of the date of this prospectus. Our board of directors has the right to elect to make any payment of profit allocation in the form of securities of the company.

 

 

See the section entitled "Our Manager—Our Relationship with Our Manager—Our Manager as an Equity Holder—Manager's Profit Allocation" for more information about the calculation and payment of profit allocation and the specific definitions of the terms used in such calculation.

Anti-takeover provisions

 

Certain provisions of the management services agreement and the third amended and restated operating agreement of the company, which we refer to as the LLC agreement, which we will enter into upon the closing of this offering, may make it more difficult for third parties to acquire control of the company by various means. These provisions could deprive our shareholders of opportunities to realize a premium on our common shares owned by them. In addition, these provisions may adversely affect the prevailing market price of our common shares.

 

 

See the section entitled "Description of Shares—Anti-Takeover Provisions" for more information about these anti-takeover provisions.

U.S. Federal Income Tax Considerations

 

Subject to the discussion in "Material U.S. Federal Income Tax Considerations," the company will be classified as a partnership for U.S. federal income tax purposes. Accordingly, the company will not incur U.S. federal income tax liability; rather, each of our shareholders will be required to take into account his or her allocable share of company income, gain, loss, deduction, and other items.

 

 

See the section entitled "Material U.S. Federal Income Tax Considerations" for information about the potential U.S. federal income tax consequences of the purchase, ownership and disposition of our common shares.

Risk factors

 

Investing in our common shares involves risks. See the section entitled "Risk Factors" and read this prospectus carefully before making an investment decision with respect to the common shares or the company.

        The above discussion assumes that the underwriters' overallotment option is not exercised. If the overallotment option is exercised in full, we will issue and sell an additional 2,000,000 common shares to the public.

13



SUMMARY FINANCIAL DATA

        The company was formed on December 26, 2006 and has conducted no operations and has generated no revenues to date. We will use the net proceeds from this offering, the separate private placement transactions and the initial borrowing under our proposed third-party credit facility to acquire and make loans to our initial businesses.

        The following summary financial data presents the historical financial information for Metal, Forest, CanAmPac and Pangborn and does not reflect the accounting for these businesses upon completion of the acquisitions and the operation of the businesses as a consolidated entity. This historical financial data does not reflect the recapitalization of these businesses upon acquisition by the company. As a result, this historical data may not be indicative of the future performance of these businesses following their acquisition by the company and recapitalization. You should read this information in conjunction with the sections entitled "Selected Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations", the financial statements and notes thereto, and the pro forma condensed combined financial statements and notes thereto which reflect the completion of the acquisitions and related transactions thereto, all included elsewhere in this prospectus.

        The summary financial data for Metal for the years ended December 31, 2005 and 2006 were derived from Metal's audited consolidated financial statements included elsewhere within this prospectus. The summary financial data for Metal for the six month periods ended June 30, 2006 and 2007 were derived from Metal's unaudited condensed interim financial statements included elsewhere within this prospectus.

        The summary financial data for Forest for the year ended December 31, 2005 was derived from Forest's audited consolidated financial statements included elsewhere in this prospectus. The summary financial data for Forest at December 31, 2006 and for the year ended December 31, 2006 were derived from "Note 21—Consolidating Balance Sheet and Statement of Operations", which we refer to as Note 21, to the audited financial statements of Forest, excluding all financial data related to CanAmPac as of the date and for the periods indicated therein, included elsewhere in this prospectus. The summary financial data for Forest for the six month periods ended June 30, 2006 and 2007 were derived from "Note 14—Consolidating Balance Sheet and Statement of Operations", which we refer to as Note 14, to Forest's unaudited condensed interim financial statements included elsewhere within this prospectus.

        The summary financial data for CanAmPac for the year ended December 31, 2005 (predecessor) and the four month period ended April 30, 2006 (predecessor) were derived from Roman's Paperboard and Packaging's audited carve-out financial statements (predecessor) included elsewhere in this prospectus. The summary financial data for CanAmPac for the eight month period ended December 31, 2006 (successor) and at December 31, 2006 (successor) were derived from Note 21 to the audited financial statements of Forest, including only financial data related to CanAmPac as of the date and for the periods indicated therein, included elsewhere in this prospectus. The summary financial data for CanAmPac for the period May 1, 2006 through June 30, 2006 (successor) and the six month period ended June 30, 2007 (successor) were derived from Note 14 to Forest's unaudited condensed interim financial statements included elsewhere in this prospectus, including only the financial data related to CanAmPac as of the date and periods indicated therein. The balances presented for the year ended December 31, 2005 and for the four month period ended April 30, 2006 were converted to U.S. dollars for the convenience of the reader at a conversion rate of one Canadian dollar to $0.87 (actual) U.S. dollar, which approximates the mean exchange rate in effect during 2006. The balances presented for both the period May 1, 2006 through June 30, 2006 (successor) and the six month period ended June 30, 2007 (successor) were converted to U.S. dollars at a conversion rate of one Canadian dollar to $0.88 (actual) U.S. dollar.

        The summary financial data for Pangborn for the year ended December 31, 2005 (predecessor), for the period January 1, 2006 to June 4, 2006 (predecessor), for the period June 5, 2006 to December 31, 2006 (successor) and at December 31, 2006 (successor) were derived from Pangborn's audited consolidated financial statements included elsewhere in this prospectus. The summary financial data for Pangborn for the period June 5, 2006 through June 30, 2006 and the six month period ended June 30, 2007 were derived from Pangborn's unaudited condensed interim financial statements included elsewhere within this prospectus.

14



Metal

 
  Years Ended December 31,
  Six month periods ended
June 30,

 
  2005
  2006
  2006
  2007
 
  ($ in thousands)

Statement of Operations Data:                        
  Net sales   $ 66,409   $ 89,918   $ 38,685   $ 53,735
  Income from operations     5,812     11,265     3,834     8,987
  Net income     5,466     10,414     3,424     8,739

 

 

At December 31,
2006


 

At June 30,
2007

 
  ($ in thousands)

Balance Sheet Data:            
  Total assets   $ 30,797   $ 31,319
  Total liabilities     26,053     21,584
  Mandatorily redeemable preferred units     6,873     6,873
  Members' equity (deficit)     (2,129 )   2,862


Forest

 
  Years Ended December 31,
  Six month periods ended
June 30,

 
 
  2005
  2006
  2006
  2007
 
 
  ($ in thousands)

 
Statement of Operations Data:                          
  Net sales   $ 83,870   $ 162,282   $ 79,204   $ 82,612  
  Income (loss) from operations     3,464     9,880     4,737     (537 )
  Net income (loss)     (256 )   4,427     2,018     (3,684 )

 

 

At December 31,
2006


 

At June 30,
2007


 
 
  ($ in thousands)

 
Balance Sheet Data:              
  Total assets   $ 92,246   $ 88,529  
  Total liabilities     88,191     88,112  
  Participating preferred units     26,055     24,011  
  Members' deficit     (22,000 )   (23,594 )


CanAmPac

 
  Predecessor
  Successor
  Predecessor
  Successor
 
  Year ended
December 31,
2005

  January 1, 2006
through
April 30, 2006

  May 1, 2006
through
December 31,
2006

  January 1,
2006
through
April 30,
2006

  May 1,
2006
through
June 30,
2006

  Six month
period
ended
June 30,
2007

 
  ($ in thousands)

Statement of Operations Data:                                    
  Net sales   $ 93,895   $ 32,155   $ 62,622   $ 32,155   $ 16,486   $ 47,990
  Income (loss) from operations     (1,752 )   332     873     332     633     2,270
  Net (loss) income     (2,251 )   (132 )   (1,622 )   (132 )   (41 )   100

 

 

At December 31,
2006


 

At June 30,
2007

 
  ($ in thousands)

Balance Sheet Data:            
  Total assets   $ 51,661   $ 57,739
  Total liabilities     35,791     40,136
  Minority interests     4,146     4,595
  Members' equity     11,724     13,008

15



Pangborn

 
  Predecessor
  Successor
  Predecessor
  Successor
 
  Year ended
December 31, 2005

  January 1, 2006
through
June 4, 2006

  June 5, 2006
through
December 31,
2006

  January 1,
2006
through
June 4,
2006

  June 5,
2006
through
June 30,
2006

  Six month
period
ended
June 30,
2007

 
  ($ in thousands)

Statement of Operations Data:                                    
  Revenues   $ 25,171   $ 10,674   $ 19,158   $ 10,674   $ 2,907   $ 15,278
  Income from operations     3,259     1,079     1,404     1,079     318     1,281
  Net income     1,736     603     204     603     82     330

 

 

At December 31,
2006


 

At June 30,
2007

 
  ($ in thousands)

Balance Sheet Data:            
  Total assets   $ 22,106   $ 23,941
  Total liabilities     20,067     21,635
  Members' equity     2,039     2,306

16



RISK FACTORS

        An investment in our common shares involves a high degree of risk. You should carefully read and consider all of the risks described below, together with all of the other information contained or referred to in this prospectus, before making an investment decision with respect to our common shares or the company. If any of the following events occur, our financial condition, business and results of operations (including cash flows) may be materially adversely affected. In that event, the market price of our common shares could decline, and you could lose all or part of your investment.

Risks Related to Our Business and Structure

We are a new company with no history and we may not be able to manage our initial businesses on a profitable basis.

        We were formed on December 26, 2006 and have conducted no operations and have generated no revenues to date. We will use the net proceeds from this offering, the separate private placement transactions and the initial borrowing under our third-party credit facility, to acquire the equity interests in and make loans to our initial businesses. Our manager will manage the day-to-day operations and affairs of the company and oversee the management and operations of our initial businesses, subject to the oversight of our board of directors. Our management team has collectively approximately 100 years of experience in acquiring and managing small and middle market businesses. However, if we do not develop effective systems and procedures, including accounting and financial reporting systems, to manage our operations as a consolidated public company, we may not be able to manage the combined enterprise on a profitable basis, which could adversely affect our ability to pay distributions to our shareholders. In addition, the pro forma condensed combined financial statements of our initial businesses cover periods during which some of our initial businesses were not under common control or management and, therefore, may not be indicative of our future financial condition, business and results of operations.

Our audited financial statements will not include meaningful comparisons to prior years until the end of our 2009 fiscal year and may differ substantially from the pro forma condensed combined financial statements included in this prospectus.

        Our audited financial statements will include consolidated results of operations and cash flows only for the period from the date of the acquisition of our initial businesses to year-end. Because we will purchase our initial businesses only after the closing of this offering and recapitalize each of them, we anticipate that our audited financial statements will not contain full-year consolidated results of operations and cash flows until the end of our 2008 fiscal year, which may differ substantially from the pro forma combined financial statements included in this prospectus. Consequently, meaningful year-to-year comparisons will not be available, at the earliest, until two fiscal years following the completion of this offering.

Our future success is dependent on the employees of our manager, our manager's operating partners and the management teams of our businesses, the loss of any of whom could materially adversely affect our financial condition, business and results of operations.

        Our future success depends, to a significant extent, on the continued services of the employees of our manager, most of whom have worked together for a number of years. Because certain employees of our manager were involved in the acquisitions of these initial businesses while working for Atlas Holdings and, since such acquisitions, have overseen the operations of these businesses, the loss of their services may materially adversely affect our ability to manage the operations of our initial businesses. While our manager may have employment agreements with certain of its employees, these employment agreements may not prevent our manager's employees from leaving our manager or from competing with us in the future. In addition, we will depend on the assistance provided by our manager's operating partners in

17



evaluating, performing diligence on and managing our businesses. The loss of any employees of our manager or any of our manager's operating partners may materially adversely affect our ability to implement or maintain our management strategy or our acquisition strategy.

        The future success of our businesses also depends on their respective management teams because we intend to operate our businesses on a stand-alone basis, primarily relying on their existing management teams for management of our businesses' day-to-day operations. Consequently, their operational success, as well as the success of any organic growth strategy, will be dependent on the continuing efforts of the management teams of our businesses. We will seek to provide these individuals with equity incentives in the company and to have employment agreements with certain persons we have identified as key to their businesses. However, these measures may not prevent these individuals from leaving their employment. The loss of services of one or more of these individuals may materially adversely affect our financial condition, business and results of operations.

We may experience difficulty as we evaluate, acquire and integrate additional businesses, which could result in drains on our resources, including the attention of our management, and disruptions of our on-going business.

        A component of our strategy is to acquire additional businesses. We will focus on small to middle market businesses in various industries. Generally, because such businesses are privately held, we may experience difficulty in evaluating potential target businesses as much of the information concerning these businesses is not publicly available. Therefore, our estimates and assumptions used to evaluate the operations, management and market risks with respect to potential target businesses may be subject to various risks and uncertainties. Further, the time and costs associated with identifying and evaluating potential target businesses and their industries may cause a substantial drain on our resources and may divert our management team's attention away from the operations of our businesses for significant periods of time.

        In addition, we may have difficulty effectively integrating and managing future acquisitions. The management or improvement of businesses we acquire may be hindered by a number of factors, including limitations in the standards, controls, procedures and policies implemented in connection with such acquisitions. Further, the management of an acquired business may involve a substantial reorganization of the business' operations resulting in the loss of employees and customers or the disruption of our ongoing businesses. We may experience greater than expected costs or difficulties relating to an acquisition, in which case, we might not achieve the anticipated returns from any particular acquisition.

We face competition for businesses that fit our acquisition strategy and, therefore, we may have to acquire targets at sub-optimal prices or, alternatively, forego certain acquisition opportunities.

        We have been formed to acquire and manage small to middle market businesses. In pursuing such acquisitions, we expect to face strong competition from a wide range of other potential purchasers. Although the pool of potential purchasers for such businesses is typically smaller than for larger businesses, those potential purchasers can be aggressive in their approach to acquiring such businesses. Furthermore, we expect that we may need to use third-party financing in order to fund some or all of these potential acquisitions, thereby increasing our acquisition costs. To the extent that other potential purchasers do not need to obtain third-party financing or are able to obtain such financing on more favorable terms, they may be in a position to be more aggressive with their acquisition proposals. As a result, in order to be competitive, our acquisition proposals may need to be aggressively priced, including at price levels that exceed what we originally determined to be fair or appropriate in order to remain competitive. Alternatively, we may determine that we cannot pursue on a cost effective basis what would otherwise be an attractive acquisition opportunity.

18



We may acquire businesses in bankruptcy or that are facing legal, financial or operational difficulties, which could cause us to assume greater risk than if we acquired healthy businesses.

        As part of our acquisition strategy, we may acquire businesses that are facing legal, financial or operational difficulties, including businesses that may be operating under the protection of bankruptcy or similar laws or that may be engaged in significant litigation. Distressed businesses often experience one or more of the following: loss of customers, loss of key employees, failure to make capital investments to maintain assets and damage to brand names and goodwill, any of which can create long-term challenges for such businesses, even after emerging from the bankruptcy process. The risks we may face when acquiring a distressed business may be greater than if we acquire a healthy business.

We may not be able to successfully fund future acquisitions of new businesses due to the unavailability of debt or equity financing on acceptable terms, which could impede the implementation of our acquisition strategy.

        In order to make future acquisitions, we intend to raise capital primarily through debt financing at the company level, additional equity offerings, the sale of equity or assets of our businesses, offering equity in the company or our businesses to the sellers of target businesses or by undertaking a combination of any of the above. Because the timing and size of acquisitions cannot be readily predicted, we may need to be able to obtain funding on short notice to benefit fully from attractive acquisition opportunities. Such funding may not be available on acceptable terms. In addition, the level of our indebtedness may impact our ability to borrow at the company level. The sale of additional common shares will also be subject to market conditions and investor demand for the common shares at prices that may not be in the best interest of our shareholders. These risks may materially adversely affect our ability to pursue our acquisition strategy.

We may change our management and acquisition strategies without the consent of our shareholders, which may result in a determination by us to pursue riskier business activities.

        We may change our strategy at any time without the consent of our shareholders, which may result in our acquiring businesses or assets that are different from, and possibly riskier than, the strategy described in this prospectus. A change in our strategy may increase our exposure to interest rate and currency fluctuations, subject us to regulation under the Investment Company Act of 1940, as amended, which we refer to as the Investment Company Act, or subject us to other risks and uncertainties that affect our operations and profitability.

Although we currently intend to make regular cash distributions to our shareholders, our board of directors has full authority and discretion over the distributions of the company, other than the profit allocation, and it may decide to reduce or not declare distributions at any time, which may materially adversely affect the market price of our common shares.

        To date, we have not declared or paid any distributions, but our board of directors intends to declare and pay a regular quarterly cash distribution to our common shareholders, including an initial quarterly distribution of $0.29 per share for the quarter ended March 31, 2008, and a distribution that is pro rated based on the initial quarterly distribution for the period from the completion of this offering to December 31, 2007. If you purchase common shares in this offering but do not hold such common shares on the record date set by our board of directors with respect to these distributions, you will not receive such distributions.

        Although we currently intend to pursue a policy of paying regular quarterly distributions, our board of directors will have full authority and discretion to determine whether or not a distribution by the company should be declared and paid to our shareholders, as well as the amount and timing of any distribution. Our board of directors may, based on their review of our financial condition and results of operations and pending acquisitions, determine to reduce or not declare distributions, which may have a material adverse effect on the market price of our common shares.

19



        In addition, the management fee, put price and profit allocation will be payment obligations of the company and, as a result, will be senior in right to the payment of any distributions to our shareholders. Further, we are required to make a profit allocation to our manager upon satisfaction of applicable conditions to payment.

Our Chief Executive Officer, President, Chief Financial Officer, Chief Accounting Officer, directors, manager and other members of our management team may allocate some of their time to other businesses, thereby causing conflicts of interest in their determination as to how much time to devote to our affairs.

        The members of our management team anticipate collectively devoting approximately 80% of their time to the affairs of the company. As such, our Chief Executive Officer, President, Chief Financial Officer, Chief Accounting Officer, directors, manager and other members of our management team may engage in other business activities. This may result in a conflict of interest in allocating their time between our operations and the management and operations of other businesses. Their other business endeavors may be related to Atlas Holdings and its affiliates, which will continue to have ownership interests in, manage or otherwise participate in the control of several other businesses along with other parties, including possibly our manager's operating partners. Conflicts of interest that arise over the allocation of time may not always be resolved in our favor and may materially adversely affect our financial condition, business and results of operations. See the section entitled "Certain Relationships and Related Persons Transactions" for more information about the potential conflicts of interest of which you should be aware.

If we are unable to generate sufficient cash flow from the dividends and interest payments we receive from our businesses, we may not be able to make distributions to our shareholders.

        The company's only business is holding controlling interests in our businesses. Therefore, we will be dependent upon the ability of our businesses to generate cash flows and, in turn, distribute cash to us in the form of interest and principal payments on indebtedness and distributions on equity to enable us, first, to satisfy our financial obligations and, second, to make distributions to our shareholders. The ability of our businesses to make payments to us may also be subject to limitations under laws of the jurisdictions in which they are incorporated or organized. If, as a consequence of these various restrictions or otherwise, we are unable to generate sufficient cash flow from our businesses, we may not be able to declare, or may have to delay or cancel payment of, distributions to our shareholders. See the section entitled "Dividend and Distribution Policy" for a more detailed description of these restrictions.

Certain provisions of the LLC agreement of the company could make it difficult for third parties to acquire control of the company and could deprive you of the opportunity to obtain a takeover premium for your common shares.

        The LLC agreement contains a number of provisions that could make it more difficult for a third party to acquire, or may discourage a third party from acquiring, control of the company. These provisions, among others things:

    restrict the company's ability to enter into certain transactions with our major shareholders, with the exception of our manager, modeled on the limitation contained in Section 203 of the Delaware General Corporation Law, which we refer to as the DGCL;

    allow only our board of directors to fill newly created directorships, for those directors who are elected by our shareholders, and allow only our manager, as holder of the allocation shares, to fill vacancies with respect to the directors appointed by our manager;

    require that directors elected by our shareholders be removed, with or without cause, only by an affirmative vote of the holders of 85% or more of the then outstanding common shares;

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    require advance notice for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by our shareholders at a meeting of our shareholders;

    provide for a substantial number of additional authorized but unissued common shares that may be issued without action by our shareholders;

    provide our board of directors with certain authority to amend the LLC agreement subject to certain voting and consent rights of the holders of common shares and allocation shares;

    provide for a staggered board of directors of the company, the effect of which could be to deter a proxy contest for control of our board of directors or a hostile takeover; and

    limit calling special meetings and obtaining written consents of our shareholders.

        These provisions, as well as other provisions in the LLC agreement, may delay, defer or prevent a transaction or a change in control that might otherwise result in you receiving a takeover premium for your common shares. See the section entitled "Description of Shares—Anti-Takeover Provisions" for more information about voting and consent rights and the anti-takeover provisions.

Our proposed third-party credit facility may expose us to additional risks associated with leverage and may inhibit our operating flexibility and reduces cash flow available for distributions to our shareholders.

        We anticipate that we will initially have approximately $50.0 million of borrowings outstanding under our proposed third-party credit facility and expect to increase our level of debt in the future. Our proposed third-party credit facility will require us to pay a commitment fee on the undrawn amount. Our proposed third-party credit facility will contain a number of affirmative and restrictive covenants.

        If we violate any such covenants, our lender could accelerate the maturity of any debt outstanding and we may be prohibited from making any distributions to our shareholders. Such debt may be secured by our assets, including the stock we own in our businesses and the rights we have under the loan agreements with our businesses. Our ability to meet our debt service obligations may be affected by events beyond our control and will depend primarily upon cash produced by our businesses and distributed or paid to the company. Any failure to comply with the terms of our indebtedness may have a material adverse effect on our financial condition.

We expect that our proposed third-party credit facility will bear interest at floating rates. Such fluctuating interest rates could materially adversely affect our financial condition, including our ability to service our debt.

        We expect that our proposed third-party credit facility will bear interest at floating rates which will generally change as interest rates change. We bear the risk that the rates we are charged by our lender will increase faster than we can grow the cash flow of our businesses, which could reduce profitability, materially adversely affect our ability to service our debt, cause us to breach covenants contained in our proposed third-party credit facility and reduce cash flow available for distribution.

We may engage in a business transaction with one or more target businesses that have relationships with our executive officers, our directors, our manager, our manager's employees or our manager's operating partners, or any of their respective affiliates, which may create or present conflicts of interest.

        We may decide to engage in a business transaction with one or more target businesses with which our executive officers, our directors, our manager, our manager's employees or our manager's operating partners, or any of their respective affiliates, have a relationship, which may create or present conflicts of interest. While we might obtain a fairness opinion from an independent investment banking firm with respect to such a transaction, conflicts of interest may still exist with respect to a particular

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acquisition and, as a result, the terms of the acquisition of a target business may not be as advantageous to our shareholders as it would have been absent any conflicts of interest.

We will incur increased costs, including costs related to legal and financial compliance, as a result of being a publicly traded company.

        As a publicly traded company, we will incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, recently adopted corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002, and other rules implemented by the Securities and Exchange Commission, which we refer to as the SEC, and Nasdaq. We believe that complying with these rules and regulations will increase substantially our legal and financial compliance costs and will make some activities more time-consuming and costly and may divert significant portions of our management team from operating and acquiring businesses to these and related matters. We also believe that being a publicly traded company will make it more difficult and more expensive for us to obtain directors and officers liability insurance.

If, in the future, we cease to control and operate our businesses or engage in certain other activities, we may be deemed to be an investment company under the Investment Company Act.

        We have the ability to make investments in businesses that we will not operate or control. If we make significant investments in businesses that we do not operate or control, or that we cease to operate or control, or if we commence certain investment-related activities, we may be deemed to be an investment company under the Investment Company Act. If we were deemed to be an investment company, we would either have to register as an investment company under the Investment Company Act, obtain exemptive relief from the SEC or modify our investments or organizational structure or our contract rights to fall outside the definition of an investment company. Registering as an investment company could, among other things, materially adversely affect our financial condition, business and results of operations, materially limit our ability to borrow funds or engage in other transactions involving leverage and require us to add directors who are independent of us or our manager and otherwise will subject us to additional regulation that will be costly and time-consuming.

Risks Relating to Our Relationship with Our Manager

Our manager and the members of our management team may engage in activities that compete with us or our businesses.

        While members of our management team intend to collectively devote approximately 80% of their time to the affairs of the company and our manager must present all opportunities that meet the company's acquisition and disposition criteria to our board of directors, neither our manager nor members of our management team are expressly prohibited from investing in or managing other entities, including those that are in the same or similar line of business as our initial businesses or those related to or affiliated with Atlas Holdings. In this regard, the management services agreement and the obligation to provide management services will not create a mutually exclusive relationship between our manager and its affiliates, on the one hand, and the company, on the other. See the sections entitled "Our Manager" and "Management Services Agreement" for more information about our relationship with our manager and our management team.

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Our manager need not present an acquisition opportunity to us if our manager determines on its own that such acquisition opportunity does not meet the company's acquisition criteria.

        Our manager will review any acquisition opportunity to determine if it satisfies the company's acquisition criteria, as established by our board of directors from time to time. If our manager determines, in its sole discretion, that an opportunity fits our criteria, our manager will refer the opportunity to our board of directors for its authorization and approval prior to signing a letter of intent, indication of interest or similar document or agreement; opportunities that our manager determines do not fit our criteria do not need to be presented to our board of directors for consideration. In addition, upon a determination by our board of directors not to promptly pursue an opportunity presented to it by our manager, in whole or in part, our manager will be unrestricted in its ability to pursue such opportunity, or any part that we do not promptly pursue, on its own or refer such opportunity to other entities, including its affiliates. If such an opportunity is ultimately profitable, we will have not participated in such opportunity. See the section entitled "Management Services Agreement—Acquisition and Disposition Opportunites" for more information about the company's current acquisition criteria.

Our Chief Executive Officer, Mr. Andrew M. Bursky, and our President, Mr. Timothy J. Fazio, control our manager and, as a result we may have difficulty severing ties with Messrs. Bursky and Fazio.

        Under the terms of the management services agreement, our board of directors may, after due consultation with our manager, at any time request that our manager replace any individual seconded to the company, and our manager will, as promptly as practicable, replace any such individual. However, because Andrew M. Bursky and Timothy J. Fazio control our manager, we may have difficulty completely severing ties with Messrs. Bursky and Fazio absent terminating the management services agreement and our relationship with our manager. Further, termination of the management services agreement could give rise to a significant financial obligation of the company, which may have a material adverse effect on our business and financial condition. See the sections entitled "Our Manager" and "Management Services Agreement" for more information about our relationship with our manager.

If the management services agreement is terminated, our manager, as holder of the allocation shares, has the right to cause the company to purchase its allocation shares, which may have a material adverse effect on our financial condition.

        If (i) the management services agreement is terminated at any time other than as a result of our manager's resignation, subject to (ii), or (ii) our manager resigns on any date that is at least three years after the closing of this offering, our manager will have the right, but not the obligation, for one year from the date of termination or resignation, as the case may be, to cause the company to purchase the allocation shares for the put price. The put price shall be equal to, as of any exercise date, (i) if we terminate the management services agreement, the sum of two separate, independently made calculations of the aggregate amount of the "base put price amount" as of such exercise date, or (ii) if our manager resigns, the average of two separate, independently made calculations of the aggregate amount of the "base put price amount" as of such exercise date. If our manager elects to cause the company to purchase its allocation shares, we are obligated to do so and, until we have done so, our ability to conduct our business, including our ability to incur debt, to sell or otherwise dispose of our property or assets, to engage in certain mergers or consolidations, to acquire or purchase the property, assets or stock of, or beneficial interests in, another business, or to declare and pay dividends, would be restricted. These financial and operational obligations of the company may have a material adverse effect on our financial condition, business and results of operations. See the section entitled "Our Manager—Our Relationship with Our Manager—Our Manager as an Equity Holder—Supplemental Put Agreement" for more information about our manager's put right and our obligations relating thereto, as well as the definition and calculation of the base put price amount.

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If the management services agreement is terminated, we will need to change our name and cease our use of the term "Atlas", which in turn could have a material adverse impact upon our business and results of operations as we would be required to expend funds to create and market a new name.

        Our manager controls our rights to the term "Atlas" as it is used in the name of the company. The company and its businesses must cease using the term "Atlas", including any trademark based on the name of the company that may be licensed to them by our manager under a sublicense agreement, entirely in their businesses and operations within 180 days of our termination of the management services agreement. The sublicense agreement would require the company and its businesses to change their names to remove any reference to the term "Atlas" or any reference to trademarks licensed to them by our manager. This also would require us to create and market a new name and expend funds to protect that name, which may have a material adverse effect on our business and results of operations.

We have agreed to indemnify our manager under the management services agreement which may result in an indemnity payment that could have a material adverse impact upon our business and results of operations.

        The management services agreement provides that we will indemnify, reimburse, defend and hold harmless our manager, together with its employees, officers, members, managers, directors and agents, from and against all losses (including lost profits), costs, damages, injuries, taxes, penalties, interests, expenses, obligations, claims and liabilities of any kind arising out of the breach of any term or condition in the management services agreement or the performance of any services under such agreement except by reason of acts or omissions constituting fraud, willful misconduct or gross negligence. If our manager is forced to defend itself in any claims or actions arising out of the management services agreement for which we are obligated to provide indemnification, our payment of such indemnity could have a material adverse impact upon our business and results of operations.

Our manager can resign on 120 days notice and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could materially adversely affect our financial condition, business and results of operations, as well as the market price of our common shares.

        Our manager has the right, under the management services agreement, to resign at any time on 120 days written notice, whether we have found a replacement or not. If our manager resigns, we may not be able to contract with a new manager or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 120 days, or at all, in which case our operations are likely to experience a disruption, our financial condition, business and results of operations, as well as our ability to pay distributions are likely to be materially adversely affected and the market price of our common shares may decline. In addition, the coordination of our internal management, acquisition activities and supervision of our businesses is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the experience and expertise possessed by our manager and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our businesses may result in additional costs and time delays that could materially adversely affect our financial condition, business and results of operations as well as the market price of our common shares.

The amount recorded for the allocation shares may be subject to substantial period-to-period changes, thereby significantly adversely impacting our results of operations.

        The company will record the allocation shares at the redemption value at each balance sheet date by recording any change in fair value through its income statement as a dividend between net income and net income available to common shareholders. The redemption value of the allocation shares is largely related to the value of the profit allocation that our manager, as holder of the allocation shares, will receive. The redemption value of the allocation shares may fluctuate on a period-to-period basis

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based on the distributions we pay to our shareholders, the earnings of our businesses and the price of our common shares, which fluctuation may be significant, and could cause a material adverse effect on the company's results of operations. See the sections entitled "Our Manager—Our Relationship with Our Manager—Our Manager as an Equity Holder—Manager's Profit Allocation" and "Our Manager—Our Relationship with Our Manager—Our Manager as an Equity Holder—Supplemental Put Agreement" for more information about the terms and calculation of the profit allocation and any payments under the supplemental put agreement and "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information about our accounting policy with respect to the profit allocation and the allocation shares.

We cannot determine the amount of management fee that will be paid to our manager over time with certainty, which management fee may be a significant cash obligation of the company and may reduce the cash available for operations and distributions to our shareholders.

        We estimate the management fee for the year ended December 31, 2006, on a pro forma basis, would have been approximately $4.9 million. The management fee will be calculated by reference to the company's adjusted net assets, which will be impacted by the following factors:

    the acquisition or disposition of businesses by the company;

    organic growth, add-on acquisitions and dispositions by our businesses; and

    the performance of our businesses.

We cannot predict these factors, which may cause significant fluctuations in our adjusted net assets and, in turn, impact the management fee we pay to our manager. Accordingly, we cannot determine the amount of management fee that will be paid to our manager over time with any certainty, which management fee may represent a significant cash obligation of the company and may reduce the cash available for our operations and distributions to our shareholders.

We must pay our manager the management fee regardless of our performance. Therefore, our manager may be induced to increase the amount of our assets rather than the performance of our businesses.

        Our manager is entitled to receive a management fee that is based on our adjusted net assets, as defined in the management services agreement, regardless of the performance of our businesses. In this respect, the calculation of the management fee is unrelated to the company's net income. As a result, the management fee may encourage our manager to increase the amount of our assets by, for example, recommending to our board of directors the acquisition of additional assets, rather than increase the performance of our businesses. In addition, payment of the management fee may reduce or eliminate the cash we have available for distribution to our shareholders.

The management fee is based solely upon our adjusted net assets; therefore, if in a given year our performance declines, but our adjusted net assets remains the same or increase, the management fee we pay to our manager for such year will increase as a percentage of our net income and may reduce the cash available for distribution to our shareholders.

        The management fee we pay to our manager will be calculated solely by reference to the company's adjusted net assets. If in a given year the performance of the company declines, but our adjusted net assets remains the same or increase, the management fee we pay to our manager for such year will increase as a percentage of our net income and may reduce the cash available for distributions to our shareholders. See the sections entitled "Pro Forma Condensed Combined Financial Statements" for more information about the pro forma management fee based on the acquisition of our initial businesses, and "Our Manager—Our Relationship with Our Manager—Our Manager as a Service Provider—Management Fee" for more information about the terms and calculation of the management fee.

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The amount of profit allocation to be paid to our manager could be substantial. However, we cannot determine the amount of profit allocation that will be paid over time or the put price with any certainty.

        We cannot determine the amount of profit allocation that will be paid over time or the put price with any certainty. Such determination would be dependent on, among other things, the number, type and size of the acquisitions and disposition we make in the future, the distributions we pay to our shareholders, the earnings of our businesses and the market value of common shares from time to time, factors that cannot be predicted with any certainty at this time. Such factors will have a significant impact on the amount of any profit allocation to be paid to our manager, especially if our share price significantly increases. See the section entitled "Our Manager—Our Relationship with Our Manager—Our Manager as an Equity Holder—Manager's Profit Allocation" for more information about the calculation and payment of profit allocation. Any amounts paid in respect of the profit allocation are unrelated to the management fee earned for performance of services under the management services agreement.

The management fee and profit allocation to be paid to our manager may significantly reduce the amount of cash available for distribution to our shareholders. In addition, the company may pay a portion of the management fee or profit allocation in common shares, which would have a dilutive effect on our shareholders.

        Under the management services agreement, the company will be obligated to pay a management fee to and, subject to certain conditions, reimburse the costs and out-of-pocket expenses of our manager incurred on behalf of the company in connection with the provision of services to the company. Similarly, our businesses will be obligated to pay fees to and reimburse the costs and expenses of our manager pursuant to any offsetting management services agreements entered into between our manager and our businesses, or any transaction services agreements to which such businesses are a party. In addition, our manager, as holder of the allocation shares, will be entitled to receive a profit allocation upon satisfaction of applicable conditions to payment and may be entitled to receive the put price upon the occurrence of certain events. While we cannot quantify with any certainty the actual amount of any such payments in the future, we do expect that such amounts could be substantial. See the section entitled "Our Manager" for more information about these payment obligations of the company. The management fee, put price and profit allocation will be payment obligations of the company and, as a result, will be senior in right to the payment of any distributions to our shareholders. In addition, the company may pay a portion of the management fee or profit allocation in common shares, which would have a dilutive effect on our shareholders.

Our manager's influence on conducting our business and operations, including acquisitions, gives it the ability to increase its fees and compensation to our Chief Executive Officer and President, which may reduce the amount of cash available for distribution to our shareholders.

        Under the terms of the management services agreement, our manager is paid a management fee calculated as a percentage of the company's adjusted net assets for certain items and is unrelated to net income or any other performance base or measure. See the section entitled "Our Manager—Our Relationship with Our Manager—Our Manager as a Service Provider—Management Fee" for more information about the calculation of the management fee. Our manager, which Andrew M. Bursky, our Chief Executive Officer, and Timothy J. Fazio, our President, control, may advise us to consummate transactions, incur third-party debt or conduct our operations in a manner that, in our manager's reasonable discretion, are necessary to the future growth of our businesses and are in the best interests of our shareholders. These transactions, however, may increase the amount of fees paid to our manager which, in turn, may result in higher compensation to Messrs. Bursky and Fazio because their compensation is paid by our manager from the management fee it receives from the company. In addition to controlling our manager, Messrs. Bursky and Fazio may also exercise influence over the company as managing members of AT Management, which has committed to purchase approximately

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978,790 common shares, representing 6.2% of our common shares, in a separate private placement transaction to close in conjunction with the closing of this offering. Our manager's ability to influence the management fee paid to it could reduce the amount of cash available for distribution to our shareholders.

Fees paid by the company and our businesses pursuant to transaction services agreements do not offset fees payable under the management services agreement and will be in addition to the management fee payable by the company under the management services agreement.

        The management services agreement provides that our businesses may enter into transaction services agreements with our manager pursuant to which our businesses will pay fees to our manager. See the section entitled "Our Manager—Our Relationship with Our Manager—Our Manager as a Service Provider" for more information about these agreements. Unlike fees paid under the offsetting management services agreements, fees that are paid pursuant to such transaction services agreements will not reduce the management fee payable by the company. Therefore, such fees will be in addition to the management fee payable by the company or offsetting management fees paid by our businesses.

        The fees to be paid to our manager pursuant to these transaction service agreements will be paid prior to any principal, interest or dividend payments to be paid to the company by our businesses, which will reduce the amount of cash available for distributions to shareholders.

Our manager's profit allocation may induce it to make decisions and recommend actions to our board of directors that are not optimal for our business and operations.

        Our manager, as holder of all of the allocation shares in the company, will receive a profit allocation based on the distributions we pay to our shareholders, the earnings of our businesses and the market price of our shares. As a result, our manager may be encouraged to make decisions or to make recommendations to our board of directors regarding our business and operations, the business and operations of our businesses, acquisitions or dispositions by us or our businesses and distributions to our shareholders, any of which factors could affect the calculation and payment of profit allocation, but which may otherwise be detrimental to our long-term financial condition and performance.

The obligations to pay the management fee and profit allocation, including the put price, may cause the company to liquidate assets or incur debt.

        If we do not have sufficient liquid assets to pay the management fee and profit allocation, including the put price, when such payments are due and payable, we may be required to liquidate assets or incur debt in order to make such payments. This circumstance could materially adversely affect our liquidity and ability to make distributions to our shareholders. See the section entitled "Our Manager" for more information about these payment obligations of the company.

Risks Related to Taxation

Our shareholders will be subject to taxation on their share of the company's taxable income, whether or not they receive cash distributions from the company.

        Our shareholders will be subject to U.S. federal income taxation and, possibly, state, local and foreign income taxation on their share of the company's taxable income, whether or not they receive cash distributions from the company. There is, accordingly, a risk that our shareholders may not receive cash distributions equal to their portion of the company's taxable income or sufficient in amount to satisfy the tax liability that results from that income. This risk is attributable to a number of variables such as results of operations, unknown liabilities, government regulation, financial covenants of the debt of the company, funds needed for future acquisitions and/or to satisfy short- and long-term working capital needs of our businesses, and the discretion and authority of the company's board of directors to pay or modify our distribution policy. In addition, if the company invests in the stock of a controlled

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foreign corporation or other foreign corporation subject to other U.S. anti-deferral rules (or if one of the corporations in which the company invests becomes a controlled foreign corporation), the company may recognize taxable income, which our shareholders will be required to take into account in determining their taxable income, without a corresponding receipt of cash to distribute to them.

        Additionally, payment of the profit allocation to our manager could result in allocations of taxable income (with no corresponding cash distributions) to our shareholders, thus giving rise to "phantom" income. There could also be situations where shareholders receive cash distributions without an accompanying allocation of profits. Such distributions may reduce your tax basis in your common shares, and if such distributions are in an amount in excess of your tax basis, you may realize taxable gain. Moreover, as a result of such distributions, you may realize greater gain (or smaller loss) than you may otherwise expect on the disposition of your common shares. You may have a tax gain even if the sales price you receive is less than your original cost.

All of the company's income could be subject to an entity-level tax in the United States, which could result in a material reduction in cash flow available for distribution to holders of common shares and thus could result in a substantial reduction in the value of the common shares.

        Our shareholders will directly own common shares in the company. Accordingly, the company will be regarded as a publicly-traded partnership. Under the federal tax laws, a publicly-traded partnership generally will be treated as a corporation for U.S. federal income tax purposes. A publicly-traded partnership will be treated as a partnership, however, and not as a corporation, for U.S. federal tax purposes, so long as 90% or more of its gross income for each taxable year constitutes "qualifying income" within the meaning of section 7704(d) of the Internal Revenue Code of 1986, as amended, or Code and the company is not required to register under the Investment Company Act. Qualifying income generally includes dividends, interest (other than interest derived in the conduct of a financial or insurance business or interest the determination of which depends in whole or in part on the income or profits of any person), gains from the sale of stock or debt instruments which are held as capital assets, and certain other forms of "passive-type" income. The company expects to realize sufficient qualifying income to satisfy the qualifying income exception. The company also expects that the company will not be required to register under the Investment Company Act.

        Under current law and assuming full compliance with the terms of the LLC agreement (and other relevant documents) and based upon factual representations made by the manager and the company, McDermott Will & Emery LLP will deliver an opinion, which states that, at the close of this offering the company will be classified as a partnership, and not as an association or publicly-traded partnership taxable as a corporation for U.S. federal tax purposes. The factual representations made by us upon which McDermott Will & Emery LLP has relied are: (a) the company has not elected and will not elect to be treated as a corporation for U.S. federal income tax purposes; (b) the company will not be required to register under the Investment Company Act; (c) for each taxable year, more than 90% of the company's gross income will consist of dividends, interest (other than interest derived from engaging in a lending, banking, financial, insurance or similar business or interest the determination of which depends in whole or in part on the income or profits of any person), and gains from the sale of stock or debt instruments which are held as capital assets; and (d) for each taxable year, the aggregate amount of offsetting management fees to be paid pursuant to the offsetting management services agreements will be subject to a pro rata limitation of 9.5% of the company's gross income.

        The IRS may assert that interest received by the company from its subsidiaries is not qualifying income either because it is received from controlled subsidiaries or because it is derived in the conduct of a financial business. If the company fails to satisfy this "qualifying income" exception or is required to register under the Investment Company Act, the company will be treated as a corporation for U.S. federal (and certain state and local) income tax purposes, and shareholders of the company would be treated as shareholders in a corporation. The company would be required to pay federal income tax at regular corporate rates on its income. In addition, the company would likely be liable for state and

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local income and/or franchise taxes on its income. Distributions to the shareholders would constitute ordinary dividend income, (taxable at then existing rates) to such holders to the extent of the company's earnings and profits, and the payment of these dividends would not be deductible to the company. Taxation of the company as a corporation could result in a material reduction in distributions to our shareholders and after-tax return and, thus, would likely result in a substantial reduction in the value of, or materially adversely affect the market price of, the common shares.

        The present U.S. federal income tax treatment of an investment in common shares may be modified by administrative, legislative, or judicial interpretation at any time, and any such action may affect investments previously made. For example, changes to the U.S. federal tax laws and interpretations thereof could make it more difficult or impossible to meet the qualifying income exception for the company to be treated as a partnership, and not as a corporation, for U.S. federal income tax purposes, necessitate that the company restructure its investments, or otherwise adversely affect an investment in the common shares.

        In addition, the company may become subject to an entity level tax in one or more states. Several states are evaluating ways to subject partnerships to entity level taxation through the imposition of state income, franchise, or other forms of taxation. If any state were to impose a tax upon the company as an entity, our distributions to you would be reduced.

Complying with certain tax-related requirements may cause the company to forego otherwise attractive business or investment opportunities or enter into acquisitions, borrowings, financings, or arrangements the company may not have otherwise entered into.

        In order for the company to be treated as a partnership for U.S. federal income tax purposes and not as a publicly traded partnership taxable as a corporation, the company must meet the qualifying income exception discussed above on a continuing basis and the company must not be required to register as an investment company under the Investment Company Act. In order to effect such treatment, the company may be required to invest through foreign or domestic corporations, forego attractive business or investment opportunities or enter into borrowings or financings the company may not have otherwise entered into. This may adversely affect our ability to operate solely to maximize our cash flow. In addition, the company may be unable to participate in certain corporate reorganization transactions that would be tax free to our shareholders if the company were a corporation.

A shareholder may recognize a greater taxable gain (or a smaller tax loss) on a disposition of common shares than expected because of the treatment of debt under the partnership tax accounting rules.

        The company may incur debt for a variety of reasons, including for acquisitions as well as other purposes. Under partnership tax accounting principles (which apply to the company), debt of the company generally will be allocable to our shareholders, who will realize the benefit of including their allocable share of the debt in the tax basis of their investment in common shares. As discussed in the section entitled "Material U.S. Federal Income Tax Considerations," the tax basis in common shares will be adjusted for, among other things, distributions of cash and common shares of company losses, if any. At the time a shareholder later sells common shares, the selling shareholder's amount realized on the sale will include not only the sales price of the common shares but also will include the shareholder's portion of the company's debt allocable to his common shares (which is treated as proceeds from the sale of those common shares). Depending on the nature of the company's activities after having incurred the debt, and the utilization of the borrowed funds, a later sale of common shares could result in a larger taxable gain (or a smaller tax loss) than anticipated.

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The treatment of qualified dividend income and long-term capital gains under current U.S. federal income tax law may be adversely affected, changed, or repealed in the future. Further, there is no assurance that the dividends the company receives from the initial businesses will continue to be treated as qualified dividend income.

        Under current law, certain qualified dividend income and long-term capital gains are taxed to U.S. individual investors at a maximum U.S. federal income tax rate of 15%. This tax treatment may be adversely affected, changed, or repealed by future changes in tax laws at any time and is currently scheduled to expire for tax years beginning after December 31, 2010.

If the acquisitions of our initial businesses by the company were determined (in whole or in part) not to be taxable transactions, the acquisition subsidiaries may not achieve a fully stepped-up tax basis in their respective underlying assets, which could materially adversely affect the market price of our common shares.

        Because certain sellers of the initial businesses will invest in the company through private placements, there is risk that the acquisitions of the initial businesses could be treated as nontaxable. The company has taken certain steps that may decrease, but not eliminate, such risk. In particular, the company's acquisition subsidiaries will issue preferred stock that will be sold, immediately after the acquisitions of the initial businesses and this offering, pursuant to a prearranged binding commitment of sale to an unaffiliated entity that is not otherwise participating in this offering or the private placements.

        If all or part of the transactions by which the company acquires controlling interests in each of our initial businesses is not considered to be a taxable transaction, our acquisition subsidiaries may receive a carryover basis in the purchased assets. If the assets are otherwise depreciable or amortizable, this carryover basis would reduce the deductions available to certain of our subsidiaries and thus result in higher taxable income. This taxable income would be subject to an entity-level tax, which could result in a material reduction in distributions to our shareholders and after-tax return and, thus, would likely result in a substantial reduction in the value of, or materially adversely affect the market price of, the common shares.

If our initial businesses are not allowed to deduct interest expense on debt owed to the company, the entity-level tax payable by our initial businesses could increase, which could materially adversely affect the market price of our common shares.

        If our initial businesses are not permitted to deduct interest expense on debt owed to the company, there could be a significant increase in the entity-level tax paid by our initial businesses. An increase in entity-level tax paid by our initial businesses could result in a material reduction in distributions to our shareholders and after-tax return and, thus, would likely result in a substantial reduction in the value of, or materially adversely affect the market price of, the common shares.

A portion of the income arising from an investment in our common shares will be treated as UBTI and taxable to certain tax-exempt holders despite such holders' tax-exempt status.

        The company expects to incur debt that would be treated as "acquisition indebtedness" under section 514(c) of the Code with respect to certain of its investments. To the extent the company recognizes income in the form of dividends or interest from any investment with respect to which there is "acquisition indebtedness" during a taxable year, or to the extent the company recognizes gain from the disposition of any investment with respect to which there is "acquisition indebtedness," a portion of the income received will be treated as unrelated business taxable income, which we refer to as UBTI, and taxable to tax-exempt investors.

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Our structure involves complex provisions of U.S. federal income tax law for which no clear precedent or authority may be available. Our structure also is subject to potential legislative, judicial, or administrative change and differing interpretations, possibly on a retroactive basis.

        The U.S. federal income tax treatment of our shareholders depends in some instances on determinations of fact and interpretations of complex provisions of U.S. federal income tax law for which no clear precedent or authority may be available. The U.S. federal income tax rules are constantly under review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, frequently resulting in revised interpretations of established concepts, statutory changes, revisions to regulations and other modifications and interpretations. The IRS pays close attention to the proper application of tax laws to partnerships. The present U.S. federal income tax treatment of an investment in our common shares may be modified by administrative, legislative, or judicial interpretation at any time, and any such action may affect investments previously made. For example, changes to the U.S. federal tax laws and interpretations thereof could make it more difficult or impossible to meet the qualifying income exception for the company to be treated as a partnership, and not as a corporation, for U.S. federal income tax purposes, cause the company to change investments, affect the tax considerations of an investment in the company, change the character or treatment of portions of the company's income, and adversely affect an investment in our common shares.

        Our LLC agreement permits the board of directors to revise our allocation methods in order to address certain changes in U.S. federal income tax regulations, legislation or interpretation. In some circumstances, such revisions could have a material adverse impact on some or all of our shareholders. Moreover, we will apply certain assumptions and conventions in an attempt to comply with applicable rules and to report income, gain, deduction, loss and credit to holders in a manner that reflects such holders' beneficial ownership of partnership items, taking into account variation in ownership interests during each taxable year because of trading activity. However, these assumptions and conventions may not be in compliance with all aspects of applicable tax requirements. It is possible that the IRS will assert successfully that the conventions and assumptions used by us do not satisfy the technical requirements of the Code and/or Regulations and could require that items of income, gain, deductions, loss or credit, including interest deductions, be adjusted, reallocated, or disallowed, in a manner that adversely affects our shareholders.

        Legislation was proposed earlier this year that could affect the taxation of profits allocated to our manager and the taxation of certain publicly traded partnerships, which publicly traded partnerships may be like or similar to the company. It is not possible to predict whether the proposed legislation will be enacted, and if enacted, in what form. Senior officials of the executive and legislative branches expressed publicly an intention to continue to examine various aspects of the taxation of publicly traded partnerships and partnerships that provide investment advisory services; however, it is unclear what the scope of final legislation, if any, may be.

Risks Relating Generally to Our Businesses

Our results of operations may vary from quarter-to-quarter, which could materially adversely impact the market price of our common shares.

        Our results of operations may experience significant quarterly fluctuations because of various factors, which include, among others:

    the general economic conditions of the industry and regions in which each of our businesses operates;

    cyclical shifts in demand and pricing for the products and services offered by certain of our businesses;

    the general economic conditions of the customers of our businesses;

    the cost and supply of raw materials used in our manufacturing operations;

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    the timing of our acquisitions of other businesses; and

    industry production levels and market capacity needs.

        Based on the foregoing, quarter-to-quarter comparisons of our consolidated results of operations and the results of operations of each of our businesses may materially adversely impact the market price of our common shares. In addition, historical results of operations may not be a reliable indication of future performance for our businesses.

Our businesses are or may be vulnerable to economic fluctuations as demand for their products and services tends to decrease as economic activity slows.

        Demand for the products and services provided by our businesses is, and businesses we acquire in the future may be, sensitive to changes in the level of economic activity in the regions and industries in which they do business. For example, as economic activity slows the demand for paper and packaging products, such as those manufactured by Forest and CanAmPac, tends to decline. Regardless of the industry, pressure to reduce prices of goods and services in competitive industries increases during periods of general economic downturn, which may cause compression on our businesses' financial margins. A significant economic downturn could have a material adverse effect on our businesses' financial condition and results of operations.

Our businesses are or may be vulnerable to the cyclicality of the markets in which they operate.

        Our businesses are, and businesses we acquire in the future may be, sensitive to cyclical price fluctuations in the markets for their goods and services. For example, a significant portion of the business of Forest is the manufacturing of recycled corrugated medium. There are many other suppliers of recycled corrugated medium, and those suppliers compete primarily on the basis of price. The revenues of commodity-based businesses tend to be cyclical, with periods of shortage and rapidly rising prices leading to increased production and increased industry investment until supply exceeds demand. Those periods are then typically followed by periods of reduced prices and excess and idled capacity until the cycle is repeated. Forest anticipates future periods of lower market prices for its products as the industry in which it operates continues to experience occasional downturns. As a result, Forest's cash flows are expected to fluctuate.

Our businesses are or may be dependent upon the financial and operating conditions of their customers. If the demand for their customers' products and services declines, demand for our businesses' products and services will be similarly affected and could have a material adverse effect on their financial condition, business and results of operations.

        The success of the products and services of our businesses' customers in the market and the strength of the markets in which these customers and clients operate affect our businesses. Our businesses' customers are subject to their own business cycles, thus posing risks to our businesses that are beyond our control. These cycles are unpredictable in commencement, severity and duration. Due to the uncertainty in the markets served by most of our businesses' customers, our businesses cannot accurately predict the continued demand for their customers' and clients' products and services and the demands of their customers and clients for their products and services. As a result of this uncertainty, past operating results and cash flows may not be indicative of our future operating results and cash flows. If the demand for the products and services of our businesses' customers and clients declines, demand for our businesses' products and services will be similarly affected.

The industries in which our businesses compete or may compete are highly competitive and they may not be able to compete effectively with their competitors.

        Our businesses face substantial competition from a number of providers of similar services and products. Some industries in which our businesses compete are highly fragmented and characterized by

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intense competition and low margins. Many of their competitors have substantially greater financial, manufacturing, marketing and technical resources, have greater name recognition and customer allegiance, operate in a wider geographic area and/or offer a greater variety of products and services. Increased competition from existing or potential competitors could result in price reductions, reduced margins and loss of market share.

The operations and research and development of some of our businesses' services and technology depend on the collective experience of their technical employees, some of whom are members of their sales forces. If these employees were to leave our businesses, our businesses' operations and their ability to compete effectively could be materially adversely impacted.

        The future success of some of our businesses depends upon the continued service of their technical personnel who have developed and continue to develop their technology and products and work closely with customers in producing customized products. If any of these employees leave our businesses, the loss of technical knowledge and experience may materially adversely affect the operations and sales of, and research and development conducted by, our businesses. We may also be unable to attract individuals with comparable technical experience because competition for such technical personnel is intense. If our businesses are not able to replace their technical personnel with new employees with relevant technical expertise, their operations and ability to compete effectively may be materially adversely affected as they may be unable to keep up with innovations in their respective industries.

If our businesses are unable to continue the technological innovation and successful commercial introduction of new products and services, our financial condition, business and results of operations may be materially adversely affected.

        The industries in which our businesses operate, or may operate, experience periodic technological changes and ongoing product and/or service improvements. The success of our businesses depends significantly on the development of commercially viable new products, product grades, applications and services, as well as production technologies and their ability to integrate new technologies. Our future growth will depend on our businesses' ability to gauge the direction of the commercial and technological progress in all key end-use markets and upon their ability to quickly and successfully develop, manufacture and market products in such changing end-use markets. In this regard, our businesses must make ongoing capital investments.

        In addition, our businesses' customers may introduce new generations of their own products, which may require new or increased technological and performance specifications, requiring our businesses to develop customized products. Our businesses may not be successful in developing new products and technology that satisfy their customers' demand, and their customers may not accept any of their new products. If our businesses fail to keep pace with evolving technological innovations or fail to modify their products in response to their customers' needs in a timely manner, then their financial condition and results of operations could be materially adversely affected as a result of reduced sales of their products and sunk developmental costs.

Our businesses rely and may rely on suppliers for the timely delivery of raw materials used in manufacturing their products. Shortages of or price fluctuations in raw materials could limit our suppliers' ability to manufacture products or delay product shipments or cause them to breach their obligations to our businesses and materially adversely affect our financial condition, business and results of operations.

        If our businesses are unable to obtain adequate supplies of raw materials in a timely manner, our business, financial condition and results of operations may be materially adversely affected. Strikes, fuel shortages and delivery delays could disrupt our businesses and reduce sales and increase costs. Many of the products our businesses manufacture require one or more components that are supplied by third parties. Our businesses generally do not have any long-term supply agreements. At various times, there are shortages of some of the components that they use, as a result of strong demand for those

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components or problems experienced by suppliers. Suppliers of these raw materials may from time to time delay delivery, limit supplies or increase prices due to capacity constraints or other factors, which could materially adversely affect our businesses' ability to deliver products on a timely or profitable basis. In addition, supply shortages for a particular component can delay production of all products using that component or cause cost increases in the services that our businesses provide. Our businesses' inability to obtain these needed materials may require them to redesign or reconfigure products to accommodate substitute materials, which could slow production or assembly, delay shipments to customers, increase costs and reduce operating income. In certain circumstances, our businesses may bear the risk of periodic price increases for materials, which could increase costs and reduce operating income.

        In addition, our businesses may purchase materials in advance of their requirements for such materials as a result of a threatened or anticipated shortage. In this event, they will incur additional inventory carrying costs, which costs may not be recoverable, and have a heightened risk of exposure to inventory obsolescence. If they fail to manage their inventory effectively, our businesses may bear the risk of fluctuations in the costs of materials, scrap and excess inventory.

Our businesses' operations are subject to operational hazards and unforeseen interruptions for which they may not be adequately insured, which hazards and interruptions could materially adversely affect the operations and, as a result, the financial condition of our businesses.

        There are a variety of operational risks inherent in our businesses' production processes, all of which could cause sudden interruptions in their operations and result in material losses attributable to reduced production, substantial repair costs, property damage, environmental pollution, personal injury or death. These operational risks include equipment failures, maintenance outages, prolonged power failures, boiler explosions or other operational problems. Risk of downtime is also associated with the implementation of capital improvements.

        Our businesses' operations are also subject to risks associated with catastrophes such as fires, floods, earthquakes, hurricanes or acts of terrorism. These or other catastrophes could impact their operations by limiting the supply of products, adversely impacting their customers or the markets that they serve or causing transportation to be disrupted in ways that prevent their products from reaching customers. As with the operational risks described above, these catastrophes could reduce our businesses' sales and adversely affect their operations.

        Our businesses currently possess property, business interruption and general liability insurance, but proceeds from such insurance coverage may not be adequate to cover liabilities or expenses incurred or revenues lost. Moreover, such insurance may not be available in the future on commercially reasonable terms. There can be no assurance that our businesses will be able to obtain the levels or types of insurance that they would otherwise have obtained prior to these market changes or that the insurance coverage that they do obtain will not contain large deductibles or fail to cover certain hazards or cover all potential losses. The occurrence of any operating risks not fully covered by insurance could have a material adverse effect on our businesses' financial condition, business and results of operations.

Our businesses' operations rely upon custom-built industrial machinery, the failure of which may result in significant downtime at our businesses and adversely affect our financial condition and results of operations.

        Our businesses' profitability is driven by operating efficiency and productivity levels achieved within their manufacturing operations. Unscheduled machinery downtime resulting from equipment failures or other factors may reduce equipment utilization and may complicate production scheduling, creating inefficiencies due to the lack of available equipment time. If our businesses were to experience significantly higher levels of unscheduled machinery downtime, due to the failure of their critical equipment, their financial condition, business and results of operations could be materially adversely affected. For example, Metal's operations could be adversely affected if its sole rotary furnace were to be unexpectedly inoperable for a significant amount of time.

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Certain of our initial businesses may from time to time experience industrial accidents, which may result in the serious injury to, or disability of, an employee and give rise to claims, including worker's compensation claims, which may exceed our businesses' insurance coverage.

        While we believe our initial businesses comply with relevant federal, state and local workplace safety rules and regulations, certain of our initial businesses may from time to time experience industrial accidents in the course of operating, which accidents may result in the serious injury to, or disability of, an employee. For example, in September 2007, an industrial accident occurred at Metal resulting in the death of an employee. Metal has notified all relevant authorities and is conducting an internal investigation into this matter. While the occurrence of such accidents is rare and unpredictable and our businesses have in place policies to minimize the risk of such accidents, occurrences of such events may nonetheless give rise to large claims, including worker's compensation claims, which may exceed our businesses' insurance coverage. If any of our businesses were required to pay such a claim, it could have a material adverse effect on our businesses' financial condition and results of operations. In addition, the occurrence of such an accident at any of our initial businesses may result in significant work stoppages which could have a material adverse effect on such business' financial condition, business and results of operations.

Our businesses are dependent on third parties to transport their products. A failure by such parties to transport our businesses' products could materially adversely affect the earnings, sales and geographic markets of our businesses.

        Our businesses are dependent on third parties for the majority of their shipping and transportation needs. If these parties fail to deliver our businesses' products in a timely fashion (e.g., due to a lack of available trucks or drivers, labor stoppages, or traffic delays at the U.S. or Canadian borders), or if there is an increase in transportation costs (e.g., due to increased fuel costs), such factors could reduce their sales and geographic market and may have a material adverse effect on our businesses' earnings.

Our businesses could experience fluctuations in the costs of raw materials as a result of inflation and other economic conditions, which fluctuations could have a material adverse effect on our financial condition, business and results of operations.

        Changes in inflation could materially adversely affect the costs and availability of raw materials used in our manufacturing businesses, and changes in fuel costs likely will affect the costs of transporting materials from our suppliers and shipping goods to our customers. For example, for Forest, the principal raw materials consisted of recycled wastepaper and represented approximately 15.6% of its total cost of goods sold during the year ended December 31, 2006 and 20.6% for the six month period ended June 30, 2007. Prices for key raw materials may fluctuate during periods of high demand. The ability of our businesses to offset the effect of increases in prices of raw materials by increasing the prices of their products is uncertain. If our businesses are unable to cover price increases of raw materials, our financial condition, business and results of operations could be materially adversely affected.

The availability of and prices for energy may adversely impact our businesses and their results of operations, which in turn may adversely impact our results of operations.

        Our businesses use energy, mainly natural gas and electricity, in their production processes, and energy costs may represent a significant portion of our businesses' cost of goods sold. Historically, energy prices have fluctuated significantly, and there can be no assurance that energy prices will not increase in the future. A substantial increase in energy costs or a prolonged power disruption or energy shortage would materially adversely affect our businesses' financial condition, business and results of operations.

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Hedging transactions may limit our businesses' income or result in losses.

        Our businesses engage in certain hedging transactions in order to limit their exposure to price fluctuations in energy resources, waste paper, interest rates, currency exchange rates and other financial market changes. For instance, our businesses may utilize instruments such as futures contracts and options on such contracts, interest rate swaps or options to hedge against fluctuations in the prices for raw materials. Such hedging transactions do not eliminate the possibility of fluctuations in our businesses' results of operations or prevent losses. Such hedging transactions may also limit the opportunity for income or gain if rates change favorably.

Our businesses do not have and may not have long-term contracts with their customers and the loss of customers could materially adversely affect our financial condition, business and results of operations.

        Our businesses' sales are and may be, based primarily upon individual orders with their customers. Our businesses historically have not entered into long-term supply contracts with their customers. As such, our businesses' customers could cease using their services or buying their products at any time and for any reason. Because our businesses do not enter into long-term contracts with their customers, they will have no recourse if a customer no longer wants to use their services or purchase their products.

Damage to our businesses' or their customers' and suppliers' offices and facilities could increase costs of doing business and materially adversely affect their ability to deliver their services and products on a timely basis, as well as decrease demand for their services and products.

        Our businesses have offices and facilities located throughout North America. The destruction or closure of these offices and facilities or transportation services, or the offices or facilities of our customers or suppliers for a significant period of time as a result of fire, explosion, act of war or terrorism, labor strikes, trade embargoes or increased tariffs, floods, tornados, hurricanes, earthquakes, tsunamis, or other natural disasters, could increase our businesses' costs of doing business and harm their ability to deliver their products and services on a timely basis as well as demand for their products and services.

Our businesses are and may be subject to environmental laws and regulations; complying with applicable environmental laws and regulations requires significant resources, and if our businesses fail to comply, they could be subject to substantial liability.

        Some of the facilities and operations of our businesses are and may be subject to a variety of environmental laws and regulations, including laws and regulations pertaining to the handling, storage and transportation of raw materials, products and wastes, and compliance with such existing and new laws and regulations requires and will continue to require significant expenditures. Compliance with current and future environmental laws is a major consideration for our businesses as violations of these laws can lead to substantial liability, revocations of discharge permits, fines or penalties. Because some of our businesses use hazardous materials and generate hazardous wastes in their operations, they may be subject to potential financial liability for costs associated with the investigation and remediation of their own sites, or sites at which they have arranged for the disposal of hazardous wastes, if such sites become contaminated. Even if our businesses fully comply with applicable environmental laws and are not directly at fault for the contamination, our businesses may still be liable.

        Although our businesses estimate their potential liability with respect to violations or alleged violations and reserve funds and obtain insurance for any such liability, such accruals may not be sufficient to cover the actual costs incurred as a result of a violation or alleged violation, which may include payment of large insurance deductibles. Additionally, if certain violations occur, premiums and deductibles for certain insurance policies may increase substantially and, in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage.

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        The identification of presently unidentified environmental conditions, more vigorous enforcement by regulatory agencies, enactment of more stringent laws and regulations, or other unanticipated events may arise in the future and give rise to material environmental liabilities, higher than anticipated levels of operating expenses and capital investment or, depending on the severity of the impact of the foregoing factors, costly plant relocation.

Our businesses are and may be subject to a variety of laws and regulations concerning employment, health, safety and products liability. Failure to comply with these laws and regulations could subject them to, among other things, potential financial liability, penalties and legal expenses.

        Our businesses are and may be subject to various employment, health, safety and products liability laws and regulations. Compliance with these laws and regulations, which may be more stringent in some jurisdictions, is a major consideration for our businesses. Government regulators generally have considerable discretion to change or increase the regulation of our operations, or implement additional laws or regulations that could materially adversely affect our operations. Noncompliance with applicable laws and regulations and other requirements could subject our businesses to investigations, sanctions, product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions. Suffering any of these consequences could materially adversely affect our financial condition, business and results of operations. In addition, responding to any action will likely result in a diversion of our manager's and our management teams' attention and resources from our operations.

        In particular, a wholly owned subsidiary of Pangborn is a defendant in lawsuits by plaintiffs alleging that they suffer from silicosis relating to exposure to silica from products sold by that subsidiary. In each of these cases, the subsidiary is one of numerous named defendants. If Pangborn is found liable in these cases and is unable to enforce an indemnity agreement with a former owner, BP America, or to access its insurance coverage, it would have a material adverse effect on Pangborn's business. See the section entitled "—Risks Related to Pangborn" for more information about risks related to Pangborn.

Some of our businesses are and may be operated pursuant to government permits, licenses, leases, concessions or contracts that are generally complex and may result in disputes over interpretation or enforceability. Our failure to comply with regulations or concessions could subject us to monetary penalties or result in a revocation of our rights to operate the affected business.

        Our businesses, to varying degrees, rely and may rely, in the future, on government permits, licenses, concessions, leases or contracts. These arrangements are generally complex and require significant expenditures and attention by management to ensure compliance. These arrangements may result in disputes, including arbitration or litigation, over interpretation or enforceability. If our businesses fail to comply with these regulations or contractual obligations, our businesses could be subject to monetary penalties or lose their rights to operate their respective businesses, or both. Further, our businesses' ability to grow may often require the consent of government regulators. These consents may be costly to obtain, and our businesses may not be able to obtain them in a timely fashion, if at all. Failure of our businesses to obtain any required consents could limit our ability to achieve our growth strategy.

Our businesses are subject to certain risks associated with their foreign operations or business they conduct in foreign jurisdictions.

        Some of our businesses have and may have operations or conduct business in Canada and various European and Asian countries. Certain risks are inherent in operating or conducting a business in foreign jurisdictions, including:

    exposure to local economic conditions;

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    difficulties in enforcing agreements and collecting or repatriating receivables through certain foreign legal systems;

    longer payment cycles for foreign customers;

    adverse currency exchange controls;

    exposure to risks associated with changes in foreign exchange rates;

    potential adverse changes in the political environment of the foreign jurisdictions or diplomatic relations of foreign countries with the United States;

    withholding taxes and restrictions on the withdrawal of foreign investments and earnings;

    export and import restrictions;

    labor relations in the foreign jurisdictions;

    difficulties in enforcing intellectual property rights; and

    required compliance with a variety of foreign laws and regulations.

Labor disputes could have a material adverse effect on our businesses' cost structure and their operations.

        As of September 30, 2007, our initial businesses collectively had approximately 500 employees represented by unions under eight separate collective bargaining agreements, which expire on or before November 1, 2012. These agreements are limited to facilities or groups of employees within the facilities. A majority of these employees belong to the United Steelworkers union under separate collective bargaining agreements at four facilities in the United States. Of the existing collective bargaining agreements, the first, which covers approximately 58 employees, will expire on October 31, 2007.

Our initial businesses have recorded a significant amount of goodwill and intangible assets, which may never be fully realized.

        Our initial businesses collectively have, as of June 30, 2007, approximately $16.9 million of goodwill and approximately $46.5 million of intangible assets on a pro forma basis. Goodwill and intangible assets on a combined basis are approximately 18.8% of our total assets on a pro forma basis. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, we are required to evaluate goodwill and other intangibles for impairment at least annually. Impairment may result from, among other things, deterioration in the performance of these businesses, adverse market conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of or affect the products and services sold by these businesses, and a variety of other factors. Depending on future circumstances, it is possible that we may never realize the full value of these intangible assets. The amount of any quantified impairment must be expensed immediately as a charge against our results of operations. Any future determination of impairment of a material portion of goodwill or other identifiable intangible assets could have a material adverse effect on our financial condition.

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The operational objectives and business plans of one of our businesses may conflict with our or another of our businesses' operational objectives and business plans.

        Our businesses operate in different industries and face different risks and opportunities depending on market and economic conditions in their respective industries and regions. A business' operational objectives and business plans may not be similar to our objectives and plans or the objectives and plans of another business that we own and operate. This could create competing demands for resources, such as management attention and funding needed for operations or acquisitions, in the future.

The internal controls of our initial businesses have not yet been integrated and we have only recently begun to examine the internal controls that are in place for each business. As a result, we may fail to comply with Section 404 of the Sarbanes-Oxley Act or our auditors may report a material weakness in the effectiveness of our internal control over financial reporting.

        We will be required under applicable law and regulations to integrate the various systems of internal control over financial reporting of our initial businesses. Beginning with our annual report for the year ended December 31, 2008, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we will be required to include management's assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal year. Additionally, our independent registered public accounting firm will be required to issue a report on management's assessment of our internal control over financial reporting and a report on their evaluation of the operating effectiveness of our internal control over financial reporting.

        We are evaluating our initial businesses' existing internal controls in light of the requirements of Section 404. During the course of our ongoing evaluation and integration of the internal controls of our initial businesses, we may identify areas requiring improvement, and may have to design enhanced processes and controls to address issues identified through this review. Since our initial businesses were not subject to the requirements of Section 404 before this offering, the evaluation of existing controls and the implementation of any additional procedures, processes or controls may be costly. Our initial compliance with Section 404 could result in significant delays and costs and require us to divert substantial resources, including management time, from other activities and hire additional staff to address Section 404 requirements. In addition, under Section 404, we are required to report all significant deficiencies to our audit committee and independent auditors and all material weaknesses to our audit committee and auditors and in our periodic reports. We may not be able to successfully complete the procedures, certification and attestation requirements of Section 404 and we may have to report material weaknesses in connection with the presentation of our financial statements for the year ended December 31, 2008.

        If we fail to comply with the requirements of Section 404 or if our auditors report such a significant deficiency or material weakness, the accuracy and timeliness of the filing of our annual report may be materially adversely affected and could cause investors to lose confidence in our reported financial information, which could have a material adverse effect on the market price of our common shares.

Risks Related to Metal

A significant decline in oil and natural gas drilling and exploration activity could reduce demand for Metal's products, which could cause a material decrease in Metal's sales.

        Metal's alloy mechanical tubes are utilized as part of a system of components for deep down-hole oil and natural gas extraction equipment and accounted for approximately 19.0% of gross revenues for the year ended December 31, 2006. Demand for Metal's products depends primarily on the number of oil and natural gas wells being drilled, completed and worked over, as well as the depth and drilling conditions of these wells. The level of such activities is subject to the economics of exploration and

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production of oil and natural gas. Many factors, such as the supply and demand for oil and natural gas, general economic conditions, global weather patterns and global conflicts, affect these economics. As a result, future levels of drilling activity are uncertain. If there is a significant decline in the oil and natural gas drilling and exploration activity, the demand for Metal's products could materially decrease, resulting in lower sales.

Metal depends on a few suppliers for a significant portion of its steel and other important raw materials. The loss of any such suppliers could materially adversely affect Metal's ability to obtain steel or other raw materials.

        Historically, Metal has purchased a significant portion of its steel and other important raw materials from a small number of suppliers. The loss of any of these suppliers or interruption of production at one or more of these suppliers could materially adversely affect Metal's ability to obtain steel and other important raw materials. In the event that Metal were to lose a key supplier, the cost of purchasing steel or other important raw materials from alternate sources could be materially higher, such alternate sources may produce raw materials of lesser or uneven quality, or Metal may encounter delays in getting necessary quantities of steel or other important raw materials to Metal's plants. Any of the foregoing could materially adversely impact Metal's ability to produce sufficient quantities of its products necessary to sustain its market share and, as a result, negatively impact operations.

Industry supply levels of Metal's products could materially adversely affect its pricing and shipment volumes, which could materially reduce revenues and profits.

        Industry inventory levels of Metal's products can change significantly from period to period. This volatility can have a direct adverse effect on the demand for production of products when customers draw from inventory rather than purchase new products. Reduced demand, in turn, would likely lead to decreased revenue and pricing, which could materially adversely affect results of operations.

        Revenue volume and pricing are also affected by the level of imports into North America. As the levels of imports change, Metal's pricing and shipment volumes are affected. Significant increases in imports without an equivalent increase in demand could result in decreased revenues and reduced overall profitability.

A substantial portion of Metal's revenues is concentrated in a small number of customers. The loss of any such customer could have a material adverse impact on Metal's revenues.

        Metal's revenue is dependent, in large part, on significant orders from a limited number of customers. Sales to Metal's top ten customers accounted for approximately 53.6% and 46.3% of Metal's gross revenues during the years ended December 31, 2006 and 2005, respectively. Metal's management believes that revenue derived from current and future key customers will continue to represent a significant portion of Metal's total revenue. If Metal were unable to continue to secure and maintain a sufficient number of large customers, Metal's business, operating results and financial condition could be materially adversely impacted. Moreover, Metal's success may depend upon its ability to obtain orders from new customers, as well as the financial condition and success of its customers and general economic conditions.

Risks Related to Forest

As a result of completing a series of acquisitions over the past few years, Forest's historical data may not reflect a full year's operating results for all the businesses that comprise Forest on a combined basis. Therefore, Forest's historical financial data may not be an accurate indicator of its future performance.

        Forest's business has been expanded through a series of recent acquisitions. As a consequence, the historical financial data included in this prospectus may not reflect a full year's operating results for all

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the businesses that comprise Forest on a combined basis; and therefore, such data may not be indicative of Forest's future performance.

Forest is subject to competition from alternative packaging products such as plastic or metal containers. If demand for such alternative products increases at the expense of Forest's products, Forest could experience lower profits and reduced cash flows, which in turn could reduce our profits and cash flows.

        The packaging market is subject to significant competition from substitute products, particularly containers made from plastic or metal. Forest may not be able to compete successfully against alternative packaging products, which could materially adversely affect Forest's financial condition, business and results of operations.

Risks Related to CanAmPac

CanAmPac's products are subject to competition from alternative packaging products such as plastic containers, particularly in the frozen foods packaging market. If demand for such alternative products increases at the expense of CanAmPac's products, CanAmPac could experience lower profits and reduced cash flows, which in turn could reduce our profits and cash flows.

        The market for frozen food packaging products is subject to competition from substitute products, particularly containers made from plastic. CanAmPac's products may not be able to compete successfully against alternative packaging products, which could materially adversely affect CanAmPac's financial condition, business and results of operations.

CanAmPac's competitive position relative to its competitors is subject to fluctuations in foreign exchange rates. If the Canadian dollar increases relative to the U.S. dollar, CanAmPac's products will become more expensive relative to the products of its competitors, which may materially adversely affect CanAmPac's results of operations.

        CanAmPac competes in a North American market, comprising principally Canada and the northeast and central United States. CanAmPac competes with both American and Canadian companies. Many of CanAmPac's costs are paid in Canadian dollars. As a result, CanAmPac's competitive position relative to its U.S. competitors may be materially adversely affected by increases in the value of the Canadian dollar relative to the U.S. dollar by making CanAmPac's products relatively more expensive in constant terms. A significant and/or prolonged increase in the value of the Canadian dollar relative to the U.S. dollar would materially adversely affect CanAmPac's financial condition, business and and results of operations.

Loss of key customer relationships could materially adversely affect CanAmPac's financial condition, business and results of operations.

        CanAmPac's strategy involves focusing on selected market niches. As a result, CanAmPac's customer base is relatively stable and most of its key customer relationships have been in place for over 15 years. CanAmPac's top ten customers accounted for approximately 34.5% of its gross sales for the year ended December 31, 2006. The loss of any key customer relationship, whether as a result of competition, industry consolidation, the cessation of the customer's business or for other reasons, could have a material adverse effect on CanAmPac's financial condition, business and results of operations. CanAmPac generally manufactures products pursuant to customer orders, rather than long-term supply contracts. Further, customers generally may cancel their orders, change production quantities or delay production.

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Risks Related to Pangborn

A subsidiary of Pangborn is a defendant in lawsuits by plaintiffs alleging that they suffer from silicosis relating to exposure to silica products sold by Pangborn. If Pangborn is found liable, it could have a material adverse effect on Pangborn's financial condition, business and results of operations.

        A wholly-owned subsidiary of Pangborn, Pangborn Corporation, is a defendant in lawsuits by plaintiffs alleging that they suffer from silicosis relating to exposure to silica from products sold by Pangborn Corporation. In each of these cases, Pangborn Corporation is one of numerous defendants. These lawsuits typically allege that these conditions resulted in part from alleged emissions from use of products manufactured by Pangborn Corporation. BP America (as successor to Carborundum) has retained all liabilities, including costs of defending claims, resulting from Pangborn's products sold prior to the acquisition of the business in 1986. Nevertheless, Pangborn Corporation could potentially be liable for these losses or claims if BP America fails to meet its obligations pursuant to the asset purchase agreement entered into with the predecessor to Pangborn. BP America is currently handling the defense of all of the cases, and to date Pangborn has not incurred any costs with respect to these lawsuits. Consistent with the experience of other companies involved in silica-related litigation, there has been an increase in the number of asserted claims that could potentially involve Pangborn. Pangborn Corporation cannot determine its potential liability, if any, for such claims, in part because the defendants in these lawsuits are often numerous and the claims generally do not specify the amount of damages sought. In addition, bankruptcy filings of companies with silica-related litigation could increase Pangborn's cost over time. If Pangborn Corporation is found liable in these cases and BP America fails to meet its obligations pursuant to the asset purchase agreement, it would have a material adverse effect on Pangborn's financial condition, business and results of operations.

Confidentiality agreements with suppliers may not adequately prevent disclosure of trade secrets and other proprietary information, the disclosure of which could have a material adverse effect on the financial condition business and results of operations of Pangborn.

        Pangborn depends upon confidentiality agreements with its suppliers to maintain the confidentiality of its trade secrets and proprietary information relating to its technology. These measures may not afford Pangborn sufficient or complete protection, and may not afford an adequate remedy in the event of an unauthorized disclosure of its trade secrets and proprietary information. In addition, others may independently develop technology similar to Pangborn's, otherwise avoiding the confidentiality agreements, or produce patents that would materially and adversely affect Pangborn's financial condition, business and results of operations.

Risks Related to this Offering

There is no public market for our common shares. You cannot be certain that an active trading market or a specific share price will be established, and you may not be able to resell your common shares at or above the initial offering price.

        We have applied to have our common shares listed on the Nasdaq Global Market. However, there currently is no public trading market for our common shares, and an active trading market may not develop upon completion of this offering or continue to exist if it does develop. The market price of our common shares may also decline below the initial public offering price. The initial public offering price per share was determined by agreement between us and the representative of the underwriters and may not be indicative of the market price of our common shares after our initial public offering.

        If the market price of our common shares declines, you may be unable to resell your common shares at or above the initial public offering price. We cannot assure you that the market price of our common shares will not fluctuate or decline significantly, including a decline below the initial public offering price, in the future.

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Future sales of common shares may affect the market price of our common shares.

        We cannot predict what effect, if any, future sales of our common shares, or the availability of common shares for future sale, will have on the market price of our common shares. Sales of substantial amounts of our common shares in the public market following our initial public offering, or the perception that such sales could occur, could materially adversely affect the market price of our common shares and may make it more difficult for you to sell your common shares at a time and price which you deem appropriate. A decline in the market price of our common shares below the initial public offering price, in the future, is possible. See the section entitled "Shares Eligible for Future Sale" for more information about the circumstances under which additional common shares may be sold.

        We, our directors and officers, the directors and officers of our businesses, our management team, AT Investments, AT Management and certain participants in the directed share program have agreed that, with limited exceptions, we and they will not directly or indirectly, without the prior written consent of Ferris, Baker Watts, Incorporated, on behalf of the underwriters, offer to sell, sell or otherwise dispose of any common shares they acquired in connection with this offering for a period of 180 days after the date of this prospectus.

We may issue additional debt and equity securities which are senior to our common shares as to distributions and in liquidation, which could materially adversely affect the market price of our common shares.

        In the future, we may attempt to increase our capital resources by entering into additional debt or debt-like financing that is secured by all or up to all of our assets, or issuing debt or equity securities, which could include issuances of commercial paper, medium-term notes, senior notes, subordinated notes or shares. In the event of our liquidation, our lenders and holders of our debt securities would receive a distribution of our available assets before distributions to our shareholders. Any preferred securities, if issued by the company, may have a preference with respect to distributions and upon liquidation, which could further limit our ability to make distributions to our shareholders. Because our decision to incur debt and issue securities in our future offerings will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings and debt financing. Further, market conditions could require us to accept less favorable terms for the issuance of our securities in the future. Thus, you will bear the risk of our future offerings reducing the value of your common shares and diluting your interest in us. In addition, we can change our leverage strategy from time to time without approval of holders of our common shares, which could materially adversely affect the market share price of our common shares.

Our earnings and cash distributions to our shareholders may affect the market price of our common shares.

        Generally, the market price of our common shares may be based, in part, on the market's perception of our growth potential and our current and potential future cash distributions, whether from operations, sales, acquisitions or refinancings, and on the value of our businesses. For that reason, our common shares may trade at prices that are higher or lower than our net asset value per share. Should we retain operating cash flow for investment purposes or working capital reserves instead of distributing the cash flows to our shareholders, the retained funds, while increasing the value of our underlying assets, may materially adversely affect the market price of our common shares. Our failure to meet market expectations with respect to earnings and cash distributions and our failure to make such distributions, for any reason whatsoever, could materially adversely affect the market price of our common shares.

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The market price, trading volume and marketability of our common shares may, from time to time, be significantly affected by numerous factors beyond our control, which may materially adversely affect the market price of your common shares, the marketability of your common shares and our ability to raise capital through future equity financings.

        The market price and trading volume of our common shares may fluctuate significantly. Many factors that are beyond our control may materially adversely affect the market price of your common shares, the marketability of your common shares and our ability to raise capital through equity financings. These factors include the following:

    price and volume fluctuations in the stock markets generally which create highly variable and unpredictable pricing of equity securities;

    significant volatility in the market price and trading volume of securities of companies in the sectors in which our businesses operate, which may not be related to the operating performance of these companies and which may not reflect the performance of our businesses;

    changes and variations in our cash flows;

    any shortfall in revenue or net income or any increase in losses from levels expected by securities analysts;

    changes in regulation or tax law;

    operating performance of companies comparable to us;

    general economic trends and other external factors including inflation, interest rates, and costs and availability of raw materials, fuel and transportation; and

    loss of a major funding source.

        All of our common shares sold in this offering will be freely transferable by persons other than our affiliates and those persons subject to lock-up agreements, without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act.

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FORWARD-LOOKING STATEMENTS

        This prospectus, including the sections entitled "Prospectus Summary," "Risk Factors," "Dividend and Distribution Policy," "The Acquisitions of and Loans to Our Initial Businesses," "Our Manager," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," and elsewhere in this prospectus contains forward-looking statements. We may, in some cases, use words such as "project," "predict," "believe," "anticipate," "plan," "expect," "estimate," "intend," "should," "would," "could," "potentially," or "may" or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this prospectus are subject to a number of risks and uncertainties, some of which are beyond our control, including, among other things:

    our ability to successfully operate our initial businesses on a combined basis, and to effectively integrate and improve any future acquisitions;

    our ability to remove our manager and our manager's right to resign;

    our organizational structure, which may limit our ability to meet our dividend and distribution policy;

    our ability to service and comply with the terms of our indebtedness;

    our cash flow available for distribution after the closing of this offering and our ability to make distributions in the future to our shareholders;

    our ability to pay the management fee, profit allocation and put price when due;

    decisions made by persons who control our initial businesses, including decisions regarding dividend and distribution policies;

    our ability to make and finance future acquisitions, including, but not limited to, the acquisitions described in this prospectus;

    labor disputes, strikes or other employee disputes or grievances;

    the ability of our initial businesses to satisfy their obligations under their pension funds or other defined benefit plans when due;

    our ability to implement our acquisition and management strategies;

    the regulatory environment in which our initial businesses operate;

    trends in the industries in which our initial businesses operate, including advancements in technology which may make the products they produce and sell obsolete or uncompetitive;

    operational and production costs and expenses, including the commodity prices of the raw materials used by our initial businesses, energy and labor costs;

    the competitive environment in which our businesses operate and the prices at which our initial businesses can sell their products;

    changes in general economic or business conditions or economic or demographic trends in the United States and other countries in which we have a presence, including changes in exchange rates, interest rates and inflation;

    environmental risks affecting the business or operations of our initial businesses;

    our and our manager's ability to retain or replace qualified employees of our initial businesses and our manager;

    casualties, condemnation or catastrophic failures with respect to any of our facilities or equipment;

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    the implementation, costs and effects of legal and administrative proceedings, settlements, investigations and claims; and

    extraordinary or force majeure events affecting the business or operations of our initial businesses.

        Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. A description of some of the risks that could cause our actual results to differ appears under the section entitled "Risk Factors" and elsewhere in this prospectus. Additional risks of which we are not currently aware or which we currently deem immaterial could also cause our actual results to differ.

        In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements. The forward-looking events discussed in this prospectus may not occur. These forward-looking statements are made as of the date of this prospectus. We undertake no obligation to publicly update or revise any forward-looking statements after the completion of this offering, whether as a result of new information, future events or otherwise, except as required by law.

Market Data

        In this prospectus, we rely on and refer to information and statistics regarding market data and the industries of our initial businesses that are obtained from internal surveys, market research, independent industry publications, the experience of our manager and its affiliates within their respective industries and other publicly available information, including information regarding public companies. The market data used in this prospectus has been prepared for purposes other than this offering. While we have not independently verified the accuracy or completeness of the market data included in this prospectus, we have a reasonable basis or belief that such market data is accurate and complete. Forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this prospectus.

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USE OF PROCEEDS

        We estimate that our net proceeds from the sale of 13,333,333 common shares in this offering will be approximately $186.0 million (or approximately $213.9 million if the underwriters' overallotment option is exercised in full) after deducting underwriting discounts and commissions (including a financial advisory fee) of approximately $14.0 million (or approximately $16.1 million if the underwriters' overallotment option is exercised in full), but without giving effect to the payment of fees, costs and expenses for this offering of approximately $6.6 million. In addition, each of the private placement participants have agreed to collectively purchase in separate private placement transactions to close in conjunction with the closing of this offering a number of common shares in the company having an aggregate purchase price of approximately $35.0 million at a per share price equal to the initial public offering price.

        The table below summarizes the expected sources of the net proceeds from this offering, the separate private placement transactions and the initial borrowing under our proposed third-party credit facility:

 
  Sources of funds
 
  ($ in thousands)

Net proceeds from initial public offering   $ 186,000
Proceeds from private placement transactions     35,000
Proceeds from initial borrowing under our proposed third-party credit facility     50,000
   
  Total Sources   $ 271,000
   

        We intend to use the above proceeds to:

    use approximately $230.6 million to capitalize and make loans to our acquisition subsidiaries which will, in turn, use such amount together with $2.8 million of preferred stock of our acquisition subsidiaries, to acquire the equity interests of our initial businesses on a debt free basis, with the exception of a financing lease obligation of approximately $11.1 million at Forest at June 30, 2007. Approximately $153.0 million of the $230.6 million will represent loans to our acquisition subsidiaries. Our acquisition subsidiaries will loan approximately $150.5 million to our initial businesses. See the section entitled "The Acquisitions of and Loans to Our Initial Businesses" for further information on loans to our initial businesses;

    pay approximately $6.6 million in fees, costs and expenses we incur in connection with this offering;

    pay approximately $3.5 million in fees associated with our proposed third-party credit facility; and

    provide funds of approximately $30.3 million for general corporate purposes.

        In connection with the termination of certain incentive plans or arrangements at each of our initial businesses, Metal, Forest, CanAmPac and Pangborn will pay certain directors and members of their respective management teams approximately $4.6 million, $1.4 million, $766,000 and $557,000, respectively. See the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" for information about the terms of the existing loans for each business. See the sections entitled "The Acquisitions of and Loans to Our Initial Businesses" and "Certain Relationships and Related Persons Transactions" for information about the acquisition of our initial businesses.

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DIVIDEND AND DISTRIBUTION POLICY

        Our board of directors intends to declare and pay a regular quarterly cash distribution on all outstanding common shares. Our board of directors intends to declare and pay an initial quarterly distribution for the first full fiscal quarter ending March 31, 2008 of approximately $0.29 per share and an initial distribution equal to the amount of the initial quarterly distribution, but pro rated for the period from the completion of this offering to December 31, 2007. The initial distribution will be paid to holders of record of the common shares, as determined by our board of directors, together at the time that the initial quarterly distribution is paid. Our board of directors intends to set this initial quarterly distribution on the basis of the current results of operations of our businesses and other resources available to the company, including the proposed third-party credit facility, and the desire to provide sustainable levels of distributions to our shareholders.

        Our distribution policy is based on the cash flows of our businesses and our intention to provide sustainable levels of distributions to our shareholders. If our strategy is successful, we expect to maintain the current level of our distribution to shareholders and to increase that level in the future.

        The declaration and payment of our initial distribution, our initial quarterly distribution and any future distributions will be subject to the approval of our board of directors, which will include a majority of independent directors. Our board of directors will take into account such matters as general business conditions, our financial condition, results of operations, capital requirements and any contractual, legal and regulatory restrictions on the payment of distributions by us to our shareholders or by our subsidiaries to us, and any other factors that our board of directors deems relevant. However, even in the event that our board of directors were to decide to declare and pay distributions, our ability to pay such distributions may be adversely impacted due to unknown liabilities, government regulations, financial covenants of the debt of the company, funds needed for acquisitions and to satisfy short- and long-term working capital needs of our businesses, if our initial businesses do not generate sufficient cash flow to support the payment of such distributions, or applicable law. In particular, we may incur debt in the future to acquire new businesses, which debt will have substantial debt commitments, which must be satisfied before we can make distributions. These factors could affect our ability to continue to make distributions.

        We may use cash flow from our initial businesses, the capital resources of the company, including borrowings under the company's proposed third-party credit facility, or a reduction in equity to pay a distribution. See the section entitled "Material U.S. Federal Income Tax Considerations" for more information about the tax treatment of distributions to our shareholders.

Estimated Pro Forma Cash Flow Available for Distribution for the Year Ended December 31, 2006 and the Six Month Period Ended June 30, 2007

        We believe that if we had completed this offering on January 1, 2006, our estimated pro forma cash flow available for distribution for the year ended December 31, 2006 and the six month period ended June 30, 2007, based on our pro forma condensed combined financial statements for the year ended December 31, 2006 and the six month period ended June 30, 2007, would have been approximately $27.0 million and $12.6 million, respectively.

        The estimated pro forma cash flow available for distribution for the year ended December 31, 2006 and the six month period ended June 30, 2007 is based on pro forma condensed combined financial statements, which include certain assumptions and considerations. These pro forma condensed combined financial statements do not reflect any internal growth in the cash flows of our businesses from the period covered until the date of this offering. In addition, these pro forma condensed financial statements do not purport to present our results of operations had the transactions contemplated in this prospectus actually been completed as of the dates indicated. Furthermore, cash flow available for distribution is a cash accounting concept, while our pro forma condensed combined financial statements have been

48



prepared on an accrual basis. As a result, you should only view the amount of pro forma estimated cash flow available for distribution as a general indication of the amount of cash we believe would have been available for distribution that we might have generated had we owned our initial businesses during these periods. No assurance can be given that the estimated pro forma cash flow available for distribution presented in the prospectus will actually be produced or, to the extent it is produced, will be sufficient to make the initial distribution and the initial quarterly distribution or distributions in subsequent quarters.

        Our estimated pro forma cash flow available for distribution also includes certain other adjustments, assumptions and considerations and reflects the amount of cash that we believe would have been available for distribution to our shareholders subject to the assumptions described in the table below. The pro forma cash flow available for distribution as of and for the year ended December 31, 2006 and as of and for the six month period ended June 30, 2007 include a management fee expense of approximately $4.9 million and approximately $2.5 million, respectively, of which 50.0% of the first four quarterly payments and 25.0% of the next four quarterly payments are to be paid in the form of common shares to our manager pursuant to the management services agreement. See the section entitled "Our Manager—Our Relationship with Our Manager—Our Manager as a Service Provider—Management Fee" for more information about the management fee to be paid to our manager. The estimated management fee expense is reflected in our pro forma financial statements for the year ended December 31, 2006 and the six month period ended June 30, 2007.

        The following table sets forth our calculation of the estimated pro forma cash flow available for distribution for the year ended December 31, 2006 and the six month period ended June 30, 2007.

 
  Year ended
December 31,
2006

  Six month
period ended
June 30,
2007

 
 
  ($ in thousands)

 
Cash Flow Available for Distribution              
Net income per pro forma income statement   $ 3,743   $ 1,501  
  Adjustments to reconcile pro forma net income to pro forma net cash provided by operating activities:              
      Depreciation and amortization     20,683     10,094  
      Amortization of deferred financing fees included as a component of interest expense     638     319  
      Minority interests     64     24  
      Annual cash payment for financing lease obligation, net of amount included as a component of interest expense     (366) (a)   (183 )
      Deferred income taxes     1,500     515  
      Commitment fee on third-party credit facility     1,275   (b)   700   (b)
      Severance pay     507   (c)   740   (c)
      Loss (income) on discontinued operations     241   (d)   (7)   (d)
      Non-cash Ivex purchase accounting adjustments     214   (e)     (e)
      Non-cash CanAmPac purchase accounting adjustments     1,694   (f)     (f)
      Non-cash restructuring charge       (g)   1,508   (g)
      Non-cash portion of management fee     2,466   (h)   617   (h)
      Interest income earned on cash from offering and debt financing for general corporate purposes     1,274     662  
   
 
 
Pro forma net cash provided by operating activities     33,933     16,490  
Preferred dividend       (i)     (i)
Less maintenance capital expenditures:(j)              
  Metal     (452 )   (100 )
  Forest     (2,299 )   (1,150 )
  CanAmPac     (480 )   (740 )
  Pangborn     (230 )   (169 )
Growth capital expenditures     (k )   (k )
Estimated incremental general and administrative costs     (3,500 )   (1,750 )
   
 
 
Estimated pro forma cash available for distribution   $ 26,972   $ 12,581  
   
 
 
Estimated pro forma cash used for distributions   $ 18,245   (l) $ 9,188   (l)
   
 
 

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(a)
Near the end of December 2006, Forest sold and leased back two properties used by its manufacturing facilities. An adjustment was recorded to reduce the cash flow available for distribution by the additional cash that would have been disbursed for the financing obligation had the financing obligation transaction occurred on January 1, 2006.

(b)
Represents an annual fee and the commitment fee on the unused portion of the proposed third-party credit facility.

(c)
Balance represents severance pay to certain salaried and hourly employees who were terminated at CanAmPac during January 2006 and to one executive at Pangborn and one executive at Ivex in the second half of 2007.

(d)
Forest discontinued a unit of its recycled paper recovery business which is included as a discontinued operation in its financial statements for the year ended December 31, 2006.

(e)
Forest recorded a non-cash adjustment in its financial statements with respect to its purchase accounting for the September 2005 Ivex acquisition.

(f)
Represents non-cash purchase accounting adjustments which reduced CanAmPac's net income for the year ended December 31, 2006.

(g)
In June 2007, Forest's management determined to close Forest's Monroeville, Ohio, manufacturing facility.

(h)
Balance represents portion of the management fee paid in the form of common shares pursuant to the management services agreement.

(i)
Under the terms of the preferred stock, all or a portion of the dividend may be paid "in-kind" or cash at the discretion of the boards of directors of each acquisition subsidiary. For purposes of this calculation we have assumed that all dividends due and payable for the periods presented are paid in kind.

(j)
Balance represents maintenance capital expenditures that were funded from operating cash flow.

(k)
Material growth capital expenditures are analyzed by management and the respective board of directors of each of the initial businesses to determine the benefits thereon and the "pay-back period". Growth capital expenditures fluctuate from period to period, are discretionary and, if material, are subject to board approval. As a result, only an adjustment for the cash required to maintain the historical capital items is included in the pro forma cash flow available for distribution. Growth capital expenditures were approximately $2.6 million and approximately $589,000 for the year ended December 31, 2006 and the six month period ended June 30, 2007, respectively.

(l)
Balance calculated assuming quarterly distributions of $0.29 per share and 15,748,871 and 15,851,638 weighted average shares outstanding for the year ended December 31, 2006 and the six month period ended June 30, 2007, respectively. Balance does not include any amount of profit allocation or put price, if any, to be paid to our manager as such amounts cannot be determined with certainty. Such amounts may be substantial. See the sections entitled "Our Manager—Our Relationship with Our Manager—Our Manager as an Equity Holder—Manager's Profit Allocation" and "Our Manager—Our Relationship with Our Manager—Our Manager as an Equity Holder—Supplemental Put Agreement" for more information about the calculation and payment of profit allocation and put price.

        This calculation is an estimate of the cash flow available for distribution to shareholders on a pro forma basis for the year ended December 31, 2006 and the six month period ended June 30, 2007 had this offering and the separate private placement transactions been consummated on January 1, 2006. It does not include any profit allocation with respect to the allocation shares held by our manager, as no trigger event has occurred, or would have occurred on a pro forma basis, during such period.

        The above calculation of cash flow available for distribution does not include any amounts attributable to profit allocation to be paid to our manager as holder of the allocation shares. Profit allocation, which is comprised of distribution-based profit allocation and equity-based profit allocation will be estimated quarterly and calculated and paid annually and, if all relevant conditions are satisfied and subject to all applicable limitations, will be paid in arrears after the end of each fiscal year. Due to the various factors involved in the calculation of the profit allocation such as the distributions we pay to our shareholders, the earnings of our businesses and the market value of common shares then outstanding and the degree of uncertainty with respect to the satisfaction of the conditions triggering profit allocation to be paid to our manager, the amount of profit allocation cannot be calculated with any degree of certainty. See the section entitled "Our Manager—Our Manager as an Equity Holder—Manager's Profit Allocation" for further information concerning the profit allocation to be paid to our manager.

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Restrictions on Distribution Payments

        We are a holding company with no operations. We will be dependent upon the ability of our businesses to generate cash flow and to make distributions to us in the form of interest and principal payments on indebtedness and distributions on equity to enable us to, first, satisfy our financial obligations, including payments under our proposed third-party credit facility, the management fee, profit allocation and put price, and, second, make distributions to our shareholders. There is no guarantee that we will make quarterly distributions, including the initial distributions we project to make, following this offering. Our ability to make quarterly distributions may be subject to or limited by certain factors, events or restrictions, including:

    the operating results of our businesses which are impacted by factors outside of our control including competition, inflation and general economic conditions;

    the ability of our businesses to make distributions to us, which may be subject to limitations under laws of the jurisdictions in which they are incorporated or organized;

    insufficient cash to pay distributions due to increases in our general and administrative expenses, including our quarterly management fee, principal and interest payments on our outstanding debt, tax expenses or working capital requirements;

    the obligation to pay our manager a profit allocation;

    the obligation to pay our manager the put price pursuant to the supplemental put agreement;

    the election by our board of directors to keep a portion of the operating cash flow in our businesses or to use such funds for the acquisition of new businesses;

    restrictions on distributions under our proposed third-party credit facility which may contain financial tests and covenants that we will have to satisfy in order to make distributions;

    possible future issuances of debt or debt-like financing arrangements that are secured by all or substantially all of our assets, or issuing debt or equity securities, which could include issuances of commercial paper, medium-term notes, senior notes, subordinated notes or interests, which obligations will have priority over our cash flow; and

    in the future, the company may issue other securities, including equity or debt-like securities, and holders of such other securities may have a preference with respect to distributions, which could limit our ability to make distributions to our shareholders.

        If, as a consequence of these various restrictions, we are unable to generate sufficient distributions from our businesses, our board of directors may not be able to declare, or may have to delay or cancel payment of, distributions to our shareholders.

        Because our board of directors intends to declare and pay regular quarterly cash distributions on all outstanding common shares, our growth may not be as fast as businesses that reinvest their available cash to expand ongoing operations. We expect that we will rely upon external financing sources, including issuances of debt or debt-like financing arrangements and the issuance of debt and equity securities, to fund our acquisitions and capital expenditures. As a result, to the extent we are unable to finance growth externally, the decision of our board of directors to declare and pay regular quarterly distributions will significantly impair our ability to grow.

        Our decision to incur debt and issue securities in future offerings will depend on market conditions and other factors beyond our control. Therefore, we cannot predict or estimate the amount, timing or nature of our future offerings and debt financings. Likewise, additional equity issuances may dilute the holdings of our shareholders.

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THE ACQUISITIONS OF AND LOANS TO OUR INITIAL BUSINESSES

        The terms and conditions of the purchase agreements and the related documents pursuant to which the company's subsidiaries will acquire our initial businesses, which agreements and documents are collectively referred to as the purchase agreements in this prospectus, were negotiated among parties affiliated with or related to the selling groups, the AH Group and our manager in the overall context of the offering. The terms and conditions so negotiated relate to, among others, the acquisition prices of our initial businesses and the representations, warranties and indemnities to be provided by the selling groups in connection with or following the acquisitions of our initial businesses. Until the agreements discussed in this section and the documents related thereto are executed, such documents may be subject to certain changes or other modifications, none of which we expect to be significant or material.

        The terms and conditions of the loan agreements pursuant to which the company will make loans indirectly to our initial businesses were negotiated among parties affiliated with or related to the selling groups, the AH Group and our manager in the overall context of the offering. The terms and conditions so negotiated relate to, among others, the nature of such loans, the aggregate principal amount of such loans, the interest rate terms of such loans and the repayment terms and schedules of such loans.

        Some of our directors and executive officers are members or affiliates of members of the selling groups. See the section entitled "Principal Shareholders/Share Ownership of Directors and Executive Officers—Our Initial Businesses" for more information about the beneficial ownership of our directors and executive officers in our initial businesses prior to the acquisitions thereof.

Background

        This offering and transactions contemplated in this prospectus are the result of our management team's consideration of various means by which it could, in general, continue to manage our initial businesses while augmenting its ability to raise capital for this purpose and possible future acquisitions of other businesses without seeking additional private investments. Our management team determined that the structure and transactions discussed in this prospectus were the most efficient and effective means by which to achieve this goal. In essence, the structure represents a modified management buy-out structure—one in which our management team creates a public vehicle to allow them to access the public capital markets to raise the necessary capital to conduct both the acquisitions of our initial businesses and the future acquisitions of other businesses, while at the same time allowing it to continue to oversee the management and operations of our initial businesses independent of the selling groups, notwithstanding the investment in our common shares by certain members of the selling groups of approximately $35.0 million. Of the $35.0 million, $14.7 million represents an investment by certain members of our management team through AT Management.

        Once identified by our management team, the proposed structure and related transactions were presented to representatives of the selling groups. After due consideration, members of the selling groups informed the management team that they would be receptive to selling our initial businesses subject to mutually agreeable terms and conditions. After initially agreeing to the concept of selling our initial businesses and, notwithstanding the relationship between our management team and the selling groups, the terms and conditions of this offering and the related transactions have been the subject of on-going negotiations between our management team, representing our interests, and representatives of each of the selling groups. These on-going negotiations have related to issues including, among others, the amount of the purchase price for each of our initial businesses and the terms and conditions of the purchase agreements, the amount of investment in our common shares by members of the selling groups, and our management team's continuing ability to identify and negotiate the acquisition of and manage other investments on behalf of members of the selling groups.

        The results of these negotiations are represented by our structure and the terms and conditions of the transactions described in this prospectus. Further, based on these negotiations in the overall context

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of this offering and the related transactions and the terms and conditions of the purchase agreements, our independent directors believe the purchase price of each of our initial businesses represents a fair value for such initial business. The company has entered into letters of intent in connection with the proposed acquisitions. An overview of the terms and conditions relating to the acquisitions in the context of this offering is discussed in more detail below.

        In order to consummate the acquisitions of our initial businesses, we established acquisition subsidiaries through which we will acquire our initial businesses. Prior to the acquisition of our initial businesses, certain of our directors also served as the directors of each of our acquisition subsidiaries. In conjunction with the closing of this offering, some of those directors may resign as directors of each of the acquisition subsidiaries and new directors will be appointed to serve on the boards of each of our acquisition subsidiaries.

Overview

        The company will use a portion of the net proceeds from this offering, the separate private placement transactions, the initial borrowing under our proposed third-party credit facility and preferred stock of our acquisition subsidiaries to acquire, through its acquisition subsidiaries, our initial businesses from the selling groups, as follows:

    all of the equity interests in Metal from the members of the Metal selling group;

    all of the equity interests in Forest from the members of the Forest selling group;

    all of the equity interests in CanAmPac from the members of the CanAmPac selling group; and

    all of the equity interests in Pangborn from the members of the Pangborn selling group.

We believe the use of the preferred stock represents an efficient use of elements of our capital structure for purposes of implementing our acquisition strategy. See the section entitled "Certain Relationships and Related Persons Transactions" for more information about the selling groups, including members of the AH Group that are directly or indirectly members of the selling groups.

        In order to capitalize our acquisition subsidiaries for the purpose of acquiring the initial businesses, the company will use a portion of the net proceeds from this offering, the separate private placement transactions and the initial borrowing under our proposed third-party credit facility to make loans and revolving financing commitments as follows:

    We intend to capitalize Atlas Metal Acquisition Corp. for purposes of acquiring the equity interests in Metal and making loans to Metal by making an equity investment of approximately $25.5 million therein and providing term loans of approximately $56.0 million. We also intend to provide a $20.0 million financing commitment pursuant to a revolving credit facility. The full amount of the term loans and approximately $350,000 of the revolving loan commitment, totaling approximately $56.4 million, will be funded in conjunction with the closing of this offering;

    We intend to capitalize Atlas Forest Acquisition Corp. for purposes of acquiring the equity interests in Forest and making loans to Forest by making an equity investment of approximately

    $22.5 million therein and providing term loans of approximately $46.5 million. We also intend to provide a $21.0 million financing commitment pursuant to a revolving credit facility. The full amount of the term loans and approximately $1.0 million of the revolving loan commitment, totaling approximately $47.5 million, will be funded in conjunction with the closing of this offering;

    We intend to capitalize Atlas CanAmPac Acquisition Corp. for purposes of acquiring the equity interests in CanAmPac and making loans to CanAmPac by making an equity investment of approximately $22.9 million therein and providing term loans of approximately $35.0 million. We also intend to provide a $16.5 million financing commitment pursuant to a revolving credit

53


      facility. The full amount of the term loans and approximately $763,000 of the revolving loan commitment, totaling approximately $35.8 million, will be funded in conjunction with the closing of this offering; and

    We intend to capitalize Atlas Pangborn Acquisition Corp. for purposes of acquiring the equity interests in Pangborn and making loans to Pangborn by making an equity investment of approximately $6.7 million therein and providing term loans of approximately $13.0 million. We also intend to provide a $5.0 million financing commitment pursuant to a revolving credit facility. The full amount of the term loans and approximately $294,000 of the revolving loan commitment, totaling approximately $13.3 million, will be funded in conjunction with the closing of this offering.

        The acquisition of and the making of the loans to each of our initial businesses will be conditioned upon the closing of this offering. Each of the loans is discussed in more detail below. The terms, including pricing, and conditions of the purchase agreements were reviewed and approved by the independent directors of the company, the directors of our acquisition subsidiaries, and the special committees that were formed to oversee the sale of the initial businesses on behalf of the selling groups. The composition of the management teams of each of our initial businesses will remain the same following the acquisition thereof.

        Likewise, the terms and conditions of the loan agreements were reviewed and approved by our independent directors and the members of the board of managers of each of our initial businesses who are not affiliated with either our management team or our board of directors. While this process of review and approval is designed to ensure that the terms of the loans will be fair to our initial businesses, it is not necessarily designed to protect you. The company believes that the terms and conditions of the loans will be substantially similar to those that our initial businesses would be able to obtain from unaffiliated third parties. In addition, the company believes that the terms of the loans will be fair and reasonable given the leverage and risk profiles of each of our initial businesses.

        Although our board of directors received an opinion from Duff & Phelps, LLC, an independent financial advisory and investment banking firm, regarding the analysis of the fairness, from a financial point of view only, of the respective acquisition prices to be paid by the company (through its acquisition subsidiaries) for all of the equity interests of each of the four initial businesses to be acquired by the company (through its acquisition subsidiaries) upon the consummation of this offering (on an individual basis only) and, notwithstanding that the purchase agreements were approved by a majority of our independent directors, the directors of our acquisition subsidiaries, and the special committees that were formed to oversee the sale of the initial businesses on behalf of the selling groups, the purchase agreements were negotiated in the overall context of this offering among the selling groups, our initial businesses and their representatives, on the one hand, and our manager, our executive officers and their representatives, on the other hand, some of whom are affiliated or which otherwise have relationships with each other. In addition, although the loan agreements were approved by a majority of our independent directors and the members of the boards of managers of each of our initial businesses who are not affiliated with our management team or our board of directors, the loan agreements were negotiated in the overall context of this offering among parties who are affiliated or which otherwise have relationships with each other. See the section entitled "Certain Relationships and Related Persons Transactions" for more information.

Metal

        The company expects to use approximately $81.9 million of the net proceeds from this offering, the separate private placement transactions and the initial borrowing under our proposed third-party credit facility to capitalize Atlas Metal Acquisition Corp. for the purpose of acquiring the equity interests in Metal and making loans to Metal. Of this amount, approximately $25.5 million will represent our equity capitalization of Atlas Metal Acquisition Corp., approximately, $56.0 million will represent term loans

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made to Atlas Metal Acquisition Corp. and, subject to certain adjustments, approximately $350,000 will represent loans made to Atlas Metal Acquisition Corp. pursuant to a revolving credit facility. We expect that Atlas Metal Acquisition Corp. will have aggregate borrowings pursuant to the term loans and revolving credit facility of approximately $56.4 million following the closing of its acquisition of Metal.

        After giving effect to an adjustment for the cash balances of Metal on the date of closing, we expect that the members of the Metal selling group will receive, collectively, approximately $71.1 million for the sale of Metal to Atlas Metal Acquisition Corp., with approximately:

    $20.7 million of such amount being paid, collectively, to members of the AH Group in connection with the sale of their interests in Metal;

    $2.5 million of such amount being paid, collectively, to our management team (other than members of the AH Group) in connection with the sale of their interests in Metal;

    $637,000 of such amount being paid, collectively, to our directors (other than members of the AH Group and our management team) in connection with the sale of their interests in Metal; and

    $41.1 million of such amount being paid, collectively, to certain officers and directors of Metal or their affiliates (exclusive of the individuals and entities identified above) in connection with the sale of their interests in Metal.

Acquisition of Metal

        Atlas Metal Acquisition Corp. expects to use approximately $81.9 million in cash and $900,000 of its Series A preferred stock to acquire all of the outstanding equity interests of Metal and to make a loan to Metal. Of such $81.9 million in cash, approximately $56.0 million will be loaned to Metal to, among other things, repay outstanding indebtedness of Metal and any associated prepayment penalties. Approximately $4.6 million of the loan proceeds will be used by Metal to terminate its incentive plans. The balance of such $81.9 million in cash, subject to certain purchase price adjustments, will be paid to the members of the Metal selling group. The Series A preferred stock will (i) have no voting rights, (ii) have a liquidation preference at $25.00 per share, and (iii) be entitled to a quarterly dividend at a rate of 11.0% per annum. After 24 months, up to 75.0% of the preferred stock can be exchanged for our common shares and all of the preferred stock is required to be redeemed on the fifth anniversary of the date of issuance. The preferred stock will be issued at a discount equal to 80.0% of its liquidation preference. Further, in conjunction with the closing of the acquisition, we expect the Series A preferred stock will be sold to an unaffiliated third-party for $900,000.

        As of September 30, 2007, the issued and outstanding equity interests of Metal consisted of:

    400,000 Series A preferred units, 400,000 Series A-1 preferred units, 400,000 Series B preferred units, 259,261 Series D preferred units; and

    258,484 Series C common units.

        As of September 30, 2007, Metal had approximately 20 holders of record. The rights of the holders of preferred and common units are substantially identical except that the preferred units are entitled to an annual 7.0% cumulative preferred return on the undistributed liquidation preference equal to the original price paid per unit, plus unpaid preferred returns less distributions as defined in the Metal Resources LLC operating agreement.

        The purchase agreement will require that, as a condition to closing, Metal will use the proceeds from Atlas Metal Acquisition Corp. to pay its outstanding indebtedness, which was approximately $11.7 million at June 30, 2007, and any associated prepayment penalties.

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        The purchase agreement will provide that, at closing, the purchase price for Metal will be subject to adjustment based on net working capital, the remaining cash of Metal, the amounts of indebtedness outstanding at closing, if any, and the value of certain assets of Metal. With respect to net working capital adjustment on the closing date, the purchase price will be increased if the estimated net working capital of Metal as of the closing of the acquisition exceeds an agreed-upon range, or decreased if such net working capital is less than such agreed-upon range (with the adjustment, in either case, to be in an amount equal to the difference between such estimated net working capital and the mid-point of such agreed-upon range). The purchase agreement will further require a post-closing adjustment 45 days after closing based on the same factors. With respect to the post-closing net working capital adjustment, the purchase price will be increased if the actual net working capital of Metal as of the closing of the acquisition exceeds an agreed-upon range, or decreased if such net working capital is less than such agreed-upon range (with the adjustment, in either case, to be equal to the amount of difference between the actual net working capital as of the closing and the mid-point of such range).

        If Metal fails to repay or is incapable of repaying indebtedness as of the closing of this offering and the related transactions, then the purchase price will be reduced by the amount of such indebtedness and we will assume such indebtedness in connection with our acquisition of Metal and repay such indebtedness as soon as reasonably practicable following the closing of this offering and the related transactions. In light of certain conditions relating to our borrowing limit under our proposed third-party credit facility, if any historic indebtedness remains outstanding after the closing of this offering and the related transactions, our borrowing availability under our proposed third-party credit facility may be materially adversely affected.

        The purchase price is subject to additional payments to the Metal selling group should certain levels of EBITDA be achieved over certain periods. Specifically, if EBITDA for the trailing 12 month period ended on March 31, 2008 is at least $15.0 million, an additional $5.0 million will be paid to the Metal selling group. In addition, if EBITDA for the trailing 12 month period ended on December 31, 2008 is at least $15.0 million, an additional $5.0 million will be paid to the Metal selling group.

        The purchase agreement will contain customary representations, warranties and covenants for the company's benefit and provide the company with certain rights to receive indemnification. See the section entitled "—Additional Acquisition Terms" for a description of the formula for determining net working capital and the agreed-upon range and a detailed discussion of the terms and provisions of the purchase agreement.

Term Loans

        In order to fund the loan to Metal, the company will make term loans to Atlas Metal Acquisition Corp. of approximately $56.0 million, consisting of a Tranche A term loan in the principal amount of approximately $28.0 million and a subordinated debt term loan in the principal amount of approximately $28.0 million. The proceeds of the term loans will be used in connection with the acquisition of Metal. Such proceeds and proceeds for the equity investment of Atlas Metal Acquisition Corp. will be used to repay the outstanding indebtedness of Metal, which is approximately $11.7 million at June 30, 2007, and any associated prepayment penalties, with the remaining balance of such proceeds being distributed, along with the excess cash of Metal, to the members of the Metal selling group prior to the closing of the acquisition of Metal.

        Interest on the Tranche A term loan will initially accrue at the per annum rates of LIBOR plus 3.75% (or a substantially equivalent rate based on the prime rate), and will be due and payable monthly in arrears on the last day of each month or as of the last day of the applicable interest period or as is otherwise mutually agreed. Interest on the subordinated debt term loan will initially accrue at the per annum rate of 14.25% and will be due and payable monthly in arrears on the last day of each month or as otherwise mutually agreed. The Tranche A term loan will amortize at $166,667 per month,

56



in arrears, and the subordinated debt term loan will not amortize during the term of the loan. The aggregate principal amount outstanding and accrued and unpaid interest for each of the Tranche A term loan and the subordinated debt term loan will mature five years from the date of funding thereof and, in each case, will be pre-payable at any time at the option of Atlas Metal Acquisition Corp., subject to a pre-payment premium of 1.0% in year one and 0.5% in year two in the case of the Tranche A term loan and 5.0% in year one, 4.0% in year two, 3.0% in year three and 2.0% in year four, in the case of the subordinated debt term loan, of the aggregate principal amount prepaid. The credit agreement will contain customary covenants and events of default. The covenants will require Atlas Metal Acquisition Corp. to maintain, among other things, the ratio of total debt to EBITDA, as well as an agreed-upon level of coverage against other measures and limitations, including the level of EBITDA to interest expense. In the event of a default by Atlas Metal Acquisition Corp. the interest rate otherwise applicable to the borrowings by Atlas Metal Acquisition Corp. under the credit agreement will be increased by an additional 2.0% per annum.

        The aggregate principal amount of the term loans may be adjusted to give effect to payments made by or other borrowings of Metal from June 30, 2007 until the closing of this offering, and may be adjusted to achieve a specific leverage after the closing of the acquisition of Metal.

        The term loans to Atlas Metal Acquisition Corp. will be secured by all of the assets and properties of Atlas Metal Acquisition Corp. and, to the extent permitted by applicable law, each of its subsidiaries, together with guarantees from such subsidiaries in respect of such indebtedness. The Tranche A term loan will rank senior to all forms of indebtedness of Atlas Metal Acquisition Corp. except for the revolving credit facility, to which it will rank pari passu. The subordinated debt term loan will rank senior to all forms of indebtedness except for the Tranche A term loan and the revolving credit facility and except for any forms of indebtedness, which by their terms, specify that they will rank pari passu with, or senior to, the subordinated debt term loan.

Revolving Loan

        The company will, pursuant to a revolving credit facility, make available to Atlas Metal Acquisition Corp. a revolving loan commitment of approximately $20.0 million. At the closing of the acquisition, approximately $350,000 will be drawn down from the revolving credit facility. Additional amounts may be drawn on the revolving credit facility to the extent necessary to pay additional purchase price adjustments or to make additional loans to Metal. Interest on the aggregate principal amount outstanding under the revolving credit facility will initially accrue at a rate of LIBOR plus 2.75% per annum (or a substantially equivalent rate based on the prime rate) and will be payable monthly in arrears on the last day of each calendar month or as of the last day of the applicable interest period or as otherwise mutually agreed. In addition, Atlas Metal Acquisition Corp. will be charged a commitment fee equal to 0.5% per annum on the unused balance of the revolving loan commitment amount, payable monthly in arrears on the last day of each calendar month. The revolving loan commitment will expire, and all revolving loans will mature five years after the effective date of the commitment, and may be prepaid and reduced at any time at the option of Atlas Metal Acquisition Corp., subject to an early termination payment of 1.0% in year one and 0.5% in year two of the total revolving loan commitment amount. The revolving credit facility will contain customary covenants and events of default. The covenants will require Atlas Metal Acquisition Corp. to maintain, among other things, an agreed upon level of fixed charge coverage and coverage against other measures and limitations, including the level of EBITDA to interest expense. The revolving credit facility will replace an existing revolving credit facility provided by a third-party lending group. Atlas Metal Acquisition Corp. will use this revolving credit facility to finance the working capital needs of Metal and for general corporate purposes.

        The revolving loan commitments to Atlas Metal Acquisition Corp. will be secured by all of the assets and properties of Atlas Metal Acquisition Corp. and, to the extent permitted by applicable law,

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each of its subsidiaries, together with guarantees from such subsidiaries in respect of such indebtedness. The revolving loan commitment may be adjusted to give effect to payments made by or other borrowings of Metal from June 30, 2007 until the closing of this offering, and may be adjusted to achieve a specific leverage after the closing of the acquisition of Metal.

        The revolving credit facility will rank senior to all forms of indebtedness of Atlas Metal Acquisition Corp. except for the Tranche A term loan, to which it will rank pari passu. Atlas Metal Acquisition Corp. will pay the company a monthly collateral management fee of approximately $1,000 payable in arrears on the last day of each calendar month.

Forest

        The company expects to use approximately $70.0 million of the net proceeds from this offering, the separate private placement transactions and the initial borrowing under our proposed third-party credit facility to capitalize Atlas Forest Acquisition Corp. for the purpose of acquiring the membership interests in Forest and making loans to Forest. Of this amount, approximately $22.5 million will represent our equity capitalization of Atlas Forest Acquisition Corp., approximately, $46.5 million will represent term loans made to Atlas Forest Acquisition Corp. and, subject to certain adjustments, approximately $1.0 million will represent loans made to Atlas Forest Acquisition Corp. pursuant to a revolving credit facility. We expect that Atlas Forest Acquisition Corp. will have aggregate borrowings pursuant to the term loans and revolving credit facility of approximately $47.5 million following the closing of its acquisition of Forest.

        After giving effect to an adjustment for the cash balance of Forest on the dates of closing, we expect that the members of the Forest selling group will receive, collectively, approximately $31.6 million for the sale of Forest to Atlas Forest Acquisition Corp., with approximately:

    $8.5 million of such amount being paid, collectively, to members of the AH Group in connection with the sale of their interests in Forest;

    $3.2 million of such amount being paid, collectively, to our management team (other than members of the AH Group) in connection with the sale of their interests in Forest;

    $471,000 of such amount being paid, collectively, to our directors (other than members of the AH Group and our management team) in connection with the sale of their interests in Forest; and

    $6.8 million of such amount being paid, collectively, to certain officers and directors of Forest (exclusive of the individuals and entities identified above) in connection with the sale of their interests in Forest.

Acquisition of Forest

        Atlas Forest Acquisition Corp. expects to use approximately $70.0 million in cash and $1.0 million of its Series A preferred stock to acquire all of the outstanding equity interests of Forest and to make a loan to Forest. Of such $70.0 million in cash, approximately $46.5 million will be loaned to Forest to repay outstanding indebtedness of Forest, with the exception of a financing lease obligation of approximately $11.1 million at June 30, 2007 which will continue to be outstanding following the acquisition, and to pay any associated prepayment penalties. Approximately $1.4 million of the loan proceeds will be used by Forest to terminate its incentive plans. The balance of such $70.0 million in cash, subject to certain purchase price adjustments, will be paid to the members of the Forest selling group. The Series A preferred stock will (i) have no voting rights, (ii) have a liquidation preference at $25.00 per share, and (iii) be entitled to a quarterly dividend at a rate of 11.0% per annum. After 24 months, up to 75.0% of the preferred stock can be exchanged for our common shares and all of the preferred stock is required to be redeemed on the fifth anniversary of the date of issuance. The preferred stock will be issued at a discount equal to 80.0% of its liquidation preference. Further, in

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conjunction with the closing of the acquisition, we expect the Series A preferred stock will be sold to an unaffiliated third-party for $1.0 million.

        As of September 30, 2007, the issued and outstanding equity interests of Forest consisted of:

    200,000 Series B participating preferred units;

    44,287 Series C participating preferred units; and

    211,105 common units.

        As of September 30, 2007, Forest had approximately 28 holders of record. The rights of the holders of Series B and C participating preferred units and common units are substantially identical except that the Series B and C participating preferred units are entitled to a preferential distribution equal to an annual cumulative dividend of 8.0% on the liquidation value. In addition, the Series C participating preferred units have a priority for distributions.

        The purchase agreement will require that, as a condition to closing, Forest will use the proceeds from Atlas Forest Acquisition Corp. to pay its outstanding indebtedness, which was approximately $56.8 million at June 30, 2007, and any associated prepayment penalties.

        The purchase agreement will provide that, at closing, the purchase price for Forest will be subject to adjustment based on net working capital, the remaining cash of Forest, the amounts of indebtedness outstanding at closing and the value of certain assets of Forest. With respect to net working capital adjustment on the closing date, the purchase price will be increased if the estimated net working capital of Forest as of the closing of the acquisition exceeds an agreed-upon range, or decreased if such net working capital is less than such agreed-upon range (with the adjustment, in either case, to be in an amount equal to the difference between such estimated net working capital and the mid-point of such agreed-upon range). The purchase agreement will further require a post-closing adjustment 45 days after closing based on the same factors. With respect to the post-closing net working capital adjustment, the purchase price will be increased if the actual net working capital of Forest as of the closing of the acquisition exceeds an agreed-upon range, or decreased if such net working capital is less than such agreed-upon range (with the adjustment, in either case, to be equal to the amount of difference between the actual net working capital as of the closing and the mid-point of such range).

        If Forest fails to repay or is incapable of repaying indebtedness as of the closing of this offering and the related transactions, then the purchase price will be reduced by the amount of such indebtedness and we will assume such indebtedness in connection with our acquisition of Forest and repay such indebtedness as soon as reasonably practicable following the closing of this offering and the related transactions. In light of certain conditions relating to our borrowing limit under our proposed third-party credit facility, if any historic indebtedness remains outstanding after the closing of this offering and the related transactions, our borrowing availability under our proposed third-party credit facility may be materially adversely affected.

        The purchase price is subject to an additional payment of $7.5 million to the Forest selling group if certain operating subsidiaries of Forest achieve certain specified EBITDA targets for the years ending December 31, 2008 and 2009 or the years ending December 31, 2009 and 2010.

        The purchase agreement will contain customary representations, warranties and covenants for the company's benefit and provide the company with certain rights to receive indemnification. See the section entitled "—Additional Acquisition Terms" for a description of the formula for determining net working capital and the agreed-upon range and a detailed discussion of the terms and provisions of the purchase agreement.

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Term Loans

        In order to fund the loan to Forest, the company will make term loans to Atlas Forest Acquisition Corp. of approximately $46.5 million, consisting of a Tranche A term loan in the principal amount of approximately $15.5 million and a subordinated debt term loan in the principal amount of approximately $31.0 million. The proceeds of the term loans will be used in connection with the acquisition of Forest. Such proceeds and proceeds for the equity investment of Atlas Forest Acquisition Corp. will be used to repay the outstanding indebtedness of Forest, which is approximately $56.8 million at June 30, 2007, and any associated prepayment penalties, with the remaining balance of the indebtedness being paid from proceeds from the revolving credit facility. The remaining excess cash of Forest will be distributed to the members of the Forest selling group prior to the closing of the acquisition of Forest.

        Interest on the Tranche A term loan will initially accrue at the per annum rate of LIBOR plus 3.75% (or a substantially equivalent rate based on the prime rate), and will be due and payable monthly in arrears on the last day of each month or as of the last day of the applicable interest period or as otherwise mutually agreed. Interest on the subordinated debt term loan will initially accrue at the per annum rate of 14.25% and will be due and payable monthly in arrears on the last day of each month or as otherwise mutually agreed. The Tranche A term loan will amortize at $166,667 per month, in arrears, and the subordinated debt term loan will not amortize during the term of the loan. The aggregate principal amount outstanding and accrued and unpaid interest for each of the Tranche A term loan and the subordinated debt term loan will mature five years from the date of funding thereof and, in each case, will be pre-payable at any time at the option of Atlas Forest Acquisition Corp., subject to a pre-payment premium of 1.0% in year one and 0.5% in year two in the case of the Tranche A term loan and 5.0% in year one, 4.0% in year two, 3.0% in year three and 2.0% in year four, in the case of the subordinated debt term loan, of the aggregate principal amount prepaid. The credit agreement will contain customary covenants and events of default. The covenants will require Atlas Forest Acquisition Corp. to maintain, among other things, the ratio of total debt to EBITDA, as well as an agreed-upon level of coverage against other measures and limitations, including the level of EBITDA to interest expense. In the event of a default by Atlas Forest Acquisition Corp., the interest rate otherwise applicable to the borrowings by Atlas Forest Acquisition Corp. under the credit agreement will be increased by an additional 2.0% per annum.

        The aggregate principal amount of the term loans may be adjusted to give effect to payments made by or other borrowings of Forest from June 30, 2007 until the closing of this offering, and may be adjusted to achieve a specific leverage after the closing of the acquisition of Forest.

        The term loans to Atlas Forest Acquisition Corp. will be secured by all of the assets and properties of Atlas Forest Acquisition Corp. and, to the extent permitted by applicable law, each of its subsidiaries, together with guarantees from such subsidiaries in respect of such indebtedness. The Tranche A term loan will rank senior to all forms of indebtedness of Atlas Forest Acquisition Corp. except for the revolving credit facility, to which it will rank pari passu. The subordinated debt term loan will rank senior to all forms of indebtedness except for the Tranche A term loan and the revolving credit facility and except for any forms of indebtedness, which by their terms, specify that they will rank pari passu with, or senior to, the subordinated debt term loan.

Revolving Loan

        The company will, pursuant to a revolving credit facility, make available to Atlas Forest Acquisition Corp. a revolving loan commitment of approximately $21.0 million. At the closing of the acquisition, approximately $1.0 million will be drawn down from the revolving credit facility. Additional amounts may be drawn on the revolving credit facility to the extent necessary to pay additional purchase price adjustments or to make additional loans to Forest. Interest on the aggregate principal

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amount outstanding under the revolving credit facility will initially accrue at a rate of LIBOR plus 2.75% per annum (or a substantially equivalent rate based on the prime rate) and will be payable monthly in arrears on the last day of each calendar month or as of the last day of the applicable interest period or as otherwise mutually agreed. In addition, Atlas Forest Acquisition Corp. will be charged a commitment fee equal to 0.5% per annum on the unused balance of the revolving loan commitment amount, payable monthly in arrears on the last day of each calendar month. The revolving loan commitment will expire, and all revolving loans will mature five years after the effective date of the commitment, and may be prepaid and reduced at any time at the option of Atlas Forest Acquisition Corp., subject to an early termination payment of 1.0% in year one and 0.5% in year two of the total revolving loan commitment amount. The revolving credit facility will contain customary covenants and events of default. The covenants will require Atlas Forest Acquisition Corp. to maintain, among other things, an agreed upon level of fixed charge coverage and coverage against a number of other measures and limitations, including the level of EBITDA to interest expense. Atlas Forest Acquisition Corp. will use this revolving credit facility to finance the working capital needs of Forest and for general corporate purposes.

        The revolving loan commitment may be adjusted to give effect to payments made by or other borrowings of Forest from June 30, 2007 until the closing of this offering, and may be adjusted to achieve a specific leverage after the closing of the acquisition of Forest.

        The revolving loan commitments to Atlas Forest Acquisition Corp. will be secured by all of the assets and properties of Atlas Forest Acquisition Corp. and, to the extent permitted by applicable law, each of its subsidiaries, together with guarantees from such subsidiaries in respect of such indebtedness. The revolving credit facility will rank senior to all forms of indebtedness of Atlas Forest Acquisition Corp. except for the Tranche A term loan, to which it will rank pari passu. Atlas Forest Acquisition Corp. will pay the company a monthly collateral management fee of approximately $1,000 payable in arrears on the last day of each calendar month.

CanAmPac

        The company expects to use approximately $58.7 million of the net proceeds from this offering, the separate private placement transactions and the initial borrowing under our proposed third-party credit facility to capitalize Atlas CanAmPac Acquisition Corp. for the purpose of acquiring the membership interests in CanAmPac and making loans to CanAmPac. Of this amount, approximately $22.9 million will represent our equity capitalization of Atlas CanAmPac Acquisition Corp., approximately, $35.0 million will represent term loans made to Atlas CanAmPac Acquisition Corp. and, subject to certain adjustments, approximately $763,000 will represent loans made to Atlas CanAmPac Acquisition Corp. pursuant to a revolving credit facility. We expect that Atlas CanAmPac Acquisition Corp. will have aggregate borrowings pursuant to the term loans and revolving credit facility of approximately $35.8 million following the closing of its acquisition of CanAmPac.

        After giving effect to an adjustment for the cash balance of CanAmPac on the date of closing, we expect that the members of the CanAmPac selling group will receive, collectively, approximately $23.6 million for the sale of CanAmPac to Atlas CanAmPac Acquisition Corp.

Acquisition of CanAmPac

        Atlas CanAmPac Acquisition Corp. expects to use approximately $58.7 million in cash and $600,000 of its Series A preferred stock to acquire all of the outstanding equity interests of CanAmPac and to make a loan to CanAmPac. Of such $58.7 million in cash, approximately $35.0 million will be loaned to CanAmPac to, among other things, repay outstanding indebtedness of CanAmPac and to pay any associated prepayment penalties. Approximately $766,000 of the loan proceeds will be used by CanAmPac to terminate its incentive plan and pursuant to other arrangements. The balance of such

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$58.7 million in cash, subject to certain purchase price adjustments, will be paid to the members of the CanAmPac selling group. The Series A preferred stock will (i) have no voting rights, (ii) have a liquidation preference at $25.00 per share, and (iii) be entitled to a quarterly dividend at a rate of 11.0% per annum. After 24 months, up to 75.0% of the preferred stock can be exchanged for our common shares and all of the preferred stock is required to be redeemed on the fifth anniversary of the date of issuance. The preferred stock will be issued at a discount equal to 80.0% of its liquidation preference. Further, in conjunction with the closing of the acquisition we expect the Series A preferred stock will be sold to an unaffiliated third-party for $600,000.

        As of September 30, 2007, the issued and outstanding equity interests of CanAmPac consisted of:

    6,873,684 Class A common units; and

    2,126,316 Class B common units.

        As of September 30, 2007, CanAmPac had two holders of record.

        The purchase agreement will require that, as a condition to closing, CanAmPac will use the proceeds from Atlas CanAmPac Acquisition Corp. to pay its outstanding indebtedness, which was approximately $30.8 million at June 30, 2007, and any associated prepayment penalties.

        The purchase agreement will provide that, at closing, the purchase price for CanAmPac will be subject to adjustment based on net working capital, the remaining cash of CanAmPac, the amounts of indebtedness outstanding at closing and the value of certain assets of CanAmPac. With respect to net working capital adjustment on the closing date, the purchase price will be increased if the estimated net working capital of CanAmPac as of the closing of the acquisition exceeds an agreed-upon range, or decreased if such net working capital is less than such agreed-upon range (with the adjustment, in either case, to be in an amount equal to the difference between such estimated net working capital and the mid-point of such agreed-upon range). The purchase agreement will further require a post-closing adjustment 45 days after closing based on the same factors. With respect to the post-closing net working capital adjustment, the purchase price will be increased if the actual net working capital of CanAmPac as of the closing of the acquisition exceeds an agreed-upon range, or decreased if such net working capital is less than such agreed-upon range (with the adjustment, in either case, to be equal to the amount of difference between the actual net working capital as of the closing and the mid-point of such range).

        If CanAmPac fails to repay or is incapable of repaying indebtedness as of the closing of this offering and the related transactions, then the purchase price will be reduced by the amount of such indebtedness and we will assume such indebtedness in connection with our acquisition of CanAmPac and repay such indebtedness as soon as reasonably practicable following the closing of this offering and the related transactions. In light of certain conditions relating to our borrowing limit under our proposed third-party credit facility, if any historic indebtedness remains outstanding after the closing of this offering and the related transactions, our borrowing availability under our proposed third-party credit facility may be materially adversely affected.

        The purchase agreement will contain customary representations, warranties and covenants for the company's benefit and provide the company with certain rights to receive indemnification. See the section entitled "—Additional Acquisition Terms" for a description of the formula for determining net working capital and the agreed-upon range and a detailed discussion of the terms and provisions of the purchase agreement.

Term Loans

        In order to fund the loan to CanAmPac, the company will make term loans to Atlas CanAmPac Acquisition Corp. of approximately $35.0 million, consisting of a Tranche A term loan in the principal

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amount of approximately $18.0 million and a subordinated debt term loan in the principal amount of approximately $17.0 million. The proceeds of the term loans will be used in connection with the acquisition of CanAmPac. Such proceeds and proceeds for the equity investment of Atlas CanAmPac Acquisition Corp. will be used to repay the outstanding indebtedness of CanAmPac, which is approximately $30.8 million at June 30, 2007, and any associated prepayment penalties, with the remaining balance of such proceeds being distributed, along with the excess cash of CanAmPac, to the members of the CanAmPac selling group prior to the closing of the acquisition of CanAmPac.

        Interest on the Tranche A term loan will initially accrue at the per annum rate of LIBOR plus 3.75% (or a substantially equivalent rate based on the prime rate), and will be due and payable monthly in arrears on the last day of each month or as of the last day of the applicable interest period or as is otherwise mutually agreed. Interest on the subordinated debt term loan will initially accrue at the per annum rate of 14.25% and will be due and payable monthly in arrears on the last day of each month or as otherwise mutually agreed. The Tranche A term loan will amortize at $83,333 per month, in arrears, and the subordinated debt term loan will not amortize during the term of the loan. The aggregate principal amount outstanding and accrued and unpaid interest for each of the Tranche A term loan and the subordinated debt term loan will mature five years from the date of funding thereof and, in each case, will be pre-payable at any time at the option of Atlas CanAmPac Acquisition Corp., subject to a pre-payment premium of 1.0% in year one and 0.5% in year two in the case of the Tranche A term loan and 5.0% in year one, 4.0% in year two, 3.0% in year three and 2.0% in year four, in the case of the subordinated debt term loan, of the aggregate principal amount prepaid. The credit agreement will contain customary covenants and events of default. The covenants will require Atlas CanAmPac Acquisition Corp. to maintain, among other things, the ratio of total debt to EBITDA, as well as an agreed-upon level of coverage against other measures and limitations, including the level of EBITDA to interest expense. In the event of a default by Atlas CanAmPac Acquisition Corp., the interest rate otherwise applicable to the borrowings by Atlas CanAmPac Acquisition Corp. under the credit agreement will be increased by an additional 2.0% per annum.

        The aggregate principal amount of the term loans may be adjusted to give effect to payments made by or other borrowings of CanAmPac from June 30, 2007 until the closing of this offering, and may be adjusted to achieve a specific leverage after the closing of the acquisition of CanAmPac.

        The term loans to Atlas CanAmPac Acquisition Corp. will be secured by all of the assets and properties of Atlas CanAmPac Acquisition Corp. and, to the extent permitted by applicable law, each of its subsidiaries, together with guarantees from such subsidiaries in respect of such indebtedness. The Tranche A term loan will rank senior to all forms of indebtedness of CanAmPac except for the revolving credit facility, to which it will rank pari passu. The subordinated debt term loan will rank senior to all forms of indebtedness except for the Tranche A term loan and the revolving credit facility and except for any forms of indebtedness, which by their terms, specify that they will rank pari passu with, or senior to, the subordinated debt term loan.

Revolving Loan

        The company will, pursuant to a revolving credit facility, make available to CanAmPac a revolving loan commitment of approximately $16.5 million. At the closing of the acquisition, approximately $763,000 will be drawn down from the revolving credit facility. Additional amounts may be drawn on the revolving credit facility to the extent necessary to pay additional purchase price adjustments or to make additional loans to CanAmPac. Interest on the aggregate principal amount outstanding under the revolving credit facility will initially accrue at a rate of LIBOR plus 2.75% per annum (or a substantially equivalent rate based on the prime rate) and will be payable monthly in arrears on the last day of each calendar month or as of the last day of the applicable interest period or as otherwise mutually agreed. In addition, Atlas CanAmPac Acquisition Corp. will be charged a commitment fee equal to 0.5% per annum on the unused balance of the revolving loan commitment amount, payable

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monthly in arrears on the last day of each calendar month. The revolving loan commitment will expire, and all revolving loans will mature five years after the effective date of the commitment, and may be prepaid and reduced at any time at the option of Atlas CanAmPac Acquisition Corp., subject to an early termination payment of 1.0% in year one and 0.5% in year two of the total revolving loan commitment amount. The revolving credit facility will contain customary covenants and events of default. The covenants will require Atlas CanAmPac Acquisition Corp. to maintain, among other things, an agreed upon level of fixed charge coverage and coverage against other measures and limitations, including the level of EBITDA to interest expense. The revolving credit facility will replace an existing revolving credit facility provided by a third-party lending group. Atlas CanAmPac Acquisition Corp. will use this revolving credit facility to finance the working capital needs of CanAmPac and for general corporate purposes.

        The revolving loan commitment may be adjusted to give effect to payments made by or other borrowings of CanAmPac from June 30, 2007 until the closing of this offering, and may be adjusted to achieve a specific leverage after the closing of the acquisition of CanAmPac.

        The revolving loan commitments to Atlas CanAmPac Acquisition Corp. will be secured by all of the assets and property of Atlas CanAmPac Acquisition Corp. and, to the extent permitted by applicable law, each of its subsidiaries, together with guarantees from such subsidiaries in respect of such indebtedness. The revolving credit facility will rank senior to all forms of indebtedness of Atlas CanAmPac Acquisition Corp. except for the Tranche A term loan, to which it will rank pari passu. Atlas CanAmPac Acquisition Corp. will pay the company a monthly collateral management fee of approximately $1,000 payable in arrears on the last day of each calendar month.

Pangborn

        The company expects to use approximately $20.0 million of the net proceeds from this offering, the separate private placement transactions and the initial borrowing under our proposed third-party credit facility to capitalize Atlas Pangborn Acquisition Corp. for the purpose of acquiring the membership interests in Pangborn and making loans to Pangborn. Of this amount, approximately $6.7 million will represent our equity capitalization of Atlas Pangborn Acquisition Corp., approximately, $13.0 million will represent term loans made to Atlas Pangborn Acquisition Corp. and, subject to certain adjustments, approximately $294,000 will represent loans made to Atlas Pangborn Acquisition Corp. pursuant to a revolving credit facility. We expect that Atlas Pangborn Acquisition Corp. will have aggregate borrowings pursuant to the term loans and revolving credit facility of approximately $13.3 million following the closing of its acquisition of Pangborn.

        After giving effect to an adjustment for the cash balance of Pangborn on the date of closing, we expect that the members of the Pangborn selling group will receive, collectively, approximately $10.6 million for the sale of Pangborn to Atlas Pangborn Acquisition Corp., with approximately:

    $4.6 million of such amount being paid, collectively, to members of the AH Group in connection with the sale of their interests in Pangborn;

    $208,000 of such amount being paid, collectively, to our management team (other than members of the AH Group) in connection with the sale of their interests in Pangborn;

    $374,000 of such amount being paid, collectively, to our directors (other than members of the AH Group and our management team) in connection with the sale of their interests in Pangborn; and

    $700,000 of such amount being paid, collectively, to certain officers and directors of Pangborn (exclusive of the individuals and entities identified above) in connection with the sale of their interests in Pangborn.

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Acquisition of Pangborn

        Atlas Pangborn Acquisition Corp. expects to use approximately $20.0 million in cash and $300,000 of its Series A preferred stock to acquire all of the outstanding equity interests of Pangborn and to make a loan to Pangborn. Of such $20.0 million in cash, approximately $13.0 million will be loaned to Pangborn to, among other things, repay outstanding indebtedness of Pangborn, including amounts due to related parties, and to pay any associated prepayment penalties. Approximately $557,000 of the loan proceeds will be used by Pangborn in connection with its incentive plans and pursuant to other arrangements. The balance of such $20.0 million in cash, subject to certain purchase price adjustments, will be paid to the members of the Pangborn selling group. The Series A preferred stock will (i) have no voting rights, (ii) have a liquidation preference at $25.00 per share, and (iii) be entitled to a quarterly dividend at a rate of 11.0% per annum. After 24 months, up to 75% of the preferred stock can be exchanged for our common shares and all of the preferred stock is required to be redeemed on the fifth anniversary of the date of issuance. The preferred stock will be issued at a discount equal to 80.0% of its liquidation preference. Further, in conjunction with the closing of the acquisition, we expect the Series A preferred stock will be sold to an unaffiliated third-party for $300,000.

        As of September 30, 2007, the issued and outstanding equity interests of Pangborn consisted of:

    20,000 preferred units; and

    7,260 common units.

        As of September 30, 2007, Pangborn had approximately 42 holders of record. The rights of the holders of preferred and common units are substantially identical except that the preferred units are entitled to an annual 7.0% cumulative preferred return and have an undistributed liquidation preference equal to $100 per unit, plus unpaid preferred returns less distributions as defined in the Pangborn LLC operating agreement.

        The purchase agreement will require that, as a condition to closing, Pangborn will use the proceeds from Atlas Pangborn Acquisition Corp. to pay its outstanding indebtedness, which was approximately $10.0 million at June 30, 2007 and includes approximately $2.5 million of amounts due to related parties, and any associated prepayment penalties.

        The purchase agreement will provide that, at closing, the purchase price for Pangborn will be subject to adjustment based on net working capital, the remaining cash of Pangborn, the amounts of indebtedness outstanding at closing and the value of certain assets of Pangborn. With respect to net working capital adjustment on the closing date, the purchase price will be increased if the estimated net working capital of Pangborn as of the closing of the acquisition exceeds an agreed-upon range, or decreased if such net working capital is less than such agreed-upon range (with the adjustment, in either case, to be in an amount equal to the difference between such estimated net working capital and the mid-point of such agreed-upon range). The purchase agreement will further require a post-closing adjustment 45 days after closing based on the same factors. With respect to the post-closing net working capital adjustment, the purchase price will be increased if the actual net working capital of Pangborn as of the closing of the acquisition exceeds an agreed-upon range, or decreased if such net working capital is less than such agreed-upon range (with the adjustment, in either case, to be equal to the amount of difference between the actual net working capital as of the closing and the mid-point of such range).

        If Pangborn fails to repay or is incapable of repaying indebtedness as of the closing of this offering and the related transactions, then the purchase price will be reduced by the amount of such indebtedness and we will assume such indebtedness in connection with our acquisition of Pangborn and repay such indebtedness as soon as reasonably practicable following the closing of this offering and the related transactions. In light of certain conditions relating to our borrowing limit under our proposed third-party credit facility, if any historic indebtedness remains outstanding after the closing of this

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offering and the related transactions, our borrowing availability under our proposed third-party credit facility may be materially adversely affected.

        The purchase agreement will contain customary representations, warranties and covenants for the company's benefit and provide the company with certain rights to receive indemnification. See the section entitled "—Additional Acquisition Terms" for a description of the formula for determining net working capital and the agreed-upon range and a detailed discussion of the terms and provisions of the purchase agreement.

Term Loans

        In order to fund the loan to Pangborn, the company will make term loans to Atlas Pangborn Acquisition Corp. of approximately $13.0 million, consisting of a Tranche A term loan in the principal amount of approximately $2.5 million and a subordinated debt term loan in the principal amount of approximately $10.5 million. The proceeds of the term loans will be used in connection with the acquisition of Pangborn. Such proceeds and proceeds for the equity investment of Atlas Pangborn Acquisition Corp. will be used to repay the outstanding indebtedness of Pangborn, which is approximately $10.0 million at June 30, 2007 and includes approximately $2.5 million due to related parties, and any associated prepayment penalties, with the remaining balance of such proceeds being distributed, along with the excess cash of Pangborn, to the members of the Pangborn selling group prior to the closing of the acquisition of Pangborn.

        Interest on the Tranche A term loan will initially accrue at the per annum rates of LIBOR plus 3.75% (or a substantially equivalent rate based on the prime rate), and will be due and payable monthly in arrears on the last day of each month or as of the last day of the applicable interest period or as is otherwise mutually agreed. Interest on the subordinated debt term loan will initially accrue at the per annum rate of 14.25% and will be due and payable monthly in arrears on the last day of each month or as otherwise mutually agreed. The Tranche A term loan will amortize at $16,667 per month, in arrears, and the subordinated debt term loan will not amortize during the term of the loan. The aggregate principal amount outstanding and accrued and unpaid interest for each of the Tranche A term loan and the Subordinated Debt term loan will mature five years from the date of funding thereof and, in each case, will be pre-payable at any time at the option of Atlas Pangborn Acquisition Corp., subject to a pre-payment premium of 1.0% in year one and 0.5% in year two in the case of the Tranche A term loan and 5.0% in year one, 4.0% in year two, 3.0% in year three and 2.0% in year four, in the case of the subordinated debt term loan, of the aggregate principal amount prepaid. The credit agreement will contain customary covenants and events of default. The covenants will require Atlas Pangborn Acquisition Corp. to maintain, among other things, the ratio of total debt to EBITDA, as well as an agreed-upon level of coverage against a number of measures, including the level of EBITDA to interest expense. In the event of a default by Atlas Pangborn Acquisition Corp., the interest rate otherwise applicable to the borrowings by Atlas Pangborn Acquisition Corp. under the credit agreement will be increased by an additional 2.0% per annum.

        The aggregate principal amount of the term loans may be adjusted to give effect to payments made by or other borrowings of Pangborn from June 30, 2007 until the closing of this offering, and may be adjusted to achieve a specific leverage after the closing of the acquisition of Pangborn.

        The term loans to Atlas Pangborn Acquisition Corp. will be secured by all of the assets and properties of Atlas Pangborn Acquisition Corp. and, to the extent permitted by applicable law, each of its subsidiaries, together with guarantees from such subsidiaries in respect of such indebtedness. The Tranche A term loan will rank senior to all forms of indebtedness of Atlas Pangborn Acquisition Corp. except for the revolving credit facility, to which it will rank pari passu. The subordinated debt term loan will rank senior to all forms of indebtedness except for the Tranche A term loan and the revolving

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credit facility and except for any forms of indebtedness, which by their terms, specify that they will rank pari passu with, or senior to, the subordinated debt term loan.

Revolving Loan

        The company will, pursuant to a revolving credit facility, make available to Pangborn a revolving loan commitment of approximately $5.0 million. At the closing of the acquisition, approximately $294,000 will be drawn down from the revolving credit facility. Additional amounts may be drawn on the revolving credit facility to the extent necessary to pay additional purchase price adjustments or to make additional loans to Pangborn. Interest on the aggregate principal amount outstanding under the revolving credit facility will initially accrue at a rate of LIBOR plus 2.75% per annum (or a substantially equivalent rate based on the prime rate) and will be payable monthly in arrears on the last day of each calendar month or as of the last day of the applicable interest period or as otherwise mutually agreed. In addition, Atlas Pangborn Acquisition Corp. will be charged a commitment fee equal to 0.5% per annum on the unused balance of the revolving loan commitment amount, payable monthly in arrears on the last day of each calendar month. The revolving loan commitment will expire, and all revolving loans will mature five years after the effective date of the commitment, and may be prepaid and reduced at any time at the option of Atlas Pangborn Acquisition Corp., subject to an early termination payment of 1.0% in year one and 0.5% in year two of the total revolving loan commitment amount. The revolving credit facility will contain customary covenants and events of default. The covenants will require Atlas Pangborn Acquisition Corp. to maintain, among other things, an agreed upon level of fixed charge coverage and coverage against other measures and limitations, including the level of EBITDA to interest expense. The revolving credit facility will replace an existing revolving credit facility provided by a third-party lending group. Atlas Pangborn Acquisition Corp. will use this revolving credit facility to finance the working capital needs of Pangborn and for general corporate purposes.

        The revolving loan commitment may be adjusted to give effect to payments made by or other borrowings of Pangborn from June 30, 2007 until the closing of this offering, and may be adjusted to achieve a specific leverage after the closing of the acquisition of Pangborn.

        The revolving loan commitments of Atlas Pangborn Acquisition Corp. will be secured by all of the assets and property of Atlas Pangborn Acquisition Corp. and, to the extent permitted by applicable law, each of its subsidiaries, together with guarantees from such subsidiaries in respect of such indebtedness. The revolving credit facility will rank senior to all forms of indebtedness of Atlas Pangborn Acquisition Corp. except for the Tranche A term loan, to which it will rank pari passu. Atlas Pangborn Acquisition Corp. will pay the company a monthly collateral management fee of approximately $1,000 payable in arrears on the last day of each calendar month.

Additional Acquisition Terms

        Pursuant to the purchase agreements, we expect that the purchase price to be paid by the company for each of our initial businesses will be increased if the net working capital of such business as of the acquisition thereof, as estimated and agreed-upon by the company and the selling groups immediately prior to such acquisition, exceeds an agreed-upon range, or decreased if such estimated net working capital is less than such range. The amount of such increase or decrease, as the case may be, we expect will be equal to the difference between the mid-point of the agreed-upon range and such estimated net working capital. The purchase agreement will further require a post-closing adjustment 45 days after closing. With respect to the post-closing net working capital adjustment, the purchase price will be increased if the actual net working capital as of the closing of the acquisition exceeds an agreed-upon range, or decreased if such net working capital is less than such agreed-upon range (with the adjustment, in either case, to be equal to the amount of difference between the actual net working capital as of the closing and the mid-point of such range). For purposes of this adjustment, net working

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capital for each of our initial businesses will be generally defined as the excess at any time, calculated on a consolidated basis taking into account intercompany eliminations and without giving effect to non-cash items and non-cash accruals which would not reasonably be expected to result in the receipt or payment of cash, of (i) all current assets (exclusive of deferred income taxes) of such business at such time, over (ii) all current liabilities (exclusive of current maturities on long-term debt and deferred income taxes) of such business at such time, as determined in accordance with generally accepted accounting principles, whether short-term or long-term.

        Further, we expect that the purchase agreements, with respect to the company's acquisition of each of our initial businesses, will include certain representations and warranties to the company regarding, among other matters, the due organization, valid existence and good standing of such business, each member of the separate selling groups' authority to enter into the purchase agreements and the legal, valid, binding and enforceable obligations thereunder and the ownership of the interests being sold. In addition, the company's indirect acquisition of our initial businesses will be subject to customary conditions precedent and regulatory approval.

        We expect that the representations, warranties and covenants of members of the selling groups will survive the closing of the acquisitions for certain specified time periods and each of the members of any selling group agrees, with certain limits, to indemnify the company for such member's proportionate share of any damages arising from a breach of any such representation, warranty or covenant by such member, in each case in respect only of that business which the company is acquiring from such member. We also expect that the purchase agreements will contain customary indemnification provisions in connection with the purchase and sale of the initial businesses. With the exception of Metal, certain of the indemnification obligations of the parties are subject to a threshold above which claims must aggregate prior to the availability of recovery of 1.0% of the purchase price of such business and a cap on the maximum potential indemnification liability of 10.0% of the purchase price of such business. Metal has a threshold and a cap of approximately 0.6% and 12.0%, respectively.

        The representations and warranties set forth in each of the purchase agreements and each other agreement filed as an exhibit to the registration statement will be made exclusively for the benefit of the parties to each such agreement and not for the benefit of any other person, including those persons seeking to make an investment decision with respect to us or the common shares. Such representations and warranties will be made solely for the purpose of consummating the transactions contemplated by the applicable agreement and allocating risk among the parties thereto, and for no other purpose. In this respect, such representations and warranties are not an indication of the actual state of facts at the time made or otherwise. Further, such representations and warranties will be made as of a specific date or dates and not with respect to the subject matter of the representations generally. Likewise, such representations and warranties will be subject to the limitations negotiated by the parties to the applicable agreement, including those relating to materiality, timing, substantive limitations as to the scope and nature of such representations and warranties and limitations arising out of disclosures between the parties during the negotiation process. Standards of materiality set forth in such representations or warranties or which are used for determining satisfaction of such representations or warranties do not necessarily correspond to standards of materiality with respect to disclosures made in a registration statement, to the public generally or otherwise. As a result, you should not place any reliance on any such representations and warranties in the course of making an investment decision with respect to us or the shares.

Reimbursement Agreement

        Our initial businesses have each agreed to pay for any fees, costs or expenses we incur in connection with this offering and the related transactions. The amount for which each of our initial businesses is responsible for paying is based on specified percentages relating to each initial business, with the exception of Metal, which is fixed at $750,000, and CamAmPac, which is fixed at $1.0 million. Upon closing the acquisitions of our initial businesses, our acquisition subsidiaries will, in turn, reimburse each of our initial businesses for the fees, costs or expenses paid by each such business on our behalf in connection with this offering and the related transactions or otherwise increase the purchase price payable to the members of the selling groups.

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OUR MANAGER

Overview of Our Manager

        Our manager is a newly created entity that is comprised of Andrew M. Bursky, our Chief Executive Officer, and Timothy J. Fazio, our President, as its managing members and Atlas Titan Carry I LLC and Atlas Titan Carry II LLC as its limited members. Messrs. Bursky and Fazio are the managing members of Atlas Titan Carry I LLC and TRAL Carry LLC is its limited member. Messrs. Bursky and Fazio are the non-economic managing members of Atlas Titan Carry II LLC and certain members of our management team are its limited members. Our manager is a member of the AH Group.

Our Management Team

        The following personnel will comprise our management team. Each of the individuals listed below will be compensated entirely by our manager from the management fees it receives. Currently, these listed individuals are employees of Atlas Holdings, with the exception of David I.J. Wang, who is a consultant. Effective January 1, 2008, the listed individuals who are employed by Atlas Holdings will resign from Atlas Holdings and become employees of our manager. Members of our management team intend to collectively devote approximately 80% of their time to our affairs. The remaining position of our management team's time may be devoted to our manager's other business activities, including the management and operations of other businesses, some which may be related to Atlas Holdings and its affiliates. Neither our manager nor the members of our management team are expressly prohibited from investing in or managing other entities, including those that are in the same or similar lines of business as our initial businesses or those related to or affiliated with Atlas Holdings. Each title reflects the individual's expected position with our manager and does not reflect the role or responsibility that the individual may have with the company at any time and may not correspond to the title or role that individual may have with the company at any time.

        Andrew M. Bursky, Managing Director.    Mr. Bursky has been the Chairman and Chief Executive Officer of the company since its inception on December 26, 2006. Since June 2002, Mr. Bursky has also been a Managing Partner of Atlas Holdings, a private investment firm. From 1999 to April 2002, Mr. Bursky was a Managing Partner of Pegasus Capital Advisors, L.P., or Pegasus, a private investment firm which had approximately $800 million of committed equity capital. Mr. Bursky joined Pegasus in 1999 after 19 years with Interlaken Capital, Inc., or Interlaken. Mr. Bursky was one of the founding principals and the Senior Managing Director of Interlaken. While at Interlaken, Mr. Bursky was responsible for all investments and business development activity, with a primary focus on industrial manufacturing and distribution, business services, financial services and distribution. Mr. Bursky serves on the boards of a number of public and private companies, including BE&K Inc., Atlas Industrial Services LLC, Wood Resources LLC, Finch Paper Holdings LLC, Metal Resources LLC, Forest Resources LLC, CanAmPac ULC, and Capital Equipment Resources LLC. In addition, Mr. Bursky serves as a Trustee of the Eisenhower Fellowships, the Skin Cancer Foundation, and Washington University in St. Louis. Mr. Bursky is a graduate of Washington University in St. Louis where he received a B.A. in Economics, a B.S. in Engineering and an M.S. in Chemical Engineering and Harvard Business School where he received an M.B.A.

        Timothy J. Fazio, Managing Director.    Mr. Fazio has been a Director and the President of the company since its inception on December 26, 2006. Since January 2002, Mr. Fazio has also been a Managing Partner of Atlas Holdings, which he co-founded with Mr. Bursky. From June 1999 to January 2002, Mr. Fazio was Vice President and a Principal at Pegasus Capital Advisors, L.P., or Pegasus, where he focused on investments in businesses facing complex financial and operational challenges. Prior to joining Pegasus, Mr. Fazio was a Vice President at Interlaken Capital, Inc. Mr. Fazio serves on the boards of Atlas Industrial Services LLC, Finch Paper Holdings LLC, Metal Resources LLC, Forest Resources LLC, CanAmPac ULC, Capital Equipment Resources LLC and Wood Resources LLC. Mr. Fazio is a graduate of the College of Arts and Sciences and the Wharton School of Business at the University of Pennsylvania where he received a B.A. in International Relations and a B.S. in Economics.

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        David I. J. Wang, Senior Director.    Mr. Wang is a director of the company. Mr. Wang has worked closely with the principals of Atlas Holdings for the past nine years in a variety of advisory roles. Mr. Wang retired from International Paper Company in 1991 as Executive Vice President and Director. He was responsible for International Paper's distribution, timber, wood products and specialty businesses which on a combined basis generated sales totaling $5 billion. He was also responsible for mergers and acquisitions, information systems, technology, engineering and logistics. Prior to joining International Paper, Mr. Wang was with Union Carbide Corporation in various capacities, including Director of Corporate Development and Vice President of the coatings and solvents division. Mr. Wang currently serves on the boards of several corporations, including BE&K, Inc., Finch Paper Holdings LLC, Metal Resources LLC, Forest Resources LLC and Wood Resources LLC. Mr. Wang is a graduate of George Washington University where he received a B.S. in mechanical engineering, and The Georgia Institute of Technology where he received an M.S. in mechanical engineering. He is a trustee of the Eisenhower Fellowships, the Southern Poverty Law Center, Rand Graduate School, Naples Philharmonic Center and the Robert F. Kennedy Memorial. He also serves on the advisory boards of George Washington University and the Coalition of Immokalee Workers.

        Daniel E. Cromie, Director.    Mr. Cromie joined Atlas Holdings in 2003 as a Vice President. Mr. Cromie has led several transactions, including the formation and financing of Atlas Industrial Services LLC, and has assisted with the formation, financing and oversight of a number of other Atlas portfolio companies. Mr. Cromie currently serves on the boards of Atlas Industrial Services LLC and Capital Equipment Resources LLC. Prior to joining Atlas, Mr. Cromie served as a consultant for the Commodity Operations group of Goldman Sachs, from 1996 to 2002, in a variety of capacities including as a member of the development team of an integrated fixed income, currency and commodities operations system. Concurrently, Mr. Cromie toured the country as a professional musician. Prior to his professional music career, Mr. Cromie was a Senior Analyst at Interlaken Capital, Inc. where he worked with Mr. Bursky and Mr. Fazio on multiple transactions. Mr. Cromie is a graduate of the University of Pennsylvania.

        Edward J. Fletcher, Director.    Mr. Fletcher has been the Chief Financial Officer and Secretary of the company since September 2007. Mr. Fletcher joined Atlas Holdings in 2007 as a Vice President. Since March 2005, Mr. Fletcher has also served as a Vice President and the Chief Financial Officer of Wood Resources LLC, an Atlas Holdings platform company. Prior to joining Atlas Holdings and Wood Resources LLC, Mr. Fletcher was a Senior Vice President and the Chief Financial Officer of a publicly traded wireless information and communication services company where he had oversight and responsibility for all financial aspects of the organization, which included the development and monitoring of fiscal policies and procedures, SEC compliance and investor relations, budgeting and cost mitigation initiatives. Mr. Fletcher began his career in 1993 at Ernst & Young LLP in the Assurance Advisory Business Services Practice where his responsibilities included the preparation and review of SEC filings in connection with quarterly and annual reports, initial public and secondary offerings, the registration of debt and equity securities and mergers and acquisitions. Mr. Fletcher holds a B.S. in accounting from Fairfield University and has received professional certifications as a Public Accountant in the State of New York and as a Fraud Examiner.

        Philip E. Schuch, Director and Chief Financial Officer.    Mr. Schuch has been the Chief Accounting Officer of the company since its inception on December 26, 2006. Mr. Schuch joined Atlas Holdings in 2003 as a Principal. Mr. Schuch also serves as the Chief Financial Officer of Atlas Holdings, manages all financial accounting due diligence, is actively involved in accounting matters at all Atlas affiliated entities and also serves as Chief Accounting Officer or Chief Financial Officer in certain Atlas affiliated entities and holding companies. Prior to joining Atlas Holdings, Mr. Schuch was employed at Ernst & Young LLP for over 14 years and was a principal with the firm's Transaction Support group participating in over 100 domestic and foreign due diligence engagements for private equity investor groups and strategic buyers. Mr. Schuch has had active participation in company

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financings and significant involvement in fraud/litigation engagements including numerous projects involving the United States Department of Justice. Mr. Schuch is a Certified Public Accountant and holds a B.S.B.A. from West Virginia University.

        Jacob D. Hudson, Senior Associate.    Mr. Hudson joined Atlas Holdings in 2005 as an Associate. Mr. Hudson has led and supported the evaluation and analysis of numerous businesses and transaction opportunities across a range of industries. Mr. Hudson has also assisted with the formation, financing and oversight of several Atlas Holdings portfolio companies. Mr. Hudson holds a B.A. from Wesleyan University.

        Zachary C. Sufrin, Senior Associate.    Mr. Sufrin joined Atlas Holdings in 2005 as an Associate. Mr. Sufrin has led and supported the evaluation and analysis of numerous businesses and transaction opportunities across a range of industries. Mr. Sufrin has also assisted with the formation, financing and oversight of several Atlas Holdings portfolio companies. Mr. Sufrin holds a B.A. from Washington University in St. Louis.

Operating Partners

        We expect that our manager will work closely with its operating partners to support and implement our strategies. Our manager's operating partners are seasoned managers of companies in business sectors in which we have focused or intend to focus our management and acquisition strategy. The operating partners will provide our manager and our businesses with additional intellectual capital, independent technical assistance and advice with respect to acquiring and operating businesses in particular sectors on a level that is not otherwise achievable without expending significant time and expense. Specifically, we expect that our manager's operating partners will be available to our manager for the following purposes:

    to assist in due diligence reviews of prospective acquisitions;

    to advise on special projects, such as capital improvement programs;

    to serve on the boards of directors of our businesses;

    to assist our manager in identifying and recruiting management personnel, as well as to serve as mentors to our management team and the management teams of our businesses; and

    to serve in other advisory capacities which benefit our manager and our businesses.

        There will be no restrictions on the ability of the operating partners to perform any of the foregoing services on behalf of or otherwise for the benefit of Atlas Holdings or any other person or entity.

        As we diversify our focus into new business sectors, our manager will seek out and engage new operating partners to help identify, perform diligence on and manage businesses in new sectors. We believe this approach, in terms of having our manager work closely with its operating partners in acquiring, managing and operating diverse businesses of the size and general nature of our initial businesses, together with our manager's continuing relationship with its operating partners, will provide us with a significant advantage in executing our overall management and acquisition strategy.

        The following individuals represent some of our manager's initial operating partners:

        Nicolas G. George.    Mr. George has worked in the paperboard and folding carton industry for 27 years. Formerly, Mr. George served as the Executive Vice President and General Manager of Rock-Tenn Company's Folding Carton division from 1991 to 2005 during which time the company integrated six strategic acquisitions. Mr. George began his employment with Rock-Tenn in 1980.

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        Roger P. Hoffman.    Mr. Hoffman has worked in the paper and packaging industry for most of his 25-year professional career. Mr. Hoffman spent more than 20 years with Green Bay Packaging where he served in a variety of positions including Mill Manager, Executive Vice President and Chief Operating Officer. Mr. Hoffman is currently the President of The Hoffman Group, a company he founded to focus on developing specialty paper and packaging products and to provide strategic consulting and technical services to clients in the paper industry. Mr. Hoffman has been recognized for his innovation in the areas of manufacturing, recycling and non-polluting manufacturing methods. In 1991, President George H.W. Bush presented Mr. Hoffman with an award for his contributions in developing new recycled paper products.

        Russell W. Maier.    Mr. Maier has worked in the steel and steel products industries for most of his professional career. He is currently the President and CEO of Metal Resources LLC. Mr. Maier began his metals career at Central Alloy Long Products in 1960. Subsequently, he served as an executive officer at Republic Steel Corporation, LTV Steel and Republic Engineered Steel. Mr. Maier also serves as a Director of Tri-Cast, Inc.

        We may reimburse our manager for certain fees and expenses related to engaging and working with the operating partners. Such a reimbursement may include reimbursement for fees paid to the operating partners, as well as reimbursement for the costs and expenses of the operating partners in providing services to our manager for our benefit. The compensation committee of the board of directors will review the reimbursements provided to our manager on an annual basis.

Our Relationship with Our Manager

        Our relationship with our manager is based on our manager having two distinct roles: first, as a service provider to us and, second, as an equity holder of our allocation shares.

        As a service provider, our manager will perform a variety of services for us, which will entitle it to receive a management fee. As holder of the company's allocation shares, our manager has the right to a preferred distribution in the form of a profit allocation upon the occurrence of certain events. Our manager paid $100,000 for the allocation shares. In addition, our manager will have certain put rights with respect to the allocation shares following the consummation of this offering. See the section below entitled "—Our Manager as an Equity Holder—Supplemental Put Agreement" for more information about the supplemental put agreement.

        These relationships with our manager will be governed principally by the following agreements:

    the management services agreements relating to the services our manager will perform for us and the businesses we own;

    the company's LLC agreement relating to our manager's rights with respect to the allocation shares it owns; and

    the supplemental put agreement relating to our manager's right to cause the company to purchase the allocation shares it owns.

        We also expect that our manager will enter into offsetting management services agreements and transaction services agreements with our businesses directly. These agreements, and some of the material terms relating thereto, are discussed in more detail below. The management fee under the management services agreement, put price under the supplemental put agreement and profit allocation will be payment obligations of the company and, as a result, will be paid, along with other company obligations, prior to the payment of distributions to our shareholders.

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Our Manager as a Service Provider

        The company will engage our manager to manage the day-to-day operations and affairs of the company, oversee the management and operations of our businesses and perform certain other services for us, subject to the oversight of our board of directors. The company will enter into a management services agreement which will set forth the services to be performed by our manager and the fees to be paid to our manager for providing such services. The company will pay our manager a quarterly management fee equal to 0.5% (2.0% annualized) of the company's adjusted net assets, as discussed in more detail below. See the section entitled "Management Services Agreement" for more information about the material terms of the management services agreement.

    Management Fee

        Subject to any adjustments discussed below, for performing management services under the management services agreement during any fiscal quarter, the company will pay our manager a management fee with respect to such fiscal quarter. The management fee to be paid with respect to any fiscal quarter will be calculated as of the last day of such fiscal quarter, which we refer to as the calculation date. The management fee will be calculated by an administrator, which will be our manager so long as the management services agreement is in effect, and reviewed by our Chief Financial Officer. The amount of any management fee payable by the company as of any calculation date with respect to any fiscal quarter will be (i) reduced by the aggregate amount of any offsetting management fees, if any, received by our manager from any of our businesses with respect to such fiscal quarter, (ii) reduced (or increased) by the amount of any over-paid (or under-paid) management fees received by (or owed to) our manager as of such calculation date, and (iii) increased by the amount of any outstanding accrued and unpaid management fees. The management fee will also be reviewed annually by the company's compensation committee.

        A portion of the management fee will be paid in the form of common shares for the first eight quarterly payments, as follows:

    50.0% of the management fee for the first four quarterly payments; and

    25.0% of the management fee for the next four quarterly payments.

In each case, the common shares to be used as payments in connection with any particular quarterly payment will be valued based on the average closing price of the common shares for the 30-day period ending on the day immediately preceding such quarterly payment date.

        As an obligation of the company, the management fee will be paid prior to the payment of distributions to our shareholders. If we do not have sufficient liquid assets to pay the management fee when due, we may be required to liquidate assets or incur debt in order to pay the management fee.

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    Example of Calculation of Management Fee

        Based on the pro forma condensed combined financial statements set forth in this prospectus at the quarter ended June 30, 2007, the quarterly management fee that would have been payable under the management services agreement, on a pro forma basis, would be calculated as follows:

 
  ($ in thousands)

 
Total management fee:        
  1.    Consolidated total assets   $ 338,086  
  2.    Consolidated accumulated amortization of intangibles      
  3.    Total cash and cash equivalents of the company (on a deconsolidated basis)     31,842  
  4.    Adjusted total liabilities     59,673  
   
 
  5.    Adjusted net assets (1 + 2 - 3 - 4)     246,571  
  6.    Quarterly management fee (0.5% * 5)     1,233  

Offsetting management fees:

 

 

 

 
  7.    Metal     100  
  8.    Forest     188  
  9.    CanAmPac     109 (1)
10.    Pangborn     75  
   
 
11.    Total offsetting management fees (7 + 8 + 9 + 10)     472  
   
 
12.    Quarterly management fee payable by the company (6 - 11)   $ 761  
   
 

(1)
The CanAmPac quarterly management fee will be approximately CAN $125, which is converted to U.S. dollars for the convenience of the reader at a conversion rate of one Canadian dollar to $0.87 (actual) U.S. dollar, which approximates the mean exchange rate in effect during 2006.

        Assuming the information above remained constant for the six month period ended June 30, 2007, the total management fee, on a pro forma basis, that would have been due on an annualized basis would have been approximately $4.9 million (4 × line 6), with total offsetting management fees of approximately $1.9 million (4 × line 11), resulting in a management fee payable by the company of approximately $3.0 million (4 × line 12). There were no transaction services agreements during this period.

        For purposes of this provision:

    "Adjusted net assets" will be equal to, with respect to the company as of any calculation date, the sum of (i)  consolidated total assets (as determined in accordance with generally accepted accounting principles, or GAAP) of the company as of such calculation date, plus (ii) the absolute amount of consolidated accumulated amortization of intangibles (as determined in accordance with GAAP) of the company as of such calculation date, minus (iii) total cash and cash equivalents of the company (on a deconsolidated basis) as of such calculation date, minus (iv) the absolute amount of adjusted total liabilities of the company as of such calculation date.

    "Adjusted total liabilities" will be equal to, with respect to the company as of any calculation date, the absolute amount of the consolidated total liabilities (as determined in accordance with GAAP) of the company as of such calculation date, minus, to the extent included therein, the sum of the absolute amount of any third-party indebtedness of the company as of such calculation date; provided, that adjusted total liabilities shall be calculated without regard to, and without giving effect to, in any manner whatsoever, any impact recorded in the company's financial statements relating to or arising in connection with either the supplemental put agreement or profit allocation as set forth in the LLC agreement.

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    "Management fee" will be equal to, as of any calculation date, the product of (i) 0.5%, multiplied by (ii) the company's adjusted net assets as of such calculation date; provided, however, that, with respect to the fiscal quarter in which the closing of this offering occurs, the company will pay our manager a management fee with respect to such fiscal quarter equal to the product of (i) (x) 0.5%, multiplied by (y) the company's adjusted net assets as of such calculation date, multiplied by (ii) a fraction, the numerator of which is the number of days from and including the date of closing to and including the last day of such fiscal quarter and the denominator of which is the number of days in such fiscal quarter; provided, further, however, that, with respect to any fiscal quarter in which the management services agreement is terminated, the company will pay our manager a management fee with respect to such fiscal quarter equal to the product of (i) (x) 0.5%, multiplied by (y) the company's adjusted net assets as of such calculation date, multiplied by (ii) a fraction, the numerator of which is the number of days from and including the first day of such fiscal quarter to but excluding the date upon which the management services agreement is terminated and the denominator of which is the number of days in such fiscal quarter.

    "Third-party indebtedness" means any indebtedness of the company owed to third-party lenders that are not affiliated with the company.

    Reimbursement of Expenses

        In general, the company will be responsible for paying costs and expenses relating to its business and operations. Except as provided below, the company will agree to reimburse our manager during the term of the management services agreement for all costs and expenses of the company that are incurred by our manager or its affiliates on behalf of the company, including any out-of-pocket costs and expenses incurred in connection with the performance of services under the management services agreement, which may include fees and expenses of our manager's operating partners, and all costs and expenses the reimbursement of which are specifically approved by our board of directors. All reimbursements will be reviewed by the compensation committee of our board of directors on an annual basis.

        The company will not be obligated or responsible for reimbursing or otherwise paying for any costs or expenses relating to our manager's overhead or any other costs and expenses relating to our manager's conduct of its business and operations. Also, the company will not be obligated or responsible for reimbursing our manager for costs and expenses incurred by our manager in the identification, evaluation, management, performance of due diligence on, negotiation and oversight of potential acquisitions of new businesses if our board of directors does not resolve to pursue such acquisition, including costs and expenses relating to travel, marketing and attendance of industry events and retention of outside service providers relating thereto. In addition, the company will not be obligated or responsible for reimbursing our manager for costs and expenses incurred by our manager in connection with the identification, evaluation, management, performance of due diligence on, negotiating and oversight of an acquisition by the company if such acquisition is actually consummated and the business so acquired entered into a transaction services agreement with our manager providing for the reimbursement of such costs and expenses by such business. In this respect, the costs and expenses associated with the pursuit of add-on acquisitions for the company may be reimbursed by any businesses so acquired pursuant to a transaction services agreement. Further, the company will not reimburse our manager for the compensation of any seconded personnel providing services pursuant to the management services agreement except that in the event that the Chief Financial Officer or any officers serving on the staff of the Chief Financial Officer, including the Chief Accounting Officer, are seconded by the manager to the company, as is currently the case, then the manager may seek reimbursement from the company for the compensation and related costs and expenses of such individuals. We currently do not expect the manager to seek reimbursement of the renumeration it pays

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to either the Chief Financial Officer or the Chief Accounting Officer. However the manager will have the right to seek such reimbursements at any time.

    Termination Fee

        We will pay our manager a fee upon termination of the management services agreement if such termination is based solely on a vote of our board of directors and our shareholders; no other fee will be payable to our manager in connection with the termination of the management services agreement for any other reason. The fee that is payable to our manager will be equal to the product of (i) two (2) multiplied by (ii) the sum of the amounts of the gross quarterly management fees calculated (prior to any reduction for offsetting management fees) with respect to the four fiscal quarters immediately preceding the termination date of the management services agreement. The termination fee will be payable in eight equal quarterly installments, with the first such installment being paid on or within five business days of the last day of the fiscal quarter in which the management services agreement was terminated and each subsequent installment being paid on or within five business days of the last day of each subsequent fiscal quarter, until such time as the termination fee is paid in full to our manager. The termination fee will not be subject to offset by offsetting management fees and does not impact our manager's supplemental put right.

    Offsetting Management Services Agreements

        Pursuant to the management services agreement, we have agreed that our manager may, at any time, enter into offsetting management services agreements with our businesses pursuant to which our manager may perform services that may or may not be similar to management services. Any fees paid by one of our businesses pursuant to such agreements are referred to as offsetting management fees and will offset, on a dollar-for-dollar basis, the management fee otherwise due and payable by the company under the management services agreement with respect to a fiscal quarter. The management services agreement provides that the aggregate amount of offsetting management fees paid to our manager with respect to any fiscal quarter shall not exceed the management fee that would otherwise be paid (without taking offsetting management fees into account) to our manager with respect to such fiscal quarter. See the section above entitled "—Management Fee" for more information about the treatment of offsetting management fees.

        Each of our initial businesses together with certain of its subsidiaries is a party to a management services agreement with Atlas Holdings or an affiliate of Atlas Holdings. Pursuant to each such agreement, Atlas Holdings or the affiliate of Atlas Holdings provides services to the applicable business, and the applicable business is obligated to pay Atlas Holdings or such affiliate an annual management fee. In conjunction with the closing of this offering, each of our initial businesses will terminate its respective management services agreement and enter into a management services agreement with our manager. Each such agreement will be an offsetting management services agreement and all payments thereunder will be offsetting management fees. We expect that our manager will receive annual management fees from Metal, Forest, CanAmPac and Pangborn of approximately $400,000, $750,000, CAN $500,000 and $300,000, in actual dollars, respectively, payable in equal quarterly installments. However, the aggregate amount of offsetting management fees to be paid pursuant to the offsetting management services agreements will be subject to a pro rata limitation of 9.5% of the company's gross income. We expect that each management services agreement will be effective during the period the management services agreement with the company is in effect. The boards of managers and management teams of each of our initial businesses believe the fees charged under the offsetting management services agreements are reasonable.

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    Transaction Services Agreements

        Pursuant to the management services agreement, we have agreed that our manager may, at any time, enter into transaction services agreements with any of our businesses relating to the performance by our manager of certain transaction-related services in connection with the acquisitions of target businesses by the company or its businesses or dispositions of the company's or its businesses' property or assets. In connection with providing transaction services, our manager will generally receive a fee equal to the sum of (i) 2.0% of the aggregate purchase price of the target business up to and equal to $50.0 million, plus (ii) 1.5% of the aggregate purchase price of the target business in excess of $50.0 million and up to and equal to $100 million, plus (iii) 1.0% of the aggregate purchase price over $100 million, subject to annual review by the nominating and corporate governance committee of our board of directors. The purchase price of a target business shall be defined as the aggregate amount of consideration, including cash and the value of any shares issued by us on the date of acquisition, paid for the equity interests of such target business plus the aggregate principal amount of any debt assumed by us of the target business on the date of acquisition or any similar formulation. The other terms and conditions relating to the performance of transaction services will be established in accordance with market practice.

        Any fees received by our manager pursuant to such a transaction services agreement will be in addition to the management fee payable by the company pursuant to the management services agreement and will not offset the payment of such management fee. A transaction services agreement with any of our businesses may provide for the reimbursement of costs and expenses incurred by our manager in connection with the acquisition of such businesses. Transaction services agreements will be reviewed, authorized and approved by the company's nominating and corporate governance committee on an annual basis.

Our Manager as an Equity Holder

        Our manager owns 100% of the allocation shares of the company, which generally will entitle our manager to receive a 20% profit allocation as a form of incentive designed to align the interests of our manager with those of our shareholders. Profit allocation has two components: a distribution-based component and an equity-based component. The distribution-based component will be paid when the distributions we pay to our shareholders exceed an annual hurdle rate of 8.0%, subject to certain conditions and adjustments. However, the distribution-based component will be recorded quarterly based on the change in the amount payable irrespective of whether distributions to common shareholders have exceeded the cumulative required distribution amount and whether there is sufficient cash available for distribution. The equity-based component will be paid when the market value of our shares appreciates, subject to certain conditions and adjustments. While the distribution-based component and the equity-based component are interrelated in certain respects, each component may independently result in a payment of profit allocation if the relevant conditions to payment are satisfied. The calculation of the profit allocation and the rights of our manager, as the holder of the allocation shares, are governed by the LLC agreement. See the section entitled "Description of Shares" for more information about the LLC agreement.

    Manager's Profit Allocation

        Subject to the terms and conditions discussed below, we are obligated to pay our manager, as holder of the allocation shares, a profit allocation, which will be paid as a distribution on the allocation shares. The profit allocation to be paid to our manager is intended to reflect a sharing of the distributions we make to our shareholders in excess of an annual hurdle rate and an incentive distribution of any increase in our market value. In this respect, profit allocation has two components:

    a distribution-based component, which we refer to as distribution-based profit allocation; and

    a common share, or equity-based component, which we refer to as equity-based profit allocation.

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        In general, profit allocation will be estimated quarterly and calculated and paid annually and, if all relevant conditions are satisfied and subject to all applicable limitations, will be paid in arrears after the end of each fiscal year. We refer generally to the obligation to make this payment to our manager as the "profit allocation" and, specifically, to the sum of distribution-based profit allocation and the current portion of the equity-based profit allocation, which we refer to as the current equity-based profit allocation, relating to any actual amount of a particular profit allocation to be paid to the manager, as the "profit distribution amount".

        Profit allocation will be calculated by an "administrator", which will be our manager so long as the management services agreement remains in effect. The company's Chief Financial Officer and the audit committee, which is comprised solely of independent directors, will have the opportunity to review and approve such calculation prior to profit allocation becoming due and payable. Other than with respect to our manager's role as the administrator, the obligation to pay profit allocation is not related in any way to the management services agreement. In this respect, termination of the management services agreement, by any means, will not affect our manager's rights with respect to the allocation shares, including our manager's right to receive profit allocation.

        All calculations of profit allocation will be based on audited financial statements of the company prepared in accordance with GAAP and applied consistently.

        The definitions used in, and an example of the calculation of profit allocation, are set forth below in more detail.

    Description of Distribution-Based Profit Allocation

        The distribution-based component of profit allocation is intended to provide a profit sharing of 20% of all distributions made by us such that, for example, if we have $100 to distribute, then $20 will be paid, subject to certain conditions, including the 8.0% annual hurdle described below, to our manager, as holder of the allocation shares, and $80 will be paid to our shareholders. In such a case, however, an absolute condition to the payment of any portion of the distribution-based component of profit allocation is that we must first make distributions to our shareholders. That is, in the foregoing example, we must first pay our shareholders $80 before we can pay $20 to our manager.

        The 8.0% annual hurdle rate will require that we pay distributions to our shareholders, which we refer to as the cumulative required distribution amount, equal to at least 8.0% of total capital invested in the company, determined by reference to the gross proceeds raised by us through the issuance of common shares, after giving effect to any capital paid out of the company resulting from a buy-back of common shares, in each case, giving effect to the timing of such sale or purchase. Thus, continuing the example above, if the cumulative required distribution amount equaled $90 and we only distributed $80 to our shareholders, no distribution-based profit allocation would be paid to our manager for such year.

        Further, the distribution-based component of profit allocation may only be paid out of, in general, net earnings of the company, as adjusted to remove the effect of certain non-cash items as set forth in the definitions relating to the calculation of profit allocation, after giving effect to payments of distributions to our shareholders and prior payments of the distribution-based component of profit allocation. In this respect, the distribution-based component of profit allocation is calculated on a cumulative basis to give effect to increases or decreases in earnings and invested capital from year-to-year, which may result in the payment of the distribution-based component of profit allocation in one year but not the next and vice-versa. We refer to the net earnings discussed above as cash available for distribution or CAD. Again, in line with our example above, if in a given year our cumulative required distribution amount was $80, we had CAD of $80 and we distributed $80 to our shareholders, no distribution-based profit allocation would be paid to our manager. If, on the other hand, all other conditions remain the same but we had CAD of $90, $100 or $110, we would pay distribution-based profit allocation to our manager equal to $10, $20 and $20 (with $10 available for subsequent calculations of CAD), respectively.

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        The result of this formulation is that, once cumulative distributions to our shareholders exceed the cumulative required distribution amount and, also, such cumulative distributions do not exceed the cumulative CAD, in each case, as of the relevant profit allocation determination date, we will pay (to the extent of available CAD) our manager a distribution-based profit allocation of an amount equal to 20% of cumulative distributions so paid to our shareholders, when considered together with the distributions so paid to our manager, subject to a high water mark with respect to previously paid distribution-based profit allocations. However, the actual amount of any payment of distribution-based profit allocation can only be paid to the extent that sufficient CAD is then available, after deducting the cumulative distributions to our shareholders, to make such payment. In this respect, if sufficient CAD is not available, the actual amount of any distribution-based profit distribution will be reduced to the amount of CAD that is then available. Nonetheless, because each calculation of distribution-based profit allocation is made on a cumulative basis, if CAD increases, any limitation previously applied to the distribution-based profit allocation may be overcome and such "short-fall" could be paid to the manager as part of future payments of distribution-based profit allocation.

        In general, this method of profit sharing is intended to ensure that the company (i) has paid distributions to its shareholders in excess of the cumulative required distribution amount and (ii) has generated sufficient cash flow to pay distributions to our shareholders and the amount of any distribution-based profit allocation, in each case, prior to any payment of such distribution-based profit allocation to our manager. However, the distribution-based profit allocation will be recorded quarterly based on the change in the amount payable irrespective of whether distributions to common shareholders have exceeded the cumulative required distribution amount and whether there is sufficient cash available for distribution. The calculation of distribution-based profit allocation is based on specific definitions relating to the components of distribution-based profit allocation, all as are discussed below. You should carefully and completely read all of the definitions relating to profit allocation to understand fully how and when it is calculated and paid.

        Because distribution-based profit allocation is determined cumulatively and the first determination of distribution-based profit allocation will not occur until December 31, 2010, in order to avoid a significant lump sum payment in the first year of calculation, distribution-based profit allocation will be paid as follows:

    50% of the cumulative calculated amount with respect to the profit allocation determination date occurring on December 31, 2010;

    75% of the cumulative calculated amount with respect to the profit allocation determination date occuring on December 31, 2011; and

    100% of the cumulative calculated amount with respect to each profit allocation determination date occurring thereafter.

    Description of Equity-Based Profit Allocation

        The equity-based component is generally intended to pay our manager 20% of the increase in the market value of our common shares, payable over several successive years, subject to adjustment. For example, if the market value of our common shares increase by $100 in a particular year, then $20 will be paid, subject to certain conditions and the deferral procedure discussed below, to our manager, as holder of the allocation shares. The calculation of equity-based profit allocation will be based on the average closing price of the common shares on the Nasdaq Global Market or other securities exchange on which the common shares are then listed, and the average common shares then outstanding, in each case, during the 45-day period immediately preceding, and including, the company's fiscal year end in which the relevant profit allocation determination date occurs. Further, the calculation of equity-based profit allocation is subject to the benchmark then established, which will be approximately $235.0 million upon the closing of this offering, that must be exceeded in order to give rise to a payment of equity-based profit allocation. Thus, in the foregoing example, if the $100 increase in the

79


market value of our common shares represents only a $90 increase over a benchmark of $10, then $18 will be paid, subject to certain conditions and the deferral procedure discussed below, to our manager.

        Our obligation to pay equity-based profit allocation is summarized as follows. With respect to each calculation of equity-based profit allocation, the amount of equity-based profit allocation as of the relevant profit allocation determination date will be added, whether as a positive or negative amount, to the balance of the deferral account then existing. That is, if our example taking into account the $10 benchmark represents the first calculation of equity-based profit allocation, then $18 would be added to the deferral account. The purpose of the deferral account is to escrow a portion of equity-based profit allocation, which amount will be reduced if the market value of our common shares decreases in subsequent years. Thereafter:

    If the balance of the deferral account is then positive as of such profit allocation determination date, we will pay 1/3 of the balance of the deferral account to the manager, which is the current equity-based profit allocation. Based on our example, if the deferral account balance is $18, then the current equity-based profit allocation to be paid to our manager would be $6.

    If the balance of the deferral account is then negative as of such profit allocation determination date, we will have no payment obligation with respect to equity-based profit allocation with respect to such profit allocation determination date. It is important to note that, in this respect, a negative balance in the deferral account will not reduce the distribution-based profit allocation.

        The benchmark is calculated by reference to the total capital invested in the company, after giving effect to any capital paid out of the company resulting from a buy-back of common shares. The benchmark as of any particular profit allocation determination date will be increased to account for any increase in the market value of our common shares or reduced to account for any decrease in the market value of our common shares. In addition, if as of any particular profit allocation determination date cumulative distributions to our shareholders do not exceed the cumulative hurdle, in each case, as of the relevant profit allocation determination date, then the benchmark will be increased further to account for the amount of distribution "short-fall".

        In general, this method of calculation is intended to ensure that the market value of the company has increased beyond the capital invested in the company prior to the payment of any amount of equity-based profit allocation, subject to the escrowing of a portion thereof to guard against decreases in the market value of our common shares in subsequent years. The calculation of equity-based profit allocation is based on specific definitions relating to the components of distribution-based profit allocation, all as are discussed below. You should carefully and completely read all of the definitions relating to profit allocation to understand fully how and when it is calculated and paid.

    Calculation and Payment of Profit Allocation

        With respect to each fiscal year, commencing with the fiscal year that includes the date of the consummation of this offering, the administrator shall calculate the profit distribution amount, and the components thereof, on or promptly following the date upon which we file our audited consolidated financial statements with the SEC, which date we refer to as the profit allocation calculation date. On each profit allocation calculation date, the profit distribution amount will be calculated as of the relevant "profit allocation determination date", including for each component of profit distribution amount. The relevant profit allocation determination date for each of the distribution-based profit allocation and the equity-based profit allocation will be December 31 of each fiscal year, commencing December 31, 2010.

        In short, on each "profit allocation calculation date", the administrator will calculate the "profit distribution amount" as of the relevant "profit allocation determination date". The definitions used in the calculation and determination of profit distribution amount are set forth below in the section entitled "—Definitions".

80


        Once calculated, the administrator will submit the calculation of profit distribution amount to our Chief Financial Officer, who will review the calculation and present the calculation, together with his report or the results of his review, to the company's audit committee for its review and approval. The audit committee will have ten business days to review and approve the calculation, which approval shall be automatic absent express disapproval by the audit committee within such ten business day period. If the audit committee timely disapproves of the administrator's calculation of profit distribution amount, the calculation and payment of profit distribution amount will be subject to a dispute resolution process, which may result in the profit distribution amount being determined, at the company's sole cost and expense, by an independent accounting firm. Any determination by such independent accounting firm will be conclusive and binding on the company and the manager. We will be obligated to pay the profit distribution amount upon approval thereof, by the audit committee or otherwise, or upon resolution of any dispute by the independent accounting firm within five business days of such approval or resolution.

        We will also pay a tax distribution to our manager if our manager is allocated taxable income as a partner in the company but does not realize actual distributions from the company at least equal to the taxes that are payable by our manager resulting from such allocations of taxable income. Any such tax distribution will be paid in a similar manner as profit allocations are paid to our manager, and will be credited against future payments of profit allocation.

        As obligations of the company, if we do not have sufficient liquid assets to pay profit allocation or a tax distribution when due, we may be required to liquidate assets or incur debt in order to pay such profit allocation or tax distribution. Our board of directors will have the right to elect to make any payment of profit allocation due on any profit allocation payment date in the form of cash or securities of the company, which must be issued on market terms and valuations at the time of issuance.

    Example of the Calculation of Profit Allocation

        The following example calculation of profit allocation is being presented solely for the purpose of demonstrating the method of calculating distribution-based profit allocation and equity-based profit allocation, based on certain assumptions and estimates. These assumptions and estimates relate to the distributions we pay to our shareholders, the earnings of our businesses and the price of our common shares, none of which can be determined or predicted with any certainty. As a result, you should not rely upon any information contained in or the results of this example calculation as being predictive of the actual amount of profit allocation that will be payable by the company in the future, our results of operations, the distributions to be paid to our shareholders or the market value of our common shares.

        The line items and numbers presented in italics below represent information that has been assumed or estimated for the purpose of this example calculation. Letters set forth in parentheticals to the right of any line items are cross-references to other line items that are identified by the corresponding letters in the left hand margin.

81


Summary Information
 
   
   
 
Year 3

 
Year 4

 
Year 5

 
Year 6

 
Year 7

Cash distributions                              

 

 

Cash paid distribution amount

 

$

15.0

 

$

20.5

 

$

21.0

 

$

22.0

 

$

20.0
    Cumulative paid distribution amount (assumes $25 of cumulative
    distributions paid through year 2)
    40.0     60.5     81.5     103.5     123.5
    Annual required distribution amount     17.7     21.9     22.0     22.6     22.7
    Cumulative required distribution amount (assumes $17 of cumulative
    distributions required through year 2) 
(m)
    34.7     56.6     78.6     101.2     123.9
    Distribution short-fall amount                     0.4

Market capitalization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average trading price - last 45 days

 

$

16.0

 

$

20.0

 

$

17.0

 

$

19.0

 

$

16.0
    Average outstanding common shares - last 45 days (o)     16.3     17.3     17.3     18.8     16.8
           
 
 
 
 
    Average year end market capitalization   $ 260.8   $ 346.0   $ 294.1   $ 357.2   $ 268.8
           
 
 
 
 

Profit distribution amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution-based profit allocation
(h)

 

$

3.6

 

$

8.6

 

$

3.6

 

$


 

$

    Current equity-based profit allocation (d)     0.7     4.5         1.9    
           
 
 
 
 
    Profit distribution amount   $ 4.3   $ 13.1   $ 3.6   $ 1.9   $
 
  Cash available for distribution and cash distributions
 
   
   
 
Year 3

 
Year 4

 
Year 5

 
Year 6

 
Year 7

    1.   Adjusted EBITDA   $ 23.0   $ 35.0   $ 28.0   $ 25.0   $ 32.3
    2.   Maintenance capital expenditures     5.9     6.3     6.5     6.1     7.0
           
 
 
 
 

(a)

 

 

 

Annual CAD (1 - 2)

 

$

17.1

 

$

28.7

 

$

21.5

 

$

18.9

 

$

25.3
           
 
 
 
 
(b)       Cumulative CAD (assumes $30 of CAD generated through year 2)     47.1     75.8     97.3     116.2     141.5

 

 

 

 

Cash distribution amount

 

 

15.0

 

 

20.5

 

 

21.0

 

 

22.0

 

 

20.0
(c)       Cumulative paid distribution amount (assumes $25 of cash distributed to common shareholders through year 2)     40.0     60.5     81.5     103.5     123.5

82


Equity-based profit allocation
 
 
   
   
 
Year 3

 
Year 4

 
Year 5

 
Year 6

 
Year 7

 
Calculation of equity-based profit allocation                                

 

 

1.

 

Average trading price - last 45 days

 

$

16.0

 

$

20.0

 

$

17.0

 

$

19.0

 

$

16.0

 
    2.   Average outstanding common shares — last 45 days (o)     16.3     17.3     17.3     18.8     16.8  
           
 
 
 
 
 
    3.   Average year end market capitalization (1 * 2)     260.8     346.0     294.1     357.2     268.8  
    4.   Market capitalization benchmark (e)     250.5     284.9     346.0     322.0     325.4  
           
 
 
 
 
 
    5.   Market capitalization adjustment amount (3 - 4)   $ 10.3   $ 61.1   $ (51.9 ) $ 35.2   $ (56.6 )
           
 
 
 
 
 
    6.   Equity-based profit allocation (0.20 * 5)   $ 2.1   $ 12.2   $ (10.4 ) $ 7.0   $ (11.3 )
           
 
 
 
 
 

Calculation of current equity-based profit allocation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.

 

Deferral account ending balance from previous year (11)

 

$


 

$

1.4

 

$

9.1

 

$

(1.3

)

$

3.8

 
    8.   Equity-based profit allocation (6)     2.1     12.2     (10.4 )   7.0     (11.3 )
           
 
 
 
 
 
    9.   Deferral account starting balance (7 + 8)   $ 2.1   $ 13.6   $ (1.3 ) $ 5.7   $ (7.5 )
           
 
 
 
 
 
(d)   10.   Current equity-based profit allocation (33% * 9, if 9 > 0)   $ 0.7   $ 4.5   $   $ 1.9   $  
           
 
 
 
 
 
    11.   Deferral account ending balance (9 - 10)   $ 1.4   $ 9.1   $ (1.3 ) $ 3.8   $ (7.5 )
           
 
 
 
 
 

Notes to equity-based profit allocation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
Market capitalization benchmark

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12.

 

Cumulative capital as of such EBPA determination date
(q)

 

$

250.5

 

$

274.6

 

$

274.6

 

$

302.5

 

$

270.3

 
    13.   Distribution short-fall amount (n)                     0.4  
    14.   Sum of all market capitalization adjustment amounts
calculated and determined with respect to each EBPA
determination date occuring prior to, but not including,
such EBPA determination date
(5)
        10.3     71.4     19.5     54.7  
           
 
 
 
 
 
(e)       Market capitalization benchmark with respect to the first EBPA determination date (12 + 13)   $ 250.5                          
           
                         
(e)       Market capitalization benchmark with respect to any subsequent EBPA determination date (12 + 13 + 14)         $ 284.9   $ 346.0   $ 322.0   $ 325.4  
                 
 
 
 
 

83


Distribution-Based Profit Allocation
 
   
   
   
 
Year 3

  Year 4
  Year 5
  Year 6
  Year 7
Calculation of distribution-based profit allocation                              

 

 

1.

 

Cumulative paid distribution amount
(c)

 

$

40.0

 

$

60.5

 

$

81.5

 

$

103.5

 

$

123.5
               
 
 
 
 
(f)   2.   Cumulative distribution base amount (0.25 * 1)   $ 10.0   $ 15.1   $ 20.4   $ 25.9   $ 30.9
    3.   Distribution high water mark (i)         3.6     12.2     15.8     15.8
               
 
 
 
 
(g)   4.   Adjusted distribution base amount (2 - 3)     10.0     11.5     8.2     10.1     15.1
    5.   CAD short-fall (j)     2.9         4.6     10.1     12.9
               
 
 
 
 
        DBPA payment trigger events:                              
        Trigger 1:   Does cumulative paid distribution amount equal or exceed the cumulative required distribution amount? (1, m)     YES     YES     YES     YES     NO
        Trigger 2:   Does cumulative CAD exceed allocated CAD?
(b, k)
    YES     YES     YES     NO     YES
(h)       Distribution based profit allocation with respect to the first DPBA determination date ((0.50*(4 - 5)), assuming both trigger events are satisfied)   $ 3.6                        
               
                       
(h)       Distribution based profit allocation with respect to the second DPBA determination date ((0.75*(4 - 5)), assuming both trigger events are satisfied)         $ 8.6                  
                     
                 
(h)       Distribution based profit allocation with respect to any subsequent DBPA determintion date (4 - 5, assuming both trigger events are satisfied)               $ 3.6   $   $
                           
 
 

Notes to distribution-based profit allocation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
Distribution high water mark

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
        Aggregate amount of all DBPA paid to allocation holder prior to, but not including, such DBPA determination date (h)   $   $ 3.6   $ 12.2   $ 15.8   $ 15.8
(i)       Distribution high water mark         3.6     12.2     15.8     15.8

    
CAD short-fall

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
    1.   Adjusted distribution base amount (g)   $ 10.0   $ 11.5   $ 8.2   $ 10.1   $ 15.1
    2.   Available CAD (l)     7.1     11.7     3.6         2.2
(j)       CAD short-fall (1 - 2 if, 1 > 2)     2.9         4.6     10.1     12.9

    
Allocated CAD and Available CAD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
    1.   Cumulative CAD (b)   $ 47.1   $ 75.8   $ 97.3   $ 116.2   $ 141.5
               
 
 
 
 
    2.   Cumulative paid distribution amount (c)     40.0     60.5     81.5     103.5     123.5
    3.   Distribution high water mark (i)         3.6     12.2     15.8     15.8
               
 
 
 
 
(k)   4.   Allocated CAD (2 + 3)   $ 40.0   $ 64.1   $ 93.7   $ 119.3   $ 139.3
               
 
 
 
 
(l)       Available CAD (1 - 4 unless 1 - 4 < 0)     7.1     11.7     3.6         2.2
               
 
 
 
 

    
Cumulative required distribution amount and distribution short-fall amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
        Annual required distribution amount (r)   $ 17.7   $ 21.9   $ 22.0   $ 22.6   $ 22.7
(m)   1.   Cumulative required distribution amount     34.7     56.6     78.6     101.2     123.9
    2.   Cumulative paid distribution amount (c)     40.0     60.5     81.5     103.5     123.5
(n)       Distribution short-fall amount (1 - 2, if 1 > 2)                     0.4

84


 
   
   
 
Year 3

 
Year 4

 
Year 5

 
Year 6

 
Year 7

Annual required distribution amount                              

Stock purchase and sale assumptions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
    Transaction date                              
        Date of transaction     July 30     Mar 25         Sep 15     June 5
    1.   Number of days remaining in fiscal year     154     281         107     209

    Stock sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
    2.   Number of shares sold     3.0     2.0         1.5    
    3.   Price per share   $ 17.0   $ 20.0   $   $ 18.6   $
           
 
 
 
 
    4.   Invested capital (2 * 3)   $ 51.0   $ 40.0   $   $ 27.9   $
           
 
 
 
 
    5.   Average invested capital (4 * (1 / 365 days))   $ 21.5   $ 30.8   $   $ 8.2   $
           
 
 
 
 

    Stock purchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
    6.   Number of shares purchased                     2.0
    7.   Basis (p)   $   $   $   $   $ 16.1
           
 
 
 
 
    8.   Returned capital (6 * 7)   $   $   $   $   $ 32.2
           
 
 
 
 
    9.   Average returned capital (8 * 1 / 365 days))   $   $   $   $   $ 18.4
           
 
 
 
 

Transaction 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
    Transaction date                              
        Date of transaction         July 1            
    10.   Number of days remaining in fiscal year         183            

    Stock purchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
    11.   Number of shares purchased         1.0            
    12.   Basis (p)   $   $ 15.9   $   $   $
           
 
 
 
 
    13.   Returned capital (11 * 12)   $   $ 15.9   $   $   $
           
 
 
 
 
    14.   Average returned capital (13 * 10 / 365 days))   $   $ 8.0   $   $   $
           
 
 
 
 

Average outstanding common shares and Basis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(o)  Average outstanding common shares     16.3     17.3     17.3     18.8     16.8
       Basis:                              
    15.   Cumulative capital as of the day immediataly preceeding such date         $ 290.5               $ 302.5
    16.   Total number of common shares outstanding as of the day immediately preceding such date           18.3                 18.8
                 
             
(p)       Basis (15 / 16)         $ 15.9               $ 16.1
                 
             

Calculation of total adjusted capital and annual required distribution amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17.

 

Total invested capital (4)

 

$

51.0

 

$

40.0

 

$


 

$

27.9

 

$

    18.   Cumulative invested capital (assumes $199.5 of cumulative invested capital as of the end of year 2)     250.5     290.5     290.5     318.4     318.4

 

 

19.

 

Total returned capital (8 + 13)

 

 


 

 

15.9

 

 


 

 


 

 

32.2
    20.   Cumulative returned capital         15.9     15.9     15.9     48.1

(q)

 

21.

 

Cumulative capital (18 - 20)

 

 

250.5

 

 

274.6

 

 

274.6

 

 

302.5

 

 

270.3
    22.   Cumulative capital of preceding fiscal year   $ 199.5   $ 250.5   $ 274.6   $ 274.6   $ 302.5

 

 

23.

 

Aggregate averaged invested capital (5)

 

 

21.5

 

 

30.8

 

 


 

 

8.2

 

 

    24.   Aggregate averaged returned capital (9 + 14)         8.0             18.4
           
 
 
 
 

 

 

25.

 

Total adjusted capital (22 + 23 - 24)

 

$

221.0

 

$

273.3

 

$

274.6

 

$

282.8

 

$

284.1
           
 
 
 
 
(r)       Annual required distribution amount (.08 * 25)   $ 17.7   $ 21.9   $ 22.0   $ 22.6   $ 22.7
           
 
 
 
 

85


    Definitions

        The following definitions are used in the calculation and determination of "profit distribution amount" for purposes of our obligation to pay profit allocation to the manager as holder of the allocation shares:

        "Adjusted EBITDA" shall mean, with respect to any fiscal year, the sum of (i) the company's net income or loss with respect to such fiscal year as reflected in the line item entitled "net income (loss)" (or any successor line item) of the company's financial statements with respect to such fiscal year, plus (ii) the absolute amount of depreciation expense as reflected in the line item entitled "depreciation expense" (or any successor line item) of the company's financial statements with respect to such fiscal year, plus (iii) the absolute amount of amortization expense as reflected in the line item entitled "amortization expense" (or any successor line item) of the company's financial statements with respect to such fiscal year, plus (iv) the absolute amount of interest expense as reported in the company's financial statements with respect to such fiscal year, plus (v) the absolute amount of income tax expense as reported in the company's financial statements with respect to such fiscal year, plus (vi) the absolute amount of equity-based compensation expense as reported in the company's financial statements with respect to such fiscal year, plus (vii) the absolute amount of any step-up in inventory basis as a result of an acquisition as reported in the company's financial statements with respect to such fiscal year, plus (viii) the absolute amount of the impairment loss expense as reported in the company's financial statements with respect to such fiscal year, plus (ix) the absolute amount of other non-cash charges as reported in the company's financial statements with respect to such fiscal year; provided that, adjusted EBITDA shall be calculated without regard to, and without giving effect to, in any manner whatsoever, any impact recorded in the company's financial statements relating to or arising in connection with either the supplemental put agreement or profit allocation as set forth in the LLC agreement.

        "Adjusted distribution base amount" shall mean, as of any DBPA determination date, the sum of (i) the cumulative distribution base amount as of such DBPA determination date, minus (ii) the distribution high water mark as of such DBPA determination date.

        "Affiliate" shall mean, with respect to any person, (i) any person directly or indirectly controlling, controlled by or under common control with such person or (ii) any officer, director, general member, member or trustee of such person. For purposes of this definition, the terms "controlling," "controlled by" or "under common control with" shall mean, with respect to any persons, the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise, or the power to elect at least fifty percent (50%) of the directors, managers, general members or persons exercising similar authority with respect to such person.

        "Affiliated" shall mean, with respect to any person, any person that is an affiliate of such person.

        "Allocated CAD" shall mean, as of any DBPA determination date, the sum of (i) the cumulative paid distribution amount as of such DBPA determination date, plus (ii) the distribution high water mark as of such DBPA determination date.

        "Annual CAD" shall mean, with respect to any fiscal year, the sum of (i) adjusted EBITDA with respect to such fiscal year, minus (ii) the absolute amount of maintenance capital expenditures with respect to such fiscal year.

        "Annual required distribution amount" shall mean, with respect to any fiscal year, the product of (i) 8.0%, multiplied by (ii) the total adjusted capital as of the last day of such fiscal year.

        "Available CAD" shall mean, as of any DBPA determination date, the amount, if any, by which (i) cumulative CAD as of such DBPA determination date, exceeds (ii) the allocated CAD as of such DBPA determination date; provided, that such amount shall not be less than zero.

86



        "Average outstanding common shares" shall mean, as of any EBPA determination date, the result of (x) the sum of the total number of shares outstanding on each trading day occurring during the 45-day period immediately preceding, and including, the company's fiscal year end in which such EBPA determination date occurs, divided by(y) the number of such trading days in such 45-day period.

        "Average trading price" shall mean, as of any EBPA determination date, the result of (i) the sum of the closing prices, as reported on the Nasdaq Global Market or other securities exchange on which the common shares are then listed, of the common shares for each trading day occurring during the 45-day period immediately preceding, and including, the company's fiscal year end in which such EBPA determination date occurs, divided by (ii) the number of such trading days in such 45-day period.

        "Average year end market capitalization" shall mean, as of any EBPA determination date, the product of (i) the average trading price as of such EBPA determination date, multiplied by (ii) the average outstanding common shares as of such EBPA determination date.

        "Averaged invested capital" shall mean, with respect to any sale of common shares by the company during any fiscal year, the product of (i) the invested capital received by the company with respect to such sale by the company of common shares during such fiscal year, multiplied by (ii) a fraction, the numerator of which is the number of days remaining in such fiscal year from, but excluding, the date of such sale and the denominator of which is 365.

        "Averaged returned capital" shall mean, with respect to any purchase of common shares by the company during any fiscal year, the product of (i) the returned capital paid by the company with respect to such purchase by the company of common shares during such fiscal year, multiplied by (ii) a fraction, the numerator of which is the number of days remaining in such fiscal year from and including the date of such purchase and the denominator of which is 365.

        "Basis" shall mean, as of any date, the result of (i) the cumulative capital as of the day immediately preceding such date, divided by (ii) the total number of common shares outstanding as of the day immediately preceding such date.

        "CAD short-fall" shall mean, as of any DBPA determination date, the amount, if any, by which (i) the adjusted distribution base amount as of such DBPA determination date, exceeds (ii) available CAD as of such DBPA determination date; provided, that such amount shall not be less than zero.

        "Cumulative CAD" shall mean, as of any DBPA determination date, the aggregate of all annual CADs with respect to each fiscal year, or portion thereof, from inception to and including such DBPA determination date.

        "Cumulative capital" shall mean, as of any date, the sum of (i) the cumulative invested capital as of such date, minus (ii) the cumulative returned capital as of such date.

        "Cumulative distribution base amount" shall mean, as of any DBPA determination date, the product of (i) the cumulative paid distribution amount as of such DBPA determination date, multiplied by (ii) 0.25.

        "Cumulative invested capital" shall mean, as of any date, the aggregate invested capital received by the company with respect to each sale by the company of common shares from inception to and including such date.

        "Cumulative paid distribution amount" shall mean, as of any profit allocation determination date, the actual aggregate amount of all cash distributions paid by the company with respect to the common shares from inception to and including such profit allocation determination date.

        "Cumulative required distribution amount" shall mean, as of any profit allocation determination date, the sum of the aggregate amount of all annual required distribution amounts calculated and

87


determined with respect to each fiscal year, or portion thereof, from inception to and including such profit allocation determination date.

        "Cumulative returned capital" shall mean, as of any date, the aggregate returned capital paid by the company with respect to each purchase by the company of common shares from inception to and including such date.

        "Current equity-based profit allocation" shall mean, as of any EBPA determination date, (i) if the deferral account starting balance as of such EBPA determination date is a positive amount, then the product of (A) the deferral account starting balance as of such EBPA determination date, multiplied by (B) 1/3; or (ii) if the deferral account starting balance as of such EBPA determination date is a negative amount, then zero.

        "DBPA determination date" shall mean December 31 of each year, commencing December 31, 2010.

        "DBPA payment trigger events" shall mean, as of any DBPA determination date, (i) the cumulative paid distribution amount as of such DBPA determination date equals or exceeds the cumulative required distribution amount as of such DBPA determination date, and (ii) cumulative CAD as of such DBPA determination date exceeds the allocated CAD as of such DBPA determination date.

        "Deferral account starting balance" shall mean (i) with respect to the first EBPA determination date, the aggregate amount of equity-based profit allocation as of such EBPA determination date, and (ii) with respect to any EBPA determination date thereafter, the sum of (x) the deferral account ending balance as of the EBPA determination date immediately preceding such EBPA determination date, plus (y) the aggregate amount of equity-based profit allocation as of such EBPA determination date.

        "Deferral account ending balance" shall mean, as of any EBPA determination date, the sum of (i) the deferral account starting balance as of such EBPA determination date, minus (ii) if the current equity-based profit allocation as of such EBPA determination date is a positive amount, the current equity-based profit allocation, if any, as of such EBPA determination date.

        "Distribution-based profit allocation" shall mean, as of any DBPA determination date, the product of (i) the sum of (x) the adjusted distribution base amount as of such DBPA determination date, minus (y) the CAD short-fall, if any, as of such DBPA determination date, multiplied by (ii) 0.50 with respect to the first calculation of distribution-based profit allocation, 0.75 with respect to the second calculation of distribution-based profit allocation or 1.0 with respect to all other calculations of distribution-based profit allocation; provided, that such amount shall not be less than zero; provided, however, that if either of the DBPA payment trigger events is not satisfied as of such DBPA determination date, then distribution-based profit allocation shall be zero as of such DBPA determination date.

        "Distribution high water mark" shall mean, as of any DBPA determination date, the aggregate amount of all distribution-based profit allocations paid by the company and actually received by the allocation holder (in the form of cash or equity or debt securities of the company) with respect to each profit allocation determination date prior to, but not including, such DBPA determination date.

        "Distribution short-fall amount" shall mean, as of any EBPA determination date, the amount, if any, by which (i) the cumulative required distribution amount as of such EBPA determination date exceeds (ii) the cumulative paid distribution amount as of such EBPA determination date; provided, that such amount shall not be less than zero.

        "EBPA determination date" shall mean December 31 of each year, commencing on December 31, 2010.

        "Equity-based profit allocation" shall mean, as of any EBPA determination date, the sum of (i) the market capitalization adjustment amount as of such EBPA determination date, multiplied by (ii) 0.2.

        "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

        "Financial statements" shall mean, with respect to any fiscal year, the audited consolidated financial statements of the company with respect to such fiscal year, as prepared in accordance with GAAP.

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        "Fiscal year" shall mean the company's fiscal year for purposes of its reporting obligations under the Exchange Act.

        "GAAP" shall mean the generally accepted accounting principles in effect in the United States, consistently applied.

        "Interest expense" shall mean, with respect to any fiscal year, the aggregate amount of interest or other expenses of the company with respect to third-party indebtedness with respect to such fiscal year, as determined in accordance with GAAP and as reflected in the company's financial statements, or the notes relating thereto, with respect to such fiscal year.

        "Invested capital" shall mean, with respect to any issuance of common shares by the company on any date, the aggregate gross consideration or value for which such common shares were issued by the company on such date with respect to such issuance of common shares.

        "IPO" shall mean the initial public offering of the common shares by the company.

        "Maintenance capital expenditures" shall mean, with respect to any fiscal year, the aggregate amount of expenses and expenditures related to repairs and maintenance of the company's or any of its subsidiaries' property, plant and equipment incurred as a liability of the company or any of its subsidiaries with respect to such fiscal year, which repairs and maintenance were made in the ordinary course of business for the primary purpose of restoring and maintaining capacity or production (as opposed to increasing capacity or production, reducing costs or increasing profitability), consistent with past practices or in accordance with regulatory requirements, taking into account advancements in technology and environmental considerations, and which expenditures are capitalized and reflected in the line item entitled "property, plant and equipment" (or any successor line item) of the company's financial statements.

        "Market capitalization adjustment amount" shall mean, as of any EBPA determination date, the sum of (i) the average year end market capitalization as of such EBPA determination date, minus (ii) the market capitalization benchmark as of such EBPA determination date.

        "Market capitalization benchmark" shall mean, as of any EBPA determination date, (i) with respect to the first EBPA determination date for which equity-based profit allocation is calculated and determined, the sum of (x) the cumulative capital as of such EBPA determination date, plus (y) the distribution short-fall amount, if any, as of such EBPA determination date, and (ii) with respect to any subsequent EBPA determination date for which equity-based profit allocation is determined, the sum of (x) the cumulative capital as of such EBPA determination date, plus (y) the distribution short-fall amount as of such EBPA determination date, plus (z) the sum of all market capitalization adjustment amounts calculated and determined with respect to each EBPA determination date occurring prior to, but not including, such EBPA determination date.

        "Outstanding" means, as of any date, with respect to any security theretofore issued by the company, except (i) such securities as represented by certificates or electronic positions evidencing such securities that have been canceled or delivered for cancellation, and (ii) such securities as represented by certificates or electronic positions that have been exchanged for or in lieu of which other securities have been executed and delivered.

        "Person" means any individual, company (whether general or limited), limited liability company, corporation, trust, estate, association, nominee or other entity.

        "Profit allocation calculation date" shall mean, with respect to any fiscal year, the date upon which financial statements of the company with respect to such fiscal year shall be first filed with the Securities and Exchange Commission, commencing with the fiscal year ended December 31, 2010.

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        "Profit allocation determination date" shall mean, with respect to any profit allocation calculation date, the DBPA determination date and the EBPA determination date, in each case, immediately preceding such profit allocation calculation date.

        "Profit allocation payment date" shall mean, with respect to any profit allocation calculation date, the fifth business day following such profit allocation calculation date.

        "Profit distribution amount" shall mean, as of any profit allocation determination date, the sum of (i) the aggregate amount of current equity-based profit allocation as of such profit allocation determination date, plus (ii) the aggregate amount of distribution-based profit allocation as of such profit allocation determination date.

        "Returned capital" shall mean, with respect to any purchase or other acquisition of common shares by the company on any date, the product of (i) the aggregate number of such common shares so purchased or otherwise acquired on such date, multiplied by (ii) the Basis as of such date.

        "Subsidiary" shall mean, with respect to the company, any entity of which the company owns more than 50% of the voting interests therein.

        "Third-party indebtedness" shall mean any indebtedness of the company owed to any person that is not affiliated with the company.

        "Total adjusted capital" shall mean, as of the last day of any fiscal year, (i) with respect to the fiscal year in which the IPO is consummated, the sum of (x) the aggregate averaged invested capital received by the company from inception of the company to, and including, the last day of the fiscal year in which the IPO is consummated, minus (y) the aggregate averaged returned capital paid by the company with respect to each purchase of common shares by the company from inception of the company to, and including, the last day of the fiscal year in which the IPO is consummated, and (ii) with respect to any other fiscal year, the sum of (x) the cumulative capital as of the last day of the immediately preceding fiscal year, plus (y) the aggregate averaged invested capital received by the company with respect to each sale of common shares by the company from, but excluding, the last day of the immediately preceding fiscal year to and including the last day of such fiscal year, minus (z) the absolute amount of the aggregate averaged returned capital paid by the company with respect to each purchase of common shares by the company from, but excluding, the last day of the immediately preceding fiscal year to and including the last day of such fiscal year.

    Supplemental Put Agreement

        In addition to the provisions discussed above, in consideration of our manager's acquisition of the allocation shares, we intend to enter into a supplemental put agreement with our manager pursuant to which our manager will have the right to cause the company to purchase the allocation shares then owned by our manager upon termination of the management services agreement. The supplemental put agreement is similar in function to a registration rights agreement relating to founders' stock in that it provides liquidity for securities that may otherwise be illiquid. Termination of the management services agreement, by any means, will not affect our manager's rights with respect to the allocation shares that it owns; however, termination of the management services agreement has been determined by the company and our manager to identify the most likely period of time at which the manager will require liquidity for the allocation shares. In this regard, our manager will retain its put right and its allocation shares after ceasing to serve as our manager.

        If (i) the management services agreement is terminated at any time other than as a result of our manager's resignation (subject to (ii)) or (ii) our manager resigns on any date that is at least three years after the closing of this offering, then our manager will have the right, but not the obligation, for one year from the date of such termination or resignation, as the case may be, to elect to cause the company to purchase all of the allocation shares then owned by our manager for the put price as of the

90



put exercise date. The exercise date shall be the date on which the manager elects to exercise the rights under the supplemental put agreement.

        For purposes of this provision, the put price shall be equal to, as of any exercise date, (i) if the management services agreement is terminated as a result of our removal of the manager, the sum of two separate, independently made calculations of the aggregate amount of the base put price amount as of such exercise date, or (ii) if the management services agreement is terminated as a result of our manager's resignation, the average of two separate, independently made calculations of the aggregate amount of the base put price amount as of such exercise date, in each case, assuming (v) that the exercise date is the relevant profit allocation determination date, without regard to when such date commences, for the purposes of such calculation, (w) that for the purpose of calculating distribution-based profit allocation as of the exercise date, the DBPA trigger events shall be deemed satisfied as of the exercise date, (x) CAD short-fall equals zero for purposes of such calculation, (y) that for the purpose of calculating the deferral account ending balance as of the exercise date, the current equity-based profit allocation equals zero, and (z) except as otherwise required by the assumptions, any components of the base put price amount shall be calculated in accordance with the calculation of the relevant components of profit allocation, as discussed above. Each of the two separate, independently made calculations of our manager's profit allocation for purposes of calculating the put price shall be performed by a different investment bank that is engaged by the company at its cost and expense. The put price will be adjusted to account for a final "true-up" of our manager's profit allocation.

        The formulation of the put price is intended to closely correlate to the conceptual basis of profit allocation, as applicable to the allocation shares, providing our manager with a right to receive, in short, 20% of the value of the company upon sale of the allocation shares, determined by reference to the value distributed to or otherwise realized by our shareholders. In general, the put price is predicated on a current calculation of the distribution-based component of profit allocation, the deferred portion of equity-based profit allocation that was calculated for prior periods and the fair market value of our businesses, subject to adjustment and less the invested capital of our shareholders. See the section entitled "—Our Relationship with Our Manager—Our Manager as Equity Holder—Manager's Profit Allocation" for more information about calculating the first two elements discussed above. The third element is based on a fair market value determination rather than the equity-based component of profit allocation in light of the company's and our manager's concern about market volatility of the market price of our shares during the period when the put right would be available to our manager (i.e., following termination of the management services agreement). As with profit allocation, these elements will be determined based on numerous variables, virtually all of which cannot be predicted or estimated with any certainty at this time. The company and our manager believe this formulation for put price most properly values the equity position of our manager in the company.

    Definitions

        The following definitions are used in the calculation and determination of "base put price amount" for purposes of our obligation to pay the put price to the manager pursuant to the supplemental put agreement:

        "Base put price amount" shall mean, with respect to any exercise date, the sum of (i) the businesses valuation amount as of such exercise date, plus (ii) the aggregate amount of distribution-based profit allocation as of such exercise date, plus (iii) the balance, if positive, of the deferral account ending balance as of such exercise date.

        "Businesses valuation amount" shall mean, with respect to any exercise date, the product of (i) the sum of (u) the aggregate fair market value of all of the company's subsidiaries, determined individually, as of such exercise date, plus (v) the aggregate principal amount of any debt investments in all of the company's subsidiaries as of such exercise date, plus any and all accrued and unpaid interest thereon,

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plus (w) the aggregate fair market value of all of the company's investments, determined individually, as of such exercise date, minus (x)  cumulative capital as of such exercise date, minus (y) the absolute aggregate principal amount of outstanding third-party indebtedness of the company, if any, as of such exercise date, plus (z) the aggregate amount of cash and cash equivalents of the company on a deconsolidated basis as of such exercise date, multiplied by (ii) 0.2. For the avoidance of doubt, any and all components of business valuation amount shall be determined and calculated without duplication of any other components, including sub-components, of business valuation amount.

        "Cumulative capital" shall mean, as of any date, the sum of (i) the cumulative invested capital as of such date, minus (ii) the cumulative returned capital as of such date.

        "Cumulative invested capital" shall mean, as of any date, the aggregate invested capital received by the company with respect to each sale by the company of common shares from inception to and including such date.

        "Cumulative returned capital" shall mean, as of any date, the aggregate returned capital paid by the company with respect to each purchase by the company of common shares from inception to and including such date.

        "Fair market value" means, with respect to any subsidiary or investment of the company, the aggregate consideration, whether cash or otherwise, for which the company, being knowledgeable, willing and free of undue pressure, would sell (i) all of its equity interests in such subsidiary or (ii) such investment, in each case, without giving effect to any discount attributable to (x) minority ownership or positions with respect to any subsidiary or investment, (y) the lack of liquidity with respect to the securities of any subsidiary or investment, and (iii) status of the securities of any subsidiary or investment under state and federal securities laws.

        "Investments" means any investment by the company in the securities of another entity other than a subsidiaries of the company.

        "Subsidiary" shall mean any entity of which the company owns more than 50% of the voting interests therein.

        "Third-party indebtedness" shall mean any indebtedness of the company owed to any person that is not affiliated with the company.

        Our manager and the company can mutually agree to permit the company to issue a note in lieu of payment of the put price when due; provided, that if the management services agreement is terminated as a result of our manager's resignation, then the company will have the right, in its sole discretion, to issue a note in lieu of payment of the put price when due. In either case the note would have an aggregate principal amount equal to the put price, would bear interest at a rate of LIBOR plus 4.0% per annum, would mature on the first anniversary of the date upon which the put price was initially due and would be subordinate to any indebtedness outstanding under our proposed third-party credit facility and would be secured by the then-highest priority lien available to be placed on our equity interests in each of our businesses.

        The company's obligations under the supplemental put agreement are absolute and unconditional. In addition, the company will be subject to certain obligations and restrictions upon exercise of our manager's put right until such time as the company's obligations under the supplemental put agreement and any related note, have been satisfied in full, including:

    subject to the company's right to issue a note in the circumstances described above, the company must use commercially reasonable efforts to raise sufficient debt or equity financing to permit the company to pay the put price or note when due and obtain approvals, waivers and consents or otherwise remove any restrictions imposed under contractual obligations or applicable law or

92


      regulations that have the effect of limiting or prohibiting the company from satisfying its obligations under the supplemental put agreement or note;

    our manager will have the right to have a representative observe meetings of our board of directors and have the right to receive copies of all documents and other information furnished to our board of directors;

    the company and its businesses will be restricted in their ability to sell, lease, transfer or otherwise dispose of their property or assets or any businesses they own and in their ability to incur indebtedness (other than in the ordinary course of business) without granting a lien on the proceeds therefrom to our manager, which lien will secure the company's obligations under the supplemental put agreement or note; and

    the company will be restricted in its ability to (i) engage in certain mergers or consolidations, (ii) sell, lease, transfer or otherwise dispose of all or a substantial part of its business, property or assets or all or a substantial portion of the stock or beneficial ownership of its businesses or a portion thereof, (iii) liquidate, wind-up or dissolve, (iv) acquire or purchase the property, assets, stock or beneficial ownership or another person, or (v) declare and pay distributions.

        The company also has agreed to indemnify our manager for any losses or liabilities it incurs or suffers in connection with, arising out of or relating to its exercise of its put right or any enforcement of terms and conditions of the supplemental put agreement.

        Except as discussed above, the obligation of the company under the supplemental put agreement will be an unsecured obligation of the company. As an obligation of the company, however, the put price will be senior in right to the payment of distributions to our shareholders. If we do not have sufficient liquid assets to pay the put price when due, we may be required to liquidate assets or incur debt in order to pay the put price.

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PRO FORMA CAPITALIZATION

        The following table sets forth our unaudited pro forma capitalization, assuming the underwriters' overallotment option is not exercised, after giving effect to the closing of this offering and sale of our common shares at the assumed public offering price of $15.00 per share (the mid-point of the expected public offering price range) and the application of the estimated net proceeds from such sale (after deducting underwriting discounts and commissions (including the financial advisory fee to be paid to Ferris, Baker Watts, Incorporated) and our estimated offering expenses) as well as the proceeds from the separate private placement transactions and the initial borrowing under our proposed third-party credit facility. The pro forma capitalization gives effect to:

    loans retiring;

    debt issuances; and

    acquisitions.

        See the section entitled "Use of Proceeds" for more information.

        You should read this information in conjunction with the financial statements and the notes related thereto, the unaudited pro forma condensed combined financial statements and the notes related thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations", all of which are included elsewhere in this prospectus.

 
  (Unaudited)
Pro Forma as of

 
  June 30, 2007
 
  ($ in thousands)

Cash and cash equivalents   $ 31,842

Debt:

 

 

 
  Debt-current portion     427
  Long-term debt     60,682

Shareholders' equity:

 

 

 
  Common shares: (no par value); 1,000,000,000 common shares authorized;            common shares issued and outstanding as adjusted for the offering      
    Total shareholders' equity     214,504
   
    Total capitalization   $ 307,455
   

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PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)

        The company was organized on December 26, 2006 for the purpose of making the acquisitions described below, using the net proceeds from this offering, the separate private placement transactions and the initial borrowing under our proposed third-party credit facility, which the company anticipates it will obtain in conjunction with this transaction. See the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information about the proposed third-party credit facility. The following unaudited pro forma condensed combined balance sheet as of June 30, 2007, gives the effect to the acquisition of all of the equity interests of:

    Metal;

    Forest;

    CanAmPac; and

    Pangborn,

as if all of these transactions had been completed as of June 30, 2007. The actual amount of pro forma adjustments, which we do not expect to be material, will depend upon the actual closing date for the acquisitions. Each of these acquisitions requires the satisfaction of conditions precedent set forth in the related purchase agreement. See the section entitled "The Acquisitions of and Loans to Our Initial Businesses" for more information about the purchase of the equity interests we are acquiring of each initial business and the conditions to be satisfied for each acquisition.

        The following unaudited pro forma condensed combined statements of operations for the year ended December 31, 2006 and the six month period ended June 30, 2007, gives effect to these transactions as if they all had occurred at the beginning of the fiscal period presented.

    The "as reported" financial information in the unaudited pro forma condensed combined financial statements at June 30, 2007 and for the period December 26, 2006 through December 31, 2006 and the six month period ended June 30, 2007 for the company was derived from the audited historical financial statements for the company for the year ended December 31, 2006 and the unaudited condensed financial statements at June 30, 2007 and for the six month period ended June 30, 2007 which are included elsewhere within this prospectus.

    The "as reported" financial information in the unaudited pro forma condensed combined financial statements for the year ended December 31, 2006 for Metal was derived from Metal's 2006 audited financial statements which are included elsewhere within this prospectus. The "as reported" financial information in the unaudited pro forma condensed combined financial statements at June 30, 2007 and the six month period ended June 30, 2007 for Metal was derived from Metal's unaudited condensed financial statements as of the date and for the period indicated therein which are included elsewhere within this prospectus.

    The "as reported" financial information in the unaudited pro forma condensed combined financial statements for the year ended December 31, 2006 for Forest was derived from "Note 21—Consolidating Balance Sheet and Statement of Operations", which we refer to as Forest's Note 21, to Forest's 2006 audited financial statements excluding all financial data related to CanAmPac as of the date and for the periods indicated therein which are included elsewhere within this prospectus. CanAmPac was excluded from Forest as the unaudited pro forma condensed statement of operations for the year ended December 31, 2006 for CanAmPac are presented separately. The "as reported" financial information in the unaudited pro forma condensed combined financial statements at June 30, 2007 and the six month period ended June 30, 2007 for Forest was derived from "Note 14—Consolidating Balance Sheet and Statement of Operations", which we refer to as Note 14, to Forest's June 30, 2007 and the six month period ended June 30, 2007 unaudited condensed financial statements excluding all financial data related to CanAmPac as of the date and for the period indicated therein which are included elsewhere within this prospectus.

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    The "as reported" financial information in the unaudited pro forma condensed statement of operations for the year ended December 31, 2006 for CanAmPac was derived from the combination of the financial information included in Forest's Note 21 and the financial information in the audited carve-out financial statements of Roman's Paperboard and Packaging Business for the period January 1, 2006 through April 30, 2006 which are included elsewhere within this prospectus. The combination was required as Forest acquired Roman's Paperboard and Packaging Business effective May 1, 2006 from Roman Corporation Limited. The "as reported" financial information in the unaudited pro forma condensed combined financial statements at June 30, 2007 and the six month period ended June 30, 2007 for CanAmPac was derived from Note 14 including all financial data only related to CanAmPac as of the date and for the period indicated therein.

    The "as reported" financial information in the unaudited pro forma condensed combined financial statements for the year ended December 31, 2006 for Pangborn was derived from Pangborn's 2006 audited financial statements which are included elsewhere within this prospectus. The "as reported" financial information in the unaudited pro forma condensed combined financial statements at June 30, 2007 and the six month period ended June 30, 2007 for Pangborn was derived from Pangborn's unaudited condensed financial statements as of the date and for the period indicated therein which are included elsewhere within this prospectus.

        For purposes of this section, we refer to Metal, Forest, CanAmPac and Pangborn as the consolidated businesses, and the following unaudited pro forma condensed combined financial statements, or the pro forma financial statements, have been prepared assuming that our acquisitions of the consolidated businesses will be accounted for under the purchase method of accounting. Under the purchase method of accounting, the assets acquired and the liabilities assumed will be recorded at their respective fair value at the date of acquisition. The total purchase price has been allocated to the assets acquired and liabilities assumed based on estimates of their respective fair values, which are subject to revision if the finalization of their respective fair values results in a material difference to the preliminary estimates used.

        The company will enter into the management services agreement with our manager, pursuant to which our manager will provide management services for a management fee. In addition, our manager will receive a profit allocation as a holder of 100% of the allocation shares in the company. See the sections entitled "Our Manager—Our Relationship with Our Manager—Our Manager as a Service Provider—Management Fee" for a discussion of how the management fee will be calculated and "Our Manager—Our Relationship with Our Manager—Our Manager as an Equity Holder—Manager's Profit Allocation" for a discussion of how the profit allocation will be calculated.

        We also expect that our manager will enter into offsetting management services agreements, transaction services agreements and other agreements, in each case, with some or all of the businesses that we own. In this respect, we expect that each of our initial businesses will terminate its respective management services agreement with Atlas Holdings or an affiliate of Atlas Holdings and enter into a management services agreement with our manager in connection with the closing of this offering. Atlas Holdings is the entity that provided management services to our businesses prior to the closing of this offering. See the section entitled "Our Manager—Our Relationship with Our Manager—Our Manager as a Service Provider" for information about these agreements.

        The unaudited pro forma condensed combined statements of operations are not necessarily indicative of operating results that would have been achieved had the transactions described above been completed at the beginning of the period presented and should not be construed as indicative of future operating results.

        You should read these unaudited pro forma condensed combined financial statements in conjunction with the accompanying notes, the financial statements of the initial businesses to be acquired and the consolidated financial statements for the company, including the notes thereto, and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" located elsewhere in this prospectus.

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Atlas Industries Holdings LLC

Pro Forma Condensed Combined Balance Sheet
at June 30, 2007
(Unaudited)

 
  Atlas
Industries
Holdings
LLC
(as reported)

  Offering(*)
  Metal
(as reported)

  Forest
(as reported)

  CanAmPac
(as reported)

  Pangborn
(as reported)

  Pro forma
adjustments

  Pro forma
combined
Atlas Industries
Holdings
LLC

 
  ($ in thousands)

Assets                                                
  Current assets:                                                
    Cash and cash equivalents   $ 20   $ 214,450   $ 3,299   $ 7,430   $   $ 501   $ (193,858 )(a) $ 31,842
    Trade accounts receivable, net     48         12,914     16,636     15,530     5,885     (55 )(b)   50,958
    Inventories             7,845     8,987     16,292     1,991     1,323   (c)   36,438
    Prepaid expenses             327     1,479     2,063     174         4,043
    Deferred offering costs     6,621     (6,621 )       3,848     551     593     (4,992 )(d)  
    Deferred tax assets                         260         260
    Bond sinking fund             465                 (465 )(f)  
   
 
 
 
 
 
 
 
  Total current assets     6,689     207,829     24,850     38,380     34,436     9,404     (198,047 )   123,541
  Property, plant and equipment, net             5,156     27,075     20,378     3,732     89,845   (e)   146,186
  Restricted cash             1,002     3,500             (4,502 )(f)  
  Goodwill                 1,409         5,195     10,315   (g)   16,919
  Intangible assets, net                 1,850     385     4,850     39,427   (h)   46,512
  Deferred financing fees             311     2,050     1,687     698     (1,221 )(i)   3,525
  Investment in affiliates                 13,777             (13,777 )(j)  
  Other non-current assets                 488     853     62         1,403
   
 
 
 
 
 
 
 
  Total non-current assets             6,469     50,149     23,303     14,537     120,087     214,545
   
 
 
 
 
 
 
 
Total assets   $ 6,689   $ 207,829   $ 31,319   $ 88,529   $ 57,739   $ 23,941   $ (77,960 ) $ 338,086
   
 
 
 
 
 
 
 
Liabilities and member's equity                                                
  Current liabilities:                                                
    Accounts payable   $   $   $ 5,838   $ 11,379   $ 6,518   $ 4,163   $ (55 )(b) $ 27,843
    Accrued liabilities     6,635     (6,621 )   4,064     7,295     2,847     3,943     (521 )(n)   17,642
    Debt-current             2,178     2,878     7,622     167     (12,845 )(k)  
    Current portion of capital lease obligations                     1,901         (1,901 )(k)  
    Current portion of financing
obligation
                427                 427
   
 
 
 
 
 
 
 
  Total current liabilities     6,635     (6,621 )   12,080     21,979     18,888     8,273     (15,322 )   45,912
  Deferred tax liabilities                         1,995     9,195   (l)   11,190
  Long-term debt             9,504     53,960     17,467     9,860     (40,791 )(k)   50,000
  Long-term capital lease obligations                     3,781         (3,781 )(k)  
  Long-term financing obligation                 10,682                 10,682
  Other non-current liabilities                 1,491         1,507         2,998
   
 
 
 
 
 
 
 
  Total non-current liabilities             9,504     66,133     21,248     13,362     (35,377 )   74,870
   
 
 
 
 
 
 
 
Total liabilities     6,635     (6,621 )   21,584     88,112     40,136     21,635     (50,699 )   120,782
Minority interests                     4,595         (1,795 )(m)   2,800
Participating preferred units             6,873     24,011             (30,884 )(m)  
Members' equity (deficit)     54     214,450     2,862     (23,594 )   13,008     2,306     5,418 (m)   214,504
   
 
 
 
 
 
 
 
Total liabilities and members' equity   $ 6,689   $ 207,829   $ 31,319   $ 88,529   $ 57,739   $ 23,941   $ (77,960 ) $ 338,086
   
 
 
 
 
 
 
 

(*)
Reflects the issuance of shares and the net proceeds from this offering after deducting underwriting discounts and commissions (including the financial advisory fee payable to Ferris, Baker Watts, Incorporated) of $14.0 million and net proceeds from the separate private placement transactions. Total offering and transaction fees are estimated at approximately $9.0 million of which approximately $6.6 million were deducted from the offering costs and approximately $2.4 million were included in transactions fees which were included in the purchase accounting adjustments.

97



Atlas Industries Holdings LLC

Pro Forma Condensed Statement of Operations
for the year ended December 31, 2006
(Unaudited)

 
  Atlas
Industries
Holdings
LLC
(as reported)

  Metal
(as reported)

  Forest
(as reported)
(*)

  CanAmPac
(as reported)
(**)

  Pangborn
(as reported)
(***)

  Pro forma
adjustments

  Pro forma
combined
Atlas
Industries
Holdings
LLC

 
 
  ($ in thousands)

 
Net sales   $   $ 89,918   $ 162,282   $ 94,777   $ 29,832   $   $ 376,809  
Cost of goods sold:                                            
  Materials and operations         71,122     124,665     76,705     16,583     532   (aa)   289,607  
  Depreciation         724     6,027     4,871         4,351   (bb)   15,973  
   
 
 
 
 
 
 
 
Total cost of goods sold         71,846     130,692     81,576     16,583     4,883     305,580  
   
 
 
 
 
 
 
 
Gross profit         18,072     31,590     13,201     13,249     (4,883 )   71,229  
Operating expenses:                                            
  Selling, general and administrative expenses     15     6,374     20,643     11,526     9,647         48,205  
  Management fees — related party         433     750     294     174     3,280   (cc)   4,931  
  Depreciation and amortization             317     176     945     3,272   (dd)   4,710  
   
 
 
 
 
 
 
 
Total operating expenses     15     6,807     21,710     11,996     10,766     6,552     57,846  
   
 
 
 
 
 
 
 
Operating income (loss)     (15 )   11,265     9,880     1,205     2,483     (11,435 )   13,383  
Other income (expense):                                            
  Interest income         103     557             (472 )(ee)   188  
  Interest expense         (961 )   (6,007 )   (3,535 )   (1,017 )   4,323   (ff)   (7,197 )
  Other         7                     7  
   
 
 
 
 
 
 
 
Income (loss) before (provision) benefit for income taxes and minority interests     (15 )   10,414     4,430     (2,330 )   1,466     (7,584 )   6,381  
Minority interests             303     501         (868 )(gg)   (64 )
(Provision) benefit for income taxes             (65 )   75     (659 )   (1,684 )(hh)   (2,333 )
   
 
 
 
 
 
 
 
Income (loss) from continuing operations     (15 )   10,414     4,668     (1,754 )   807     (10,136 )   3,984  
Loss from discontinued operations             241                 241  
   
 
 
 
 
 
 
 
Net income (loss)   $ (15 ) $ 10,414   $ 4,427   $ (1,754 ) $ 807   $ (10,136 ) $ 3,743  
   
 
 
 
 
 
 
 
Pro forma income per share                                       $ 0.24  
Pro forma weighted-average number of shares outstanding                                         15,721,338  
Supplemental information:                                            
  Maintenance capital expenditures   $   $ 452   $ 2,299   $ 480   $ 230         $ 3,461  
   
 
 
 
 
       
 

(*)
Balances presented for Forest exclude the financial results for CanAmPac, which is presented separately.

(**)
Reflects the combination of the financial results of Roman's Paperboard and Packaging Business for the period January 1, 2006 through April 30, 2006 and CanAmPac for the period May 1, 2006 through December 31, 2006. This combination was required because Roman's Paperboard and Packaging Business was acquired by Forest on May 1, 2006.

(***)
Reflects the combination of the financial results of Pangborn Corporation for the period January 1, 2006 through June 4, 2006 and Pangborn for the period June 5, 2006 through December 31, 2006. This combination was required because Pangborn Corporation was acquired by Capital Equipment Resources LLC on June 5, 2006.

98



Atlas Industries Holdings LLC

Pro Forma Condensed Statement of Operations
for the six month period ended June 30, 2007
(Unaudited)

 
  Atlas
Industries
Holdings
LLC
(as reported)

  Metal
(as reported)

  Forest
(as reported)
(*)

  CanAmPac
(as reported)

  Pangborn
(as reported)

  Pro forma
adjustments

  Pro forma
combined
Atlas
Industries
Holdings
LLC

 
 
  ($ in thousands)

 
Net sales   $   $ 53,735   $ 82,612   $ 47,990   $ 15,278   $   $ 199,615  
Cost of goods sold:                                            
  Materials and operations         40,955     65,891     38,454     8,351     (447 )(aa)   153,204  
  Restructuring charge             1,508                 1,508  
  Depreciation         420     2,273     1,744         3,550   (bb)   7,987  
   
 
 
 
 
 
 
 
Total cost of goods sold         41,375     69,672     40,198     8,351     3,103     162,699  
   
 
 
 
 
 
 
 
Gross profit         12,360     12,940     7,792     6,927     (3,103 )   36,916  
Operating expenses:                                            
  Selling, general and administrative expenses     31     3,173     12,847     5,196     5,119         26,366  
  Management fees — related party         200     375     221     150     1,520   (cc)   2,466  
  Depreciation and amortization             255     105     377     1,370   (dd)   2,107  
   
 
 
 
 
 
 
 
Total operating expenses     31     3,373     13,477     5,522     5,646     2,890     30,939  
   
 
 
 
 
 
 
 
Operating income (loss)     (31 )   8,987     (537 )   2,270     1,281     (5,993 )   5,977  
Other income (expense):                                            
  Interest income         80     340             (291 )(ee)   129  
  Interest expense         (328 )   (3,346 )   (2,084 )   (752 )   2,848   (ff)   (3,662 )
   
 
 
 
 
 
 
 
Income (loss) before (provision) benefit for income taxes and minority interests     (31 )   8,739     (3,543 )   186     529     (3,436 )   2,444  
Minority interests                 (31 )       7   (gg)   (24 )
(Provision) benefit for income taxes             (148 )   (55 )   (199 )   (524 )(hh)   (926 )
   
 
 
 
 
 
 
 
Income (loss) from continuing operations     (31 )   8,739     (3,691 )   100     330     (3,953 )   1,494  
Income from discontinued operations             7                 7  
   
 
 
 
 
 
 
 
Net income (loss)   $ (31 ) $ 8,739   $ (3,684 ) $ 100   $ 330   $ (3,953 ) $ 1,501  
   
 
 
 
 
 
 
 
Pro forma income per share                                       $ 0.09  
Pro forma weighted-average number of shares outstanding                                         15,851,638  
Supplemental information:                                            
  Maintenance capital expenditures   $   $ 100   $ 1,150   $ 740   $ 169         $ 2,159  
   
 
 
 
 
       
 

(*)
Balances presented for Forest exclude the financial results for CanAmPac, which is presented separately.

99



Notes to Pro Forma Condensed Combined Financial Statements
(Unaudited)

        This information in Note 1 provides the summary of the purchase transactions of Metal, Forest, CanAmPac and Pangborn. Note 2 describes the significant purchase accounting adjustments recorded by line item component of the pro forma condensed balance sheet or statement of operations. Unless otherwise noted, all amounts are in thousands of dollars ($000).

Note 1—Summary of Purchase Transactions

        In conjunction with this offering, the company, through its acquisition subsidiaries, will acquire the businesses of Metal, Forest, CanAmPac and Pangborn. The following table presents a summary of sources and uses:

 
  Sources of
funds

   
  Uses
of funds

Net proceeds from initial public         Purchase of equity:      
  offering(1)   $ 186,000       Metal   $ 25,520
Proceeds from term loan     50,000       Forest     22,500
Proceeds from private placement             CanAmPac     22,900
  transactions     35,000       Pangborn     6,700
Issuance of non-voting preferred stock         Minority interests:      
  (non-cash)     2,800       Metal     900
Initial cash injection at Atlas Industries             Forest     1,000
  Holdings LLC     100       CanAmPac     600
Cash remaining at Metal     1,467       Pangborn     300
          Loans to initial businesses:(2)      
              Metal     56,350
              Forest     47,543
              CanAmPac     35,763
              Pangborn     13,294
          Atlas Industries Holdings LLC expenses incurred since inception     80
          Offering transaction costs     6,550
          Estimated third-party credit facility origination fee     3,525
          General corporate purposes     31,842
   
     
Total sources of funds   $ 275,367   Total uses of funds   $ 275,367
   
     

(1)
Assumes that the underwriters have not exercised their overallotment option.

(2)
See the liquidity and capital resources discussion for each initial business in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information about the outstanding debt of each initial business that will be repaid in connection with this offering. See the section entitled "The Acquisitions of and Loans to Our Initial Businesses" for more information about the loans to each of our initial businesses.

100


Metal

        The purchase of Metal by the Company for the purposes of the pro forma condensed combined financial statements was as of January 1, 2006 and was accounted for as a purchase transaction in accordance with SFAS No. 141. The total purchase price was allocated to the assets, including identifiable intangibles, and liabilities based upon their respective fair values estimated by management. The purchase price is subject to an earnout if EBITDA for the trailing 12 month period ended on March 31, 2008 equals or exceeds $15.0 million. If this is achieved, an additional $5.0 million will be paid to the Metal selling group which will result in an increase to long term assets of approximately $3.3 million and goodwill of approximately $1.7 million. In addition, if EBITDA for the trailing 12 month period ended on December 31, 2008 equals or exceeds $15.0 million, an additional $5.0 million will be paid to the Metal selling group which will result in an increase to goodwill of approximately $5.0 million. The following table presents a summary of the purchase transaction before the earnout:

Purchase price:      
  Cash purchase price for Metal   $ 81,520
  Issuance of preferred stock     900
  Transaction costs     350
  Assumed liabilities     9,902
   
Total purchase price   $ 92,672
   

Purchase accounting:

 

 

 
  Fair market value of assets acquired:      
    Accounts receivable   $ 12,914
    Inventories     9,168
    Cash (previously classified as restricted cash)     1,002
    Cash (previously classified as bond sinking fund)     465
    Prepaid expenses     327
    Property, plant and equipment     51,484
    Intangible assets     17,312
   
    $ 92,672
   

101


Forest

        The purchase of Forest by the company for the purposes of the pro forma condensed combined financial statements was as of January 1, 2006 and was accounted for as a purchase transaction in accordance with SFAS No. 141. The total purchase price was allocated to the assets, including identifiable intangibles, and liabilities based upon their respective fair values estimated by management. The purchase price in excess of fair value resulted in goodwill of approximately $3.9 million. The purchase price is subject to an earnout dependent upon certain operating subsidiaries of Forest achieving specified EBITDA targets for the years ended December 31, 2008 and 2009 or the years ended December 31, 2009 and 2010. If the specified condition is satisfied for either period, an additional $7.5 million will be paid to the Forest selling group, which will result in an increase to goodwill of $7.5 million. The following table presents a summary of the purchase transaction:

Purchase price:      
  Cash purchase price for Forest   $ 69,000
  Issuance of preferred stock     1,000
  Transaction costs     1,043
  Assumed financing obligation     11,109
  Assumed liabilities     19,589
   
Total purchase price   $ 101,741
   

Purchase accounting:

 

 

 
  Fair market value of assets acquired:      
    Accounts receivable   $ 16,581
    Inventories     8,987
    Prepaid expenses     1,479
    Property, plant and equipment     61,245
    Intangible assets     9,100
    Other assets     488
   
      97,880
  Goodwill     3,861
   
    $ 101,741
   

102


CanAmPac

        The purchase of CanAmPac by the company for the purposes of the pro forma condensed combined financial statements was as of January 1, 2006 and was accounted for as a purchase transaction in accordance with SFAS No. 141. The total purchase price was allocated to the assets, including identifiable intangibles, and liabilities based upon their respective fair values estimated by management. The purchase price in excess of fair value resulted in goodwill of approximately $3.6 million. The following table presents a summary of the purchase transaction:

Purchase price:      
  Cash purchase price for CanAmPac   $ 57,900
  Issuance of preferred stock     600
  Transaction costs     763
  Deferred tax liabilities     6,060
  Assumed liabilities     9,365
   
Total purchase price   $ 74,688
   

Purchase accounting:

 

 

 
  Fair market value of assets acquired:      
    Accounts receivable   $ 15,530
    Inventories     16,292
    Prepaid expenses     2,063
    Property, plant and equipment     29,625
    Intangible assets     6,700
    Other assets     853
   
      71,063
  Goodwill     3,625
   
    $ 74,688
   

103


Pangborn

        The purchase of Pangborn by the company for the purposes of the pro forma condensed combined financial statements was as of January 1, 2006 and was accounted for as a purchase transaction in accordance with SFAS No. 141. The total purchase price was allocated to the assets, including identifiable intangibles, and liabilities based upon their respective fair values estimated by management. The purchase price in excess of fair value resulted in goodwill of approximately $9.4 million. The following table presents a summary of the purchase transaction:

Purchase price:      
  Cash purchase price for Pangborn   $ 19,700
  Issuance of preferred stock     300
  Transaction costs     294
  Deferred tax liabilities     5,130
  Assumed liabilities     9,613
   
Total purchase price   $ 35,037
   
Purchase accounting:      
  Fair market value of assets acquired:      
    Accounts receivable   $ 5,885
    Inventories     1,991
    Prepaid expenses     174
    Deferred tax assets     260
    Property, plant and equipment     3,832
    Intangible assets     13,400
    Other assets     62
   
      25,604
  Goodwill     9,433
   
    $ 35,037
   

Note 2—Pro Forma Adjustments

        The following discusses the pro forma adjustments recorded on the pro forma condensed combined financial statements for the year ended December 31, 2006 and the six month period ended June 30, 2007. The references below are reflected in the tables at the beginning of this section.

Balance Sheet Pro Forma Adjustments

(a)    Pro forma adjustment for cash and cash equivalents

        An adjustment was recorded to reduce the net proceeds from this offering and the private placements by expenses incurred with this offering which is summarized in the following table:

Cash purchase price of Metal   $ (81,870 )
Cash distribution to Metal members(1)     (3,299 )
Cash purchase price of Forest(2)     (70,043 )
Cash distribution to Forest members(3)     (10,930 )
Cash purchase price of CanAmPac(2)     (58,663 )
Cash purchase price of Pangborn(2)     (19,994 )
Cash distribution to Pangborn members(4)     (501 )
Payment of proposed third-party credit facility origination fees     (3,525 )
   
 
    $ (248,825 )
   
 

(1)
Balance represents cash "on hand" recorded on Metal's June 30, 2007 balance sheet that would be distributed to its members had the transaction been consummated at that date as the purchase price excludes this cash "on hand".

(2)
The purchase price includes the acquisition of the business on a debt free basis with the exception of a financing obligation at Forest approximating $11.1 million.

104


(3)
Balance represents cash "on hand" (the sum of $7.4 million cash and $3.5 million restricted cash) recorded on Forest's June 30, 2007 balance sheet that would be distributed to its members had the transaction been consummated at that date as the purchase price excludes this cash "on hand".

(4)
Balance represents cash "on hand" recorded on Pangborn's June 30, 2007 balance sheet that would be distributed to its members had the transaction been consummated at that date as the purchase price excludes this cash "on hand".

        As a result of pre-payment of debt, the bond sinking fund and restricted cash will be released. As a result, the bond sinking fund and restricted cash balance were reduced and cash was increased. The net pro forma cash adjustment is as follows:

Net cash pro forma adjustment above   $ (248,825 )
Borrowings on term loan     50,000  
Reclass of Bond sinking fund to cash     465  
Reclass of restricted cash to cash     4,502  
   
 
Net cash pro forma adjustment   $ (193,858 )
   
 

(b)    Pro forma adjustments for accounts receivable and accounts payable

        Balance represents an adjustment to eliminate approximately $55 of accounts receivable recorded by Forest as due from CanAmPac and approximately $55 of accounts payable recorded by CanAmPac as due to Forest.

(c)    A pro forma adjustment of approximately $1.3 million was recorded to eliminate the Metal LIFO reserve at June 30, 2007. This adjustment was recorded to reflect Metal's earnings on a FIFO basis of accounting to be consistent with the inventory accounting method at Forest, CanAmPac and Pangborn.

(d)    Pro forma adjustment for deferred offering costs

        Deferred offering costs will be netted against equity upon consummation of this offering. A pro forma adjustment was recorded to eliminate these balances.

(e)    Pro forma adjustment for property, plant and equipment

        Pro forma adjustments were recorded to adjust property, plant and equipment to a preliminary estimate of fair market value. The fair market value of the property, plant and equipment was based upon management's judgment. The following table presents the summary adjustments recorded for each business:

Record new property, plant and equipment:        
  Metal   $ 51,484  
  Forest     61,245  
  CanAmPac     29,625  
  Pangborn     3,832  
   
 
      146,186  

Eliminate historical property, plant and equipment:

 

 

 

 
  Metal     (5,156 )
  Forest     (27,075 )
  CanAmPac     (20,378 )
  Pangborn     (3,732 )
   
 
    $ 89,845  
   
 

        The preceding step-up was recorded for book purposes. There will not be a step-up in the basis for CanAmPac or Pangborn for tax purposes.

105



(f)    Pro forma adjustment for restricted cash

        Under Metal's and Forest's prior debt structure, a bond sinking fund and a portion of cash was restricted in accordance with the covenants per Metal's and Forest's debt agreements. Metal's and Forest's prior debt structure will be eliminated in conjunction with the acquisition of Metal and Forest and, as a result, the balance of approximately $465 in bond sinking fund and approximately $4.5 million in restricted cash were reclassified to cash. Also see Note (a).

(g)    Pro forma adjustment for goodwill

        Goodwill represents the excess purchase price over fair value of net assets acquired and liabilities assumed in a business combination. The pro forma adjustment for goodwill is based upon management's allocations of the fair market values to assets after consideration of management's preliminary estimates of value for property, plant and equipment and analyses of intangible assets. The following table presents the summary goodwill adjustments recorded for each entity:

Record new goodwill:        
  Metal   $  
  Forest     3,861  
  CanAmPac     3,625  
  Pangborn     9,433  
   
 
Pro forma goodwill     16,919  
Eliminate historical goodwill:        
  Metal      
  Forest     (1,409 )
  CanAmPac      
  Pangborn     (5,195 )
   
 
Pro forma adjustment   $ 10,315  
   
 

(h)    Pro forma adjustment for identifiable intangible assets

        Management has estimated the identifiable intangible assets giving consideration to items such as, but not limited to, trade names, trademarks, patents, non-compete agreements, backlog, customer relationships, and royalty agreements. Management estimated the value of identifiable intangible assets which are summarized in the following table:

Record new intangibles:        
  Metal   $ 17,312  
  Forest     9,100  
  CanAmPac     6,700  
  Pangborn     13,400  
   
 
Pro forma identifiable intangible assets     46,512  
Eliminate historical intangibles:        
  Metal      
  Forest     (1,850 )
  CanAmPac     (385 )
  Pangborn     (4,850 )
   
 
Pro forma adjustment   $ 39,427  
   
 

106


(i)    Pro forma adjustment for deferred financing fees

        In conjunction with the acquisition of the initial businesses, all of the debt outstanding at each business will be prepaid with the exception of a financing obligation at Forest approximating $11.1 million. As a result, a pro forma adjustment was recorded to eliminate the historical deferred financing fees for each business. In addition, the company expects to have a $100.0 million third-party revolving credit facility and a $50.0 million term loan which we expect will require a 2.25% fee that will be amortized over the five year life for the portion relating to the proposed third-party revolving credit facility and will be amortized over six years for the portion relating to the term loan. In addition, an annual fee of 0.1% is required on the $100.0 million third-party revolving credit facility and the $50.0 million term loan. The following table summarizes the pro forma deferred financing fee adjustment:

Eliminate historical deferred financing fees:        
  Metal   $ (311 )
  Forest     (2,050 )
  CanAmPac     (1,687 )
  Pangborn     (698 )
   
 
      (4,746 )
Deferred financing fees for the proposed third-party credit facility consisting of a $100.0 million revolving credit facility and a $50.0 million term loan     3,525  
   
 
Pro forma adjustment   $ (1,221 )
   
 

(j)    Pro forma adjustment for investment in affiliates

        The contemplated acquisitions associated with this offering will have the company acquire CanAmPac from Forest. In accordance with GAAP, CanAmPac is consolidated with Forest. As a result, pro forma adjustments were recorded to eliminate the investment by Forest in CanAmPac.

107


(k)    Pro forma adjustments for debt, current and long-term

        The company has negotiated purchase prices with the businesses whereas the businesses will be acquired debt-free with the exception of a financing obligation at Forest approximating $11.1 million. The following table summarizes the repayment of debt and new obligations by business:

 
  Debt
as reported

  Debt repaid
in conjunction
with offering

  New debt
  Total
remaining
debt

Atlas Industries Holdings:                        
  Borrowings on term loan   $   $   $ 50,000   $ 50,000

Metal:

 

 

 

 

 

 

 

 

 

 

 

 
  Current debt     2,178     2,178        
  Long-term debt     9,504     9,504        

Forest:

 

 

 

 

 

 

 

 

 

 

 

 
  Current debt     2,878     2,878        
  Long-term debt     53,960     53,960        
  Current portion of financing obligation     427             427
  Long-term portion of financing obligation     10,682             10,682

CanAmPac:

 

 

 

 

 

 

 

 

 

 

 

 
  Current debt     7,622     7,622        
  Long-term debt     17,467     17,467        
  Current capital leases     1,901     1,901        
  Long-term capital leases     3,781     3,781        

Pangborn:

 

 

 

 

 

 

 

 

 

 

 

 
  Current debt     167     167        
  Long-term debt     9,860     9,860        
   
 
 
 
    $ 120,427   $ 109,318   $ 50,000   $ 61,109
   
 
 
 
 
  Existing
debt
re-paid

  New debt
  Pro forma
adjustments

 
Pro forma adjustments:                    
  Debt—current   $ 12,845   $   $ (12,845 )
  Long-term debt     90,791     50,000     (40,791 )
  Current portion of capital lease obligations     1,901         (1,901 )
  Long-term capital lease obligations     3,781         (3,781 )

(l)    Pro forma adjustment for deferred tax liabilities

        As a result of the purchase accounting for the consummated acquisitions, adjustments were recorded to increase deferred tax liabilities for CanAmPac and Pangborn to reflect the difference between the step-up in the basis of the assets for book purposes versus tax purposes in the amount of approximately $9.2 million.

(m)    Pro forma adjustment for equity

        The pro forma adjustments represent the balance to eliminate the "old" equity accounts, eliminate the investment Forest has in CanAmPac and record the issuance of approximately $2.8 million of non-voting preferred stock.

(n)    An adjustment of approximately $521 was recorded to reduce accrued liabilities for dividends due to members.

108



Statement of Operations Pro Forma Adjustments

(aa)    Die costs and LIFO

        CanAmPac's policy is to expense costs for dies used in production. The predecessor to CanAmPac, Roman's Paperboard and Packaging Business, capitalized die costs and amortized the costs over a period of three years. Management recorded a pro forma adjustment of approximately $125 to record an expense for the die costs capitalized for the year ended December 31, 2006. Also, adjustments approximating $407 for the year ended December 31, 2006 and approximating $447 for the six month period ended June 30, 2007 were recorded to eliminate the effects of accounting for inventory under the LIFO method of accounting at Metal.

(bb)    Pro forma adjustment for cost of goods sold

        The following table presents a summary of the cost of goods sold pro forma adjustments:

 
  Year ended
December 31,
2006

  Six month
period ended
June 30,
2007

 
Eliminate recorded depreciation expense   $ (11,622 ) $ (4,437 )
Record pro forma depreciation expense as a result of purchase accounting     15,973     7,987  
   
 
 
    $ 4,351   $ 3,550  
   
 
 

        Management did not record a pro forma adjustment to reflect the "purchased manufacturing profit in inventory" in conjunction with the consummation of these transactions.

    Pro forma depreciation expense

        As a result of purchase accounting, the assets were "stepped-up" to fair value which results in higher depreciation expense compared to that historically recorded. In addition, purchase accounting resulted in recording intangible assets primarily consisting of customer relationships and backlog. The company depreciates its assets over their estimated useful lives for book purposes and uses Modified Accelerated Cost Recovery System, or MACRS, depreciation for income tax purposes.

(cc)    Pro forma adjustment for operating expenses—management fees

        The following table presents a summary of the management fees pro forma adjustments:

 
  Year ended
December 31,
2006

  Six month
period ended
June 30,
2007

 
Recorded management fees   $ (1,651 ) $ (946 )
Pro forma management fees     4,931     2,466  
   
 
 
Net incremental management fees   $ 3,280   $ 1,520  
   
 
 

    Pro forma management fees

        We recorded a pro forma adjustment to reflect an estimate of the management fees pursuant to the Management Services Agreement to be incurred in connection with the closing of this offering. This amount represents the total management fee to be paid to our manager. The amounts for the year

109


ended December 31, 2006 and six month period ended June 30, 2007 were determined by using the combined pro forma balance sheet as of June 30, 2007 and was calculated as follows:

Total pro forma assets   $ 338,086
Add: Accumulated amortization of intangibles    
Less:      
  Total liabilities less third-party debt     59,673
  Cash and cash equivalents     31,842
   
Adjusted net assets     246,571
Management fee percent     2.00
   
Annual pro forma management fee   $ 4,931
   
Six month period ended pro forma management fee   $ 2,466
   

        The management fees will be paid to Atlas Industries Management LLC. Pursuant to the management services agreement, which will be entered into in connection with the closing of this offering, a portion of the management fee will be paid in the form of common shares for the first eight quarterly payments, as follows:

    50.0% of the management fee for the first four quarterly payments will be paid in the form of common shares; and

    25.0% of the management fee for the next four quarterly payments will be paid in the form of common shares.

In each case, the common shares to be used as payments in connection with any particular quarterly payment will be valued based on the average closing price of the common shares for the 30-day period ending on the day immediately preceding such quarterly payment date.

(dd)    Pro forma adjustment for operating expenses—depreciation and amortization

        Discussed in Note (bb) above in this section, we calculated the depreciation and amortization expense for cost of goods sold and selling, general and administrative expenses. The following table summarizes the elimination of the historical depreciation and amortization expense recorded and pro forma adjustments for depreciation and amortization expense for selling, general and administrative expenses:

 
  Year ended
December 31,
2006

  Six month
period ended
June 30,
2007

 
Eliminate depreciation and amortization recorded in selling, general and administrative expenses   $ (1,438 ) $ (737 )
Record pro forma depreciation and amortization for selling, general and administrative expense     4,710     2,107  
   
 
 
    $ 3,272   $ 1,370  
   
 
 

(ee)    Pro forma adjustment for interest income

        We recorded pro forma adjustments to reduce historical interest income to levels that we believe will approximate interest income that would have been generated by average available cash on hand under the proposed capital structure.

        Our adjustment takes into account average available cash on hand from operations, adjusted for distributions on the Series A Preferred Stock by each of our acquisition subsidiary and distributions on the common shares of the company outstanding following this offering, invested in an account bearing interest at an annual rate of 5.25%. Our adjustments exclude interest earned on excess cash raised from this offering and debt financing.

110


(ff)    Pro forma adjustment for interest expense

        As previously discussed, in conjunction with this offering and the purchase of Metal, Forest, CanAmPac and Pangborn, all of the acquired businesses' debt will be prepaid with the exception of a financing obligation at Forest approximating $11.1 million. In addition, there will be a proposed $150.0 million third-party credit facility comprised of a $50.0 million term loan and a $100.0 million revolving line of credit. As of the close of this offering, we expect no draw on the revolving line of credit and a full draw of approximately $50.0 million on the term loan. As a result, the company recorded pro forma adjustments for the financing obligation, the amortization of the deferred financing for the proposed $150.0 million third-party credit facility, and the commitment fee for the proposed $150.0 million third-party credit facility. The following table summarizes the preceding:

 
  Year ended
December 31,
2006

  Six month
period ended
June 30,
2007

 
Elimination of historical interest expense   $ 11,520   $ 6,510  
Interest expense on term loan     (4,725 )   (2,363 )
Interest expense on financing obligation retained     (559 )   (280 )
Amortization of deferred financing fees for the:              
  Third-party revolving line of credit     (450 )   (225 )
  Third-party term loan     (188 )   (94 )
Amortization of annual third-party credit facility fee     (150 )   (75 )
Commitment fee on proposed $100.0 million unused third-party revolving line of credit     (1,125 )   (625 )
   
 
 
Pro forma interest expense adjustment   $ 4,323   $ 2,848  
   
 
 

(gg)    Pro forma adjustment for minority interest

        We recorded a pro forma adjustment to eliminate historical minority interests in each of our initial businesses and to record minority interest for the issuance of the preferred stock, which shall be designated as "Series A Preferred Stock" for each of our initial businesses. It is anticipated that            shares of Series A Preferred Stock, par value $0.01 per share, will be authorized and outstanding. The shares of Series A Preferred Stock will not have any voting rights. Holders of the Series A Preferred Stock will have the right to receive cumulative distributions at a fixed annual rate equal to 11.0% of the liquidation preference price each share when and as declared by our acquisition subsidiaries' boards of directors. Distributions on the Series A Preferred Stock must be paid before any distributions are paid on common stock of our acquisition subsidiaries. The Series A Preferred Stock is also entitled to rights on liquidation which are senior to those of common stock.

        Each acquisition subsidiary must redeem its respective Series A Preferred Stock five years from the closing date of this offering at an amount equal to the liquidation preference of $25.00 per share plus all accrued but unpaid dividends. No sinking fund is required for the redemption of shares of Series A Preferred Stock. After two years from the closing date of this offering, either the holder of the Series A Preferred Stock or the company may exchange approximately 75.0% of the liquidation preference into the company's securities at the then prevailing market price for such securities.

111


(hh)    Pro forma adjustment for income taxes

        We recorded pro forma adjustments of approximately $1.7 million and approximately $524 for the year ended December 31, 2006 and the six month period ended June 30, 2007, respectively, to reflect the estimated income tax expense associated with the pro forma income for the company.

Note 3—Pro Forma Net Income

        Pro forma net income per share is approximately $0.24 (actual dollars) and $0.09 (actual dollars) for the year ended December 31, 2006 and the six month period ended June 30, 2007, reflecting the shares issued in this offering and the private placement transactions as if such shares were outstanding from the beginning of the respective periods and was calculated as follows:

 
  Year ended
December 31,
2006

  Six month
period ended
June 30,
2007

Net income   $ 3,743   $ 1,501
Pro forma weighted average number of shares outstanding(1)     15,748,871     15,851,638
   
 
Pro forma net income per share (actual dollars)   $ 0.24   $ 0.09
   
 

(1)
Pro forma weighted average number of shares outstanding was derived by dividing the estimated gross proceeds from this offering, private placement of approximately $35.0 million and the portion of the management fee to be paid in the form of common shares by the initial offering price per share of $15.00 (actual dollars).

Note 4—Other Estimates

        In addition to the pro forma adjustments above, we expect to incur incremental administrative expenses, professional fees and management fees as a public company after the consummation of the transactions described above. Such fees and expenses include accounting, legal and other consultant fees, SEC and listing fees, directors' fees and directors and officers insurance premiums. We currently estimate these additional fees and expenses will total approximately $3.5 million during the first year of operations. The actual amount of these expenses and fees could vary significantly.

112



SELECTED FINANCIAL DATA

        The company was formed on December 26, 2006 and has conducted no operations and has generated no revenues to date. We will use the net proceeds from the offering, the separate private placement transactions, and the initial borrowing under our proposed third-party credit facility to acquire all of the equity interests in and make loans to our initial businesses.

        The following selected financial data represent the historical financial information for Metal, Forest, CanAmPac and Pangborn and does not reflect the accounting for these businesses upon completion of the acquisitions and the operation of the businesses as a consolidated entity. This historical financial data does not reflect the recapitalization of these businesses upon acquisition by the company. As a result, this historical data may not be indicative of the future performance of these businesses following their acquisition by the company and recapitalization. You should read this information in conjunction with the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations", the financial statements and notes thereto, and the unaudited pro forma condensed combined financial statements and notes thereto, all included elsewhere in this prospectus.

        The selected financial data for Metal for the years ended December 31, 2004, 2005 and 2006 were derived from Metal's audited consolidated financial statements included elsewhere within this prospectus. The selected financial data for Metal for the six month periods ended June 30, 2006 and 2007 were derived from Metal's unaudited condensed interim financial statements included elsewhere within this prospectus.

        The selected financial data for Forest for the years ended December 31, 2004 and 2005 were derived from Forest's audited consolidated financial statements included elsewhere in this prospectus. The selected financial data for Forest at December 31, 2006 and for the year ended December 31, 2006 were derived from "Note 21—Consolidating Balance Sheet and Statement of Operations", which we refer to as Note 21, to the audited financial statements of Forest, excluding all financial data related to CanAmPac as of the date and for the periods indicated therein, included elsewhere in this prospectus. The selected financial data for Forest for the six month periods ended June 30, 2006 and 2007 were derived from "Note 14—Consolidating Balance Sheet and Statement of Operations", which we refer to as Note 14, to Forest's unaudited condensed interim financial statements included elsewhere within this prospectus.

        The selected financial data for CanAmPac for the years ended December 31, 2004 and 2005 (predecessor) and the four month period ended April 30, 2006 (predecessor) were derived from Roman's Paperboard and Packaging's audited carve-out financial statements (predecessor) included elsewhere in this prospectus. The selected financial data for CanAmPac for the eight month period ended December 31, 2006 (successor) and at December 31, 2006 (successor) were derived from Note 21 to the audited financial statements of Forest, including only financial data related to CanAmPac as of the date and for the periods indicated therein, included elsewhere in this prospectus. The selected financial data for CanAmPac for the period May 1, 2006 through June 30, 2006 (successor) and the six month period ended June 30, 2007 (successor) were derived from Note 14 to Forest's unaudited condensed interim financial statements included elsewhere in this prospectus, including only the financial data related to CanAmPac as of the date and periods indicated therein. The balances presented for the years ended December 31, 2004 and 2005 and for the four month period ended April 30, 2006 were converted to U.S. dollars for the convenience of the reader at a conversion rate of one Canadian dollar to $0.87 (actual) U.S. dollar, which approximates the mean exchange rate in effect during 2006. The balances presented for both the period May 1, 2006 through June 30, 2006 (successor) and the six month period ended June 30, 2007 (successor) were converted to U.S. dollars at a conversion rate of one Canadian dollar to $0.88 (actual) U.S. dollar.

        The selected financial data for Pangborn for the years ended December 31, 2004 and 2005 (predecessor), for the period January 1, 2006 to June 4, 2006 (predecessor), for the period June 5, 2006 to December 31, 2006 (successor) and at December 31, 2006 (successor) were derived from Pangborn's audited consolidated financial statements included elsewhere in this prospectus. The selected financial data for Pangborn for the period June 5, 2006 through June 30, 2006 and the six month period ended June 30, 2007 were derived from Pangborn's unaudited condensed interim financial statements included elsewhere within this prospectus.

113



Metal

 
  Years ended December 31,
  Six month periods
ended June 30,

 
 
  2004
  2005
  2006
  2006
  2007
 
 
  ($ in thousands)

 
Statement of operations data:                                
  Net sales   $ 46,883   $ 66,409   $ 89,918   $ 38,685   $ 53,735  
  Cost of goods sold     37,860     54,990     71,846     32,157     41,375  
   
 
 
 
 
 
  Gross profit     9,023     11,419     18,072     6,528     12,360  
  Operating expenses     4,391     5,607     6,807     2,694     3,373  
   
 
 
 
 
 
  Income from operations     4,632     5,812     11,265     3,834     8,987  
  Other income (expense):                                
    Interest income     5     93     103     42     80  
    Interest expense     (484 )   (428 )   (961 )   (452 )   (328 )
    Other     103     (11 )   7          
   
 
 
 
 
 
  Net income   $ 4,256   $ 5,466   $ 10,414   $ 3,424   $ 8,739  
   
 
 
 
 
 

Cash flow data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Cash provided by (used in) operating activities   $ (3,484 ) $ 6,076   $ 13,745   $ 4,384   $ 8,487  
  Cash used in investing activities     (1,487 )   (634 )   (1,441 )   (617 )   (101 )
  Cash provided by (used in) financing activities     4,968     (5,161 )   (12,237 )   (3,571 )   (5,435 )
   
 
 
 
 
 
  Net increase (decrease) in cash   $ (3 ) $ 281   $ 67   $ 196   $ 2,951  
   
 
 
 
 
 

Supplemental information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Depreciation   $ 523   $ 617   $ 724   $ 450   $ 420  
   
 
 
 
 
 
 
  December 31,
  June 30,
 
 
   
 
  2005
  2006
  2007
 
  ($ in thousands)

Balance sheet data:                  
  Total current assets   $ 20,253   $ 23,978   $ 24,850
  Property, plant and equipment     4,764     5,475     5,156
  Other identifiable intangible assets and other     2,776     1,344     1,313
   
 
 
    Total assets     27,793     30,797     31,319
 
Current liabilities

 

 

8,192

 

 

14,995

 

 

12,080
  Long-term debt     16,110     11,058     9,504
   
 
 
    Total liabilities     24,302     26,053     21,584
 
Mandatorily redeemable preferred units

 

 

1,116

 

 

6,873

 

 

6,873
  Members' equity (deficit)     2,375     (2,129 )   2,862

114



Forest

 
  Years ended December 31,
  Six month periods
ended June 30,

 
 
  2004
  2005
  2006
  2006
  2007
 
 
  ($ in thousands)

 
Statement of operations data:                                
  Net sales   $ 61,065   $ 83,870   $ 162,282   $ 79,204   $ 82,612  
  Cost of goods sold     48,759     67,869     130,692     64,288     68,164  
  Restructuring charge                     1,508