SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
(Rule 13e-100)
TRANSACTION STATEMENT UNDER
SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934 AND
RULE 13e-3 THEREUNDER
Rule 13e-3 Transaction Statement under Section 13(e)
of the Securities Exchange Act of 1934
(Amendment No. 1)
STEIN MART, INC.
Name of Subject Company (Issuer)
Stein Mart, Inc.
Stratosphere Holdco, LLC
Stratosphere Merger Sub, Inc.
Kingswood Capital Management, L.P.
Kingswood Stratosphere Investor, LLC
Kingswood Intermediary I, Inc.
Kingswood Intermediary II, Inc.
Kingswood Capital Opportunities Fund I, L.P.
Kingswood Capital Opportunities Fund I-A, L.P.
Kingswood Capital Opportunities Fund I GP, L.P.
Jay Stein
Stein Family Holdco LLC
(Names of Filing Persons (other person(s)))
Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
858375108
(CUSIP Number of Class of Securities)
Alex Wolf Managing Partner Kingswood Capital Management, L.P. 11777 San Vicente Blvd., Suite 650 Los Angeles, CA 90049 (424) 744-8238 |
D. Hunt Hawkins Chief Executive Officer Stein Mart, Inc. 1200 Riverplace Blvd. Jacksonville, FL 32207 (904) 346-1500 |
Jay Stein Manager Stein Family Holdco LLC 8265 Bayberry Road Jacksonville, FL 32256 (904) 739-1311 |
(Name, address, and telephone numbers of person authorized to receive notices and communications on behalf of filing persons)
With copies to:
John Haggerty, Esq. Goodwin Procter LLP 100 Northern Avenue Boston, Massachusetts 02210-1980 Telephone: (617) 649-1411 |
Gardner F. Davis, Esq. John J. Wolfel, Esq. Foley & Lardner LLP One Independent Drive Jacksonville, Florida 32202-5039 Telephone: (904) 359-2000 |
David Zaheer, Esq. Latham & Watkins, LLP 355 South Grand Avenue Los Angeles, CA 90071-1560 Telephone: (213) 891-8045 |
This statement is filed in connection with (check the appropriate box):
a. |
☒ | The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934. | ||
b. |
☐ | The filing of a registration statement under the Securities Act of 1933. | ||
c. |
☐ | A tender offer. | ||
d. |
☐ | None of the above. |
Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: ☒
Check the following box if the filing is a final amendment reporting the results of the transaction: ☐
Calculation of Filing Fee
Transaction valuation* | Amount of filing fee** | |
$28,568,804. |
$3,708. |
* |
The maximum aggregate value was determined based upon 31,743,115 shares of Company Common Stock (including 761,569 shares of Company Common Stock subject to time vesting restricted stock units, 343,219 shares of Company Common Stock subject to time vesting restricted stock and 29,734 shares that could be issued under the Stein Mart, Inc. Employee Stock Purchase Plan prior to the completion of the merger) multiplied by $0.90 per share. |
** |
The filing fee was calculated in accordance with Rule 0-11 under the Securities and Exchange Act of 1934, as amended, by multiplying the transaction value by 0.0001298. |
☒ |
Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and date of its filing. |
Amount Previously Paid: $3,708. |
Filing Party: Stein Mart, Inc. | |
Form or Registration No.: Schedule 14A |
Date Filed: March 2, 2020 |
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION, PASSED UPON THE MERITS OR FAIRNESS OF THIS TRANSACTION, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS SCHEDULE 13E-3. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE
Item 1. |
Summary Term Sheet | 2 | ||||
Item 2. |
Subject Company Information | 2 | ||||
Item 3. |
Identity and Background of Filing Person | 3 | ||||
Item 4. |
Terms of the Transaction | 3 | ||||
Item 5. |
Past Contacts, Transactions, Negotiations and Agreements | 4 | ||||
Item 6. |
Purposes of the Transaction and Plans or Proposals | 5 | ||||
Item 7. |
Purposes, Alternatives, Reasons and Effects | 5 | ||||
Item 8. |
Fairness of the Transaction | 6 | ||||
Item 9. |
Reports, Opinions, Appraisals and Negotiations | 7 | ||||
Item 10. |
Source and Amounts of Funds or Other Consideration | 8 | ||||
Item 11. |
Interest in Securities of the Subject Company | 8 | ||||
Item 12. |
The Solicitation or Recommendation | 8 | ||||
Item 13. |
Financial Statements | 9 | ||||
Item 14. |
Persons/Assets, Retained, Employed, Compensated Or Used | 9 | ||||
Item 15. |
Additional Information | 9 | ||||
Item 16. |
Exhibits | 9 |
INTRODUCTION
This Amendment No. 1 to Rule 13E-3 Transaction Statement on Schedule 13E-3, together with the exhibits hereto (this Schedule 13E-3 or Transaction Statement) is being filed with the Securities and Exchange Commission (the SEC) pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the Exchange Act), jointly by the following persons (each, a Filing Person, and collectively, the Filing Persons): (i) Stein Mart, Inc. (Stein Mart, or the Company), a Florida corporation and the issuer of the common stock, par value $0.01 per share (the Company Common Stock), that is subject to the Rule 13e-3 transaction; (ii) Stratosphere Holdco, LLC, a Delaware limited liability company (Parent), (iii) Stratosphere Merger Sub, Inc., a Florida corporation and an indirectly wholly-owned subsidiary of Parent (Merger Sub); (iv) Stein Family Holdco LLC, a Delaware limited liability company managed by Jay Stein, the Chairman of the Companys board of directors (Stein Family Holdco); (v) Jay Stein, individually (together with Stein Family Holdco, collectively, the Rollover Investor), (vi) Kingswood Stratosphere Investor, LLC, a Delaware limited liability company (TopCo); (vi) Kingswood Intermediary I, Inc., a Delaware corporation (Kingswood Intermediary I); (viii) Kingswood Intermediary II, Inc., a Delaware corporation (Kingswood Intermediary II); (ix) Kingswood Capital Opportunities Fund I, L.P. , a Delaware limited partnership (Kingswood Fund I); (x) Kingswood Capital Opportunities Fund I-A, L.P., a Delaware limited partnership (Kingswood Fund I-A); and (xi) Kingswood Capital Management, L.P., a Delaware limited partnership (Kingswood and, together with Parent, Merger Sub, TopCo, Kingswood Intermediary I, Kingswood Intermediary II, Kingswood Fund I and Kingswood Fund I-A, collectively, the Kingswood Group Filing Persons) . The Rollover Investor and the Kingswood Group Filing Persons are collectively referred to herein as the Acquiring Group or the Acquiring Group Filing Persons.
The Company, Parent and Merger Sub entered into an Agreement and Plan of Merger (as amended, restated, supplemented or otherwise modified from time to time, the merger agreement), dated January 30, 2020, which provides for, among other things, the merger of Merger Sub with and into the Company (the merger), with the Company surviving the merger as an indirect wholly-owned subsidiary of Parent. Concurrently with the filing of this Schedule 13E-3, the Company is filing with the SEC a preliminary Proxy Statement (the Proxy Statement) under Regulation 14A of the Exchange Act, relating to a special meeting of the shareholders of the Company (the Special Meeting) at which the shareholders of the Company will consider and vote upon a proposal to adopt the merger agreement and cast an advisory (non-binding) vote to approve certain items of compensation that are based on or otherwise related to the merger and may become payable to certain named executive officers of the Company under existing agreements with the Company. The adoption of the merger agreement will require the affirmative vote of the holders of a majority of the shares of the Company Common Stock entitled to vote thereon outstanding as of the close of business on the record date for the Special Meeting. A copy of the preliminary Proxy Statement is attached hereto as Exhibit (a)(2)(i). A copy of the merger agreement is attached as Appendix A to the preliminary Proxy Statement and is incorporated herein by reference.
Under the terms of the merger agreement, if the merger is completed, each share of Company Common Stock, other than as provided below, will be converted into the right to receive $0.90 in cash (the per share merger consideration), without interest and less applicable withholding taxes. The following shares of Company Common Stock will not be converted into the right to receive the per share merger consideration in connection with the merger: (i) shares of Company Common Stock held by the Company or any of its subsidiaries, (ii) shares of Company Common Stock held by Parent or any of its subsidiaries (including shares of Company Common Stock contributed by the Rollover Investor to Parent immediately prior to the effective time of the merger), and (iii) shares of Company Common Stock whose holders have not voted in favor of adopting the merger agreement and have demanded and perfected their appraisal rights in accordance with, and have complied in all respects with the Florida Business Corporation Act.
The merger remains subject to the satisfaction or waiver of the conditions set forth in the merger agreement, including the adoption of the merger agreement by the Companys shareholders. The Rollover Investor has committed to contribute, immediately prior to the effective time of the merger, all of the outstanding Company Common Stock that it owns (representing approximately 36% of the Company Common Stock outstanding as of the date of the merger agreement) to Parent in exchange for equity securities of Parent.
The board of directors formed a special committee comprised entirely of independent and disinterested directors, consisting of Richard Sisisky (Chairman), Irwin Cohen, Thomas Cole and Timothy Cost (the Special Committee) to consider and negotiate the terms and conditions of the merger and to recommend to the board of directors whether to pursue the merger and, if so, on what terms and conditions.
The cross-references below are being supplied pursuant to General Instruction G to Schedule 13E-3 and show the location in the Proxy Statement of the information required to be included in response to the items of Schedule 13E-3. Pursuant to General Instruction F to Schedule 13E-3, the information contained in the Proxy Statement, including all appendices thereto, is incorporated in its entirety herein by reference, and the responses to each item in this Schedule 13E-3 are qualified in their entirety by the information contained in the Proxy Statement and the appendices thereto.
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As of the date hereof, the Proxy Statement is in preliminary form and is subject to completion and/or amendment. Capitalized terms used but not expressly defined in this Schedule 13E-3 shall have the respective meanings given to them in the Proxy Statement.
While each of the Filing Persons acknowledges that the merger is a going private transaction for purposes of Rule 13E-3 under the Exchange Act, the filing of this Transaction Statement shall not be construed as an admission by any Filing Person, or by any affiliate of a Filing Person, that the Company is controlled by any Filing Person.
Item |
1. Summary Term Sheet. |
The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
Item |
2. Subject Company Information. |
(a) Name and Address. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
THE PARTIES TO THE MERGER
(b) Securities. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
THE SPECIAL MEETINGWho is Entitled to Vote at the Special Meeting?
IMPORTANT INFORMATION REGARDING THE COMPANYSecurity Ownership of Certain Beneficial Owners and Management
The exact title of the subject equity securities is Stein Mart, Inc. common stock, par value $ 0.01 per share.
(c) Trading Market and Price. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
IMPORTANT INFORMATION REGARDING THE COMPANYMarkets and Market Price
(d) Dividends. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
IMPORTANT INFORMATION REGARDING THE COMPANYMarkets and Market Price
SPECIAL FACTORSDividends
(e) Prior Public Offerings. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
IMPORTANT INFORMATION REGARDING THE COMPANYPrior Public Offerings
(f) Prior Stock Purchases. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
COMMON STOCK TRANSACTION INFORMATIONTransactions by the Acquiring Group Filing Persons
COMMON STOCK TRANSACTION INFORMATIONTransactions by the Company
COMMON STOCK TRANSACTION INFORMATIONTransactions by the Companys Directors and Executive Officers
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Item |
3. Identity and Background of Filing Person. |
(a)-(c) Name and Address; Business and Background of Entities; Business and Background of Natural Persons. Stein Mart, Inc. is the subject company. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
THE PARTIES TO THE MERGER
IMPORTANT INFORMATION REGARDING THE COMPANY
IMPORTANT INFORMATION REGARDING PARENT, MERGER SUB, AND THE KINGSWOOD GROUP FILING PERSONS
IMPORTANT INFORMATION REGARDING THE ROLLOVER INVESTOR
Item |
4. Terms of the Transaction. |
(a)(1) Tender Offers. Not Applicable.
(a)(2) Mergers or Similar Transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
SPECIAL FACTORSPurposes and Reasons of the Acquiring Group Filing Persons for the Merger
SPECIAL FACTORSCertain Effects of the Merger; Plans for the Company
SPECIAL FACTORSFinancing of the Merger
SPECIAL FACTORSInterests of the Companys Directors and Executive Officers in the Merger
SPECIAL FACTORSAppraisal Rights
SPECIAL FACTORSMaterial U.S. Federal Income Tax Consequences
THE SPECIAL MEETINGHow Many Votes Are Needed to Approve Each Proposal?
THE MERGER AGREEMENT
Appendix AAgreement and Plan of Merger
(c) Different Terms. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
SPECIAL FACTORSCertain Effects of the Merger; Plans for the Company
SPECIAL FACTORSFinancing of the Merger
SPECIAL FACTORSInterests of the Companys Directors and Executive Officers in the Merger
SPECIAL FACTORSIndemnification of Directors and Officers; Directors and Officers Insurance
SPECIAL FACTORSMerger Proceeds in Respect of Company Equity-Based Awards
THE MERGER AGREEMENTConversion of Securities
ADVISORY VOTE ON MERGER-RELATED EXECUTIVE COMPENSATION
(d) Appraisal Rights. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEETAppraisal Rights
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
SPECIAL FACTORSAppraisal Rights
THE SPECIAL MEETINGRights of Shareholders Who Object to the Merger
Appendix CSections 607.1301-607.1340 of the Florida Business Corporation Act
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(e) Provisions for Unaffiliated Security Holders. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
SPECIAL FACTORSProvisions for Unaffiliated Shareholders
(f) Eligibility for Listing or Trading. Not Applicable.
Item |
5. Past Contacts, Transactions, Negotiations and Agreements. |
(a) Transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSInterests of the Companys Directors and Executive Officers in the Merger
THE MERGER AGREEMENTConversion of Securities
COMMON STOCK TRANSACTION INFORMATIONTransactions by the Acquiring Group Filing Persons
COMMON STOCK TRANSACTION INFORMATIONTransactions by the Company
COMMON STOCK TRANSACTION INFORMATIONTransactions by the Companys Directors and Executive Officers
WHERE SHAREHOLDERS CAN FIND MORE INFORMATION
Appendix AAgreement and Plan of Merger
(b) Significant Corporate Events. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSCertain Effects of the Merger
SPECIAL FACTORSPlans for the Company
SPECIAL FACTORSFinancing of the Merger
SPECIAL FACTORSLimited Guarantee
SPECIAL FACTORSInterests of the Companys Directors and Executive Officers in the Merger
SPECIAL FACTORSIndemnification of Directors and Officers; Directors and Officers Insurance
SPECIAL FACTORSMerger Proceeds in Respect of Company Equity-Based Awards
SPECIAL FACTORSVoting Agreement
THE MERGER AGREEMENT
ADVISORY VOTE ON MERGER-RELATED EXECUTIVE COMPENSATION
Appendix AAgreement and Plan of Merger
(c) Negotiations or Contacts. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSInterests of the Companys Directors and Executive Officers in the Merger
(e) Agreements Involving the Subject Companys Securities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSCertain Effects of the Merger; Plans for the Company
SPECIAL FACTORSFinancing of the Merger
SPECIAL FACTORSLimited Guarantee
SPECIAL FACTORSInterests of the Companys Directors and Executive Officers in the Merger
SPECIAL FACTORSMerger Proceeds in Respect of Company Equity-Based Awards
SPECIAL FACTORSVoting Agreement
SPECIAL FACTORSPledge and Security Agreement
THE MERGER AGREEMENT
ADVISORY VOTE ON MERGER-RELATED EXECUTIVE COMPENSATION
4
WHERE SHAREHOLDERS CAN FIND MORE INFORMATION
Appendix AAgreement and Plan of Merger
Item |
6. Purposes of the Transaction and Plans or Proposals. |
(b) Use of Securities Acquired. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSCertain Effects of the Merger; Plans for the Company
SPECIAL FACTORSDelisting and Deregistration of Company Common Stock
SPECIAL FACTORSPayment of Merger Consideration and Surrender of Stock Certificates
THE MERGER AGREEMENTConversion of Securities
(c)(1)-(8) Plans. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
SPECIAL FACTORSPurposes and Reasons of the Acquiring Group Filing Persons for the Merger
SPECIAL FACTORSPositions of the Kingswood Group Filing Persons Regarding the Fairness of the Merger
SPECIAL FACTORSPositions of the Rollover Investor Regarding the Fairness of the Merger
SPECIAL FACTORSCertain Effects of the Merger; Plans for the Company
SPECIAL FACTORSDelisting and Deregistration of Company Common Stock
SPECIAL FACTORSFinancing of the Merger
SPECIAL FACTORSLimited Guarantee
SPECIAL FACTORSInterests of the Companys Directors and Executive Officers in the Merger
SPECIAL FACTORSIndemnification of Directors and Officers; Directors and Officers Insurance
SPECIAL FACTORSMerger Proceeds in Respect of Company Equity-Based Awards
SPECIAL FACTORSVoting Agreement
SPECIAL FACTORSDividends
ADVISORY VOTE ON MERGER-RELATED EXECUTIVE COMPENSATION
Appendix AAgreement and Plan of Merger
Item |
7. Purposes, Alternatives, Reasons and Effects. |
(a) Purposes. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
SPECIAL FACTORSPurposes and Reasons of the Acquiring Group Filing Persons for the Merger
SPECIAL FACTORSCertain Effects of the Merger; Plans for the Company
(b) Alternatives. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
SPECIAL FACTORSAlternatives to the Merger
(c) Reasons. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
SPECIAL FACTORSOpinion of PJ Solomon Securities, LLC
5
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
SPECIAL FACTORSPositions of the Kingswood Group Filing Persons Regarding the Fairness of the Merger
SPECIAL FACTORSPositions of the Rollover Investor Regarding the Fairness of the Merger
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
SPECIAL FACTORSPurposes and Reasons of the Acquiring Group Filing Persons for the Merger
SPECIAL FACTORSCertain Effects of the Merger; Plans for the Company
SPECIAL FACTORSAlternatives to the Merger
Appendix BOpinion of PJ Solomon Securities, LLC
(d) Effects. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
SPECIAL FACTORSPurposes and Reasons of the Acquiring Group Filing Persons for the Merger
SPECIAL FACTORSCertain Effects of the Merger; Plans for the Company
SPECIAL FACTORSEffects on the Company if the Merger is not Completed
SPECIAL FACTORSFinancing of the Merger
SPECIAL FACTORSInterests of the Companys Directors and Executive Officers in the Merger
SPECIAL FACTORSIndemnification of Directors and Officers; Directors and Officers Insurance
SPECIAL FACTORSMerger Proceeds in Respect of Company Equity-Based Awards
SPECIAL FACTORSDelisting and Deregistration of Company Common Stock
SPECIAL FACTORSMaterial U.S. Federal Income Tax Consequences
SPECIAL FACTORSAppraisal Rights
SPECIAL FACTORSPayment of Merger Consideration and Surrender of Stock Certificates
SPECIAL FACTORSFees and Expenses
THE MERGER AGREEMENTCertificate of Incorporation; Bylaws
THE MERGER AGREEMENTConversion of Securities
ADVISORY VOTE ON MERGER-RELATED EXECUTIVE COMPENSATION
Appendix CSections 607.1301-607.1340 of the Florida Business Corporation Act
Item |
8. Fairness of the Transaction. |
(a), (b) Fairness; Factors Considered in Determining Fairness. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
SPECIAL FACTORSOpinion of PJ Solomon Securities, LLC
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
SPECIAL FACTORSPurposes and Reasons of the Acquiring Group Filing Persons for the Merger
SPECIAL FACTORSPositions of the Kingswood Group Filing Persons Regarding the Fairness of the Merger
SPECIAL FACTORSPositions of the Rollover Investor Regarding the Fairness of the Merger
SPECIAL FACTORSInterests of the Companys Directors and Executive Officers in the Merger
Appendix BOpinion of PJ Solomon Securities, LLC
The presentations and discussion materials dated August 22, 2019, September 20, 2019, January 20, 2020, January 22, 2020, January 27, 2020, January 29, 2020 and January 30, 2020, each prepared by PJ Solomon Securities, LLC and reviewed by the special committee of the board of directors of the Company or the board of directors of the Company, as applicable, are attached hereto as Exhibits (c)(2) (c)(8) and are incorporated by reference herein.
(c) Approval of Security Holders. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
6
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
SPECIAL FACTORSBackground of the Merger
THE SPECIAL MEETINGWho is Entitled to Vote at the Special Meeting?
THE SPECIAL MEETINGHow Many Votes are Needed to Approve Each Proposal?
THE SPECIAL MEETINGHow Many Shares Must Be Present to Constitute a Quorum for the Special Meeting?
THE MERGER AGREEMENTConditions to the Completion of the Merger
(d) Unaffiliated Representative. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
SPECIAL FACTORSPositions of the Kingswood Group Filing Persons Regarding the Fairness of the Merger
SPECIAL FACTORSPositions of the Rollover Investor Regarding the Fairness of the Merger
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
(e) Approval of Directors. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
(f) Other Offers. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSAlternatives to the Merger
Item |
9. Reports, Opinions, Appraisals and Negotiations. |
(a)-(c) Report, Opinion or Appraisal; Preparer and Summary of the Report, Opinion or Appraisal; Availability of Documents. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference.
SUMMARY TERM SHEET
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
SPECIAL FACTORSOpinion of PJ Solomon Securities, LLC
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
WHERE SHAREHOLDERS CAN FIND MORE INFORMATION
Appendix BOpinion of PJ Solomon Securities, LLC
The presentations and discussion materials dated, August 22, 2019, September 20, 2019, January 20, 2020, January 22, 2020, January 27, 2020, January 29, 2020 and January 30, 2020, each prepared by PJS and reviewed by the special committee of the board of directors of the Company or the board of directors of the Company, as applicable, are attached hereto as Exhibits (c)(2) (c)(8) and are incorporated by reference herein.
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Item |
10. Source and Amounts of Funds or Other Consideration. |
(a), (b) Source of Funds; Conditions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSFinancing of the Merger
SPECIAL FACTORSLimited Guarantee
SPECIAL FACTORSVoting Agreement
THE MERGER AGREEMENTClosing and Effective Time of the Merger
THE MERGER AGREEMENTCovenants of the Company
THE MERGER AGREEMENTCovenants of Parent and/or Merger Sub
THE MERGER AGREEMENTCertain Covenants of Each Party
(c) Expenses. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSFees and Expenses
THE SPECIAL MEETINGExpenses of Proxy Solicitation
THE MERGER AGREEMENTTermination
THE MERGER AGREEMENTEffects of Termination; Fees and Expenses
(d) Borrowed Funds. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSFinancing of the Merger
Item |
11. Interest in Securities of the Subject Company. |
(a) Securities Ownership. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
SPECIAL FACTORSInterests of the Companys Directors and Executive Officers in the Merger
THE SPECIAL MEETINGStock Ownership and Interests of Certain Persons
IMPORTANT INFORMATION REGARDING THE COMPANYSecurity Ownership of Certain Beneficial Owners and Management
(b) Securities Transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SPECIAL FACTORSInterests of the Companys Directors and Executive Officers in the Merger
SPECIAL FACTORSVoting Agreement
SPECIAL FACTORSBackground of the Merger
COMMON STOCK TRANSACTION INFORMATIONTransactions by the Acquiring Group Filing Persons
COMMON STOCK TRANSACTION INFORMATIONTransactions by the Company
COMMON STOCK TRANSACTION INFORMATIONTransactions by the Companys Directors and Executive Officers
THE MERGER AGREEMENT
Appendix AAgreement and Plan of Merger
Item |
12. The Solicitation or Recommendation. |
(d) Intent to Tender or Vote in a Going-Private Transaction. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
SPECIAL FACTORSInterests of the Companys Directors and Executive Officers in the Merger
SPECIAL FACTORSVoting Agreement
THE SPECIAL MEETINGStock Ownership and Interests of Certain Persons
8
(e) Recommendation of Others. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
SPECIAL FACTORSPurposes and Reasons of the Acquiring Group Filing Persons for the Merger
SPECIAL FACTORSPositions of the Kingswood Group Filing Persons Regarding the Fairness of the Merger
SPECIAL FACTORSPositions of the Rollover Investor Regarding the Fairness of the Merger
Item |
13. Financial Statements. |
(a) Financial Information. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
IMPORTANT INFORMATION REGARDING THE COMPANYSelected Historical Financial Information
WHERE SHAREHOLDERS CAN FIND MORE INFORMATION
(b) Pro Forma Information. Not Applicable.
Item |
14. Persons/Assets, Retained, Employed, Compensated Or Used. |
(a) Solicitations or Recommendations. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
SPECIAL FACTORSPurposes and Reasons of the Company for the Merger
SPECIAL FACTORSFees and Expenses
THE SPECIAL MEETINGExpenses of Proxy Solicitation
(b) Employees and Corporate Assets. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
QUESTIONS AND ANSWERS ABOUT THE MERGER, THE MERGER-RELATED EXECUTIVE COMPENSATION AND THE SPECIAL MEETING
SPECIAL FACTORSBackground of the Merger
SPECIAL FACTORSRecommendation of the Special Committee and Our Board of Directors; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
THE SPECIAL MEETINGExpenses of Proxy Solicitation
Item |
15. Additional Information. |
(b) The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
SUMMARY TERM SHEET
ADVISORY VOTE ON MERGER-RELATED EXECUTIVE COMPENSATION
(c) Other Material Information. The entirety of the Proxy Statement, including all appendices thereto, is incorporated herein by reference.
Item |
16. Exhibits. |
(a), (b), (c), (d), (f), (g). The list of exhibits filed as part of this Schedule 13E-3 is submitted in the Exhibit Index and is incorporated herein by reference.
9
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
STEIN MART, INC. | ||||||
By: |
/s/ D. Hunt Hawkins |
|||||
Name: | D. Hunt Hawkins | |||||
Title: | Chief Executive Officer | |||||
Dated: April 3, 2020 |
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
STRATOSPHERE HOLDCO, LLC | ||||||
By: Kingswood Stratosphere Investor, LLC, its sole member | ||||||
By: Kingswood Capital Management, L.P., its manager | ||||||
By: |
/s/ Alex Wolf |
|||||
Name: | Alex Wolf | |||||
Title: | Managing Partner | |||||
Dated: April 3, 2020 |
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
STRATOSPHERE MERGER SUB, INC. | ||||||
By: |
/s/ Alex Wolf |
|||||
Name: | Alex Wolf | |||||
Title: | President | |||||
Dated: April 3, 2020 |
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
KINGSWOOD CAPITAL MANAGEMENT, L.P. | ||||||
By: |
/s/ Alex Wolf |
|||||
Name: | Alex Wolf | |||||
Title: | Managing Partner | |||||
Dated: April 3, 2020 |
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
KINGSWOOD STRATOSPHERE INVESTOR, LLC | ||||||
By: Kingswood Capital Management, L.P., its manager | ||||||
By: |
/s/ Alex Wolf |
|||||
Name: | Alex Wolf | |||||
Title: | Managing Partner | |||||
Dated: April 3, 2020 |
10
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
KINGSWOOD INTERMEDIARY I, INC. | ||||||
By: |
/s/ Alex Wolf |
|||||
Name: | Alex Wolf | |||||
Title: | President | |||||
Dated: April 3, 2020 |
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
KINGSWOOD INTERMEDIARY II, INC. | ||||||
By: |
/s/ Alex Wolf |
|||||
Name: | Alex Wolf | |||||
Title: | President | |||||
Dated: April 3, 2020 |
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
KINGSWOOD CAPITAL OPPORTUNITIES FUND I, L.P. | ||||||
By: |
/s/ Alex Wolf |
|||||
Name: | Alex Wolf | |||||
Title: | Partner | |||||
Dated: April 3, 2020 |
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
KINGSWOOD CAPITAL OPPORTUNITIES FUND I-A, L.P. | ||||||
By: |
/s/ Alex Wolf |
|||||
Name: | Alex Wolf | |||||
Title: | Partner | |||||
Dated: April 3, 2020 |
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
KINGSWOOD CAPITAL OPPORTUNITIES FUND I GP, L.P. | ||||||
By: |
/s/ Alex Wolf |
|||||
Name: | Alex Wolf | |||||
Title: | Managing Partner | |||||
Dated: April 3, 2020 |
11
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
/s/ Jay Stein |
||||||
Name: | Jay Stein | |||||
Dated: April 3, 2020 |
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
STEIN FAMILY HOLDCO LLC | ||||||
By: |
/s/ Jay Stein |
|||||
Name: Jay Stein | ||||||
Title: Manager | ||||||
Dated: April 3, 2020 |
12
EXHIBIT INDEX
(g) None.
* |
Previously filed as an exhibit to the Schedule 13E-3 filed on March 2, 2020. |
Exhibit 99(C)(2)
PROJECT STRATOSPHERE UPDATE August 22, 2019
DISCLAIMER The following pages contain material provided to the Special Committee of the Board of Directors (the Special Committee) of Stein Mart, Inc. (the Company) by PJ Solomon, L.P. and its affiliates, including, without limitation, PJ Solomon Securities, LLC (collectively, PJ Solomon or Solomon) in connection with Project Stratosphere. These materials were prepared on a confidential basis in connection with an oral presentation to the Special Committee and not with a view toward complying with the disclosure standards under state or federal securities laws or otherwise. The information contained in this presentation was based solely on publicly available information or information furnished to PJ Solomon by the Company. PJ Solomon has relied, without independent investigation or verification, on the accuracy, completeness and fair presentation of all such information and the conclusions contained herein are conditioned upon such information (whether written or oral) being accurate, complete and fairly presented in all respects. This presentation includes certain statements, estimates and projections provided by the Company with respect to the historical and anticipated future performance of the Company. Such statements, estimates and projections contain or are based on significant assumptions and subjective judgments made by the Companys management. None of PJ Solomon, its affiliates or its or their respective employees, directors, officers, contractors, advisors, members, successors or agents makes any representation or warranty in respect of the accuracy, completeness or fair presentation of any information, projections or any conclusion contained herein. PJ Solomon, its affiliates and its and their respective employees, directors, officers, contractors, advisors, members, successors and agents shall have no liability with respect to any information, projections or matter contained herein, or any oral information provided herewith or data any of them generates. The information contained herein should not be assumed to have been updated at any time subsequent to date shown on the first page of the presentation and the delivery of the presentation does not constitute a representation by PJ Solomon that such information will be updated at any time after the date of the presentation. Neither PJ Solomon nor any of its affiliates is an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction. The Company acknowledges that PJ Solomon is an affiliate of Natixis, a global full service commercial and investment bank.
PROCESS UPDATE SINCE LOI SUBMISSION Following the submission of its Letter of Intent (LOI, Reaffirmed Proposal) on July 24, the Special Committee, advised by PJ Solomon, analyzed and discussed the LOI and decided to grant Kingswood exclusivity conditioned upon (i) a higher price per share offer than the $1.10 per share price indicated (ii) further evidence that Kingswoods $100M fundraising would be successful PJ Solomon spoke with M2O (Kingswoods fund placement agent) and learned the fundraising was going well and targeting a mid-late August close Additionally, PJ Solomon negotiated with Kingswood and on July 30, Kingswood submitted an updated LOI (Updated LOI) increasing the purchase price to $1.15 per share Satisfying the Special Committees two conditions, Kingswood and Stratosphere executed an Exclusivity Agreement on July 31, which grants Kingswood exclusivity until 11:59pm August 31, 2019 (and terminates if Kingswood stops pursuing the transaction or signs a definitive agreement) On August 1, PJ Solomon sent a Foley-prepared draft of the Merger Agreement and Disclosure Schedules, Voting Agreement and Guarantee to Kingswood From August 6-8, Kingswood and its new Operating Partner [Third Party] traveled to Jacksonville to conduct on-site diligence, which included meetings with key management and a store visit Following the on-site diligence meetings, Kingswood hired several advisors including Goodwin Procter (Legal), Aon (Insurance & Benefits), Alix Partners (Operational) and A&G (Real Estate) ? These advisors have been active in the data room and are providing supplemental document requests Additionally, Kingswood has narrowed down its financing process to five ABL providers (RBC, PNC, Fifth Third, BAML, JPM) and two FILO / Term Loan providers (Great American, Pathlight) ? PJ Solomon (with the Special Committees permission) also granted Kingswood access to Wells Fargo and Gordon Brothers and is inviting them to defend their incumbent position as the current ABL / FILO provider
PROCESS UPDATE SINCE LOI SUBMISSION (CONTD) On August 22, PJ Solomon spoke with Kingswood, who mentioned the diligence process has been going well so far. Michael Niegsch, the lead Partner on the deal, provided the following commentary: ? Currently, Kingswoods main focus is developing a business plan with Alix Partners that anticipates potential savings and opportunities under its ownership ? Before signing a definitive agreement, Kingswood also plans to hire a third-party accounting advisor that would conduct a workpaper review, but anticipates it would be largely confirmatory in nature ? With respect to the Merger Agreement (and related transaction documents), Goodwin Procter (Kingswoods legal advisor) has specialists reviewing the data room and the Merger Agreement to provide a fulsome markup next week ? The financing process has been going well, but Kingswood anticipates keeping the incumbent lenders (Wells Fargo and Gordon Brothers) based on their aggressive borrowing rates, lower closing / pre-payment fees and knowledge of the business ? Jay Stein is current on Kingswoods progress and remains excited about the potential transaction ? Kingswoods anticipates its inaugural $100M fundraising will close tomorrow (Friday, August 23)
DUE DILIGENCE UPDATE Business due diligence is largely complete and several third party workstreams well underway with 72% requests addressed to date (although follow-up requests are likely) Kingswood has communicated it is likely to hire more advisors (e.g., accounting / tax) Kingswood anticipates providing a markup of the Merger Agreement next week Stratosphere Data Room Number of Documents: 7,226 Page Total: 86,286 Goodwin Procter Aon (Insurance + Alix Partners Kingswood Total (Legal) Benefits) (Operational) Diligence Requests / Questions Open 0 19 21 7 47 In Process 3 8 4 0 15 Closed 100 34 16 11 161 Total Requests 103 61 41 18 223 % Closed 97% 56% 36% 61% 72% Meetings 1 Pre-LOI meeting None None None 2 1 Post-LOI on-site diligence meeting Calls 1 pre-LOI financial call None 1 diligence call None 5 3 post-LOI diligence calls Note: Updated as of August 21, 2019.
COMP STORE SALES PERFORMANCE VS. FORECAST Comps underperformed forecasts in 18 of the last 24 observable months 2017 Actual Monthly Comp Store Sales Performance vs. 2017 2+10 Forecast (0.1%) (0.6%) (3.1%) (5.2%) (5.0%) (4.7%) (4.5%) (5.6%) (4.1%) (7.0%) (6.2%) (7.2%) (6.0%) (7.0%) (6.5%) (8.8%) (8.5%) (10.3%) (9.5%) (12.7%) Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2017 2+10 Forecast Actual 2018 Actual Monthly Comp Store Sales Performance vs. 2018 2+10 Forecast 1.8% 3.4% 3.7% 1.5% 2.6% 1.8% 2.7% 0.8% 0.0% (0.3%) (1.6%) (0.2%) (1.5%) (1.0%) (1.8%) (3.4%) (6.6%) (7.8%) (6.9%) (11.9%) Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2018 2+10 Forecast Actual 2019 Actual Monthly Comp Store Sales Performance vs. Management Plan (2+10 Forecast) 10.5% 5.3% 2.0% 3.6% 3.3% 5.0% 2.8% 4.7% 4.4% (5.6%) (0.6%) (2.9%) (1.7%) (10.4%) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Management Plan (2019 2+10 Forecast) Actual Note: Comp Store Sales include eCommerce sales but exclude LXR and DSW commissioned sales. 5
Exhibit 99(C)(3)
PROJECT STRATOSPHERE September 20, 2019
DISCLAIMER The following pages contain material provided to the Special Committee of the Board of Directors (the Special Committee) of Stein Mart, Inc. (the Company) by PJ Solomon, L.P. and its affiliates, including, without limitation, PJ Solomon Securities, LLC (collectively, PJ Solomon or Solomon) in connection with Project Stratosphere. These materials were prepared on a confidential basis in connection with an oral presentation to the Special Committee and not with a view toward complying with the disclosure standards under state or federal securities laws or otherwise. The information contained in this presentation was based solely on publicly available information or information furnished to PJ Solomon by the Company. PJ Solomon has relied, without independent investigation or verification, on the accuracy, completeness and fair presentation of all such information and the conclusions contained herein are conditioned upon such information (whether written or oral) being accurate, complete and fairly presented in all respects. This presentation includes certain statements, estimates and projections provided by the Company with respect to the historical and anticipated future performance of the Company. Such statements, estimates and projections contain or are based on significant assumptions and subjective judgments made by the Companys management. None of PJ Solomon, its affiliates or its or their respective employees, directors, officers, contractors, advisors, members, successors or agents makes any representation or warranty in respect of the accuracy, completeness or fair presentation of any information, projections or any conclusion contained herein. PJ Solomon, its affiliates and its and their respective employees, directors, officers, contractors, advisors, members, successors and agents shall have no liability with respect to any information, projections or matter contained herein, or any oral information provided herewith or data any of them generates. The information contained herein should not be assumed to have been updated at any time subsequent to date shown on the first page of the presentation and the delivery of the presentation does not constitute a representation by PJ Solomon that such information will be updated at any time after the date of the presentation. Neither PJ Solomon nor any of its affiliates is an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction. The Company acknowledges that PJ Solomon is an affiliate of Natixis, a global full service commercial and investment bank. DRAFT 1
THE SHAKEOUT IS IN FULL SWING Selected retailers who have filed, liquidated or shut-down over the last few years, or are currently distressed 2019 will likely see more liquidations as non-ABL financing dries up July 142014 Dec 14 2015 * * * * * * * * (a) * * 2016 * * (a) * * * * * (a) 2017 * * * * * * * * *(a) * (a) 2018 * * 2019 * * * * * * * * Distressed Retailers DRAFT Note: * indicates liquidated and (a) indicates pure play digital. As of September 16, 2019. 2
COMP SALES(a) PERFORMANCE VS. FORECAST Comps underperformed forecasts in 13 of the last 15 observable months 2018 Actual Monthly Comp Store Sales Performance vs. 2018 2+10 Forecast 3.6% 5.4% 5.7% 4.8% 3.9% 5.7% 1.4% 2.3% 1.7% 3.0% 0.8% 2.3% (0.0%) (0.4%) (0.2%) (0.2%) (5.0%)(5.0%) (5.5%) (11.6%) Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2018 2+10 Forecast Actual 2019 Actual Monthly Comp Store Sales Performance vs. Management Five Year Plan (2+10 Forecast for 2019) 11.2% 5.2% 2.8% 4.1% 2.9% 1.4% 3.9% 3.2% 4.8% 3.7% 0.0% (4.4%) (2.9%) (0.6%) (10.1%) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Management Five Year Plan (2019 2+10 Forecast) (b) Actual DRAFT (a) Comp figures for 2019 represent Store + eCommerce comparable sales. Comp figures for 2018 represent total comp, representative of Store, eCommerce and Licensed comparable sales. (b) Management Five Year Plan approved by the Board of Directors on May 14, 2019. 3
FY 2019 COMPARISON OF ACTUALS TO PLAN ($ in millions) Management Five Year Plan Management Reforecast (6+6) Actual REVENUE $168 $166 $114 $120 $118 $112 $109 $117 $119 $108 $107 $102 $98 $97 $78 $76 $81 $77 $80 $64 $64 Apr-2019 May-2019 Jun-2019 Jul-2019 Aug-2019Aug-19 Sep-2019 Oct-2019 Nov-2019 Dec-2019 Jan-2020 Comp Sales % 11.2% 5.2% (4.4%) (10.1%) 2.8% 0.0% 4.1% (2.9%) 2.9% (1.7%) 1.4% 3.9% 3.2% (0.6%) 4.8% 3.7% ADJUSTED EBITDA Five Year Plan approved on 5/14/19 EBITDA missed Management Management included actual March and was informed Reforecast (6+6) in August by Five Year Plan by April preliminary results $2.8M, largely as a result of $23.3 $21.7 (5/14/19) permanent markdown timing shifts 2019E EBITDA = $14.5 $15.3 which reduced merchandise $35.7M margin by ~$2M Management $8.4 $9.5 Reforecast (6+6) $6.7 $5.4 $4.9 2019E EBITDA = $0.1 $2.0 $1.5 $0.9 $31.3M ($0.5) ($2.0) ($4.7) ($7.5) ($8.5) ($11.3) ($9.9) ($14.1) Apr-2019 May-2019 Jun-2019 Jul-2019 Aug-2019 Sep-2019 Oct-2019 Nov-2019 Dec-2019 Jan-2020 Rolling LTM EBITDA: $34.9 $27.3 $25.6 $31.7 $24.1 Management Reforecast (6+6) not adjusted to reflect timing shift of LTM EBITDA at LTM EBITDA at markdowns pulled forward into August Management believes this DRAFT first-round IOI Reaffirmed Proposal shift should result in higher merchandise margin through remainder of Q3 and early Q4 Sources: Management Five Year Plan approved by the Board of Directors on May 14, 2019; Management 6+6 Reforecast provided on August 15, 2019. 4
Exhibit 99(C)(4)
Project Stratosphere Special Committee Discussion Materials January 20, 2020 Private and Confidential
Disclaimer The following pages contain material provided to the Special Committee of the Board of Directors (the Special Committee) of Stein Mart, Inc. (the Company) by PJ Solomon, L.P. and its affiliates, including, without limitation, PJ Solomon Securities, LLC (collectively, PJ Solomon or Solomon) in connection with Project Stratosphere. These materials were prepared on a confidential basis in connection with an oral presentation to the Special Committee and not with a view toward complying with the disclosure standards under state or federal securities laws or otherwise. The information contained in this presentation was based solely on publicly available information or information furnished to PJ Solomon by the Company. PJ Solomon has relied, without independent investigation or verification, on the accuracy, completeness and fair presentation of all such information and the conclusions contained herein are conditioned upon such information (whether written or oral) being accurate, complete and fairly presented in all respects. This presentation includes certain statements, estimates and projections provided by the Company with respect to the historical and anticipated future performance of the Company. Such statements, estimates and projections contain or are based on significant assumptions and subjective judgments made by the Companys management. None of PJ Solomon, its affiliates or its or their respective employees, directors, officers, contractors, advisors, members, successors or agents makes any representation or warranty in respect of the accuracy, completeness or fair presentation of any information, projections or any conclusion contained herein. PJ Solomon, its affiliates and its and their respective employees, directors, officers, contractors, advisors, members, successors and agents shall have no liability with respect to any information, projections or matter contained herein, or any oral information provided herewith or data any of them generates. The information contained herein should not be assumed to have been updated at any time subsequent to date shown on the first page of the presentation and the delivery of the presentation does not constitute a representation by PJ Solomon that such information will be updated at any time after the date of the presentation. Neither PJ Solomon nor any of its affiliates is an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction. The Company acknowledges that PJ Solomon is an affiliate of Natixis, a global full service commercial and investment bank. Private and Confidential 1
Executive Summary Following a weak November, Kingswood decided to slow the process to be able to observe December performance In November, actual adjusted EBITDA was ($4.9) million vs. the 6+6 projection of ($0.5) million In December, actual adjusted EBITDA was $18.0 million vs. the 6+6 projection of $21.7 million In the interim, Kingswood sent drafts of key transaction documentation including the Merger Agreement, Voting Agreement, Equity and Debt Commitments and Rollover Agreement as it progressed on non-value workstreams On January 17, 2020, PJ Solomon received an email from Kingswood detailing their response on the three remaining open items in the draft Merger Agreement: Purchase Price per Share: $0.75 Excess Availability at Close: Not less than 32.5% of the Loan Cap Parent Termination Fee and Company Termination Fee: 5% of equity value / equity purchase price PJ Solomon called Kingswood in response to confirm receipt and clarify the Excess Availability definition Per Kingswood, the definition is as per existing Wells Fargo Credit Facility loan documents Wells Fargo and Pathlight (Kingswoods new lenders) are both finalizing the Debt Commitment Agreements on Tuesday, January 21 Private and Confidential 2
2019E Management Forecasts Over Time Outlook for 2019E has worsened over time as Stratosphere missed forecasts ($ in Millions) FY 2019E % Difference 2+10 (a) 6+6 (b) 11+1 (c) 11+1 vs. 2+10 11+1 vs. 6+6 Total Revenue $1,270.0 $1,256.0 $1,234.2 (2.8%) (1.7%) % Store Comp 0.6% (0.8%) (1.2%) % Total Comp 1.8% 0.4% (1.5%) Gross Profit (d) $348.5 $343.9 $335.3 (3.8%) (2.5%) % Margin 27.4% 27.4% 27.2% Adjusted EBITDA $35.7 $31.3 $24.9 (30.2%) (20.2%) % Margin 2.8% 2.5% 2.0% a) Source: Management 2019 2+10 Forecast approved by the Board of Directors on May 14, 2019. b) Source: Management 2019 6+6 Forecast approved by the Board of Directors on August 27, 2019. c) Source: Management internal 2019 11+1 Forecast. d) Includes credit card, breakage and other income. Private and Confidential 3
Comp Sales(a) Performance vs. Forecast Comps underperformed forecasts for 17 of the last 19 observable months 2018 Actual Monthly Comp Store Sales Performance vs. 2018 2+10 Forecast 3.6% 5.4% 5.7% 4.8% 3.9% 5.7% 1.4% 2.3% 1.7% 3.0% 0.8% 2.3% (0.0%) (0.4%) (0.2%) (0.2%) (5.0%)(5.0%) (5.5%) (11.6%) Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2018 2+10 Forecast Actual 2019 Actual Monthly Comp Store Sales Performance vs. Management Five Year Plan (2+10 Forecast for 2019) 11.2% 5.2% 2.8% 4.1% 2.9% 1.5% 3.9% 0.2% 3.2% 4.8% 1.4% 3.7% 0.0% (0.9%) (0.6%) (4.4%) (2.9%) (4.1%) (10.1%) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Management Five Year Plan (2019 2+10 Forecast) Actual a) Comp figures for 2019 represent Store + eCommerce comparable sales. Comp figures for 2018 represent total comp, representative of Store, Private and eCommerce and Licensed comparable sales. Confidential 4
Retailing Environment Update Private and Confidential 5
The Shakeout Is In Full Swing Selected retailers who have filed, liquidated, shut-down or are distressed July 142014 Dec 14 2015 * * * * * * * * (a) * * 2016 * * (a) * * * * * (a) 2017 * * * * * * * * *(a) * (a) 2018 * * 2019 * * * * * * * * * Distressed Retailers Private and Note: * indicates liquidated and (a) indicates pure play digital. Red box indicates department store / off-price retailer. Confidential 6
In 2019, U.S. Retailers Announced ~9,300 closures Closures were more than double the number of openings Excluding Discount and Dollar stores, closures were approximately three times the number of openings 2019 Store Closure Announcements 2,100 800 650 557 512 390 363 261 250 230 222 210 200 200 178 170 150 140 1,719 Total = 9,302 Total (excl. Discount / Dollar) = 7,992 (a) 2019 Store Opening Announcements 975 500 210 200 200 155 150 145 116 100 1,641 Total = 4,392 Total (excl. Discount / Dollar) = 2,672 (a) Source: Coresight h and other publicly available information as of January 2020. Private and a) Discount / Dollar includes Aldi, Dollar General, Dollar Tree, Family Dollar, Five Below, Freds and Shopko. Confidential 7
2019 Preliminary Retail Holiday Overview Online was the bright spot as in-store traffic continued to weaken Holiday Retail Overview Holiday sales rose 3.4% (including online) as e-commerce sales rose 18.8% over 2018 (Mastercard SpendingPulse) Full holiday season online sales reached $142.5 billion (Digital Media Solutions) Global digital spending grew 8% to $723 billion, driven by mobile devices In-store traffic fell 6.1% in December compared to December 2018 (ShopperTrak) Holiday Survey: 27% spending increased, 56% spending unchanged, 17% spending reduced (Shopify) Holiday Sales Apparel: +1.0% overall (11/1 12/26) Brick & Mortar: ND Online: +17.0% (Mastercard) 190 million people (142 million online) shopped during Cyber 5 (b), representing a record number and 14% increase over 2018 (NRF) Black Friday online sales hit a record $7.4 billion, up 19% from 2018 (Adobe) Cyber Monday hit $9.2 billion with the golden hours of retail (10PM 2AM) driving 30% of revenue (Adobe) Sales for the four-day Thanksgiving weekend grew 5.4% to $68.9 billion (Customer Growth Partners) a) Mastercard SpendingPulse. b) Thanksgiving Day through Cyber Monday. c) Digital Media Solutions. d) Mastercard SpendingPulse. Compared to 14.4% and 12.3% in 2018 and 2017, respectively. Holiday Spending YoY Changes (a) 6.8% 5.5% 4.9% 5.1% 4.1% 3.8% 3.2% 3.2% 3.4% 2.3% 2.4% 08 09 10 11 12 13 14 15 16 17 18 19 (6.4%) Holiday E-Commerce Key Statistics $144B 80% 14.6% Global Online Holiday of traffic driven by E-Commerce percentage Sales Volume (c) mobile devices (a) of total retail sales (d) E-commerce sales hit a record high this year with more people doing their holiday shopping online. Due to a later than usual Thanksgiving holiday, we saw retailers offering omnichannel sales earlier in the season, meeting consumers demand for the best deals across all channels and devices.Steve Sadove, former CEO and Chairman of Saks Incorporated Private and Confidential 8
Mall Traffic in 2019 was ~25+% Lower than in 2013 105 100 2013 2014 95 90 2015 85 2016 80 2018 2017 75 2019 2019 traffic continued to be challenged 70 Jan Feb March April May June July Aug Sep Oct Nov Dec Private and Source: Shoppertrak as of January 13, 2020. Confidential 9
Updated 1/17/2020 Indication Summary Private and Confidential 10
Analysis At Various Prices ($ in Millions, Except Per Share Data) Current Kingswood Market (Public Net Debt) Market (Private Net Debt) Indication 1/17/2020 1/17/2020 1/17/2020 Stock Price / Proposed Offer Price $0.69 $0.69 $0.75 $0.85 $0.95 $1.05 $1.15 Shares Outstanding (a) 47.6 47.6 47.6 47.6 47.6 47.6 47.6 Unvested Restricted Stock Units (b) 1.3 1.3 1.3 1.3 1.3 Option Equivalent Shares (c) Diluted Shares Outstanding 47.6 47.6 48.9 48.9 48.9 48.9 48.9 Total Equity Value $32.8 $32.8 $36.6 $41.5 $46.4 $51.3 $56.2 Plus: Net Debt 157.3 (d) 104.0 (e) 104.0 (e) 104.0 (e) 104.0 (e) 104.0 (e) 104.0 (e) Total Enterprise Value $190.2 $136.8 $140.6 $145.5 $150.4 $155.3 $160.1 Premium / (Discount) to: Current Price 1/17/2020 $0.69 % % 8.7 % 23.2 % 37.7 % 52.2 % 66.7 % 30-Day VWAP 0.68 1.5 1.5 10.4 25.1 39.8 54.5 69.2 60-Day VWAP 0.71 (2.7) (2.7) 5.7 19.8 33.9 48.0 62.1 90-Day VWAP 0.73 (6.1) (6.1) 2.1 15.7 29.3 43.0 56.6 180-Day VWAP 0.76 (8.8) (8.8) (0.8) 12.4 25.6 38.8 52.1 52-Week High 2/14/2019 1.23 (43.9) (43.9) (39.0) (30.9) (22.8) (14.6) (6.5) 52-Week Low 1/3/2020 0.66 4.5 4.5 13.6 28.8 43.9 59.1 74.2 Enterprise Value as a Multiple of: Total Revenue LTM (Q3 19)Public $1,240.6 15.3 % 11.0 % 11.3 % 11.7 % 12.1 % 12.5 % 12.9 % LTM (Dec. 19)Private 1,234.4 15.4 11.1 11.4 11.8 12.2 12.6 13.0 Adj. EBITDA LTM (Q3 19)Public $30.0 6.3 x 4.6 x 4.7 x 4.8 x 5.0 x 5.2 x 5.3 x LTM (Dec. 19)Private 27.9 6.8 4.9 5.0 5.2 5.4 5.6 5.7 FY 2019B (f) 24.9 7.6 5.5 5.6 5.8 6.0 6.2 6.4 Price as a Multiple of: Diluted Adj. EPS FY 2019B (f) ($0.26) NM NM NM NM NM NM NM FY 2020E (f) 0.02 44.0 x 44.0 x 47.8 x 54.2 x 60.5 x 66.9 x 73.3 x (a) Total shares outstanding of 47.6M as of January 4, 2020, per Computershare Capital Breakdown Report, which includes 0.6M Restricted Stock Awards, which have voting rights. (b) Unvested Restricted Stock Units (RSUs) as of January 6, 2020, which are not included in shares outstanding and have a double trigger change-incontrol provision. (c) Assumes treasury stock method with no options in the money as of January 6, 2020. PSUs not included as Total Shareholder Return (TSR) target as of January 20, 2020 has not been achieved. (d) Based on cash of $13.0M and total debt of $170.3M as of November 2, 2019 per Company FY 2019 Q3 10-Q filing. (e) Based on cash of $8.5M and total debt of $112.4M as of January 4, 2020 per Management 11+1 Forecast. Private and (f) Source: Management Five Year Plan approved by the Special Committee on January 15, 2020. 2019 based on Management 11+1 Forecast. Confidential 11
Volume Weighted Average Price By Range (Shares in Millions) Volume Per Price Range Last 6 Months Average Daily Volume 0.12 M 3.6 3.9 3.8 2.7 0.6 0.5 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 ? x < ? x < ? x < ? x < ? x < ? x < ? x $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 % of Total Volume: 23.5% 25.7% 17.9% 25.3% 4.0% 3.5% 0.0% 49% Volume Per Price Range Last Month Average Daily Volume 0.16 M 2.7 0.8 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 ? x < ? x < ? x < ? x < ? x < ? x < ? x $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 % of Total Volume: 77.8% 22.2% 0.0% 0.0% 0.0% 0.0% 0.0% 100% Source: Capital IQ as of January 17, 2020. Volume Per Price Range Last 3 Months Average Daily Volume 0.13 M 2.8 2.5 1.9 1.4 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 ? x < ? x < ? x < ? x < ? x < ? x < ? x $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 % of Total Volume: 32.7% 28.6% 16.8% 21.9% 0.0% 0.0% 0.0% 61% Volume Per Price Range CY2020 YTD Average Daily Volume 0.13 M 1.0 0.6 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 ? x < ? x < ? x < ? x < ? x < ? x < ? x $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 % of Total Volume: 62.4% 37.6% 0.0% 0.0% 0.0% 0.0% 0.0% 100% Private and Confidential 12
Premiums Paid Analysis ($ in Millions) Announce Enterprise One Day 30-Day Date Acquirer Target Value Premium Premium Dec-19 Lumos Networks; EQT Partners North State Telecommunications $236.5 29.6% 23.1% Nov-19 ICV Partners Diversified Restaurant Holdings 176.4 123.4% 75.0% Sep-19 Greenbriar Equity Group Arotech Corp. 102.1 32.7% 38.2% Sep-19 Accel-KKR et al. MAM Software Group 152.1 15.4% 13.7% Aug-19 Assurance Global Services Computer Task Group 106.8 33.8% 47.8% Aug-19 Austin Nichols & Co. Castle Brands 263.3 92.1% 136.1% Jun-19 Atlantis Acquisitionco Canada Corp. Hydrogenics Corp. 279.4 (3.1%) 55.3% Jun-19 YANMAR America Corp. ASV Holdings 104.0 332.5% 200.0% Jun-19 Extreme Networks, Inc. Aerohive Networks 198.7 39.5% 25.7% May-19 Vintage Capital Management Liberty Tax 160.8 31.1% 19.9% Apr-19 MTY Food Group, Inc. Papa Murphys Holdings 197.4 31.9% 15.8% Apr-19 The Ancora Group J. Alexanders Holdings 262.4 12.5% 22.7% Apr-19 Cresco Labs CannaRoyalty Corp. 276.6 (54.1%) (41.2%) Mar-19 HEXO Corp. Newstrike Brands 125.0 4.1% (11.6%) Feb-19 Tesla Maxwell Technologies 293.6 96.3% 234.8% Dec-18 Cerberus Capital Management Sparton Corp. 253.9 41.0% 47.8% Nov-18 Altair Engineering Datawatch Corp. 162.6 35.2% 13.9% Oct-18 General Catalyst et al. Intersections 102.6 107.3% 111.5% Oct-18 Z Capital Group; Affinity Gaming Full House Resorts 211.9 79.6% 67.3% Sep-18 Stryker Corp. Invuity 188.7 28.7% 87.3% Aug-18 Moodys Analytics Maryland Corp. Reis 251.1 32.2% 2.7% Aug-18 The Invus Group et al. Zoes Kitchen 295.3 33.4% 27.9% Aug-18 Roark Capital Group; FOCUS Brands Jamba 194.5 16.3% 20.8% Apr-18 NICE Systems, Inc. Mattersight Corp. 105.0 25.6% 17.4% Apr-18 SPX Corp. ELXSI Corp. 152.6 30.4% 29.9% Mar-18 William Morris Endeavor et al. NeuLion 203.0 116.5% 103.9% Mar-18 GP Investimentos Ltda. Bravo Brio Restaurant Group 100.1 16.8% 35.0% Feb-18 AMC Networks, Inc. RLJ Entertainment 163.7 61.5% 59.4% Jan-18 Duravant LLC Key Technology 172.0 50.6% 34.1% Median 32.7% 34.1% Source: FactSet. Represents transactions of $100-$300M in enterprise value with North American targets, in which at least a 50% stake was acquired. Private and Excludes financial services, healthcare, real estate and energy/mining/minerals industries. Confidential 13
Preliminary Liquidity Observations Private and Confidential 14
Forecasted January July 2020 Liquidity Note: Line Cap, as defined in the current Wells Fargo ABL credit agreement, is the lesser of the net ABL Borrowing Base and the Credit Facility Size Kingswood indicated a minimum available requirement of 32.5% of the Line Cap on January 17, 2020 ($ in Thousands) January, Week Ended February, Week Ended March, Week Ended April, Week Ended Month Ended 24-Jan 31-Jan 7-Feb 14-Feb 21-Feb 28-Feb 6-Mar 13-Mar 20-Mar 27-Mar 3-Apr 10-Apr 30-Apr (a) 31-May (a) 30-Jun (a) 31-Jul (a) Eligible Inventory $220,384 $220,384 $220,384 $227,464 $227,464 $227,464 $227,464 $249,447 $249,447 $249,447 $249,447 $249,447 $247,492 $248,876 $236,622 $210,587 Eligible Credit Card Receivables 5,652 5,652 5,652 6,378 6,378 6,378 6,378 9,164 9,164 9,164 9,164 9,164 10,021 17,943 10,492 9,918 Eligible FF&E 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,701 2,701 2,701 2,599 Less: Reserves (18,294) (18,294) (18,294) (18,005) (18,005) (18,005) (18,005) (15,505) (15,505) (15,505) (15,505) (15,505) (15,661) (15,408) (15,361) (16,494) Net Credit Facility Borrowing Base $210,544 $210,544 $210,544 $218,640 $218,640 $218,640 $218,640 $245,909 $245,909 $245,909 $245,909 $245,909 $244,552 $254,112 $234,454 $206,610 Borrowing (157,872) (155,472) (155,472) (170,172) (163,672) (158,705) (157,559) (174,303) (170,939) (152,689) (146,878) (166,741) (137,216) (125,989) (120,947) (128,612) Excess Above Available Minimum $52,672 $55,072 $55,072 $48,468 $54,968 $59,935 $61,081 $71,606 $74,970 $93,220 $99,031 $79,168 $107,336 $128,123 $113,507 $77,998 Net Credit Facility Borrowing Base $210,544 $210,544 $210,544 $218,640 $218,640 $218,640 $218,640 $245,909 $245,909 $245,909 $245,909 $245,909 $244,552 $254,112 $234,454 $206,610 Less: Term Loan (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) Line Cap (ABL Credit Facility Borrowing Base) $175,544 $175,544 $175,544 $183,640 $183,640 $183,640 $183,640 $210,909 $210,909 $210,909 $210,909 $210,909 $209,552 $219,112 $199,454 $171,610 % of Line Cap 30.0% 31.4% 31.4% 26.4% 29.9% 32.6% 33.3% 34.0% 35.5% 44.2% 47.0% 37.5% 51.2% 58.5% 56.9% 45.5% Comparison to Minimum Avail. Req. ($) ($4,380) ($1,980) ($1,980) ($11,215) ($4,715) $252 $1,398 $3,061 $6,425 $24,675 $30,486 $10,623 $39,231 $56,912 $48,684 $22,225 Comparison to Minimum Avail. Req. (%) -2.5% -1.1% -1.1% -6.1% -2.6% 0.1% 0.8% 1.5% 3.0% 11.7% 14.5% 5.0% 18.7% 26.0% 24.4% 13.0% Memo: Adjusted EBITDA (b) ($4,612) ($6,754) $10,946 $12,250 $5,049 $7,406 ($1,372) Source: 13-Week Cash Flow Forecast as of January 13, 2020 and Companys preliminary 2020 monthly budget as of January 16, 2020. a) Month-end borrowing base calculation represents projected certificate from the third Monday of the previous month. Private and b) Monthly Adjusted EBITDA per Management internal 2019 11+1 Forecast and Companys preliminary 2020 monthly budget as of January 16, 2020. Confidential 15
Historical and Projected Availability as a % of Line Cap 2018A (a) 2019A 2020E Minimum Availability Requirement (32.5%) 32.5% February and July are typically liquidity low points February March April May June July Source: Historical borrowing base calculations and Companys preliminary 2020 monthly budget as of January 16, 2020. Private and a) Calculated using $50M Wells Fargo FILO Term Loan. Replaced by the Gordon Brothers $35M term loan in August 2018. Confidential 16
Exhibit 99(C)(5)
Project Stratosphere Discussion Materials January 22, 2020 Private and Confidential
Disclaimer The following pages contain material provided to the Special Committee of the Board of Directors (the Special Committee) of Stein Mart, Inc. (the Company) by PJ Solomon, L.P. and its affiliates, including, without limitation, PJ Solomon Securities, LLC (collectively, PJ Solomon or Solomon) in connection with Project Stratosphere. These materials were prepared on a confidential basis in connection with an oral presentation to the Special Committee and not with a view toward complying with the disclosure standards under state or federal securities laws or otherwise. The information contained in this presentation was based solely on publicly available information or information furnished to PJ Solomon by the Company. PJ Solomon has relied, without independent investigation or verification, on the accuracy, completeness and fair presentation of all such information and the conclusions contained herein are conditioned upon such information (whether written or oral) being accurate, complete and fairly presented in all respects. This presentation includes certain statements, estimates and projections provided by the Company with respect to the historical and anticipated future performance of the Company. Such statements, estimates and projections contain or are based on significant assumptions and subjective judgments made by the Companys management. None of PJ Solomon, its affiliates or its or their respective employees, directors, officers, contractors, advisors, members, successors or agents makes any representation or warranty in respect of the accuracy, completeness or fair presentation of any information, projections or any conclusion contained herein. PJ Solomon, its affiliates and its and their respective employees, directors, officers, contractors, advisors, members, successors and agents shall have no liability with respect to any information, projections or matter contained herein, or any oral information provided herewith or data any of them generates. The information contained herein should not be assumed to have been updated at any time subsequent to date shown on the first page of the presentation and the delivery of the presentation does not constitute a representation by PJ Solomon that such information will be updated at any time after the date of the presentation. Neither PJ Solomon nor any of its affiliates is an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction. The Company acknowledges that PJ Solomon is an affiliate of Natixis, a global full service commercial and investment bank. Private and Confidential 1
Process Update On August 1, 2019, Stratosphere entered into exclusivity with Kingswood following the buyers $1.15 per share indication submitted July 30, 2019 At the time, the prevailing projections were the 4+8 forecast indicating FY 2019E EBITDA of $35.1 million On August 27, 2019, the full Stratosphere Board of Directors (excluding Jay Stein) approved the 6+6 projections and the revised Five Year Plan, which PJ Solomon thereafter sent to Kingswood; the 6+6 indicated revised FY 2019E EBITDA of $31.3 million On August 30, 2019, Kingswood sent Stratospheres advisors a markup of the Merger Agreement Foley sent a revised draft of the Merger Agreement on September 7, 2019, which, among other revisions, reinstated the provision to make the transaction contingent on approval of the majority of the minority shareholders In several subsequent conversations between PJ Solomon and Kingswood on the open points in the Merger Agreement, PJ Solomon insisted on keeping the transaction contingent on approval of the majority of the minority shareholders, which led to the parties breaking off discussions In October, after hiring a new operating partner [Third Party], Kingswood and the Company decided to re-engage [Third Party] met with Management in-person in Jacksonville on October 7-8, 2019 and then visited stores in Dallas on November 7, 2019 and in Orlando on November 20, 2019 As Kingswood continued its diligence, several key issues arose: Stratospheres financial performance continued to deteriorate, ultimately revising its year end Adj. EBITDA down to $24.9 million from $31.3 million in its 6+6 Board-approved plan Kingswood believed several agreements signed by Management [vendor] were expensive and not additive to the business Kingswood vocalized concerns over the large severance liability for the 11 EVPs / SVPs and 24 VPs, currently estimated at ~$11 million of impact (according to the buyers) Private and Confidential 2
Process Update (Contd) Following a weak November, Kingswood decided to slow the process to be able to observe December performance In November, actual adjusted EBITDA was ($4.9) million vs. the 6+6 projection of ($0.5) million In December, actual adjusted EBITDA was $18.0 million vs. the 6+6 projection of $21.7 million Following this poor performance, Management reforecasted its FY 2019E estimate (11+1) and created an updated version of the 5 Year Plan which was approved by the Special Committee on January 15, 2020 In the interim, Kingswood sent drafts of key transaction documentation including the Merger Agreement, Voting Agreement, Equity and Debt Commitments and Rollover Agreement as it progressed on non-value workstreams On January 17, 2020, PJ Solomon received an email from Kingswood detailing their response on the three remaining open items in the draft Merger Agreement: Purchase Price per Share: $0.75 Excess Availability at Close: Not less than 32.5% of the Line Cap Parent Termination Fee and Company Termination Fee: 5% of equity value / equity purchase price PJ Solomon called Kingswood in response to confirm receipt and clarify the Excess Availability definition Per Kingswood, the definition is as per existing Wells Fargo Credit Facility loan documents On January 20, 2020, the Special Committee rejected the $0.75 per share purchase price with no counter-offer as it determines what, if any, next steps are to be taken Wells Fargo and Pathlight (Kingswoods new lenders) are both finalizing the Debt Commitment Agreements and indicated an anticipated delivery date to Stratosphere of Wednesday, January 22, 2020 Private and Confidential 3
2019E Management Forecasts Over Time Outlook for 2019E has worsened over time as Stratosphere missed forecasts ($ in Millions) FY 2019E % Difference 2+10 (a) 4+8 (b) 6+6 (c) 11+1 (d) 11+1 vs. 2+10 11+1 vs. 4+8 11+1 vs. 6+6 Total Revenue $1,270.0 $1,259.8 $1,256.0 $1,234.2 (2.8%) (2.0%) (1.7%) % Store Comp 0.6% (0.7%) (0.8%) (1.2%) % Total Comp 1.8% 0.4% 0.4% (1.5%) Gross Profit (e) $348.5 $346.3 $343.9 $335.3 (3.8%) (3.2%) (2.5%) % Margin 27.4% 27.5% 27.4% 27.2% Adjusted EBITDA $35.7 $35.1 $31.3 $24.9 (30.2%) (29.0%) (20.2%) % Margin 2.8% 2.8% 2.5% 2.0% a) Source: Management 2019 2+10 Forecast approved by the Board of Directors on May 14, 2019. b) Source: Management internal 2019 4+8 Forecast c) Source: Management 2019 6+6 Forecast approved by the Board of Directors on August 27, 2019. d) Source: Management internal 2019 11+1 Forecast. e) Includes credit card, breakage and other income. Private and Confidential 4
Comp Sales(a) Performance vs. Forecast Comps underperformed forecasts for 17 of the last 19 observable months 2018 Actual Monthly Comp Store Sales Performance vs. 2018 2+10 Forecast 3.6% 5.4% 5.7% 4.8% 3.9% 5.7% 1.4% 2.3% 1.7% 3.0% 0.8% 2.3% (0.0%) (0.4%) (0.2%) (0.2%) (5.0%)(5.0%) (5.5%) (11.6%) Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2018 2+10 Forecast Actual 2019 Actual Monthly Comp Store Sales Performance vs. Management Five Year Plan (2+10 Forecast for 2019) 11.2% 5.2% 2.8% 4.1% 2.9% 1.5% 3.9% 0.2% 3.2% 4.8% 1.4% 3.7% 0.0% (0.9%) (0.6%) (4.4%) (2.9%) (4.1%) (10.1%) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Management Five Year Plan (2019 2+10 Forecast) Actual a) Comp figures for 2019 represent Store + eCommerce comparable sales. Comp figures for 2018 represent total comp, representative of Store, eCommerce and Licensed comparable sales. Private and Confidential 5
Retailing Environment Update Private and Confidential 6
The Shakeout Is In Full Swing Selected retailers who have filed, liquidated, shut-down or are distressed July 142014 Dec 14 2015 * * * * * * * * (a) * * 2016 * * (a) * * * * * (a) 2017 * * * * * * * * *(a) * (a) 2018 * * 2019 * * * * * * * * * Distressed Retailers Note: * indicates liquidated and (a) indicates pure play digital. Red box indicates department store / broadlines retailer. Private and Confidential 7
In 2019, U.S. Retailers Announced ~9,300 closures Closures were more than double the number of openings Excluding Discount and Dollar stores, closures were approximately three times the number of openings 2019 Store Closure Announcements 2,100 800 650 557 512 390 363 261 250 230 222 210 200 200 178 170 150 140 1,719 Total = 9,302 Total (excl. Discount / Dollar) = 7,992 (a) 2019 Store Opening Announcements 975 500 210 200 200 155 150 145 116 100 1,641 Total = 4,392 Total (excl. Discount / Dollar) = 2,672 (a) Source: Coresight h and other publicly available information as of January 2020. a) Discount / Dollar includes Aldi, Dollar General, Dollar Tree, Family Dollar, Five Below, Freds and Shopko. Private and Confidential 8
2019 Preliminary Retail Holiday Overview Online was the bright spot as in-store traffic continued to weaken Holiday Retail Overview Holiday sales rose 3.4% (including online) as e-commerce sales rose 18.8% over 2018 (Mastercard SpendingPulse) Full holiday season online sales reached $142.5 billion (Digital Media Solutions) Global digital spending grew 8% to $723 billion, driven by mobile devices In-store traffic fell 6.1% in December compared to December 2018 (ShopperTrak) Holiday Survey: 27% spending increased, 56% spending unchanged, 17% spending reduced (Shopify) Holiday Sales Apparel: +1.0% overall (11/1 12/26) Brick & Mortar: ND Online: +17.0% (Mastercard) 190 million people (142 million online) shopped during Cyber 5 (b), representing a record number and 14% increase over 2018 (NRF) Black Friday online sales hit a record $7.4 billion, up 19% from 2018 (Adobe) Cyber Monday hit $9.2 billion with the golden hours of retail (10PM 2AM) driving 30% of revenue (Adobe) Sales for the four-day Thanksgiving weekend grew 5.4% to $68.9 billion (Customer Growth Partners) a) Mastercard SpendingPulse. b) Thanksgiving Day through Cyber Monday. c) Digital Media Solutions. d) Mastercard SpendingPulse. Compared to 14.4% and 12.3% in 2018 and 2017, respectively. Holiday Spending YoY Changes (a) 6.8% 5.5% 4.9% 5.1% 4.1% 3.8% 3.2% 3.2% 3.4% 2.3% 2.4% 08 09 10 11 12 13 14 15 16 17 18 19 (6.4%) Holiday E-Commerce Key Statistics $144B 80% 14.6% Global Online Holiday of traffic driven by E-Commerce percentage Sales Volume (c) mobile devices (a) of total retail sales (d) E-commerce sales hit a record high this year with more people doing their holiday shopping online. Due to a later than usual Thanksgiving holiday, we saw retailers offering omnichannel sales earlier in the season, meeting consumers demand for the best deals across all channels and devices.Steve Sadove, former CEO and Chairman of Saks Incorporated Private and Confidential 9
Mall Traffic in 2019 was ~25+% Lower than in 2013 105 100 2013 2014 95 90 2015 85 2016 80 2018 2017 75 2019 2019 traffic continued to be challenged 70 Jan Feb March April May June July Aug Sep Oct Nov Dec Source: Shoppertrak as of January 13, 2020. Private and Confidential 10
Updated 1/17/2020 Indication Summary Private and Confidential 11
Projected Financials 11+1 Forecast and Five Year Plan (Amounts in Millions, Except Per Share Data) LTM Fiscal Year CAGR Income Statement Data Dec-19 2019B 2020P 2021P 2022P 2023P 2024P FY19-FY24 Total Revenue $1,234.4 $1,234.2 $1,255.5 $1,277.6 $1,297.3 $1,321.5 $1,366.2 2.1% Gross Profit 337.2 335.3 349.6 353.9 358.4 365.4 376.6 2.4 Adj. SG&A 309.3 310.3 312.0 319.7 324.7 330.0 338.5 1.8 Adj. EBITDA 27.9 24.9 37.5 34.2 33.7 35.4 38.1 8.9 Adj. EBIT (0.6) (3.3) 10.2 9.7 12.3 17.0 21.3 NM Diluted EPS ($0.17) ($0.25) $0.00 $0.01 $0.05 $0.12 $0.22 NM Adjusted Diluted EPS ($0.22) ($0.26) $0.02 $0.03 $0.07 $0.15 $0.25 NM Number of Stores 283 283 281 277 274 276 280 Margins Gross Profit 27.3% 27.2% 27.8% 27.7% 27.6% 27.7% 27.6% Adj. EBITDA 2.3 2.0 3.0 2.7 2.6 2.7 2.8 Adj. EBIT (0.0) (0.3) 0.8 0.8 0.9 1.3 1.6 Comparable Sales Store Sales (2.0%) (a) (1.2%) 2.4% 1.5% 1.5% 1.4% 1.5% ECommerce 9.0 (a) (b) (16.3%) (2.3%) 14.4% 13.5% 10.0% 10.0% Total Comp Sales (excl. DSW & LXR) (1.7) (a) (1.5%) 2.2% 1.9% 2.0% 1.8% 1.9% Growth Rates Total Revenue (4.4%) (3.0%) 1.7% 1.8% 1.5% 1.9% 3.4% Adj. EBITDA (32.8%) (36.8) 50.5 (9.0) (1.3) 4.9 7.8 Adj. EBIT (106.6%) NM NM (4.9) 26.2 38.7 25.2 Balance Sheet and Cash Flow Data Cash $8.5 $12.0 $12.0 $12.0 $12.0 $12.0 $12.0 Total Debt 112.4 147.5 129.0 121.6 113.3 104.7 97.8 Depreciation and Amortization 28.5 28.2 27.3 24.4 21.4 18.3 16.8 Cum. FY20-FY24 Capital Expenditures (6.1) (7.7) (10.6) (16.0) (14.8) (15.8) (15.2) (72.4) Change in Net Working Capital (12.5) (3.7) (2.0) (2.7) (1.8) (2.9) (8.8) Free Cash Flow (c) 7.3 7.6 17.8 9.4 10.4 8.7 6.7 60.5 Leverage and Interest Coverage Ratios Adj. Debt / Adj. EBITDAR (d) 7.1 x N/A N/A N/A N/A N/A N/A Total Debt / Adj. EBITDA 4.0 5.9 x 3.4 x 3.6 x 3.4 x 3.0 x 2.6 x Source: Management Five Year Plan and 2019 11+1 Forecast approved by the Special Committee on January 15, 2020. Adjusted EBITDA, EBIT and Diluted EPS exclude store impairments, gain from credit card settlement and pre-opening costs identified by Management. a) Represents year-to-date comparable store sales. b) Represents omni-channel comparable sales, which are not comparable with historical periods. With the rollout of Smart Fulfillment in August 2019 and BOPIS in September 2019, a significant portion of eComm sales have shifted to ship-from-store, and to a lesser extent, BOPIS. As a result, ECommerce comparable sales are down (15.6%) YTD. c) Defined as Cash Flow from Operating Activities less Capital Expenditures. d) Assumes 8.0x rent methodology as it is not yet clear that the lender and credit analyst communities have altered their leverage measurement methodologies for revised lease accounting rules. Private and Confidential 12
Analysis At Various Prices ($ in Millions, Except Per Share Data) Current Kingswood Market (Public Net Debt) Market (Avg. Net Debt) Market (Private Net Debt) Indication 1/17/2020 1/17/2020 1/17/2020 1/17/2020 Stock Price / Proposed Offer Price $0.69 $0.69 $0.69 $0.75 $0.85 $0.95 $1.05 $1.15 Shares Outstanding (a) 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 Unvested Restricted Stock Units (b) 1.3 1.3 1.3 1.3 1.3 Option Equivalent Shares (c) Diluted Shares Outstanding 47.6 47.6 47.6 48.9 48.9 48.9 48.9 48.9 Total Equity Value $32.8 $32.8 $32.8 $36.6 $41.5 $46.4 $51.3 $56.2 Plus: Net Debt 157.3 (d) 136.1 (e) 104.0 (f) 104.0 (f) 104.0 (f) 104.0 (f) 104.0 (f) 104.0 (f) Total Enterprise Value $190.2 $168.9 $136.8 $140.6 $145.5 $150.4 $155.3 $160.1 Premium / (Discount) to: Current Price 1/17/2020 $0.69 % % % 8.7 % 23.2 % 37.7 % 52.2 % 66.7 % 30-Day VWAP 0.68 1.5 1.5 1.5 10.4 25.1 39.8 54.5 69.2 60-Day VWAP 0.71 (2.7) (2.7) (2.7) 5.7 19.8 33.9 48.0 62.1 90-Day VWAP 0.73 (6.1) (6.1) (6.1) 2.1 15.7 29.3 43.0 56.6 180-Day VWAP 0.76 (8.8) (8.8) (8.8) (0.8) 12.4 25.6 38.8 52.1 13-Week High 11/18/2019 0.85 (18.3) (18.3) (18.3) (11.2) 0.6 12.4 24.3 36.1 26-Week High 8/21/2019 0.95 (27.0) (27.0) (27.0) (20.6) (10.1) 0.5 11.1 21.7 52-Week High 2/14/2019 1.23 (43.9) (43.9) (43.9) (39.0) (30.9) (22.8) (14.6) (6.5) 52-Week Low 1/3/2020 0.66 4.5 4.5 4.5 13.6 28.8 43.9 59.1 74.2 Enterprise Value as a Multiple of: Total Revenue LTM (Q3 19)Public $1,240.6 15.3 % 13.6 % 11.0 % 11.3 % 11.7 % 12.1 % 12.5 % 12.9 % LTM (Dec. 19)Private 1,234.4 15.4 13.7 11.1 11.4 11.8 12.2 12.6 13.0 Adj. EBITDA LTM (Q3 19)Public $30.0 6.3 x 5.6 x 4.6 x 4.7 x 4.8 x 5.0 x 5.2 x 5.3 x LTM (Dec. 19)Private 27.9 6.8 6.1 4.9 5.0 5.2 5.4 5.6 5.7 FY 2019B (g) 24.9 7.6 6.8 5.5 5.6 5.8 6.0 6.2 6.4 Price as a Multiple of: Diluted Adj. EPS FY 2019B (g) ($0.26) NM NM NM NM NM NM NM NM FY 2020E (g) 0.02 44.0 x 44.0 x 44.0 x 47.8 x 54.2 x 60.5 x 66.9 x 73.3 x a) Total shares outstanding of 47.6M as of January 4, 2020, per Computershare Capital Breakdown Report, which includes 0.6M Restricted Stock Awards, which have voting rights. b) Unvested Restricted Stock Units (RSUs) as of January 6, 2020, which are not included in shares outstanding and have a double trigger change-incontrol provision. c) Assumes treasury stock method with no options in the money as of January 6, 2020. PSUs not included as Total Shareholder Return (TSR) target as of January 20, 2020 has not been achieved. d) Based on cash of $13.0M and total debt of $170.3M as of November 2, 2019 per Company FY 2019 Q3 10-Q filing. e) Based on average month-end net debt balances for the last twelve months from January 2019 through December 2019. f) Based on cash of $8.5M and total debt of $112.4M as of January 4, 2020 per Management 11+1 Forecast. g) Source: Management Five Year Plan approved by the Special Committee on January 15, 2020. 2019 based on Management 11+1 Forecast. Private and Confidential 13
Volume Weighted Average Price By Range (Shares in Millions) Volume Per Price Range Last 6 Months Average Daily Volume 0.12 M 3.6 3.9 3.8 2.7 0.6 0.5 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 ? x < ? x < ? x < ? x < ? x < ? x < ? x $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 % of Total Volume: 23.5% 25.7% 17.9% 25.3% 4.0% 3.5% 0.0% 49% Volume Per Price Range Last Month Average Daily Volume 0.16 M 2.7 0.8 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 ? x < ? x < ? x < ? x < ? x < ? x < ? x $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 % of Total Volume: 77.8% 22.2% 0.0% 0.0% 0.0% 0.0% 0.0% 100% Source: Capital IQ as of January 17, 2020. Volume Per Price Range Last 3 Months Average Daily Volume 0.13 M 2.8 2.5 1.9 1.4 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 ? x < ? x < ? x < ? x < ? x < ? x < ? x $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 % of Total Volume: 32.7% 28.6% 16.8% 21.9% 0.0% 0.0% 0.0% 61% Volume Per Price Range CY2020 YTD Average Daily Volume 0.13 M 1.0 0.6 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 ? x < ? x < ? x < ? x < ? x < ? x < ? x $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 % of Total Volume: 62.4% 37.6% 0.0% 0.0% 0.0% 0.0% 0.0% 100% Private and Confidential 14
($ in Millions) Announce Enterprise One Day 30-Day Date Acquirer Target Value Premium Premium Dec-19 Lumos Networks; EQT Partners North State Telecommunications $236.5 29.6% 23.1% Nov-19 ICV Partners Diversified Restaurant Holdings 176.4 123.4% 75.0% Sep-19 Greenbriar Equity Group Arotech Corp. 102.1 32.7% 38.2% Sep-19 Accel-KKR et al. MAM Software Group 152.1 15.4% 13.7% Aug-19 Assurance Global Services Computer Task Group 106.8 33.8% 47.8% Aug-19 Austin Nichols & Co. Castle Brands 263.3 92.1% 136.1% Jun-19 Atlantis Acquisitionco Canada Corp. Hydrogenics Corp. 279.4 (3.1%) 55.3% Jun-19 YANMAR America Corp. ASV Holdings 104.0 332.5% 200.0% Jun-19 Extreme Networks, Inc. Aerohive Networks 198.7 39.5% 25.7% May-19 Vintage Capital Management Liberty Tax 160.8 31.1% 19.9% Apr-19 MTY Food Group, Inc. Papa Murphys Holdings 197.4 31.9% 15.8% Apr-19 The Ancora Group J. Alexanders Holdings 262.4 12.5% 22.7% Apr-19 Cresco Labs CannaRoyalty Corp. 276.6 (54.1%) (41.2%) Mar-19 HEXO Corp. Newstrike Brands 125.0 4.1% (11.6%) Feb-19 Tesla Maxwell Technologies 293.6 96.3% 234.8% Dec-18 Cerberus Capital Management Sparton Corp. 253.9 41.0% 47.8% Nov-18 Altair Engineering Datawatch Corp. 162.6 35.2% 13.9% Oct-18 General Catalyst et al. Intersections 102.6 107.3% 111.5% Oct-18 Z Capital Group; Affinity Gaming Full House Resorts 211.9 79.6% 67.3% Sep-18 Stryker Corp. Invuity 188.7 28.7% 87.3% Aug-18 Moodys Analytics Maryland Corp. Reis 251.1 32.2% 2.7% Aug-18 The Invus Group et al. Zoes Kitchen 295.3 33.4% 27.9% Aug-18 Roark Capital Group; FOCUS Brands Jamba 194.5 16.3% 20.8% Apr-18 NICE Systems, Inc. Mattersight Corp. 105.0 25.6% 17.4% Apr-18 SPX Corp. ELXSI Corp. 152.6 30.4% 29.9% Mar-18 William Morris Endeavor et al. NeuLion 203.0 116.5% 103.9% Mar-18 GP Investimentos Ltda. Bravo Brio Restaurant Group 100.1 16.8% 35.0% Feb-18 AMC Networks, Inc. RLJ Entertainment 163.7 61.5% 59.4% Jan-18 Duravant LLC Key Technology 172.0 50.6% 34.1% Median 32.7% 34.1% Source: FactSet. Represents transactions of $100-$300M in enterprise value with North American targets, in which at least a 50% stake was acquired. Excludes financial services, healthcare, real estate and energy/mining/minerals industries. Private and Confidential 15
Preliminary Liquidity Observations Private and Confidential 16
Forecasted January July 2020 Liquidity Note: Line Cap, as defined in the current Wells Fargo ABL credit agreement, is the lesser of the net ABL Borrowing Base and the Credit Facility Size Kingswood indicated a minimum available requirement of 32.5% of the Line Cap on January 17, 2020 ($ in Thousands) January, Week Ended February, Week Ended March, Week Ended April, Week Ended Month Ended 24-Jan 31-Jan 7-Feb 14-Feb 21-Feb 28-Feb 6-Mar 13-Mar 20-Mar 27-Mar 3-Apr 10-Apr 17-Apr 30-Apr (a) 31-May (a) 30-Jun (a) 31-Jul (a) Eligible Inventory $213,843 $213,843 $213,843 $226,464 $226,464 $226,464 $226,464 $249,568 $249,568 $249,568 $249,568 $249,568 $249,568 $247,492 $248,876 $236,622 $210,587 Eligible Credit Card Receivables 5,028 5,028 5,028 6,210 6,210 6,210 6,210 9,092 9,092 9,092 9,092 9,092 9,092 10,021 17,943 10,492 9,918 Eligible FF&E 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,803 2,701 2,701 2,701 2,599 Less: Reserves (17,462) (17,462) (17,462) (18,005) (18,005) (18,005) (18,005) (15,505) (15,505) (15,505) (15,505) (15,505) (15,505) (15,661) (15,408) (15,361) (16,494) Net Credit Facility Borrowing Base $204,212 $204,212 $204,212 $217,472 $217,472 $217,472 $217,472 $245,958 $245,958 $245,958 $245,958 $245,958 $245,958 $244,552 $254,112 $234,454 $206,610 Less: Term Loan (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) Line Cap (ABL Credit Facility Borrowing Base) $169,212 $169,212 $169,212 $182,472 $182,472 $182,472 $182,472 $210,958 $210,958 $210,958 $210,958 $210,958 $210,958 $209,552 $219,112 $199,454 $171,610 Net Credit Facility Borrowing Base $204,212 $204,212 $204,212 $217,472 $217,472 $217,472 $217,472 $245,958 $245,958 $245,958 $245,958 $245,958 $245,958 $244,552 $254,112 $234,454 $206,610 Borrowing (152,972) (151,572) (151,872) (166,072) (160,272) (158,440) (157,613) (174,728) (171,378) (153,092) (147,320) (167,219) (153,773) (137,216) (125,989) (120,947) (128,612) A Excess Above Available Minimum $51,240 $52,640 $52,340 $51,400 $57,200 $59,032 $59,859 $71,230 $74,580 $92,866 $98,638 $78,739 $92,185 $107,336 $128,123 $113,507 $77,998 B KW Minimum Availability Requirement (32.5% of Line Cap) $54,994 $54,994 $54,994 $59,303 $59,303 $59,303 $59,303 $68,561 $68,561 $68,561 $68,561 $68,561 $68,561 $68,104 $71,212 $64,822 $55,773 AB Comparison to Minimum Avail. Req. ($) ($3,754) ($2,354) ($2,654) ($7,903) ($2,103) ($271) $556 $2,669 $6,019 $24,305 $30,077 $10,178 $23,624 $39,231 $56,912 $48,684 $22,225 Comparison to Minimum Avail. Req. (%) -2.2% -1.4% -1.6% -4.3% -1.2% -0.1% 0.3% 1.3% 2.9% 11.5% 14.3% 4.8% 11.2% 18.7% 26.0% 24.4% 13.0% Memo: Adjusted EBITDA (b) ($4,612) ($6,754) $10,946 $12,250 $5,049 $7,406 ($1,372) Source: 13-Week Cash Flow Forecast as of January 21, 2020 and Companys preliminary 2020 monthly budget as of January 16, 2020. a) Month-end borrowing base calculation represents projected certificate from the third Monday of the previous month. b) Monthly Adjusted EBITDA per Management internal 2019 11+1 Forecast and Companys preliminary 2020 monthly budget as of January 16, 2020. Private and Confidential 17
Historical and Projected Availability as a % of Line Cap 2018A (a) 2019A 2020E Minimum Availability Requirement (32.5%) 32.5% February and July are typically liquidity low points February March April May June July Source: Historical borrowing base calculations and Companys preliminary 2020 monthly budget as of January 16, 2020. a) Calculated using $50M Wells Fargo FILO Term Loan. Replaced by the Gordon Brothers $35M term loan in August 2018. Private and Confidential 18
Exhibit 99(C)(6)
Project Stratosphere Discussion Materials January 27, 2020 AN AFFILIATE OF
Disclaimer The following pages contain material provided to the Board of Directors (the Board of Directors) of Stein Mart, Inc. (the Company) by PJ Solomon, L.P. and its affiliates, including, without limitation, PJ Solomon Securities, LLC (collectively, PJ Solomon or Solomon) in connection with Project Stratosphere. These materials were prepared on a confidential basis in connection with an oral presentation to the Board of Directors and not with a view toward complying with the disclosure standards under state or federal securities laws or otherwise. The information contained in this presentation was based solely on publicly available information or information furnished to PJ Solomon by the Company. PJ Solomon has relied, without independent investigation or verification, on the accuracy, completeness and fair presentation of all such information and the conclusions contained herein are conditioned upon such information (whether written or oral) being accurate, complete and fairly presented in all respects. This presentation includes certain statements, estimates and projections provided by the Company with respect to the historical and anticipated future performance of the Company. Such statements, estimates and projections contain or are based on significant assumptions and subjective judgments made by the Companys management. None of PJ Solomon, its affiliates or its or their respective employees, directors, officers, contractors, advisors, members, successors or agents makes any representation or warranty in respect of the accuracy, completeness or fair presentation of any information, projections or any conclusion contained herein. PJ Solomon, its affiliates and its and their respective employees, directors, officers, contractors, advisors, members, successors and agents shall have no liability with respect to any information, projections or matter contained herein, or any oral information provided herewith or data any of them generates. The information contained herein should not be assumed to have been updated at any time subsequent to date shown on the first page of the presentation and the delivery of the presentation does not constitute a representation by PJ Solomon that such information will be updated at any time after the date of the presentation. Neither PJ Solomon nor any of its affiliates is an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction. The Company acknowledges that PJ Solomon is an affiliate of Natixis, a global full service commercial and investment bank. Private and Confidential
Table of Contents SECTION I Process Summary to Date 3 II Retailing Environment Update 10 III Market Perspective 14 IV Financial Performance 19 V Updated 1/22/2020 Indication Summary 24 VI Valuation Summary 27 VII Process Timeline 35 APPENDIX 37 A Preliminary Liquidity Observations 38 B Additional Analyses 41 Private and Confidential
Process Summary to Date
2018 Process Summary In January 2018, PJ Solomon (PJS) conducted a process to evaluate strategic alternatives for Stratosphere, including a potential sale 19 parties in total were contacted, of which 5 signed NDAs and 4 received data room access Firm A, a private equity fund, initially submitted a preliminary indication of interest and met with the Management team, but offered no price or structural specifics All other parties contacted declined to submit an offer for an acquisition of Stratosphere With no buyers emerging from the initial outreach, PJS advised the Special Committee on securing a $50 million FILO Loan from Gordon Brothers in March 2018 to provide the Company with liquidity to operate PJS also ran a Tailored Capital Process to raise $100 million through an equity-linked term loan in March 2018 and ultimately received one proposal for a $60-70 million Senior Secured Term Loan from Firm A, which was off-market in the judgement of PJS On May 1, 2018, Firm A, together with operating partner [Third Party], contacted the Special Committee revisiting their interest in buying the whole company (closing stock price was $2.04 per share on that date) Firm A met the Special Committee and PJS on May 3, 2018, to discuss their views on the Companys valuation and the acquisition opportunity indicated that subject to further diligence, they (together with Jay Stein) were willing to pay $2.25 to $2.50 per share to acquire 100% of Stratosphere However, on May 7, 2018, Firm A called to say they did not see a take-private deal as possible at the current market price ($2.48 per share) and instead reverted to the refinancing solution, which, again, PJS did not view as a viable solution and thought was not in the best interest of the shareholders Private and Confidential 4
2018 2019 Process Summary Financing In August 2018, PJS ran a marketing process to refinance Stratospheres ABL Facility, but ultimately negotiated with its incumbent lenders, Wells Fargo and Gordon Brothers to increase the advance rates and right-size its existing credit facility to reduce interest expense and increase Excess Availability Strategic Alternatives 2019 On March 28, 2019, Moelis, Jay Steins investment bank, relayed to PJS that Jay Stein was potentially interested in taking Stratosphere private and that they had reached out to several potential equity partners using public information Moelis identified three parties (Kingswood, [Third Party] and Firm B), which expressed serious interest On April 2, 2019, PJS communicated to Moelis that the Special Committee would control discussions with any potential third-party acquirors, as well as the dissemination of any necessary confidential information On April 5, 2019, Moelis called PJS to convey that Jay Stein had agreed to: Sign an NDA to receive confidential information, distinct from those sent to the private equity firms Forgo contact with any potential debt or equity investors (without prior Special Committee approval) Roll his shares as part of a take-private of Stratosphere Follow a sale process led by the Special Committee Subject any take-private deal to an approval vote by the majority of the disinterested shareholders(a) On April 5, 2019, PJS reached out to the three initial private equity firms to discuss process and rules of the road The Special Committee held a telephone meeting with PJS and Foley on April 11, 2019, to discuss inbound interest conveyed through Jay Stein and subsequently shared by Moelis, Jay Steins advisor, to PJS Private and a) Moelis noted, however, that if Jay Stein ends up selling his shares, he would want to retain his voting rights. Confidential 5
2019 Process Summary Process PJS began contacting the strategic and financial buyer universe on April 15, 2019 71 parties were contacted (13 strategics and 58 financial sponsors), of which Moelis had previously contacted 30 29 parties requested an NDA (41% of buyers contacted) 16 parties executed an NDA and, after May 7, 2019, received data room access and the public company wrapper (55% of buyers who received an NDA / 23% of buyers contacted) The parties also received a Process Letter which requested Indications of Interest (IOI) by May 30, 2019 13 parties declined after executing NDAs On May 30, 2019, two parties, Firm B and Kingswood, submitted IOIs which proposed $1.20 and $1.50 purchase prices per share, respectively [Third Party] did not submit an IOI but verbally indicated it was interested in being matched with an equity partner Strategic Buyers Financial Sponsors Total Contacted 13 58 71 Signed NDA / Received Data Room 2 14 16 Access and Wrapper Received Process Letter 2 12 14 Submitted IOI 0 2 2 Private and Confidential
2019 Process Summary (Contd) After deliberating and evaluating the IOIs, the Special Committee decided to grant Firm B and Kingswood further access to Management and Company information to continue due diligence Both Firm B and Kingswood traveled to Jacksonville for Management meetings on June 18-19, 2019, and conducted extensive diligence over the next two months, leading up to a July 24, 2019, bid deadline Additionally, both parties had multiple calls with Jay Stein and Moelis, chaperoned by PJS, to provide updates on their respective diligence processes PJS sent a Process Letter on July 17, 2019, to both parties asking for a Letter of Intent (LOI, Reaffirmed Proposal) on July 24, 2019 On July 22, 2019, Firm B submitted a presentation to PJS intended for the Special Committee detailing its findings from its diligence process (which PJS shared with the Special Committee on July 23, 2019) Firm B noted in the presentation that it had spent considerable time and resources evaluating Stratosphere and the transaction, but that, because of the continued pressure on the Companys financials and the inability of Stratospheres Management to improve performance, Firm B would need to employ additional resources to understand the Company and create a strategy for improving the business As a result, Firm B asked the Special Committee to pay for an estimated $550,000 of intensive third-party consulting workstreams over the course of four to six weeks to further understand Firm Bs questions and identify a go-forward strategy for improving the business Firm B confirmed that it would need the compensation and to complete this diligence before it would consider whether or not it would put forth an LOI and confirmed it would not be submitting one by the July 24, 2019, deadline On July 24, 2019, PJS received one LOI from Kingswood Kingswood reduced its purchase price to $1.10 from $1.50 per share in its IOI The purchase price was based on a 21% premium to trailing VWAP since Stratospheres then most recent earnings release Kingswood planned on financing its portion of the equity through a new fund or its existing relationship with Global Endowment Management (GEM) Kingswood asked for exclusivity until the earlier of signing a definitive agreement or August 30, 2019 Private and
2019 Process Summary (Contd) The Special Committee, advised by PJS, analyzed and discussed the LOI and decided to grant Kingswood exclusivity after PJS (i) negotiated an increase in price to $1.15 per share and (ii) spoke with Kingswoods placement agent (M20) to ensure it would raise its $100 million inaugural fund in August 2019 Kingswood On August 1, 2019, Stratosphere entered into exclusivity with Kingswood At the time, the prevailing projections were the 4+8 forecast indicating FY 2019E Adj. EBITDA of $35.1 million On the same day, PJS sent Foley-prepared drafts of the Merger Agreement, Disclosure Schedules, Voting Agreement and Guarantee to Kingswood From August 6-8, 2019, Kingswood and its new Operating Partner [third Party] traveled to Jacksonville to conduct on-site diligence, which included meetings with key Management and a store visit Following the on-site diligence meetings, Kingswood hired several advisors including Goodwin Procter (Legal), Aon (Insurance & Benefits), Alix Partners (Operational) and A&G (Real Estate) On August 27, 2019, the full Stratosphere Board of Directors (excluding Jay Stein) approved the 6+6 projections and the revised Five Year Plan, which PJS thereafter sent to Kingswood; the 6+6 indicated revised FY 2019E Adj. EBITDA of $31.3 million On August 30, 2019, Kingswood sent Stratospheres advisors a markup of the Merger Agreement Foley sent a revised draft of the Merger Agreement on September 7, 2019, which, among other revisions, reinstated the provision to make the transaction contingent on approval of the majority of the disinterested shareholders In several subsequent conversations between PJS and Kingswood on the open points in the Merger Agreement, PJS insisted on keeping the transaction contingent on approval of the majority of the disinterested shareholders, which led to the parties breaking off discussions In October 2019, after hiring a new Operating Partner [Third Party], Kingswood and the Company decided to re-engage [Third Party] met with Management in-person in Jacksonville on October 7-8, 2019 and then visited stores in Dallas on November 7, 2019 and in Orlando on November 20, 2019 Private and Confidential 8
2019 Process Summary (Contd) As Kingswood continued its diligence, several key issues arose: Stratospheres financial performance continued to deteriorate, ultimately revising its year end Adj. EBITDA down to $24.9 million from $31.3 million in its 6+6 Board-approved plan Kingswood believed several agreements signed by Management (e.g., Vendor) were expensive and not additive to the business Kingswood vocalized concerns over the large severance liability for the 11 EVPs / SVPs and 24 VPs, currently estimated at ~$11 million of impact (according to the buyers) Following a weak November, Kingswood decided to slow the process to be able to observe December performance In November, actual adjusted Adj. EBITDA was ($4.9) million vs. the 6+6 projection of ($0.5) million In December, actual adjusted Adj. EBITDA was $18.0 million vs. the 6+6 projection of $21.7 million After this poor performance, Management reforecasted its FY 2019E estimate (11+1) and created an updated version of the 5 Year Plan which was approved by the Special Committee on January 15, 2020 In the interim, Kingswood sent drafts of key transaction documentation including the Merger Agreement, Voting Agreement, Equity and Debt Commitments and Rollover Agreement as it progressed on non-value workstreams On January 17, 2020, PJS received an email from Kingswood detailing their response on the three remaining open items in the draft Merger Agreement: $0.75 per share purchase price, Excess Availability at close of 32.5% of the ABL Loan Cap and 5% equity value parent / Company termination fee On January 20, 2020, the Special Committee rejected the $0.75 per share purchase price with no counter-offer provided as it determines what, if any, next steps are to be taken On January 22, 2020, Kingswood reached out to PJS to raise its purchase price to $0.85 per share and provided PJS with its executed Debt Commitments with Wells Fargo and Pathlight The debt commitment agreements indicated that minimum Excess Availability at close would be $75 million Kingswood informed PJS on January 24, 2020, that its revised Debt Commitments would include a minimum Excess Availability at close of 35% of the Loan Cap and that the Merger Agreements Material Adverse Effect clause would reflect the same 35% Private and Confidential 9
Retailing Environment Update
The Shakeout is in Full Swing Selected retailers who have filed, liquidated, shut-down or are distressed July 142014 Dec 14 2015 * * * * * * * * (a) * * 2016 * * (a) * * * * * (a) 2017 * * * * * * * * *(a) * (a) 2018 * * 2019 2020 * * * * * * * * * * Distressed Retailers Note: * indicates liquidated and (a) indicates pure play digital. Red box indicates department store / broadlines retailer. Confidential
In 2019, U.S. Retailers Announced ~9,300 closures Closures were more than double the number of openings Excluding Discount and Dollar stores, closures were approximately three times the number of openings 2019 Store Opening Announcements 975 500 210 200 200 155 150 145 116 100 1,641 Total = 4,392 Total (excl. Discount / Dollar) = 2,672 (a) Source: Coresight h and other publicly available information as of January 2020. a) Discount / Dollar includes Aldi, Dollar General, Dollar Tree, Family Dollar, Five Below, Freds and Shopko. Private and Confidential 12
Mall Traffic in 2019 was ~25+% Lower than in 2013 105 100 2013 2014 95 90 2015 85 2016 80 2018 2017 75 2019 2019 traffic continued to be challenged 70 Jan Feb March April May June July Aug Sep Oct Nov Dec Source: Shoppertrak as of January 13, 2020. Private and Confidential 13
Market Perspective
Stratosphere Summary Capitalization and Market Data (Amounts in Millions, Except Per Share Data) Stock Information Financial Information Credit Statistics Ticker Symbol STRAT Fiscal Year End Feb 2, 2019 As of Stock Exchange NasdaqGS LTM DatePublic Nov 2, 2019 Dec-19 (b) Stock Price as of 1/24/20 $0.66 LTM DatePrivate Jan 4, 2020 Adj. Debt / Adj. EBITDAR (c) 7.1 x Total Debt / Adj. EBITDA 4.0 x 52-Week Stock Price LTM Revenue (Q3 19)Public $1,240.6 Net Debt / Adj. EBITDA 3.7 x High 2/14/19 $1.23 LTM Revenue (Dec. 19)Private (b) 1,234.4 Adj. EBITDA / Interest, Net 3.0 x Low 1/3/20 0.66 LTM Adj. EBITDA (Q3 19)Public 30.0 LTM Adj. EBITDA (Dec. 19)Private (b) 27.9 5-Year Stock Price FY 2019B Adj. EBITDAPrivate (b) 24.9 High 2/26/15 $16.46 Total Debt / Total Capitalization 78.1% Low 2/8/18 0.51 LTM Adj. EPS (Q3 19)Public ($0.17) Net Debt / Net Capitalization 76.7% FY 2019B Adj. EPSPrivate (b) (0.26) Average Daily Volume (3 Mo.) 0.1 FY 2020E Adj. EPSPrivate (b) 0.02 Shares Sold Short 3.1 FY 2021E Adj. EPSPrivate (b) 0.03 Short Int. as % of Public Float (a) 9.5% Market Capitalization and Firm Value Market Valuation Beneficial Ownership by Category (g) Stock Price as of 1/24/20 $0.66 Enterprise Value as a Multiple of: Beneficial Percent of Shares Outstanding (d) 47.6 LTM Revenue (Q3 19)Public 15.2% Ownership Total Option Equivalent Shares (e) LTM Adj. EBITDA (Q3 19)Public 6.3 x Jay Stein 15.3 31.1% Equity Value $31.5 FY 2019B Adj. EBITDAPrivate (b) 7.6 x Other Insiders 2.1 4.3% Plus: Total Debt (f) 170.3 Stock Price as a Multiple of: Top 10 Institutions 2.9 5.9% Less: Cash & Cash Equivalents (13.0) FY 2020E Adj. EPSPrivate (b) 31.4 x Public and Other 28.9 58.7% Enterprise Value $188.8 FY 2021E Adj. EPSPrivate (b) 22.0 x Total 49.2 100.0% a) Excludes shares beneficially owned by Jay Stein. b) Source: Management Five Year Plan approved by the Special Committee on January 15, 2020, Management internal 2019 11+1 Forecast as of January 15, 2020 and Management preliminary 2020 monthly budget as of January 16, 2020. c) Assumes 8.0x rent methodology as it is not yet clear that the lender and credit analyst communities have altered their leverage measurement methodologies for revised lease accounting rules. d) Total shares outstanding of 47.6M as of January 4, 2020. Excludes 62K RSUs which vested on January 22, 2020. Source: Computershare Capital Breakdown Report. e) Assumes the treasury stock method with no options in the money. f) Total financial debt does not include operating lease liabilities. As of November 2, 2019 per Company FY 2019 Q3 10-Q filing. g) Includes exercisable options held by directors and executive officers. Source: Companys Proxy Statement dated May 7, 2019. Private and Confidential 15
Stock Price Performance Stock Price Performance (January 24, 2017 January 24, 2020) $ 8.00 Median March 2018: Stratosphere 3-Yr 2-Yr 6-Mo January 2017: Hunt announces stronger $1.20 $0.82 $0.76 $ 6.00 Hawkins takes over than expected earnings; September 2018: Wells as permanent CEO closes new $50mm term Fargo, Gordon Brothers loan facility amend and upsize May 2019: Stratosphere Stratosphere ABL announces installment $ 4.00 March 2017: facility to $275mm of self-service Amazon Suspends lockers in nearly 200 quarterly dividend stores $ 2.00 $0.66 $ 0.00 Jan-17 Jan-18 Jan-19 Jan-20 Indexed Stock Performance (January 24, 2017 January 24, 2020) 100% Stratosphere Select Broadlines(a) Off-Price(b) S&P Adjusted Retail (c) Note: Select Broadlines does not 84.6% ) ge Bon-Ton include Sears, due to Gordmans the fact they and 57.1% an 50% entered bankruptcy during this Ch period (% ce 0% an rform (10.5%) Pe (50%) e Pric (83.2%) (100%) Jan-17 Jan-18 Jan-19 Jan-20 Source: Capital IQ as of January 24, 2020. a) Comprised of JWN, M, KSS, DDS, JCP, SSI and CATO. b) Comprised of CTRN, ROST, TJX, BURL and FIVE. c) Comprised of AAP, AN, AZO, BBBY, BBY, KMX, DG, DLTR, FL, GPC, KSS, JWN, ROST, SIG, TGT, GPS, TJX, TIF, ULTA, URBN, TSCO, ORLY, LB, LKQ, M, HD and LOW. Private and Confidential 16
Operating Performance Off-Price retailers growth and margins generally exceed those of Broadlines Same Store Sales Last two fiscal years Select Broadlines OffPrice stacked Two-Year Median: (0.5%) Two-Year Median: 8.0% Last quarter two-year Two-Quarter Median: 2.9% Two-Quarter Median: 7.7% stacked 14.6% 10.4% 8.0% 8.0% 11.0% 7.7% 8.0% 7.1% 5.0% 6.6% 6.1% 1.9% 1.2% 3.2% 2.9% 2.5%ND 2.0% 3.0% 3.2% (0.5%) (0.2%) (3.0%) (5.5%) (6.6%) (9.7%) (12.0%) (12.0%) STRAT. STRAT. KSS (a) JWN (a) DDS M (a) JCP (a) SSI (b) CATO FIVE (a) ROST TJX BURL (a) CTRN (Stores) (Total) LTM Adj. EBITDA Margin Select Broadlines OffPrice Median: 6.5% Median: 11.9% 15.5% 14.1% 11.9% 11.8% 10.6% 10.1% 9.0% 6.5% 6.3% 5.3% 4.5% 2.3% 1.0% STRAT. KSS M JWN DDS CATO JCP SSI ROST FIVE BURL TJX CTRN Source: Company filings. Note: Medians excludes Stratosphere. a) Comparable store sales for these companies are calculated inclusive of eCommerce / Digital sales. b) Comparable department store sales for SSI are calculated inclusive of eCommerce / Digital sales, while its Off-Price comparable sales are not calculated inclusive of eCommerce / Digital sales. Private and Confidential 17
Relative Stock Price Performance Given divergent performance trends, Off-Price stores stocks outperformed Broadlines 1 Year Select Broadlines OffPrice 311.6% Median: (24.4%) Median: 25.7% 32.0% 26.9% 25.7% 9.9% 4.2% NA NA 11.9% (17.2%) (4.3%) (40.9%) (31.5%) (33.4%) (37.8%) (54.3%) STRAT. SSI DDS CATO JWN M KSS JCP Sears (a) Bon-Ton (a) Gordmans BURL ROST TJX CTRN FIVE 3 Years Select Broadlines OffPrice Median: (42.4%) Median: 75.1% 201.4% 164.1% 75.1% 64.1% 22.5% 14.5% 13.0% 34.6% (14.0%) (40.8%) (44.0%) (83.2%) (88.5%) (97.3%) (99.0%) (100.0%) STRAT. DDS SSI KSS JWN CATO M JCP Sears (a) Bon-Ton (a) Gordmans FIVE BURL ROST TJX CTRN 5 Years Select Broadlines OffPrice Median: (78.9%) 327.8% Median: 143.1% 245.2% 143.1% 79.6% (25.9%) (40.5%) (50.4%) (64.3%) (74.6%) (4.7%) (95.5%) (83.2%) (89.6%) (99.3%) (99.8%) (100.0%) STRAT. KSS DDS JWN CATO M SSI JCP Sears (a) Bon-Ton (a) Gordmans BURL FIVE ROST TJX CTRN Source: Capital IQ as of January 24, 2020. Note: Medians excludes Stratosphere. a) Over-the-counter trading value potentially represents reconstituted equity. Private and Confidential 18
Financial Performance Private and Confidential
Historical Financials (Amounts in Millions, Except Per Share Data) Fiscal Year LTM LTM CAGR Income Statement Data 2014A 2015A 2016A 2017A 2018A Oct-19 Dec-19 FY14-FY18 Total Revenue $1,323.7 $1,367.0 $1,374.6 $1,332.6 $1,272.7 $1,240.6 $1,234.4 (1.0%) Gross Profit 392.8 392.4 373.1 344.9 352.9 341.1 337.2 (2.6) Adj. SG&A 305.7 315.7 328.5 337.3 313.4 311.1 309.3 0.6 Adj. EBITDA 87.0 76.7 44.6 7.6 39.5 30.0 27.9 (17.9) Adj. EBIT 53.9 43.8 8.4 (26.9) 7.3 1.1 (0.6) (39.4) Diluted EPS $0.59 $0.51 $0.01 ($0.52) ($0.13) ($0.14) ($0.17) NM Adjusted Diluted EPS $0.68 $0.54 $0.07 ($0.43) ($0.10) ($0.17) ($0.22) NM Number of Stores 270 278 290 293 287 283 283 Margins Gross Profit 29.7% 28.7% 27.1% 25.9% 27.7% 27.5% 27.3% Adj. EBITDA 6.6 5.6 3.2 0.6 3.1 25.1 2.3 Adj. EBIT 4.1 3.2 0.6 (2.0) 0.5 2.4 (0.0) Comparable Sales Store Sales N/A N/A N/A (7.1%) (2.6%) (2.3%) (a) (2.0%) (a) ECommerce N/A N/A N/A 33.5 38.8 10.2 (a) (b) 9.0 (a) (b) Total Comp Sales (excl. DSW & LXR) 3.3% 1.0% (3.8%) (5.5) (1.1) (1.9) (a) (c) (1.7) (a) (c) Growth Rates Total Revenue 4.8% 3.3% 0.6% (3.1%) (4.5%) (5.8%) (4.4%) Adj. EBITDA 65.5 (11.9) (41.9) (82.9) 418.4 (27.2) (32.8) Adj. EBIT 2.5 (18.7) (80.7) NM NM (87.9) NM Balance Sheet and Cash Flow Data Cash $65.3 $11.8 $10.6 $10.4 $9.0 $13.0 $8.5 Total Debt 190.2 181.8 156.1 153.3 170.3 112.4 Depreciation and Amortization 29.1 29.9 32.6 32.3 32.4 21.2 28.5 Cum. FY14-YTD19 Capital Expenditures (40.2) (44.4) (42.4) (21.2) (9.0) (6.8) (6.1) ($163.3) Change in Net Working Capital (14.1) (18.5) 17.0 32.9 (25.4) (4.5) (12.5) Free Cash Flow (d) 12.2 (6.0) 18.2 26.5 (0.1) 17.8 7.3 58.2 Leverage and Interest Coverage Ratios Adj. Debt / Adj. EBITDAR (e) 3.8 x 5.4 x 6.9 x 9.1 x 6.8 x 7.4 x 7.1 x Total Debt / Adj. EBITDA 2.5 4.1 20.5 3.9 5.7 4.0 Note: Stratosphere paid a $5.00 / share special dividend in FY 2015. Source: Company Management and SEC filings. LTM includes results through October per publicly available financials and through December per Company internal financials. a) Represents year-to-date comparable store sales. b) Represents omni-channel comparable sales, which are not comparable with historical periods. With the rollout of Smart Fulfillment in August 2019 and BOPIS in September 2019, a significant portion of ECommerce sales have shifted to ship-from-store, and to a lesser extent, BOPIS. As a result, ECommerce comparable sales are down (15.6%) as of December YTD. c) Represents Total Comp, inclusive of leased departments (DSW & LXR). d) Defined as Cash Flow from Operating Activities less Capital Expenditures. e) Assumes 8.0x rent methodology as it is not yet clear that the lender and credit analyst communities have altered their leverage measurement methodologies for revised lease accounting rules. Private and Confidential 20
FY 2019E Management Forecasts Over Time Outlook for FY 2019E has worsened over time as Stratosphere missed forecasts ($ in Millions) FY 2019E % Difference 2+10 (a) 4+8 (b) 6+6 (c) 11+1 (d) 11+1 vs. 2+10 11+1 vs. 4+8 11+1 vs. 6+6 Total Revenue $1,270.0 $1,259.8 $1,256.0 $1,234.2 (2.8%) (2.0%) (1.7%) % Store Comp 0.6% (0.7%) (0.8%) (1.2%) % Total Comp (excl. DSW & LXR) 1.5% (0.0%) (0.1%) (1.8%) Gross Profit (e) $348.5 $346.3 $343.9 $335.3 (3.8%) (3.2%) (2.5%) % Margin 27.4% 27.5% 27.4% 27.2% Adjusted EBITDA $35.7 $35.1 $31.3 $24.9 (30.2%) (29.0%) (20.2%) % Margin 2.8% 2.8% 2.5% 2.0% Prevailing forecast when Kingswood submitted revised LOI at $1.15 / share a) Source: Management 2019 2+10 Forecast approved by the Board of Directors on May 14, 2019. b) Source: Management internal 2019 4+8 Forecast. c) Source: Management 2019 6+6 Forecast approved by the Board of Directors on August 27, 2019. d) Source: Management internal 2019 11+1 Forecast. e) Includes credit card, breakage and other income. Private and Confidential 21
Comp Sales(a) Performance vs. Forecast Comps underperformed forecasts for 17 of the last 19 observable months 2018 Actual Monthly Comp Store Sales Performance vs. 2018 2+10 Forecast 3.6% 5.4% 5.7% 4.8% 3.9% 5.7% 1.4% 2.3% 1.7% 3.0% 0.8% 2.3% (0.0%) (0.4%) (0.2%) (0.2%) (5.0%)(5.0%) (5.5%) (11.6%) Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2018 2+10 Forecast Actual 2019 Actual Monthly Comp Store Sales Performance vs. Management Five Year Plan (2+10 Forecast for 2019) 11.2% 5.2% 2.8% 4.1% 2.9% 1.5% 3.9% 0.2% 3.2% 4.8% 1.4% 3.7% 0.0% (0.9%) (0.6%) (4.4%) (2.9%) (4.1%) (10.1%) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Management Five Year Plan (2019 2+10 Forecast) Actual a) Comp figures for 2019 represent Store + eCommerce comparable sales. Comp figures for 2018 represent total comp, representative of Store, eCommerce and Licensed comparable sales. Private and Confidential 22
Projected Financials 11+1 Forecast and Five Year Plan (Amounts in Millions, Except Per Share Data) LTM Fiscal Year CAGR Income Statement Data Dec-19 2019B 2020P 2021P 2022P 2023P 2024P FY19-FY24 Total Revenue $1,234.4 $1,234.2 $1,254.8 $1,277.6 $1,297.3 $1,321.5 $1,366.2 2.1% Gross Profit 337.2 335.3 348.8 353.9 358.4 365.4 376.6 2.4 Adj. SG&A 309.3 310.3 311.2 319.7 324.7 330.0 338.5 1.8 Adj. EBITDA 27.9 24.9 37.5 34.2 33.7 35.4 38.1 8.9 Adj. EBIT (0.6) (3.3) 10.2 9.7 12.3 17.0 21.3 NM Diluted EPS ($0.17) ($0.25) ($0.00) $0.01 $0.05 $0.12 $0.22 NM Adjusted Diluted EPS ($0.22) ($0.26) $0.02 $0.03 $0.07 $0.15 $0.25 NM Number of Stores 283 283 281 277 274 276 280 Margins Gross Profit 27.3% 27.2% 27.8% 27.7% 27.6% 27.7% 27.6% Adj. EBITDA 2.3 2.0 3.0 2.7 2.6 2.7 2.8 Adj. EBIT (0.0) (0.3) 0.8 0.8 0.9 1.3 1.6 Comparable Sales Store Sales (2.0%) (a) (1.2%) 2.5% 1.5% 1.5% 1.4% 1.5% ECommerce 9.0 (a) (b) (16.3) (4.2) 14.4 13.5 10.0 10.0 Total Comp Sales (excl. DSW & LXR) (1.7) (a) (c) (1.8) 2.2 1.9 2.0 1.8 1.9 Growth Rates Total Revenue (4.4%) (3.0%) 1.7% 1.8% 1.5% 1.9% 3.4% Adj. EBITDA (32.8) (36.8) 50.5 (9.0) (1.3) 4.9 7.8 Adj. EBIT NM NM NM (4.9) 26.2 38.7 25.2 Balance Sheet and Cash Flow Data Cash $8.5 $12.0 $12.0 $12.0 $12.0 $12.0 $12.0 Total Debt 112.4 147.5 129.0 121.6 113.3 104.7 97.8 Depreciation and Amortization 28.5 28.2 27.3 24.4 21.4 18.3 16.8 Cum. FY20-FY24 Capital Expenditures (6.1) (7.7) (10.6) (16.0) (14.8) (15.8) (15.2) (72.4) Change in Net Working Capital (12.5) (3.7) 1.8 (2.7) (1.8) (2.9) (8.8) Free Cash Flow (d) 7.3 7.6 21.6 9.4 10.4 8.7 6.7 56.8 Leverage and Interest Coverage Ratios Adj. Debt / Adj. EBITDAR (e) 7.1 x N/A N/A N/A N/A N/A N/A Total Debt / Adj. EBITDA 4.0 5.9 x 3.4 x 3.6 x 3.4 x 3.0 x 2.6 x Source: Management Five Year Plan approved by the Special Committee on January 15, 2020, Management internal 2019 11+1 Forecast as of January 15, 2020 and Management preliminary 2020 budget as of January 16, 2020. Note: Adjusted EBITDA, EBIT and Diluted EPS exclude store impairments, gain from credit card settlement and pre-opening costs identified by Management. a) Represents year-to-date comparable store sales. b) Represents omni-channel comparable sales, which are not comparable with historical periods. With the rollout of Smart Fulfillment in August 2019 and BOPIS in September 2019, a significant portion of ECommerce sales have shifted to ship-from-store, and to a lesser extent, BOPIS. As a result, ECommerce comparable sales are down (15.6%) as of December YTD. c) Represents Total Comp, inclusive of leased departments (DSW & LXR). d) Defined as Cash Flow from Operating Activities less Capital Expenditures. e) Assumes 8.0x rent methodology as it is not yet clear that the lender and credit analyst communities have altered their leverage measurement Private and methodologies for revised lease accounting rules. Confidential 23
Updated 1/22/2020 Indication Summary
Analysis at Various Prices ($ in Millions, Except Per Share Data) Current Kingswood Market (Public Net Debt) Market (Avg. Net Debt) Market (Private Net Debt) Revised Indication 1/24/2020 1/24/2020 1/24/2020 1/22/2020 Stock Price / Proposed Offer Price $0.66 $0.66 $0.66 $0.85 $0.90 $1.00 $1.15 Shares Outstanding (a) 47.6 47.6 47.6 47.6 47.6 47.6 47.6 Unvested Restricted Stock Units (b) 1.3 1.3 1.3 1.3 Option Equivalent Shares (c) Diluted Shares Outstanding 47.6 47.6 47.6 48.9 48.9 48.9 48.9 Total Equity Value $31.5 $31.5 $31.5 $41.5 $44.0 $48.9 $56.2 Plus: Net Debt 157.3 (d) 136.8 (e) 104.0 (f) 104.0 (f) 104.0 (f) 104.0 (f) 104.0 (f) Total Enterprise Value $188.8 $168.3 $135.5 $145.5 $147.9 $152.8 $160.1 Premium / (Discount) to: Current Price 1/24/2020 $0.66 % % % 28.4 % 36.0 % 51.1 % 73.7 % 30-Day VWAP 0.68 (2.0) (2.0) (2.0) 25.8 33.2 48.0 70.2 60-Day VWAP 0.69 (4.7) (4.7) (4.7) 22.3 29.5 43.9 65.5 90-Day VWAP 0.73 (8.7) (8.7) (8.7) 17.2 24.1 37.9 58.6 180-Day VWAP 0.75 (11.8) (11.8) (11.8) 13.3 20.0 33.3 53.3 52-Week High 2/14/2019 1.23 (46.2) (46.2) (46.2) (30.9) (26.8) (18.7) (6.5) 52-Week Low 1/3/2020 0.66 0.3 0.3 0.3 28.8 36.4 51.5 74.2 Enterprise Value as a Multiple of: Total Revenue LTM (Q3 19)Public $1,240.6 15.2 % 13.6 % 10.9 % 11.7 % 11.9 % 12.3 % 12.9 % LTM (Dec. 19) (g) 1,234.4 15.3 13.6 11.0 11.8 12.0 12.4 13.0 Adj. EBITDA LTM (Q3 19)Public $30.0 6.3 x 5.6 x 4.5 x 4.8 x 4.9 x 5.1 x 5.3 x LTM (Dec. 19) (g) 27.9 6.8 6.0 4.9 5.2 5.3 5.5 5.7 FY 2019B (g) 24.9 7.6 6.7 5.4 5.8 5.9 6.1 6.4 Price as a Multiple of: Diluted Adj. EPS FY 2020E (g) $0.02 31.4 x 31.4 x 31.4 x 40.4 x 42.8 x 47.5 x 54.6 x FY 2021E (g) 0.03 22.0 22.0 22.0 28.3 30.0 33.3 38.3 a) Total shares outstanding of 47.6M as of January 4, 2020, per Computershare Capital Breakdown Report, which includes 0.6M Restricted Stock Awards, which have voting rights. Excludes 62K RSUs which vested on January 22, 2020. b) Unvested Restricted Stock Units (RSUs) as of January 6, 2020, which are not included in shares outstanding and have a double trigger change-incontrol provision. Includes 62K RSUs which vested on January 22, 2020. c) Assumes treasury stock method with no options in the money as of January 6, 2020. PSUs not included as Total Shareholder Return (TSR) target as of January 20, 2020 has not been achieved. d) Based on cash of $13.0M and total debt of $170.3M as of November 2, 2019 per Company FY 2019 Q3 10-Q filing. e) Based on average month-end net debt balances for the last twelve months from January 2019 through December 2019. f) Based on cash of $8.5M and total debt of $112.4M as of January 4, 2020 per Management internal 2019 11+1 Forecast. g) Source: Management Five Year Plan approved by the Special Committee on January 15, 2020, Management internal 2019 11+1 Forecast as of Private and January 15, 2020 and Management preliminary 2020 budget as of January 16, 2020. Confidential 25
Volume Weighted Average Price by Range (Shares in Millions) Volume Per Price Range Last 6 Months Volume Per Price Range Last 3 Months Average Daily Volume 0.12 M Average Daily Volume 0.14 M 3.9 3.9 3.8 3.2 2.5 2.7 1.4 1.7 0.5 0.1 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 ? x < ? x < ? x < ? x < ? x < ? x < ? x ? x < ? x < ? x < ? x < ? x < ? x < ? x $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 % of % of Total Total Volume: 26.0% 26.0% 18.2% 25.7% 0.5% 3.6% 0.0% Volume: 36.1% 28.2% 16.6% 19.0% 0.0% 0.0% 0.0% 96% 100% Volume Per Price Range Last Month Volume Per Price Range CY2020 YTD Average Daily Volume 0.16 M Average Daily Volume 0.12 M 1.3 2.6 0.6 0.7 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 ? x < ? x < ? x < ? x < ? x < ? x < ? x ? x < ? x < ? x < ? x < ? x < ? x < ? x $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 % of % of Total Total Volume: 78.3% 21.7% 0.0% 0.0% 0.0% 0.0% 0.0% Volume: 68.9% 31.1% 0.0% 0.0% 0.0% 0.0% 0.0% 100% 100% Note: Stratosphere float represents 64.7% of total shares outstanding per Companys Proxy Statement dated May 7, 2019. Private and Source: Capital IQ as of January 24, 2020. Confidential 26
Valuation Summary
Summary Financial Valuation Overview 1/24/20 1/22/20 1/24/20 Current Price Revised Indication Price w/ Control Premium(a) $0.66 $0.85 $0.88 Selected Public Companies $1.54 Selected Precedent Transactions $4.80 Discounted Cash Flow (b) $1.51 52-Week Trading Range $0.66 $1.23 $1.00 $2.00 $3.00 $4.00 $5.00 Note: 52-Week Trading Range is for informational purposes only. a) Source: FactSet. 32.7% based on a median one-day premium for transactions of $100M to $300M enterprise value with North American targets, in which at least a 50% stake was acquired. Excludes financial services, healthcare, real estate and energy/mining/minerals industries. b) Assumes terminal value EBITDA multiple of 3.5x6.0x for the terminal value method, perpetuity growth rate of 0.0%2.0% for the perpetuity growth Private and rate method and WACC of 9.5% to 11.5% for both methods. Confidential 28
Public Companies EV/EBITDA and P/E Performance EV / EBITDA Multiples (a) EV / LTM EBITDA EV / LTM EBITDA Median: 5.1x EV / CY 2019E EBITDA EV / CY 2019E EBITDA Median: 5.5x 8.3 x 7.1 x 5.9 x 5.5 x 5.5 x 5.6 x 4.7 x 4.7 x 4.3 x 3.7 x 3.2 x NM NM(b) NM JCP JWN DDS KSS M CATO SSI Market Capitalization ($mm): $255 $6,004 $1,735 $7,122 $5,184 $390 $105 LTM Adj. EBITDA % Margin: 5.3% 9.0% 6.5% 10 .6% 10 .1% 6.3% 1.0% Total Debt / Adj. EBITDA: 6.9x 1.9x 1.6x 1.6x 1.8x 0.0x NM P / E Multiples CY 2020E P/E Ratio CY 2020E P/E Ratio Median: 10.4x CY 2021E P/E Ratio CY 2021E P/E Ratio Median: 10.7x 21.1 x 19.8 x 11.0 x 11.5 x 9.8 x 10.0 x 6.9 x 7.4 x NM NM NM NM NM NM DDS JWN KSS M SSI CATO JCP Source: Public filings, Capital IQ as of January 24, 2020. a) Note: Enterprise value does not include capitalized operating leases (per IFRS 16, effective January 2019) as debt. b) EV / LTM Adjusted EBITDA multiple for SSI is 27.0x due to a low positive EBITDA and is deemed non-material for trading purposes. Private and Confidential 29
Summary Valuation Based on Selected Public Companies (Amounts in Millions, Except Per Share Data) Adjusted EBITDA Valuation Multiples Implied Equity Value (a) Implied Per Share Value (b) LTM Q3 FY 2019A $30.0 3.2 x5.9 x ($8)$73 ($ 0.17)$1.54 CY 2019E / LTM (Dec. 19) 27.9 4.3 x5.6 x 1652 0.331.10 Adjusted EPS Valuation Multiples Implied Equity Value Implied Per Share Value (b) CY 2020E $0.02 6.9 x21.1 x $6$18 $ 0.13$0.38 CY 2021E 0.03 7.4 x19.8 x 1028 0.220.58 Source: Management Five Year Plan approved by the Special Committee on January 15, 2020 and Management internal 2019 11+1 Forecast. a) Net debt of $104.0M represents total debt less cash as of January 4, 2020 per Management internal 2019 11+1 Forecast. b) Total shares outstanding of 47.6M as of January 4, 2020 per Computershare Capital Breakdown Report. Excludes 62K RSUs which vested on Private and January 22, 2020. Confidential 30
Selected Precedent Transactions (Amounts in USD, Millions) Date Enterprise EV as a Multiple of LTM: Announced Acquiror Target Value Sales EBITDA Aug-19 Liberty Tax Sears Outlet $133 27.4% 3.7 x Aug-19 Le Tote Lord & Taylor C$133 (a) NM NM Jun-19 Elliott Management Barnes & Noble Inc. $683 19.2% 4.6 x May-17 Camping World Gander Mountain (b) 34 25.6% ND Oct-16 Dicks Golfsmith (b) 43 8.7% ND Aug-16 Versa Capital Management Vestis Retail Group (b) 37 9.1% NM Source: Company fillings and other publicly available information. a) Total deal value includes C$99.5M upfront cash consideration, C$33.2M in the form of a promissory note payable in cash two years from closing and a minority equity stake in Le Tote. Private and b) Companies sold in 363 sale process. Confidential 31
Summary Valuation Based on Selected Precedent Transactions (Amounts in Millions, Except Per Share Data) Total Revenue Valuation Multiples Implied Equity Value (a) Implied Per Share Value (b) LTM (Dec. 19) $1,234.4 8.7%27.4% $ 3$234 $ 0.07$4.80 Adj. EBITDA Valuation Multiples Implied Equity Value (a) Implied Per Share Value (b) LTM (Dec. 19) $27.9 3.7 x4.6 x ($ 1)$24 ($ 0.02)$0.50 Source: Management Five Year Plan approved by the Special Committee on January 15, 2020 and Management internal 2019 11+1 Forecast. a) Net debt of $104.0M represents total debt less cash as of January 4, 2020 per Management internal 2019 11+1 Forecast. b) Total shares outstanding of 48.9 as of January 4, 2020, which includes 1.3M Unvested RSUs (including the 62K that vested on January 22, 2020) as Private and of January 6, 2020 per Computershare Capital Breakdown Report. Confidential 32
Discounted Cash Flow Analysis (Amounts in Millions, Except Per Share Data) Fiscal Year 1 Mo. 2019B 2020E 2021E 2022E 2023E 2024E Total Revenue $64.4 $1,254.8 $1,277.6 $1,297.3 $1,321.5 $1,366.2 % Growth (0.2%) 1.7% 1.8% 1.5% 1.9% 3.4% Adj. EBITDA (a) (4.6) 37.5 34.2 33.7 35.4 38.1 % of Net Sales (7.2%) 3.0% 2.7% 2.6% 2.7% 2.8% Adj. EBIT (a) (7.0) 10.2 9.7 12.3 17.0 21.3 % of Net Sales (10.8%) 0.8% 0.8% 0.9% 1.3% 1.6% Taxes @ 25.0% 1.7 (2.6) (2.4) (3.1) (4.3) (5.3) Tax-Effected Adj. EBIT (5.2) 7.7 7.3 9.2 12.8 16.0 Depreciation & Amortization 2.3 27.3 24.4 21.4 18.3 16.8 Capital Expenditures (2.2) (10.6) (16.0) (14.8) (15.8) (15.2) Change in Net Working Capital (23.8) 1.8 (2.7) (1.8) (2.9) (8.8) Free Cash Flow ($28.9) $26.1 $13.0 $14.0 $12.4 $8.9 Growth in Free Cash Flow 81.8% (50.1%) 7.1% (11.3%) (28.5%) Terminal Value / Adj. EBITDA Multiple 3.5 x 3.50 x 3.5 x 4.8 x 4.75 x 4.8 x 6.0 x 6.00 x 6.0 x Discount Rate 9.5% 10.5% 11.5% 9.5% 10.5% 11.5% 9.5% 10.5% 11.5% Present Value of Free Cash Flow $30.6 $29.3 $28.1 $30.6 $29.3 $28.1 $30.6 $29.3 $28.1 Present Value of Terminal Value 84.6 80.8 77.2 114.8 109.7 104.8 145.0 138.5 132.4 Total Enterprise Value $115.2 $110.1 $105.3 $145.4 $139.0 $132.9 $175.6 $167.9 $160.5 Less: Net Debt (b) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) Total Equity Value $11.2 $6.2 $1.4 $41.4 $35.0 $29.0 $71.6 $63.9 $56.6 Total Equity Value Per Share (c) $0.24 $0.13 $0.03 $0.87 $0.73 $0.61 $1.51 $1.34 $1.19 Terminal Value as a % of Total Value 73.4% 73.4% 73.3% 78.9% 78.9% 78.8% 82.6% 82.5% 82.5% Implied Perpetuity Growth Rate 2.7% 3.6% 4.6% 4.4% 5.4% 6.3% 5.4% 6.4% 7.3% Perpetuity Growth Rate 0.0% 0.0% 0.0% 1.0% 1.0% 1.0% 2.0% 2.0% 2.0% Discount Rate 9.5% 10.5% 11.5% 9.5% 10.5% 11.5% 9.5% 10.5% 11.5% Present Value of Free Cash Flow $30.6 $29.3 $28.1 $30.6 $29.3 $28.1 $30.6 $29.3 $28.1 Present Value of Terminal Value 59.0 51.0 44.5 66.7 57.0 49.3 76.3 64.3 55.0 Total Enterprise Value $89.7 $80.4 $72.7 $97.3 $86.3 $77.4 $106.9 $93.7 $83.1 Less: Net Debt (b) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) Total Equity Value ($14.3) ($23.6) ($31.3) ($6.7) ($17.6) ($26.6) $2.9 ($10.3) ($20.8) Total Equity Value Per Share (c) ($0.30) ($0.50) ($0.66) ($0.14) ($0.37) ($0.56) $0.06 ($0.22) ($0.44) Terminal Value as a % of Total Value 65.9% 63.5% 61.3% 68.5% 66.0% 63.7% 71.4% 68.7% 66.2% Implied Terminal Value / Adj. EBITDA 2.4 x 2.2 x 2.0 x 2.8 x 2.5 x 2.2 x 3.2 x 2.8 x 2.5 x Source: Management Five Year Plan approved by the Special Committee on January 15, 2020 and Management internal 2019 11+1 Forecast . Note: Discounted to January 24, 2020. a) Adj. EBITDA and Adj. EBIT exclude pre-opening expenses and relocated/closed stores impairments. b) Net debt of $104.0M represents total debt less cash as of January 4, 2020 per Management internal 2019 11+1 Forecast. c) Per share data based on share count of 47.6M as of January 4, per Computershare Capital Breakdown Report, which does not include unvested RSUs. Excludes 62K RSUs which vested on January 22, 2020. Private and Confidential
Premiums Paid Analysis ($ in Millions) Announce Enterprise One Day 30-Day Date Acquirer Target Value Premium Premium Dec-19 Lumos Networks; EQT Partners North State Telecommunications $236.5 29.6% 23.1% Nov-19 ICV Partners Diversified Restaurant Holdings 176.4 123.4% 75.0% Sep-19 Greenbriar Equity Group Arotech Corp. 102.1 32.7% 38.2% Sep-19 Accel-KKR et al. MAM Software Group 152.1 15.4% 13.7% Aug-19 Assurance Global Services Computer Task Group 106.8 33.8% 47.8% Aug-19 Austin Nichols & Co. Castle Brands 263.3 92.1% 136.1% Jun-19 Atlantis Acquisitionco Canada Corp. Hydrogenics Corp. 279.4 (3.1%) 55.3% Jun-19 YANMAR America Corp. ASV Holdings 104.0 332.5% 200.0% Jun-19 Extreme Networks, Inc. Aerohive Networks 198.7 39.5% 25.7% May-19 Vintage Capital Management Liberty Tax 160.8 31.1% 19.9% Apr-19 MTY Food Group, Inc. Papa Murphys Holdings 197.4 31.9% 15.8% Apr-19 The Ancora Group J. Alexanders Holdings 262.4 12.5% 22.7% Apr-19 Cresco Labs CannaRoyalty Corp. 276.6 (54.1%) (41.2%) Mar-19 HEXO Corp. Newstrike Brands 125.0 4.1% (11.6%) Feb-19 Tesla Maxwell Technologies 293.6 96.3% 234.8% Dec-18 Cerberus Capital Management Sparton Corp. 253.9 41.0% 47.8% Nov-18 Altair Engineering Datawatch Corp. 162.6 35.2% 13.9% Oct-18 General Catalyst et al. Intersections 102.6 107.3% 111.5% Oct-18 Z Capital Group; Affinity Gaming Full House Resorts 211.9 79.6% 67.3% Sep-18 Stryker Corp. Invuity 188.7 28.7% 87.3% Aug-18 Moodys Analytics Maryland Corp. Reis 251.1 32.2% 2.7% Aug-18 The Invus Group et al. Zoes Kitchen 295.3 33.4% 27.9% Aug-18 Roark Capital Group; FOCUS Brands Jamba 194.5 16.3% 20.8% Apr-18 NICE Systems, Inc. Mattersight Corp. 105.0 25.6% 17.4% Apr-18 SPX Corp. ELXSI Corp. 152.6 30.4% 29.9% Mar-18 William Morris Endeavor et al. NeuLion 203.0 116.5% 103.9% Mar-18 GP Investimentos Ltda. Bravo Brio Restaurant Group 100.1 16.8% 35.0% Feb-18 AMC Networks, Inc. RLJ Entertainment 163.7 61.5% 59.4% Jan-18 Duravant LLC Key Technology 172.0 50.6% 34.1% Median 32.7% 34.1% Source: FactSet. Represents transactions of $100-$300M in enterprise value with North American targets, in which at least a 50% stake was acquired. Excludes financial services, healthcare, real estate and energy/mining/minerals industries. Private and Confidential
Process Timeline
Illustrative Process Timeline If the Board were to agree to a transaction, we would estimate it would take ~4.5 months to close January February March April May June S M T W T F S S M T W T F S S M T W T F S S M T W T F S S M T W T F S S M T W T F S 1 2 3 4 1 1 2 3 4 5 6 7 1 2 3 4 1 2 1 2 3 4 5 6 5 6 7 8 9 10 11 2 3 4 5 6 7 8 8 9 10 11 12 13 14 5 6 7 8 9 10 11 3 4 5 6 7 8 9 7 8 9 10 11 12 13 12 13 14 15 16 17 18 9 10 11 12 13 14 15 15 16 17 18 19 20 21 12 13 14 15 16 17 18 10 11 12 13 14 15 16 14 15 16 17 18 19 20 19 20 21 22 23 24 25 16 17 18 19 20 21 22 22 23 24 25 26 27 28 19 20 21 22 23 24 25 17 18 19 20 21 22 23 21 22 23 24 25 26 27 26 27 28 29 30 31 23 24 25 26 27 28 29 29 30 31 26 27 28 29 30 24 25 26 27 28 29 30 28 29 30 31 Month Action Items Role Sign and announce transaction (pre-opening announcement on January 30) Strat., BoD January Begin preparing preliminary Proxy Foley, PJS February Continue preparing preliminary Proxy Foley, PJS Send preliminary Proxy to SEC for comment (March 11) Foley March Distribute revised Proxy to shareholders Foley Begin shareholder outreach Kingsdale Continue shareholder outreach Kingsdale April Begin preparing flow of funds PJS Prepare closing balance sheet and documentation for buyer Strat., PJS Special Shareholder Meeting Strat., BoD, Foley May / June Close transaction PJS, Foley Private and Confidential
Appendix Private and Confidential
A. Preliminary Liquidity Observations Private and Confidential
Forecasted January April 2020 Liquidity Note: Loan Cap, as defined in the new Wells Fargo ABL credit agreement, is the lesser of the net ABL Borrowing Base and the Aggregate Commitments ($240 million) On January 24, 2020, Kingswood indicated that its revised Debt Commitments would include a minimum Excess Availability of 35% of the Loan Cap ($ in Thousands) January, Week Ended February, Week Ended March, Week Ended April, Week Ended 24-Jan 31-Jan 7-Feb 14-Feb 21-Feb 28-Feb 6-Mar 13-Mar 20-Mar 27-Mar 3-Apr 10-Apr 17-Apr 24-Apr Eligible Inventory $213,843 $213,843 $213,843 $226,464 $226,464 $226,464 $226,464 $249,568 $249,568 $249,568 $249,568 $249,568 $249,568 $247,492 Eligible Credit Card Receivables $2,803 $2,803 $2,803 $2,803 $2,803 $2,803 $2,803 $2,803 $2,803 $2,803 $2,803 $2,803 $2,803 $2,701 Eligible FF&E $5,028 $5,028 $5,028 $6,210 $6,210 $6,210 $6,210 $9,092 $9,092 $9,092 $9,092 $9,092 $9,092 $10,021 Less: Reserves (17,462) (17,462) (17,462) (18,005) (18,005) (18,005) (18,005) (15,505) (15,505) (15,505) (15,505) (15,505) (15,505) (15,661) Net Credit Facility Borrowing Base $204,212 $204,212 $204,212 $217,472 $217,472 $217,472 $217,472 $245,958 $245,958 $245,958 $245,958 $245,958 $245,958 $244,552 Less: Term Loan (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) Loan Cap (ABL Credit Facility Borrowing Base) $169,212 $169,212 $169,212 $182,472 $182,472 $182,472 $182,472 $210,958 $210,958 $210,958 $210,958 $210,958 $210,958 $209,552 Net Credit Facility Borrowing Base $204,212 $204,212 $204,212 $217,472 $217,472 $217,472 $217,472 $245,958 $245,958 $245,958 $245,958 $245,958 $245,958 $244,552 Less: Borrowing (152,972) (151,572) (151,872) (166,072) (160,272) (158,440) (157,613) (174,728) (171,378) (153,092) (147,320) (166,207) (149,508) (146,676) A Excess Availability $51,240 $52,640 $52,340 $51,400 $57,200 $59,032 $59,859 $71,230 $74,580 $92,866 $98,638 $79,751 $96,450 $97,876 KW Minimum Availability Requirement B Revised 1/2435% of Loan Cap $59,224 $59,224 $59,224 $63,865 $63,865 $63,865 $63,865 $73,835 $73,835 $73,835 $73,835 $73,835 $73,835 $73,343 AB Comparison to Revised Minimum Avail. Req. ($) ($7,984) ($6,584) ($6,884) ($12,465) ($6,665) ($4,833) ($4,006) ($2,606) $745 $19,031 $24,803 $5,916 $22,615 $24,532 Memo: Adjusted EBITDA (a) ($4,612) ($6,754) $10,946 $12,250 Source: 26-Week Cash Flow Forecast as of January 23, 2020. a) Monthly Adjusted EBITDA per Management internal 2019 11+1 Forecast and Management preliminary 2020 monthly budget as of January 16, 2020. Private and Confidential 39
Forecasted May July 2020 Liquidity Note: Loan Cap, as defined in the new Wells Fargo ABL credit agreement, is the lesser of the net ABL Borrowing Base and the Aggregate Commitments ($240 million) On January 24, 2020, Kingswood indicated that its revised Debt Commitments would include a minimum Excess Availability of 35% of the Loan Cap ($ in Thousands) May, Week Ended Ended June, Week Ended Ended July, Week Ended Ended 1-May 8-May 15-May 22-May 29-May 5-Jun 12-Jun 19-Jun 26-Jun 3-Jul 10-Jul 17-Jul 24-Jul Eligible Inventory $247,492 $247,492 $248,876 $248,876 $248,876 $248,876 $248,876 $236,622 $236,622 $236,622 $236,622 $236,622 $210,587 Eligible Credit Card Receivables $2,701 $2,701 $2,701 $2,701 $2,701 $2,701 $2,701 $2,701 $2,701 $2,701 $2,701 $2,701 $2,599 Eligible FF&E $10,021 $10,021 $12,960 $12,960 $12,960 $12,960 $12,960 $10,492 $10,492 $10,492 $10,492 $10,492 $7,134 Less: Reserves (15,661) (15,661) (15,408) (15,408) (15,408) (15,408) (15,408) (15,361) (15,361) (15,361) (15,361) (15,361) (16,494) Net Credit Facility Borrowing Base $244,552 $244,552 $249,129 $249,129 $249,129 $249,129 $249,129 $234,454 $234,454 $234,454 $234,454 $234,454 $203,825 Less: Term Loan (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) (35,000) Loan Cap (ABL Credit Facility Borrowing Base) $209,552 $209,552 $214,129 $214,129 $214,129 $214,129 $214,129 $199,454 $199,454 $199,454 $199,454 $199,454 $168,825 Net Credit Facility Borrowing Base $244,552 $244,552 $249,129 $249,129 $249,129 $249,129 $249,129 $234,454 $234,454 $234,454 $234,454 $234,454 $203,825 Less: Borrowing (134,873) (129,983) (140,456) (135,887) (124,889) (123,416) (130,704) (123,590) (120,378) (120,747) (139,069) (137,347) (132,027) A Excess Availability $109,679 $114,569 $108,673 $113,242 $124,240 $125,713 $118,425 $110,863 $114,076 $113,706 $95,385 $97,107 $71,799 KW Minimum Availability Requirement B Revised 1/2435% of Loan Cap $73,343 $73,343 $74,945 $74,945 $74,945 $74,945 $74,945 $69,809 $69,809 $69,809 $69,809 $69,809 $59,089 AB Comparison to Revised Minimum Avail. Req. ($) $36,336 $41,226 $33,728 $38,297 $49,295 $50,768 $43,480 $41,055 $44,267 $43,898 $25,576 $27,298 $12,710 Memo: Adjusted EBITDA (a) $5,049 $7,406 ($1,372) Source: 26-Week Cash Flow Forecast as of January 23, 2020. a) Monthly Adjusted EBITDA per Management internal 2019 11+1 Forecast and Management preliminary 2020 monthly budget as of January 16, 2020. Private and Confidential 40
B. Additional Analyses
Weighted Average Cost of Capital ($ in Millions) LTM Interest Total Implied Market Levered Debt / Unlevered Name Expense Debt (a) Cost of Debt Cap. Beta (b) Equity Beta (c) Stratosphere ($9) $112 8.2% $31 1.32 356.9% 0.36 Kohls ($216) $3,298 6.5% $7,122 1.08 46.3% 0.80 Macys (192) 4,683 4.1% 5,184 1.05 90.3% 0.63 Nordstrom (89) 2,679 3.3% 6,004 1.01 44.6% 0.76 Dillards (47) 666 7.1% 1,735 1.03 38.4% 0.80 Cato NM 390 0.74 0.74 J. C. Penney (298) 4,205 7.1% 255 1.31 1,649.2% 0.10 Stage Stores (16) 365 4.3% 105 0.96 347.0% 0.27 Select Broadlines Median (excl. Stratosphere) 5.4% 1.03 46.3% 0.74 WACC Calculation (Assuming Select Broadlines Median Beta of Comps and D/E of Comps) Assumptions Cost of Equity Calculation Risk Free Rate of Return (d) 1.7% Risk Free Rate of Return (d) 1.7% Historical Market Risk Premium (e) 6.9% Historical Market Risk Premium (e) 6.9% Supply-Side Market Risk Premium (e) 6.1% Levered Beta (b) 1.00 Size Premium (e) (f) 5.2% Size Premium (e) (f) 5.2% Marginal Tax Rate 25.0% Cost of Equity 13.8% Other Inputs WACC Calculation Before Tax Cost of Debt 5.4% Cost of Equity 13.8% After-Tax Cost of Debt 4.1% Equity / Total Capitalization 68.4% Debt / Equity 46.3% After-Tax Cost of Debt 4.1% Debt / Total Capitalization 31.6% Debt / Total Capitalization 31.6% Levered Beta (b) 1.00 WACC 10.7% Unlevered Beta (c) 0.74 a) Assumes book value of debt approximates market value. Does not include capitalized operating leases (per IFRS 16, effective January 2019) as debt. b) Source: Bloomberg 5-year adjusted weekly beta as reported on January 24, 2020. c) Unlevered Beta = Levered Beta / {1+(Debt/Market Equity)*(1-Tax Rate)}. d) 10-year Treasury Note yield as of January 24, 2020. e) Source: Duff & Phelps 2018 Valuation Handbook. f) Size premium of 5.22% for companies with market capitalizations between $2.5M and $321.6M. Private and Confidential 42
Exhibit 99(C)(7)
Project Stratosphere January 29, 2020 Private and Confidential
Disclaimer The following pages contain material provided to the Special Committee of the Board of Directors (the Special Committee) of Stein Mart, Inc. (the Company) by PJ Solomon, L.P. and its affiliates, including, without limitation, PJ Solomon Securities, LLC (collectively, PJ Solomon or Solomon) in connection with Project Stratosphere. These materials were prepared on a confidential basis in connection with an oral presentation to the Special Committee and not with a view toward complying with the disclosure standards under state or federal securities laws or otherwise. The information contained in this presentation was based solely on publicly available information or information furnished to PJ Solomon by the Company. PJ Solomon has relied, without independent investigation or verification, on the accuracy, completeness and fair presentation of all such information and the conclusions contained herein are conditioned upon such information (whether written or oral) being accurate, complete and fairly presented in all respects. This presentation includes certain statements, estimates and projections provided by the Company with respect to the historical and anticipated future performance of the Company. Such statements, estimates and projections contain or are based on significant assumptions and subjective judgments made by the Companys management. None of PJ Solomon, its affiliates or its or their respective employees, directors, officers, contractors, advisors, members, successors or agents makes any representation or warranty in respect of the accuracy, completeness or fair presentation of any information, projections or any conclusion contained herein. PJ Solomon, its affiliates and its and their respective employees, directors, officers, contractors, advisors, members, successors and agents shall have no liability with respect to any information, projections or matter contained herein, or any oral information provided herewith or data any of them generates. The information contained herein should not be assumed to have been updated at any time subsequent to date shown on the first page of the presentation and the delivery of the presentation does not constitute a representation by PJ Solomon that such information will be updated at any time after the date of the presentation. Neither PJ Solomon nor any of its affiliates is an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction. The Company acknowledges that PJ Solomon is an affiliate of Natixis, a global full service commercial and investment bank. These materials are not and should not be construed as a fairness opinion. Private and Confidential 1
Selected Proposed Transaction Terms Acquiror Kingswood Capital Management, LLC Per Share Consideration $0.90 in cash Stock Price Premiums To: Current Price ($ 0.64): 41.0% Offer Premium 30-Days VWAP ($ 0.67): 34.2% 60-Days VWAP ($ 0.69): 30.4% 90-Days VWAP ($ 0.72): 24.9% Implied Equity Value (a) $44.6M Implied Enterprise Value (b) $148.5M $30.7M new equity from Kingswood Financing $13.9M rollover equity from Jay Stein Remainder drawn from new $ 240M Wells Fargo ABL Credit Facility and $ 35M Pathlight FILO Term Loan Go Shop / No Shop No shop with a termination right to pay a 5.0% of equity value (including rollover shares) break fee and accept a Superior Proposal Reverse Termination Fee Parent required to pay 5.0% of equity value (including rollover shares) reverse break fee paid if it fails to close when required to do so Termination Date 6 Months from Date of Agreement Minimum Excess Availability 35.0% of ABL Credit Facility Loan Cap (c) at Close a) Based on 48.4M total shares outstanding and 1.2M Restricted Stock Units (RSUs) as of January 27, 2020 per Company Management. b) Based on cash of $8.5M and total debt of $112.4M as of January 4, 2020 per Management internal 2019 11+1 Forecast. c) Defined as the lesser of the net ABL Borrowing Base and the Credit Facility Size. Private and Confidential 2
Offer Summary ($ in Millions, Except Per Share Data) Current Kingswood Market (Public Net Debt) Market (Avg. Net Debt) Market (Private Net Debt) Offer 1/28/2020 1/28/2020 1/28/2020 1/27/2020 Stock Price / Proposed Offer Price $0.64 $0.64 $0.64 $0.90 Shares Outstanding (a) 48.4 48.4 48.4 48.4 Restricted Stock Units (b) 1.2 Option Equivalent Shares (c) Diluted Shares Outstanding 48.4 48.4 48.4 49.5 Total Equity Value $30.9 $30.9 $30.9 $44.6 Plus: Net Debt 157.3 (d) 136.8 (e) 104.0 (f) 104.0 (f) Total Enterprise Value $188.2 $167.6 $134.8 $148.5 Premium / (Discount) to: Current Price 1/28/2020 $0.64 % % % 41.0 % 30-Day VWAP 0.67 (4.8) (4.8) (4.8) 34.2 60-Day VWAP 0.69 (7.6) (7.6) (7.6) 30.4 90-Day VWAP 0.72 (11.5) (11.5) (11.5) 24.9 180-Day VWAP 0.75 (14.5) (14.5) (14.5) 20.6 52-Week High 2/14/2019 1.23 (48.1) (48.1) (48.1) (26.8) 52-Week Low 1/28/2020 0.64 41.0 Enterprise Value as a Multiple of: Total Revenue LTM (Q3 19)Public $1,240.6 15.2 % 13.5 % 10.9 % 12.0 % LTM (Dec. 19) (g) 1,234.4 15.2 13.6 10.9 12.0 Adj. EBITDA LTM (Q3 19)Public $30.0 6.3 x 5.6 x 4.5 x 4.9 x LTM (Dec. 19) (g) 27.9 6.8 6.0 4.8 5.3 FY 2019B (g) 24.9 7.5 6.7 5.4 6.0 Price as a Multiple of: Diluted Adj. EPS FY 2020E (g) $0.02 30.3 x 30.3 x 30.3 x 42.8 x FY 2021E (g) 0.03 21.2 21.2 21.2 30.0 a) Total shares outstanding of 48.4M as of January 27, 2020, per Company Management, which includes 0.6M Restricted Stock Awards. b) Restricted Stock Units (RSUs) as of January 27, 2020, per Company Management, which are not included in shares outstanding and have a double trigger change-in-control provision. c) Assumes treasury stock method based on 1.4M stock options outstanding with no options in the money as of January 27, 2020, per Company Management. d) Based on cash of $13.0M and total debt of $170.3M as of November 2, 2019 per Company FY 2019 Q3 10-Q filing. e) Based on average month-end net debt balances for the last twelve months from January 2019 through December 2019. f) Based on cash of $8.5M and total debt of $112.4M as of January 4, 2020 per Management internal 2019 11+1 Forecast. g) Source: Management Five Year Plan approved by the Special Committee on January 15, 2020, Management internal 2019 11+1 Forecast as of January 15, 2020, which is not materially different than the 10+2 Forecast approved by the Special Committee on January 15, 2020 and Management preliminary 2020 budget as of January 16, 2020. Private and Confidential 3
Stratosphere Summary Capitalization and Market Data (Amounts in Millions, Except Per Share Data) Stock Information Financial Information Credit Statistics Ticker Symbol STRAT Fiscal Year End Feb 2, 2019 As of Stock Exchange NasdaqGS LTM DatePublic Nov 2, 2019 Dec-19 (b) Stock Price as of 1/28/20 $0.64 LTM DatePrivate Jan 4, 2020 Adj. Debt / Adj. EBITDAR (c) 7.1 x Total Debt / Adj. EBITDA 4.0 x 52-Week Stock Price LTM Revenue (Q3 19)Public $1,240.6 Net Debt / Adj. EBITDA 3.7 x High 2/14/19 $1.23 LTM Revenue (Dec. 19)Private (b) 1,234.4 Adj. EBITDA / Interest, Net 3.0 x Low 1/28/20 0.64 LTM Adj. EBITDA (Q3 19)Public 30.0 LTM Adj. EBITDA (Dec. 19)Private (b) 27.9 5-Year Stock Price FY 2019B Adj. EBITDAPrivate (b) 24.9 High 2/26/15 $16.46 Total Debt / Total Capitalization 78.2% Low 2/8/18 0.51 LTM Adj. EPS (Q3 19)Public ($0.17) Net Debt / Net Capitalization 76.8% FY 2019B Adj. EPSPrivate (b) (0.26) Average Daily Volume (3 Mo.) 0.1 FY 2020E Adj. EPSPrivate (b) 0.02 Shares Sold Short 3.1 FY 2021E Adj. EPSPrivate (b) 0.03 Short Int. as % of Public Float (a) 9.3% Market Capitalization and Firm Value Market Valuation Beneficial Ownership by Category (g) Stock Price as of 1/28/20 $0.64 Enterprise Value as a Multiple of: Beneficial Percent of Shares Outstanding (d) 48.4 LTM Revenue (Q3 19)Public 15.2% Ownership Total Option Equivalent Shares (e) LTM Adj. EBITDA (Q3 19)Public 6.3 x Jay Stein 15.3 31.1% Equity Value $30.9 FY 2019B Adj. EBITDAPrivate (b) 7.5 x Other Insiders 2.1 4.3% Plus: Total Debt (f) 170.3 Stock Price as a Multiple of: Top 10 Institutions 2.9 5.9% Less: Cash & Cash Equivalents (13.0) FY 2020E Adj. EPSPrivate (b) 30.3 x Public and Other 28.9 58.7% Enterprise Value $188.2 FY 2021E Adj. EPSPrivate (b) 21.2 x Total 49.2 100.0% a) Excludes shares beneficially owned by Jay Stein. b) Source: Management Five Year Plan approved by the Special Committee on January 15, 2020, Management internal 2019 11+1 Forecast as of January 15, 2020, which is not materially different than the 10+2 Forecast approved by the Special Committee on January 15, 2020 and Management preliminary 2020 monthly budget as of January 16, 2020. c) Assumes 8.0x rent methodology as it is not yet clear that the lender and credit analyst communities have altered their leverage measurement methodologies for revised lease accounting rules. d) Total shares outstanding of 48.4M as of January 27, 2020, per Company Management. e) Assumes treasury stock method based on 1.4M stock options outstanding with no options in the money as of January 27, 2020, per Company Management. f) Total financial debt does not include operating lease liabilities. As of November 2, 2019 per Company FY 2019 Q3 10-Q filing. g) Includes exercisable options held by directors and executive officers. Source: Companys Proxy Statement dated May 7, 2019. Private and Confidential 4
Stock Price Performance Stock Price Performance (January 27, 2017 January 27, 2020) $ 8.00 Median 3-Yr 2-Yr 6-Mo $1.20 $0.82 $0.76 $ 6.00 $ 4.00 $ 2.00 $0.64 $ 0.00 Jan-17 Jan-18 Jan-19 Jan-20 Indexed Stock Performance (January 27, 2017 January 27, 2020) 100% Stratosphere Select Broadlines(a) Off-Price(b) S&P Adjusted Retail (c) Note: Select Broadlines does not 86.3% ) ge Bon-Ton include Sears, due to Gordmans the fact they and 59.9% an 50% entered bankruptcy during this Ch period (% ce 0% an rform (9.9%) Pe (50%) e Pric (82.3%) (100%) Jan-17 Jan-18 Jan-19 Jan-20 Source: Capital IQ as of January 28, 2020. a) Comprised of JWN, M, KSS, DDS, JCP, SSI and CATO. b) Comprised of CTRN, ROST, TJX, BURL and FIVE. c) Comprised of AAP, AN, AZO, BBBY, BBY, KMX, DG, DLTR, FL, GPC, KSS, JWN, ROST, SIG, TGT, GPS, TJX, TIF, ULTA, URBN, TSCO, ORLY, LB, LKQ, M, HD and LOW. Private and Confidential 5
Historical Financials (Amounts in Millions, Except Per Share Data) Fiscal Year LTM LTM CAGR Income Statement Data 2014A 2015A 2016A 2017A 2018A Oct-19 Dec-19 FY14-FY18 Total Revenue $1,323.7 $1,367.0 $1,374.6 $1,332.6 $1,272.7 $1,240.6 $1,234.4 (1.0%) Gross Profit 392.8 392.4 373.1 344.9 352.9 341.1 337.2 (2.6) Adj. SG&A 305.7 315.7 328.5 337.3 313.4 311.1 309.3 0.6 Adj. EBITDA 87.0 76.7 44.6 7.6 39.5 30.0 27.9 (17.9) Adj. EBIT 53.9 43.8 8.4 (26.9) 7.3 1.1 (0.6) (39.4) Diluted EPS $0.59 $0.51 $0.01 ($0.52) ($0.13) ($0.14) ($0.17) NM Adjusted Diluted EPS $0.68 $0.54 $0.07 ($0.43) ($0.10) ($0.17) ($0.22) NM Number of Stores 270 278 290 293 287 283 283 Margins Gross Profit 29.7% 28.7% 27.1% 25.9% 27.7% 27.5% 27.3% Adj. EBITDA 6.6 5.6 3.2 0.6 3.1 2.4 2.3 Adj. EBIT 4.1 3.2 0.6 (2.0) 0.5 0.1 (0.0) Comparable Sales Store Sales N/A N/A N/A (7.1%) (2.6%) (2.3%) (a) (2.0%) (a) ECommerce N/A N/A N/A 33.5 38.8 10.2 (a) (b) 9.0 (a) (b) Total Comp Sales (excl. DSW & LXR) 3.3% 1.0% (3.8%) (5.5) (1.1) (1.9) (a) (c) (1.7) (a) (c) Growth Rates Total Revenue 4.8% 3.3% 0.6% (3.1%) (4.5%) (5.8%) (4.4%) Adj. EBITDA 65.5 (11.9) (41.9) (82.9) 418.4 (27.2) (32.8) Adj. EBIT 2.5 (18.7) (80.7) NM NM (87.9) NM Balance Sheet and Cash Flow Data Cash $65.3 $11.8 $10.6 $10.4 $9.0 $13.0 $8.5 Total Debt 190.2 181.8 156.1 153.3 170.3 112.4 Depreciation and Amortization 29.1 29.9 32.6 32.3 32.4 21.2 28.5 Cum. FY14-YTD19 Capital Expenditures (40.2) (44.4) (42.4) (21.2) (9.0) (6.8) (6.1) ($163.3) Change in Net Working Capital (14.1) (18.5) 17.0 32.9 (25.4) (4.5) (12.5) Free Cash Flow (d) 12.2 (6.0) 18.2 26.5 (0.1) 17.8 7.3 58.2 Leverage and Interest Coverage Ratios Adj. Debt / Adj. EBITDAR (e) 3.8 x 5.4 x 6.9 x 9.1 x 6.8 x 7.4 x 7.1 x Total Debt / Adj. EBITDA 2.5 4.1 20.5 3.9 5.7 4.0 Note: Stratosphere paid a $5.00 / share special dividend in FY 2015. Source: Company Management and SEC filings. LTM includes results through October per publicly available financials and through December per Company internal financials. a) Represents year-to-date comparable store sales. b) Represents omni-channel comparable sales, which are not comparable with historical periods. With the rollout of Smart Fulfillment in August 2019 and BOPIS in September 2019, a significant portion of ECommerce sales have shifted to ship-from-store, and to a lesser extent, BOPIS. As a result, ECommerce comparable sales are down (15.6%) as of December YTD. c) Represents Total Comp, inclusive of leased departments (DSW & LXR). d) Defined as Cash Flow from Operating Activities less Capital Expenditures. e) Assumes 8.0x rent methodology as it is not yet clear that the lender and credit analyst communities have altered their leverage measurement methodologies for revised lease accounting rules. Private and Confidential 6
Projected Financials (Amounts in Millions, Except Per Share Data) LTM Fiscal Year CAGR Income Statement Data Dec-19 2019B 2020P 2021P 2022P 2023P 2024P FY19-FY24 Total Revenue $1,234.4 $1,234.2 $1,254.8 $1,277.6 $1,297.3 $1,321.5 $1,366.2 2.1% Gross Profit 337.2 335.3 348.8 353.9 358.4 365.4 376.6 2.4 Adj. SG&A 309.3 310.3 311.2 319.7 324.7 330.0 338.5 1.8 Adj. EBITDA 27.9 24.9 37.5 34.2 33.7 35.4 38.1 8.9 Adj. EBIT (0.6) (3.3) 10.2 9.7 12.3 17.0 21.3 NM Diluted EPS ($0.17) ($0.25) ($0.00) $0.01 $0.05 $0.12 $0.22 NM Adjusted Diluted EPS ($0.22) ($0.26) $0.02 $0.03 $0.07 $0.15 $0.25 NM Number of Stores 283 283 281 277 274 276 280 Margins Gross Profit 27.3% 27.2% 27.8% 27.7% 27.6% 27.7% 27.6% Adj. EBITDA 2.3 2.0 3.0 2.7 2.6 2.7 2.8 Adj. EBIT (0.0) (0.3) 0.8 0.8 0.9 1.3 1.6 Comparable Sales Store Sales (2.0%) (a) (1.2%) 2.5% 1.5% 1.5% 1.4% 1.5% ECommerce 9.0 (a) (b) (16.3) (4.2) 14.4 13.5 10.0 10.0 Total Comp Sales (excl. DSW & LXR) (1.7) (a) (c) (1.8) 2.2 1.9 2.0 1.8 1.9 Growth Rates Total Revenue (4.4%) (3.0%) 1.7% 1.8% 1.5% 1.9% 3.4% Adj. EBITDA (32.8) (36.8) 50.5 (9.0) (1.3) 4.9 7.8 Adj. EBIT NM NM NM (4.9) 26.2 38.7 25.2 Balance Sheet and Cash Flow Data Cash $8.5 $12.0 $12.0 $12.0 $12.0 $12.0 $12.0 Total Debt 112.4 147.5 129.0 121.6 113.3 104.7 97.8 Depreciation and Amortization 28.5 28.2 27.3 24.4 21.4 18.3 16.8 Cum. FY20-FY24 Capital Expenditures (6.1) (7.7) (10.6) (16.0) (14.8) (15.8) (15.2) (72.4) Change in Net Working Capital (12.5) (3.7) 1.8 (2.7) (1.8) (2.9) (8.8) Free Cash Flow (d) 7.3 7.6 21.6 9.4 10.4 8.7 6.7 56.8 Leverage and Interest Coverage Ratios Adj. Debt / Adj. EBITDAR (e) 7.1 x N/A N/A N/A N/A N/A N/A Total Debt / Adj. EBITDA 4.0 5.9 x 3.4 x 3.6 x 3.4 x 3.0 x 2.6 x Source: Source: Management Five Year Plan approved by the Special Committee on January 15, 2020, Management internal 2019 11+1 Forecast as of January 15, 2020, which is not materially different than the 10+2 Forecast approved by the Special Committee on January 15, 2020 and Management preliminary 2020 monthly budget as of January 16, 2020. Note: Adjusted EBITDA, EBIT and Diluted EPS exclude store impairments, gain from credit card settlement and pre-opening costs identified by Management. a) Represents year-to-date comparable store sales. b) Represents omni-channel comparable sales, which are not comparable with historical periods. With the rollout of Smart Fulfillment in August 2019 and BOPIS in September 2019, a significant portion of ECommerce sales have shifted to ship-from-store, and to a lesser extent, BOPIS. As a result, ECommerce comparable sales are down (15.6%) as of December YTD. c) Represents Total Comp, inclusive of leased departments (DSW & LXR). d) Defined as Cash Flow from Operating Activities less Capital Expenditures. e) Assumes 8.0x rent methodology as it is not yet clear that the lender and credit analyst communities have altered their leverage measurement methodologies for revised lease accounting rules. Private and Confidential 7
Summary Financial Valuation Overview 1/28/20 1/28/20 1/27/20 Current Price Price w/ Control Premium(a) Offer Price $0.64 $0.85 $0.90 Selected Public Companies $1.45 Selected Precedent Transactions $5.08 Discounted Cash Flow (b) $1.49 52-Week Trading Range $0.64 $1.23 $1.00 $2.00 $3.00 $4.00 $5.00 Note: 52-Week Trading Range is for informational purposes only. a) Source: FactSet. 32.7% based on a median one-day premium for transactions of $100M to $300M enterprise value with North American targets, in which at least a 50% stake was acquired. Excludes financial services, healthcare, real estate and energy/mining/minerals industries. b) Assumes terminal value EBITDA multiple of 3.5x6.0x for the terminal value method, perpetuity growth rate of 0.0%2.0% for the perpetuity growth rate method and WACC of 9.5% to 11.5% for both methods. Private and Confidential 8
Public Companies EV/EBITDA and P/E Performance EV / EBITDA Multiples (a) EV / LTM EBITDA EV / LTM EBITDA Median: 5.1x EV / CY 2019E EBITDA EV / CY 2019E EBITDA Median: 5.4x 8.3 x 7.1 x 5.8 x 5.4 x 5.5 x 5.6 x 4.7 x 4.7 x 4.3 x 3.7 x 3.2 x NM NM(b) NM JCP JWN DDS KSS M CATO SSI Market Capitalization ($mm): $257 $5,979 $1,718 $7,058 $5,212 $391 $95 LTM Adj. EBITDA % Margin: 5.3% 9.0% 6.5% 10 .6% 10 .1% 6.3% 1.0% Total Debt / Adj. EBITDA: 6.9x 1.9x 1.6x 1.6x 1.8x 0.0x 22 .2x P / E Multiples CY 2020E P/E Ratio CY 2020E P/E Ratio Median: 10.3x CY 2021E P/E Ratio CY 2021E P/E Ratio Median: 10.7x 20.9 x 19.6 x 11.0 x 11.4 x 9.7 x 9.9 x 7.0 x 7.4 x NM NM NM NM NM NM DDS JWN KSS M SSI CATO JCP Source: Public filings, Capital IQ as of January 28, 2020. a) Note: Enterprise value does not include capitalized operating leases (per IFRS 16, effective January 2019) as debt. b) EV / LTM Adjusted EBITDA multiple for SSI is 26.3x due to a low positive EBITDA and is deemed non-material for trading purposes. Private and Confidential 9
Summary Valuation Based on Selected Public Companies (Amounts in Millions, Except Per Share Data) Adjusted EBITDA Valuation Multiples Implied Equity Value (a) Implied Per Share Value (b) LTM Q3 FY 2019A $30.0 3.2 x5.8 x ($8)$70 ($ 0.16)$1.45 CY 2019E / LTM (Dec. 19) 27.9 4.3 x5.6 x 1652 0.331.08 Adjusted EPS Valuation Multiples Implied Equity Value (b) Implied Per Share Value (b) CY 2020E $0.02 7.0 x20.9 x $6$18 $ 0.13$0.38 CY 2021E 0.03 7.4 x19.6 x 1028 0.220.57 Source: Management Five Year Plan approved by the Special Committee on January 15, 2020 and Management internal 2019 11+1 Forecast as of January 15, 2020, which is not materially different than the 10+2 Forecast approved by the Special Committee on January 15, 2020. a) Net debt of $104.0M represents total debt less cash as of January 4, 2020 per Management internal 2019 11+1 Forecast. b) Total shares outstanding of 48.4M as of January 27, 2020 per Company Management. Private and Confidential 10
Selected Precedent Transactions (Amounts in USD, Millions) Date Enterprise EV as a Multiple of LTM: Announced Acquiror Target Value Sales EBITDA Aug-19 Liberty Tax Sears Outlet $133 27.4% 3.7 x Aug-19 Le Tote Lord & Taylor C$133 (a) NM NM Jun-19 Elliott Management Barnes & Noble Inc. $683 19.2% 4.6 x May-17 Camping World Gander Mountain (b) 34 25.6% ND Oct-16 Dicks Golfsmith (b) 43 8.7% ND Aug-16 Versa Capital Management Vestis Retail Group (b) 115 (c) 28.8% NM Source: Company fillings and other publicly available information. a) Total deal value includes C$99.5M upfront cash consideration, C$33.2M in the form of a promissory note payable in cash two years from closing and a minority equity stake in Le Tote. b) Companies sold in 363 sale process. c) Enterprise Value per implied recoveries from October 9, 2018 Disclosure Statement. Private and Confidential 11
Summary Valuation Based on Selected Precedent Transactions (Amounts in Millions, Except Per Share Data) Total Revenue Valuation Multiples Implied Equity Value (a) Implied Per Share Value (b) LTM (Dec. 19) $1,234.4 8.7%28.8% $ 3$252 $ 0.07$5.08 Adj. EBITDA Valuation Multiples Implied Equity Value (a) Implied Per Share Value (b) LTM (Dec. 19) $27.9 3.7 x4.6 x ($ 1)$24 ($ 0.02)$0.49 Source: Management Five Year Plan approved by the Special Committee on January 15, 2020 and Management internal 2019 11+1 Forecast as of January 15, 2020, which is not materially different than the 10+2 Forecast approved by the Special Committee on January 15, 2020. a) Net debt of $104.0M represents total debt less cash as of January 4, 2020 per Management internal 2019 11+1 Forecast. b) Total shares outstanding of 49.5M, which includes 1.2M RSUs, as of January 27, 2020 per Company Management. Private and Confidential 12
Discounted Cash Flow Analysis (Amounts in Millions, Except Per Share Data) Fiscal Year 1 Mo. 2019B 2020E 2021E 2022E 2023E 2024E Total Revenue $64.4 $1,254.8 $1,277.6 $1,297.3 $1,321.5 $1,366.2 % Growth (0.2%) 1.7% 1.8% 1.5% 1.9% 3.4% Adj. EBITDA (a) (4.6) 37.5 34.2 33.7 35.4 38.1 % of Net Sales (7.2%) 3.0% 2.7% 2.6% 2.7% 2.8% Adj. EBIT (a) (7.0) 10.2 9.7 12.3 17.0 21.3 % of Net Sales (10.8%) 0.8% 0.8% 0.9% 1.3% 1.6% Taxes @ 25.0% 1.7 (2.6) (2.4) (3.1) (4.3) (5.3) Tax-Effected Adj. EBIT (5.2) 7.7 7.3 9.2 12.8 16.0 Depreciation & Amortization 2.3 27.3 24.4 21.4 18.3 16.8 Capital Expenditures (2.2) (10.6) (16.0) (14.8) (15.8) (15.2) Change in Net Working Capital (23.8) 1.8 (2.7) (1.8) (2.9) (8.8) Free Cash Flow ($28.9) $26.1 $13.0 $14.0 $12.4 $8.9 Growth in Free Cash Flow 81.8% (50.1%) 7.1% (11.3%) (28.5%) Terminal Value / Adj. EBITDA Multiple 3.5 x 3.50 x 3.5 x 4.8 x 4.75 x 4.8 x 6.0 x 6.00 x 6.0 x Discount Rate 9.5% 10.5% 11.5% 9.5% 10.5% 11.5% 9.5% 10.5% 11.5% Present Value of Free Cash Flow $30.6 $29.4 $28.2 $30.6 $29.4 $28.2 $30.6 $29.4 $28.2 Present Value of Terminal Value 84.7 80.9 77.3 114.9 109.8 104.9 145.1 138.7 132.5 Total Enterprise Value $115.3 $110.3 $105.5 $145.5 $139.1 $133.1 $175.8 $168.0 $160.7 Less: Net Debt (b) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) Total Equity Value $11.3 $6.3 $1.5 $41.6 $35.2 $29.1 $71.8 $64.1 $56.7 Total Equity Value Per Share (c) $0.23 $0.13 $0.03 $0.86 $0.74 $0.60 $1.49 $1.33 $1.17 Terminal Value as a % of Total Value 73.4% 73.4% 73.3% 78.9% 78.9% 78.8% 82.6% 82.5% 82.5% Implied Perpetuity Growth Rate 2.7% 3.6% 4.6% 4.4% 5.4% 6.3% 5.4% 6.4% 7.3% Perpetuity Growth Rate 0.0% 0.0% 0.0% 1.0% 1.0% 1.0% 2.0% 2.0% 2.0% Discount Rate 9.5% 10.5% 11.5% 9.5% 10.5% 11.5% 9.5% 10.5% 11.5% Present Value of Free Cash Flow $30.6 $29.4 $28.2 $30.6 $29.4 $28.2 $30.6 $29.4 $28.2 Present Value of Terminal Value 59.1 51.1 44.6 66.7 57.0 49.3 76.4 64.4 55.1 Total Enterprise Value $89.7 $80.5 $72.8 $97.4 $86.4 $77.5 $107.0 $93.8 $83.2 Less: Net Debt (b) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) (104.0) Total Equity Value ($14.2) ($23.5) ($31.2) ($6.6) ($17.5) ($26.5) $3.0 ($10.2) ($20.7) Total Equity Value Per Share (c) ($0.29) ($0.49) ($0.65) ($0.14) ($0.36) ($0.55) $0.06 ($0.21) ($0.43) Terminal Value as a % of Total Value 65.9% 63.5% 61.3% 68.5% 66.0% 63.7% 71.4% 68.7% 66.2% Implied Terminal Value / Adj. EBITDA 2.4 x 2.2 x 2.0 x 2.8 x 2.5 x 2.2 x 3.2 x 2.8 x 2.5 x Source: Management Five Year Plan approved by the Special Committee on January 15, 2020 and Management internal 2019 11+1 Forecast as of January 15, 2020, which is not materially different than the 10+2 Forecast approved by the Special Committee on January 15, 2020. Note: Discounted to January 28, 2020. a) Adj. EBITDA and Adj. EBIT exclude pre-opening expenses and relocated/closed stores impairments. b) Net debt of $104.0M represents total debt less cash as of January 4, 2020 per Management internal 2019 11+1 Forecast. c) Per share data based on share count of 48.4M as of January 27, per Company Management. Private and Confidential 13
Appendix Private and Confidential 14
Weighted Average Cost of Capital ($ in Millions) LTM Interest Total Implied Market Levered Debt / Unlevered Name Expense Debt (a) Cost of Debt Cap. Beta (b) Equity Beta (c) Stratosphere ($9) $112 8.2% $31 1.32 357.7% 0.36 Kohls ($216) $3,298 6.5% $7,058 1.08 46.7% 0.80 Macys (192) 4,683 4.1% 5,212 1.05 89.8% 0.63 Nordstrom (89) 2,679 3.3% 5,979 1.01 44.8% 0.76 Dillards (47) 666 7.1% 1,718 1.03 38.8% 0.80 Cato NM 391 0.74 0.74 J. C. Penney (298) 4,205 7.1% 257 1.31 1,634.6% 0.10 Stage Stores (16) 365 4.3% 95 0.96 383.9% 0.25 Median (excl. Stratosphere) 5.4% 1.03 46.7% 0.74 WACC Calculation (Assuming Median Beta and D/E) Assumptions Cost of Equity Calculation Risk Free Rate of Return (d) 1.7% Risk Free Rate of Return (d) 1.7% Historical Market Risk Premium (e) 6.9% Historical Market Risk Premium (e) 6.9% Size Premium (e) (f) 5.2% Levered Beta (b) 1.00 Marginal Tax Rate 25.0% Size Premium (e) (f) 5.2% Cost of Equity 13.8% Other Inputs Before Tax Cost of Debt 5.4% WACC Calculation After-Tax Cost of Debt 4.1% Cost of Equity 13.8% Debt / Equity 46.7% Equity / Total Capitalization 68.2% Debt / Total Capitalization 31.8% After-Tax Cost of Debt 4.1% Levered Beta (b) 1.00 Debt / Total Capitalization 31.8% Unlevered Beta (c) 0.74 WACC 10.7% a) Assumes book value of debt approximates market value. Does not include capitalized operating leases (per IFRS 16, effective January 2019) as debt. b) Source: Bloomberg 5-year adjusted weekly beta as reported on January 28, 2020. c) Unlevered Beta = Levered Beta / {1+(Debt/Market Equity)*(1-Tax Rate)}. d) 10-year Treasury Note yield as of January 28, 2020. e) Source: Duff & Phelps 2018 Valuation Handbook. f) Size premium of 5.22% for companies with market capitalizations between $2.5M and $321.6M. Private and Confidential 15
Premiums Paid Analysis ($ in Millions) Announce Enterprise One Day 30-Day Date Acquirer Target Value Premium Premium Dec-19 Lumos Networks; EQT Partners North State Telecommunications $236.5 29.6% 23.1% Nov-19 ICV Partners Diversified Restaurant Holdings 176.4 123.4% 75.0% Sep-19 Greenbriar Equity Group Arotech Corp. 102.1 32.7% 38.2% Sep-19 Accel-KKR et al. MAM Software Group 152.1 15.4% 13.7% Aug-19 Assurance Global Services Computer Task Group 106.8 33.8% 47.8% Aug-19 Austin Nichols & Co. Castle Brands 263.3 92.1% 136.1% Jun-19 Atlantis Acquisitionco Canada Corp. Hydrogenics Corp. 279.4 (3.1%) 55.3% Jun-19 YANMAR America Corp. ASV Holdings 104.0 332.5% 200.0% Jun-19 Extreme Networks, Inc. Aerohive Networks 198.7 39.5% 25.7% May-19 Vintage Capital Management Liberty Tax 160.8 31.1% 19.9% Apr-19 MTY Food Group, Inc. Papa Murphys Holdings 197.4 31.9% 15.8% Apr-19 The Ancora Group J. Alexanders Holdings 262.4 12.5% 22.7% Apr-19 Cresco Labs CannaRoyalty Corp. 276.6 (54.1%) (41.2%) Mar-19 HEXO Corp. Newstrike Brands 125.0 4.1% (11.6%) Feb-19 Tesla Maxwell Technologies 293.6 96.3% 234.8% Dec-18 Cerberus Capital Management Sparton Corp. 253.9 41.0% 47.8% Nov-18 Altair Engineering Datawatch Corp. 162.6 35.2% 13.9% Oct-18 General Catalyst et al. Intersections 102.6 107.3% 111.5% Oct-18 Z Capital Group; Affinity Gaming Full House Resorts 211.9 79.6% 67.3% Sep-18 Stryker Corp. Invuity 188.7 28.7% 87.3% Aug-18 Moodys Analytics Maryland Corp. Reis 251.1 32.2% 2.7% Aug-18 The Invus Group et al. Zoes Kitchen 295.3 33.4% 27.9% Aug-18 Roark Capital Group; FOCUS Brands Jamba 194.5 16.3% 20.8% Apr-18 NICE Systems, Inc. Mattersight Corp. 105.0 25.6% 17.4% Apr-18 SPX Corp. ELXSI Corp. 152.6 30.4% 29.9% Mar-18 William Morris Endeavor et al. NeuLion 203.0 116.5% 103.9% Mar-18 GP Investimentos Ltda. Bravo Brio Restaurant Group 100.1 16.8% 35.0% Feb-18 AMC Networks, Inc. RLJ Entertainment 163.7 61.5% 59.4% Jan-18 Duravant LLC Key Technology 172.0 50.6% 34.1% Median 32.7% 34.1% Source: FactSet. Represents transactions of $100-$300M in enterprise value with North American targets, in which at least a 50% stake was acquired. Excludes financial services, healthcare, real estate and energy/mining/minerals industries. Private and Confidential 16