February 17, 2006
RE: IMPORTANT NOTICE ABOUT PROGRESS ON THE RESTRUCTURING PLAN AT SCRIP ADVANTAGE
In mid and late December I laid out a timeline for exploring restructuring options that would lead to a known course of action for Scrip Advantage in 30 to 45 days and we have made substantial progress.
What We've Been Doing
The board members, our new Scrip Advantage management and our legal counsel were - and remain - committed to our priority of returning as much value to our creditors as possible. We continue working to that end. The board of directors and I have been working with financial and legal advisors to evaluate the company's options and prepare the way for whatever next steps are taken.
However, as we said at the creditor meetings in December, we believe the most value will be returned to creditors through a Chapter 11 restructuring, which requires a cohesive plan that the court determines is in the best interest of creditors and other stakeholders. In order to enter Chapter 11 the court must also believe that Scrip Advantage can successfully come out of it as a stronger company able to create more value for its creditors than if it just closes down and sells off remaining assets.
Since that requires new capital investment in Scrip Advantage, I have been working with others to identify potential funding sources for a restructured Scrip Advantage. The business plan for the restructured Scrip Advantage requires $6 million in financing. We have now narrowed the field of potential investors for this capital. A restructured Scrip Advantage with adequate capital will be able to operate with more efficient processes and provide trusted transactions.
What's Next … and When
A series of formal presentations with more detailed financial projections will be presented to these potential investors. We expect to know their answers with enough clarity to determine if we can tell the court that there is a reasonable possibility of additional funding at the levels required by the business plan for us to proceed with Chapter 11.
The board of directors of Scrip Advantage is now planning on making a decision on how to proceed.
What You Should Do
You can review updated information posted here at www.scripadvantage.com.
Thank you for your patience over these past months.
Cordially,
Scrip Advantage
