We were retained by Samsung Electronics Co., Ltd. in November 1995 as financial advisor to evaluate a potential motion picture co-financing arrangement with New Regency Productions Inc. (“New Regency”) and/or a minority equity investment. At that time we understood that Samsung was contemplating a $200-250 million transaction. New Regency is a motion picture production company for distribution by Warner Brothers.

In early November, Soo-Ryong (S.R.) Kim and Bob Hinaman assisted Samsung’s President J.K. Lee in preparations for a dinner in Paris with Arnon Milchan, Chairman of New Regency. Arnon Milchan brought Tom Cruise to the dinner with President Lee and S.R. Kim at his chateau in the suburbs of Paris. On November 14, the Chase team, including Richard Kelly, S.R. Kim, John Miller, Christa Thomas and Jay Winthrop, met in Los Angeles with President Lee et al to present our preliminary due diligence report. Our report, which was produced by Chase’s entertainment M&A team in New York and Los Angeles, included findings on New Regency’s management, the Warner relationship, the Kerry Packer relationship, ownership and valuation, historical performance, financial position and industry analysis. The report also included a detailed economic analysis of a co-financing arrangement. At this meeting, President J.K. Lee expressed Samsung’s goal in becoming a leading global media and entertainment company within ten years. We understood that a significant co-financing or equity investment in a leading independent film production company was a central element in Samsung’s strategy.

On November 21, S.R. Kim met with Samsung representatives in Seoul to discuss our preliminary due diligence findings and respond to questions from the Samsung team. Immediately following this meeting, our M&A team in New York responded in writing to approximately 25 questions posed by Samsung. The questions concerned valuation methodology, due diligence, exit strategies, use of proceeds, financing alternatives and industry analysis.

In late November, we commenced an intensive due diligence review of New Regency. Chase put together a dedicated team of M&A professionals in New York and Los Angeles who worked diligently to complete the project on time. Our work included interviews with management, a film-by-film valuation of New Regency’s program library, analyses of comparable companies and M&A transactions, and an examination of the legal and accounting effects of an equity investment by Samsung. An integral part of this work was the creation of a financial model, which enabled Samsung to conduct sensitivity analyses on NRP’s valuation.

On December 14, S.R. Kim and K.W. Shim of Chase met with Senior Managing Director D.K. Lee, Director Won Choi and Greg Park to present financing proposals in connection with a $250 million equity investment in New Regency and a $200 million co-financing arrangement.

On December 22, Richard Kelly, S.R. Kim, John Miller, Christa Thomas and Jay Winthrop met with the Samsung team in Seoul to present a comprehensive due diligence and financial analysis report. This report included an industry analysis, New Regency update, co-financing analysis, equity investment analysis, and legal and accounting due diligence update. We recommended that Samsung make a significant equity investment in New Regency at an approximate valuation of up to $650 million. This recommendation was based on our understanding of Samsung’s strategy and the results of our due diligence and financial analysis. We explained the potential risks associated with such an investment but stated our view that the risks were manageable.

Based on our December 22 report, Samsung concentrated on analyzing a possible equity investment in New Regency in early January. During this week President Lee and S.R. Kim were invited by Arnon Milchan to have dinner with Sigourney Weaver, Robert De Niro, Al Pacino and himself for preview dinner party for movies “Heat” and “Copy Cat.”

In the first week of January, however, Arnon Milchan expressed concern about the slow pace of discussions. He explained that other companies were interested in exploring a deal with New Regency and that he needed to receive a framework for a deal with Samsung soon. We met with the Samsung working level team in Los Angeles the week of January 16 to resolve valuation issues and assemble the framework for a deal. These meetings were the first in a series of difficult negotiations between Samsung and New Regency. At this point, Arnon Milchan suggested to S.R. Kim that he can arrange for S.R. Kim and President Lee to have a golf outing with Sean Connery and himself. This was Arnon’s tactic to help enhance the price and terms in view of S.R. Kim’s critical role for Samsung. Arnon Milchan said that he and Sean Connery have been close friends since 1970’s. However, we declined this invitation because we were to reduce their asking price to a half at the very weekend.

We played a central role as Samsung’s representative in these negotiations, initiating and receiving conference calls late at night, on weekends and holidays. In particular, S.R. Kim’s sleepless, arduous efforts to bring the two principals together over this difficult two-week period prevented Arnon Milchan from signing a deal with another potential buyer. The deal was about to fall through, though. Arnon Milchan refused to talk further with Samsung. The two principals finally struck a deal thanks to a two-hour long teleconference S.R. Kim managed to arrange on Feb. 16, 1996. These negotiations culminated in a signed Memorandum of Agreement dated February 19, 1996. The principal terms for negotiation were valuation, investment size, a distribution agreement for Korea, minority shareholder rights and home video distribution rights for Warner films. We worked hard on Samsung’s behalf, recognizing that Samsung was cautious due to its sour experience with AST Research, the inherent risks of investing in the filmed entertainment industry and sensitive political factors in Korea. We believe our work was critical in fashioning a deal that included a $60 million investment with a 2-year option to invest an additional $50 million, Korean distribution rights for a 2% advance, similar shareholder rights as Kerry Packer and Warner home video rights.

We submitted a fairness opinion on April 8, which included a transaction summary, valuation analysis and a signed letter from Chase Securities affirming the reasonableness of the $750 million valuation. The opinion was followed by more intensive discussions between Samsung and New Regency, principally concerning payment of Dutch taxes ownership of cash flows to REVOF. On April 15, Richard Kelly joined President Lee and Arnon Milchan in Australia to tour Kerry Packer’s facilities and to celebrate the Samsung-New Regency-Packer partnership. We received the success fee from Samsung at the end of April.