SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT UNDER SECTION 13(E)
OF THE SECURITIES EXCHANGE ACT OF 1934
Steel Connect, Inc.
(NAME OF THE ISSUER)
Steel Connect, Inc.
Steel Partners Holdings L.P.
SP Merger Sub, Inc.
Handy & Harman Ltd.
WHX CS Corp.
Steel Partners, Ltd.
SPH Group LLC
SPH Group Holdings LLC
Steel Partners Holdings GP, Inc.
Steel Excel Inc.
Warren G. Lichtenstein
Jack L. Howard
(Names of Person(s) Filing Statement)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
858098106
(CUSIP Number of Class of Securities)
|
Steel Connect, Inc. Attn: Jason Wong 2000 Midway Ln |
Steel Partners Holdings L.P. Attn: Maria Reda 590 Madison Avenue, 32nd Floor |
(Name, Address, and Telephone Numbers of Person Authorized to Receive Notices and Communications on Behalf of the Persons Filing Statement)
With copies to
Colin
J. Diamond White & Case LLP 1221
Avenue of the Americas (212) 819-8754 |
Victor
H. Boyajian 22 Little West 12th Street New
York, New York 10014 |
Brian H. Blaney Alan I. Annex Greenberg Traurig, LLP 333 SE 2nd Avenue, Suite 4400 (602) 445-8322 |
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: ☐
Neither the SEC nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness
of the Merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal
offense.
Introduction
This Rule 13E-3 Transaction Statement, together with the exhibits hereto (this “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 (the “Exchange Act”), by: (i) Steel Connect, Inc., a Delaware corporation (the “Company” or “Steel Connect”), and the issuer of the shares of common stock, par value $0.01 per share (the “Common Stock”) that are subject to the Rule 13e-3 transaction; (ii) Steel Partners Holdings L.P., a Delaware limited partnership (“Parent” or “Steel Partners”); (iii) SP Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub” and, together with Parent, the “Parent Parties”), (iv) Handy & Harman Ltd., a Delaware limited company, (v) WHX CS Corp., a Delaware corporation, (vi) Steel Partners, Ltd., a Delaware limited company, (vii) SPH Group LLC, a Delaware limited liability company, (viii) SPH Group Holdings LLC, a Delaware limited liability company, (ix) Steel Partners Holdings GP, Inc., a Delaware corporation, (x) Steel Excel Inc., a Delaware incorporation, (xi) Warren G. Lichtenstein, an individual, and (xii) Jack L. Howard, an individual. Collectively, the persons filing this Transaction Statement are referred to as the “filing persons.”
This Transaction Statement relates to the Agreement and Plan of Merger, dated June 12, 2022 (as it may be amended from time to time, the “Merger Agreement”), by and among the Company and the Parent Parties. Pursuant to the Merger Agreement, if the conditions to the closing of the merger are either satisfied or waived, as applicable, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving entity and becoming a private, wholly owned subsidiary of Parent (the “Merger”). Pursuant to the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of Common Stock (other than (i) shares owned by the Company or any of its wholly owned subsidiaries or by Parent or any of its wholly owned subsidiaries (collectively, “Excluded Shares”) and (ii) shares for which appraisal rights have been properly and validly perfected and not withdrawn or lost will be converted into the right to (a) receive $1.35 in cash per share, without interest and subject to any withholding taxes and (b) one contingent value right to receive, subject to the terms of the Contingent Value Rights Agreement among the Company, Parent, a rights agent to be determined thereunder and a shareholder representative to be designated therein (substantially in the form attached to the Merger Agreement), the ModusLink CVR Payment Amount as provided for in the Merger Agreement.
The board of directors of the Company (the “Board”), acting on the unanimous recommendation of the special committee of the Board (the “Special Committee”), has adopted resolutions (i) determining that the terms of the Merger Agreement and the Merger and the transactions contemplated by the Merger Agreement (the “Transactions”) are advisable, fair to and in the best interest of the Company and the holders of capital stock of the Company (other than holders of Excluded Shares), (ii) approving and declaring advisable the Merger Agreement and the Transactions and (iii) recommending that the holders of capital stock of the Company entitled to vote, vote for the adoption of the Merger Agreement. The Board of Directors of Steel Partners Holdings GP, Inc., the general partner of the Company, has also approved the Merger Agreement and the Transactions.
Concurrently with the filing of this Transaction Statement, the Company is filing with the SEC a preliminary proxy statement (the “Proxy Statement”) under Regulation 14A of the Exchange Act. The Board will solicit proxies from the stockholders of the Company in connection with the Merger pursuant to the definitive version of the Proxy Statement. The Proxy Statement is attached hereto as Exhibit (a)(1). A copy of the Merger Agreement is attached to the Proxy Statement as Annex A and is incorporated herein by reference.
Pursuant to General Instruction F to Schedule 13E-3, the information in the Proxy Statement, including all annexes thereto, is expressly incorporated by reference herein in its entirety, and responses to each item herein are qualified in their entirety by the information contained in the Proxy Statement. 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. Capitalized terms used but not defined in this Transaction Statement have the meanings given to them in the Proxy Statement.
All information concerning the Company contained in, or incorporated by reference into, this Transaction Statement was supplied by the Company. Similarly, all information concerning each other filing person contained in, or incorporated by reference into, this Transaction Statement was supplied by such filing person.
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Item 1. Summary Term Sheet
Regulation M-A Item 1001
| (a) | The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger”
“Questions and Answers About the Annual Meeting and the Merger”
Item 2. Subject Company Information
Regulation M-A Item 1002
| (a) | Name and Address. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—The Parties to the Merger”
“The Parties to the Merger”
“Proposal No. 1: The Merger Proposal—The Merger Agreement”
“Important Additional Information Regarding Steel Connect—Company Background”
| (b) | Securities. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—Record Date and Quorum”
| (c) | Trading Market and Price. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference: |
“Important Additional Information Regarding Steel Connect—Market Price of Our Common Stock”
| (d) | Dividends. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference: |
“Important Additional Information Regarding Steel Connect—Dividends”
| (e) | Prior Public Offerings. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference: |
“Important Additional Information Regarding Steel Connect—Prior Public Offerings”
| (f) | Prior Stock Purchases. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference: |
“Important Additional Information Regarding Steel Connect—Prior Stock Purchases”
Item 3. Identity and Background of Filing Person
Regulation M-A Item 1003
| (a)-(c) | Name and Address; Business and Background of Entities; Business and Background of Natural Persons. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger”
“The Parties to the Merger”
“Important Information Regarding the Parent Group Members”
“Proposal No. 3: The Election Proposal—Information Concerning the Directors and the Board’s Nominees”
“Important Additional Information Regarding Steel Connect—Company Background”
“Important Additional Information Regarding Steel Connect—Executive Officers and Directors”
“Important Additional Information Regarding Steel Connect—Security Ownership of Certain Beneficial Owners and Management”
“Where You Can Find Additional Information”
Item 4. Terms of the Transaction
Regulation M-A Item 1004
| (a) | Material Terms. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger”
“Questions and Answers About the Annual Meeting and the Merger”
“Special Factors—Background of the Merger”
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“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—The Parent Group Members’ Purposes and Reasons for the Merger”
“Special Factors—Position of the Parent Group as to Fairness of the Merger”
“Special Factors—Plans for Steel Connect after the Merger”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
“Special Factors—Material U.S. Federal Income Tax Consequences of the Merger”
“Special Factors—Regulatory Approvals”
“Special Factors—Anticipated Accounting Treatment of the Merger”
“Proposal No. 1: The Merger Proposal—Vote Required”
“Proposal No. 1: The Merger Proposal—The Merger Agreement”
“Proposal No. 1: The Merger Proposal—Support Agreement”
“Proposal No. 1: The Merger Proposal—Form of Contingent Value Rights Agreement”
Annex A: Agreement and Plan of Merger
Annex C: Voting and Support Agreement
Annex D; Form of Contingent Value Rights Agreement
| (c) | Different Terms. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger”
“Questions and Answers About the Annual Meeting and the Merger”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
“Proposal No. 1: The Merger Proposal—The Merger Agreement”
Annex A: Agreement and Plan of Merger
| (d) | Appraisal Rights. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—Rights of Appraisal”
“Special Factors—Rights of Appraisal”
“Proposal No. 1: The Merger Proposal—The Merger Agreement”
Annex E: Section 262 of the General Corporation Law of the State of Delaware
| (e) | Provisions for Unaffiliated Security Holders. The information set forth in the Proxy Statement under following the caption is incorporated herein by reference: |
“Other Information—Provisions for Unaffiliated Stockholders”
| (f) | Eligibility for Listing or Trading. Not applicable. |
Item 5. Past Contacts, Transactions, Negotiations and Agreements
Regulation M-A Item 1005
| (a) | Transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
“Important Information Regarding the Parent Group Members—Past Transactions of the Parent Group”
“Important Additional Information Regarding Steel Connect—Transactions in Common Stock”
“Important Additional Information Regarding Steel Connect—Transactions between Steel Connect and the Parent Group Members”
| (b)-(c) | Significant Corporate Events; Negotiations or Contacts. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—The Parent Group Members’ Purposes and Reasons for the Merger”
“Special Factors—Position of the Parent Group as to Fairness of the Merger”
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“Special Factors—Plans for Steel Connect after the Merger”
“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
“Important Information Regarding the Parent Group Members—Past Transactions of the Parent Group”
“Proposal No. 1: The Merger Proposal—The Merger Agreement”
“Important Additional Information Regarding Steel Connect—Transactions in Common Stock”
“Important Additional Information Regarding Steel Connect—Transactions between Steel Connect and the Parent Group Members”
“Important Additional Information Regarding Steel Connect—Executive Officers and Directors”
“Where You Can Find Additional Information”
Annex A: Agreement and Plan of Merger
Annex C: Voting and Support Agreement
Annex D: Form of Contingent Value Rights Agreement
| (e) | Agreements Involving the Subject Company’s Securities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
“Important Information Regarding the Parent Group Members—Past Transactions of the Parent Group”
“Proposal No. 1: The Merger Proposal—Vote Required”
“Proposal No. 1: The Merger Proposal—The Merger Agreement”
“Proposal No. 1: The Merger Proposal—Support Agreement”
“Important Additional Information Regarding Steel Connect—Transactions in Common Stock” “Important Additional Information Regarding Steel Connect—Transactions between Steel Connect and the Parent Group Members”
“Where You Can Find Additional Information”
Annex A: Agreement and Plan of Merger
Annex C: Voting and Support Agreement
Annex D: Form of Contingent Value Rights Agreement
Item 6. Purposes of the Transaction and Plans or Proposals
Regulation M-A Item 1006
| (b) | Use of Securities Acquired. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—Certain Effects of the Merger”
“Questions and Answers About the Annual Meeting and the Merger”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Delisting and Deregistration of Common Stock”
Annex A: Agreement and Plan of Merger
(c)(1)-(8) Plans. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet Relating to the Merger”
“Questions and Answers About the Annual Meeting and the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—The Parent Group Members’ Purposes and Reasons for the Merger”
“Special Factors—Plans for Steel Connect after the Merger”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
“Special Factors—Delisting and Deregistration of Common Stock”
“Proposal No. 1: The Merger Proposal—The Merger Agreement”
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“Proposal No. 2: The Amendment Proposal”
“Proposal No. 3: The Election Proposal”
“Important Additional Information Regarding Steel Connect—Dividends”
Annex A: Agreement and Plan of Merger
Annex C: Voting and Support Agreement
Annex D: Form of Contingent Value Rights Agreement
Item 7. Purposes, Alternatives, Reasons and Effects
Regulation M-A Item 1013
| (a) | Purposes. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference |
“Summary Term Sheet Relating to the Merger—Purposes and Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Summary Term Sheet Relating to the Merger—The Parent Group Members’ Purposes and Reasons for the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—The Parent Group Members’ Purposes and Reasons for the Merger”
“Special Factors—Position of the Parent Group as to Fairness of the Merger”
“Special Factors—Certain Effects of the Merger”
Annex A: Agreement and Plan of Merger
| (b) | Alternatives. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—Purposes and Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—The Parent Group Members’ Purposes and Reasons for the Merger”
“Special Factors—Position of the Parent Group as to Fairness of the Merger”
| (c) | Reasons. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—Purposes and Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Summary Term Sheet Relating to the Merger—The Parent Group Members’ Purposes and Reasons for the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—The Parent Group Members’ Purposes and Reasons for the Merger”
“Special Factors—Position of the Parent Group as to Fairness of the Merger”
“Special Factors—Certain Effects of the Merger”
Annex A: Agreement and Plan of Merger
Annex B: Opinion of Houlihan Lokey Capital, Inc.”
| (d) | Effects. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger”
“Questions and Answers About the Annual Meeting and the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
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“Special Factors—The Parent Group Members’ Purposes and Reasons for the Merger”
“Special Factors—Position of the Parent Group as to Fairness of the Merger”
“Special Factors—Plans for Steel Connect after the Merger”
“Special Factors—Projected Financial Information”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
“Special Factors—Material U.S. Federal Income Tax Consequences of the Merger”
“Special Factors—Delisting and Deregistration of Common Stock”
“Special Factors—Anticipated Accounting Treatment of the Merger”
“Special Factors—Rights of Appraisal”
“Proposal No. 1: The Merger Proposal—The Merger Agreement”
“Proposal No. 1: The Merger Proposal—Form of Contingent Value Rights Agreement
Annex A: Agreement and Plan of Merger
Annex D: Form of Contingent Value Rights Agreement
Item 8. Fairness of the Transaction
Regulation M-A Item 1014
| (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: |
“Summary Term Sheet Relating to the Merger—Purposes and Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Summary Term Sheet Relating to the Merger—Opinion of Houlihan Lokey Capital, Inc., Financial Advisor to the Special Committee”
“Summary Term Sheet Relating to the Merger—The Parent Group Members’ Purposes and Reasons for the Merger”
“Summary Term Sheet Relating to the Merger—Position of the Parent Group as to Fairness of the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—Opinion of Houlihan Lokey Capital, Inc., Financial Advisor to the Special Committee”
“Special Factors—The Parent Group Members’ Purposes and Reasons for the Merger”
“Special Factors—Position of the Parent Group as to Fairness of the Merger”
“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
Annex B: Opinion of Houlihan Lokey Capital, Inc.
| (c) | Approval of Security Holders. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—Required Votes”
“Questions and Answers About the Annual Meeting and the Merger”
“Proposal No. 1: The Merger Proposal—Vote Required”
“Proposal No. 1: The Merger Proposal—The Merger Agreement”
| (d) | Unaffiliated Representative. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—Purposes and Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Summary Term Sheet—Opinion of Houlihan Lokey Capital, Inc., Financial Advisor to the Special Committee”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—Opinion of Houlihan Lokey Capital, Inc., Financial Advisor to the Special Committee”
Annex B: Opinion of Houlihan Lokey Capital, Inc.
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| (e) | Approval of Directors. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—Purposes and Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
| (f) | Other Offers. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Special Factors—Background of the Merger”
Item 9. Reports, Opinions, Appraisals and Negotiations
Regulation M-A Item 1015
| (a)-(b) | Report, Opinion or Appraisal; Preparer and Summary of the Report, Opinion or Appraisal. The discussion and/or presentation materials and other selected observations prepared by Houlihan Lokey Capital, Inc. and provided to the Special Committee, dated March 9, 2021, March 31, 2021, September 7, 2021, September 9, 2021, October 21, 2021, January 10, 2022, April 4, 2022 and June 12, 2022, are set forth as Exhibits (c)(1)-(c)(8) respectively, hereto and are incorporated herein by reference. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—Purposes and Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Summary Term Sheet—Opinion of Houlihan Lokey Capital, Inc., Financial Advisor to the Special Committee”
“Special Factors—Background of the Merger”
“Special Factors—Purposes and Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—Opinion of Houlihan Lokey Capital, Inc., Financial Advisor to the Special Committee”
“Special Factors—Projected Financial Information”
“Special Factors—Fees and Expenses”
“Where You Can Find Additional Information”
Annex B: Opinion of Houlihan Lokey Capital, Inc.
| (c) | Availability of Documents. The reports, opinions or appraisals referenced in this Item 9 and filed herewith and will be made available for inspection and copying at the principal executive offices of the Company during its regular business hours by any interested holder of Common Stock or by a representative who has been so designated in writing. The reports, opinions or appraisals referenced in this Item 9 will also be transmitted by the Company to any interested holder of Common Stock or representative who has been so designated in writing upon written request at the expense of the requesting holder of Common Stock. |
Item 10. Source and Amounts of Funds or Other Consideration
Regulation M-A Item 1007
| (a)-(b) | Source of Funds; Conditions. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—Financing”
“Special Factors—Financing”
“Special Factors—Fees and Expenses”
“Proposal No. 1 – The Merger Proposal—The Merger Agreement”
“Proposal No. 1 – The Merger Proposal—Form of Contingent Value Rights Agreement”
| (c) | Expenses. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—Expense Reimbursement and Termination Fee Provisions”
“Special Factors—Fees and Expenses”
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“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger—Compensation of the Special Committee”
“Proposal No. 1: The Merger Proposal—The Merger Agreement”
| (d) | Borrowed Funds. Not applicable. |
Item 11. Interest in Securities of the Subject Company
Regulation M-A Item 1008
| (a) | Securities Ownership. The information set forth in the Proxy Statement under the following captions is incorporated herein
by reference: “Special Factors—Interest of Steel Connect’s Directors and Executive Officers in the Merger” |
“Important Information Regarding the Parent Group Members”
“Important Additional Information Regarding Steel Connect—Security 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: |
“Important Additional Information Regarding Steel Connect—Transactions in Common Stock”
Item 12. The Solicitation or Recommendation
Regulation M-A Item 1012
| (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: |
“Summary Term Sheet Relating to the Merger”
“Questions and Answers About the Annual Meeting and the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—The Parent Group Members’ Purposes and Reasons for the Merger”
“Special Factors—Position of the Parent Group as to Fairness of the Merger”
“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
“Important Information Regarding the Parent Group Members”
“Proposal No. 1: The Merger Proposal—Vote Required”
“Proposal No. 1: The Merger Proposal—Support Agreement”
“Important Additional Information Regarding Steel Connect—Security Ownership of Certain Beneficial Owners and Management”
Annex C: Voting and Support Agreement
| (e) | Recommendations of Others. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger”
“Questions and Answers About the Annual Meeting and the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—The Parent Group Members’ Purposes and Reasons for the Merger
“Special Factors—Position of the Parent Group as to Fairness of the Merger”
“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
Item 13. Financial Statements
Regulation M-A Item 1010
| (a) | Financial Information. The audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal years ended July 31, 2021, and July 31, 2020, filed with the Securities and Exchange Commission on October 29, 2021, are incorporated herein by reference and included as Exhibits (a)(6) and (a)(7), respectively, hereto. The unaudited financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2022, filed with the Securities and Exchange Commission on June 14, 2022, are incorporated herein by reference and included as Exhibit (a)(8) hereto. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Important Additional Information Regarding Steel Connect—Selected Historical Consolidated Financial Information”
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“Important Additional Information Regarding Steel Connect—Book Value Per Share”
“Where You Can Find Additional Information”
| (b) | Pro Forma Information. Not applicable. |
Item 14. Persons/Assets, Retained, Employed, Compensated or Used
Regulation M-A Item 1009
| (a)-(b) | Solicitations or Recommendations; Employees and Corporate Assets. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger”
“Questions and Answers About the Annual Meeting and the Merger”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger”
“Special Factors—Opinion of Houlihan Lokey Capital, Inc., Financial Advisor to the Special Committee”
“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
“Special Factors—Fees and Expenses”
Annex B: Opinion of Houlihan Lokey Capital, Inc.
Item 15. Additional Information
Regulation M-A Item 1011
| (b) | Golden Parachute Compensation. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference: |
“Summary Term Sheet Relating to the Merger—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
“Special Factors—Interests of Steel Connect’s Directors and Executive Officers in the Merger”
| (c) | Other Material Information. The information set forth in the Proxy Statement, including all annexes thereto, is incorporated herein by reference. |
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| Item 16. | Exhibits |
Regulation M-A Item 1016
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SIGNATURes
After due inquiry and to the best of each of the undersigned’s knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated: July 8, 2022
| STEEL CONNECT, INC. | ||
| By: | /s/ Jason Wong | |
| Name: | Jason Wong | |
| Title: | Chief Financial Officer | |
| STEEL PARTNERS HOLDINGS L.P. | ||
| By: | Steel Partners Holdings GP Inc., its general partner | |
| By: | /s/ Jack L. Howard | |
| Name: | Jack L. Howard | |
| Title: | President | |
| SP MERGER SUB, INC. | ||
| By: | /s/ Gordon A. Walker | |
| Name: | Gordon A. Walker | |
| Title: | President | |
| HANDY & HARMAN LTD. | ||
| By: | /s/Jason Wong | |
| Name: | Jason Wong | |
| Title: | Senior Vice President | |
| WHX CS CORP. | ||
| By: | /s/ Jason Wong | |
| Name: | Jason Wong | |
| Title: | Senior Vice President | |
| STEEL PARTNERS, LTD. | ||
| By: | /s/ Jack L. Howard | |
| Name: | Jack L. Howard | |
| Title: | President | |
10
| SPH GROUP LLC | ||
| By: | Steel Partners Holdings GP Inc., its managing member | |
| By: | /s/ Jack L. Howard | |
| Name: | Jack L. Howard | |
| Title: | President | |
| SPH GROUP HOLDINGS LLC | ||
| By: | Steel Partners Holdings GP Inc., its Manager | |
| By: | /s/ Jack L. Howard | |
| Name: | Jack L. Howard | |
| Title: | President | |
| STEEL PARTNERS HOLDINGS GP INC. | ||
| By: | /s/ Jack L. Howard | |
| Name: | Jack L. Howard | |
| Title: | President | |
| STEEL EXCEL, INC. | ||
| By: | /s/ Jason Wong | |
| Name: | Jason Wong | |
| Title: | Senior Vice President | |
| WARREN G. LICHTENSTEIN | |
| /s/ Warren G. Lichtenstein | |
| JACK L. HOWARD | |
| /s/ Jack L. Howard |
11
Exhibit (c) (2)
Project Carbon PRESENTATION TO THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS MARCH 9, 2021 | CONFIDENTIAL | PRELIMINARY DRAFT
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Agenda 2 □ Process Update □ ModusLink Preliminary Observations □ Additional Considerations □ Next Steps
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW (dollars in millions) Fiscal Year Ended July 31, Fiscal Year Ending July 31, CAGR CAGR 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2018 to 2020 2021E to 2025E Revenue $345.9 $332.9 $338.5 $234.2 $236.5 $240.3 $249.5 $259.3 -1.1% 2.6% Growth % NA -3.8% 1.7% -30.8% 1.0% 1.6% 3.8% 3.9% Base Business VAR 143.5 131.6 145.2 114.2 116.6 116.0 118.3 123.3 New Business VAR 7.8 9.9 3.0 6.2 5.0 7.5 10.0 10.0 VAR $151.3 $141.5 $148.2 $120.4 $121.6 $123.5 $128.3 $133.3 -1.0% 2.6% Growth % NA -6.5% 4.7% -18.8% 1.0% 1.6% 3.8% 3.9% % of Revenue 43.7% 42.5% 43.8% 51.4% 51.4% 51.4% 51.4% 51.4% Cost of Goods Sold (119.4) (106.0) (84.4) (71.5) (72.0) (74.1) (77.0) (80.0) Gross Profit $31.9 $35.5 $63.8 $48.9 $49.6 $49.4 $51.3 $53.3 41.3% 2.2% % of Revenue 9.2% 10.7% 18.8% 20.9% 21.0% 20.6% 20.6% 20.6% % of VAR 21.1% 25.1% 43.0% 40.6% 40.8% 40.0% 40.0% 40.0% Operating Expenses [1] (31.3) (39.3) (35.8) (36.6) (35.4) (35.4) (35.4) (35.4) Depreciation and Amortization 6.8 5.6 4.1 3.5 3.5 3.5 3.5 3.5 Total Adjustments [2] (12.4) 3.4 0.4 2.8 0.0 0.0 0.0 0.0 Adjusted EBITDA ($4.9) $5.2 $32.5 $18.6 $17.7 $17.5 $19.4 $21.4 NMF 3.5% % of Revenue -1.4% 1.6% 9.6% 8.0% 7.5% 7.3% 7.8% 8.3% % of VAR -3.3% 3.7% 21.9% 15.5% 14.6% 14.2% 15.1% 16.1% Preliminary ModusLink Financial Observations Note: Operating expenses burdened with $800k payable to Steel Partners for certain services. 1. FY 2021E operating expenses consist of $33.8 million of recurring SG&A expense and $2.8 million of one - time expenses added - b ack to arrive at Adjusted EBITDA, which include (i) $1.2 million restructuring expense and (ii) $1.6 million one - time non - cash charge. 2. FY 2018 Adjustments consist primarily of $12.7mm reversal of gain on sale of long - lived assets. FY 2019 Adjustments consist primarily of $3.0mm add - back of asset impairment charge. Adjustments also include strategic consulting & related fees, executive severance & employee retention, restructuring expense, other gain or loss on s ale of long - lived assets and dormant entity non - cash charge. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms; CAGR refers to Compound Annual Growth Rate; E refers to Estimated; FY refers to Fiscal Year; NA refers to not available; NMF refers to not meaningful figure; VAR refers to Value - Added Revenue. Source: Company management. After stabilizing in FY 2018 – FY 2020, VAR is projected to decline ~20% in FY 2021 before rebounding at a CAGR of ~2.5% over th e projection period. VAR declines in FY 2021 are attributable primarily to (i) customer exits and (ii) organic volume declines at certain top cust ome rs. Gross profit doubled from FY 2018 to FY 2020 amid a management program to cut direct labor costs and exit unprofitable accoun ts, with gross margins generally projected to remain elevated. Management is forecasting that EBITDA will grow at a CAGR of ~3.5% after FY 2021, driven primarily by (i) new business VAR ou tpa cing erosion in the baseline business and (ii) continued cost discipline supporting elevated profit margins. 3 C B A Selected Commentary C A B
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW $390 $346 $298 $304 $289 $254 $193 $186 $151 $142 $148 $120 $122 $124 $128 $133 $35 $36 $37 $37 $38 $39 $41 $46 $49 $50 $52 $54 $56 $58 $61 $- $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 $1,000.0 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021E FY 2022E FY 2023E FY 2024E FY 2025E $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 CAGRs 2 VAR IVA 10 - Year (2010 – 2020) (9.2%) 4.0% 3 5 - Year (2015 – 2020) (10.2%) 5.6% 4 - Year (2021E – 2025E) 2.6% 4.4% ModusLink Long - Term Value Added - Revenue (VAR) Performance 1. Defined as the market value of goods and services produced by the industry minus the cost of goods and services used in p rod uction. Also described as the industry’s contribution to GDP, or profit plus wages and depreciation, per IBIS World; 2. Refers to fiscal years for ModusLink and calendar years for industry data; 3. Represents 9 - year (CY 2011 – 2020) CAGR due to unavailability of CY 2010 data. CAGR refers to Compound Annual Growth Rate; E refers to Estimated; FY refers to Fiscal Year; VAR refers to Value - Added Revenue. Source: Company management, IBIS World, World Bank. ModusLink VAR vs. Third Party Logistics Industry Value Added (“IVA”) 1 (VAR dollars in millions; IVA dollars in billions) VAR: New Business vs. Erosion (dollars in millions) New Business Erosion VAR IVA / / 4 $45 $31 $42 $20 $33 $26 $12 $8 $10 $3 $6 $5 $8 $10 $10 $89 $80 $36 $35 $67 $87 $19 $43 $20 - $4 $34 $4 $6 $5 $5 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021E FY 2022E FY 2023E FY 2024E FY 2025E Erosion has exceeded new business in 8 of the last 10 years, leading to a ~(9)% CAGR over the past decade New Business refers to new customers or new programs with existing customers Erosion refers to VAR declines from existing customer programs
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink Profitability Observations 1. Data shown for FY 2010 – FY 2017 represents information for the entire company (prior to the acquisition of IWCO). E refers to Estimated; FY refers to Fiscal Year’ VAR refers to Value - Added Revenue. Source: Company management, Capital IQ, public filings. Gross Profit 1 (dollars in millions) Gross Margins 1 $111 $81 $69 $74 $75 $54 $25 $36 $32 $36 $64 $49 $50 $49 $51 $53 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021E FY 2022E FY 2023E FY 2024E FY 2025E 5 12% 10% 10% 10% 10% 10% 5% 8% 9% 11% 19% 21% 21% 21% 21% 21% 28% 23% 23% 24% 26% 21% 13% 20% 21% 25% 43% 41% 41% 40% 40% 40% FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021E FY 2022E FY 2023E FY 2024E FY 2025E Gross Profit as % of Revenue / Gross Profit as % of VAR /
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW $31.9 $63.8 $48.9 $5.0 $1.5 $6.5 $1.8 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 FY 18A FY 20A Customer Y Customer Z Customer B Other Net Erosion FY 21E $151.3 $148.2 $120.4 $20.4 $7.8 $11.7 $7.7 $4.5 $4.0 $4.4 $7.7 $7.6 $4.9 $80.0 $100.0 $120.0 $140.0 $160.0 $180.0 $200.0 FY 18A Growth Erosion FY 20A Customer Y Customer Z Customer B Other Net Erosion FY 21E ModusLink FY 2018 to FY 2021E VAR & Gross Profit Bridge 6 FY refers to Fiscal Year; VAR refers to Value - Added Revenue. Source: Company management. Gross Profit Bridge (dollars in millions) VAR Bridge (dollars in millions) Gross profit growth is attributable to the following factors : (i) elimination of approximately $ 23 million of direct labor costs between FY 2018 and FY 2020 ; (ii) exits from unprofitable customers ; and (iii) organic growth in VAR at certain high margin customers Exits from unprofitable customers Organic growth from existing programs at Customer A and B Customer exits Organic declines in existing programs $31.9 Growth
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 2H FY'21 2H FY'21 Original Current Difference ($ in millions) Budget Projections $ VAR Base Business VAR 53.7 50.5 ($3.1) New Business VAR 7.3 4.3 ($3.0) Total VAR $61.0 $54.8 ($6.2) % of Revenue 45.0% 52.2% 7.2% Cost of Goods Sold 35.8 35.4 ($0.4) Gross Profit $25.2 $19.4 ($5.8) % of Revenue 18.6% 18.5% -0.1% % of VAR 41.3% 35.4% -5.9% Recurring SG&A 18.7 17.5 ($1.2) Nonrecurring Opex 1 0.0 0.0 $0.0 Add: Depreciation and Amortization 1.7 1.7 ($0.0) Adjusted EBITDA $8.2 $3.6 ($4.5) % of Revenue 6.0% 3.5% -2.6% % of VAR 13.4% 6.6% -6.8% C A Summary Comparison of FY 2021 Forecast vs. Original Budget 1. Recurring SG&A and non - recurring opex sum up to $36.6 million of FY21E operating expenses shown on page 3. 2. Non - recurring opex consists of restructuring expense ($0.7 million budgeted vs. $1.2 million actual), as well as $1.6 million actual non - cash charge that was not budgeted. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms; FY refers to Fiscal Year; H refers to Half; NMF refers to not meaningful figure; SG&A refers to Selling, General and Administrative expenses; VAR refers to Value - Added Revenue. Source: Company management. A B 1H VAR – Base business outperformance driven by outperformance at most accounts (including ~$2.5mm variance from delayed Customer Y / Customer Z exits) offset by underperformance in new business generation. 1H Costs – Gross margins elevated given VAR outperformance, with SG&A below budget primarily due to reductions/delays in certain budgete d sales hires and marketing spend. 2H VAR – 2H VAR forecasted to be lower than budget primarily due to headwinds tied to existing Customer B program (~$5mm negative vari ance), continued delays in new contracts tied to COVID - related logos and substantial reduction in the pipeline. 2H Costs – Despite lower VAR forecast than originally budgeted, COGS largely unchanged due to certain fixed costs. SG&A forecast below budget due to pull - back in sales/marketing spend amid pipeline reduction. 2H Adjusted EBITDA – 2H Adjusted EBITDA forecast of $3.6mm is lower than 1H Adj. EBITDA due to (among other factors): (i) headwinds at Customer B, (ii) Customer Y and Customer Z exits, (iii) elevated COGS margins due to VAR reduction and (iv) slightly higher SG&A level. B 7 1H FY 2021 2H FY 2021 Selected Commentary D C D D B 1H FY'21 Original 1H FY'21 Difference ($ in millions) Budget Actual $ VAR Base Business VAR 58.8 63.7 $4.9 New Business VAR 3.3 1.9 ($1.5) Total VAR $62.1 $65.5 $3.4 % of Revenue 44.1% 50.8% 6.6% Cost of Goods Sold 35.3 36.1 $0.8 Gross Profit $26.9 $29.5 $2.6 % of Revenue 19.1% 22.8% 3.8% % of VAR 43.2% 45.0% 1.7% Recurring SG&A 19.3 16.3 ($2.9) Nonrecurring Opex 1,2 0.7 2.8 $2.1 Add: Depreciation and Amortization 1.9 1.8 ($0.1) Adjusted EBITDA $9.5 $15.0 $5.4 % of Revenue 6.8% 11.6% 4.8% % of VAR 15.3% 22.8% 7.5% E E E
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Financial Projections Comparison 1. SG&A for FY 2021 excludes restructuring expenses of $0.7 million in the September Projections and $1.2 million in the Curr ent Projections. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms; CAGR refers to Compound Annual Growth Rate; SG&A refers to Selling, General and Administrative expenses; VAR refers to Value - Added Revenue. Source: Company management. 8 Below is a comparison of the current financial projections prepared by ModusLink management to a prior set of projections developed in connection with a refinancing process undertaken in September 2020 (that did not ultimately result in a refinanc ing ) Key differences include: Cumulative impact of lower new business assumptions due to lack of momentum in new customer pipeline / contract delays Lower profit margins due to factors including operating leverage VAR CAGR : ~6% Gross Margin : ~300 to 400 bps expansion SG&A : ~$3 million increase relative to recent levels to support growth VAR CAGR : ~2.5% Gross Margin : ~50 bps compression SG&A : Remains near recent levels Cumulative VAR Reduction : ~9% Cumulative Adjusted EBITDA Reduction : ~29% September Projections Current Projections Difference Fiscal Year ended July 31, Fiscal Year ended July 31, Fiscal Year ended July 31, (dollars in millions) 2021 2022 2023 2024 2025 2021 2022 2023 2024 2025 2021 2022 2023 2024 2025 VAR Base Business VAR 112.5 119.7 126.7 131.4 141.3 114.2 116.6 116.0 118.3 123.3 1.8 (3.1) (10.6) (13.1) (18.1) New Business VAR 10.7 10.0 10.0 15.0 15.0 6.2 5.0 7.5 10.0 10.0 (4.5) (5.0) (2.5) (5.0) (5.0) Total VAR $123.1 $129.7 $136.7 $146.4 $156.3 $120.4 $121.6 $123.5 $128.3 $133.3 ($2.8) ($8.1) ($13.1) ($18.1) ($23.1) Growth % -16.9% 5.3% 5.4% 7.1% 6.8% -18.8% 1.0% 1.6% 3.8% 3.9% -1.9% -4.4% -3.7% -3.3% -2.9% Less: Cost of Goods Sold 71.1 73.9 76.5 80.5 84.4 71.5 72.0 74.1 77.0 80.0 0.4 (2.0) (2.4) (3.5) (4.5) Gross Profit $52.1 $55.8 $60.1 $65.9 $71.9 $48.9 $49.6 $49.4 $51.3 $53.3 ($3.2) ($6.2) ($10.7) ($14.6) ($18.6) % of Revenue 18.8% 19.4% 20.2% 21.2% 22.1% 20.9% 21.0% 20.6% 20.6% 20.6% 2.1% 1.6% 0.3% -0.6% -1.5% % of VAR 42.3% 43.0% 44.0% 45.0% 46.0% 40.6% 40.8% 40.0% 40.0% 40.0% -1.6% -2.2% -4.0% -5.0% -6.0% Less: SG&A 1 38.0 38.0 38.0 38.0 38.0 35.4 35.4 35.4 35.4 35.4 (2.6) (2.6) (2.6) (2.6) (2.6) Add: Depreciation and Amortization 3.6 3.6 3.6 3.6 3.6 3.5 3.5 3.5 3.5 3.5 (0.1) (0.1) (0.1) (0.1) (0.1) Add: Adjustments 0.0 0.0 0.0 0.0 0.0 1.6 0.0 0.0 0.0 0.0 1.6 0.0 0.0 0.0 0.0 Adjusted EBITDA $17.7 $21.4 $25.8 $31.5 $37.6 $18.6 $17.7 $17.5 $19.4 $21.4 $0.9 ($3.7) ($8.3) ($12.1) ($16.2) % of Revenue 6.4% 7.4% 8.7% 10.1% 11.5% 7.9% 7.5% 7.3% 7.8% 8.3% 1.5% 0.0% -1.4% -2.3% -3.3% % of VAR 14.4% 16.5% 18.9% 21.5% 24.0% 15.5% 14.6% 14.2% 15.1% 16.1% 1.1% -2.0% -4.7% -6.4% -8.0%
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink Process Observations 9 □ 200+ parties contacted between launch in early 2019 and re - launch in early 2020 □ Four LOI’s received, with offers ranging between ~$15mm - $60mm 1 □ FY 2020 results reflect profitability turnaround, but certain topline headwinds have surfaced in FY 2021 □ Certain considerations raised by parties during sales process remain: » No clear path to winning new logos and/or top - line growth » Complexity of global operations raises scalability concerns » Unsustainable lack of investment in the business 1. Documentation of $60 million offer subject to confirmation. Source: Company management and financial advisor.
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Next Steps & Timing 10 □ ModusLink Next Steps □ IWCO Projections & Corporate Review □ Preparation of Preliminary Financial Analyses □ Discussion of Potential Response Considerations
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CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 13 CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCI AL AND VALUATION ADVISORY HL .com
Exhibit (c) (3)
Project Carbon SELECTED OBSERVATIONS MARCH 31, 2021 | CONFIDENTIAL
CONFIDENTIAL Steel Connect: Trading History (Last 3 Years) 1. Per Capital IQ, as of 3/30/21 close . FY refers to Fiscal Year; Q refers to Quarter. Sources: Capital IQ and public filings. Event a Date Comment 11/19/20 Steel Connect announced that Steel Partners made a non - binding expression of interest to acquire the remaining interest that it did not already own in Steel Connect on November 19, 2020. Under the proposed transaction, each share of Steel Connect’s common stock will be exchanged for a per share consideration consisting of cash and units of Steel Partners Holdings L.P.’s publicly traded 6% Series A Preferred Units, imp lyi ng a $0.65 - $0.72 per share value range of the Steel Connect’s common stock. Various Announcement of Steel Connect’s recent quarterly or annual financial results 0.00 5.00 10.00 15.00 20.00 25.00 30.00 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 3/30/18 6/30/18 9/30/18 12/31/18 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 Steel Connect Daily Trading Volume Steel Connect Stock Price Closing Stock Price ($) Daily Volume (millions) Selected Key Events 1 - Year 3 - Year Average Daily Trading Volume 1 0.42mm 0.16mm High Closing Stock Price 1 $2.67 $2.67 Low Closing Stock Price 1 $0.46 $0.46 Q2 FY 2021 (1/31/21) Q1 FY 2021 (10/31/20) Q4 and FY 2020 (7/31/20) Q3 FY 2020 (4/30/20) 2
CONFIDENTIAL Steel Connect: Relative Stock Performance (Last 1 Year) 1. Since 11/19/20, the date in which Steel Partners made a non - binding expression of interest to acquire the remaining interest tha t it did not already own in Steel Connect. Sources : Capital IQ as of 3/30/21. Steel Connect vs . S&P 500 Index Indexed Prices -50% -25% 0% 25% 50% 75% 100% 125% 150% 175% 200% 225% 250% 275% Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Steel Connect S&P 500 Index Steel Partners makes non - binding expression of interest to acquire the remaining interest it did not already own in Steel Connect on 11 / 19 / 20 Relative Stock Performance as of 3/30/21 Since Proposal [1] 1-Year Steel Connect 179.4% 139.8% S&P 500 Index 10.5% 50.7% 3
CONFIDENTIAL Steel Connect: Trading History (Last 2 Months) 1. Per Capital IQ, as of 3/30/21 close. 2. VWAP based on cumulative trading activity over designated number of trading days (based on intraday trading) per Bloomberg as of 3/30/21. VWAP refers to Volume Weighted Average Price. Sources: Capital IQ , Bloomberg and public filings. Current Stock Price: $1.97 1 1 - Day 5 - Day 10 - Day 20 - Day 1 - Month 2 - Month $1.98 $1.93 $1.88 $1.82 $1.82 $1.90 (dollars per share) Historical VWAPs 2 Daily trading value of ~ $ 1 . 7 mm on 3 / 29 / 21 2 - Month Average Daily Trading Volume 1 0.36 mm 2 - Month High Closing Stock Price 1 $2.09 2 - Month Low Closing Stock Price 1 $1.68 0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 1/29/21 2/5/21 2/12/21 2/22/21 3/1/21 3/8/21 3/15/21 3/22/21 3/29/21 Daily Volume (millions) Closing Stock Price ($) Steel Connect Daily Trading Volume Steel Connect Stock Price Current Steel Connect Stock Price [1] 4
CONFIDENTIAL Steel Connect: Selected Historical Trading Activity 1. Since 11/19/20, the date in which Steel Partners made a non - binding expression of interest to acquire the remaining interest tha t it did not already own in Steel Connect. 2. Based on VWAP over specified period (last two months or one month ). VWAP refers to Volume - Weighted Average Price. Source : Bloomberg as of 3/30/21. Total VWAP Volume: 5.6 million VWAP 2 : $1.82 Since Proposal 1 Last Three Months Last Two Months Last One Month Total VWAP Volume: 62.6 million VWAP 2 : $2.02 Total VWAP Volume: 57.0 million VWAP 2 : $2.13 Total VWAP Volume: 14.2 million VWAP 2 : $1.90 5.5% 13.4% 28.0% 37.0% 16.2% $1.60- $1.70 $1.70- $1.80 $1.80- $1.90 $1.90- $2.00 $2.00- $2.13 14.1% 27.0% 38.5% 20.5% 0.0% $1.60- $1.70 $1.70- $1.80 $1.80- $1.90 $1.90- $2.00 $2.00- $2.13 6.2% 7.8% 2.1% 2.6% 0.0% 4.3% 17.1% 5.5% 5.3% 49.2% $0.60- $0.80 $0.80- $1.00 $1.00- $1.20 $1.20- $1.40 $1.40- $1.60 $1.60- $1.80 $1.80- $2.00 $2.00- $2.20 $2.20- $2.40 $2.40- $2.50 3.1% 2.3% 2.3% 2.8% 0.0% 4.7% 18.8% 6.1% 5.8% 54.0% $0.60- $0.80 $0.80- $1.00 $1.00- $1.20 $1.20- $1.40 $1.40- $1.60 $1.60- $1.80 $1.80- $2.00 $2.00- $2.20 $2.20- $2.40 $2.40- $2.50 5
CONFIDENTIAL Selected Historical and Projected Financial Information * Per Company management, projected figures for IWCO exclude the impact of 606 adjustments and sales and use tax accruals; as su ch, the projected figures for IWCO are presented on a slightly different basis than the historical financials, which are based on the figures reported in the Company’s public filings. 1. Historical Adjusted EBITDA based on figures reported in the Company’s public filings. A refers to Actual; Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for ce rta in non - recurring items; E refers to Estimated; FY refers to Fiscal Year; Q refers to Quarter. Source : P ublic filings, Company management. Gross Profit By Quarter (FY 2019 – FY 2021) 10.0% 14.0% 18.0% 22.0% 26.0% 30.0% $0 $10 $20 $30 $40 $50 Q1 2019A Q2 2019A Q3 2019A Q4 2019A Q1 2020A Q2 2020A Q3 2020A Q4 2020A Q1 2021A Q2 2021A Q3 2021E* Q4 2021E* ModusLink IWCO Consolidated Gross Margin % (dollars in millions) Adjusted EBITDA 1 By Quarter (FY 2019 – FY 2021) ( dollars in millions) 0.0% 3.0% 6.0% 9.0% 12.0% 15.0% 18.0% $0 $5 $10 $15 $20 $25 $30 Q1 2019A Q2 2019A Q3 2019A Q4 2019A Q1 2020A Q2 2020A Q3 2020A Q4 2020A Q1 2021A Q2 2021A Q3 2021E* Q4 2021E* Consolidated Adjusted EBITDA Adjusted EBITDA Margin % 6
CONFIDENTIAL Observations from Recent Shareholder Communications Overall Business 1 □ A discounted valuation to peers EV/EBITDA multiples, FCF yield, and sum - of - the - parts valuation scenarios ( valued at $6.00 – $10.00+ per share ) □ $6.00 to $10.00 per share referenced by shareholder (based on current capital structure) implies the following 2 : x ~$700mm – $950mm enterprise value x ~8x – 11x FY 2020 EBITDA of ~$87mm x ~10x – 14x FY 2021E EBITDA of ~$69mm IWCO & ModusLink “Sum of the Parts” □ Upside based on a sum - of - the - parts analysis x ModusLink EV ~$250mm – $400mm x IWCO EV ~$500mm – $700mm □ Results of recent ModusLink process □ IWCO purchased for TEV of ~$475mm in 2017 x LTM EBITDA of ~$82mm at time of acquisition vs. EBITDA of ~$60mm today NOL □ Partial value for the company’s $2.1 billion in NOL tax assets ( valued at $2.00 – $3.00 per share ) □ $1.8 billion of NOL’s expire by 2023 Litigation □ Value for pending shareholder litigation advancing against the company and SPLP for the dilutive convertible preferred issue in December 2017 (valued at $1.00 per share) □ Related discussions in progress Shareholder Observations Additional Observations 1. Does not include potential value from NOLs or pending litigation. 2. Does not treat convertible preferred notes on an as - converted basis per shareholder method, despite being in the - money. CY refers to Calendar Year; EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization; EV refers to Ent erp rise Value; FCF refers to Free Cash Flow; NOL refers to Net Operating Loss. Source: Shareholder communications quoted from Seeking Alpha articles dated 3/26/2021 and 2/9/2021. EBITDA figures and NOL information cited in Additional Observations per Company management . Observations Related to Cited Value Drivers “The Special Committee is completing their 11 th week of review which likely includes management interviews, business forecasting, company and individual business segment valuation and advanced negotiations with Steel Partners. Investors should expect an update any day” “[We] would not support a deal to tender our STCN shares below $4.00 per share in cash ” General Process Observations 7
CONFIDENTIAL This presentation, and any supplemental information (written or oral) or other documents provided in connection therewith (collectively, the “materials”), are provided solely for the information of the Special Committee (the “Committee”) of the Board of Directors (the “Board ”) of Steel Connect, Inc . (the “Company”) by Houlihan Lokey in connection with the Committee’s consideration of a potential transaction (the “Transaction”) involving the Company . This presentation is incomplete without reference to, and should be considered in conjunction with, any supplemental information provided by and discussions with Houlihan Lokey in connection therewith . Any defined terms used herein shall have the meanings set forth herein, even if such defined terms have been given different meanings elsewhere in the materials . The materials are for discussion purposes only . Houlihan Lokey expressly disclaims any and all liability, whether direct or indirect, in contract or tort or otherwise, to any person in connection with the materials . The materials were prepared for specific persons familiar with the business and affairs of the Company for use in a specific context and were not prepared with a view to public disclosure or to conform with any disclosure standards under any state, federal or international securities laws or other laws, rules or regulations, and none of the Committee, the Company or Houlihan Lokey takes any responsibility for the use of the materials by persons other than the Committee . The materials are provided on a confidential basis solely for the information of the Committee and may not be disclosed, summarized, reproduced, disseminated or quoted or otherwise referred to, in whole or in part, without Houlihan Lokey’s express prior written consent . Notwithstanding any other provision herein, the Company (and each employee, representative or other agent of the Company) may disclose to any and all persons without limitation of any kind, the tax treatment and tax structure of any transaction and all materials of any kind (including opinions or other tax analyses, if any) that are provided to the Company relating to such tax treatment and structure . However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws . For this purpose, the tax treatment of a transaction is the purported or claimed U . S . income or franchise tax treatment of the transaction and the tax structure of a transaction is any fact that may be relevant to understanding the purported or claimed U . S . income or franchise tax treatment of the transaction . If the Company plans to disclose information pursuant to the first sentence of this paragraph, the Company shall inform those to whom it discloses any such information that they may not rely upon such information for any purpose without Houlihan Lokey’s prior written consent . Houlihan Lokey is not an expert on, and nothing contained in the materials should be construed as advice with regard to, legal, accounting, regulatory, insurance, tax or other specialist matters . Houlihan Lokey’s role in reviewing any information was limited solely to performing such a review as it deemed necessary to support its own advice and analysis and was not on behalf of the Committee . The materials necessarily are based on financial, economic, market and other conditions as in effect on, and the information available to Houlihan Lokey as of, the date of the materials . Although subsequent developments may affect the contents of the materials, Houlihan Lokey has not undertaken, and is under no obligation, to update, revise or reaffirm the materials, except as may be expressly contemplated by Houlihan Lokey’s engagement letter . The materials are not intended to provide the sole basis for evaluation of the Transaction and do not purport to contain all information that may be required . The materials do not address the underlying business decision of the Company or any other party to proceed with or effect the Transaction, or the relative merits of the Transaction as compared to any alternative business strategies or transactions that might be available for the Company or any other party . The materials do not constitute any opinion, nor do the materials constitute a recommendation to the Board, the Committee, the Company, any security holder of the Company or any other party as to how to vote or act with respect to any matter relating to the Transaction or otherwise or whether to buy or sell any assets or securities of any company . Houlihan Lokey’s only opinion is the opinion, if any, that is actually delivered to the Committee . In preparing the materials Houlihan Lokey has acted as an independent contractor and nothing in the materials is intended to create or shall be construed as creating a fiduciary or other relationship between Houlihan Lokey and any party . The materials may not reflect information known to other professionals in other business areas of Houlihan Lokey and its affiliates . The preparation of the materials was a complex process involving quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytic methods employed and the adaption and application of these methods to the unique facts and circumstances presented and, therefore, is not readily susceptible to partial analysis or summary description . Furthermore, Houlihan Lokey did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor . Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques . Accordingly, the analyses contained in the materials must be considered as a whole . Selecting portions of the analyses, analytic methods and factors without considering all analyses and factors could create a misleading or incomplete view . The materials reflect judgments and assumptions with regard to industry performance, general business, economic, regulatory, market and financial conditions and other matters, many of which are beyond the control of the participants in the Transaction . Any estimates of value contained in the materials are not necessarily indicative of actual value or predictive of future results or values, which may be significantly more or less favorable . Any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which any assets, businesses or securities may actually be sold . The materials do not constitute a valuation opinion or credit rating . The materials do not address the consideration to be paid or received in, the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the Transaction or otherwise . Furthermore, the materials do not address the fairness of any portion or aspect of the Transaction to any party . In preparing the materials, Houlihan Lokey has not conducted any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (contingent or otherwise) of the Company or any other party and has no obligation to evaluate the solvency of the Company or any other party under any law . Disclaimer 8
CONFIDENTIAL All budgets, projections, estimates, financial analyses, reports and other information with respect to operations (including estimates of potential cost savings and expenses) reflected in the materials have been prepared by management of the relevant party or are derived from such budgets, projections, estimates, financial analyses, reports and other information or from other sources, which involve numerous and significant subjective determinations made by management of the relevant party and/or which such management has reviewed and found reasonable . The budgets, projections and estimates ( including, without limitation, estimates of potential cost savings and synergies) contained in the materials may or may not be achieved and differences between projected results and those actually achieved may be material . Houlihan Lokey has relied upon representations made by management of the Company and other participants in the Transaction that such budgets, projections and estimates have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management (or, with respect to information obtained from public sources, represent reasonable estimates), and Houlihan Lokey expresses no opinion with respect to such budgets, projections or estimates or the assumptions on which they are based . The scope of the financial analysis contained herein is based on discussions with the Company (including, without limitation, regarding the methodologies to be utilized), and Houlihan Lokey does not make any representation, express or implied, as to the sufficiency or adequacy of such financial analysis or the scope thereof for any particular purpose . Houlihan Lokey has assumed and relied upon the accuracy and completeness of the financial and other information provided to, discussed with or reviewed by it without (and without assuming responsibility for) independent verification of such information, makes no representation or warranty (express or implied) in respect of the accuracy or completeness of such information and has further relied upon the assurances of the Company and other participants in the Transaction that they are not aware of any facts or circumstances that would make such information inaccurate or misleading . In addition, Houlihan Lokey has relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company or any other participant in the Transaction since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to, discussed with or reviewed by Houlihan Lokey that would be material to its analyses, and that the final forms of any draft documents reviewed by Houlihan Lokey will not differ in any material respect from such draft documents . The materials are not an offer to sell or a solicitation of an indication of interest to purchase any security, option, commodity, future, loan or currency . The materials do not constitute a commitment by Houlihan Lokey or any of its affiliates to underwrite, subscribe for or place any securities, to extend or arrange credit, or to provide any other services . In the ordinary course of business, certain of Houlihan Lokey’s affiliates and employees, as well as investment funds in which they may have financial interests or with which they may co - invest, may acquire, hold or sell, long or short positions, or trade or otherwise effect transactions, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, the Company, any Transaction counterparty, any other Transaction participant, any other financially interested party with respect to any transaction, other entities or parties that are mentioned in the materials, or any of the foregoing entities’ or parties’ respective affiliates, subsidiaries, investment funds, portfolio companies and representatives (collectively, the “Interested Parties”), or any currency or commodity that may be involved in the Transaction . Houlihan Lokey provides mergers and acquisitions, restructuring and other advisory and consulting services to clients, which may have in the past included, or may currently or in the future include, one or more Interested Parties, for which services Houlihan Lokey has received, and may receive, compensation . Although Houlihan Lokey in the course of such activities and relationships or otherwise may have acquired, or may in the future acquire, information about one or more Interested Parties or the Transaction, or that otherwise may be of interest to the Board, the Committee, or the Company, Houlihan Lokey shall have no obligation to, and may not be contractually permitted to, disclose such information, or the fact that Houlihan Lokey is in possession of such information, to the Board, the Committee, or the Company or to use such information on behalf of the Board, the Committee, or the Company . Houlihan Lokey’s personnel may make statements or provide advice that is contrary to information contained in the materials . Disclaimer (cont.) 9
CONFIDENTIAL 10 CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCI AL AND VALUATION ADVISORY HL .com
Exhibit (c) (4)
Project Carbon PRELIMINARY DISCUSSION MATERIALS FOR THE SPECIAL COMMITTEE SEPTEMBER 9, 2021 | CONFIDENTIAL | PRELIMINARY DRAFT
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Table of Contents 2 Page 1. Executive Summary 3 2. Preliminary Financial Analyses Summary 6 3. Preliminary Financial Observations and Analyses 12 IWCO 13 ModusLink 25 4. Preliminary Considerations Related to Proposal 35 5. Appendices 45 Supplemental Financial Analysis Schedules 46 Form of Consideration Observations 48 6. Disclaimer 52
Page 1. Executive Summary 3 2. Preliminary Financial Analyses Summary 6 3. Preliminary Financial Observations and Analyses 12 4. Preliminary Considerations Related to Proposal 35 5. Appendices 45 6. Disclaimer 52
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Executive Summary Proposal Overview On November 19 , 2020 , the Board of Directors of Steel Connect, Inc . (“Steel Connect”, “SC” or the “Company”) received a non - binding expression of interest from Steel Partners Holdings L . P . (“Steel Partners” or “SP”) to acquire all of the outstanding shares of SC common stock not already owned by SP (the "Proposal") for consideration consisting of an unspecified mix of cash and SP publicly traded 6 % Series A Preferred Units The Proposal indicated a per share value implied by the consideration in the range of $ 0 . 65 to $ 0 . 72 The high and low ends of the range stated in the Proposal reflect a premium of ~ 2 . 1 % and a discount of ~ 7 . 8 % , respectively, in each case over the Company's closing stock price as of the unaffected date 1 The range stated in the Proposal reflects a discount of ~ 60 % - 70 % relative to recent stock prices The Proposal is conditioned on approval by the Special Committee and a majority of holders of outstanding shares of SC common stock excluding SP, senior management or their respective affiliates (such holders, the “Unaffiliated Stockholders”) SP also indicated that it does not intend to sell its interest in the Company or support an alternative corporate transaction Situatio n Overview & Preliminary Observations Steel Connect’s assets consist primarily of holdings in IWCO Direct Holdings, Inc. (“IWCO”) and ModusLink Corporation (“ModusLink” or “ML”), and ~$2.1 billion of federal NOLs (~$1.8 billion of which expire in 2023) 2 IWCO and ModusLink are operated as discrete businesses with separate management teams, customer bases, operations and balance sheets (debt facilities are non - recourse and allow specified distributions to Steel Connect) ModusLink’s topline has declined at a ~10% CAGR over the last decade. An operating improvement program has recently restored profitability to the business 3 and enabled a renewed focus on topline growth, but meaningful new wins have not yet materialized IWCO is a direct mail business that consistently generated gross profits above $100mm prior to CY 2020 4 Since that time IWCO’s financial performance has come under pressure amid secular industry challenges, departures of key management and sales personnel, and ensuing customer attrition and volume reductions IWCO has launched a competitive improvement program to stabilize the business that appears to have the support of its lenders, but refinancing risk remains on its ~$365mm credit facility, which matures in December 2022 Market feedback related to a recent sales process for ModusLink and refinancing process for IWCO may provide insights on implied third - party perspectives on value Limited float / liquidity / analyst coverage, with limited capital return opportunities since 2011 Two months following announcement of the Proposal, the stock experienced particularly elevated trading volume over a 2 - day period of ~30mm shares at a $2.47 VWAP and a closing high of $2.67 (surpassing the $2.60 closing high otherwise observed over the last 5 years). Since that time (and including the 2 - day period) the stock has traded in a range of $1.49 to $2.67 5 , with an overall VWAP of $2.18, a 3 - month VWAP of $1.98 and a 1 - month VWAP of $1.78 Shareholder base with substantial retail component, with outreach by a number of investors related to the Proposal See following page for footnotes. 4
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Executive Summary (cont.) Potential Next Steps & Other Considerations Special Committee to determine whether and how to respond to the Proposal, taking into consideration the status of ongoing discussions with IWCO lenders, as well as FY 2021 results / FY 2022 budget Preliminary observations subject to continued diligence / review of the following: Final FY 2021 results for IWCO and ModusLink FY 2022 budgets for IWCO and ModusLink Usability of federal and state NOLs (including, but not limited to, allocations to each of IWCO and ModusLink income streams) Status of discussions with IWCO lenders (financial projections assume that IWCO will be able to extend the maturity on its credit facility, but there are no guarantees it will be able to do so ; inability to obtain an extension or alternative financing would result in material adverse implications for the business not reflected in the financial projections, per SC management) Further consideration to f actors impacted by scenarios in which IWCO does not operate as a going concern / have positive equity value including (i) potential wind - down costs incurred by SC, (ii) potential changes to corporate cost structure and (iii) usability of NOLs Certain illustrative assumptions associated with the selected transactions approach Limited observations / analyses have been conducted to date on Steel Partners 1. Based on closing price on November 19, 2020, the last trading day prior to the date in which the Proposal was publicly announ ced . 2. Per SC management. 3. ModusLink generated adjusted EBITDA of $34.4mm in FY 2020 and $16.9mm in FY 2021, with ML management projecting adjusted EBIT DA of $21.4mm by FY 2025 based on the ML projections prepared by ML management, in consultation with SC management, as authorized by the Special Committee for Houlihan Lokey’s use in thes e p reliminary discussion materials (the “ML Projections”). 4. IWCO generated adjusted EBITDA of $60.3mm in FY 2020 and $56.3mm in FY 2021, with IWCO management projecting adjusted EBITDA of $65.6mm by FY 2025 based on the IWCO projections prepared by IWCO management, in consultation with SC management, as authorized by the Special Committee for Houlihan Lokey’s use in th ese preliminary discussion materials (the “IWCO Projections”). 5. Based on closing stock prices between January 19, 2021 and September 2, 2021. Source: SC, IWCO and ML managements, public filings, Capital IQ, Bloomberg. All FY 2021 figures preliminary. 5
Page 1. Executive Summary 3 2. Preliminary Financial Analyses Summary 6 3. Preliminary Financial Observations and Analyses 12 4. Preliminary Considerations Related to Proposal 35 5. Appendices 45 6. Disclaimer 52
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW b Low High Low High Low High Overview of Approach to Preliminary Financial Analyses IWCO & ML (General) ▪ Businesses are valued on a ‘sum - of - the - parts ’ basis given that each unit has discrete management teams, operations and balance sheets ▪ IWCO debt facility is non - recourse and permits annual cash flow distributions to SC of up to ~$5 (not including tax distributions) ▪ ML debt facility allows ~$10 distribution to SC in FY 22, and further amendments may be sought to allow for incremental distr ibu tions, assuming sufficient cash flow generation and liquidity IWCO ▪ Management projections assume successful (i) implementation of competitive improvement plan (“CIP”) and (ii) extension of credit facilities beyond December 2022 maturity (which may not occur, as discussions with lenders remain ongoing) ▪ Enterprise value derived using selected companies, selected transactions and discounted cash flow approaches (without giving effect to one - time CIP outlays) ▪ Equity value derived by adjusting enterprise value for ~$39 cash balance, ~$364 debt balance and ~$33 present value of one - time CIP outlays Enterprise Value: $115.0 to $424.9 Equity Value: $0.0 to $66.3 Enterprise Value: $281.5 to $394.1 Equity Value: $0.0 to $35.4 Enterprise Value: $337.2 to $460.7 Equity Value: $0.0 to $102.0 ModusLink ▪ Enterprise value derived using selected companies, selected transactions and discounted cash flow approaches ▪ Equity value derived by adjusting enterprise value for ~$20 net cash balance Enterprise Value: $67.7 to $106.2 Equity Value: $87.6 to $126.1 Enterprise Value: $67.7 to $101.5 Equity Value: $87.6 to $121.5 Enterprise Value: $79.5 to $103.4 Equity Value: $99.4 to $123.4 Corporate ▪ Corporate costs 1 : present value of ~$7.0 - $7.5 projected annual corporate SG&A costs 2 using a discounted cash flow analysis. Corporate costs consist of: (i) ~$3.7 management & personnel expenses for time allocated specifically to corporate/accounting/audit matters; (ii) ~$1.1 board fees; (iii) ~$1.5 professional fees (legal, stock exchange) and (iv) ~$0.8 taxes and other expenses (except for illustrative selected transactions approach, which assumes corporate entity is liquidated and incurs $5 of wind - down cash outlays) ▪ Balance sheet adjustments for ~$38 cash, ~$15 convertible note 3 and ~$35 preferred stock 4 (based on higher of outstanding balance / liquidation preference or as - converted) $(39.2) to $(61.0) $(5.0) $(39.2) to $(61.0) $(11.8) 3,4 NOLs ▪ NOLs based primarily on ~$300 of federal NOLs assumed to be utilized over 8 years per the Consolidated Projections ($1.8 billion of NOLs expire in 2023). Value ascribed to NOLs in illustrative selected transactions approach gives consideration to S382 limitations; while certain selected companies have NOLs, for conservatism full NOL value is ascribed to selected companies approach $36.8 to $48.5 $4.2 to $4.8 $36.8 to $48.5 Litigation Settlements ▪ Per SC management, Reith litigation assumed to be settled through extinguishment of ~2.9 million shares of common stock and ~0.5 million unvested RSUs , pursuant to publicly - disclosed agreement between the parties, which remains subject to judicial review Overview of Approach to Preliminary Financial Analyses Description / Treatment Selected Companies Approach Illustrative Selected Transactions Approach Component Discounted Cash Flow Approach (dollars in millions, unless otherwise noted) Note: Present values as of 9/9/21; mid - year convention applied. No weighting ascribed to any particular methodology. 1. Value ranges do not vary across methodologies since analyses are solely based on a discounted cash flow approach, except in t he case of the Illustrative Selected Transactions Approach. 2. Based on SC projections prepared by SC management, as authorized by the Special Committee for Houlihan Lokey’s use in these preliminary discussion materials (the “SC Projections” and , together with the ML Projections and IWCO Projections, the “Consolidated Projections”). 3. Figures shown above are illustratively based on outstanding principal balance of $14.9 million; for indications in which the conversion option is imp lie d to be in - the - money (implied per share equity value greater than $2.37 per share), the balance sheet deduction is reduced to $0 and the diluted shares outstanding is increased by 6.3 million shares. 4. Figures shown above are illustratively based on liquidation preference of $35.0 million; for indications in which the convers io n option is implied to be in - the - money (implied per share equity value greater than $1.96 per share), the balance sheet deduction is reduced to $0 and the diluted shares outstanding is incre ase d by 17.9 million shares. Source: Refer to pages 9 - 11 for additional details and sources for figures referenced above. 7
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW $1.22 $1.27 $1.26 $1.24 $1.41 $2.15 $1.69 $2.57 $2.30 $2.97 Current Stock Price [1]: $2.00 Steel Partners Proposal Price [2]: $0.65 - $0.72 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 Selected Companies Analysis FY 2021E Adjusted EBITDA ML: 4.0x - 6.0x IWCO: 5.0x - 7.0x Selected Companies Analysis FY 2022E Adjusted EBITDA ML: 4.0x - 6.0x IWCO: 5.0x - 7.0x Selected Companies Analysis FY 2023E Adjusted EBITDA ML: 4.0x - 6.0x IWCO: 5.0x - 7.0x Selected Transactions Analysis FY 2021E Adjusted EBITDA ML: 4.0x - 6.0x IWCO: 5.0x - 7.0x Discounted Cash Flow Analysis ML Perpetual Growth Rate: 0.0% - 2.0% ML Discount Rate: 13.0% - 15.0% IWCO Perpetual Growth Rate: 0.0% - 2.0% IWCO Discount Rate: 11.0% - 13.0% Implied Equity Value Per Share Reference Range Preliminary Financial Analyses Summary Steel Connect Implied Equity Value Per Share Reference Ranges Note: No particular weight was attributed to any analysis. 1. Based on closing stock price as of 9/2/21. 2. Steel Partners Proposal based on consideration in the form of cash and Steel Partners 6.0% Series A Preferred Units, impli ed by Steel Partners to be valued in a range of $0.65 to $0.72 per share. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation, and Amortization, adjusted for certain non - recurring it ems. E refers to Estimated. FY refers to Fiscal Year. Source: Refer to following page for additional details and sources. Preliminary Illustrative Only NOL value reference ranges across Selected Companies and DCF approaches reflect implied per share values ranging between $0.57 and $0.81 for conservatism, and remain subject to continued review and diligence, which will likely have a downward impact on per share value reference ranges shown below – particularly in scenarios where IWCO does not have positive value 8
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW [Preliminary Illlustrative Only] Selected Companies Selected Companies Selected Companies Selected Transactions Discounted Cash Flow Analysis Analysis Analysis Analysis [10] [11] Analysis FY 2021E FY 2022E FY 2023E FY 2021E Perpetual Growth Rate Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA 0.0% -- 2.0% Implied Equity Value Reference Range - IWCO [1] $0.0 -- $35.4 $0.0 -- $0.0 $0.0 -- $66.3 $0.0 -- $35.4 $0.0 -- $102.0 Implied Equity Value Reference Range - ModusLink $87.6 -- $121.5 $90.7 -- $126.1 $90.0 -- $125.0 $87.6 -- $121.5 $99.4 -- $123.4 Present Value of Steel Connect Corporate Expenses [2] (39.2) -- (61.0) (39.2) -- (61.0) (39.2) -- (61.0) (5.0) -- (5.0) (39.2) -- (61.0) Present Value of Net Operating Losses [2] [3] [4] 36.8 -- 48.5 36.8 -- 48.5 36.8 -- 48.5 4.2 -- 4.8 36.8 -- 48.5 Steel Connect Cash and Cash Equivalents as of 7/31/2021 [5] [6] 38.1 -- 38.1 38.1 -- 38.1 38.1 -- 38.1 38.1 -- 38.1 38.1 -- 38.1 Convertible Senior Notes as of 7/31/2021 [5] [7] (14.9) -- (14.9) (14.9) -- (14.9) (14.9) -- 0.0 (14.9) -- (14.9) (14.9) -- 0.0 Series C Convertible Preferred Stock as of 7/31/2021 [5] [8] (35.0) -- 0.0 (35.0) -- (35.0) (35.0) -- 0.0 (35.0) -- 0.0 (35.0) -- 0.0 Implied Total Equity Value Reference Range 73.4 167.6 76.5 101.7 75.7 216.8 74.9 179.8 85.2 251.0 Diluted Shares Outstanding [5] [9] 60.2 -- 78.1 60.2 -- 60.2 60.2 -- 84.4 60.2 -- 78.1 60.2 -- 84.4 Implied Equity Value Per Share Reference Range $1.22 -- $2.15 $1.27 -- $1.69 $1.26 -- $2.57 $1.24 -- $2.30 $1.41 -- $2.97 Preliminary Financial Analyses Summary (cont.) Steel Connect (dollars and shares outstanding in millions, except per share values) Note: Refer to following pages for derivation of IWCO and ML equity value reference ranges. Present value of Steel Connect co rpo rate expenses based on the SC Projections of ~$7.0 - $7.5mm of corporate expenses, tax - affected and based on a discount rate range of 11.0% to 15.0% across the selected companies and DCF approaches; selected transactions approach assumes liquida tio n of corporate entity and $5 million of wind - down/severance cash outlays, based on discussions with SC management. 1. In the event that certain equity value reference range indications for IWCO are not positive, values are shown as "0" for con ser vatism given that IWCO debt is non - recourse. However, it is possible that SC may incur wind - down costs or otherwise use its cash balance to support IWCO activities. 2. Scenarios resulting in equity value for IWCO that is not positive would limit usability of NOLs and may present opportunities fo r a reduction in corporate costs. While factoring in such adjustments would likely result in net diminution in the low end of th e implied equity value per share reference ranges shown above, given insufficient information and for conservatism, no adjustme nts have been made. Subject to continued review. 3. NOL value reference ranges subject to continued diligence and review. Reflects net present value of tax savings from federal and state NOLs. Net present value of tax savings from utilization of the Company's federal NOL balance of ~$2.1 billion (of which ~$1.8 billion expires in 2023) based on the Consolidated Projections and a discount rate range of 15.0% to 18.0%. Per S C m anagement, state NOLs are not projected to have material value; as such, the low end of the range ascribes zero value to the state NOLs and the high end of the range ascribes $2.5mm of value to the NOLs, based on the maximum potential value pe r S C management. Foreign NOLs are not projected to be utilized, per SC management. 4. While a number of the selected companies have NOL balances that may impact their TEV/EBITDA multiples, we have added the full pr esent value of the Company's NOLs to all of the selected companies approaches for conservatism. The value reference range for the Company's NOLs under the selected transactions analysis is illustratively based on application of S38 2 l imitations on the ability to utilize the Company's existing NOLs; consideration was not given to potential impact of NUBIG on illustrative S382 limitation amounts, given limited applicability. 5. Per SC management. 6. Reflects corporate cash and cash equivalents held by SC as of 7/31/21; does not reflect any potential cash from settlement of Do nald Reith litigation. 7. Reflects outstanding principal balance of Convertible Senior Notes as of 7/31/21, except for indications under which conversi on option is deemed to be in - the - money (implied per share equity value greater than $2.37 per share), in which case the outstanding balance is reduced to $0 and the diluted shares outstanding figure is increased by 6.3 million shares. 8. Reflects liquidation preference of outstanding Series C Convertible Preferred Stock as of 7/31/21, except for indications und er which conversion option is deemed to be in - the - money (implied per share equity value greater than $1.96 per share), in which case the liquidation preference is reduced to $0 and the diluted shares outstanding figure is increased by 17.9 million share s. 9. Based on total shares outstanding as of 7/31/21 pro forma for the impact of the pending Donald Reith litigation settlement; r efl ects 60.2 million common shares outstanding, plus the impact of 12.0 thousand stock options outstanding, to the extent in - the - money (based on the treasury method). Also reflects dilutive impact of Convertible Senior Notes and Series C Convertible Pref err ed stock to the extent in - the - money. 10. Illustrative selected transactions approach assumes buyers would pay SC proceeds for IWCO and ModusLink and that SC would win d d own the corporate entity. For illustrative purposes, assumes NOL value reference ranges based on applying S382 limitations to existing NOL balance and assumes wind - down/severance cash outlays of $5 million, based on discussion with SC mana gement. Subject to continued review. 11. For illustrative purposes, selected transactions approach that applies 5.0 – 7.0x multiple range to IWCO FY 2022 Adjusted EBITDA of $23.0 million without taking into account PV of restructuring activities would result in an implied per share value reference range of $1.24 to $1.81. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation, and Amortization, adjusted for certain non - recurring it ems. E refers to Estimated. FY refers to Fiscal Year. Source: SC, IWCO and ML managements; Consolidated Projections; Capital IQ; Bloomberg; public filings. NOL value reference ranges across Selected Companies and DCF approaches reflect implied per share values ranging between $0.57 and $0.81 for conservatism, and remain subject to continued review and diligence, which will likely have a downward impact on per share value reference ranges shown below – particularly in scenarios where IWCO does not have positive value 9
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW IWCO: Preliminary Financial Analyses Summary (dollars in millions) 1. Per SC and IWCO managements. 2. Reflects present value of cash flows related to restructuring activities in connection with the CIP at IWCO; based on disc oun t rate range of 11.0% - 13.0%. 3. Equity value cannot equal less than zero; negative equity values are shown above for illustrative purposes to demonstrate ext ent to which equity is out - of - the - money. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation, and Amortization, adjusted for certain non - recurring it ems. E refers to Estimated. FY refers to Fiscal Year. Source: SC and IWCO managements; IWCO Projections; Capital IQ; Bloomberg; public filings. [Preliminary Illlustrative Only] Selected Companies Selected Companies Selected Companies Selected Transactions Discounted Cash Flow Analysis Analysis Analysis Analysis Analysis FY 2021E FY 2022E FY 2023E FY 2021E Perpetual Growth Rate Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA 0.0% -- 2.0% Discount Rate Corresponding Base Amount $56.3 $23.0 $60.7 $56.3 11.0% -- 13.0% Selected Multiples Range 5.0x -- 7.0x 5.0x -- 7.0x 5.0x -- 7.0x 5.0x -- 7.0x Implied Enterprise Value Reference Range $281.5 -- $394.1 $115.0 -- $161.0 $303.5 -- $424.9 $281.5 -- $394.1 $337.2 -- $460.7 Cash and Cash Equivalents as of 7/31/2021 [1] 38.8 -- 38.8 38.8 -- 38.8 38.8 -- 38.8 38.8 -- 38.8 38.8 -- 38.8 Implied Total Enterprise Value Reference Range $320.3 -- $432.9 $153.8 -- $199.8 $342.3 -- $463.8 $320.3 -- $432.9 $376.0 -- $499.5 Total Debt as of 7/31/2021 [1] (364.3) -- (364.3) (364.3) -- (364.3) (364.3) -- (364.3) (364.3) -- (364.3) (364.3) -- (364.3) Present Value of Restructuring Activities [1] [2] (32.7) -- (33.1) (32.7) -- (33.1) (32.7) -- (33.1) (32.7) -- (33.1) (32.7) -- (33.1) Implied Total Equity Value Reference Range [3] ($76.8) -- $35.4 ($243.3) -- ($197.7) ($54.7) -- $66.3 ($76.8) -- $35.4 ($21.0) -- $102.0 10
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink: Preliminary Financial Analyses Summary (dollars in millions) 1. Per SC and ML managements. 2. Per SC management, assuming the ML business continues to generate sufficient cash flows and maintain sufficient liquidity, th e e xpectation is that ML would likely dividend to SC the remaining $10 million allowable under its existing credit facility; in addition, SC management has indicated that a portion of ML’s cash and cash e qui valents balance is currently offshore and would potentially be subject to repatriation tax. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation, and Amortization, adjusted for certain non - recurring it ems. E refers to Estimated. FY refers to Fiscal Year. Source: SC and ML managements; ML Projections; Capital IQ; Bloomberg; public filings. [Preliminary Illlustrative Only] Selected Companies Selected Companies Selected Companies Selected Transactions Discounted Cash Flow Analysis Analysis Analysis Analysis Analysis FY 2021 FY 2022E FY 2023E FY 2021 Perpetual Growth Rate Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA 0.0% -- 2.0% Discount Rate Corresponding Base Amount $16.9 $17.7 $17.5 $16.9 13.0% -- 15.0% Selected Multiples Range 4.0x -- 6.0x 4.0x -- 6.0x 4.0x -- 6.0x 4.0x -- 6.0x Implied Enterprise Value Reference Range $67.7 -- $101.5 $70.8 -- $106.2 $70.0 -- $105.0 $67.7 -- $101.5 $79.5 -- $103.4 Cash and Cash Equivalents as of 7/31/2021 [1] [2] 20.1 -- 20.1 20.1 -- 20.1 20.1 -- 20.1 20.1 -- 20.1 20.1 -- 20.1 Implied Total Enterprise Value Reference Range $87.8 -- $121.6 $90.8 -- $126.2 $90.1 -- $125.1 $87.8 -- $121.6 $99.6 -- $123.5 Total Debt as of 7/31/2021 [1] (0.1) -- (0.1) (0.1) -- (0.1) (0.1) -- (0.1) (0.1) -- (0.1) (0.1) -- (0.1) Implied Equity Value Reference Range $87.6 -- $121.5 $90.7 -- $126.1 $90.0 -- $125.0 $87.6 -- $121.5 $99.4 -- $123.4 11
Page 1. Executive Summary 3 2. Preliminary Financial Analyses Summary 6 3. Preliminary Financial Observations and Analyses 12 IWCO 13 ModusLink 25 4. Preliminary Considerations Related to Proposal 35 5. Appendices 45 6. Disclaimer 52
Page 1. Executive Summary 3 2. Preliminary Financial Analyses Summary 6 3. Preliminary Financial Observations and Analyses 12 IWCO 13 ModusLink 25 4. Preliminary Considerations Related to Proposal 35 5. Appendices 45 6. Disclaimer 52
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW IWCO has been a leader in direct mail for ~50 years Direct mail space has been undergoing secular decline, with projected CY 2020 - 2025 CAGR of ~(5)% 1 as customers continue to move towards digital and omni - channel solutions IWCO pursuing strategic repositioning initiatives given industry backdrop, but efforts have been complicated by the following factors: Substantial management team departures in CY 2020 Sales team turnover appears to have contributed to loss of a number of key customers in CY 2020 and CY 2021 Significant financial leverage limits operating flexibility and ability to invest in strategic repositioning IWCO management is implementing a competitive improvement plan (“CIP”) to stabilize the business and enhance profitability Per IWCO and Steel Connect management: Financial projections contemplate successful implementation of Phase I of the CIP (which positions IWCO as the premier digital direct mail company) with run - rate EBITDA achieved by the outer years of the projection period Financial projections do not contemplate meaningful revenue contributions or related investments in infrastructure or certain other costs associated with providing omni - channel solutions With regards to the existing credit facility, which matures in 2022: Financial projections assume that IWCO will retain sufficient liquidity to remain in compliance with the terms of its credit facility through maturity IWCO will need to refinance its credit facility (or obtain alternative financing) to continue to operate as a going concern Steel Connect / IWCO managements are in discussions with lenders regarding an amendment; lenders appear supportive of the CIP Although the financial projections assume that IWCO will be able to extend the maturity of its credit facility, there are no guarantees that IWCO will be able obtain such an extension (or alternative financing) If IWCO is not able to obtain an extension or alternative financing, there would be material adverse implications for the business not reflected in the projections Preliminary Selected Observations Related to IWCO General Observations Projections: Certain Observations & Qualifications Source: SC and IWCO managements. 1. Per S&P Kagan. The CIP is designed to achieve the following specific objectives: (i) retain profitable customers by enhancing quality of direct mail services relative to price, (ii) enhance margins through cost reduction and (iii) position IWCO to service SMEs with omni - channel offerings Key components of Phase I of the CIP include: Investments in digital presses and epic inserters to facilitate transition to fully digital production platform Consolidation from 7 to 3 facilities and substantial headcount reductions Exits from unprofitable customers One - time costs and investments are estimated at ~$35mm, with certain equipment to be furnished via operating leases Implementation of Phase I of the CIP is expected to be complete by the end of CY 2022 Competitive Improvement Plan Additional Considerations & Open Items IWCO analyses are based on a “going concern” approach, are based on financial projections, and account for one - time CIP costs/investments If IWCO does not operate as a going concern and/or does not have positive equity value, the following factors need to be further evaluated: (i) wind - down costs to / other cash outlays by Steel Connect; (ii) potential changes to the corporate cost structure; and (iii) usability of existing NOLs (and would likely result in a downward revision to preliminary indications shown) FY 2021 results are shown on a preliminary basis and will be finalized towards the end of September IWCO management is preparing its FY 2022 budget, which will be finalized towards the end of September Discussions with lenders around an extension and IWCO goodwill impairment testing remain underway 14
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW A B B IWCO: Historical and Projected Financial Observations 1. SG&A burdened with $1.3 million paid to Steel Connect in connection with allocation of time of shared personnel to IWCO, b ut excludes the remaining portion of the $5.0 million distribution payable to Steel Connect pursuant to the existing credit facility. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortiz ati on, adjusted for certain non - recurring items. Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non - recurring items. CAGR refers to Compound Annual Growth Rate. E refers to Estimated. FY refers to Fiscal Year. NMF refers to Not Meaningful Figure. Source: SC and IWCO managements; historical figures per SC and IWCO managements and public filings; projected figures per IWCO Projections. Revenues declined in FY20 as a result of industry headwinds, including COVID - related impacts; revenues are projected to continue declining in FY21 and FY22, including as a result of material customer attrition and certain strategic exits, before stabilizing in the outer years of the projection period Significant margin improvements are projected to result from both cost - cutting initiatives and the exiting of certain lower margin customer accounts One - time CIP Phase I implementation outlays of ~$35mm are projected, with purchase of equipment, severance payments and facility closure costs comprising key expenditures. CIP assumptions include: (i) certain equipment is furnished through operating leases due to credit facility compliance requirements; (ii) direct mail optimization program is completed and (iii) no significant investments made in omni - channel infrastructure C B A Selected Commentary C Restructuring Activities Detail Fiscal Year Ending July 31, 2022E 2023E 2024E 2025E Restructuring Activities Detail Lease Buyout Payments $0.0 ($5.2) $0.0 $0.0 Severance and Retention (7.1) (2.5) 0.0 0.0 Professional Fees and Other One-Time Costs (6.0) (0.2) 0.0 0.0 Total Restructuring Expenses ($13.1) ($7.9) $0.0 $0.0 Purchase of Capital Equipment (14.2) 0.0 0.0 0.0 Capital Lease Payments (2.1) (1.8) (1.8) (0.1) Proceeds from Equipment Sales and Inventory Reduction 2.0 3.2 0.0 0.0 Total Restructuring Cash Flows ($27.4) ($6.4) ($1.8) ($0.1) 2. Total Adjustments: (dollars in millions) Fiscal Year Ended July 31, Fiscal Year Ending July 31, CAGR CAGR 2019 2020 2021E 2022E 2023E 2024E 2025E 2019 to 2021 2021 to 2025E Revenue $486.9 $444.4 $389.8 $263.0 $279.4 $294.8 $309.5 -10.5% -5.6% Growth % -8.7% -12.3% -32.5% 6.2% 5.5% 5.0% Cost of Sales (Goods Sold) (372.7) (345.2) (303.6) (208.5) (189.4) (200.9) (213.2) Gross Profit $114.2 $99.2 $86.3 $54.5 $90.0 $93.9 $96.3 Margin % 23.5% 22.3% 22.1% 20.7% 32.2% 31.9% 31.1% Selling, General, and Administrative [1] (124.6) (87.5) (96.0) (75.6) (70.2) (64.1) (66.0) Depreciation and Amortization 46.9 46.2 37.1 31.0 33.1 34.2 35.3 Total Adjustments [2] 32.5 2.4 28.9 13.1 7.9 0.0 0.0 Adjusted EBITDA $69.0 $60.3 $56.3 $23.0 $60.7 $64.0 $65.6 -9.7% 3.9% Margin % 14.2% 13.6% 14.4% 8.7% 21.7% 21.7% 21.2% Growth % -12.7% -6.6% -59.2% 164.0% 5.4% 2.6% Depreciation and Amortization (46.9) (46.2) (37.1) (31.0) (33.1) (34.2) (35.3) Adjusted EBIT $22.1 $14.0 $19.2 ($8.0) $27.7 $29.8 $30.3 -6.9% 12.1% Margin % 4.5% 3.2% 4.9% -3.0% 9.9% 10.1% 9.8% Growth % -36.6% 36.7% NMF NMF 7.7% 1.7% Loss on Sale of Long-lived Assets 0.4 0.4 0.0 0.0 0.0 0.0 0.0 Adjustments related to tax liabilities 32.1 1.9 0.0 0.0 0.0 0.0 0.0 Impairment of long-lived assets 0.0 0.0 25.9 0.0 0.0 0.0 0.0 Restructuring Expenses 0.0 0.0 3.0 13.1 7.9 0.0 0.0 Other 0.1 0.0 0.0 0.0 0.0 0.0 0.0 Total Adjustments $32.5 $2.4 $28.9 $13.1 $7.9 $0.0 $0.0 15
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW $128 $156 $157 $198 CY 2018 CY 2019 CY 2020 CY 2021E $233 $223 $172 $176 CY 2018 CY 2019 CY 2020 CY 2021E IWCO Revenue Observations and Industry Trends 1. Reflects Direct Mail Industry Advertising Revenue per S&P Kagan. 2. Per Winterberry studies provided by SC management. CAG R r efers to Compound Annual Growth Rate. CY refers to Calendar Year. E refers to Estimated. Source: SC and IWCO managements, Public filings, S&P Kagan, Winterberry, historical figures per SC and IWCO man age ments and public filings; projected figures per IWCO Projections. IWCO Revenue vs. Direct Mail Advertising Market Performance (Revenue dollars in millions; Industry dollars in billions) (dollars in billions) IWCO Industry 1 / / Revenue CAGRs IWCO Revenue Industry 1 CY 2011 – CY 2019 3.1% - 1.8% CY 2019 – CY 2020 - 16.9% - 23.1% CY 2020 – CY 2025E - 5.0% - 4.9% CY 2020 – CY 2022E - 21.6% - 4.1% CY 2022E – CY 2025E 8.0% - 5.4% U.S. Offline Advertising & Marketing Spend 2 U.S. Online Advertising & Marketing Spend 2 (dollars in billions) IWCO figures on the pages that follow are presented on a calendar year basis, consistent with how IWCO management has histori cal ly prepared detailed figures. These figures will differ from certain pages that are presented based on the Company’s fiscal year end of July 31. $386 $333 $369 $400 $444 $443 $484 $492 $491 $408 $348 $251 $288 $301 $316 $45 $44 $43 $42 $41 $42 $39 $40 $39 $30 $29 $28 $26 $25 $23 CY 2011 CY 2012 CY 2013 CY 2014 CY 2015 CY 2016 CY 2017 CY 2018 CY 2019 CY 2020 CY 2021E CY 2022E CY 2023E CY 2024E CY 2025E 16
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Gross Profit (dollars in millions) IWCO Profitability Observations Note: IWCO figures shown above are presented on a calendar year basis; these figures will differ from certain pages that are pre sented based on the Company’s fiscal year end of July 31. CY refers to Calendar Year. E refers to Estimated. Source: Historical figures per SC and IWCO managements and public filings; projected figures per IWCO Projections. Gross Profit Gross Margin % / / 10 - Year Average Historical Figures: Gross Profit: $104.7 Gross Margin: 24.6% $104 $74 $88 $102 $121 $115 $128 $117 $109 $89 $72 $68 $96 $98 $102 27% 22% 24% 26% 27% 26% 26% 24% 22% 22% 21% 27% 33% 33% 32% CY 2011 CY 2012 CY 2013 CY 2014 CY 2015 CY 2016 CY 2017 CY 2018 CY 2019 CY 2020 CY 2021E CY 2022E CY 2023E CY 2024E CY 2025E 17
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW $408.2 $250.8 CY 2020 Customer A Customer B Customer C Customer D Customer E Customer F Total Customer Increases [1] Other Net Customer Declines CY 2022E IWCO CY 2020 to CY 2022E Revenue Bridge Note: IWCO figures shown above are presented on a calendar year basis; these figures will differ from certain pages that are pre sented based on the Company’s fiscal year end of July 31. 1. Reflects aggregate revenue increases from four of IWCO’s top customers that are expected to experience revenue increases b etw een CY 2020 and CY 2022E. CY refers to Calendar Year. E refers to Estimated. Source: SC and IWCO managements, IWCO Projections. (dollars in millions) ($38.9) ($27.7) ($27.5) ($16.8) ($13.5) ($11.3) $7.5 ($26.5) Revenues Projected to be Lost by End of CY 2021E Incremental Revenues Projected to be Lost By End of CY 2022E Lost business to competitor and/or cost - cutting measures put in place Decision to exit business due to low margins 18
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW IWCO: Preliminary Selected Companies Analysis (dollars in millions, except per share values) Note: No company used in this analysis for comparative purposes is identical to IWCO. 1. Enterprise Value equals equity market value + debt outstanding + preferred stock + minority interests – cash and cash equivalent s. 2. Based on closing prices as of 9/2/21. 3. Based on diluted shares. 4. FY 2021E multiples based on reported LTM June 2021 financials for all of the selected companies, except for Ennis, Inc. and T ran scontinental Inc., whose financials have been calendarized to IWCO’s fiscal year end of July 31. 5. Multiples based on forward looking financial information have been calendarized to IWCO’s fiscal year end of July 31 for all of the selected companies, except for Cimpress plc whose fiscal year end is June 30. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms; E refers to Estimated; FY refers to Fiscal Year; NA refers to Not Available. Source: Bloomberg, Capital IQ and public filings. Share Equity Market Enterprise Enterprise Value [1] to Adjusted EBITDA Selected Company Price [2] Value [2,3] Value [2,3] FY 2021E [4] FY 2022E [5] FY 2023E [5] Printing Services Cimpress plc $96.61 2,574.5 4,052.7 13.2x 10.7x 9.8x Dai Nippon Printing Co., Ltd. $24.18 6,759.6 5,760.1 5.5x 5.7x 5.4x Deluxe Corporation $39.39 1,724.3 3,394.6 9.0x 7.9x 7.4x Ennis, Inc. $19.39 508.5 427.1 7.3x NA NA Kyodo Printing Co., Ltd. $23.99 198.7 309.7 5.3x NA NA Quad/Graphics, Inc. $4.16 245.0 997.8 4.1x NA NA R. R. Donnelley & Sons Company $4.87 371.7 1,689.9 4.7x 4.3x NA Toppan Inc. $17.58 5,994.3 5,254.5 4.4x 4.7x NA Transcontinental Inc. $19.28 1,678.2 2,237.9 5.9x 6.0x 6.0x Low 4.1x 4.3x 5.4x High 13.2x 10.7x 9.8x Median 5.5x 5.8x 6.7x Mean 6.6x 6.5x 7.1x Diversified Marketing Services Cheil Worldwide Inc. $20.55 $2,081.5 $1,701.7 7.6x 6.7x 6.2x Dentsu Group Inc. $37.50 10,550.8 11,662.3 6.8x 6.4x 6.3x Omnicom Group Inc. $74.34 16,204.3 18,921.4 8.8x 8.1x 7.8x Publicis Groupe S.A. $67.43 17,012.6 18,542.8 7.0x 6.7x 6.5x The Interpublic Group of Companies, Inc. $37.51 14,779.6 16,027.3 9.5x 9.4x 9.1x WPP plc $13.81 15,984.7 18,550.1 7.7x 6.7x 6.1x Low 6.8x 6.4x 6.1x High 9.5x 9.4x 9.1x Median 7.6x 6.7x 6.4x Mean 7.9x 7.3x 7.0x All Selected Companies Low 4.1x 4.3x 5.4x High 13.2x 10.7x 9.8x Median 7.0x 6.7x 6.4x Mean 7.1x 6.9x 7.1x 19
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW IWCO: Preliminary Selected Benchmarking Data Note: No company shown for comparative purposes is identical to IWCO. 1. Based on public trading prices of common stock. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. E refers to Estimated. FY refers to Fiscal Year. LTM refers to the most recently completed 12 - month period for which financial information has been made public, other than for I WCO, in which case LTM refers to Latest 12 Months. NA refers to Not Available. Sources: Bloomberg, Capital IQ, SC and IWCO managements, IWCO Projections and public filings. Size Size [1] Revenue Growth Revenue Growth (LTM Revenue, millions) (Enterprise Value as of 9/2/21, millions) (FY 2019 to FY 2021E Revenue) (FY 2021E to FY 2022E Revenue) Name Value Name Value Name Value Name Value Printing Services Printing Services Printing Services Printing Services Toppan Inc. $13,470.8 Dai Nippon Printing Co., Ltd. $5,711.8 Deluxe Corporation 0.1% Cimpress plc 7.0% Dai Nippon Printing Co., Ltd. $12,217.6 Toppan Inc. $5,198.7 Toppan Inc. -0.3% Deluxe Corporation 4.0% R. R. Donnelley & Sons Company $4,858.5 Cimpress plc $4,052.7 Dai Nippon Printing Co., Ltd. -2.1% R. R. Donnelley & Sons Company 2.4% Quad/Graphics, Inc. $2,922.3 Deluxe Corporation $3,394.6 Cimpress plc -2.1% Dai Nippon Printing Co., Ltd. 1.9% Cimpress plc $2,592.5 Transcontinental Inc. $2,237.9 Ennis, Inc. -5.2% Transcontinental Inc. 0.8% Deluxe Corporation $2,066.3 R. R. Donnelley & Sons Company $1,689.9 R. R. Donnelley & Sons Company -6.8% Toppan Inc. -0.3% Transcontinental Inc. $1,981.9 Quad/Graphics, Inc. $997.8 Transcontinental Inc. -9.2% IWCO -32.5% Kyodo Printing Co., Ltd. $816.3 Ennis, Inc. $427.1 IWCO -10.5% Quad/Graphics, Inc. NA IWCO $389.8 Kyodo Printing Co., Ltd. $308.6 Quad/Graphics, Inc. NA Ennis, Inc. NA Ennis, Inc. $365.9 Kyodo Printing Co., Ltd. NA Kyodo Printing Co., Ltd. NA Diversified Marketing Services Diversified Marketing Services Diversified Marketing Services Diversified Marketing Services WPP plc $17,358.5 Omnicom Group Inc. $18,921.4 Publicis Groupe S.A. 3.1% Cheil Worldwide Inc. 9.7% Omnicom Group Inc. $13,962.1 WPP plc $18,550.1 The Interpublic Group of Companies, Inc. 2.0% The Interpublic Group of Companies, Inc. 8.5% Publicis Groupe S.A. $11,707.0 Publicis Groupe S.A. $18,542.8 Dentsu Group Inc. -2.9% Dentsu Group Inc. 5.3% Dentsu Group Inc. $8,845.2 The Interpublic Group of Companies, Inc. $16,027.3 Omnicom Group Inc. -4.2% Publicis Groupe S.A. 4.5% The Interpublic Group of Companies, Inc. $8,536.3 Dentsu Group Inc. $11,598.4 WPP plc -5.6% Omnicom Group Inc. 4.3% Cheil Worldwide Inc. $2,513.5 Cheil Worldwide Inc. $1,631.7 Cheil Worldwide Inc. -7.5% WPP plc -0.4% IWCO $389.8 IWCO -10.5% IWCO -32.5% Revenue Growth Adjusted EBITDA Growth Adjusted EBITDA Growth Adjusted EBITDA Growth (FY 2021E to FY 2023E Revenue) (FY 2019 to FY 2021E Adjusted EBITDA) (FY 2021E to FY 2022E Adjusted EBITDA) (FY 2021E to FY 2023E Adjusted EBITDA) Name Value Name Value Name Value Name Value Printing Services Printing Services Printing Services Printing Services Cimpress plc 6.2% Cimpress plc 9.4% Deluxe Corporation 9.5% Cimpress plc 8.9% Deluxe Corporation 4.7% R. R. Donnelley & Sons Company 4.8% Cimpress plc 9.4% Deluxe Corporation 8.0% Dai Nippon Printing Co., Ltd. 2.0% Dai Nippon Printing Co., Ltd. 2.7% R. R. Donnelley & Sons Company 4.8% Dai Nippon Printing Co., Ltd. 4.2% Transcontinental Inc. 0.6% Toppan Inc. 0.3% Dai Nippon Printing Co., Ltd. 2.7% IWCO 3.8% Toppan Inc. 0.2% Transcontinental Inc. -1.0% Toppan Inc. 0.3% Transcontinental Inc. -0.8% IWCO -15.3% Deluxe Corporation -8.3% Transcontinental Inc. -1.0% Quad/Graphics, Inc. NA Quad/Graphics, Inc. NA IWCO -9.7% IWCO -59.2% R. R. Donnelley & Sons Company NA R. R. Donnelley & Sons Company NA Quad/Graphics, Inc. NA Quad/Graphics, Inc. NA Ennis, Inc. NA Ennis, Inc. NA Ennis, Inc. NA Ennis, Inc. NA Kyodo Printing Co., Ltd. NA Kyodo Printing Co., Ltd. NA Kyodo Printing Co., Ltd. NA Kyodo Printing Co., Ltd. NA Toppan Inc. NA Diversified Marketing Services Diversified Marketing Services Diversified Marketing Services Diversified Marketing Services Cheil Worldwide Inc. 8.2% WPP plc 15.5% WPP plc 15.5% WPP plc 12.0% The Interpublic Group of Companies, Inc. 6.3% Cheil Worldwide Inc. 13.5% Cheil Worldwide Inc. 13.5% Cheil Worldwide Inc. 10.8% Dentsu Group Inc. 5.2% The Interpublic Group of Companies, Inc. 12.7% The Interpublic Group of Companies, Inc. 12.7% The Interpublic Group of Companies, Inc. 7.9% Publicis Groupe S.A. 3.8% Omnicom Group Inc. 8.7% Omnicom Group Inc. 8.7% Omnicom Group Inc. 6.2% Omnicom Group Inc. 3.3% Dentsu Group Inc. 7.0% Dentsu Group Inc. 7.0% Dentsu Group Inc. 4.4% WPP plc 1.4% Publicis Groupe S.A. 4.4% Publicis Groupe S.A. 4.4% Publicis Groupe S.A. 3.9% IWCO -15.3% IWCO -9.7% IWCO -59.2% IWCO 3.8% 20
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW IWCO: Preliminary Selected Benchmarking Data (cont.) Note: No company shown for comparative purposes is identical to IWCO. 1. IWCO Margin based on FY 2023E. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non - recurring items. Depr. refers to Depreciation. E refers to Estimated. LTM refers to the most recently completed 12 - month period for which financial information has been made public, other than for I WCO, in which case LTM refers to Latest 12 Months. NA refers to Not Available. Sources: Bloomberg, Capital IQ, SC and IWCO managements, IWCO Projections and public filings. Profitability Profitability Profitability Profitability (FY 2021E Adjusted EBITDA to FY 2021E Revenue) (FY 2022E to FY 2023E Average Adjusted EBITDA Margin) (FY 2021E Adjusted EBIT to FY 2021E Revenue) (FY 2022E to FY 2023E Average Adjusted EBIT Margin) Name Value Name Value Name Value Name Value Printing Services Printing Services Printing Services Printing Services Deluxe Corporation 19.6% IWCO [1] 21.7% Deluxe Corporation 19.6% Deluxe Corporation 19.6% Transcontinental Inc. 18.7% Deluxe Corporation 20.8% Transcontinental Inc. 18.7% Transcontinental Inc. 18.7% Ennis, Inc. 15.7% Transcontinental Inc. 18.3% Ennis, Inc. 15.7% Ennis, Inc. 15.7% IWCO 14.4% Cimpress plc 13.8% Cimpress plc 13.3% Cimpress plc 13.3% Cimpress plc 13.3% Dai Nippon Printing Co., Ltd. 8.3% Toppan Inc. 8.4% IWCO [1] 9.9% Toppan Inc. 8.4% R. R. Donnelley & Sons Company 7.9% Dai Nippon Printing Co., Ltd. 8.1% Toppan Inc. 8.4% Dai Nippon Printing Co., Ltd. 8.1% Ennis, Inc. NA R. R. Donnelley & Sons Company 7.7% Dai Nippon Printing Co., Ltd. 8.1% R. R. Donnelley & Sons Company 7.7% Toppan Inc. NA IWCO 4.9% R. R. Donnelley & Sons Company 7.7% Quad/Graphics, Inc. NA Quad/Graphics, Inc. NA Quad/Graphics, Inc. NA Quad/Graphics, Inc. NA Kyodo Printing Co., Ltd. NA Kyodo Printing Co., Ltd. NA Kyodo Printing Co., Ltd. NA Kyodo Printing Co., Ltd. NA Diversified Marketing Services Diversified Marketing Services Diversified Marketing Services Diversified Marketing Services Publicis Groupe S.A. 22.2% Publicis Groupe S.A. 22.2% Publicis Groupe S.A. 22.2% Publicis Groupe S.A. 22.2% Dentsu Group Inc. 19.0% IWCO [1] 21.7% Dentsu Group Inc. 19.0% Dentsu Group Inc. 19.0% The Interpublic Group of Companies, Inc. 17.4% Dentsu Group Inc. 19.0% The Interpublic Group of Companies, Inc. 17.4% The Interpublic Group of Companies, Inc. 17.4% Omnicom Group Inc. 15.6% The Interpublic Group of Companies, Inc. 18.0% Omnicom Group Inc. 15.6% Omnicom Group Inc. 15.6% WPP plc 14.9% WPP plc 17.7% WPP plc 14.9% WPP plc 14.9% IWCO 14.4% Omnicom Group Inc. 16.3% Cheil Worldwide Inc. 8.8% IWCO [1] 9.9% Cheil Worldwide Inc. 8.8% Cheil Worldwide Inc. 9.2% IWCO 4.9% Cheil Worldwide Inc. 8.8% Relative Depreciation Internal Investment (LTM Depr. to LTM Adjusted EBITDA) (LTM Capital Expenditures to LTM Revenue) Name Value Name Value Printing Services Printing Services Ennis, Inc. 31.3% Ennis, Inc. 0.9% Deluxe Corporation 35.0% IWCO 1.1% R. R. Donnelley & Sons Company 38.5% Cimpress plc 1.5% Transcontinental Inc. 44.3% R. R. Donnelley & Sons Company 1.6% Dai Nippon Printing Co., Ltd. 45.1% Quad/Graphics, Inc. 1.7% Toppan Inc. 49.0% Transcontinental Inc. 3.2% Cimpress plc 56.4% Dai Nippon Printing Co., Ltd. 3.8% IWCO 65.9% Toppan Inc. 3.8% Quad/Graphics, Inc. 69.0% Deluxe Corporation 4.0% Kyodo Printing Co., Ltd. 92.6% Kyodo Printing Co., Ltd. 7.1% Diversified Marketing Services Diversified Marketing Services Omnicom Group Inc. 10.0% Cheil Worldwide Inc. 0.3% Cheil Worldwide Inc. 10.3% Omnicom Group Inc. 0.5% WPP plc 14.8% IWCO 1.1% The Interpublic Group of Companies, Inc. 16.8% Publicis Groupe S.A. 1.4% Publicis Groupe S.A. 21.4% WPP plc 1.7% Dentsu Group Inc. 43.9% The Interpublic Group of Companies, Inc. 1.8% IWCO 65.9% Dentsu Group Inc. 2.2% 21
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW IWCO: Preliminary Selected Transactions Analysis Printing Services Note: No company used in this analysis for comparative purposes is identical to IWCO, and no transaction used in this analysi s f or comparative purposes is identical to the Proposal. 1. Transaction Value refers to the implied enterprise value of target company, based on the announced transaction equity pric e a nd other public information available at the time of the announcement. 2. Based on reported metric for the most recent LTM period for which information was made public prior to the announcement of th e transaction. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. Sources: Capital IQ, public filings, press releases. Transaction Value / LTM Adjusted Transaction LTM Adjusted EBITDA Announced Effective Target Acquiror Value [1] EBITDA [2] Margin % [2] Printing Services 10/1/2020 InnerWorkings, Inc. HH Global Limited $253.1 6.8x 3.5% 7/2/2019 Multi-Color Corporation WS Packaging Group, Inc. $2,520.1 8.8x 16.5% 12/10/2018 Communisis plc Output Services Group, Inc. $224.7 5.9x 8.0% 3/27/2017 The Garvey Group, LLC and Graphic Tech LLC IntegraColor, LLC (nka:Orora Visual LLC) $54.0 5.8x 10.3% 1/5/2017 Register Print Group Inc. IntegraColor, LLC (nka:Orora Visual LLC) $44.0 5.8x 18.1% 6/8/2015 Courier Communications LLC R. R. Donnelley & Sons Company $307.5 8.4x 13.3% 1/31/2014 Consolidated Graphics, Inc. R. R. Donnelley & Sons Company $702.2 5.5x 12.2% Low $44.0 5.5x 3.5% High $2,520.1 8.8x 18.1% Median $253.1 5.9x 12.2% Mean $586.5 6.7x 11.7% Acquisition of IWCO Transaction Value / LTM Adjusted Transaction LTM Adjusted EBITDA Effective Target Acquiror Value [1] EBITDA [2] Margin % [2] 12/15/2017 IWCO Direct ModusLink Global Solutions, Inc. $476.0 5.8x 17.5% 7/16/2020 2/26/2019 2/15/2017 12/15/2016 10/23/2018 12/1/2014 10/24/2013 12/18/2017 Announced (dollars in millions) 22
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW IWCO: Preliminary Selected Transactions Analysis (cont.) Diversified Marketing Services Note: No company used in this analysis for comparative purposes is identical to IWCO, and no transaction used in this analysi s f or comparative purposes is identical to the Proposal. 1. Transaction Value refers to the implied enterprise value of target company, based on the announced transaction equity pric e a nd other public information available at the time of the announcement. 2. Based on reported metric for the most recent LTM period prior to the announcement of the transaction. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. NA refers to Not Available. Sources: Capital IQ, public filings, press releases. (dollars in millions) Transaction Value / LTM Adjusted Transaction LTM Adjusted EBITDA Announced Effective Target Acquiror Value [1] EBITDA [2] Margin % [2] Diversified Marketing Services Pending ZetaDisplay AB Alpha Acquisition AB $109.1 16.5x 15.0% 8/2/2021 MDC Partners Inc. Stagwell Media LP ; The Stagwell Group LLC $1,201.4 9.2x 10.5% 4/27/2020 Growww Media Co., Ltd. Hakuhodo Zeta Inc. $96.0 6.2x 11.7% 4/20/2020 Sanoma Media Netherlands DPG Media $510.4 6.5x 19.7% 10/25/2019 Firewood Marketing, Inc. MediaMonks $150.0 13.2x NA 7/2/2019 Epsilon Data Management, LLC Publicis Groupe Holdings B.V.; MMS USA Investments, Inc. $4,400.0 8.2x 28.2% 12/24/2018 MightyHive, Inc. S4 Capital plc $150.0 13.5x 27.3% 11/2/2018 Eleven Inc. Vision 7 Communications U.S. Inc. $30.0 NANA NA 4/1/2018 Daehong Communications Inc. LOTTE Corporation $208.6 5.5x 9.7% 8/24/2018 Goldbach Group AG Tamedia AG $180.7 4.8x 7.4% 12/7/2017 Asatsu-DK Inc Bain Capital Private Equity, LP $1,186.5 17.3x 2.2% 7/3/2017 Havas SA Vivendi SA $4,069.8 9.9x 16.6% 4/12/2017 SinnerSchrader Aktiengesellschaft Accenture Holding GmbH & Co. KG $103.4 16.9x NA 12/23/2016 Creston plc RedWhiteBlue Champion Limited $89.3 5.5x 12.0% 9/27/2016 Sizmek Inc Vector Capital $76.8 8.8x 4.7% Low $30.0 4.8x 2.2% High $4,400.0 17.3x 28.2% Median $150.0 9.0x 11.8% Mean $837.5 10.1x 13.7% 6/28/2021 12/10/2019 12/4/2018 10/8/2019 10/2/2017 8/3/2016 10/31/2018 2/20/2017 1/2/2018 12/22/2017 5/11/2017 11/17/2016 4/14/2019 12/21/2020 2/25/2020 23
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW IWCO: Preliminary Discounted Cash Flow Analysis (dollars in millions) Note: Present values as of 9/9/21; mid - year convention applied. 1. Reflects depreciation and amortization expense on a tax basis, per SC and IWCO managements. 2. Tax at 26.0%, per SC and IWCO managements. 3. Reflects add - back for restructuring expenses included in SG&A, the impact of which is separately captured in our analyses. 4. Includes 606 adjustment. 5. Implied from corresponding discount rate and perpetual growth rate applied to 2025 unlevered free cash flow. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. EBIT refers to Earnings Before Interest and Taxes. E refers to Estimated. PV refers to Present Value. Source: SC and IWCO managements, IWCO Projections. Projected Fiscal Year Ending July 31, Terminal Value 2022E 2023E 2024E 2025E Assumptions Revenue $263.0 $279.4 $294.8 $309.5 $309.5 Growth % -32.5% 6.2% 5.5% 5.0% Cost of Sales (Goods Sold) (208.5) (189.4) (200.9) (213.2) (203.1) Selling, General, and Administrative (75.6) (70.2) (64.1) (66.0) (48.8) Depreciation and Amortization (Book Basis) 31.0 33.1 34.2 35.3 8.0 Total Adjustments 13.1 7.9 0.0 0.0 0.0 Adjusted EBITDA $23.0 $60.7 $64.0 $65.6 $65.6 Margin % 8.7% 21.7% 21.7% 21.2% 21.2% Total Adjustments (13.1) (7.9) 0.0 0.0 0.0 Depreciation and Amortization (Tax Basis) [1] (13.8) (13.8) (13.8) (12.4) (8.0) Taxable EBIT ($3.9) $39.0 $50.1 $53.3 $57.6 Taxes [2] 0.0 (10.1) (13.0) (13.9) (15.0) Discount Rate 0.00% 1.00% 2.00% Unlevered Earnings ($3.9) $28.9 $37.1 $39.4 $42.6 11.00% 6.1x 6.7x 7.5x Depreciation and Amortization (Tax Basis) [1] 13.8 13.8 13.8 12.4 8.0 11.50% 5.8x 6.4x 7.2x Capital Expenditures (1.2) (5.2) (8.0) (8.0) (8.0) 12.00% 5.6x 6.1x 6.8x Change in Net Working Capital 11.4 (1.0) (1.1) (1.2) (1.2) 12.50% 5.4x 5.9x 6.5x Restructuring Expense Add-Back [3] 13.1 7.9 0.0 0.0 0.0 13.00% 5.2x 5.7x 6.2x Other [4] (0.0) (1.7) (0.6) (0.2) 0.0 Unlevered Free Cash Flows $33.2 $42.7 $41.3 $42.4 $41.5 DCF Assumptions Present Value PV of Terminal Value Based of Cash Flows on Perpetual Growth Rate for Implied Enterprise Value (2022 - 2025) 2025 Unlevered Free Cash Flow Discount Rate 0.00% 1.00% 2.00% 0.00% 1.00% 2.00% Discount Rate 0.00% 1.00% 2.00% 11.00% $130.6 $264.8 $294.2 $330.1 $395.4 $424.8 $460.7 11.00% 67.0% 69.3% 71.7% 11.50% $129.5 $249.5 $276.0 $308.0 $378.9 $405.4 $437.5 11.50% 65.8% 68.1% 70.4% 12.00% $128.4 + $235.5 $259.5 $288.2 = $363.9 $387.9 $416.6 12.00% 64.7% 66.9% 69.2% 12.50% $127.3 $222.7 $244.5 $270.4 $350.0 $371.8 $397.7 12.50% 63.6% 65.7% 68.0% 13.00% $126.3 $210.9 $230.8 $254.2 $337.2 $357.1 $380.6 13.00% 62.5% 64.6% 66.8% Implied 2025E Adjusted EBITDA Terminal Multiple [5] PV of Terminal Value as a % of Enterprise Value 24
Page 1. Executive Summary 3 2. Preliminary Financial Analyses Summary 6 3. Preliminary Financial Observations and Analyses 12 IWCO 13 ModusLink 25 4. Preliminary Considerations Related to Proposal 35 5. Appendices 45 6. Disclaimer 52
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 200+ parties contacted between launch in early 2019 and re - launch in early 2020 Four LOIs received, with offers ranging between ~$15mm – $60mm 1 FY 2020 results reflect profitability turnaround, but certain topline headwinds have surfaced in FY 2021 Certain considerations raised by parties during sales process remain: No clear path to winning new logos and/or top - line growth Complexity of global operations raises scalability concerns Unsustainable lack of investment in the business Preliminary Selected Observations Related to ModusLink General Observations Prior Sales Process Observations Updates Since 3/9/2021 Discussion Open Items & Additional Considerations 1. Documentation of $60 million offer subject to confirmation. Source: SC and ML managements, financial advisor. In recent years, ModusLink management implemented an operating improvement plan involving strategic exits from unprofitable customers and right - sizing its cost structure (including elimination of ~$23mm of direct labor costs) ModusLink has a number of longstanding blue chip customers, but faces substantial customer concentration challenges With successful implementation of cost savings initiatives, ModusLink is focused on sourcing growth through (i) cross - selling at top customers and (ii) adding new logos However, FY 2021 saw year - over - year VAR declines due to the following factors: Continued customer exits Slowing end - market momentum at certain top customers Challenges in converting marketing efforts into new wins (including due to ongoing build - out of sourcing infrastructure) FY 2021 results registered slightly below forecasts as of March 2021, as the shortage in semiconductor chips continued to impact demand at certain top customers FY 21E VAR of $117.0mm vs. $120.4mm (~3% lower) FY 21E gross profit of $47.4mm vs. $48.9mm (~3% lower) FY 21E Adj. EBITDA of $16.9mm vs. $18.6mm (~9% lower) ModusLink continues to identify new prospects but has not to date converted on material new wins Medium - to - long term outlook remains unchanged, with no changes to financial projections FY 2021 results are shown on a preliminary basis and will be finalized towards the end of September ModusLink management is preparing its FY 2022 budget, which will be finalized towards the end of September Steel Connect management has indicated that, assuming solid financial performance, sufficient liquidity and compliance with existing credit facilities, a distribution of up to $10mm of cash from ModusLink to Steel Connect is likely in FY 2022 Steel Connect management will continue to periodically consider amendments to the existing credit facility to permit cash distributions from ModusLink to Steel Connect 26
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW (dollars in millions) Fiscal Year Ended July 31, Fiscal Year Ending July 31, CAGR CAGR 2019 2020 2021 2022E 2023E 2024E 2025E 2019 to 2021 2021 to 2025E Revenue $332.9 $338.5 $226.0 $236.5 $240.3 $249.5 $259.3 -17.6% 3.5% Growth % 1.7% -33.2% 4.6% 1.6% 3.8% 3.9% Cost of Materials (191.4) (190.3) (109.0) (114.9) (116.8) (121.3) (126.0) VAR $141.5 $148.2 $117.0 $121.6 $123.5 $128.3 $133.3 -9.1% 3.3% Growth % 4.7% -21.1% 3.9% 1.6% 3.8% 3.9% % of Revenue 42.5% 43.8% 51.8% 51.4% 51.4% 51.4% 51.4% Cost of Goods Sold (106.0) (84.4) (69.5) (72.0) (74.1) (77.0) (80.0) Gross Profit $35.5 $63.8 $47.4 $49.6 $49.4 $51.3 $53.3 15.6% 3.0% % of Revenue 10.7% 18.8% 21.0% 21.0% 20.6% 20.6% 20.6% % of VAR 25.1% 43.0% 40.6% 40.8% 40.0% 40.0% 40.0% Operating Expenses (39.3) (35.8) (37.9) (35.4) (35.4) (35.4) (35.4) Depreciation and Amortization 5.6 4.1 3.4 3.5 3.5 3.5 3.5 Total Adjustments [1] 7.2 2.4 4.0 0.0 0.0 0.0 0.0 Adjusted EBITDA $9.1 $34.4 $16.9 $17.7 $17.5 $19.4 $21.4 36.7% 6.0% Growth % 279.7% -50.8% 4.6% -1.1% 10.8% 10.3% % of Revenue 2.7% 10.2% 7.5% 7.5% 7.3% 7.8% 8.3% % of VAR 6.4% 23.2% 14.5% 14.6% 14.2% 15.1% 16.1% Depreciation and Amortization (5.6) (4.1) (3.4) (3.5) (3.5) (3.5) (3.5) Adjusted EBIT $3.4 $30.3 $13.5 $14.2 $14.0 $15.9 $17.9 99.1% 7.3% Growth % 788.2% -55.4% 4.9% -1.3% 13.5% 12.6% % of Revenue 1.0% 8.9% 6.0% 6.0% 5.8% 6.4% 6.9% ModusLink Historical and Projected Financial Information 1. Total Adjustments: Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms; CAGR refers to Compound Annual Growth Rate; E refers to Estimated; FY refers to Fiscal Year; NA refers to not available; NMF refers to not meaningful figure; VAR refers to Value - Added Revenue. Source: SC and ML managements, historical figures per SC and ML managements and public filings; projected figures per ML Proj ect ions. After stabilizing in FY 2019 – FY 2020 , VAR declined by ~ 21 % in FY 2021 as a result of (i) customer exits and (ii) organic volumes declines at certain top customers . VAR is expected to stabilize again, growing at ~ 3 . 3 % over the projection period . Gross profit nearly doubled between FY 2019 and FY 2020 amid a management program to cut direct labor costs and exit unprofitable accounts, with gross margins generally projected to remain elevated (at levels approximating FY 2021 performance) . ModusLink management is forecasting that Adjusted EBITDA will grow at a CAGR of ~ 6 . 0 % after FY 2021 , driven primarily by (i) new business VAR outpacing erosion in the baseline business and (ii) continued cost discipline supporting elevated profit margins . C B A Selected Commentary C A B Severance 1.0 3.1 (0.1) 0.0 0.0 0.0 0.0 Provision for Asset Impairment 3.0 0.0 0.0 0.0 0.0 0.0 0.0 Bad Debt Expense 0.9 0.2 (0.1) 0.0 0.0 0.0 0.0 Cyber-Attack Impact 1.5 (0.7) 0.0 0.0 0.0 0.0 0.0 Penalties & Fines 0.8 (0.2) (0.0) 0.0 0.0 0.0 0.0 SAP Project Costs 0.0 0.0 2.6 0.0 0.0 0.0 0.0 France / Hungary Non-Cash Charge 0.0 0.0 1.6 0.0 0.0 0.0 0.0 Total Adjustments $7.2 $2.4 $4.0 $0.0 $0.0 $0.0 $0.0 27
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW $45 $31 $42 $20 $33 $26 $12 $8 $10 $3 $5 $5 $7 $10 $10 $89 $80 $36 $35 $67 $87 $19 $43 $20 - $4 $36 $0 $6 $5 $5 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022E FY 2023E FY 2024E FY 2025E Erosion has exceeded new business in 9 of the last 11 years ModusLink Long - Term Value Added - Revenue (VAR) Performance 1. Defined as the market value of goods and services produced by the industry minus the cost of goods and services used in produ c tion. Also described as the industry’s contribution to GDP, or profit plus wages and depreciation, per IBIS World; 2. Refers to fiscal years for ModusLink and calendar years for industry data; 3. Represents 9 - year (CY 2011 – 2020) CAGR due to unavailability of CY 2010 data. CAGR refers to Compound Annual Growth Rate; E refers to Estimated; FY refers to Fiscal Year; VAR refers to Value - Added Revenue. Source: SC and ML managements, IBIS World, World Bank, historical figures per SC and ML managements and public filings, projected figures per ML Projections . ModusLink VAR vs. Third Party Logistics Industry Value Added (“IVA”) 1 (VAR dollars in millions; IVA dollars in billions) VAR: New Business vs. Erosion (dollars in millions) New Business Erosion VAR IVA / / New Business refers to new customers or new programs with existing customers Erosion refers to VAR declines from existing customer programs $390 $346 $298 $304 $289 $254 $193 $186 $151 $142 $148 $117 $122 $124 $128 $133 $35 $36 $37 $37 $38 $39 $41 $46 $49 $50 $52 $54 $56 $58 $61 $- $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 $1,000.0 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022E FY 2023E FY 2024E FY 2025E $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 CAGRs 2 VAR IVA 10 - Year (2010 – 2020) (9.2%) 4.0% 3 5 - Year (2015 – 2020) (10.2%) 5.6% 4 - Year (2021 – 2025E) 3.3% 4.4% 28
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink Profitability Observations 1. Data shown for FY 2010 – FY 2017 represents information for the entire company (prior to the acquisition of IWCO). E refers to Estimated; FY refers to Fiscal Year; VAR refers to Value - Added Revenue. Source: Hi storical figures per SC and ML managements and public filings; projected figures per ML Projections . Gross Profit 1 (dollars in millions) Gross Margins 1 Gross Profit as % of Revenue / Gross Profit as % of VAR / $111 $81 $69 $74 $75 $54 $25 $36 $32 $36 $64 $47 $50 $49 $51 $53 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022E FY 2023E FY 2024E FY 2025E 12% 10% 10% 10% 10% 10% 5% 8% 9% 11% 19% 21% 21% 21% 21% 21% 28% 23% 23% 24% 26% 21% 13% 20% 21% 25% 43% 41% 41% 40% 40% 40% FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022E FY 2023E FY 2024E FY 2025E 29
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW $31.9 $63.8 $47.4 $5.0 $1.2 $7.8 $2.3 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 FY 18A FY 20A Customer Y Customer Z Customer B Other Net Erosion FY 21A $151.3 $148.2 $117.0 $20.4 $7.8 $11.7 $7.3 $5.2 $7.0 $4.4 $7.7 $7.6 $4.9 $80.0 $100.0 $120.0 $140.0 $160.0 $180.0 $200.0 FY 18A Growth Erosion FY 20A Customer Y Customer Z Customer B Other Net Erosion FY 21A ModusLink FY 2018 to FY 2021 VAR & Gross Profit Bridge FY refers to Fiscal Year; VAR refers to Value - Added Revenue. Source: SC and ML managements, ML Projections. Gross Profit Bridge (dollars in millions) VAR Bridge (dollars in millions) Gross profit growth is attributable to the following factors : (i) elimination of approximately $ 23 million of direct labor costs between FY 2018 and FY 2020 ; (ii) exits from unprofitable customers ; and (iii) organic growth in VAR at certain high margin customers Exits from unprofitable customers Organic growth from existing programs at Customer A and B Customer exits Organic declines in existing programs $31.9 Growth 30
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink: Preliminary Selected Companies Analysis (dollars in millions, except per share values) Note: No company used in this analysis for comparative purposes is identical to ModusLink. 1. Enterprise Value equals equity market value + debt outstanding + preferred stock + minority interests – cash and cash equivalent s. 2. Based on closing prices as of 9/2/21. 3. Based on diluted shares. 4. FY 2021E multiples based on reported LTM June 2021 financials for all of the selected companies, except for Clipper Logistics pl c, FedEx Corporation, Kerry Logistics Network Limited, and Wincanton plc, whose financials have been calendarized to ModusLink’s fiscal year end of July 31, as well as Jabil Inc., whos e m ultiples are based on FY August 2021 estimates. 5. Multiples based on forward looking financial information have been calendarized to ModusLink’s fiscal year end of July 31 for al l of the selected companies, except for Jabil Inc., whose fiscal year end is August 31. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. E refers to Estimated. FY refers to Fiscal Year. Source: Bloomberg, Capital IQ and public filings. Share Equity Market Enterprise Enterprise Value [1] to Adjusted EBITDA Selected Company Price [2] Value [2,3] Value [2,3] FY 2021E [4] FY 2022E [5] FY 2023E [5] Celestica Inc. $9.29 1,289.4 1,377.2 5.3x 4.1x NA CJ Logistics Corporation $147.67 $2,945.2 $4,614.4 6.7x 6.4x 6.0x Clipper Logistics plc $12.85 $1,341.4 $1,338.4 21.5x 10.8x 9.3x Deutsche Post AG $70.56 87,240.1 90,578.2 8.3x 6.6x 6.5x FedEx Corporation $267.09 72,958.0 86,750.0 8.6x 7.4x 6.8x Flex Ltd. $19.03 9,620.3 10,706.3 6.5x 6.7x 6.3x Jabil Inc. $61.48 9,355.9 10,975.5 5.4x 5.0x 5.1x Kerry Logistics Network Limited $3.46 6,265.5 7,209.0 8.1x 7.6x 8.5x Kuehne + Nagel International AG $371.47 44,773.3 44,501.2 21.7x 15.7x 16.3x United Parcel Service, Inc. $198.19 173,433.2 186,087.2 13.5x 12.1x 11.4x Wincanton plc $5.57 709.5 693.0 6.6x 4.8x 4.4x XPO Logistics, Inc. $88.53 10,458.2 14,037.2 15.3x 9.2x 9.7x Low 5.3x 4.1x 4.4x High 21.7x 15.7x 16.3x Median 8.2x 7.0x 6.8x Mean 10.6x 8.0x 8.2x 31
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink: Preliminary Selected Benchmarking Data Note: No company shown for comparative purposes is identical to ModusLink; certain selected companies do not report VAR. 1. Based on public trading prices of common stock. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non - recurring items. Depr. refers to Depreciation. E refers to Estimated. LTM refers to the most recently completed 12 - month period for which financial information has been made public, other than for M odusLink, in which case LTM refers to Latest 12 Months. NA refers to Not Available. Source: Bloomberg, Capital IQ, SC and ML managements, public filings, and ML Projections. Size Size [1] Revenue Growth Revenue Growth (LTM Revenue, millions) (Enterprise Value as of 9/2/21, millions) (FY 2019 to FY 2021 Revenue) (FY 2021 to FY 2023E Revenue) Name Value Name Value Name Value Name Value United Parcel Service, Inc. $92,466.0 United Parcel Service, Inc. $186,087.2 Kerry Logistics Network Limited 28.7% Clipper Logistics plc 7.8% Deutsche Post AG $87,470.9 Deutsche Post AG $90,578.2 Clipper Logistics plc 23.1% Jabil Inc. 4.6% FedEx Corporation $83,959.0 FedEx Corporation $86,750.0 United Parcel Service, Inc. 11.3% FedEx Corporation 4.2% Jabil Inc. $29,175.7 Kuehne + Nagel International AG $44,501.2 FedEx Corporation 10.6% Kuehne + Nagel International AG 4.1% Kuehne + Nagel International AG $26,062.0 XPO Logistics, Inc. $14,037.2 Kuehne + Nagel International AG 9.3% Flex Ltd. 3.4% Flex Ltd. $25,313.0 Jabil Inc. $10,975.5 XPO Logistics, Inc. 8.8% United Parcel Service, Inc. 3.4% XPO Logistics, Inc. $11,399.5 Flex Ltd. $10,706.3 Jabil Inc. 8.1% Wincanton plc 3.2% CJ Logistics Corporation $9,547.0 Kerry Logistics Network Limited $7,209.0 Deutsche Post AG 7.5% CJ Logistics Corporation 3.1% Kerry Logistics Network Limited $8,774.2 CJ Logistics Corporation $4,614.4 CJ Logistics Corporation 5.9% ModusLink 3.1% Celestica Inc. $5,592.3 Celestica Inc. $1,377.2 Wincanton plc 3.3% Kerry Logistics Network Limited 3.0% Wincanton plc $1,689.7 Clipper Logistics plc $1,338.4 Flex Ltd. -1.5% Deutsche Post AG 2.9% Clipper Logistics plc $962.7 Wincanton plc $693.0 Celestica Inc. -4.3% XPO Logistics, Inc. 1.9% ModusLink $226.0 ModusLink -17.6% Celestica Inc. NA Adjusted EBITDA Growth Adjusted EBITDA Growth Profitability Profitability (FY 2019 to FY 2021 Adjusted EBITDA) (FY 2021 to FY 2023E Adjusted EBITDA) (LTM Adjusted EBITDA to LTM Revenue) (FY 2021 to FY 2023 Average Adjusted EBITDA Margin) Name Value Name Value Name Value Name Value Kerry Logistics Network Limited 42.9% Clipper Logistics plc 23.5% United Parcel Service, Inc. 14.9% United Parcel Service, Inc. 15.7% Deutsche Post AG 37.9% Wincanton plc 14.5% Deutsche Post AG 12.4% Deutsche Post AG 14.3% ModusLink 36.7% Jabil Inc. 12.4% FedEx Corporation 11.6% FedEx Corporation 12.7% Clipper Logistics plc 35.8% FedEx Corporation 8.3% XPO Logistics, Inc. 8.1% Clipper Logistics plc 10.4% Kuehne + Nagel International AG 33.0% Deutsche Post AG 7.5% Kuehne + Nagel International AG 7.9% XPO Logistics, Inc. 10.1% Flex Ltd. 16.9% United Parcel Service, Inc. 7.2% Kerry Logistics Network Limited 7.8% Kerry Logistics Network Limited 10.0% Jabil Inc. 15.0% XPO Logistics, Inc. 7.1% ModusLink 7.5% Kuehne + Nagel International AG 8.9% United Parcel Service, Inc. 14.5% Kuehne + Nagel International AG 5.4% CJ Logistics Corporation 7.3% Wincanton plc 7.5% Celestica Inc. 14.0% CJ Logistics Corporation 3.8% Flex Ltd. 6.5% ModusLink 7.4% CJ Logistics Corporation 14.0% Flex Ltd. 3.8% Clipper Logistics plc 6.5% CJ Logistics Corporation 7.2% FedEx Corporation 12.9% ModusLink 1.7% Jabil Inc. 6.5% Jabil Inc. 7.0% XPO Logistics, Inc. 8.9% Kerry Logistics Network Limited -1.8% Wincanton plc 5.1% Flex Ltd. 6.2% Wincanton plc 4.9% Celestica Inc. NA Celestica Inc. 4.7% Celestica Inc. NA Profitability Profitability Relative Depreciation Internal Investment (LTM Adjusted EBIT to LTM Revenue) (FY 2021 to FY 2023 Average Adjusted EBIT Margin) (LTM Depr. to LTM Adjusted EBITDA) (LTM Capital Expenditures to LTM Revenue) Name Value Name Value Name Value Name Value United Parcel Service, Inc. 11.9% United Parcel Service, Inc. 12.5% Kuehne + Nagel International AG 11.5% Wincanton plc 0.7% Deutsche Post AG 10.2% Deutsche Post AG 9.5% Wincanton plc 14.7% Kuehne + Nagel International AG 0.8% FedEx Corporation 7.1% FedEx Corporation 8.2% Clipper Logistics plc 15.3% Celestica Inc. 0.9% Kuehne + Nagel International AG 6.9% Kuehne + Nagel International AG 6.4% Deutsche Post AG 17.8% Clipper Logistics plc 1.0% Kerry Logistics Network Limited 6.2% ModusLink 5.9% ModusLink 20.1% ModusLink 1.4% ModusLink 6.0% XPO Logistics, Inc. 5.8% Kerry Logistics Network Limited 20.4% Flex Ltd. 1.4% Clipper Logistics plc 5.5% Clipper Logistics plc 5.8% United Parcel Service, Inc. 20.6% Kerry Logistics Network Limited 1.9% Wincanton plc 4.3% Wincanton plc 4.8% Celestica Inc. 35.4% CJ Logistics Corporation 2.4% Flex Ltd. 4.0% Flex Ltd. 4.4% Flex Ltd. 38.0% Jabil Inc. 4.2% XPO Logistics, Inc. 3.9% Jabil Inc. 4.3% FedEx Corporation 38.8% Deutsche Post AG 4.5% Jabil Inc. 3.6% CJ Logistics Corporation 3.4% Jabil Inc. 44.5% XPO Logistics, Inc. 4.6% Celestica Inc. 3.0% Kerry Logistics Network Limited NA XPO Logistics, Inc. 51.5% United Parcel Service, Inc. 5.4% CJ Logistics Corporation 2.9% Celestica Inc. NA CJ Logistics Corporation 61.0% FedEx Corporation 7.0% 32
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink: Preliminary Selected Transactions Analysis Note: No company used in this analysis for comparative purposes is identical to ModusLink, and no transaction used in this an aly sis for comparative purposes is identical to the Proposal. 1. Transaction Value refers to the implied enterprise value of target company, based on the announced transaction equity pric e a nd other public information available at the time of the announcement. 2. Based on reported metric for the most recent LTM period prior to the announcement of the transaction. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. NA refers to Not Available. Sources: Capital IQ, public filings, press releases. (dollars in millions) Transaction Value / LTM Adjusted Transaction LTM Adjusted EBITDA Announced Effective Target Acquiror Value [1] EBITDA [2] Margin % [2] Syncreon Syncreon.Us Inc. DP World Limited $1,200.0 NA NA 6/30/2021 Quad Logistics Services, LLC Mullen Group Ltd. $40.0 8.0x NA AGI Agility Global Integrated Logistics DSV Panalpina A/S $4,200.0 16.3x 6.2% Lasership Lasership, Inc. American Securities LLC $1,700.0 13.0x NA AIT AIT Worldwide Logistics, Inc. The Jordan Company, L.P. $1,200.0 NA NA Ingram Ingram Micro Inc. Platinum Equity, LLC $7,200.0 6.9x 2.3% Performance Performance Team LLC A.P. Møller - Mærsk A/S $545.0 6.1x 17.1% PDS Prime Distribution Services, Inc. C.H. Robinson Worldwide, Inc. $225.0 NA NA CaseStack CaseStack, Inc. Hub Group, Inc. $255.0 11.6x 9.1% APL APL Logistics Ltd Kintetsu World Express, Inc. $1,200.0 15.0x 4.8% FSCDS FedEx Supply Chain Distribution System, Inc. FedEx Corporation $1,380.0 NA NA New Breed New Breed Holding Company XPO Logistics, Inc. $615.0 8.0x 12.9% Low $40.0 6.1x 2.3% High $7,200.0 16.3x 17.1% Median $1,200.0 9.8x 7.7% Mean $1,646.7 10.6x 8.7% 1/30/2015 9/2/2014 3/2/2020 7/7/2021 1/4/2020 12/3/2018 5/29/2015 12/9/2020 02/19/2020 1/28/2020 11/5/2018 2/17/2015 12/15/2014 7/29/2014 5/12/2021 5/12/2021 3/17/2021 3/17/2021 7/1/2021 Pending 4/27/2021 8/16/2021 6/30/2021 33
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink: Preliminary Discounted Cash Flow Analysis (dollars in millions) Note: Present values as of 9/9/21; mid - year convention applied. 1. Reflects depreciation and amortization expense on a tax basis, per SC and ML managements. 2. Tax at 25.0%, per SC and ML managements. 3. Implied from corresponding discount rate and perpetual growth rate applied to 2025 unlevered free cash flow. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. EBIT refers to Earnings Before Interest and Taxes. E refers to Estimated. PV refers to Present Value. Source: SC and ML managements, ML Projections. Projected Fiscal Year Ending July 31, Terminal Value 2022E 2023E 2024E 2025E Assumptions Revenue $236.5 $240.3 $249.5 $259.3 $259.3 Growth % 4.6% 1.6% 3.8% 3.9% Cost of Materials (114.9) (116.8) (121.3) (126.0) (126.0) Cost of Sales (Goods Sold) (72.0) (74.1) (77.0) (80.0) (80.0) Operating Expenses (35.4) (35.4) (35.4) (35.4) (36.9) Depreciation and Amortization (Book Basis) 3.5 3.5 3.5 3.5 5.0 Adjusted EBITDA $17.7 $17.5 $19.4 $21.4 $21.4 % of Revenue 7.5% 7.3% 7.8% 8.3% 8.3% Depreciation and Amortization (Tax Basis) [1] (5.1) (5.1) (5.1) (4.2) (5.0) Taxable EBIT $12.6 $12.4 $14.3 $17.2 $16.4 Taxes [2] (3.2) (3.1) (3.6) (4.3) (4.1) Discount Rate 0.00% 1.00% 2.00% Unlevered Earnings $9.5 $9.3 $10.7 $12.9 $12.3 13.00% 4.4x 4.8x 5.3x Depreciation and Amortization (Tax Basis) [1] 5.1 5.1 5.1 4.2 5.0 13.50% 4.3x 4.7x 5.1x Capital Expenditures (4.0) (5.0) (5.0) (5.0) (5.0) 14.00% 4.1x 4.5x 4.9x Change in Net Working Capital (0.5) (0.1) (0.7) (0.7) (0.7) 14.50% 4.0x 4.3x 4.7x Unlevered Free Cash Flows $10.0 $9.3 $10.1 $11.4 $11.6 15.00% 3.9x 4.2x 4.6x DCF Assumptions Present Value PV of Terminal Value Based of Cash Flows on Perpetual Growth Rate for Implied Enterprise Value (2022 - 2025) 2025 Unlevered Free Cash Flow Discount Rate 0.00% 1.00% 2.00% 0.00% 1.00% 2.00% Discount Rate 0.00% 1.00% 2.00% 13.00% $32.4 $58.9 $64.4 $71.0 $91.3 $96.9 $103.4 13.00% 64.5% 66.5% 68.7% 13.50% $32.2 $55.9 $61.0 $66.9 $88.0 $93.1 $99.1 13.50% 63.5% 65.5% 67.5% 14.00% $31.9 + $53.1 $57.7 $63.2 = $85.0 $89.6 $95.1 14.00% 62.5% 64.4% 66.4% 14.50% $31.7 $50.5 $54.8 $59.8 $82.2 $86.4 $91.4 14.50% 61.5% 63.4% 65.4% 15.00% $31.4 $48.1 $52.1 $56.6 $79.5 $83.5 $88.0 15.00% 60.5% 62.4% 64.3% PV of Terminal Value as a % of Enterprise Value Implied 2025E Adjusted EBITDA Terminal Multiple [3] 34
Page 1. Executive Summary 3 2. Preliminary Financial Analyses Summary 6 3. Preliminary Financial Observations and Analyses 12 4. Preliminary Considerations Related to Proposal 35 5. Appendices 45 6. Disclaimer 52
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Proposal Overview Note: VWAP based on cumulative trading activity over designated number of trading days (based on intraday trading) per Bloomb erg . 1. Represents the last trading day prior to the date the Proposal was publicly disclosed. VWAP refers to Volume - Weighted Average Price. Source: Capital IQ, Bloomberg, public filings. On November 19 , 2020 , the Board of Directors of the Company received a non - binding expression of interest from Steel Partners to acquire all of the outstanding shares of Company common stock not already owned by Steel Partners (the "Proposal") for consideration consisting of an unspecified mix of cash and Steel Partners publicly traded 6 % Series A Preferred Units . The Proposal indicated that the value per share of Company common stock implied by the consideration was in the range of $ 0 . 65 to $ 0 . 72 . The high end of the range stated in the Proposal reflects a premium of 2 . 1 % over the Company's closing stock price on November 19 , 2020 , immediately prior to announcement of the Proposal, while the low end of the range stated by the Proposal reflects a 7 . 8 % discount to the unaffected closing stock price 1 . The range stated in the Proposal reflects a discount of ~ 60 % - 70 % relative to recent trading levels (as shown below) . The Proposal is conditioned on approval by the Special Committee and a majority of holders of outstanding shares of Company common stock not held by Steel Partners, senior management or their respective affiliates or associates . Steel Partners also indicated that it does not intend to sell its interest in the Company or support an alternative extraordinary corporate transaction . Proposal Premium to Unaffected Proposal Premium to Current 11/19/2020 [1] 9/2/2021 Low High Low High Unaffected Current ($0.65) ($0.72) ($0.65) ($0.72) 1-Day Closing $0.71 $2.00 (7.8%) 2.1% (67.5%) (64.0%) 5-Day VWAP $0.64 $1.87 1.2% 12.1% (65.3%) (61.5%) 10-Day VWAP $0.61 $1.81 5.9% 17.3% (64.1%) (60.2%) 20-Day VWAP $0.60 $1.78 8.0% 19.6% (63.4%) (59.5%) 30-Day VWAP $0.61 $1.81 6.9% 18.5% (64.0%) (60.1%) 3-Month VWAP $0.60 $1.98 8.4% 20.0% (67.2%) (63.7%) 6-Month VWAP $0.59 $1.94 9.9% 21.8% (66.4%) (62.8%) 1-Year VWAP $0.65 $1.90 (0.2%) 10.6% (65.8%) (62.2%) 11/19/2020 1 9/2/2021 52-Week High Closing $1.88 $2.67 (65.4%) (73.0%) (75.7%) (73.0%) 52-Week Low Closing $0.46 $0.51 41.3% 40.1% 26.5% 40.1% 36
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 0.0 5.0 10.0 15.0 20.0 25.0 30.0 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 Volume Price Offer Price Range [3] Daily Volume (millions) Closing Stock Price ($) 1 - Year Unaffected 2 5 - Year Current 3 - Year Current Since Unaffected 2 Since 1/19/21 Average Daily Trading Volume 1 0.17mm 0.14mm 0.18mm 0.41mm 0.44mm Average Daily Trading Value 1 ($mm) $0.12 $0.24 $0.28 $0.85 $1.01 VWAP $0.65 $1.62 $1.54 $2.01 $2.18 High Closing Stock Price 1 $1.88 $2.67 $2.67 $2.67 $2.67 Low Closing Stock Price 1 $0.46 $0.46 $0.46 $0.68 $1.49 Stock Trading History (Last 5 Years) Steel Connect 1. Per Capital IQ. 2. Since 11/19/20, the last trading day prior to the date the Proposal was publicly disclosed. 3. Reflects the per share value range implied by the Proposal. Source: Capital IQ , Bloomberg, public filings. Note: All information as of 9/2/21 close (except where otherwise specified) Proposal Price Range: $0.65 – $0.72 3 Announcement of IWCO Acquisition (12/18/17): $2.19, up from closing stock price of $1.49 one day prior Announcement of Steel Partners Proposal: stock price closed at $0.68 following announcement, down slightly from $0.71 one day prior Elevated trading volumes were observed on January 19, 2021: stock price closed at $1.49, up from $1.09 one day prior; higher trading volumes were observed on Jan. 20 - 21, with stock price closing at $2.67 and $2.64 37
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Relative Total Shareholder Return Information (Last 3 Years) 1. Since 11/19/20, the last trading day prior to the date the Proposal was publicly disclosed. 2. ModusLink Selected Companies Index includes Celestica, Inc., CJ Logistics Corporation, Clipper Logistics plc, Deutsche Post A G, FedEx Corporation, Flex Ltd., Jabil Inc., Kerry Logistics Network Limited, Kuehne + Nagel International AG, United Parcel Service, Inc., Wincanton plc, and XPO Logistics, Inc. 3. IWCO Selected Companies Index includes Cimpress plc, Dai Nippon Printing Co., Ltd., Deluxe Corporation, Ennis, Inc., Kyodo Pr int ing Co., Ltd., Quad/Graphics, Inc., R.R. Donnelley & Sons Company, Toppan Inc., Transcontinental Inc., Cheil Worldwide Inc., Dentsu Group Inc., Omnicom Group Inc., Publicis Groupe S.A., The Interpublic Gro up of Companies, Inc., WPP plc. Source: Capital IQ as of 9/2/21. Total Shareholder Return -100% -75% -50% -25% 0% 25% 50% 75% 100% 125% Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Steel Connect, Inc. S&P 500 Index (Total Return) Steel Partners Holdings L.P. ModusLink Selected Companies Index [2] IWCO Selected Companies Index [3] Current Unaffected Three-Year Two-Year Since Unaffected Date [1] Two-Year One-Year Return Return Return Return Return Steel Connect, Inc. -5.7% 10.5% 183.7% -59.2% -50.7% S&P 500 Index (Total Return) 64.9% 61.1% 27.8% 38.4% 17.0% Steel Partners Holdings L.P. 68.1% 121.7% 245.3% -44.8% -30.1% ModusLink Selected Companies Index [2] 60.4% 96.3% 28.4% 40.7% 37.3% IWCO Selected Companies Index [3] -5.0% 11.7% 28.8% -20.3% -21.6% 38
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW -100% -50% 0% 50% 100% 150% 200% 250% 300% 350% 400% 450% 500% Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Steel Connect, Inc. Steel Partners Holdings L.P. S&P 500 Index Recent Total Shareholder Return Information (Last 1 Year) Source: Capital IQ as of 9/2/21. Steel Connect vs. Steel Partners vs. S&P 500 Index Total Shareholder Return Steel Partners makes non - binding expression of interest to acquire the remaining interest it did not already own in Steel Connect on 11 / 19 / 20 230.7% 28.2% 303.0% 39
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 19.3% 32.6% 39.4% 7.7% 0.9% 0.0% 0.0% 0.4 0.7 0.8 0.2 0.0 0.0 0.0 $1.60- $1.70 $1.70- $1.80 $1.80- $1.90 $1.90- $2.00 $2.00- $2.10 $2.10- $2.20 $2.20- $2.30 6.0% 10.1% 12.2% 13.2% 29.8% 27.5% 1.2% 0.4 0.7 0.8 0.9 2.1 1.9 0.1 $1.60- $1.70 $1.70- $1.80 $1.80- $1.90 $1.90- $2.00 $2.00- $2.10 $2.10- $2.20 $2.20- $2.30 0.1% 0.7% 6.4% 4.0% 2.9% 0.8% 3.9% 23.8% 20.6% 21.4% 12.6% 2.9% 0.1 0.6 4.7 2.9 2.1 0.6 2.9 17.6 15.3 15.8 9.3 2.1 Below $0.65 $0.65- $0.72 $0.72- $0.85 $0.85- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 $2.00- $2.25 $2.25- $2.50 $2.50- $2.75 $2.75- $3.00 Selected Historical Trading Activity Since Proposal Steel Connect Note: Based on the closing price in one - minute intervals as provided by Bloomberg and the amount of volume transacted during tha t intraday window. VWAP refers to Volume - Weighted Average Price. Source: Bloomberg as of 9/2/2021. Trading Activity Since Proposal (11/19/2020) Proposal Range $0.65 - $0.72 per share Volume = 0.6 million shares 0.7% of Total Volume VWAP Volume: 73.9 million VWAP: $2.01 Last Three Months Last One Month VWAP Volume: 6.9 million VWAP: $1.98 Since the Proposal date, ~ 42 . 5 million shares (or ~ 57 . 5 % ) have traded above $ 2 . 00 per share . On January 20 - 21 , 2021 , elevated trading levels were observed with ~ 30 million shares trading at a VWAP of $ 2 . 47 . VWAP Volume: 2.1 million VWAP: $1.78 (shares in millions) (shares in millions) (shares in millions) ~ 58 . 5 % of shares have traded above $ 2 . 00 over the last three months, but ~ 0 . 9 % of shares have traded above that level in the last month 40
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Ownership Summary Steel Connect 1. Includes (i) 17.9 million shares of common stock underlying the Company’s Series C Convertible Preferred Stock and (ii) 6.3 m ill ion shares of common stock underlying the Company’s Convertible Senior Notes, both of which are owned by Steel Partners, presented on an as - converted basis. Based on total common s hares outstanding as of June 1, 2021, per the Company’s Form 10 - Q for the quarter ended April 30, 2021, as adjusted for certain effects of the Donald Reith litigation settlement descri bed below. 2. Based on shares outstanding as of August 17, 2021 per the Form 4 filings dated August 19, 2021; reflects the surrender of sha res by Mr. Lichtenstein and Mr. Howard in connection with the Donald Reith litigation settlement. 3. Source: Capital IQ. 4. Reflects pro forma adjustment to remove 100,000 shares that are expected to be surrendered by Mr. Fejes in connection with th e D onald Reith litigation settlement. Denotes ownership of Steel Partners’ 13D group. Source: Capital IQ, Bloomberg, public filings. (shares outstanding in millions) As-Converted Shares [1] Holder Shares % Outstanding Steel Partners Holdings L.P. [1] 42.3 50.2% Warren Lichtenstein (Executive Chairman & Interim CEO) [2] 1.5 1.8% Jack Howard (Director) [2] 0.8 1.0% Glen Kassan (Vice Chairman) 0.4 0.4% Other Current / Former Directors and Executive Officers [3] [4] 2.2 2.7% Steel Partners and Other Insiders 47.3 56.0% Renaissance Technologies Corp. 2.5 3.0% 6.8% GAMCO Investors, Inc. (NYSE:GBL) 2.5 3.0% 6.8% The Vanguard Group, Inc. 1.8 2.1% 4.8% BlackRock, Inc. (NYSE:BLK) 1.0 1.2% 2.8% Solas Capital Management, LLC 0.9 1.0% 2.3% Bridgeway Capital Management, Inc. 0.3 0.3% 0.7% Geode Capital Management, LLC 0.2 0.3% 0.6% Other Public Shareholders 27.9 33.0% 75.0% Total Public Float [3] 37.1 44.0% 100.0% Total As-Converted Shares [1] 84.4 100.0% % of Unafilliated 41
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Recent Trading Activity by Shareholder Largest Steel Connect Shareholders (Excluding Steel Partners and Other Insiders) Note: Net Shares Added / (Deducted) is shown through Q2 CY 2021. CY refers to Calendar Year; NMF refers to not meaningful figure; Q refers to Quarter; VWAP refers to Volume - Weighted Average Pri ce. Source: Capital IQ, public filings. (dollars and shares in actuals) % of Latest Total Net Shares Added / (Deducted) by Quarter Stockholder Shareholdings Float Q1 CY 2020 Q2 CY 2020 Q3 CY 2020 Q4 CY 2020 Q1 CY 2021 Q2 CY 2021 Renaissance Technologies Corp. 2,537,400 6.8% (2,342) 283,239 121,943 293,441 (91,033) (102,444) % of Holdings Traded (0.1%) 13.9% 5.3% 12.0% (3.3%) (3.9%) GAMCO Investors, Inc. 2,533,649 6.8% - 552,000 1,610,920 (7,422) (511,799) (278,050) % of Holdings Traded 0.0% 47.3% 93.7% (0.2%) (15.4%) (9.9%) The Vanguard Group, Inc. 1,793,573 4.8% (89,800) (102,386) (146,947) (21,801) 1,228,031 31,156 % of Holdings Traded (10.0%) (12.7%) (20.9%) (3.9%) 229.8% 1.8% BlackRock, Inc. 1,032,621 2.8% (15,971) (81,325) 15 1,275 2,180 (72,226) % of Holdings Traded (1.3%) (6.9%) 0.0% 0.1% 0.2% (6.5%) Solas Capital Management, LLC 867,736 2.3% 61,695 - - - - 68,368 % of Holdings Traded 8.4% 0.0% 0.0% 0.0% 0.0% 8.6% Bridgeway Capital Management, Inc. 274,845 0.7% - (250,600) (43,000) (35,200) (46,155) 68,700 % of Holdings Traded 0.0% (43.1%) (13.0%) (12.2%) (18.3%) 33.3% Geode Capital Management, LLC 232,624 0.6% 1,045 - - - 29,080 13,335 % of Holdings Traded 0.6% 0.0% 0.0% 0.0% 15.3% 6.1% VWAP During Quarter $1.21 $0.58 $0.56 $0.74 $2.14 $2.01 High Closing Stock Price During Quarter $1.57 $0.87 $0.67 $0.98 $2.67 $2.21 Low Closing Stock Price During Quarter $0.75 $0.46 $0.51 $0.51 $0.77 $1.79 42
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Illustrative Premium Observations Implied Per Share Consideration Based on Illustrative Premium to Closing Share Price / VWAP Note: Reference to "Day" is based on trading days and reference to "Month" is based on calendar months. 1. Based on trading information as of 9/2/21. VWAP refers to Volume - Weighted Average Price. Source: Capital IQ, Bloomberg. 43 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 1-Day Closing $2.00 $2.00 $2.10 $2.20 $2.30 $2.40 $2.50 $2.60 $2.70 5-Day VWAP $1.87 $1.87 $1.96 $2.06 $2.15 $2.25 $2.34 $2.43 $2.53 10-Day VWAP $1.81 $1.81 $1.90 $1.99 $2.08 $2.17 $2.26 $2.35 $2.44 20-Day VWAP $1.78 $1.78 $1.86 $1.95 $2.04 $2.13 $2.22 $2.31 $2.40 30-Day VWAP $1.81 $1.81 $1.90 $1.99 $2.08 $2.17 $2.26 $2.35 $2.44 3-Month VWAP $1.98 $1.98 $2.08 $2.18 $2.28 $2.38 $2.48 $2.58 $2.68 6-Month VWAP $1.94 $1.94 $2.03 $2.13 $2.23 $2.32 $2.42 $2.52 $2.61 Since Proposal (11/19/20) VWAP $2.01 $2.01 $2.11 $2.21 $2.31 $2.41 $2.51 $2.61 $2.71 12-Month VWAP $1.90 $1.90 $2.00 $2.09 $2.19 $2.28 $2.38 $2.47 $2.57 52-week High Closing Price $2.67 $2.67 $2.80 $2.94 $3.07 $3.20 $3.34 $3.47 $3.60 52-week Low Closing Price $0.51 $0.51 $0.54 $0.57 $0.59 $0.62 $0.64 $0.67 $0.69 Illustrative Premium to Closing Share Price / VWAP Closing Share Price / VWAP [1] Note: The sensitivities shown are intended to be for illustrative purposes only, and are not intended to be indicative of or pro vide any conclusions regarding valuation.
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Preliminary Overview of Potential Alternatives □ Certain potential alternatives to a transaction with Steel Partners include but are not limited to the following: » Status Quo » Sale of one or both businesses to one or more third - parties » Recapitalization » Acquisitions » Share Repurchases / Dividends □ Preliminary considerations related to certain alternatives include but are not limited to the following: » Steel Partners has indicated that it does not intend to sell its holdings of Company common stock or vote in favor of any alt ern ative sale, merger or similar transaction involving the Company » Universe of potential buyers for Steel Connect likely to be limited given that IWCO and ModusLink are distinct businesses wit h l ittle to no overlap in business models, services provided, customers served and end markets » Steel Connect has been exploring the potential sale of the ModusLink business for several years (including via broad market o utr each in early 2019 and a follow - on process in early 2020), but has not received any proposals above $60 million 1 » IWCO faces refinancing risk related to ~$365 million of debt that matures in December 2022 – the business has faced significant headwinds over the last 1 - 2 years due to secular industry challenges, departures of key management and sales personnel, and resulting cust omer attrition and volume reductions. IWCO has launched a “competitive improvement plan” to stabilize the business, but its exist ing capital structure may present challenges to operating flexibility and ability to effectuate a strategic repositioning towards digital an d omni - channel offerings » The Company has been in discussions with lenders regarding an amendment and maturity extension to its term loan facility at I WCO , but has not yet reached an agreement » The Company has limited ability to support incremental leverage to facilitate potential acquisitions or capital return opport uni ties (i.e., stock buybacks, dividends, etc.) and has not made material distributions to common stockholders or engaged in a material stock buyb ack since 2011 1. Documentation of $60 million subject to confirmation. Source: SC, IWCO and ML managements, advisors. 44
Page 1. Executive Summary 3 2. Preliminary Financial Analyses Summary 6 3. Preliminary Financial Observations and Analyses 12 4. Preliminary Considerations Related to Proposal 35 5. Appendices 45 Supplemental Financial Analysis Schedules 46 Form of Consideration Observations 48 6. Disclaimer 52
Page 1. Executive Summary 3 2. Preliminary Financial Analyses Summary 6 3. Preliminary Financial Observations and Analyses 12 4. Preliminary Considerations Related to Proposal 35 5. Appendices 45 Supplemental Financial Analysis Schedules 46 Form of Consideration Observations 48 6. Disclaimer 52
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Present Value of Corporate Costs Note: Present values as of 9/9/21; mid - year convention applied. Discount Rate range informed by 11% to 13% discount rate range u sed for IWCO and 13% to 15% discount rate range used for ModusLink. 1. Includes salary and wages for employees at Steel Connect (primarily related to corporate accounting and audit work) as wel l a s Steel Partners shared services fee, which reflects salaries of Steel Partners employees based on allocation of time for functions performed for the benefit of Steel Connect. 2. Includes legal fees, investor relations fees, and stock market fees, among other professional fees. E refers to Estimated. Source: SC management, SC Projections. (dollars in millions) Projected Fiscal Year Ending July 31, 2022E 2023E 2024E 2025E Management Salary and Wages [1] ($3.7) ($3.7) ($3.7) ($3.8) Board Fees ($1.1) ($1.1) ($1.2) ($1.2) Other Professional Fees [2] ($1.5) ($1.5) ($1.6) ($1.6) Tax and Other Expenses ($0.8) ($0.8) ($0.8) ($0.8) Total Corporate Operating Expenses ($7.1) ($7.2) ($7.3) ($7.4) Taxes @ 26.0% $1.8 $1.9 $1.9 $1.9 Tax-Effected Corporate Expenses ($5.3) ($5.3) ($5.4) ($5.4) Present Value PV of Terminal Value Based of Cash Flows on Perpetual Growth Rate for (2022 - 2025) 2025 Tax-Effected Corporate Expenses Discount Rate 0.00% 1.00% 2.00% 0.00% 1.00% 2.00% 11.00% ($17.6) ($34.8) ($38.6) ($43.3) ($52.4) ($56.3) ($61.0) 12.00% ($17.4) ($30.9) ($34.1) ($37.8) ($48.3) ($51.4) ($55.2) 13.00% ($17.1) + ($27.7) ($30.3) ($33.4) = ($44.8) ($47.4) ($50.5) 14.50% ($16.7) ($23.7) ($25.8) ($28.1) ($40.4) ($42.5) ($44.8) 15.00% ($16.6) ($22.6) ($24.5) ($26.6) ($39.2) ($41.0) ($43.2) Implied Present Value of Tax-Effected Corporate Expenses 47
Page 1. Executive Summary 3 2. Preliminary Financial Analyses Summary 6 3. Preliminary Financial Observations and Analyses 12 4. Preliminary Considerations Related to Proposal 35 5. Appendices 45 Supplemental Financial Analysis Schedules 46 Form of Consideration Observations 48 6. Disclaimer 52
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Steel Partners Series A Preferred Units Summary of Selected Key Terms 1. As of 6/30/21 based on Steel Partners Holdings L.P. Form 10 - Q. VWAP refers to Volume Weighted Average Price. PIK refers to Payment - In - Kind. Sources: Public filings and Capital IQ. Issuer Steel Partners Holdings L.P. Issuance History • ~2.5 million units issued during 2017 in connection with acquisition of Steel Excel • ~5.4 million units issued during 2017 in connection with acquisition of Handy & Harman • ~0.2 million units issued during 2018 in connection with acquisition of WebFinancial • ~1.6 million units redeemed by Steel Partners in cash in February 2020 Current Number of Units Outstanding 1 6,422,128 Liquidation Preference $25.00 per unit; $160.6 million in aggregate 1 Dividend 6.0% cumulative dividend, payable quarterly in cash or PIK Maturity Date February 7, 2026 Redemption Can be redeemed by Steel Partners at any time based on liquidation preference (including any accrued or unpaid dividends) either in cash or in the form of Steel Partners common units (based on the 60 - day VWAP at the time of redemption) Conversion n/a Voting Rights None 49
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 $10.00 $15.00 $20.00 $25.00 $30.00 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Daily Trading Volume Steel Partners Series A Preferred Units Current Unit Price [1] Closing Unit Price (dollars per unit ) Daily Volume (millions) Steel Partners Series A Preferred Units Trading History (Last Three Years) 1. As of 9/2/21 close. 2. Source: Bloomberg. VWAP based on cumulative trading activity over designated number of trading days (based on intraday tra din g). VWAP refers to Volume Weighted Average Price. Sources: Capital IQ and Bloomberg as of 9/2/21. Current Unit Price: $23.49 (94.0% of Par) 1 1 - Day 10 - Day 20 - Day 1 - Month 3 - Month 6 - Month 12 - Month $23.51 94.0% of Par $23.58 94.3% of Par $23.59 94.4% of Par $23.53 94.1% of Par $23.20 92.8% of Par $21.26 85.0% of Par $20.93 83.7% of Par (dollars per unit) Historical VWAP 2 120% of Par 100% of Par 80% of Par 60% of Par 40% of Par 50
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Steel Partners Trading History (Last 3 Years) Relative Performance of Common Units vs. Series A Preferred Units 1. Source: Bloomberg. VWAP based on cumulative trading activity over designated number of trading days (based on intraday tra din g). VWAP refers to Volume Weighted Average Price. Sources: Capital IQ and Bloomberg as of 9/2/21. -100% -75% -50% -25% 0% 25% 50% 75% 100% 125% Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Steel Partners Common Units Steel Partners Series A Preferred Units Selected Trading Statistics Steel Partners Common Units Steel Partners Series A Preferred Units Current Price $28.49 $23.49 (94.0% of par) 1 - Month VWAP 1 $30.85 $23.53 (94.1% of par) 3 - Month VWAP 1 $29.15 $23.20 (92.8% of par) 90 - Day Average Daily Trading Volume ~38.0k shares ~13.6k shares 90 - Day Average Daily Trading Value $1.121 million $0.317 million Indexed Price 68.1% 3.1% 3-Year Price Performance (9/2/18 - 9/2/21) Steel Partners Common Units: 68.1% Steel Partners Series A Preferred Units: 3.1% 2-Year Price Performance (9/2/19 - 9/2/21) Steel Partners Common Units: 121.7% Steel Partners Series A Preferred Units: 12.9% 1-Year Price Performance (9/2/20 - 9/2/21) Steel Partners Common Units: 303.0% Steel Partners Series A Preferred Units: 32.8% 51
Page 1. Executive Summary 3 2. Preliminary Financial Analyses Summary 6 3. Preliminary Financial Observations and Analyses 12 4. Preliminary Considerations Related to Proposal 35 5. Appendices 45 6. Disclaimer 52
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW This presentation, and any supplemental information (written or oral) or other documents provided in connection therewith (collectively, the “materials”), are provided solely for the information of the Special Committee (the “Committee”) of the Board of Directors (the “Board”) of Steel Connect, Inc . (the “Company”) by Houlihan Lokey in connection with the Committee’s consideration of a potential transaction (the “Transaction”) involving the Company . This presentation is incomplete without reference to, and should be considered in conjunction with, any supplemental information provided by and discussions with Houlihan Lokey in connection therewith . Any defined terms used herein shall have the meanings set forth herein, even if such defined terms have been given different meanings elsewhere in the materials . The materials are for discussion purposes only . Houlihan Lokey expressly disclaims any and all liability, whether direct or indirect, in contract or tort or otherwise, to any person in connection with the materials . The materials were prepared for specific persons familiar with the business and affairs of the Company for use in a specific context and were not prepared with a view to public disclosure or to conform with any disclosure standards under any state, federal or international securities laws or other laws, rules or regulations, and none of the Committee, the Company or Houlihan Lokey takes any responsibility for the use of the materials by persons other than the Committee . The materials are provided on a confidential basis solely for the information of the Committee and may not be disclosed, summarized, reproduced, disseminated or quoted or otherwise referred to, in whole or in part, without Houlihan Lokey’s express prior written consent . Notwithstanding any other provision herein, the Company (and each employee, representative or other agent of the Company) may disclose to any and all persons without limitation of any kind, the tax treatment and tax structure of any transaction and all materials of any kind (including opinions or other tax analyses, if any) that are provided to the Company relating to such tax treatment and structure . However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws . For this purpose, the tax treatment of a transaction is the purported or claimed U . S . income or franchise tax treatment of the transaction and the tax structure of a transaction is any fact that may be relevant to understanding the purported or claimed U . S . income or franchise tax treatment of the transaction . If the Company plans to disclose information pursuant to the first sentence of this paragraph, the Company shall inform those to whom it discloses any such information that they may not rely upon such information for any purpose without Houlihan Lokey’s prior written consent . Houlihan Lokey is not an expert on, and nothing contained in the materials should be construed as advice with regard to, legal, accounting, regulatory, insurance, tax or other specialist matters . Houlihan Lokey’s role in reviewing any information was limited solely to performing such a review as it deemed necessary to support its own advice and analysis and was not on behalf of the Committee . The materials necessarily are based on financial, economic, market and other conditions as in effect on, and the information available to Houlihan Lokey as of, the date of the materials . 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The materials do not constitute any opinion, nor do the materials constitute a recommendation to the Board, the Committee, the Company, any security holder of the Company or any other party as to how to vote or act with respect to any matter relating to the Transaction or otherwise or whether to buy or sell any assets or securities of any company . Houlihan Lokey’s only opinion is the opinion, if any, that is actually delivered to the Committee . In preparing the materials Houlihan Lokey has acted as an independent contractor and nothing in the materials is intended to create or shall be construed as creating a fiduciary or other relationship between Houlihan Lokey and any party . The materials may not reflect information known to other professionals in other business areas of Houlihan Lokey and its affiliates . The preparation of the materials was a complex process involving quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytic methods employed and the adaption and application of these methods to the unique facts and circumstances presented and, therefore, is not readily susceptible to partial analysis or summary description . Furthermore, Houlihan Lokey did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor . Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques . Accordingly, the analyses contained in the materials must be considered as a whole . Selecting portions of the analyses, analytic methods and factors without considering all analyses and factors could create a misleading or incomplete view . The materials reflect judgments and assumptions with regard to industry performance, general business, economic, regulatory, market and financial conditions and other matters, many of which are beyond the control of the participants in the Transaction . Any estimates of value contained in the materials are not necessarily indicative of actual value or predictive of future results or values, which may be significantly more or less favorable . Any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which any assets, businesses or securities may actually be sold . The materials do not constitute a valuation opinion or credit rating . The materials do not address the consideration to be paid or received in, the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the Transaction or otherwise . Furthermore, the materials do not address the fairness of any portion or aspect of the Transaction to any party . In preparing the materials, Houlihan Lokey has not conducted any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (contingent or otherwise) of the Company or any other party and has no obligation to evaluate the solvency of the Company or any other party under any law . Disclaimer 53
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW All budgets, projections, estimates, financial analyses, reports and other information with respect to operations (including estimates of potential cost savings and expenses) reflected in the materials have been prepared by management of the relevant party or are derived from such budgets, projections, estimates, financial analyses, reports and other information or from other sources, which involve numerous and significant subjective determinations made by management of the relevant party and/or which such management has reviewed and found reasonable . The budgets, projections and estimates (including, without limitation, estimates of potential cost savings and synergies) contained in the materials may or may not be achieved and differences between projected results and those actually achieved may be material . 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CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 55 CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCI AL AND VALUATION ADVISORY HL .com
Exhibit (c) (5)
Project Carbon PRELIMINARY DISCUSSION MATERIALS FOR THE SPECIAL COMMITTEE OCTOBER 21, 2021 | CONFIDENTIAL | PRELIMINARY DRAFT
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Financial Projections Comparison July 2021 Projections vs. October 2021 Projections Note: Financials shown above are based on the Company’s fiscal year - end of July 31. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. E refers to Estimated; FY refers to Fiscal Year; VAR refers to Value - Added Revenue. Source: ModusLink projections prepared by ModusLink management, in consultation with Steel Connect management; IWCO projections prepared by IWC O management, in consultation with Steel Connect management. ModusLink IWCO ▪ FY 2022 VAR decline of ~0.5% relative to prior FY 2022 forecast due to result of continued impact from global chip shortage on certain customer accounts, offset by ( i ) longer tail for certain legacy accounts and (ii) assumed uptick in new business wins ▪ FY 2022 gross profit and adjusted EBITDA forecast lowered by ~5% - 6%, reflecting lower profitability of legacy accounts and new business (relative to core base business), partially offset by expected SG&A cost reductions ▪ ModusLink management has not revised forecasts beyond 2022 ▪ IWCO management has revised forecasts for the entire projection period ▪ Final results for FY 2021 lower than preliminary figures provided due to accelerated customer attrition ▪ FY 2022 to FY 2025 projections primarily reflect the impact of ( i ) revisions to customer / product package mix and (ii) adjustments to capex spend associated with the CIP (dollars in millions) July 2021 Projections October 2021 Projections Differentials FY-21E FY-22E FY-23E FY-24E FY-25E FY-21E FY-22E FY-23E FY-24E FY-25E FY-21E FY-22E FY-23E FY-24E FY-25E VAR $117.0 $121.6 $123.5 $128.3 $133.3 $117.2 $121.0 $123.5 $128.3 $133.3 $0.2 ($0.6) -- -- -- Gross Profit $47.4 $49.6 $49.4 $51.3 $53.3 $47.7 $46.9 $49.4 $51.3 $53.3 $0.3 ($2.7) -- -- -- % VAR 40.6% 40.8% 40.0% 40.0% 40.0% 40.7% 38.7% 40.0% 40.0% 40.0% 0.2% -2.1% 0.0% 0.0% 0.0% Adjusted EBITDA $16.9 $17.7 $17.5 $19.4 $21.4 $17.5 $16.7 $17.5 $19.4 $21.4 $0.6 ($1.0) -- -- -- % VAR 14.5% 14.6% 14.2% 15.1% 16.1% 15.0% 13.8% 14.2% 15.1% 16.1% 0.5% -0.7% 0.0% 0.0% 0.0% As referenced in the preliminary discussion materials dated 9/9/2021, the budgeting process has been underway for the last se ver al weeks. Below are preliminary updates to the ModusLink and IWCO financial projections made by the respective management teams. No updates have been made to the corporate level financial projections. 2 (dollars in millions) July 2021 Projections October 2021 Projections Differentials FY-21E FY-22E FY-23E FY-24E FY-25E FY-21E FY-22E FY-23E FY-24E FY-25E FY-21E FY-22E FY-23E FY-24E FY-25E Revenue $389.8 $263.0 $279.4 $294.8 $309.5 $384.4 $287.9 $298.5 $313.8 $332.4 ($5.4) $24.9 $19.1 $19.0 $22.9 Gross Profit $86.3 $54.5 $90.0 $93.9 $96.3 $81.2 $55.1 $91.9 $96.6 $100.8 ($5.1) $0.7 $1.9 $2.7 $4.6 Margin % 22.1% 20.7% 32.2% 31.9% 31.1% 21.1% 19.2% 30.8% 30.8% 30.3% -1.0% -1.6% -1.4% -1.1% -0.8% Adjusted EBITDA $56.3 $23.0 $60.7 $64.0 $65.6 $51.0 $23.4 $64.3 $67.9 $71.2 ($5.3) $0.4 $3.6 $3.9 $5.5 Margin % 14.4% 8.7% 21.7% 21.7% 21.2% 13.3% 8.1% 21.5% 21.6% 21.4% -1.2% -0.6% -0.2% -0.1% 0.2%
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 0.0 5.0 10.0 15.0 20.0 25.0 30.0 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 Volume Price Initial Proposal Range [3] Revised Indication [4] Daily Volume (millions) Closing Stock Price ($) 1 - Year Unaffected 2 5 - Year Current 3 - Year Current Since Unaffected 2 Since 1/19/21 Average Daily Trading Volume 1 0.17mm 0.14mm 0.18mm 0.37mm 0.39mm Average Daily Trading Value 1 ($mm) $0.12 $0.24 $0.29 $0.77 $0.87 VWAP $0.65 $1.63 $1.55 $2.00 $2.17 High Closing Stock Price 1 $1.88 $2.67 $2.67 $2.67 $2.67 Low Closing Stock Price 1 $0.46 $0.46 $0.46 $0.68 $1.49 Stock Trading History (Last 5 Years) Steel Connect 1. Per Capital IQ. 2. Since 11/19/20, the last trading day prior to the date the Initial Proposal was publicly disclosed. 3. Reflects the per share value range implied by the Initial Proposal. 4. Reflects revised indication from Steel Partners on October 4, 2021. Source: Capital IQ , Bloomberg, public filings. Note: All information as of 10/19/21 close (except where otherwise specified) Initial Proposal Range : $0.65 – $0.72 3 Announcement of IWCO Acquisition (12/18/17): $2.19, up from closing stock price of $1.49 one day prior Announcement of Steel Partners Proposal: stock price closed at $0.68 following announcement, down slightly from $0.71 one day prior Elevated trading volumes were observed on January 19, 2021: stock price closed at $1.49, up from $1.09 one day prior; higher trading volumes were observed on Jan. 20 - 21, with stock price closing at $2.67 and $2.64 Revised Indication : $ 2.15 4 3
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 0.0% 0.0% 13.5% 52.6% 16.7% 17.2% 0.0 0.0 0.3 1.3 0.4 0.4 $1.55- $1.70 $1.70- $1.85 $1.85- $2.00 $2.00- $2.15 $2.15- $2.30 $2.30- $2.45 7.0% 22.9% 26.7% 29.6% 6.8% 6.9% 0.4 1.4 1.6 1.7 0.4 0.4 $1.55- $1.70 $1.70- $1.85 $1.85- $2.00 $2.00- $2.15 $2.15- $2.30 $2.30- $2.45 0.1% 0.7% 7.8% 4.3% 1.1% 1.6% 14.6% 26.6% 19.1% 18.6% 5.6% 0.1 0.6 6.0 3.3 0.8 1.2 11.2 20.5 14.7 14.4 4.3 Below $0.65 $0.65- $0.72 $0.72- $0.90 $0.90- $1.15 $1.15- $1.40 $1.40- $1.65 $1.65- $1.90 $1.90- $2.15 $2.15- $2.40 $2.40- $2.65 $2.65- $2.90 Selected Historical Trading Activity Since Proposal Steel Connect Note: Based on the closing price in one - minute intervals as provided by Bloomberg and the amount of volume transacted during tha t intraday window. VWAP refers to Volume - Weighted Average Price. Source: Bloomberg as of 10/19/2021. Trading Activity Since Initial Proposal (11/19/2020) Initial Proposal Range $0.65 - $0.72 per share Volume = 0.6 million shares 0.7% of Total Volume VWAP Volume: 77.0 million VWAP: $2.00 Last Three Months Last One Month VWAP Volume: 5.9 million VWAP: $1.97 On January 20 - 21 , 2021 , elevated trading levels were observed with ~ 30 million shares trading at a VWAP of $ 2 . 47 . VWAP Volume: 2.4 million VWAP: $2.12 (shares in millions) (shares in millions) (shares in millions) Intraday High : $ 2 . 85 Intraday Low : $ 0 . 60 Intraday High : $ 2 . 45 Intraday Low : $ 1 . 60 Intraday High : $ 2 . 45 Intraday Low : $ 1 . 91 4
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Illustrative Premium Observations Implied Per Share Consideration Based on Illustrative Premium to Closing Share Price / VWAP Note: Reference to "Day" is based on trading days and reference to "Month" is based on calendar months. 1. Per Capital IQ. 2. Based on trading information per Bloomberg as of 10/19/21. ADTV refers to Average Daily Trading Volume. NA refers to Not Available. VWAP refers to Volume - Weighted Average Price. Source: Capital IQ, Bloomberg. Note: The sensitivities shown are intended to be for illustrative purposes only, and are not intended to be indicative of or pro vide any conclusions regarding valuation. 5 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 1-Day Closing 0.06 0.2% $2.04 $2.04 $2.14 $2.24 $2.35 $2.45 $2.55 $2.65 $2.75 5-Day VWAP 0.20 0.5% $2.24 $2.24 $2.36 $2.47 $2.58 $2.69 $2.81 $2.92 $3.03 10-Day VWAP 0.14 0.4% $2.21 $2.21 $2.32 $2.43 $2.54 $2.65 $2.76 $2.87 $2.98 20-Day VWAP 0.12 0.3% $2.13 $2.13 $2.24 $2.35 $2.45 $2.56 $2.67 $2.77 $2.88 30-Day VWAP 0.10 0.3% $2.09 $2.09 $2.20 $2.30 $2.41 $2.51 $2.62 $2.72 $2.83 3-Month VWAP 0.09 0.3% $1.97 $1.97 $2.06 $2.16 $2.26 $2.36 $2.46 $2.55 $2.65 6-Month VWAP 0.13 0.3% $2.01 $2.01 $2.11 $2.21 $2.31 $2.41 $2.51 $2.61 $2.71 Since Initial Proposal (11/19/20) VWAP 0.37 1.0% $2.00 $2.00 $2.10 $2.20 $2.30 $2.40 $2.50 $2.60 $2.70 12-Month VWAP 0.35 0.9% $1.96 $1.96 $2.06 $2.16 $2.25 $2.35 $2.45 $2.55 $2.64 52-week High Closing Price NA NA $2.67 $2.67 $2.80 $2.94 $3.07 $3.20 $3.34 $3.47 $3.60 52-week Low Closing Price NA NA $0.51 $0.51 $0.54 $0.57 $0.59 $0.62 $0.64 $0.67 $0.69 Illustrative Premium to Closing Share Price / VWAP Closing Share Price / VWAP [2] Average Daily Trading Volume (mm) [1] ADTV % of Public Float [1]
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Illustrative Premium Observations (cont.) Implied Premium (Discount) to Closing Share Price / VWAP Based on Illustrative Per Share Consideration Note: The sensitivities shown are intended to be for illustrative purposes only, and are not intended to be indicative of or pro vide any conclusions regarding valuation. 6 Note: Reference to "Day" is based on trading days and reference to "Month" is based on calendar months. 1. Per Capital IQ. 2. Based on trading information as of 10/19/21. ADTV refers to Average Daily Trading Volume. NA refers to Not Available. VWAP refers to Volume - Weighted Average Price. Source: Capital IQ, Bloomberg. $2.15 $2.20 $2.25 $2.30 $2.35 $2.40 $2.45 $2.50 1-Day Closing 0.06 0.2% $2.04 5.4% 7.8% 10.3% 12.7% 15.2% 17.6% 20.1% 22.5% 5-Day VWAP 0.20 0.5% $2.24 (4.2%) (2.0%) 0.3% 2.5% 4.7% 6.9% 9.2% 11.4% 10-Day VWAP 0.14 0.4% $2.21 (2.6%) (0.3%) 2.0% 4.2% 6.5% 8.8% 11.0% 13.3% 20-Day VWAP 0.12 0.3% $2.13 0.8% 3.1% 5.5% 7.8% 10.2% 12.5% 14.9% 17.2% 30-Day VWAP 0.10 0.3% $2.09 2.7% 5.0% 7.4% 9.8% 12.2% 14.6% 17.0% 19.4% 3-Month VWAP 0.09 0.3% $1.97 9.4% 12.0% 14.5% 17.0% 19.6% 22.1% 24.7% 27.2% 6-Month VWAP 0.13 0.3% $2.01 7.1% 9.6% 12.1% 14.6% 17.1% 19.5% 22.0% 24.5% Since Initial Proposal (11/19/20) VWAP 0.37 1.0% $2.00 7.3% 9.8% 12.3% 14.8% 17.3% 19.8% 22.3% 24.8% 12-Month VWAP 0.35 0.9% $1.96 9.7% 12.3% 14.8% 17.4% 20.0% 22.5% 25.1% 27.6% 52-week High Closing Price NA NA $2.67 (19.5%) (17.6%) (15.7%) (13.9%) (12.0%) (10.1%) (8.2%) (6.4%) 52-week Low Closing Price NA NA $0.51 318.3% 328.0% 337.7% 347.5% 357.2% 366.9% 376.7% 386.4% Average Daily Trading Volume (mm) [1] Closing Share Price / VWAP [2] Illustrative Per Share Consideration ADTV % of Public Float [1]
Appendix
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW $1.22 $1.27 $1.26 $1.24 $1.41 $2.15 $1.69 $2.57 $2.30 $2.97 Current Stock Price [1]: $2.00 Steel Partners Proposal Price [2]: $0.65 - $0.72 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 Selected Companies Analysis FY 2021E Adjusted EBITDA ML: 4.0x - 6.0x IWCO: 5.0x - 7.0x Selected Companies Analysis FY 2022E Adjusted EBITDA ML: 4.0x - 6.0x IWCO: 5.0x - 7.0x Selected Companies Analysis FY 2023E Adjusted EBITDA ML: 4.0x - 6.0x IWCO: 5.0x - 7.0x Selected Transactions Analysis FY 2021E Adjusted EBITDA ML: 4.0x - 6.0x IWCO: 5.0x - 7.0x Discounted Cash Flow Analysis ML Perpetual Growth Rate: 0.0% - 2.0% ML Discount Rate: 13.0% - 15.0% IWCO Perpetual Growth Rate: 0.0% - 2.0% IWCO Discount Rate: 11.0% - 13.0% Implied Equity Value Per Share Reference Range Preliminary Financial Analyses Summary – Steel Connect [Excerpt from Preliminary Discussion Materials Dated 9/9/2021] Implied Equity Value Per Share Reference Ranges Note: No particular weight was attributed to any analysis. 1. Based on closing stock price as of 9/2/21. 2. Steel Partners Proposal based on consideration in the form of cash and Steel Partners 6.0% Series A Preferred Units, impli ed by Steel Partners to be valued in a range of $0.65 to $0.72 per share. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation, and Amortization, adjusted for certain non - recurring it ems. E refers to Estimated. FY refers to Fiscal Year. Source: Steel Connect, IWCO, and ModusLink managements; Capital IQ; Bloomberg; public filings. Preliminary Illustrative Only NOL value reference ranges across Selected Companies and DCF approaches reflect implied per share values ranging between $0.57 and $0.81 for conservatism, and remain subject to continued review and diligence, which will likely have a downward impact on per share value reference ranges shown below – particularly in scenarios where IWCO does not have positive value 8
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW This presentation, and any supplemental information (written or oral) or other documents provided in connection therewith (collectively, the “materials”), are provided solely for the information of the Special Committee (the “Committee”) of the Board of Directors (the “Board”) of Steel Connect, Inc . (the “Company”) by Houlihan Lokey in connection with the Committee’s consideration of a potential transaction (the “Transaction”) involving the Company . This presentation is incomplete without reference to, and should be considered in conjunction with, any supplemental information provided by and discussions with Houlihan Lokey in connection therewith . Any defined terms used herein shall have the meanings set forth herein, even if such defined terms have been given different meanings elsewhere in the materials . The materials are for discussion purposes only . Houlihan Lokey expressly disclaims any and all liability, whether direct or indirect, in contract or tort or otherwise, to any person in connection with the materials . The materials were prepared for specific persons familiar with the business and affairs of the Company for use in a specific context and were not prepared with a view to public disclosure or to conform with any disclosure standards under any state, federal or international securities laws or other laws, rules or regulations, and none of the Committee, the Company or Houlihan Lokey takes any responsibility for the use of the materials by persons other than the Committee . The materials are provided on a confidential basis solely for the information of the Committee and may not be disclosed, summarized, reproduced, disseminated or quoted or otherwise referred to, in whole or in part, without Houlihan Lokey’s express prior written consent . Notwithstanding any other provision herein, the Company (and each employee, representative or other agent of the Company) may disclose to any and all persons without limitation of any kind, the tax treatment and tax structure of any transaction and all materials of any kind (including opinions or other tax analyses, if any) that are provided to the Company relating to such tax treatment and structure . However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws . For this purpose, the tax treatment of a transaction is the purported or claimed U . S . income or franchise tax treatment of the transaction and the tax structure of a transaction is any fact that may be relevant to understanding the purported or claimed U . S . income or franchise tax treatment of the transaction . If the Company plans to disclose information pursuant to the first sentence of this paragraph, the Company shall inform those to whom it discloses any such information that they may not rely upon such information for any purpose without Houlihan Lokey’s prior written consent . Houlihan Lokey is not an expert on, and nothing contained in the materials should be construed as advice with regard to, legal, accounting, regulatory, insurance, tax or other specialist matters . Houlihan Lokey’s role in reviewing any information was limited solely to performing such a review as it deemed necessary to support its own advice and analysis and was not on behalf of the Committee . The materials necessarily are based on financial, economic, market and other conditions as in effect on, and the information available to Houlihan Lokey as of, the date of the materials . Although subsequent developments may affect the contents of the materials, Houlihan Lokey has not undertaken, and is under no obligation, to update, revise or reaffirm the materials, except as may be expressly contemplated by Houlihan Lokey’s engagement letter . The materials are not intended to provide the sole basis for evaluation of the Transaction and do not purport to contain all information that may be required . The materials do not address the underlying business decision of the Company or any other party to proceed with or effect the Transaction, or the relative merits of the Transaction as compared to any alternative business strategies or transactions that might be available for the Company or any other party . The materials do not constitute any opinion, nor do the materials constitute a recommendation to the Board, the Committee, the Company, any security holder of the Company or any other party as to how to vote or act with respect to any matter relating to the Transaction or otherwise or whether to buy or sell any assets or securities of any company . Houlihan Lokey’s only opinion is the opinion, if any, that is actually delivered to the Committee . In preparing the materials Houlihan Lokey has acted as an independent contractor and nothing in the materials is intended to create or shall be construed as creating a fiduciary or other relationship between Houlihan Lokey and any party . The materials may not reflect information known to other professionals in other business areas of Houlihan Lokey and its affiliates . The preparation of the materials was a complex process involving quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytic methods employed and the adaption and application of these methods to the unique facts and circumstances presented and, therefore, is not readily susceptible to partial analysis or summary description . Furthermore, Houlihan Lokey did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor . Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques . Accordingly, the analyses contained in the materials must be considered as a whole . Selecting portions of the analyses, analytic methods and factors without considering all analyses and factors could create a misleading or incomplete view . The materials reflect judgments and assumptions with regard to industry performance, general business, economic, regulatory, market and financial conditions and other matters, many of which are beyond the control of the participants in the Transaction . Any estimates of value contained in the materials are not necessarily indicative of actual value or predictive of future results or values, which may be significantly more or less favorable . Any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which any assets, businesses or securities may actually be sold . The materials do not constitute a valuation opinion or credit rating . The materials do not address the consideration to be paid or received in, the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the Transaction or otherwise . Furthermore, the materials do not address the fairness of any portion or aspect of the Transaction to any party . In preparing the materials, Houlihan Lokey has not conducted any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (contingent or otherwise) of the Company or any other party and has no obligation to evaluate the solvency of the Company or any other party under any law . Disclaimer 9
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW All budgets, projections, estimates, financial analyses, reports and other information with respect to operations (including estimates of potential cost savings and expenses) reflected in the materials have been prepared by management of the relevant party or are derived from such budgets, projections, estimates, financial analyses, reports and other information or from other sources, which involve numerous and significant subjective determinations made by management of the relevant party and/or which such management has reviewed and found reasonable . The budgets, projections and estimates (including, without limitation, estimates of potential cost savings and synergies) contained in the materials may or may not be achieved and differences between projected results and those actually achieved may be material . Houlihan Lokey has relied upon representations made by management of the Company and other participants in the Transaction that such budgets, projections and estimates have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management (or, with respect to information obtained from public sources, represent reasonable estimates), and Houlihan Lokey expresses no opinion with respect to such budgets, projections or estimates or the assumptions on which they are based . The scope of the financial analysis contained herein is based on discussions with the Company (including, without limitation, regarding the methodologies to be utilized), and Houlihan Lokey does not make any representation, express or implied, as to the sufficiency or adequacy of such financial analysis or the scope thereof for any particular purpose . 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In addition, Houlihan Lokey has relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company or any other participant in the Transaction since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to, discussed with or reviewed by Houlihan Lokey that would be material to its analyses, and that the final forms of any draft documents reviewed by Houlihan Lokey will not differ in any material respect from such draft documents . The materials are not an offer to sell or a solicitation of an indication of interest to purchase any security, option, commodity, future, loan or currency . 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Houlihan Lokey’s personnel may make statements or provide advice that is contrary to information contained in the materials . Disclaimer (cont.) 10
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 11 CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCI AL AND VALUATION ADVISORY HL .com
Exhibit (c) (6)
Exhibit (c) (7)
Project Carbon PRELIMINARY DISCUSSION MATERIALS FOR THE SPECIAL COMMITTEE APRIL 4, 2022 | CONFIDENTIAL | PRELIMINARY DRAFT
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Table of Contents 2 Page 1. Selected General Updates 3 2. Preliminary Financial Analyses Summary 12 3. Selected Changes to Preliminary Discussion Materials Dated 1/10/22 18 4. Preliminary Financial Analyses: ModusLink 22 5. Appendices 29 Supplemental Financial Analysis Schedule 30 Selected Public Market Observations 32 6. Disclaimer 36
Page 1. Selected General Updates 3 2. Preliminary Financial Analyses Summary 12 3. Selected Changes to Preliminary Discussion Materials Dated 1/10/22 18 4. Preliminary Financial Analyses: ModusLink 22 5. Appendices 29 6. Disclaimer 36
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Selected Updates Since Preliminary Discussion Materials Dated 1/10/2022 Revised Proposal On March 24 , 2022 , the Special Committee of Steel Connect, Inc . (“Steel Connect”, “SC” or the “Company”) received a revised, non - binding expression of interest from Steel Partners Holdings, L . P . (“Steel Partners” or “SP”) to acquire all of the outstanding shares of SC common stock not already owned by SP and affiliates for cash consideration of $ 1 . 30 per share (the “Revised Proposal”) Reflects an increase of ~ 80 % - 100 % relative to the value of the consideration of $ 0 . 65 to $ 0 . 72 per share implied by the initial expression of interest from SP on November 19 , 2020 (the “Initial Proposal”) 1 but a discount relative to more recent discussions 2 Reflects a premium of ~ 7 % over the 30 - day VWAP and ~ 12 % over the closing stock price as of March 28 , 2022 , immediately prior to public announcement of the Revised Proposal General Observations IWCO : On February 25 , 2022 , the Company announced the disposition of IWCO Direct Holdings, Inc . (“IWCO”) to Cerberus Cerberus had previously notified IWCO of the occurrence of an event of default under its credit facilities The disposition was made in exchange for a waiver of events of default and a mutual release – no consideration was received other than a $ 6 . 9 million subordinated note payable from IWCO (related to a prior intercompany payable) 3 ModusLink Process : Recent discussions related to a potential sale of ModusLink Corporation (“ ModusLink ” or “ML”) between SC, ML and a party (the “Potential Acquiror”) that had expressed interest in an acquisition of ML in 2019 and 2020 have been terminated 4 Discussions began in September 2021 , resulting in receipt of an IOI in late November 2021 based on a ~ $ 70 million valuation and a revised IOI (the “Revised IOI”) in early March 2022 based on a purchase price of ~ $ 80 million incorporating ML’s ~ $ 20 million cash balance and a reduction of ~ $ 18 million of future operating lease payments 5 SC and ML, in consultation with their advisors, expressed potential interest in a transaction at a ~ $ 90 million valuation and subject to a shortened diligence period – culminating in withdrawal of the Revised IOI by the Potential Acquiror and an end to discussions ModusLink Performance: 2Q FY 2022 VAR reflected ~3% outperformance relative to the FY 2022 2Q Forecast prepared by ML management in December 2021 6 but underperformed by ~5% relative to the FY 2022 Budget finalized by ML management in October 2021. ML management has updated the FY 2022 forecast given the passage of time and expected near - term headwinds in the business. However, ML management has indicated that, despite continued uncertainty, its longer - term view of the business remains unchanged - and has not revised projections beyond FY 2022. 7 See page 6 for further details on financial projections related to ML. Stock Price Performance: VWAP of ~$1.26 per share since disposition of IWCO Note: See following page for footnotes. 4
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Selected Updates Since Preliminary Discussion Materials Dated 1/10/2022 (cont.) Preliminary Financial Analyses Preliminary financial analyses have been updated to reflect, among other things : ( i ) disposition of IWCO, (ii) reduction in usability of NOLs 8 resulting from lower projected earnings due to IWCO disposition, (iii) recent financial performance and updated FY 2022 E forecast from ML management and (iv) updated market data related to selected companies and transactions SC management has not revised annual corporate expense projections of ~ $ 7 . 0 million to ~ $ 7 . 5 million 9 but is exploring potential opportunities to generate certain savings (illustrative sensitivities have been prepared to highlight the impact of potential cost savings) For the avoidance of doubt, the preliminary financial analyses evaluate Steel Connect on a standalone basis and do not explicitly reflect any potential synergies (from use of NOLs or otherwise) that Steel Partners may create if it were to acquire the equity interests in SC it does not currently own Next Steps Determine response to Revised Proposal (including consideration to structures providing for capture of future potential SP synergies) 1. The Initial Proposal contemplated consideration in the form of cash and SP Preferred Stock, and implied value of consideratio n i s as stated in the Initial Proposal. 2. Such discussions occurred prior to the disposition of IWCO. 3. The note does not have a stated interest rate. 4. The Preliminary Discussion Materials dated 1/10/2022 incorrectly stated discussions around a sale of ML were on hold – discussio ns with one party remained ongoing, despite headwinds in the business. Two other parties contacted did not express an interest in making a proposal, and no other parties have been contacted. 5. Per discussions with ML management, it was unclear what amount of ML’s cash balance was factored into the November 2021 IOI. 6. While ML benefited from an uptick in performance at certain key accounts, it remains unclear whether those favorable variance s a re due to timing or indicative of a trend. At the same time, performance at ML's top customer and with new customers registered below the FY 2022 2Q Forecast. 7. ModusLink projections prepared by ML management, in consultation with SC management, as authorized by the Special Committee for Houliha n Lokey’s use in these preliminary discussion materials, are referred to herein as the “ML Projections”. 8. Taxable income projections and NOL utilization assumptions prepared by SC and ML managements, as authorized by the Special Co mmi ttee for Houlihan Lokey’s use in these preliminary discussion materials, are referred to herein as the “NOL Projections”. 9. Steel Connect corporate expense projections prepared by SC management, as authorized by the Special Committee for Houlihan Lo key 's use in these preliminary discussion materials, are referred to herein as the "Corporate Expense Projections“ and, together with the ML Projections and the NOL Projections, the “Consolidated Projections” . Source: SC and ML managements, Consolidated Projections, public filings, Bloomberg, Capital IQ. 5
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Overview of Financial Projections Utilized in Preliminary Discussion Materials Overview of ModusLink Projections Overview of NOL, SC and Consolidated Projections In February 2021, ML management, in consultation with SC management, prepared a set of long - term projections for FY 2021 through FY 2025 which were subsequently reviewed by the SC Board. In July/August 2021, ML management, in consultation with SC management, prepared its annual budget for FY 2022, which was fin ali zed in October 2021 based on feedback from and subsequently approved by the SC Board (such final budget, the “ FY 2022 Budget ”). The projections for FY 2023 through FY 2025 remained unchanged based on ML management’s assessment of the longer - term business outlook. ML underperformed relative to its FY 2022 Budget during the first fiscal quarter, with ML management also observing headwinds th at they believed would translate into near - term pressure on financial results. Accordingly, in December 2021, ML management 1 updated its forecast for FY 2022 (the “ FY 2022 2Q Forecast ”) but left its projections unchanged for FY 2023 to FY 2025. In the second fiscal quarter, ML continued to underperform relative to its FY 2022 Budget (VAR was ~5% lower than budgeted) b ut outperformed the FY 2022 2Q Forecast (VAR was ~3% higher than estimated). 2 In February 2022, ML management 1 updated its forecast for FY 2022 (the “ Current FY 2022 Forecast ”) to reflect the latest outlook, which contemplates a slower than previously estimated ramp - up of new customer accounts but maintains effectively the same full - year EBITDA level relative to the FY 2022 2Q Forecast. Projections fo r FY 2023 to FY 2025 remained unchanged. The Current FY 2022 Forecast, together with the FY 2023 to FY 2025 projections, which have been authorized by the Special Com mit tee for Houlihan Lokey’s use in these preliminary discussion materials, are referred to herein as the “ ML Projections ”. In February 2021, SC management prepared corporate expense projections for FY 2021 through FY 2025, with the FY 2022 projecti ons subsequently updated in connection with the annual budgeting process that was finalized in October 2021 (and FY 2023 – FY 2025 p rojections remaining unchanged). Following the disposition of IWCO, such projections were left unchanged by SC management, which is in e arl y stages of reviewing opportunities to generate certain cost savings. Such projections, as authorized by the Special Committee for Houlih an Lokey’s use in these preliminary discussion materials, are referred to herein as the “ Corporate Expense Projections ”. Following the disposition of IWCO, SC and ML managements prepared revised taxable income projections and NOL utilization assu mpt ions, which were authorized by the Special Committee for Houlihan Lokey’s use in these preliminary discussion materials. Such proje cti ons are referred to herein as the “ NOL Projections ”. The Corporate Expense Projections, together with the ML Projections and the NOL Projections, are referred to herein as the “ Consolidated Projections ”. 1. The FY 2022 2Q Forecast and Current FY 2022 Forecast were prepared by ML management in consultation with SC management and re viewed by the SC Board. 2. While ML benefited from an uptick in performance at certain key accounts, it remains unclear whether those favorable varia nce s are due to timing or indicative of a trend. At the same time, performance at ML’s top customer and with new customers registered below the FY 2022 2Q Forecast . Source: ML and SC managements. 6
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink Financial Performance Update: 2Q FY 2022 Note: Financials shown above are based on Steel Connect’s fiscal year - end of July 31. Adj. EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring items. E refers to Estimated. FY refers to Fiscal Year. Q refers to Quarter. VAR refers to Value - Added Revenue. Source: ML management. (dollars in millions) 2Q FY 2022 Actuals vs. FY 2022 Budget and FY 2022 2Q Forecast Selected Variance Observations • VAR underperformed the FY 2022 Budget by 5% but outperformed the FY 2022 2Q Forecast by 3%. Base VAR has generally outperformed as continued headwinds at ML’s top customer have been offset by outperformance at other key customer accounts. New VAR has underperformed amid challenges with timely conversion of new business • EBITDA has underperformed the FY 2022 Budget. Positive variance relative to the FY 2022 2Q Forecast reflects topline results and continued implementation of temporary cost - cutting measures Financial results for 2Q FY 2022 underperformed the FY 2022 Budget but outperformed the FY 2022 2Q Forecast. 7 2Q FY 2022 Base VAR $26.7 $27.1 $0.4 $25.8 $27.1 $1.3 New VAR 3.5 1.6 (1.9) 2.0 1.6 (0.4) VAR $30.2 $28.6 ($1.6) $27.8 $28.6 $0.9 Gross Profit $12.4 $10.9 ($1.5) $9.9 $10.9 $1.0 % of VAR 40.9% 38.1% -2.8% 35.6% 38.1% 2.5% Adjusted EBITDA $4.6 $3.8 ($0.8) $2.2 $3.8 $1.6 % of VAR 15.0% 13.2% -1.9% 7.9% 13.2% 5.3% FY 2022 2Q Forecast Actuals Variance FY 2022 Budget Actuals Variance
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink Outlook Observations: Current FY 2022 Forecast Note: Financials shown above are based on Steel Connect’s fiscal year - end of July 31. Adj. EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring items. E refers to Estimated. FY refers to Fiscal Year. H refers to Half. Q refers to Quarter. VAR refers to Value - Added Revenue. Source: ML management. (dollars in millions) Current FY 2022 Forecast – 1H vs. 2H Observations The Current FY 2022 Forecast contemplates ( i ) continued headwinds at the top customer driving Base VAR and (ii) a significant pick - up in new customers driving New VAR in 2H FY 2022 FY 2022E Base VAR $23.6 $27.1 $49.2 $99.9 New VAR 1.7 1.6 13.6 16.9 VAR $25.3 $28.6 $62.9 $116.8 Gross Profit $9.4 $10.9 $22.4 $42.7 % of VAR 37.2% 38.1% 35.7% 36.6% Adjusted EBITDA $2.1 $3.8 $6.7 $12.5 % of VAR 8.2% 13.2% 10.6% 10.7% Q1 Actuals 2H EstimatedQ2 Actuals FY Estimated 8
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW FY 2022E Forecast Base VAR $105.5 $99.9 ($5.6) $98.5 $99.9 $1.4 New VAR 15.5 16.9 1.4 21.2 16.9 (4.3) VAR $121.0 $116.8 ($4.2) $119.7 $116.8 ($2.9) Gross Profit $47.1 $42.7 ($4.4) $42.6 $42.7 $0.1 % of VAR 38.9% 36.6% -2.3% 35.6% 36.6% 1.0% Adjusted EBITDA $15.3 $12.5 ($2.7) $12.4 $12.5 $0.2 % of VAR 12.6% 10.7% -1.9% 10.3% 10.7% 0.4% FY 2022 2Q Forecast Current FY 2022 Forecast Change FY 2022 Budget Change Current FY 2022 Forecast ModusLink Outlook Observations: Current FY 2022 Forecast ( cont.) Note: Financials shown above are based on Steel Connect’s fiscal year - end of July 31. 1. Relative to the FY 2022 2Q Forecast, the Current FY 2022 Forecast lowers 2H FY 2022 VAR, Gross Profit and EBITDA outlook by ~ $3. 8mm, $0.9mm and $1.4mm, respectively. In 2Q FY 2022, ML benefited from an uptick in performance at certain key accounts, but it remains unclear whether those favorable variances are due to timing or ind icative of a trend. At the same time, performance at ML's top customer and with new customers registered below the FY 2022 2Q Forecast. Adj. EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring items. E refers to Estimated. FY refers to Fiscal Year. Q refers to Quarter. VAR refers to Value - Added Revenue. Source: ML management, ML Projections. (dollars in millions) Selected Observations • The Current FY 2022 Forecast contemplates lower topline and profitability performance than initially budgeted • Relative to the 2Q Forecast the Current FY 2022 Forecast contemplates a downward revision to VAR offset by a more favorable customer mix to keep full - year Gross Profit and EBITDA in - line 1 Current FY 2022 Forecast vs. FY 2022 Budget & FY 2022 2Q Forecast 9
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 0.0% 4.0% 72.1% 16.2% 7.7% 0.0% 0.0 0.2 0.6 0.3 0.0 $0.85- $1.00 $1.00- $1.15 $1.15- $1.30 $1.30- $1.45 $1.45- $1.60 $1.60- $1.75 2.7% 14.8% 51.5% 16.4% 13.3% 1.4% 0.2 1.0 3.5 1.1 0.9 0.1 $0.85- $1.00 $1.00- $1.15 $1.15- $1.30 $1.30- $1.45 $1.45- $1.60 $1.60- $1.75 3 - Month High: $1.69 3 - Month Low: $0.92 0.0 5.0 10.0 15.0 20.0 25.0 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 11/19/20 12/19/20 1/19/21 2/19/21 3/19/21 4/19/21 5/19/21 6/19/21 7/19/21 8/19/21 9/19/21 10/19/21 11/19/21 12/19/21 1/19/22 2/19/22 3/19/22 Volume (millions) Closing Price ($) Volume Price Recent Stock Performance Stock Performance Since Initial Proposal (11/19/20) Last Three Months 1 Since IWCO Disposition (2/25/22) 1 (shares in millions) (shares in millions) Intraday High : $ 1 . 69 Intraday Low : $ 0 . 92 Intraday High : $ 1 . 53 Intraday Low : $ 1 . 11 1. Based on the closing price in one - minute intervals as provided by Bloomberg and the amount of volume transacted during that i ntraday window. 2. Per Bloomberg, reflects the number of shares traded over the period that are included for purposes of the VWAP calculation s. FY refers to Fiscal Year. Q refers to Quarter. VWAP refers to Volume - Weighted Average Price. Source: Bloomberg and Capital IQ as of 3/31/22. Indicates Earnings Announcement Q1 FY 21 Q2 FY 21 Q3 FY 21 Q4 FY 21 Q2 FY 22 Announcement of IWCO Disposition (2/25/22) VWAP Volume 2 : 6.8 million VWAP: $1.26 VWAP Volume 2 : 3.8 million VWAP: $1.26 Q1 FY 22 2.8 Announcement of Revised Proposal (3/28/22) 10
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Illustrative Premium Observations Implied Per Share Consideration Based on Illustrative Premium to Closing Share Price / VWAP Note: Reference to "Day" is based on trading days and reference to "Month" is based on calendar months. 1. Per Capital IQ. 2. Per Bloomberg, reflects the number of shares traded over the period that are included for purposes of the VWAP calculations. 3. Based on trading information per Bloomberg as of 3/31/22, unless otherwise indicated. ADTV refers to Average Daily Trading Volume. NA refers to Not Available. VWAP refers to Volume - Weighted Average Price. Source: Capital IQ, Bloomberg. Note: The sensitivities shown are intended to be for illustrative purposes only, and are not intended to be indicative of or pro vide any conclusions regarding valuation. Every $0.05 increase in the per share consideration relative to the Revised Proposal of $1.30 per share results in an incremental cash outlay of ~$2 million for Steel Partners. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% Unaffected Date Closing (3/28/22) 0.03 0.01 $1.16 $1.16 $1.22 $1.28 $1.33 $1.39 $1.45 $1.51 $1.57 1-Day Closing 0.08 0.08 $1.29 $1.29 $1.35 $1.42 $1.48 $1.55 $1.61 $1.68 $1.74 10-Day VWAP 0.20 1.96 $1.21 $1.21 $1.27 $1.33 $1.39 $1.45 $1.51 $1.57 $1.63 20-Day VWAP 0.14 2.66 $1.24 $1.24 $1.30 $1.36 $1.43 $1.49 $1.55 $1.61 $1.67 30-Day VWAP 0.15 4.33 $1.23 $1.23 $1.29 $1.35 $1.41 $1.47 $1.54 $1.60 $1.66 2-Month VWAP 0.12 5.10 $1.21 $1.21 $1.28 $1.34 $1.40 $1.46 $1.52 $1.58 $1.64 3-Month VWAP 0.11 6.77 $1.26 $1.26 $1.32 $1.38 $1.45 $1.51 $1.57 $1.64 $1.70 6-Month VWAP 0.10 12.09 $1.50 $1.50 $1.58 $1.66 $1.73 $1.81 $1.88 $1.96 $2.03 12-Month VWAP 0.12 28.59 $1.78 $1.78 $1.87 $1.96 $2.05 $2.14 $2.23 $2.31 $2.40 Since IWCO Disposition (2/25/22) VWAP 0.16 3.85 $1.26 $1.26 $1.32 $1.38 $1.45 $1.51 $1.57 $1.63 $1.70 Since Initial Proposal (11/19/20) VWAP 0.28 87.63 $1.93 $1.93 $2.03 $2.12 $2.22 $2.32 $2.41 $2.51 $2.61 52-week High Closing Price NA NA $2.40 $2.40 $2.52 $2.64 $2.76 $2.88 $3.00 $3.12 $3.24 52-week Low Closing Price NA NA $1.00 $1.00 $1.05 $1.10 $1.15 $1.20 $1.25 $1.30 $1.35 Illustrative Premium to Closing Share Price / VWAP Closing Share Price / VWAP [3] Average Daily Trading Volume (mm) [1] VWAP Volume (mm) [2] 11
Page 1. Selected General Updates 3 2. Preliminary Financial Analyses Summary 12 3. Selected Changes to Preliminary Discussion Materials Dated 1/10/22 18 4. Preliminary Financial Analyses: ModusLink 22 5. Appendices 29 6. Disclaimer 36
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW $0.00 $0.28 $0.60 $0.95 $0.72 $0.14 $0.56 $1.05 $1.42 $1.00 Current Stock Price [1]: $1.29 Revised Proposal: $1.30 $0.00 $0.50 $1.00 $1.50 $2.00 Selected Companies Analysis LTM Ended 1/31/22 Adjusted EBITDA ML: 4.0x - 6.0x Selected Companies Analysis FY 2022E Adjusted EBITDA ML: 4.0x - 6.0x Selected Companies Analysis FY 2023E Adjusted EBITDA ML: 4.0x - 6.0x Selected Transactions Analysis FY 2022E Adjusted EBITDA ML: 4.5x - 6.5x Discounted Cash Flow Analysis ML Perpetual Growth Rate: 0.0% - 2.0% ML Discount Rate: 13.0% - 15.0% Implied Equity Value Per Share Reference Range Preliminary Financial Analyses Summary Steel Connect Implied Equity Value Per Share Reference Ranges Note: No particular weight was attributed to any analysis. 1. Based on closing stock price as of 3/31/22. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation, and Amortization, adjusted for certain non - recurring it ems. E refers to Estimated. FY refers to Fiscal Year. Source: Refer to following page for additional details and sources. Illustrative Only Illustrative Only 13
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Preliminary Financial Analyses Summary (cont.) Steel Connect (dollars and shares outstanding in millions, except per share values) Note: Refer to page 23 for derivation of ML equity value reference ranges. 1. Per ML management, ModusLink currently has ~$10 million of ‘trapped cash’ potentially subject to repatriation, as well as over ~$5 million of cash require d for near - term net working capital needs; if this cash was excluded from the implied equity value reference ranges for ModusLink , it would result in a reduction of ~$0.25 to the implied equity value per share reference ranges shown above. 2. Per SC and ML managements, in early March 2022, ML received the Revised IOI based on a purchase price for ML of $80 million, inc orporating ML’s ~$20 million cash balance and a reduction of ~$18 million for future operating lease payments, following an initial indication of interest based on a valuation of $70 million submitted in No vember 2021; however, the Revised IOI was subsequently withdrawn. 3. For Selected Companies and DCF approaches, reflects present value of annual corporate expense projections of ~$7.0 million to ~$ 7.5 million per Corporate Expense Projections, tax - effected and using a discount rate range of 13.0% to 15.0%. SC management has indicated it is exploring opportunities to reduce certain corporate expenses fol lowing the disposition of IWCO but does not yet have sufficient information to revise or provide estimated changes to the Corporate Expense Projections. Refer to the next page for illustrative details related to th e p otential impact of corporate expense savings on implied equity value per share reference ranges. Illustrative Selected Transactions approach illustratively assumes liquidation of corporate entity and $5 million of wi nd - down/severance cash outlays, based on discussions with SC management. 4. Reflects net present value of tax savings from utilization of the Company's federal NOL balance of ~$2.2 billion (of which ~$ 1.8 billion expires in 2023), inclusive of $97 million of worthless stock deduction accrued in FY 2022 as a result of the IWCO disposition. Based on the NOL Projections, the Consolidated Projections, a federal corporate tax rate of 21%, and a discount rate range of 15.0% to 18.0%. Per SC management, state NOLs are not projected to have material value, if any, and foreign NOLs are not projected to be utilized; as such, we have as cri bed zero value to state and foreign NOLs in the above analyses. Subject to further review. 5. Per Company management. 6. Reflects note payable received in connection with disposition of IWCO. Per discussions with SC management, the likelihood of rec overing any value from the note payable is minimal and is therefore ascribed zero value on the low end and 50% of its face value of $6.9 million on the high end. 7. Reflects outstanding principal balance of Convertible Senior Notes as of 1/31/22. In a situation under which the conversion o pti on is deemed to be in - the - money (implied per share equity value greater than $2.37 per share), the outstanding balance would be reduced to $0 and the diluted shares outstanding figure would be increased by 6.3 mi lli on shares. 8. Reflects liquidation preference of outstanding Series C Convertible Preferred Stock as of 1/31/22. In a situation under which th e conversion option is deemed to be in - the - money (implied per share equity value greater than $1.96 per share), the liquidation preference would be reduced to $0 and the diluted shares outstanding figure would be i ncr eased by 17.9 million shares. 9. Equity value cannot equal less than zero; negative equity values are shown above for illustrative purposes to demonstrate ext ent to which equity is out - of - the - money. 10. Reflects 60.5 million common shares outstanding as of 3/1/22, plus the impact of 2.0 thousand stock options outstanding, to t he extent in - the - money (based on the treasury method), per SC management. 11. Illustrative Selected Transactions approach assumes buyer would pay SC proceeds for ModusLink and that SC would wind down the corporate entity. For illustrative purposes, assumes zero NOL value and assumes wind - down/severance cash outlays of $5 million, based on discussion with SC management. Also assumes any taxable gain on a sale of ML is offset by existing NOLs. Subject to continued review. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation, and Amortization, adjusted for certain non - recurring it ems. E refers to Estimated. FY refers to Fiscal Year. Source: SC and ML managements; Consolidated Projections; Capital IQ; Bloomberg; public filings. 14 [Illustrative Only] [Illustrative Only] Selected Companies Selected Companies Selected Companies Selected Transactions Discounted Cash Flow Analysis Analysis Analysis Analysis [11] Analysis LTM Ended 1/31/22 FY 2022E FY 2023E FY 2022E Perpetual Growth Rate Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA 0.0% -- 2.0% Implied Equity Value Reference Range - ModusLink [1] [2] $50.9 -- $67.4 $68.1 -- $93.2 $87.9 -- $122.9 $74.3 -- $99.4 $95.1 -- $119.9 Present Value of Steel Connect Corporate Expenses [3] (39.2) -- (50.9) (39.2) -- (50.9) (39.2) -- (50.9) (5.0) -- (5.0) (39.2) -- (50.9) Present Value of Net Operating Losses [4] 0.0 -- 0.4 0.0 -- 0.4 0.0 -- 0.4 0.0 -- 0.0 0.0 -- 0.4 Steel Connect Cash and Cash Equivalents as of 1/31/2022 [5] 37.8 -- 37.8 37.8 -- 37.8 37.8 -- 37.8 37.8 -- 37.8 37.8 -- 37.8 Note Payable as of 1/31/2022 [5] [6] 0.0 -- 3.5 0.0 -- 3.5 0.0 -- 3.5 0.0 -- 3.5 0.0 -- 3.5 Convertible Senior Notes as of 1/31/2022 [5] [7] (14.9) -- (14.9) (14.9) -- (14.9) (14.9) -- (14.9) (14.9) -- (14.9) (14.9) -- (14.9) Series C Convertible Preferred Stock as of 1/31/2022 [5] [8] (35.0) -- (35.0) (35.0) -- (35.0) (35.0) -- (35.0) (35.0) -- (35.0) (35.0) -- (35.0) Implied Total Equity Value Reference Range [9] (0.5) -- 8.2 16.7 -- 34.0 36.5 -- 63.7 57.2 -- 85.7 43.8 -- 60.7 Diluted Shares Outstanding [5] [10] 60.5 -- 60.5 60.5 -- 60.5 60.5 -- 60.5 60.5 -- 60.5 60.5 -- 60.5 Implied Equity Value Per Share Reference Range $0.00 -- $0.14 $0.28 -- $0.56 $0.60 -- $1.05 $0.95 -- $1.42 $0.72 -- $1.00
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Illustrative SC Corporate Expenses Sensitivity Analyses 1. Reduction in annual corporate expenses is assumed to start in FY 2023E. 2. Based on corporate expense level in FY 2023. 3. Reflects change to Present Value of Steel Connect Corporate Expenses as shown on the prior page; based on midpoint of implied pr esent value ranges. 4. Reflects change to the Present Value of Net Operating Losses as shown on the prior page; based on midpoint of implied present va lue ranges. 5. Calculated as the sum of Reduction to PV of SC Corporate Expenses and Increase to PV of NOLs. 6. Based on diluted shares outstanding as shown on the prior page. NOL refers to Net Operating Loss. PV refers to Present Value. Source: SC and ML managements, Consolidated Projections. (dollars in millions, except per share values) Every $1 million reduction in Steel Connect corporate expenses would result in a ~$6 - $7 million increase to the Company’s implied equity value, or ~$0.11 per share . Illustrative Steel Connect Corporate Expense Reduction Sensitivities The Corporate Expense Projections contemplate annual corporate SG&A expenses of ~$7.0 million to ~$7.5 million consisting of th e following: ( i ) ~$3.7 million of management & personnel expenses for time allocated specifically to corporate/accounting/audit matters; (ii ) ~ $1.1 million of board fees; (iii) ~$1.5 million of professional fees (e.g., legal, stock exchange) and (iv) ~$0.8 million of taxes and other exp enses. SC management has not revised its projections for such expenses following the disposition of IWCO, but has noted it is explor ing certain savings opportunities. SC management has indicated that it does not yet have sufficient information to provide estimates around potential cost savin gs, but expects that most expenses will continue to be incurred under all potential operating scenarios. The illustrative sensitivities below highlight the potential impact of reductions to annual corporate expenses (and correspon din g implications for NOL usage) on both the implied total equity value and equity value per share reference ranges for Steel Connect across both t he Selected Companies and Discounted Cash Flow approaches shown on the prior page. Reduction in Annual Corporate Expenses [1] $1.0 $2.0 $3.0 $4.0 $5.0 Implied % of Total Corporate Expenses [2] 14% 28% 42% 56% 70% Reduction to PV of SC Corporate Expenses [3] $5.9 $11.7 $17.6 $23.4 $29.3 Increase to PV of NOLs [4] $0.6 $1.5 $2.5 $3.7 $5.0 Increase to Implied Total Equity Value [5] $6.5 $13.2 $20.1 $27.1 $34.3 Increase to Implied Per Share Equity Value [6] $0.11 $0.22 $0.33 $0.45 $0.57 15
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Year Generated NOL Amount Maximum Tax Shelter [1] Expiration Date FY 2003 $1,786.0 $375.1 7/31/2023 FY 2004 $48.3 $10.2 7/31/2024 FY 2007 $19.4 $4.1 7/31/2027 FY 2008 $39.7 $8.3 7/31/2028 FY 2009 $4.8 $1.0 7/31/2029 FY 2011 $14.6 $3.1 7/31/2031 FY 2012 $5.3 $1.1 7/31/2032 FY 2013 $44.0 $9.2 7/31/2033 FY 2015 $12.7 $2.7 7/31/2035 FY 2016 $40.9 $8.6 7/31/2036 FY 2017 $13.1 $2.7 7/31/2037 FY 2018 $30.7 $6.4 7/31/2038 FY 2022 $97.0 $20.4 NA [3] Total $2,156.4 $452.8 Illustrative Federal NOL Observations Note: Does not reflect $73.4 million of foreign NOLs or $111.1 million of state NOLs, which SC management has indicated it do es not project utilizing over the projection period. 1. Calculated by multiplying corresponding gross NOL amount by the current federal tax rate of 21.0%. 2. Reflects $97 million worthless stock deduction from disposition of IWCO, per SC management. Additional NOLs may be generated in FY 2022 depending on final year - end results. 3. NOLs generated after FY 2018 are not expected to expire, per SC management. FY refers to Fiscal Year; NA refers to Not Available; NOL refers to Net Operating Loss. Source: SC management, Consolidated Projections. (dollars in millions) Every $3 million of NOL shelter results in an increase of ~$0.05 to the implied equity value per share reference range Schedule of Steel Connect Federal NOLs [2] 16
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Illustrative Federal NOL Observations (cont.) Note: Does not reflect $73.4 million of foreign NOLs or $111.1 million of state NOLs, which SC management has indicated it do es not project utilizing over the projection period. 1. 10 - year time period based on 8/1/2011 to 7/31/2021 and 5 - year time period based on 8/1/2016 to 7/31/2021. 2. Potentially through acquisitions. 3. Refers to the 8/1/2021 to 7/31/2031 period. 4. Refers to the 8/1/2021 to 7/31/2026 period. FY refers to Fiscal Year; NA refers to Not Available; NOL refers to Net Operating Loss. Source: SC management, Consolidated Projections. Per Steel Connect and ModusLink management, the Consolidated Projections do not contemplate material usage of the Company’s ~ $2. 2 billion of NOL’s (~$1.8 billion of which expire on 7/31/2023). Per Steel Connect management, Steel Connect has utilized ~$65 million of NOLs over the last 10 years 1 and ~$54 million of NOLs over the last 5 years 1 For illustrative purposes only , the below provides an analysis of the hypothetical present value reference range of tax savings in the event that Steel Connect is able to generate NOL utilization 2 approximating historical performance, based on a federal corporate tax rate of 21% and an assumed discount rate range of 15% to 18%: (i) the implied present value reference range of tax savings would be ~$7.4 million to ~$8.0 million assuming that ~$65 million o f N OLs were utilized ratably over each of the next 10 years 3 (ii) the implied present value reference range of tax savings would be ~$8.5 million to ~$8.9 million assuming that ~$54 million o f N OLs were utilized ratably over each of the next 5 years 4 Every $3 million of NOL shelter results in an increase of ~$0.05 to the implied equity value per share reference range 8/1/2011 - 7/31/2016 ~$11 million NOL usage 8/1/2016 - 7/31/2021 ~$54 million NOL usage 8/1/2021 - 7/31/2025 ~$0 million NOL usage 17
Page 1. Selected General Updates 3 2. Preliminary Financial Analyses Summary 12 3. Selected Changes to Preliminary Discussion Materials Dated 1/10/22 18 4. Preliminary Financial Analyses: ModusLink 22 5. Appendices 29 6. Disclaimer 36
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Summary of Selected Changes Relative to Prior Preliminary Financial Analyses Dated January 10, 2022 The following changes have been made relative to the prior preliminary discussion materials dated 1/10/22 Disposition of IWCO: The total equity value and equity value per share reference ranges for Steel Connect were adjusted to reflect ( i ) removal of the implied equity value reference ranges of IWCO and (ii) inclusion of the note payable from IWCO. The implied equity value for IWCO ranged from $0.0 to $146.9 million in the prior preliminary discussion materials dated 1/10/22 Present Value of Net Operating Losses (“NOLs”): SC and ML managements provided updated NOL Projections, reflecting ( i ) removal of IWCO from the Consolidated Projections, and (ii) revised assumptions related to breakdown of foreign vs. domestic earnings in the ML Projections 1 The present value of NOLs decreased by $40.9 million to $47.1 million relative to the prior preliminary discussion materials dated 1/10/22, primarily due to the impact of the IWCO disposition and ensuing reduction in projected taxable earnings The Preliminary Financial Analyses were updated to reflect the following updated financial information provided by SC and ML man agements: Updated based on use of Current FY 2022E forecast in the ML Projections (with projections for the outer years remaining uncha nge d) Balance sheet financials based on 1/31/22 figures (compared to 10/31/21 figures incorporated in the prior preliminary discuss ion materials dated 1/10/22) Capitalization information as of 3/1/22 (compared to information as of 12/28/21 incorporated in the prior preliminary discuss ion materials dated 1/10/22) Preliminary Selected Companies Analysis: The preliminary selected companies analysis for ML was updated to reflect stock prices and other publicly available financial in formation as of 3/31/22 (previously, as of 1/4/22 market close). See page 21 for further detail on observed multiples. No changes have been made to the selected multiples ranges relative to the prior preliminary discussion materials dated 1/10/ 22 Preliminary Illustrative Selected Transactions Analysis: The ML preliminary illustrative selected transactions were updated to include the recently announced acquisitions of ( i ) Clipper Logistics plc by GXO Logistics, Inc., (ii) Kane Logistics, Inc. by ID Logistics Group SA, (iii) LF Logistics Holdings Limited by A.P. Møller - Mærsk A/S and (iv) Whiplash Inc. by Ryder System, Inc. The preliminary illustrative selected transactions analysis for ModusLink was updated to reflect ( i ) capitalization of FY 2022E Adjusted EBITDA instead of the corresponding metric for FY 2021 (given the passage of time) and (ii) an increase to the selected multiple range by 0.5x rela tiv e to the prior preliminary discussion materials dated 1/10/22 Preliminary Discounted Cash Flow (“DCF”) Analysis: Stock prices, betas, risk - free rates and other public information utilized in discount rate calculations have been updated to ma rket close on 3/31/22 (previously, as of 1/4/22 market close) No changes have been made to the selected discount rate range and the selected perpetual growth rates utilized in the prelimi nar y DCF analysis relative to the prior preliminary discussion materials dated 1/10/22 1. The Consolidated Projections now incorporate $97 million of incremental NOLs generated from the IWCO disposition, but such NO Ls are not projected to be able to be utilized due to limited US earnings . 19
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Selected Changes to Preliminary Financial Analyses ModusLink 1. Refer to page 23 for further detail on derivation of ML current equity value reference ranges. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization. E refers to Estimated. FY refers to Fiscal Year. Source: SC and ML managements; January 10, 2022 Discussion Materials based on ML Projections prepared as of December 2021; cu rre nt preliminary discussion materials based on ML Projections prepared as of February 2022; Capital IQ; Bloomberg; public filings. (dollars in millions, except per share amounts) January 10, 2022 Discussion Materials April 4, 2022 Discussion Materials Selected Companies Analysis Metric Capitalized FY 2021 Adjusted EBITDA FY 2022E Adjusted EBITDA FY 2023E Adjusted EBITDA LTM Ended 1/31/22 Adjusted EBITDA [Illustrative Only] FY 2022E Adjusted EBITDA FY 2023E Adjusted EBITDA Base Amount $17.3 $12.4 $17.5 $8.3 $12.5 $17.5 Selected Multiple Range 4.0x - 6.0x 4.0x - 6.0x 4.0x - 6.0x 4.0x - 6.0x 4.0x - 6.0x 4.0x - 6.0x Implied Equity Value [1] $85.4 - $119.9 $65.9 - $90.6 $86.3 - $121.4 $50.9 - $67.4 $68.1 - $93.2 $87.9 - $122.9 Selected Transactions Analysis [Illustrative Only] Metric Capitalized FY 2021 Adjusted EBITDA FY 2022E Adjusted EBITDA Base Amount $17.3 $12.5 Selected Multiple Range 4.0x - 6.0x 4.5x - 6.5x Implied Equity Value [1] $85.4 - $119.9 $74.3 - $99.4 Discounted Cash Flow Analysis Terminal Metric Unlevered Free Cash Flow Unlevered Free Cash Flow Perpetual Growth Rate Range 0.0% - 2.0% 0.0% - 2.0% Discount Rate Range 13.0% - 15.0% 13.0% - 15.0% Implied Equity Value [1] $92.4 - $116.8 $95.1 - $119.9 20
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Selected Market Changes ModusLink Selected Companies Note: No company used in this analysis for comparative purposes is identical to ModusLink. 1. Enterprise Value equals equity market value + debt outstanding + preferred stock + minority interests – cash and cash equivalent s. 2. Multiples based on forward looking financial information have been calendarized to ModusLink’s fiscal year end of July 31 for all of the selected companies, except for Jabil Inc., whose fiscal year end is August 31. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. E refers to Estimated. FY refers to Fiscal Year. LTM refers to the most recently completed 12 - month period for which financial information has been made public. Source: Bloomberg, Capital IQ and public filings. Pricing As of 1/4/22 Pricing As of 3/31/22 Change Versus Prior Materials Enterprise Value [1] to Adjusted EBITDA Enterprise Value [1] to Adjusted EBITDA Enterprise Value [1] to Adjusted EBITDA Selected Company LTM FY 2022E[2] FY 2023E[2] LTM FY 2022E[2] FY 2023E[2] LTM FY 2022E[2] FY 2023E[2] Celestica Inc. 8.3x 4.7x 4.2x 6.7x 5.0x 4.6x -1.6x 0.3x 0.4x CJ Logistics Corporation 5.4x 5.3x 4.8x 5.4x 4.9x 4.6x 0.0x -0.4x -0.2x Clipper Logistics plc 26.5x 13.1x 11.7x 27.0x 13.4x 12.1x 0.4x 0.3x 0.4x Deutsche Post AG 7.7x 6.3x 6.2x 5.6x 4.6x 4.5x -2.1x -1.7x -1.7x FedEx Corporation 8.6x 7.6x 7.0x 7.3x 6.8x 6.3x -1.3x -0.7x -0.7x Flex Ltd. 6.3x 6.7x 6.2x 6.5x 6.5x 6.0x 0.2x -0.2x -0.1x Jabil Inc. 6.3x 5.2x 5.3x 5.3x 4.5x 4.3x -1.0x -0.6x -1.0x Kerry Logistics Network Limited 8.0x 7.0x 7.8x 5.2x 6.0x 5.5x -2.9x -1.0x -2.3x Kuehne + Nagel International AG 15.1x 10.8x 11.9x 9.3x 9.3x 10.9x -5.8x -1.5x -1.0x United Parcel Service, Inc. 14.0x 12.7x 12.1x 12.3x 11.3x 11.1x -1.7x -1.4x -1.0x Wincanton plc 7.1x 4.5x 4.1x 7.5x 4.7x 4.4x 0.4x 0.2x 0.2x GXO Logistics, Inc. 19.4x 16.2x 14.1x 15.0x 11.3x 10.2x -4.4x -4.9x -4.0x Low 5.4x 4.5x 4.1x 5.2x 4.5x 4.3x -0.2x 0.1x 0.2x High 26.5x 16.2x 14.1x 27.0x 13.4x 12.1x 0.4x -2.8x -2.0x Median 8.2x 6.9x 6.6x 7.0x 6.2x 5.8x -1.2x -0.6x -0.8x Mean 11.1x 8.3x 8.0x 9.4x 7.4x 7.0x -1.6x -1.0x -0.9x 21
Page 1. Selected General Updates 3 2. Preliminary Financial Analyses Summary 12 3. Selected Changes to Preliminary Discussion Materials Dated 1/10/22 18 4. Preliminary Financial Analyses: ModusLink 22 5. Appendices 29 6. Disclaimer 36
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink : Preliminary Financial Analyses Summary (dollars in millions) 1. Per SC and ML managements. 2. ML management has indicated that ( i ) ~$10 million of ML’s cash and cash equivalents balance is currently “trapped cash” and would potentially be subject to repa tri ation tax and (ii) over ~$5 million of ML’s cash and cash equivalents balance may be required for near - term net working capital requirements; these amounts have not been ex cluded from the cash balances shown above. Per SC and ML managements, ML may dividend to SC up to $10 million allowable under its existing credit facility. 3. Per SC and ML management, in early March 2022, ML received the Revised IOI based on a purchase price for ML of $80 million, i nco rporating ML’s ~$20 million cash balance and a reduction of ~$18 million for future operating lease payments, following an initial indication of interest based on a valuation of $70 million sub mitted in November 2021; however, the Revised IOI was subsequently withdrawn. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation, and Amortization, adjusted for certain non - recurring it ems. E refers to Estimated. FY refers to Fiscal Year. Source: SC and ML managements; ML Projections; Capital IQ; Bloomberg; public filings. [Illustrative Only] [Illustrative Only] Selected Companies Selected Companies Selected Companies Selected Transactions Discounted Cash Flow Analysis Analysis Analysis Analysis [3] Analysis LTM Ended 1/31/22 FY 2022E FY 2023E FY 2022E Perpetual Growth Rate Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA 0.0% -- 2.0% Discount Rate Corresponding Base Amount $8.3 $12.5 $17.5 $12.5 13.0% -- 15.0% Selected Multiples Range 4.0x -- 6.0x 4.0x -- 6.0x 4.0x -- 6.0x 4.5x -- 6.5x Implied Enterprise Value Reference Range $33.0 -- $49.5 $50.2 -- $75.3 $70.0 -- $105.0 $56.5 -- $81.6 $77.3 -- $102.1 Cash and Cash Equivalents as of 1/31/2022 [1] [2] 17.9 -- 17.9 17.9 -- 17.9 17.9 -- 17.9 17.9 -- 17.9 17.9 -- 17.9 Implied Total Enterprise Value Reference Range $50.9 -- $67.4 $68.1 -- $93.2 $87.9 -- $122.9 $74.3 -- $99.4 $95.1 -- $119.9 Total Debt as of 1/31/2022 [1] 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 Implied Equity Value Reference Range [3] $50.9 -- $67.4 $68.1 -- $93.2 $87.9 -- $122.9 $74.3 -- $99.4 $95.1 -- $119.9 23
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink Historical and Projected Financial Information 1. Total Adjustments: Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms; CAGR refers to Compound Annual Growth Rate; E refers to Estimated; FY refers to Fiscal Year; VAR refers to Value - Added Revenue. Source: SC and ML managements, historical figures per SC and ML managements and public filings; projected figures per ML Proj ect ions. After stabilizing in FY 2019 – FY 2020 , VAR declined by ~ 21 % in FY 2021 as a result of (i) customer exits and (ii) organic volume declines at certain top customers . VAR is expected to stabilize again, growing at ~ 3 . 3 % over the projection period . Gross profit nearly doubled between FY 2019 and FY 2020 amid a management program to cut direct labor costs and exit unprofitable accounts, with gross margins generally projected to remain elevated (at levels near FY 2021 performance) . ModusLink management is forecasting that Adjusted EBITDA will generally grow at a CAGR of ~ 5 . 5 % after FY 2021 , driven primarily by (i) new business VAR outpacing erosion in the baseline business and (ii) continued cost discipline supporting elevated profit margins . ModusLink is facing a decline in demand from certain customers, including due to the semiconductor chip shortage, which has impacted LTM and FY 2022 performance . ModusLink management believes that some recovery in demand from such customers, coupled with new business wins, will lead to a rebound in the outer years of the projection period . C B A Selected Commentary C A B D D Fiscal Year Ended July 31, LTM Ended Fiscal Year Ending July 31, CAGR CAGR 2019 2020 2021 1/31/2022 2022E 2023E 2024E 2025E 2019 to 2021 2021 to 2025E Revenue $332.9 $338.5 $226.3 $195.8 $203.2 $240.3 $249.5 $259.3 -17.6% 3.5% Growth % 1.7% -33.1% -10.2% 18.2% 3.8% 3.9% Cost of Materials (191.4) (190.3) (109.0) (90.2) (86.5) (116.8) (121.3) (126.0) VAR $141.5 $148.2 $117.2 $105.6 $116.8 $123.5 $128.3 $133.3 -9.0% 3.3% Growth % 4.7% -20.9% -0.4% 5.8% 3.8% 3.9% % of Revenue 42.5% 43.8% 51.8% 53.9% 57.5% 51.4% 51.4% 51.4% Cost of Goods Sold (106.0) (84.4) (69.5) (67.0) (74.0) (74.1) (77.0) (80.0) Gross Profit $35.5 $63.8 $47.7 $38.6 $42.7 $49.4 $51.3 $53.3 15.9% 2.8% % of Revenue 10.7% 18.8% 21.1% 19.7% 21.0% 20.6% 20.6% 20.6% % of VAR 25.1% 43.0% 40.7% 36.6% 36.6% 40.0% 40.0% 40.0% Operating Expenses (39.3) (35.8) (39.1) (36.2) (31.9) (35.4) (35.4) (35.4) Depreciation and Amortization 5.6 4.1 3.4 2.8 2.2 3.5 3.5 3.5 Total Adjustments [1] 7.2 2.4 5.3 3.0 (0.5) 0.0 0.0 0.0 Adjusted EBITDA $9.1 $34.4 $17.3 $8.3 $12.5 $17.5 $19.4 $21.4 38.1% 5.5% Growth % 279.7% -49.8% -27.3% 39.5% 10.8% 10.3% % of Revenue 2.7% 10.2% 7.6% 4.2% 6.2% 7.3% 7.8% 8.3% % of VAR 6.4% 23.2% 14.7% 7.8% 10.7% 14.2% 15.1% 16.1% Depreciation and Amortization (5.6) (4.1) (3.4) (2.8) (2.2) (3.5) (3.5) (3.5) Adjusted EBIT $3.4 $30.3 $13.9 $5.5 $10.3 $14.0 $15.9 $17.9 101.7% 6.6% Growth % 788.2% -54.2% -25.4% 35.3% 13.5% 12.6% % of Revenue 1.0% 8.9% 6.1% 2.8% 5.1% 5.8% 6.4% 6.9% Severance 1.0 3.1 (0.1) (0.4) (0.0) 0.0 0.0 0.0 Provision for Asset Impairment 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Bad Debt Expense 0.9 0.2 (0.0) 0.1 (0.0) 0.0 0.0 0.0 Cyber-Attack Impact 1.5 (0.7) 0.0 (0.0) 0.0 0.0 0.0 0.0 Penalties & Fines 0.8 (0.2) (0.0) (0.1) (0.0) 0.0 0.0 0.0 SAP Project Costs 0.0 0.0 2.6 2.6 0.0 0.0 0.0 0.0 France / Hungary non-cash charge 0.0 0.0 1.6 0.0 0.0 0.0 0.0 0.0 eBusiness PCL charge 0.0 0.0 1.2 0.8 (0.5) 0.0 0.0 0.0 Total Adjustments $7.2 $2.4 $5.3 $3.0 ($0.5) $0.0 $0.0 $0.0 24
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink: Preliminary Selected Companies Analysis (dollars in millions, except per share values) Note: No company used in this analysis for comparative purposes is identical to ModusLink. 1. Enterprise Value equals equity market value + debt outstanding + preferred stock + minority interests – cash and cash equivalent s. 2. Based on closing prices as of 3/31/22. 3. Based on diluted shares. 4. Multiples based on forward looking financial information have been calendarized to ModusLink’s fiscal year end of July 31 for al l of the selected companies, except for Jabil Inc., whose fiscal year end is August 31. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. E refers to Estimated. FY refers to Fiscal Year. LTM refers to the most recently completed 12 - month period for which financial information has been made public. Source: Bloomberg, Capital IQ and public filings. Share Equity Market Enterprise Enterprise Value [1] to Adjusted EBITDA Selected Company Price [2] Value [2,3] Value [2,3] LTM FY 2022E [4] FY 2023E [4] Celestica Inc. $11.91 $1,633.7 $2,034.1 6.7x 5.0x 4.6x CJ Logistics Corporation $104.55 $2,085.2 $3,694.9 5.4x 4.9x 4.6x Clipper Logistics plc $15.66 $1,644.7 $1,643.0 27.0x 13.4x 12.1x Deutsche Post AG $48.38 59,945.4 62,094.9 5.6x 4.6x 4.5x FedEx Corporation $231.39 60,956.9 75,400.9 7.3x 6.8x 6.3x Flex Ltd. $18.55 9,051.1 10,923.1 6.5x 6.5x 6.0x Jabil Inc. $61.73 9,222.1 11,011.1 5.3x 4.5x 4.3x Kerry Logistics Network Limited $2.29 4,155.5 4,185.4 5.2x 6.0x 5.5x Kuehne + Nagel International AG $285.70 34,420.5 32,305.2 9.3x 9.3x 10.9x United Parcel Service, Inc. $214.46 187,276.7 198,614.7 12.3x 11.3x 11.1x Wincanton plc $5.07 645.9 667.5 7.5x 4.7x 4.4x GXO Logistics, Inc. $71.34 8,191.5 8,858.5 15.0x 11.3x 10.2x Low 5.2x 4.5x 4.3x High 27.0x 13.4x 12.1x Median 7.0x 6.2x 5.8x Mean 9.4x 7.4x 7.0x 25
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink: Preliminary Selected Benchmarking Data Note: No company shown for comparative purposes is identical to ModusLink; certain selected companies do not report VAR. 1. Based on public trading prices of common stock. 2. Represents FY 2021 Capital Expenditures to FY 2021 Revenue. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non - recurring items. Depr. refers to Depreciation. E refers to Estimated. FY refers to Fiscal Year. LTM refers to the most recently completed 12 - month period for which financial information has been made public, other than for M odusLink, in which case LTM refers to Latest 12 Months. Source: Bloomberg, Capital IQ, SC and ML managements, public filings, and ML Projections. Size Size [1] Revenue Growth Revenue Growth (LTM Revenue, millions) (Enterprise Value as of 3/31/22, millions) (FY 2019 to FY 2021 Revenue) (FY 2021 to FY 2023E Revenue) Name Value Name Value Name Value Name Value United Parcel Service, Inc. $97,287.0 United Parcel Service, Inc. $198,614.7 Clipper Logistics plc 24.4% GXO Logistics, Inc. 11.4% FedEx Corporation $91,683.0 FedEx Corporation $75,400.9 Kerry Logistics Network Limited 20.3% Clipper Logistics plc 9.7% Deutsche Post AG $90,809.8 Deutsche Post AG $62,094.9 Kuehne + Nagel International AG 15.6% Celestica Inc. 8.0% Kuehne + Nagel International AG $35,618.8 Kuehne + Nagel International AG $32,305.2 United Parcel Service, Inc. 12.1% Kerry Logistics Network Limited 8.0% Jabil Inc. $30,744.0 Jabil Inc. $11,011.1 FedEx Corporation 10.9% United Parcel Service, Inc. 5.5% Flex Ltd. $25,456.0 Flex Ltd. $10,923.1 GXO Logistics, Inc. 8.9% Jabil Inc. 5.2% Kerry Logistics Network Limited $10,081.1 GXO Logistics, Inc. $8,858.5 Jabil Inc. 7.6% Wincanton plc 5.0% CJ Logistics Corporation $9,338.4 Kerry Logistics Network Limited $4,185.4 Deutsche Post AG 7.5% FedEx Corporation 5.0% GXO Logistics, Inc. $7,940.0 CJ Logistics Corporation $3,694.9 Wincanton plc 4.7% CJ Logistics Corporation 4.3% Celestica Inc. $5,634.7 Celestica Inc. $2,034.1 CJ Logistics Corporation 2.2% Deutsche Post AG 4.2% Wincanton plc $1,752.9 Clipper Logistics plc $1,643.0 Flex Ltd. -1.8% Flex Ltd. 3.9% Clipper Logistics plc $1,047.9 Wincanton plc $667.5 Celestica Inc. -4.3% ModusLink 3.1% ModusLink $195.8 ModusLink -17.6% Kuehne + Nagel International AG 2.6% Adjusted EBITDA Growth Adjusted EBITDA Growth Profitability Profitability (FY 2019 to FY 2021 Adjusted EBITDA) (FY 2021 to FY 2023E Adjusted EBITDA) (LTM Adjusted EBITDA to LTM Revenue) (FY 2022E to FY 2023E Average Adjusted EBITDA Margin) Name Value Name Value Name Value Name Value Kuehne + Nagel International AG 38.4% Clipper Logistics plc 22.3% United Parcel Service, Inc. 16.5% United Parcel Service, Inc. 16.6% ModusLink 38.1% GXO Logistics, Inc. 19.1% Deutsche Post AG 12.2% Deutsche Post AG 14.6% Clipper Logistics plc 37.2% Celestica Inc. 16.4% FedEx Corporation 11.3% FedEx Corporation 11.9% Kerry Logistics Network Limited 24.3% Wincanton plc 14.4% Kuehne + Nagel International AG 9.8% Clipper Logistics plc 10.8% Deutsche Post AG 18.9% Deutsche Post AG 13.1% Kerry Logistics Network Limited 8.0% Kuehne + Nagel International AG 9.6% Flex Ltd. 18.0% Jabil Inc. 9.3% GXO Logistics, Inc. 7.4% GXO Logistics, Inc. 8.6% United Parcel Service, Inc. 17.1% United Parcel Service, Inc. 8.7% CJ Logistics Corporation 7.3% Wincanton plc 7.8% FedEx Corporation 12.2% Kerry Logistics Network Limited 7.1% Jabil Inc. 6.8% CJ Logistics Corporation 7.6% Jabil Inc. 12.0% FedEx Corporation 6.5% Flex Ltd. 6.6% Jabil Inc. 7.4% Celestica Inc. 11.8% CJ Logistics Corporation 6.0% Clipper Logistics plc 5.8% Kerry Logistics Network Limited 7.1% GXO Logistics, Inc. 7.4% Flex Ltd. 5.1% Celestica Inc. 5.4% ModusLink 6.8% Wincanton plc 6.3% Kuehne + Nagel International AG 4.3% Wincanton plc 5.1% Flex Ltd. 6.5% CJ Logistics Corporation 3.3% ModusLink 0.7% ModusLink 4.2% Celestica Inc. 6.2% Profitability Profitability Relative Depreciation Internal Investment (LTM Adjusted EBIT to LTM Revenue) (FY 2022E to FY 2023E Average Adjusted EBIT Margin) (LTM Depr. to LTM Adjusted EBITDA) (LTM Capital Expenditures to LTM Revenue) Name Value Name Value Name Value Name Value United Parcel Service, Inc. 13.5% United Parcel Service, Inc. 13.6% Kuehne + Nagel International AG 7.7% ModusLink [2] 0.5% Deutsche Post AG 9.9% Deutsche Post AG 9.6% Wincanton plc 7.8% Kuehne + Nagel International AG 0.6% Kuehne + Nagel International AG 9.0% FedEx Corporation 7.6% Kerry Logistics Network Limited 11.7% Wincanton plc 0.7% Kerry Logistics Network Limited 7.1% Kuehne + Nagel International AG 7.1% Clipper Logistics plc 15.8% Celestica Inc. 0.9% FedEx Corporation 7.0% Kerry Logistics Network Limited 6.2% United Parcel Service, Inc. 18.3% Clipper Logistics plc 1.6% Clipper Logistics plc 4.9% Clipper Logistics plc 5.8% Deutsche Post AG 18.6% Flex Ltd. 1.7% Wincanton plc 4.7% ModusLink 5.5% Flex Ltd. 33.1% CJ Logistics Corporation 1.9% Flex Ltd. 4.4% GXO Logistics, Inc. 5.1% ModusLink 33.4% Kerry Logistics Network Limited 2.6% Jabil Inc. 3.8% Wincanton plc 4.8% FedEx Corporation 37.9% GXO Logistics, Inc. 3.1% GXO Logistics, Inc. 3.2% Flex Ltd. 4.6% Celestica Inc. 41.5% Jabil Inc. 3.9% CJ Logistics Corporation 3.2% Jabil Inc. 4.5% Jabil Inc. 43.6% United Parcel Service, Inc. 4.3% Celestica Inc. 3.2% Celestica Inc. 4.4% CJ Logistics Corporation 56.6% Deutsche Post AG 4.6% ModusLink 2.8% CJ Logistics Corporation 3.9% GXO Logistics, Inc. 56.9% FedEx Corporation 6.6% 26
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink: Preliminary Selected Transactions Analysis Note: No company used in this analysis for comparative purposes is identical to ModusLink, and no transaction used in this an aly sis for comparative purposes is identical to the Revised Proposal. 1. Transaction Value refers to the implied enterprise value of target company, based on the announced transaction equity pric e a nd other public information available at the time of the announcement. 2. Based on reported metric for the most recent LTM period prior to the announcement of the transaction. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. NA refers to Not Available. NMF refers to Not Meaningful Figure. Sources: Capital IQ, public filings, press releases. (dollars in millions) Transaction Value / LTM Adjusted Transaction LTM Adjusted EBITDA Announced Effective Target Acquiror Value [1] EBITDA [2] Margin % [2] CLGPending Clipper Logistics plc GXO Logistics, Inc. $925.6 # 20.0x 5.8% KLIPending Kane Logistics, Inc. ID Logistics Group SA $240.0 # NANA NA LFLPending LF Logistics Holdings Limited A.P. Møller - Mærsk A/S $3,860.0 # 16.4x 18.1% WHIP1/1/2022 Whiplash Inc. Ryder System, Inc. $480.0 # NANA NA ECHO11/23/2021 Echo Global Logistics, Inc The Jordan Company, L.P. $1,340.4 # 13.2x 3.2% BCEH10/1/2021 B2C Europe Holding B.V. A.P. Møller - Mærsk A/S $86.0 # 11.0x NA VSCM8/6/2021 Visible Supply Chain Management, LLC A.P. Møller - Mærsk A/S $838.0 # 13.0x NA Trans11/15/2021 Transplace Inc Uber Freight LLC $2,250.0 # NMFNMF NA IPLPending Imperial Logistics Limited DP World Limited $1,237.4 # 6.1x 5.6% Syncreon Syncreon.Us Inc. DP World Limited $1,200.0 NA NA 6/30/2021 Quad Logistics Services, LLC Mullen Group Ltd. $40.0 8.0x NA AGI Agility Global Integrated Logistics DSV Panalpina A/S $4,200.0 16.3x 6.4% Lasership Lasership, Inc. American Securities LLC $1,700.0 13.0x NA AIT AIT Worldwide Logistics, Inc. The Jordan Company, L.P. $1,200.0 NA NA Ingram Ingram Micro Inc. Platinum Equity, LLC $7,200.0 6.9x 2.3% Performance Performance Team LLC A.P. Møller - Mærsk A/S $545.0 6.1x 17.1% PDS Prime Distribution Services, Inc. C.H. Robinson Worldwide, Inc. $225.0 NA NA CaseStack CaseStack, Inc. Hub Group, Inc. $255.0 11.6x 9.1% APL APL Logistics Ltd Kintetsu World Express, Inc. $1,200.0 15.0x 4.8% FSCDS FedEx Supply Chain Distribution System, Inc. FedEx Corporation $1,380.0 NA NA New Breed New Breed Holding Company XPO Logistics, Inc. $615.0 8.0x 12.9% Low $40.0 6.1x 2.3% High $7,200.0 20.0x 18.1% Median $1,200.0 12.3x 6.1% Mean $1,477.0 11.8x 8.5% 1/30/2015 9/2/2014 3/2/2020 7/7/2021 1/4/2020 12/3/2018 5/29/2015 12/9/2020 02/19/2020 1/28/2020 11/5/2018 2/17/2015 12/15/2014 7/29/2014 5/12/2021 3/17/2021 3/17/2021 7/1/2021 Pending 4/27/2021 8/16/2021 6/30/2021 7/8/2021 8/6/2021 8/6/2021 9/10/2021 5/12/2021 2/20/2022 2/14/2022 12/22/2021 12/13/2021 7/22/2021 27
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink: Preliminary Discounted Cash Flow Analysis (dollars in millions) Note: Present values as of 4/4/22; mid - year convention applied. 1. Represents a 6.0 - month stub period. 2. Tax at 25.0%, per SC and ML managements. 3. Implied from corresponding discount rate and perpetual growth rate applied to 2025 unlevered free cash flow. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non - recurring items. E refers to Estimated. PV refers to Present Value. Source: SC and ML managements, ML Projections. Projected Fiscal Year Ending July 31, Terminal Value 2022E [1] 2023E 2024E 2025E Assumptions Revenue $104.6 $240.3 $249.5 $259.3 $259.3 Growth % -10.2% 18.2% 3.8% 3.9% Cost of Materials (41.7) (116.8) (121.3) (126.0) (126.0) Cost of Sales (Goods Sold) (40.4) (74.1) (77.0) (80.0) (80.0) Operating Expenses (16.8) (35.4) (35.4) (35.4) (36.9) Depreciation and Amortization 1.0 3.5 3.5 3.5 5.0 Total Adjustments 0.0 0.0 0.0 0.0 0.0 Adjusted EBITDA $6.7 $17.5 $19.4 $21.4 $21.4 % of Revenue 6.4% 7.3% 7.8% 8.3% 8.3% Depreciation and Amortization (1.0) (3.5) (3.5) (3.5) (5.0) Adjusted EBIT $5.7 $14.0 $15.9 $17.9 $16.4 Taxes [2] (1.4) (3.5) (4.0) (4.5) (4.1) Discount Rate 0.00% 1.00% 2.00% Unlevered Earnings $4.2 $10.5 $11.9 $13.4 $12.3 13.00% 4.4x 4.8x 5.3x Depreciation and Amortization 1.0 3.5 3.5 3.5 5.0 13.50% 4.3x 4.7x 5.1x Capital Expenditures (1.9) (5.0) (5.0) (5.0) (5.0) 14.00% 4.1x 4.5x 4.9x Change in Net Working Capital (1.1) (0.1) (0.7) (0.7) (0.7) 14.50% 4.0x 4.3x 4.7x Unlevered Free Cash Flows $2.2 $8.9 $9.8 $11.2 $11.6 15.00% 3.9x 4.2x 4.6x DCF Assumptions Present Value PV of Terminal Value Based of Cash Flows on Perpetual Growth Rate for Implied Enterprise Value (2022 - 2025) 2025 Unlevered Free Cash Flow Discount Rate 0.00% 1.00% 2.00% 0.00% 1.00% 2.00% Discount Rate 0.00% 1.00% 2.00% 13.00% $26.0 $63.1 $69.1 $76.1 $89.1 $95.0 $102.1 13.00% 70.9% 72.7% 74.6% 13.50% $25.8 $60.0 $65.5 $71.9 $85.8 $91.3 $97.7 13.50% 70.0% 71.8% 73.6% 14.00% $25.6 + $57.2 $62.2 $68.0 = $82.8 $87.8 $93.6 14.00% 69.1% 70.9% 72.7% 14.50% $25.4 $54.5 $59.2 $64.5 $79.9 $84.5 $89.9 14.50% 68.2% 70.0% 71.8% 15.00% $25.2 $52.1 $56.3 $61.3 $77.3 $81.6 $86.5 15.00% 67.4% 69.1% 70.9% Implied 2025E Adjusted EBITDA Terminal Multiple [3] PV of Terminal Value as a % of Enterprise Value 28
Page 1. Selected General Updates 3 2. Preliminary Financial Analyses Summary 12 3. Selected Changes to Preliminary Discussion Materials Dated 1/10/22 18 4. Preliminary Financial Analyses: ModusLink 22 5. Appendices 29 Supplemental Financial Analysis Schedule 30 Selected Public Market Observations 32 6. Disclaimer 36
Page 1. Selected General Updates 3 2. Preliminary Financial Analyses Summary 12 3. Selected Changes to Preliminary Discussion Materials Dated 1/10/22 18 4. Preliminary Financial Analyses: ModusLink 22 5. Appendices 29 Supplemental Financial Analysis Schedule 30 Selected Public Market Observations 32 6. Disclaimer 36
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Present Value of Corporate Costs Note: Present values as of 4/4/22; mid - year convention applied. Discount Rate range informed by 13% to 15% discount rate range u sed for ModusLink. 1. Represents a 6.0 - month stub period. 2. Includes salary and wages for employees at Steel Connect (primarily related to corporate accounting and audit work) as wel l a s Steel Partners shared services fee, which reflects salaries of Steel Partners employees based on allocation of time for functions performed for the benefit of Steel Connect. 3. Includes legal fees, investor relations fees, and stock market fees, among other professional fees. E refers to Estimated. Source: SC management, Corporate Expense Projections. (dollars in millions) Projected Fiscal Year Ending July 31, 2022E [1] 2023E 2024E 2025E Management Salary and Wages [2] ($1.1) ($3.7) ($3.7) ($3.8) Board Fees ($0.6) ($1.1) ($1.2) ($1.2) Other Professional Fees [3] ($0.8) ($1.5) ($1.6) ($1.6) Tax and Other Expenses ($0.5) ($0.8) ($0.8) ($0.8) Total Corporate Operating Expenses ($2.9) ($7.2) ($7.3) ($7.4) Taxes @ 26.0% $0.8 $1.9 $1.9 $1.9 Tax-Effected Corporate Expenses ($2.2) ($5.3) ($5.4) ($5.4) Present Value PV of Terminal Value Based of Cash Flows on Perpetual Growth Rate for (2022 - 2025) 2025 Tax-Effected Corporate Expenses Discount Rate 0.00% 1.00% 2.00% 0.00% 1.00% 2.00% 13.00% ($15.1) ($29.7) ($32.5) ($35.8) ($44.8) ($47.6) ($50.9) 13.50% ($15.0) ($28.2) ($30.8) ($33.8) ($43.2) ($45.8) ($48.8) 14.00% ($14.9) + ($26.9) ($29.2) ($32.0) = ($41.8) ($44.1) ($46.9) 14.50% ($14.8) ($25.6) ($27.8) ($30.3) ($40.4) ($42.6) ($45.1) 15.00% ($14.7) ($24.5) ($26.5) ($28.8) ($39.2) ($41.2) ($43.5) Implied Present Value of Tax-Effected Corporate Expenses 31
Page 1. Selected General Updates 3 2. Preliminary Financial Analyses Summary 12 3. Selected Changes to Preliminary Discussion Materials Dated 1/10/22 18 4. Preliminary Financial Analyses: ModusLink 22 5. Appendices 29 Supplemental Financial Analysis Schedule 30 Selected Public Market Observations 32 6. Disclaimer 36
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Relative Total Shareholder Return Information (Last 3 Years) 1. ModusLink Selected Companies Index includes Celestica, Inc., CJ Logistics Corporation, Clipper Logistics plc, Deutsche Post AG, FedEx C or poration, Flex Ltd., Jabil Inc., Kerry Logistics Network Limited, Kuehne + Nagel International AG, United Parcel Service, Inc., Wincanton plc, and GXO Logistics, Inc. Source: Capital IQ as of 3/31/22. Total Shareholder Return -100% -75% -50% -25% 0% 25% 50% 75% 100% 125% 150% 175% 200% 225% 250% Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Steel Connect, Inc. S&P 500 Index (Total Return) Steel Partners Holdings L.P. ModusLink Selected Companies Index [1] Three-Year Two-Year One-Year Return Return Return Steel Connect, Inc. -35.5% 72.0% -34.8% S&P 500 Index (Total Return) 68.9% 83.7% 17.5% Steel Partners Holdings L.P. 199.6% 666.3% 202.3% ModusLink Selected Companies Index [1] 52.1% 88.8% -5.6% 33
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Recent Trading Activity by Shareholder Largest Steel Connect Shareholders (Excluding Steel Partners and Other Insiders) Note: Net Shares Added / (Deducted) is shown through Q4 CY 2021. CY refers to Calendar Year; Q refers to Quarter; VWAP refers to Volume - Weighted Average Price. Source: Capital IQ, public filings. (dollars and shares in actuals) % of Latest Total Net Shares Added / (Deducted) by Quarter Stockholder Shareholdings Float Q1 CY 2020 Q2 CY 2020 Q3 CY 2020 Q4 CY 2020 Q1 CY 2021 Q2 CY 2021 Q3 CY 2021 Q4 CY 2021 GAMCO Investors, Inc. 2,553,000 6.7% - 552,000 1,610,920 (7,422) (511,799) (278,050) 19,351 - % of Holdings Traded 0.0% 47.3% 93.7% (0.2%) (15.4%) (9.9%) 0.8% 0.0% Renaissance Technologies LLC 2,297,196 6.1% (2,342) 283,239 121,943 293,441 (91,033) (102,444) (114,404) (125,800) % of Holdings Traded (0.1%) 13.9% 5.3% 12.0% (3.3%) (3.9%) (4.5%) (5.2%) The Vanguard Group, Inc. 1,909,467 5.0% (89,800) (102,386) (146,947) (21,801) 1,228,031 31,156 61,779 54,115 % of Holdings Traded (10.0%) (12.7%) (20.9%) (3.9%) 229.8% 1.8% 3.4% 2.9% BlackRock, Inc. 1,038,519 2.7% (15,971) (81,325) 15 1,275 2,180 (72,226) (599) 6,497 % of Holdings Traded (1.3%) (6.9%) 0.0% 0.1% 0.2% (6.5%) (0.1%) 0.6% Solas Capital Management, LLC 867,736 2.3% 61,695 - - - - 68,368 - - % of Holdings Traded 8.4% 0.0% 0.0% 0.0% 0.0% 8.6% 0.0% 0.0% Bridgeway Capital Management, Inc. 274,845 0.7% - (250,600) (43,000) (35,200) (46,155) 68,700 - - % of Holdings Traded 0.0% (43.1%) (13.0%) (12.2%) (18.3%) 33.3% 0.0% 0.0% Geode Capital Management, LLC 232,624 0.6% 1,045 - - - 29,080 13,335 - - % of Holdings Traded 0.6% 0.0% 0.0% 0.0% 15.3% 6.1% 0.0% 0.0% VWAP During Quarter $1.21 $0.58 $0.56 $0.74 $2.14 $2.01 $1.90 $1.79 High Closing Stock Price During Quarter $1.57 $0.87 $0.67 $0.98 $2.67 $2.21 $2.07 $2.40 Low Closing Stock Price During Quarter $0.75 $0.46 $0.51 $0.51 $0.77 $1.79 $1.64 $1.31 34
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Ownership Summary Steel Connect 1. Includes (i) 17.9 million shares of common stock underlying the Company’s Series C Convertible Preferred Stock and (ii) 6.3 m ill ion shares of common stock underlying the Company’s Convertible Senior Notes, both of which are owned by Steel Partners, presented on an as - converted basis. Based on total common s hares outstanding as of March 1, 2022, per the Company’s Form 10 - Q for the quarter ended January 31, 2022. 2. Source: Capital IQ. Denotes ownership of Steel Partners’ 13D group. Source: Capital IQ, Bloomberg, public filings. (shares outstanding in millions) As-Converted Shares [1] Holder Shares % Outstanding Steel Partners Holdings L.P. [1] 42.3 50.0% Warren Lichtenstein (Executive Chairman & Interim CEO) 1.6 1.8% Jack Howard (Director) 0.8 1.0% Glen Kassan (Vice Chairman) 0.4 0.5% Other Current / Former Directors and Executive Officers [2] 1.6 1.9% Steel Partners and Other Insiders 46.7 55.2% GAMCO Investors, Inc. (NYSE:GBL) 2.6 3.0% 6.7% Renaissance Technologies LLC 2.3 2.7% 6.1% The Vanguard Group, Inc. 1.9 2.3% 5.0% BlackRock, Inc. (NYSE:BLK) 1.0 1.2% 2.7% Solas Capital Management, LLC 0.9 1.0% 2.3% Bridgeway Capital Management, LLC 0.3 0.3% 0.7% Geode Capital Management, LLC 0.2 0.3% 0.6% Other Public Shareholders 28.7 34.0% 75.8% Total Public Float [2] 37.9 44.8% 100.0% Total As-Converted Shares [1] 84.6 100.0% % of Unafilliated 35
Page 1. Selected General Updates 3 2. Preliminary Financial Analyses Summary 12 3. Selected Changes to Preliminary Discussion Materials Dated 1/10/22 18 4. Preliminary Financial Analyses: ModusLink 22 5. Appendices 29 6. Disclaimer 36
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW This presentation, and any supplemental information (written or oral) or other documents provided in connection therewith (collectively, the “materials”), are provided solely for the information of the Special Committee (the “Committee”) of the Board of Directors (the “Board”) of Steel Connect, Inc . (the “Company”) by Houlihan Lokey in connection with the Committee’s consideration of a potential transaction (the “Transaction”) involving the Company . This presentation is incomplete without reference to, and should be considered in conjunction with, any supplemental information provided by and discussions with Houlihan Lokey in connection therewith . Any defined terms used herein shall have the meanings set forth herein, even if such defined terms have been given different meanings elsewhere in the materials . The materials are for discussion purposes only . Houlihan Lokey expressly disclaims any and all liability, whether direct or indirect, in contract or tort or otherwise, to any person in connection with the materials . The materials were prepared for specific persons familiar with the business and affairs of the Company for use in a specific context and were not prepared with a view to public disclosure or to conform with any disclosure standards under any state, federal or international securities laws or other laws, rules or regulations, and none of the Committee, the Company or Houlihan Lokey takes any responsibility for the use of the materials by persons other than the Committee . The materials are provided on a confidential basis solely for the information of the Committee and may not be disclosed, summarized, reproduced, disseminated or quoted or otherwise referred to, in whole or in part, without Houlihan Lokey’s express prior written consent . Notwithstanding any other provision herein, the Company (and each employee, representative or other agent of the Company) may disclose to any and all persons without limitation of any kind, the tax treatment and tax structure of any transaction and all materials of any kind (including opinions or other tax analyses, if any) that are provided to the Company relating to such tax treatment and structure . However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws . For this purpose, the tax treatment of a transaction is the purported or claimed U . S . income or franchise tax treatment of the transaction and the tax structure of a transaction is any fact that may be relevant to understanding the purported or claimed U . S . income or franchise tax treatment of the transaction . If the Company plans to disclose information pursuant to the first sentence of this paragraph, the Company shall inform those to whom it discloses any such information that they may not rely upon such information for any purpose without Houlihan Lokey’s prior written consent . Houlihan Lokey is not an expert on, and nothing contained in the materials should be construed as advice with regard to, legal, accounting, regulatory, insurance, tax or other specialist matters . Houlihan Lokey’s role in reviewing any information was limited solely to performing such a review as it deemed necessary to support its own advice and analysis and was not on behalf of the Committee . The materials necessarily are based on financial, economic, market and other conditions as in effect on, and the information available to Houlihan Lokey as of, the date of the materials . Although subsequent developments may affect the contents of the materials, Houlihan Lokey has not undertaken, and is under no obligation, to update, revise or reaffirm the materials, except as may be expressly contemplated by Houlihan Lokey’s engagement letter . The materials are not intended to provide the sole basis for evaluation of the Transaction and do not purport to contain all information that may be required . The materials do not address the underlying business decision of the Company or any other party to proceed with or effect the Transaction, or the relative merits of the Transaction as compared to any alternative business strategies or transactions that might be available for the Company or any other party . The materials do not constitute any opinion, nor do the materials constitute a recommendation to the Board, the Committee, the Company, any security holder of the Company or any other party as to how to vote or act with respect to any matter relating to the Transaction or otherwise or whether to buy or sell any assets or securities of any company . Houlihan Lokey’s only opinion is the opinion, if any, that is actually delivered to the Committee . In preparing the materials Houlihan Lokey has acted as an independent contractor and nothing in the materials is intended to create or shall be construed as creating a fiduciary or other relationship between Houlihan Lokey and any party . The materials may not reflect information known to other professionals in other business areas of Houlihan Lokey and its affiliates . 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Selecting portions of the analyses, analytic methods and factors without considering all analyses and factors could create a misleading or incomplete view . The materials reflect judgments and assumptions with regard to industry performance, general business, economic, regulatory, market and financial conditions and other matters, many of which are beyond the control of the participants in the Transaction . Any estimates of value contained in the materials are not necessarily indicative of actual value or predictive of future results or values, which may be significantly more or less favorable . Any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which any assets, businesses or securities may actually be sold . The materials do not constitute a valuation opinion or credit rating . The materials do not address the consideration to be paid or received in, the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the Transaction or otherwise . Furthermore, the materials do not address the fairness of any portion or aspect of the Transaction to any party . In preparing the materials, Houlihan Lokey has not conducted any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (contingent or otherwise) of the Company or any other party and has no obligation to evaluate the solvency of the Company or any other party under any law . Disclaimer 37
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW All budgets, projections, estimates, financial analyses, reports and other information with respect to operations (including estimates of potential cost savings and expenses) reflected in the materials have been prepared by management of the relevant party or are derived from such budgets, projections, estimates, financial analyses, reports and other information or from other sources, which involve numerous and significant subjective determinations made by management of the relevant party and/or which such management has reviewed and found reasonable . The budgets, projections and estimates (including, without limitation, estimates of potential cost savings and synergies) contained in the materials may or may not be achieved and differences between projected results and those actually achieved may be material . Houlihan Lokey has relied upon representations made by management of the Company and other participants in the Transaction that such budgets, projections and estimates have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management (or, with respect to information obtained from public sources, represent reasonable estimates), and Houlihan Lokey expresses no opinion with respect to such budgets, projections or estimates or the assumptions on which they are based . The scope of the financial analysis contained herein is based on discussions with the Company (including, without limitation, regarding the methodologies to be utilized), and Houlihan Lokey does not make any representation, express or implied, as to the sufficiency or adequacy of such financial analysis or the scope thereof for any particular purpose . Houlihan Lokey has assumed and relied upon the accuracy and completeness of the financial and other information provided to, discussed with or reviewed by it without (and without assuming responsibility for) independent verification of such information, makes no representation or warranty (express or implied) in respect of the accuracy or completeness of such information and has further relied upon the assurances of the Company and other participants in the Transaction that they are not aware of any facts or circumstances that would make such information inaccurate or misleading . In addition, Houlihan Lokey has relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company or any other participant in the Transaction since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to, discussed with or reviewed by Houlihan Lokey that would be material to its analyses, and that the final forms of any draft documents reviewed by Houlihan Lokey will not differ in any material respect from such draft documents . The materials are not an offer to sell or a solicitation of an indication of interest to purchase any security, option, commodity, future, loan or currency . The materials do not constitute a commitment by Houlihan Lokey or any of its affiliates to underwrite, subscribe for or place any securities, to extend or arrange credit, or to provide any other services . In the ordinary course of business, certain of Houlihan Lokey’s affiliates and employees, as well as investment funds in which they may have financial interests or with which they may co - invest, may acquire, hold or sell, long or short positions, or trade or otherwise effect transactions, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, the Company, any Transaction counterparty, any other Transaction participant, any other financially interested party with respect to any transaction, other entities or parties that are mentioned in the materials, or any of the foregoing entities’ or parties’ respective affiliates, subsidiaries, investment funds, portfolio companies and representatives (collectively, the “Interested Parties”), or any currency or commodity that may be involved in the Transaction . Houlihan Lokey provides mergers and acquisitions, restructuring and other advisory and consulting services to clients, which may have in the past included, or may currently or in the future include, one or more Interested Parties, for which services Houlihan Lokey has received, and may receive, compensation . Although Houlihan Lokey in the course of such activities and relationships or otherwise may have acquired, or may in the future acquire, information about one or more Interested Parties or the Transaction, or that otherwise may be of interest to the Board, the Committee, or the Company, Houlihan Lokey shall have no obligation to, and may not be contractually permitted to, disclose such information, or the fact that Houlihan Lokey is in possession of such information, to the Board, the Committee, or the Company or to use such information on behalf of the Board, the Committee, or the Company . Houlihan Lokey’s personnel may make statements or provide advice that is contrary to information contained in the materials . Disclaimer (cont.) 38
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 39 CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCI AL AND VALUATION ADVISORY HL .com
Exhibit (c) (8)
Project Carbon EXCERPT OF DISCUSSION MATERIALS FOR THE SPECIAL COMMITTEE JUNE 12, 2022 | CONFIDENTIAL | PRELIMINARY DRAFT
Page 1. Selected Updates Since Prior Discussion Materials 2 Financial Projections Overview & Selected Updates 3 2. Financial Analyses: ModusLink 9 3. Selected Public Market Observations 14 4. Appendices 18 5. Disclaimer 22
Page 1. Selected Updates Since Prior Discussion Materials 2 Financial Projections Overview & Selected Updates 3 2. Financial Analyses: ModusLink 9 3. Selected Public Market Observations 14 4. Appendices 18 5. Disclaimer 22
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Overview of Financial Projections Overview of ModusLink Projections Overview of NOL, SC and Consolidated Projections In February 2021, ML management, in consultation with SC management, prepared a set of long - term projections for FY 2021 through FY 2025 which were subsequently reviewed by the SC Board. In July/August 2021, ML management, in consultation with SC management, prepared its annual budget for FY 2022, which was fin ali zed in October 2021 based on feedback from and subsequently approved by the SC Board (such final budget, the “ FY 2022 Budget ”). The projections for FY 2023 through FY 2025 remained unchanged based on ML management’s assessment of the longer - term business outlook. ML underperformed relative to its FY 2022 Budget during the first fiscal quarter, with ML management also observing headwinds th at they believed would translate into near - term pressure on financial results. Accordingly, in December 2021, ML management 1 updated its forecast for FY 2022 (the “ FY 2022 2Q Forecast ”), but left its projections unchanged for FY 2023 to FY 2025. In the second fiscal quarter, ML continued to underperform relative to its FY 2022 Budget (VAR was ~5% lower than budgeted) b ut outperformed the FY 2022 2Q Forecast (VAR was ~3% higher than estimated). In February 2022, ML management 1 updated its forecast for FY 2022 (the “ FY 2022 3Q Forecast ”), which contemplated a slower than previously estimated ramp - up of new customer accounts but maintained effectively the same full - year E BITDA level relative to the FY 2022 2Q Forecast. Projections for FY 2023 to FY 2025 remained unchanged. In the third fiscal quarter, ML continued to face headwinds with new customer conversion, driving VAR underperformance relati ve to the FY 2022 Budget (~11%) and the FY 2022 3Q Forecast (~2%). In May 2022, ML management 1 updated its forecast for FY 2022 (the “ Current FY 2022 Forecast ”) to reflect the latest outlook, which contemplates a slower ramp - up of new customer accounts and lower EBITDA relative to the FY 2022 3Q Forecast. Projections f or FY 2023 to FY 2025 remained unchanged. The Current FY 2022 Forecast, together with the FY 2023 to FY 2025 projections, which have been authorized by the Special Com mit tee for Houlihan Lokey’s use in these discussion materials, are referred to herein as the “ ML Projections ”. In February 2021, SC management prepared corporate expense projections for FY 2021 through FY 2025, with the FY 2022 projecti ons subsequently updated in connection with the annual budgeting process that was finalized in October 2021 (and FY 2023 – FY 2025 projections remaining unc hanged). Such figures are referred to herein as the “ Pre - IWCO Disposition Corporate Expense Projections ”. In May 2022, SC management revised such projections to reflect corporate savings opportunities identified at Steel Connect following the disposition of IWCO. Such projections, as authorized by the S pec ial Committee for Houlihan Lokey’s use in these discussion materials, are referred to herein as the “ Corporate Expense Projections ”. Following the disposition of IWCO as well as the preparation of the updated Corporate Expense Projections, SC and ML manageme nts prepared revised taxable income projections and NOL utilization assumptions, which were authorized by the Special Committee for Houlihan Lokey’s use in these discussion materials. Such projections are referred to herein as the “ NOL Projections ”. The Corporate Expense Projections, together with the ML Projections and the NOL Projections, are referred to herein as the “ Consolidated Projections ”. 1. The FY 2022 2Q Forecast, FY 2022 3Q Forecast and Current FY 2022 Forecast were prepared by ML management in consultation w ith SC management and reviewed by the SC Board. Source: ML and SC managements. 4
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink Financial Performance Update: 3Q FY 2022 Note: Financials shown above are based on Steel Connect’s fiscal year - end of July 31. Adj. EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring items. E refers to Estimated. FY refers to Fiscal Year. Q refers to Quarter. VAR refers to Value - Added Revenue. Source: ML management. (dollars in millions) 3Q FY 2022 Actuals vs. FY 2022 Budget and FY 2022 3Q Forecast Selected Variance Observations • VAR underperformed the FY 2022 3Q Forecast by 2%, driven by lower - than - expected conversion of new business opportunities • EBITDA outperformed the FY 2022 3Q Forecast (but was still below the FY 2022 Budget) as a result of continued implementation of temporary cost - cutting measures 3Q FY 2022 Base VAR $25.9 $25.0 ($0.9) $23.8 $25.0 $1.2 New VAR 4.8 2.3 (2.5) 4.0 2.3 (1.7) VAR $30.7 $27.2 ($3.5) $27.8 $27.2 ($0.6) Gross Profit $11.4 $9.2 ($2.2) $9.2 $9.2 $0.0 % of VAR 37.1% 34.0% -3.1% 33.1% 34.0% 0.9% Adjusted EBITDA $3.5 $2.5 ($1.0) $1.4 $2.5 $1.1 % of VAR 11.4% 9.1% -2.3% 5.0% 9.1% 4.0% Variance FY 2022 Budget Actuals Variance FY 2022 3Q Forecast Actuals 5
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW FY 2022E Base VAR $23.6 $27.1 $25.0 $25.8 $101.5 New VAR 1.7 1.6 2.3 4.7 10.3 VAR $25.3 $28.6 $27.2 $30.7 $111.8 Gross Profit $9.4 $10.9 $9.2 $9.9 $39.4 % of VAR 37.2% 38.1% 34.0% 32.1% 35.2% Adjusted EBITDA $2.1 $4.0 $2.5 $2.3 $10.9 % of VAR 8.2% 13.9% 9.1% 7.6% 9.7% Q2 Actuals FY EstimatedQ1 Actuals Q4 EstimatedQ3 Actuals ModusLink Outlook Observations: Current FY 2022 Forecast Note: Financials shown above are based on Steel Connect’s fiscal year - end of July 31. 1. Adjusted EBITDA variance not referenced due to insufficient information related to adjustments. Adj. EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring items. E refers to Estimated. FY refers to Fiscal Year. Q refers to Quarter. VAR refers to Value - Added Revenue. Source: ML management, ML Projections. (dollars in millions) Current FY 2022 Forecast & Performance – Quarterly Observations While the Current FY 2022 Forecast contemplates a rebound in VAR performance in 4Q 2022 supported by an uptick in new business, New VAR forecasts for 4Q 2022 are down by ~$5 million relative to 4Q estimates in the FY 2022 3Q Forecast due to challenges in converting prospects into new customers, as well as on - boarding delays The Current FY 2022 Forecast contemplates lower margins for 4Q 2022 due in part to customer mix ML management has indicated that based on preliminary results, May VAR and gross profit performance registered ~$0.2 million and nearly ~$1.0 million, respectively, above May expectations in the Current FY 2022 Forecast 1 6
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink Outlook Observations: Current FY 2022 Forecast (cont.) Note: Financials shown above are based on Steel Connect’s fiscal year - end of July 31. 1. In the prior Special Committee Discussion Materials dated 4/4/2022, the then - current FY 2022 3Q Forecast for Adjusted EBITDA was shown as $12.5 million; that figure has since been updated to $12.8 million, as shown above, based on additional information received from SC and ML management regarding EBITDA adjustments. Adj. EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring items. E refers to Estimated. FY refers to Fiscal Year. VAR refers to Value - Added Revenue. Source: ML management, ML Projections. (dollars in millions) Selected Observations • Relative to the FY 2022 3Q Forecast, the Current FY 2022 Forecast contemplates a decline in new business VAR, resulting in a downward revision to gross profit and EBITDA for FY 2022 • VAR and profit forecasts have declined repeatedly throughout FY 2022 amid sustained headwinds in the business Current FY 2022 Forecast vs. FY 2022 Budget, FY 2022 2Q Forecast, and FY 2022 3Q Forecast FY 2022E Forecast Base VAR $105.5 $98.5 $99.9 $101.5 $1.6 New VAR 15.5 21.2 16.9 10.3 (6.6) VAR $121.0 $119.7 $116.8 $111.8 ($5.0) Gross Profit $47.1 $42.6 $42.7 $39.4 ($3.3) % of VAR 38.9% 35.6% 36.6% 35.2% -1.3% Adjusted EBITDA 1 $15.3 $12.4 $12.8 $10.9 ($1.9) % of VAR 12.6% 10.3% 10.9% 9.7% -1.2% FY 2022 3Q Forecast FY 2022 2Q Forecast FY 2022 Budget Current FY 2022 Forecast Change (Current vs. 3Q Forecast) 7
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Projected FY Ending July 31, Projected FY Ending July 31, Projected FY Ending July 31, 2022E 2023E 2022E 2023E 2022E 2023E Management Salary and Wages [2] ($3.4) ($3.7) ($2.5) ($2.2) $0.9 $1.5 Board Fees ($1.1) ($1.1) ($1.2) ($1.0) ($0.1) $0.1 Other Professional Fees [3] ($1.5) ($1.5) ($2.8) ($1.6) ($1.3) ($0.0) Tax and Other Expenses ($1.0) ($0.8) ($0.7) ($0.8) $0.3 $0.0 Total Corporate Operating Expenses ($7.1) ($7.2) ($7.2) ($5.6) ($0.1) $1.6 Pre-IWCO Disposition Corporate Expense Projections Corporate Expense Projections (Current) [1] Difference Corporate Expense Projections Comparison 1. Comparison focuses on FY 2022 and FY 2023, as FY 2023 approximates annual run - rate, per SC management. 2. Includes salary and wages for employees at Steel Connect (in the Pre - IWCO Disposition Corporate Expense Projections), as well as Steel Partners shared services fee, which reflects salaries of Steel Partners employees based on allocation of time for functions performed for the benefit of Steel Connect. 3. Includes legal fees, auditor fees, investor relations fees, and stock market fees, among other professional fees. 4. SC management has indicated that audit fees at Steel Connect are expected to increase following the disposition of IWCO, as c ert ain audit costs that were previously allocated to IWCO will now be allocated to Steel Connect, relating to additional audit work that will need to be conducted at the SC level. E refers to Estimated. FY refers to Fiscal Year. Source: Steel Connect management, Corporate Expense Projections. (dollars in millions) A Selected Observations The current Corporate Expense Projections reflect a ~$1.5 million reduction to run - rate SC management salary and wages in FY 202 3, as SC increases the use of shared SP resources to manage the entity and eliminates dedicated SC headcount. Board fees, as well as tax and other expenses, are projected to remain in - line with the Pre - IWCO Disposition Corporate Expense P rojections. FY 2023 professional fees, which approximate an annual run - rate per SC management, are projected to remain in - line with the Pre - IWCO Disposition Corporate Expense Projections, with certain identified cost savings offset by increases in other professional fees following the disposition of IWCO 4 . B C A B C B SC management has updated its Corporate Expense Projections to reflect its latest estimate of corporate savings opportunities at Steel Connect following the disposition of IWCO. FY 2024 and FY 2025 projections reflect same $1.6mm annual variance observed for FY 2023 projections, which approximate annual run - rate, per SC management. 8
Page 1. Selected Updates Since Prior Discussion Materials 2 2. Financial Analyses: ModusLink 9 3. Selected Public Market Observations 14 4. Appendices 18 5. Disclaimer 22
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Fiscal Year Ended July 31, LTM Ended Fiscal Year Ending July 31, CAGR CAGR 2019 2020 2021 4/30/2022 2022E 2023E 2024E 2025E 2019 to 2021 2021 to 2025E Revenue $332.9 $338.5 $226.3 $197.9 $201.0 $240.3 $249.5 $259.3 -17.6% 3.5% Growth % 1.7% -33.1% -11.1% 19.5% 3.8% 3.9% Cost of Materials (191.4) (190.3) (109.0) (91.9) (89.2) (116.8) (121.3) (126.0) VAR $141.5 $148.2 $117.2 $106.0 $111.8 $123.5 $128.3 $133.3 -9.0% 3.3% Growth % 4.7% -20.9% -4.6% 10.4% 3.8% 3.9% % of Revenue 42.5% 43.8% 51.8% 53.6% 55.6% 51.4% 51.4% 51.4% Cost of Goods Sold (106.0) (84.4) (69.5) (68.0) (72.4) (74.1) (77.0) (80.0) Gross Profit $35.5 $63.8 $47.7 $38.0 $39.4 $49.4 $51.3 $53.3 15.9% 2.8% % of Revenue 10.7% 18.8% 21.1% 19.2% 19.6% 20.6% 20.6% 20.6% % of VAR 25.1% 43.0% 40.7% 35.8% 35.2% 40.0% 40.0% 40.0% Operating Expenses (39.3) (35.8) (39.1) (33.0) (30.8) (35.4) (35.4) (35.4) Depreciation and Amortization 5.6 4.1 3.4 2.5 2.2 3.5 3.5 3.5 Total Adjustments [1] 7.2 2.4 5.3 2.1 0.0 0.0 0.0 0.0 Adjusted EBITDA $9.1 $34.4 $17.3 $9.6 $10.9 $17.5 $19.4 $21.4 38.1% 5.5% Growth % 279.7% -49.8% -37.0% 60.9% 10.8% 10.3% % of Revenue 2.7% 10.2% 7.6% 4.8% 5.4% 7.3% 7.8% 8.3% % of VAR 6.4% 23.2% 14.7% 9.0% 9.7% 14.2% 15.1% 16.1% Depreciation and Amortization (5.6) (4.1) (3.4) (2.5) (2.2) (3.5) (3.5) (3.5) Adjusted EBIT $3.4 $30.3 $13.9 $7.1 $8.7 $14.0 $15.9 $17.9 101.7% 6.6% Growth % 788.2% -54.2% -37.4% 61.4% 13.5% 12.6% % of Revenue 1.0% 8.9% 6.1% 3.6% 4.3% 5.8% 6.4% 6.9% ModusLink Historical and Projected Financial Information 1. Total Adjustments: Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms; CAGR refers to Compound Annual Growth Rate; E refers to Estimated; FY refers to Fiscal Year; VAR refers to Value - Added Revenue. Source: SC and ML managements, historical figures per SC and ML managements and public filings; projected figures per ML Proj ect ions. (dollars in millions) Severance 1.0 3.1 (0.1) 0.0 (0.0) 0.0 0.0 0.0 Provision for Asset Impairment 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Bad Debt Expense 0.9 0.2 (0.0) 0.1 (0.0) 0.0 0.0 0.0 Cyber-Attack Impact 1.5 (0.7) 0.0 0.0 0.0 0.0 0.0 0.0 Penalties & Fines 0.8 (0.2) (0.0) (0.1) (0.0) 0.0 0.0 0.0 SAP Project Costs 0.0 0.0 2.6 0.8 0.0 0.0 0.0 0.0 France / Hungary non-cash charge 0.0 0.0 1.6 0.0 0.0 0.0 0.0 0.0 eBusiness PCL charge 0.0 0.0 1.2 0.8 (0.5) 0.0 0.0 0.0 Other Income 0.0 0.0 0.0 0.5 0.5 0.0 0.0 0.0 Total Adjustments $7.2 $2.4 $5.3 $2.1 $0.0 $0.0 $0.0 $0.0 10
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink: Selected Companies Analysis (dollars in millions, except per share values) Note: No company used in this analysis for comparative purposes is identical to ModusLink. 1. Enterprise Value equals equity market value + debt outstanding + preferred stock + minority interests – cash and cash equivalent s. 2. Based on closing prices as of 6/9/22. 3. Based on diluted shares. 4. Multiples based on forward looking financial information have been calendarized to ModusLink’s fiscal year end of July 31 for al l of the selected companies, except for Jabil Inc., whose fiscal year end is August 31. 5. Financial information for GXO Logistics, Inc. is presented on a standalone basis, excluding the impact of the acquisition of Cli pper Logistics plc, due to the lack of pro forma historical financial information being publicly available and consensus estimates that are not pro forma for the acquisition. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. E refers to Estimated. FY refers to Fiscal Year. LTM refers to the most recently completed 12 - month period for which financial information has been made public. Source: Bloomberg, Capital IQ and public filings. Share Equity Market Enterprise Enterprise Value [1] to Adjusted EBITDA Selected Company Price [2] Value [2,3] Value [2,3] LTM FY 2022E [4] FY 2023E [4] Celestica Inc. $11.02 $1,509.7 $1,814.4 5.7x 5.3x 4.2x CJ Logistics Corporation $95.90 $1,912.7 $3,568.5 5.2x 5.3x 4.8x Deutsche Post AG $38.15 46,619.7 62,525.9 5.7x 5.4x 4.8x FedEx Corporation $217.00 56,999.0 71,443.0 6.9x 6.5x 6.0x Flex Ltd. $16.85 8,111.5 9,422.5 6.4x 6.0x 5.1x GXO Logistics, Inc. [5] $52.12 6,064.2 6,725.2 11.2x 10.4x 8.7x Jabil Inc. $60.97 9,108.5 10,897.5 5.2x 4.5x 4.3x Kerry Logistics Network Limited $2.30 4,160.4 4,190.3 5.2x 5.3x 5.9x Kuehne + Nagel International AG $231.99 27,944.9 25,212.0 6.3x 6.8x 7.1x United Parcel Service, Inc. $176.55 154,671.5 164,025.5 9.9x 9.9x 9.4x Wincanton plc $4.65 583.4 578.8 6.1x 5.2x 3.9x Low 5.2x 4.5x 3.9x High 11.2x 10.4x 9.4x Median 6.1x 5.4x 5.1x Mean 6.7x 6.4x 5.8x 11
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink : Selected Benchmarking Data Note: No company shown for comparative purposes is identical to ModusLink; certain selected companies do not report VAR. Note: Financial information for GXO Logistics, Inc. is presented on a standalone basis, excluding the impact of the acquisiti on of Clipper Logistics plc, due to the lack of pro forma historical financial information being publicly available and consensus estimates that are not pro forma for the acquisition. 1. Based on public trading prices of common stock. 2. Represents FY 2022E Capital Expenditures to FY 2022E Revenue. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non - recurring items. Depr. refers to Depreciation. E refers to Estimated. FY refers to Fiscal Year. LTM refers to the most recently completed 12 - month period for which financial information has been made public, other than for M odusLink, in which case LTM refers to Latest 12 Months. Source: Bloomberg, Capital IQ, SC and ML managements, public filings, and ML Projections. Size Size [1] Revenue Growth Revenue Growth (LTM Revenue, millions) (Enterprise Value as of 6/9/22, millions) (FY 2019 to FY 2021 Revenue) (FY 2021 to FY 2023E Revenue) Name Value Name Value Name Value Name Value United Parcel Service, Inc. $98,757.0 United Parcel Service, Inc. $164,025.5 Kerry Logistics Network Limited 20.3% GXO Logistics, Inc. 8.9% FedEx Corporation $91,683.0 FedEx Corporation $71,443.0 Kuehne + Nagel International AG 15.6% Kuehne + Nagel International AG 7.9% Deutsche Post AG $91,130.1 Deutsche Post AG $62,525.9 United Parcel Service, Inc. 12.1% Celestica Inc. 6.1% Kuehne + Nagel International AG $37,739.5 Kuehne + Nagel International AG $25,212.0 FedEx Corporation 10.9% Kerry Logistics Network Limited 5.7% Jabil Inc. $30,744.0 Jabil Inc. $10,897.5 GXO Logistics, Inc. 8.9% Wincanton plc 5.6% Flex Ltd. $26,041.0 Flex Ltd. $9,422.5 Jabil Inc. 7.6% Jabil Inc. 5.2% Kerry Logistics Network Limited $10,059.3 GXO Logistics, Inc. $6,725.2 Deutsche Post AG 7.5% Flex Ltd. 4.9% CJ Logistics Corporation $9,120.5 Kerry Logistics Network Limited $4,190.3 Wincanton plc 3.3% FedEx Corporation 4.9% GXO Logistics, Inc. $8,201.0 CJ Logistics Corporation $3,568.5 CJ Logistics Corporation 2.2% Deutsche Post AG 4.3% Celestica Inc. $5,966.7 Celestica Inc. $1,814.4 Flex Ltd. 1.2% United Parcel Service, Inc. 4.2% Wincanton plc $1,779.9 Wincanton plc $578.8 Celestica Inc. -4.3% CJ Logistics Corporation 3.6% ModusLink $197.9 ModusLink -17.6% ModusLink 3.1% Adjusted EBITDA Growth Adjusted EBITDA Growth Profitability Profitability (FY 2019 to FY 2021 Adjusted EBITDA) (FY 2021 to FY 2023E Adjusted EBITDA) (LTM Adjusted EBITDA to LTM Revenue) (FY 2022E to FY 2023E Average Adjusted EBITDA Margin) Name Value Name Value Name Value Name Value Kuehne + Nagel International AG 38.4% Wincanton plc 21.3% United Parcel Service, Inc. 16.8% United Parcel Service, Inc. 16.6% ModusLink 38.1% Celestica Inc. 16.3% Deutsche Post AG 12.0% Deutsche Post AG 13.6% Kerry Logistics Network Limited 24.3% GXO Logistics, Inc. 14.6% FedEx Corporation 11.3% FedEx Corporation 11.9% Deutsche Post AG 18.9% Kuehne + Nagel International AG 13.2% Kuehne + Nagel International AG 10.6% Kuehne + Nagel International AG 10.0% United Parcel Service, Inc. 18.3% Deutsche Post AG 11.9% Kerry Logistics Network Limited 8.0% GXO Logistics, Inc. 8.0% FedEx Corporation 12.2% Jabil Inc. 9.1% CJ Logistics Corporation 7.5% CJ Logistics Corporation 7.5% Jabil Inc. 12.0% Flex Ltd. 7.1% GXO Logistics, Inc. 7.4% Jabil Inc. 7.4% Celestica Inc. 10.0% United Parcel Service, Inc. 7.0% Jabil Inc. 6.8% Kerry Logistics Network Limited 7.4% Flex Ltd. 8.2% FedEx Corporation 6.3% Flex Ltd. 5.6% Wincanton plc 7.0% GXO Logistics, Inc. 7.4% CJ Logistics Corporation 5.2% Celestica Inc. 5.4% ModusLink 6.4% CJ Logistics Corporation 3.3% Kerry Logistics Network Limited 4.6% Wincanton plc 5.3% Flex Ltd. 6.2% Wincanton plc -2.2% ModusLink 0.7% ModusLink 4.8% Celestica Inc. 5.9% Profitability Profitability Relative Depreciation Internal Investment (LTM Adjusted EBIT to LTM Revenue) (FY 2022E to FY 2023E Average Adjusted EBIT Margin) (LTM Depr. to LTM Adjusted EBITDA) (LTM Capital Expenditures to LTM Revenue) Name Value Name Value Name Value Name Value United Parcel Service, Inc. 13.8% United Parcel Service, Inc. 13.6% Kuehne + Nagel International AG 6.5% Kuehne + Nagel International AG 0.5% Kuehne + Nagel International AG 9.9% Deutsche Post AG 9.5% Kerry Logistics Network Limited 11.7% Wincanton plc 0.8% Deutsche Post AG 9.8% Kuehne + Nagel International AG 8.2% Wincanton plc 14.1% Celestica Inc. 0.9% Kerry Logistics Network Limited 7.1% FedEx Corporation 7.6% United Parcel Service, Inc. 18.0% Flex Ltd. 1.7% FedEx Corporation 7.0% Kerry Logistics Network Limited 5.9% Deutsche Post AG 18.4% CJ Logistics Corporation 1.7% Wincanton plc 4.6% ModusLink 5.1% ModusLink 25.9% ModusLink [2] 1.9% Jabil Inc. 3.8% Wincanton plc 4.7% Celestica Inc. 31.2% Kerry Logistics Network Limited 2.6% Flex Ltd. 3.8% Jabil Inc. 4.5% Flex Ltd. 32.9% GXO Logistics, Inc. 3.0% Celestica Inc. 3.7% Flex Ltd. 4.4% FedEx Corporation 37.9% Jabil Inc. 3.9% ModusLink 3.6% GXO Logistics, Inc. 4.3% Jabil Inc. 43.6% United Parcel Service, Inc. 4.0% CJ Logistics Corporation 3.4% Celestica Inc. 4.2% CJ Logistics Corporation 55.0% Deutsche Post AG 4.4% GXO Logistics, Inc. 3.3% CJ Logistics Corporation 3.5% GXO Logistics, Inc. 55.1% FedEx Corporation 6.6% 12
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink : Selected Transactions Analysis Note: No company used in this analysis for comparative purposes is identical to ModusLink, and no transaction used in this an aly sis for comparative purposes is identical to the Transaction. 1. Transaction Value refers to the implied enterprise value of target company, based on the announced transaction equity pric e a nd other public information available at the time of the announcement. 2. Based on reported metric for the most recent LTM period prior to the announcement of the transaction. 3. Per Wall Street equity research, the intermodal business of XPO Logistics, Inc. has an estimated EBITDA of ~$70 million, w hic h implies an EBITDA multiple of ~10.1x. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. NA refers to Not Available. NMF refers to Not Meaningful Figure. Sources: Capital IQ, public filings, press releases. (dollars in millions) Transaction Value / LTM Adjusted Transaction LTM Adjusted EBITDA Announced Effective Target Acquiror Value [1] EBITDA [2] Margin % [2] CLG3/25/2022 Intermodal Business of XPO Logistics, Inc. STG Logistics, Inc. $710.0 # NANA NA [3] CLG5/24/2022 Clipper Logistics plc GXO Logistics, Inc. $1,257.7 # 20.0x 5.8% KLI4/4/2022 Kane Logistics, Inc. ID Logistics Group SA $240.0 # NANA NA LFLPending LF Logistics Holdings Limited A.P. Møller - Mærsk A/S $3,860.0 # 16.4x 18.1% WHIP1/1/2022 Whiplash Inc. Ryder System, Inc. $480.0 # NANA NA ECHO11/23/2021 Echo Global Logistics, Inc The Jordan Company, L.P. $1,340.4 # 13.2x 3.2% BCEH10/1/2021 B2C Europe Holding B.V. A.P. Møller - Mærsk A/S $86.0 # 11.0x NA VSCM8/6/2021 Visible Supply Chain Management, LLC A.P. Møller - Mærsk A/S $838.0 # 13.0x NA Trans11/15/2021 Transplace Inc Uber Freight LLC $2,250.0 # NMFNMF NA IPLPending Imperial Logistics Limited DP World Limited $1,237.4 # 6.1x 5.6% Syncreon Syncreon.Us Inc. DP World Limited $1,200.0 NA NA 6/30/2021 Quad Logistics Services, LLC Mullen Group Ltd. $40.0 8.0x NA AGI Agility Global Integrated Logistics DSV Panalpina A/S $4,200.0 16.3x 6.4% Lasership Lasership, Inc. American Securities LLC $1,700.0 13.0x NA AIT AIT Worldwide Logistics, Inc. The Jordan Company, L.P. $1,200.0 NA NA Ingram Ingram Micro Inc. Platinum Equity, LLC $7,200.0 6.9x 2.3% Performance Performance Team LLC A.P. Møller - Mærsk A/S $545.0 6.1x 17.1% PDS Prime Distribution Services, Inc. C.H. Robinson Worldwide, Inc. $225.0 NA NA CaseStack CaseStack, Inc. Hub Group, Inc. $255.0 11.6x 9.1% APL APL Logistics Ltd Kintetsu World Express, Inc. $1,200.0 15.0x 4.8% FSCDS FedEx Supply Chain Distribution System, Inc. FedEx Corporation $1,380.0 NA NA New Breed New Breed Holding Company XPO Logistics, Inc. $615.0 8.0x 12.9% Low $40.0 6.1x 2.3% High $7,200.0 20.0x 18.1% Median $1,200.0 12.3x 6.1% Mean $1,457.2 11.8x 8.5% 1/30/2015 9/2/2014 3/2/2020 7/7/2021 1/4/2020 12/3/2018 5/29/2015 12/9/2020 02/19/2020 1/28/2020 11/5/2018 2/17/2015 12/15/2014 7/29/2014 5/12/2021 5/12/2021 3/17/2021 3/17/2021 7/1/2021 Pending 4/27/2021 8/16/2021 6/30/2021 7/22/2021 7/8/2021 8/6/2021 8/6/2021 9/10/2021 3/25/2022 2/20/2022 2/14/2022 12/22/2021 12/13/2021 13
Page 1. Selected Updates Since Prior Discussion Materials 2 2. Financial Analyses: ModusLink 9 3. Selected Public Market Observations 14 4. Appendices 18 5. Disclaimer 22
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Transaction Implied Premiums to Historical Stock Trading Prices (dollars per share in actuals) 1. Closing prices per Capital IQ. VWAP based on trading information, per Bloomberg as of 6/9/22. 2. Reflects the closing stock price on June 1, 2022, immediately prior to public announcement of the Final Proposal. “Final Proposal” refers to final, non - binding expression of interest from Steel Partners on May 27, 2022 (based on cash consider ation of $1.35 per share and ModusLink CVR), which was publicly announced on 6/1/22 after market close. “Revised Proposal” refers to the revised, non - binding expression of interest from Steel Partners on March 24, 2022 (based on cas h consideration of $1.30 per share), which was publicly announced on 3/28/22 after market close. “Initial Proposal” refers to the initial, non - binding expression of interest from Steel Partners on November 19, 2020 (based on consideration per share of $0.65 to $0.72), which was publicly announced the same day after market close. VWAP refers to Volume - Weighted Average Price. Source: Capital IQ and Bloomberg. Implied Premium of Per Share Cash Trading Period Selected Merger Consideration As of 6/9/22 Metric [1] over Selected Metric Unaffected Date Closing (6/1/22) $1.22 10.7% [2] 1-Day Closing Price $1.27 6.3% 10-Day VWAP $1.25 7.8% 20-Day VWAP $1.21 11.4% 30-Day VWAP $1.23 10.1% 2-Month VWAP $1.25 8.1% 3-Month VWAP $1.24 8.9% 6-Month VWAP $1.28 5.2% 12-Month VWAP $1.64 (17.6%) Since Final Proposal (6/1/22) VWAP $1.27 6.1% Since Revised Proposal (3/28/22) VWAP $1.25 8.4% Since IWCO Disposition (2/25/22) VWAP $1.25 7.6% Since Initial Proposal (11/19/20) VWAP $1.91 (29.5%) 52-Week High - 10/14/21 Closing $2.40 (43.8%) 52-Week Low - 2/23/22 Closing $1.00 35.0% 15
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 0.0% 15.3% 84.2% 0.5% 0.0% 0.0% 0.0 0.0 0.1 0.0 0.0 0.0 $1.05- $1.15 $1.15- $1.25 $1.25- $1.35 $1.35- $1.45 $1.45- $1.55 $1.55- $1.65 0.6% 50.1% 46.4% 2.8% 0.0% 0.0% 0.0 2.4 2.2 0.1 0.0 0.0 $1.05- $1.15 $1.15- $1.25 $1.25- $1.35 $1.35- $1.45 $1.45- $1.55 $1.55- $1.65 3 - Month High: $1.50 3 - Month Low: $1.13 0.0 5.0 10.0 15.0 20.0 25.0 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 11/19/20 12/19/20 1/19/21 2/19/21 3/19/21 4/19/21 5/19/21 6/19/21 7/19/21 8/19/21 9/19/21 10/19/21 11/19/21 12/19/21 1/19/22 2/19/22 3/19/22 4/19/22 5/19/22 Volume (millions) Closing Price ($) Volume Price Recent Stock Performance Stock Performance Since Initial Proposal (11/19/20) Last Three Months 1 Since Final Proposal (6/1/22) 1 (shares in millions) (shares in millions) Intraday High : $ 1 . 50 Intraday Low : $ 1 . 13 Intraday High : $ 1 . 36 Intraday Low : $ 1 . 20 1. Based on the closing price in one - minute intervals as provided by Bloomberg and the amount of volume transacted during that i ntraday window. 2. Per Bloomberg, reflects the number of shares traded over the period that are included for purposes of the VWAP calculation s. FY refers to Fiscal Year. Q refers to Quarter. VWAP refers to Volume - Weighted Average Price. Source: Bloomberg and Capital IQ as of 6/9/22. Indicates Earnings Announcement Q1 FY 21 Q2 FY 21 Q3 FY 21 Q4 FY 21 Q2 FY 22 Announcement of IWCO Disposition (2/25/22) VWAP Volume 2 : 4.7 million VWAP: $1.24 VWAP Volume 2 : 0.1 million VWAP: $1.27 Q1 FY 22 Announcement of Revised Proposal (3/28/22) Announcement of Final Proposal (6/1/22) 16
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Relative Total Shareholder Return Information (Last 3 Years) 1. Since March 28, 2022, the last trading day prior to public announcement of the Revised Proposal. 2. Since June 1, 2022, the last trading day prior to public announcement of the Final Proposal. 3. ModusLink Selected Companies Index includes Celestica, Inc., CJ Logistics Corporation, Deutsche Post AG, FedEx Corporation, Flex Ltd., GX O Logistics, Inc., Jabil Inc., Kerry Logistics Network Limited, Kuehne + Nagel International AG, United Parcel Service, Inc., and Wincanton plc. Source: Capital IQ as of 6/9/22. Total Shareholder Return -100% -75% -50% -25% 0% 25% 50% 75% 100% 125% 150% 175% 200% 225% 250% Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Steel Connect, Inc. S&P 500 Index (Total Return) Steel Partners Holdings L.P. ModusLink Selected Companies Index [3] Three-Year Two-Year One-Year Since Revised Since Final Return Return Return Proposal (3/28/22) [1] Proposal (6/1/22) [2] Steel Connect, Inc. -30.2% 76.0% -40.7% 9.5% 4.1% S&P 500 Index (Total Return) 46.3% 29.1% -3.4% -11.9% -2.0% Steel Partners Holdings L.P. 203.7% 545.6% 52.6% -1.7% -1.7% ModusLink Selected Companies Index [3] 42.6% 35.7% -27.3% -14.9% -4.1% 17
Page 1. Selected Updates Since Prior Discussion Materials 2 2. Financial Analyses: ModusLink 9 3. Selected Public Market Observations 14 4. Appendices 18 Selected Ownership Information 19 5. Disclaimer 22
Page 1. Selected Updates Since Prior Discussion Materials 2 2. Financial Analyses: ModusLink 9 3. Selected Public Market Observations 14 4. Appendices 18 Selected Ownership Information 19 5. Disclaimer 22
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Ownership Summary Steel Connect 1. Includes (i) 17.9 million shares of common stock underlying the Company’s Series C Convertible Preferred Stock and (ii) 6.3 m ill ion shares of common stock underlying the Company’s Convertible Senior Notes, both of which are owned by Steel Partners, presented on an as - converted basis. Based on total common s hares outstanding as of June 1, 2022, per SC management. 2. Source: Capital IQ. Denotes ownership of Steel Partners’ 13D group. Source: Capital IQ, Bloomberg, public filings, SC management. (shares outstanding in millions) As-Converted Shares [1] Holder Shares % Outstanding Steel Partners Holdings L.P. [1] 42.3 50.1% Warren Lichtenstein (Executive Chairman & Interim CEO) 1.6 1.9% Jack Howard (Director) 0.9 1.0% Glen Kassan (Vice Chairman) 0.4 0.5% Other Current / Former Directors and Executive Officers [2] 1.7 2.0% Steel Partners and Other Insiders 46.8 55.4% GAMCO Investors, Inc. (NYSE:GBL) 2.6 3.0% 6.8% Renaissance Technologies LLC 2.2 2.6% 5.8% The Vanguard Group, Inc. 1.9 2.2% 5.0% BlackRock, Inc. (NYSE:BLK) 1.0 1.2% 2.7% Bridgeway Capital Management, LLC 0.3 0.3% 0.7% Bank of America Corporation 0.2 0.3% 0.6% Geode Capital Management, LLC 0.2 0.3% 0.6% Other Public Shareholders 29.3 34.6% 77.7% Total Public Float [2] 37.7 44.6% 100.0% Total As-Converted Shares [1] 84.5 100.0% % of Unafilliated 20
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Recent Trading Activity by Shareholder Largest Steel Connect Shareholders (Excluding Steel Partners and Other Insiders) Note: Net Shares Added / (Deducted) is shown through Q1 CY 2022. CY refers to Calendar Year; Q refers to Quarter; VWAP refers to Volume - Weighted Average Price. Source: Capital IQ, Bloomberg, public filings. (dollars and shares in actuals) % of Latest Total Net Shares Added / (Deducted) by Quarter Stockholder Shareholdings Float Q2 CY 2020 Q3 CY 2020 Q4 CY 2020 Q1 CY 2021 Q2 CY 2021 Q3 CY 2021 Q4 CY 2021 Q1 CY 2022 GAMCO Investors, Inc. 2,553,000 6.8% 552,000 1,610,920 (7,422) (511,799) (278,050) 19,351 - - % of Holdings Traded 47.3% 93.7% (0.2%) (15.4%) (9.9%) 0.8% 0.0% 0.0% Renaissance Technologies LLC 2,199,315 5.8% 283,239 121,943 293,441 (91,033) (102,444) (114,404) (125,800) (97,881) % of Holdings Traded 13.9% 5.3% 12.0% (3.3%) (3.9%) (4.5%) (5.2%) (4.3%) The Vanguard Group, Inc. 1,901,359 5.0% (102,386) (146,947) (21,801) 1,228,031 31,156 61,779 54,115 (8,108) % of Holdings Traded (12.7%) (20.9%) (3.9%) 229.8% 1.8% 3.4% 2.9% (0.4%) BlackRock, Inc. 1,024,979 2.7% (81,325) 15 1,275 2,180 (72,226) (599) 6,497 (13,540) % of Holdings Traded (6.9%) 0.0% 0.1% 0.2% (6.5%) (0.1%) 0.6% (1.3%) Bridgeway Capital Management, Inc. 262,845 0.7% (250,600) (43,000) (35,200) (46,155) 68,700 - - (12,000) % of Holdings Traded (43.1%) (13.0%) (12.2%) (18.3%) 33.3% 0.0% 0.0% (4.4%) Bank of America Corporation 243,500 0.6% - 1,220 (1,220) - 310 12,216 157,303 73,671 % of Holdings Traded 0.0% New Position (100.0%) 0.0% New Position 3940.6% 1255.8% 43.4% Geode Capital Management, LLC 232,624 0.6% - - - 29,080 13,335 - - - % of Holdings Traded 0.0% 0.0% 0.0% 15.3% 6.1% 0.0% 0.0% 0.0% VWAP During Quarter $0.58 $0.56 $0.74 $2.14 $2.01 $1.90 $1.79 $1.25 High Closing Stock Price During Quarter $0.87 $0.67 $0.98 $2.67 $2.21 $2.07 $2.40 $1.57 Low Closing Stock Price During Quarter $0.46 $0.51 $0.51 $0.77 $1.79 $1.64 $1.31 $1.00 21
Page 1. Selected Updates Since Prior Discussion Materials 2 2. Financial Analyses: ModusLink 9 3. Selected Public Market Observations 14 4. Appendices 18 5. Disclaimer 22
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW This presentation, and any supplemental information (written or oral) or other documents provided in connection therewith (collectively, the “materials”), are provided solely for the information of the Special Committee (the “Committee”) of the Board of Directors (the “Board”) of Steel Connect, Inc . (the “Company”) by Houlihan Lokey in connection with the Committee’s consideration of a potential transaction (the “Transaction”) involving the Company . This presentation is incomplete without reference to, and should be considered in conjunction with, any supplemental information provided by and discussions with Houlihan Lokey in connection therewith . Any defined terms used herein shall have the meanings set forth herein, even if such defined terms have been given different meanings elsewhere in the materials . The materials are for discussion purposes only . Houlihan Lokey expressly disclaims any and all liability, whether direct or indirect, in contract or tort or otherwise, to any person in connection with the materials . The materials were prepared for specific persons familiar with the business and affairs of the Company for use in a specific context and were not prepared with a view to public disclosure or to conform with any disclosure standards under any state, federal or international securities laws or other laws, rules or regulations, and none of the Committee, the Company or Houlihan Lokey takes any responsibility for the use of the materials by persons other than the Committee . The materials are provided on a confidential basis solely for the information of the Committee and may not be disclosed, summarized, reproduced, disseminated or quoted or otherwise referred to, in whole or in part, without Houlihan Lokey’s express prior written consent . Notwithstanding any other provision herein, the Company (and each employee, representative or other agent of the Company) may disclose to any and all persons without limitation of any kind, the tax treatment and tax structure of any transaction and all materials of any kind (including opinions or other tax analyses, if any) that are provided to the Company relating to such tax treatment and structure . However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws . For this purpose, the tax treatment of a transaction is the purported or claimed U . S . income or franchise tax treatment of the transaction and the tax structure of a transaction is any fact that may be relevant to understanding the purported or claimed U . S . income or franchise tax treatment of the transaction . If the Company plans to disclose information pursuant to the first sentence of this paragraph, the Company shall inform those to whom it discloses any such information that they may not rely upon such information for any purpose without Houlihan Lokey’s prior written consent . Houlihan Lokey is not an expert on, and nothing contained in the materials should be construed as advice with regard to, legal, accounting, regulatory, insurance, tax or other specialist matters . Houlihan Lokey’s role in reviewing any information was limited solely to performing such a review as it deemed necessary to support its own advice and analysis and was not on behalf of the Committee . The materials necessarily are based on financial, economic, market and other conditions as in effect on, and the information available to Houlihan Lokey as of, the date of the materials . Although subsequent developments may affect the contents of the materials, Houlihan Lokey has not undertaken, and is under no obligation, to update, revise or reaffirm the materials, except as may be expressly contemplated by Houlihan Lokey’s engagement letter . The materials are not intended to provide the sole basis for evaluation of the Transaction and do not purport to contain all information that may be required . The materials do not address the underlying business decision of the Company or any other party to proceed with or effect the Transaction, or the relative merits of the Transaction as compared to any alternative business strategies or transactions that might be available for the Company or any other party . The materials do not constitute any opinion, nor do the materials constitute a recommendation to the Board, the Committee, the Company, any security holder of the Company or any other party as to how to vote or act with respect to any matter relating to the Transaction or otherwise or whether to buy or sell any assets or securities of any company . Houlihan Lokey’s only opinion is the opinion, if any, that is actually delivered to the Committee . In preparing the materials Houlihan Lokey has acted as an independent contractor and nothing in the materials is intended to create or shall be construed as creating a fiduciary or other relationship between Houlihan Lokey and any party . The materials may not reflect information known to other professionals in other business areas of Houlihan Lokey and its affiliates . The preparation of the materials was a complex process involving quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytic methods employed and the adaption and application of these methods to the unique facts and circumstances presented and, therefore, is not readily susceptible to partial analysis or summary description . Furthermore, Houlihan Lokey did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor . Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques . Accordingly, the analyses contained in the materials must be considered as a whole . Selecting portions of the analyses, analytic methods and factors without considering all analyses and factors could create a misleading or incomplete view . The materials reflect judgments and assumptions with regard to industry performance, general business, economic, regulatory, market and financial conditions and other matters, many of which are beyond the control of the participants in the Transaction . Any estimates of value contained in the materials are not necessarily indicative of actual value or predictive of future results or values, which may be significantly more or less favorable . Any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which any assets, businesses or securities may actually be sold . The materials do not constitute a valuation opinion or credit rating . The materials do not address the consideration to be paid or received in, the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the Transaction or otherwise . Furthermore, the materials do not address the fairness of any portion or aspect of the Transaction to any party . In preparing the materials, Houlihan Lokey has not conducted any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (contingent or otherwise) of the Company or any other party and has no obligation to evaluate the solvency of the Company or any other party under any law . Disclaimer 23
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW All budgets, projections, estimates, financial analyses, reports and other information with respect to operations (including estimates of potential cost savings and expenses) reflected in the materials have been prepared by management of the relevant party or are derived from such budgets, projections, estimates, financial analyses, reports and other information or from other sources, which involve numerous and significant subjective determinations made by management of the relevant party and/or which such management has reviewed and found reasonable . The budgets, projections and estimates (including, without limitation, estimates of potential cost savings and synergies) contained in the materials may or may not be achieved and differences between projected results and those actually achieved may be material . Houlihan Lokey has relied upon representations made by management of the Company and other participants in the Transaction that such budgets, projections and estimates have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management (or, with respect to information obtained from public sources, represent reasonable estimates), and Houlihan Lokey expresses no opinion with respect to such budgets, projections or estimates or the assumptions on which they are based . The scope of the financial analysis contained herein is based on discussions with the Company (including, without limitation, regarding the methodologies to be utilized), and Houlihan Lokey does not make any representation, express or implied, as to the sufficiency or adequacy of such financial analysis or the scope thereof for any particular purpose . Houlihan Lokey has assumed and relied upon the accuracy and completeness of the financial and other information provided to, discussed with or reviewed by it without (and without assuming responsibility for) independent verification of such information, makes no representation or warranty (express or implied) in respect of the accuracy or completeness of such information and has further relied upon the assurances of the Company and other participants in the Transaction that they are not aware of any facts or circumstances that would make such information inaccurate or misleading . In addition, Houlihan Lokey has relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company or any other participant in the Transaction since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to, discussed with or reviewed by Houlihan Lokey that would be material to its analyses, and that the final forms of any draft documents reviewed by Houlihan Lokey will not differ in any material respect from such draft documents . The materials are not an offer to sell or a solicitation of an indication of interest to purchase any security, option, commodity, future, loan or currency . The materials do not constitute a commitment by Houlihan Lokey or any of its affiliates to underwrite, subscribe for or place any securities, to extend or arrange credit, or to provide any other services . In the ordinary course of business, certain of Houlihan Lokey’s affiliates and employees, as well as investment funds in which they may have financial interests or with which they may co - invest, may acquire, hold or sell, long or short positions, or trade or otherwise effect transactions, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, the Company, any Transaction counterparty, any other Transaction participant, any other financially interested party with respect to any transaction, other entities or parties that are mentioned in the materials, or any of the foregoing entities’ or parties’ respective affiliates, subsidiaries, investment funds, portfolio companies and representatives (collectively, the “Interested Parties”), or any currency or commodity that may be involved in the Transaction . Houlihan Lokey provides mergers and acquisitions, restructuring and other advisory and consulting services to clients, which may have in the past included, or may currently or in the future include, one or more Interested Parties, for which services Houlihan Lokey has received, and may receive, compensation . Although Houlihan Lokey in the course of such activities and relationships or otherwise may have acquired, or may in the future acquire, information about one or more Interested Parties or the Transaction, or that otherwise may be of interest to the Board, the Committee, or the Company, Houlihan Lokey shall have no obligation to, and may not be contractually permitted to, disclose such information, or the fact that Houlihan Lokey is in possession of such information, to the Board, the Committee, or the Company or to use such information on behalf of the Board, the Committee, or the Company . Houlihan Lokey’s personnel may make statements or provide advice that is contrary to information contained in the materials . Disclaimer (cont.) 24
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 25 CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCI AL AND VALUATION ADVISORY HL .com
Project Carbon DISCUSSION MATERIALS FOR THE SPECIAL COMMITTEE JUNE 12, 2022 | CONFIDENTIAL | PRELIMINARY DRAFT
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Table of Contents 2 Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 Financial Projections Overview & Selected Updates 9 Selected Updates Since Prior Discussion Materials 15 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 Supplemental Financial Analysis Schedule 31 NOL Information 33 Weighted Average Cost of Capital Calculation 36 Selected Ownership Information 39 6. Disclaimer 42
Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 6. Disclaimer 42
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Summary of Selected Transaction Terms 1 Parties to the Transaction: Steel Partners Holdings L.P., a Delaware limited partnership (“Steel Partners” or “SP” or “Parent”) [MERGER SUB], a Delaware corporation and a wholly - owned subsidiary of Parent (“Merger Sub”) Steel Connect, Inc., a Delaware corporation (“Steel Connect”, “SC” or the “Company”) Form of Transaction: Merger Sub shall be merged with and into the Company, with the Company continuing as the surviving corporation and becoming a wholly - owned subsidiary of Parent Transaction Consideration: 2 Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares and Dissenting Shares) shall be converted into the right to receive (A) $1.35 in cash (the “Per Share Cash Merger Consideration”) and (B) one contingent value right to receive, subject to the terms of the CVR Agreement (defined below), an amount equal to ( i ) (a) Fair Market Value of the aggregate amount of gross proceeds received in connection with one or more sales of ModusLink Assets that are consummated within 24 months of the Effective Time (with the amount of any cash retained by the Company or its subsidiaries that would otherwise have been included in the ModusLink Assets), minus (b) $80 million plus transaction expenses, divided by (ii) number of fully diluted shares of Company Common Stock outstanding 3 immediately prior to the Effective Time (the “ModusLink CVR”) 4 . Certain Conditions: 2 Affirmative vote of holders of a majority of the outstanding shares of Company Common Stock not owned, directly or indirectly, by Parent (or its affiliates) or any other officers or directors of the Company Affirmative vote of holders of a majority in voting power of the outstanding shares of Company Common Stock and Company Series C Preferred Stock, voting together as a single class Affirmative vote of holders of a majority of the outstanding shares of Company Series C Preferred Stock Go - Shop: 30 - day go shop period Termination Fee: 5 $1.5 million termination fee Expense reimbursement of up to $1.0 million 1. This summary is intended only as an overview of selected terms and is not intended to cover all terms or details of the Trans act ion. 2. The terms Company Common Stock, Excluded Shares, Dissenting Shares, Series C Preferred Stock and Effective Time are as define d i n the Agreement (defined below). The terms Fair Market Value and ModusLink Assets are as defined in the CVR Agreement (defined below). 3. Refers to number of shares of Company Common Stock outstanding as of immediately prior to the Effective Time. 4. At the direction of the Special Committee, given the uncertainty around events potentially impacting the value of the ModusLink CVR, we have not ascribed any value to the ModusLink CVR for purposes of our financial analyses or our Opinion. 5. $1.5 million termination fee not payable in, among other situations, the event of (a) alternative transaction during the go - shop period or with a party from which a bona fide proposal was received during the go - shop period and remains pending or (b) breach of certain representations, warranties, covenants or agreements by Parent. Sources: Draft of the Agreement and Plan of Merger Agreement dated [June 9, 2022] (the “Agreement”) and draft of the Continge nt Value Rights Agreement dated [June 11, 2022] (the “CVR Agreement”). 4
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW $0.13 $0.22 $0.66 $0.84 $0.78 $0.37 $0.50 $1.16 $1.27 $1.12 10 - Day VWAP [2]: $1.25 Per Share Cash Merger Consideration [1]: $1.35 $0.00 $0.50 $1.00 $1.50 $2.00 Selected Companies Analysis LTM Ended 4/30/22 Adjusted EBITDA ML: 4.0x - 6.0x Selected Companies Analysis FY 2022E Adjusted EBITDA ML: 4.0x - 6.0x Selected Companies Analysis FY 2023E Adjusted EBITDA ML: 4.0x - 6.0x Selected Transactions Analysis FY 2022E Adjusted EBITDA ML: 5.0x - 7.0x Discounted Cash Flow Analysis ML Perpetual Growth Rate: 0.0% - 2.0% ML Discount Rate: 13.0% - 15.0% Implied Equity Value Per Share Reference Range Financial Analyses Summary Steel Connect Implied Equity Value Per Share Reference Ranges Note: No particular weight was attributed to any analysis. 1. At the direction of the Special Committee, given the uncertainty around events potentially impacting the value of the ModusLink CVR, we have not ascribed any value to the ModusLink CVR for purposes of our financial analyses. 2. Based on 10 - Day VWAP as of 6/9/22, per Bloomberg. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation, and Amortization, adjusted for certain non - recurring it ems. E refers to Estimated. FY refers to Fiscal Year. VWAP refers to Volume - Weighted Average Price. Source: Refer to following page for additional details and sources. Illustrative Only 5
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Financial Analyses Summary (cont.) Steel Connect (dollars and shares outstanding in millions, except per share values) Note: Refer to following page for derivation of ML equity value reference ranges. 1. Per ML management, ModusLink currently has ~$10 million of ‘trapped cash’ potentially subject to repatriation, as well as ~$5 mi llion of cash required for near - term net working capital needs; if this cash was excluded from the implied equity value reference ranges for ModusLink, it would result in a reduction of ~$0.25 to the implied equity val ue per share reference ranges shown above. 2. Per SC and ML managements, in early March 2022, ML received a revised indication of interest based on a purchase price for ML of $80 million (the “Revised IOI”), incorporating ML’s then - current ~$20 million cash balance and a reduction of ~$18 million for future operating lease payments, following an initial indication of interest base d o n a valuation of $70 million submitted in November 2021; however, the Revised IOI was subsequently withdrawn. 3. For Selected Companies and DCF approaches, reflects present value of annual corporate expense projections of ~$5.6 million to ~$ 5.8 million per Corporate Expense Projections (as defined on page 10 herein), tax - effected and using a discount rate range of 13.0% to 15.0%. Selected Transactions approach assumes liquidation of corporate e nti ty and ~$5 million of wind - down/severance cash outlays based on certain hypothetical assumptions, per SC management. 4. Reflects net present value of tax savings from utilization of the Company's federal NOL balance of ~$2.2 billion (of which ~$ 1.8 billion expires in 2023), inclusive of $97 million of worthless stock deduction accrued in FY 2022 as a result of the IWCO disposition. For Selected Companies and DCF approaches, based on the NOL Projections, the Con sol idated Projections (in each case, as defined on page 10 herein), a federal corporate tax rate of 21%, and a discount rate range of 15.0% to 18.0%. For Selected Transactions Analysis, based on S382 lim ita tions and assumes ( i ) (a) midpoint of ModusLink equity value reference ranges shown herein and (b) 1.64% long - term tax - exempt rate to derive annual usage limitation, (ii) federal corporate tax rate of 21% and (ii i) discount rate range of 15.0% to 18.0%. Per SC management, state NOLs are not projected to have material value, if any, and foreign NOLs are not projected to be utilized; as such, we have ascribed zero v alu e to state and foreign NOLs in the above analyses. 5. Per Company management. 6. Reflects note payable received in connection with disposition of IWCO. Per discussions with SC management, the likelihood of rec overing any value from the note payable is minimal, and as such, the Company has determined that the fair value was zero for purposes of its financial statements; we have ascribed zero value on the low end and 50% of its face value of $6.9 million on the high end of the range. 7. Reflects outstanding principal balance of Convertible Senior Notes as of 4/30/22. In a situation under which the conversion o pti on is deemed to be in - the - money (implied per share equity value greater than $2.37 per share), the outstanding balance would be reduced to $0 and the diluted shares outstanding figure would be increased by 6.3 mi lli on shares. 8. Reflects liquidation preference of outstanding Series C Convertible Preferred Stock as of 4/30/22. In a situation under which th e conversion option is deemed to be in - the - money (implied per share equity value greater than $1.96 per share), the liquidation preference would be reduced to $0 and the diluted shares outstanding figure would be i ncr eased by 17.9 million shares. 9. Reflects 60.4 million common shares outstanding as of 6/1/22, plus the impact of 2.0 thousand stock options outstanding, to t he extent in - the - money (based on the treasury method), per SC management. 10. Selected Transactions approach assumes buyer would pay SC proceeds for ModusLink and that SC would wind down the corporate entity. Assumes wind - down/severance cash outlays of ~$5 million based on certain hypothetical assumptions, per SC management. Ascribes value to Company NOLs based on net present value of tax savings using S 382 limitation analysis. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation, and Amortization, adjusted for certain non - recurring it ems. E refers to Estimated. FY refers to Fiscal Year. Source: SC and ML managements; Consolidated Projections (as defined on page 10 herein); Capital IQ; Bloomberg; public filings . [Illustrative Only] Selected Companies Selected Companies Selected Companies Selected Transactions Discounted Cash Flow Analysis Analysis Analysis Analysis [10] Analysis LTM Ended 4/30/22 FY 2022E FY 2023E FY 2022E Perpetual Growth Rate Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA 0.0% -- 2.0% Implied Equity Value Reference Range - ModusLink [1] [2] $53.2 -- $72.3 $58.4 -- $80.2 $84.9 -- $119.9 $69.3 -- $91.1 $92.4 -- $117.5 Present Value of Steel Connect Corporate Expenses [3] (31.3) -- (40.7) (31.3) -- (40.7) (31.3) -- (40.7) (5.0) -- (5.0) (31.3) -- (40.7) Present Value of Net Operating Losses [4] 1.2 -- 2.3 1.2 -- 2.3 1.2 -- 2.3 1.6 -- 1.9 1.2 -- 2.3 Steel Connect Cash and Cash Equivalents as of 4/30/2022 [5] 35.0 -- 35.0 35.0 -- 35.0 35.0 -- 35.0 35.0 -- 35.0 35.0 -- 35.0 Note Payable as of 4/30/2022 [5] [6] 0.0 -- 3.5 0.0 -- 3.5 0.0 -- 3.5 0.0 -- 3.5 0.0 -- 3.5 Convertible Senior Notes as of 4/30/2022 [5] [7] (14.9) -- (14.9) (14.9) -- (14.9) (14.9) -- (14.9) (14.9) -- (14.9) (14.9) -- (14.9) Series C Convertible Preferred Stock as of 4/30/2022 [5] [8] (35.0) -- (35.0) (35.0) -- (35.0) (35.0) -- (35.0) (35.0) -- (35.0) (35.0) -- (35.0) Implied Total Equity Value Reference Range 8.1 -- 22.5 13.4 -- 30.3 39.9 -- 70.1 51.0 -- 76.5 47.3 -- 67.6 Diluted Shares Outstanding [5] [9] 60.4 -- 60.4 60.4 -- 60.4 60.4 -- 60.4 60.4 -- 60.4 60.4 -- 60.4 Implied Equity Value Per Share Reference Range $0.13 -- $0.37 $0.22 -- $0.50 $0.66 -- $1.16 $0.84 -- $1.27 $0.78 -- $1.12 6
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Financial Analyses Summary (cont.) ModusLink (dollars in millions) 1. Per SC and ML managements. 2. ML management has indicated that ( i ) ~$10 million of ML’s cash and cash equivalents balance is currently “trapped cash” and would potentially be subject to repa tri ation tax and (ii) ~$5 million of ML’s cash and cash equivalents balance may be required for near - term net working capital requirements; these amounts have not been exclude d from the cash balances shown above. Per SC and ML managements, ML may dividend to SC up to $10 million allowable under its existing credit facility, subject to covenant requirements. 3. Per SC and ML management, in early March 2022, ML received the Revised IOI based on a purchase price for ML of $80 million, i nco rporating ML’s then - current ~$20 million cash balance and a reduction of ~$18 million for future operating lease payments, following an initial indication of interest based on a valuation of $70 mil lion submitted in November 2021; however, the Revised IOI was subsequently withdrawn. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation, and Amortization, adjusted for certain non - recurring it ems. E refers to Estimated. FY refers to Fiscal Year. Source: SC and ML managements; ML Projections (as defined on page 10 herein); Capital IQ; Bloomberg; public filings. [Illustrative Only] Selected Companies Selected Companies Selected Companies Selected Transactions Discounted Cash Flow Analysis Analysis Analysis Analysis [3] Analysis LTM Ended 4/30/22 FY 2022E FY 2023E FY 2022E Perpetual Growth Rate Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA 0.0% -- 2.0% Discount Rate Corresponding Base Amount $9.6 $10.9 $17.5 $10.9 13.0% -- 15.0% Selected Multiples Range 4.0x -- 6.0x 4.0x -- 6.0x 4.0x -- 6.0x 5.0x -- 7.0x Implied Enterprise Value Reference Range $38.3 -- $57.4 $43.5 -- $65.3 $70.0 -- $105.0 $54.4 -- $76.1 $77.5 -- $102.6 Cash and Cash Equivalents as of 4/30/2022 [1] [2] 14.9 -- 14.9 14.9 -- 14.9 14.9 -- 14.9 14.9 -- 14.9 14.9 -- 14.9 Implied Total Enterprise Value Reference Range $53.2 -- $72.3 $58.4 -- $80.2 $84.9 -- $119.9 $69.3 -- $91.1 $92.4 -- $117.5 Total Debt as of 4/30/2022 [1] 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 Implied Equity Value Reference Range [3] $53.2 -- $72.3 $58.4 -- $80.2 $84.9 -- $119.9 $69.3 -- $91.1 $92.4 -- $117.5 7
Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 Financial Projections Overview & Selected Updates 9 Selected Updates Since Prior Discussion Materials 15 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 6. Disclaimer 42
Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 Financial Projections Overview & Selected Updates 9 Selected Updates Since Prior Discussion Materials 15 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 6. Disclaimer 42
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Overview of Financial Projections Overview of ModusLink Projections Overview of NOL, SC and Consolidated Projections In February 2021, ML management, in consultation with SC management, prepared a set of long - term projections for FY 2021 through FY 2025 which were subsequently reviewed by the SC Board. In July/August 2021, ML management, in consultation with SC management, prepared its annual budget for FY 2022, which was fin ali zed in October 2021 based on feedback from and subsequently approved by the SC Board (such final budget, the “ FY 2022 Budget ”). The projections for FY 2023 through FY 2025 remained unchanged based on ML management’s assessment of the longer - term business outlook. ML underperformed relative to its FY 2022 Budget during the first fiscal quarter, with ML management also observing headwinds th at they believed would translate into near - term pressure on financial results. Accordingly, in December 2021, ML management 1 updated its forecast for FY 2022 (the “ FY 2022 2Q Forecast ”), but left its projections unchanged for FY 2023 to FY 2025. In the second fiscal quarter, ML continued to underperform relative to its FY 2022 Budget (VAR was ~5% lower than budgeted) b ut outperformed the FY 2022 2Q Forecast (VAR was ~3% higher than estimated). In February 2022, ML management 1 updated its forecast for FY 2022 (the “ FY 2022 3Q Forecast ”), which contemplated a slower than previously estimated ramp - up of new customer accounts but maintained effectively the same full - year E BITDA level relative to the FY 2022 2Q Forecast. Projections for FY 2023 to FY 2025 remained unchanged. In the third fiscal quarter, ML continued to face headwinds with new customer conversion, driving VAR underperformance relati ve to the FY 2022 Budget (~11%) and the FY 2022 3Q Forecast (~2%). In May 2022, ML management 1 updated its forecast for FY 2022 (the “ Current FY 2022 Forecast ”) to reflect the latest outlook, which contemplates a slower ramp - up of new customer accounts and lower EBITDA relative to the FY 2022 3Q Forecast. Projections f or FY 2023 to FY 2025 remained unchanged. The Current FY 2022 Forecast, together with the FY 2023 to FY 2025 projections, which have been authorized by the Special Com mit tee for Houlihan Lokey’s use in these discussion materials, are referred to herein as the “ ML Projections ”. In February 2021, SC management prepared corporate expense projections for FY 2021 through FY 2025, with the FY 2022 projecti ons subsequently updated in connection with the annual budgeting process that was finalized in October 2021 (and FY 2023 – FY 2025 projections remaining unc hanged). Such figures are referred to herein as the “ Pre - IWCO Disposition Corporate Expense Projections ”. In May 2022, SC management revised such projections to reflect corporate savings opportunities identified at Steel Connect following the disposition of IWCO. Such projections, as authorized by the S pec ial Committee for Houlihan Lokey’s use in these discussion materials, are referred to herein as the “ Corporate Expense Projections ”. Following the disposition of IWCO as well as the preparation of the updated Corporate Expense Projections, SC and ML manageme nts prepared revised taxable income projections and NOL utilization assumptions, which were authorized by the Special Committee for Houlihan Lokey’s use in these discussion materials. Such projections are referred to herein as the “ NOL Projections ”. The Corporate Expense Projections, together with the ML Projections and the NOL Projections, are referred to herein as the “ Consolidated Projections ”. 1. The FY 2022 2Q Forecast, FY 2022 3Q Forecast and Current FY 2022 Forecast were prepared by ML management in consultation w ith SC management and reviewed by the SC Board. Source: ML and SC managements. 10
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink Financial Performance Update: 3Q FY 2022 Note: Financials shown above are based on Steel Connect’s fiscal year - end of July 31. Adj. EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring items. E refers to Estimated. FY refers to Fiscal Year. Q refers to Quarter. VAR refers to Value - Added Revenue. Source: ML management. (dollars in millions) 3Q FY 2022 Actuals vs. FY 2022 Budget and FY 2022 3Q Forecast Selected Variance Observations • VAR underperformed the FY 2022 3Q Forecast by 2%, driven by lower - than - expected conversion of new business opportunities • EBITDA outperformed the FY 2022 3Q Forecast (but was still below the FY 2022 Budget) as a result of continued implementation of temporary cost - cutting measures 3Q FY 2022 Base VAR $25.9 $25.0 ($0.9) $23.8 $25.0 $1.2 New VAR 4.8 2.3 (2.5) 4.0 2.3 (1.7) VAR $30.7 $27.2 ($3.5) $27.8 $27.2 ($0.6) Gross Profit $11.4 $9.2 ($2.2) $9.2 $9.2 $0.0 % of VAR 37.1% 34.0% -3.1% 33.1% 34.0% 0.9% Adjusted EBITDA $3.5 $2.5 ($1.0) $1.4 $2.5 $1.1 % of VAR 11.4% 9.1% -2.3% 5.0% 9.1% 4.0% Variance FY 2022 Budget Actuals Variance FY 2022 3Q Forecast Actuals 11
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW FY 2022E Base VAR $23.6 $27.1 $25.0 $25.8 $101.5 New VAR 1.7 1.6 2.3 4.7 10.3 VAR $25.3 $28.6 $27.2 $30.7 $111.8 Gross Profit $9.4 $10.9 $9.2 $9.9 $39.4 % of VAR 37.2% 38.1% 34.0% 32.1% 35.2% Adjusted EBITDA $2.1 $4.0 $2.5 $2.3 $10.9 % of VAR 8.2% 13.9% 9.1% 7.6% 9.7% Q2 Actuals FY EstimatedQ1 Actuals Q4 EstimatedQ3 Actuals ModusLink Outlook Observations: Current FY 2022 Forecast Note: Financials shown above are based on Steel Connect’s fiscal year - end of July 31. 1. Adjusted EBITDA variance not referenced due to insufficient information related to adjustments. Adj. EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring items. E refers to Estimated. FY refers to Fiscal Year. Q refers to Quarter. VAR refers to Value - Added Revenue. Source: ML management, ML Projections. (dollars in millions) Current FY 2022 Forecast & Performance – Quarterly Observations While the Current FY 2022 Forecast contemplates a rebound in VAR performance in 4Q 2022 supported by an uptick in new business, New VAR forecasts for 4Q 2022 are down by ~$5 million relative to 4Q estimates in the FY 2022 3Q Forecast due to challenges in converting prospects into new customers, as well as on - boarding delays The Current FY 2022 Forecast contemplates lower margins for 4Q 2022 due in part to customer mix ML management has indicated that based on preliminary results, May VAR and gross profit performance registered ~$0.2 million and nearly ~$1.0 million, respectively, above May expectations in the Current FY 2022 Forecast 1 12
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink Outlook Observations: Current FY 2022 Forecast (cont.) Note: Financials shown above are based on Steel Connect’s fiscal year - end of July 31. 1. In the prior Special Committee Discussion Materials dated 4/4/2022, the then - current FY 2022 3Q Forecast for Adjusted EBITDA was shown as $12.5 million; that figure has since been updated to $12.8 million, as shown above, based on additional information received from SC and ML management regarding EBITDA adjustments. Adj. EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring items. E refers to Estimated. FY refers to Fiscal Year. VAR refers to Value - Added Revenue. Source: ML management, ML Projections. (dollars in millions) Selected Observations • Relative to the FY 2022 3Q Forecast, the Current FY 2022 Forecast contemplates a decline in new business VAR, resulting in a downward revision to gross profit and EBITDA for FY 2022 • VAR and profit forecasts have declined repeatedly throughout FY 2022 amid sustained headwinds in the business Current FY 2022 Forecast vs. FY 2022 Budget, FY 2022 2Q Forecast, and FY 2022 3Q Forecast FY 2022E Forecast Base VAR $105.5 $98.5 $99.9 $101.5 $1.6 New VAR 15.5 21.2 16.9 10.3 (6.6) VAR $121.0 $119.7 $116.8 $111.8 ($5.0) Gross Profit $47.1 $42.6 $42.7 $39.4 ($3.3) % of VAR 38.9% 35.6% 36.6% 35.2% -1.3% Adjusted EBITDA 1 $15.3 $12.4 $12.8 $10.9 ($1.9) % of VAR 12.6% 10.3% 10.9% 9.7% -1.2% FY 2022 3Q Forecast FY 2022 2Q Forecast FY 2022 Budget Current FY 2022 Forecast Change (Current vs. 3Q Forecast) 13
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Projected FY Ending July 31, Projected FY Ending July 31, Projected FY Ending July 31, 2022E 2023E 2022E 2023E 2022E 2023E Management Salary and Wages [2] ($3.4) ($3.7) ($2.5) ($2.2) $0.9 $1.5 Board Fees ($1.1) ($1.1) ($1.2) ($1.0) ($0.1) $0.1 Other Professional Fees [3] ($1.5) ($1.5) ($2.8) ($1.6) ($1.3) ($0.0) Tax and Other Expenses ($1.0) ($0.8) ($0.7) ($0.8) $0.3 $0.0 Total Corporate Operating Expenses ($7.1) ($7.2) ($7.2) ($5.6) ($0.1) $1.6 Pre-IWCO Disposition Corporate Expense Projections Corporate Expense Projections (Current) [1] Difference Corporate Expense Projections Comparison 1. Comparison focuses on FY 2022 and FY 2023, as FY 2023 approximates annual run - rate, per SC management. 2. Includes salary and wages for employees at Steel Connect (in the Pre - IWCO Disposition Corporate Expense Projections), as well as Steel Partners shared services fee, which reflects salaries of Steel Partners employees based on allocation of time for functions performed for the benefit of Steel Connect. 3. Includes legal fees, auditor fees, investor relations fees, and stock market fees, among other professional fees. 4. SC management has indicated that audit fees at Steel Connect are expected to increase following the disposition of IWCO, as c ert ain audit costs that were previously allocated to IWCO will now be allocated to Steel Connect, relating to additional audit work that will need to be conducted at the SC level. E refers to Estimated. FY refers to Fiscal Year. Source: Steel Connect management, Corporate Expense Projections. (dollars in millions) A Selected Observations The current Corporate Expense Projections reflect a ~$1.5 million reduction to run - rate SC management salary and wages in FY 202 3, as SC increases the use of shared SP resources to manage the entity and eliminates dedicated SC headcount. Board fees, as well as tax and other expenses, are projected to remain in - line with the Pre - IWCO Disposition Corporate Expense P rojections. FY 2023 professional fees, which approximate an annual run - rate per SC management, are projected to remain in - line with the Pre - IWCO Disposition Corporate Expense Projections, with certain identified cost savings offset by increases in other professional fees following the disposition of IWCO 4 . B C A B C B SC management has updated its Corporate Expense Projections to reflect its latest estimate of corporate savings opportunities at Steel Connect following the disposition of IWCO. FY 2024 and FY 2025 projections reflect same $1.6mm annual variance observed for FY 2023 projections, which approximate annual run - rate, per SC management. 14
Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 Financial Projections Overview & Selected Updates 9 Selected Updates Since Prior Discussion Materials 15 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 6. Disclaimer 42
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Summary of Selected Changes Relative to Prior Preliminary Financial Analyses Dated April 4, 2022 The following changes have been made relative to the prior preliminary discussion materials dated 4/4/22 Corporate Expense Projections and NOL Projections 1 : SC management provided updated Corporate Expense Projections reflecting its latest estimate of corporate savings opportunitie s a t Steel Connect following the disposition of IWCO, as well as updated NOL Projections reflecting such revised Corporate Expense Proje cti ons The present value of Steel Connect Corporate Expenses decreased by $7.9 million to $10.2 million relative to the prior preliminary discussion materials dated 4/4/22 The present value of NOLs increased by $1.2 million to $1.8 million relative to the prior preliminary discussion materials dated 4/4/22 The Financial Analyses were updated to reflect the following additional updated financial information provided by SC and ML managements: Current FY 2022E forecast in the ML Projections (with projections for the outer years remaining unchanged) Financial information (including LTM Adjusted EBITDA and balance sheet items) based on 4/30/22 figures (compared to 1/31/22 f igu res incorporated in the prior preliminary discussion materials dated 4/4/22) Capitalization information as of 6/1/22 (compared to information as of 3/1/22 incorporated in the prior preliminary discussio n m aterials dated 4/4/22) Selected Companies Analysis: The selected companies analysis for ML was updated to reflect stock prices and other publicly available financial information as of 6/9/22 (previously, as of 3/31/22 market close). See page 19 for further detail on observed multiples. Clipper Logistics plc was removed from the selected companies, due to the closing of its announced sale to GXO Logistics, Inc . No changes have been made to the selected multiples ranges relative to the prior preliminary discussion materials dated 4/4/2 2 Selected Transactions Analysis: The ML selected transactions were updated to include the recently announced acquisition of the Intermodal Business of XPO Log ist ics Inc. by STG Logistics, Inc. The selected transactions analysis for ModusLink was updated to reflect an increase to the selected multiple range by 0.5x re lat ive to the prior preliminary discussion materials dated 4/4/22 Discounted Cash Flow (“DCF”) Analysis: Stock prices, betas, risk - free rates and other public information utilized in discount rate calculations have been updated to ma rket close on 6/9/22 (previously, as of 3/31/22 market close) No changes have been made to the selected discount rate range and the selected perpetual growth rates utilized in the DCF ana lys is relative to the prior preliminary discussion materials dated 4/4/22 1. Utilized in the Selected Companies and DCF approaches. 16
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Selected Changes to Financial Analyses Steel Connect (Consolidated) 1. Refer to page 6 for further detail on derivation of value reference ranges. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization. E refers to Estimated. FY refers to Fiscal Year. Source: SC and ML managements; 4/4/22 preliminary discussion materials based on Consolidated Projections prepared as of Febru ary 2022; current discussion materials based on Consolidated Projections prepared as of May 2022; Capital IQ; Bloomberg; public filings. (dollars in millions, except per share amounts) April 4, 2022 Discussion Materials June 12, 2022 Discussion Materials Selected Companies Analysis Metric Capitalized LTM Ended 1/31/22 Adjusted EBITDA [Illustrative Only] FY 2022E Adjusted EBITDA FY 2023E Adjusted EBITDA LTM Ended 4/30/22 Adjusted EBITDA [Illustrative Only] FY 2022E Adjusted EBITDA FY 2023E Adjusted EBITDA Implied Total Equity Value [1] ($0.5) - $8.2 $16.7 - $34.0 $36.5 - $63.7 $8.1 - $22.5 $13.4 - $30.3 $39.9 - $70.1 Implied Equity Value Per Share [1] $0.00 - $0.14 $0.28 - $0.56 $0.60 - $1.05 $0.13 - $0.37 $0.22 - $0.50 $0.66 - $1.16 Selected Transactions Analysis Metric Capitalized FY 2022E Adjusted EBITDA [Illustrative Only] FY 2022E Adjusted EBITDA Implied Total Equity Value [1] $57.2 - $85.7 $51.0 - $76.5 Implied Equity Value Per Share [1] $0.95 - $1.42 $0.84 - $1.27 Discounted Cash Flow Analysis Terminal Metric Unlevered Free Cash Flow Unlevered Free Cash Flow Implied Total Equity Value [1] $43.8 - $60.7 $47.3 - $67.6 Implied Equity Value Per Share [1] $0.72 - $1.00 $0.78 - $1.12 17
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Selected Changes to Financial Analyses ModusLink 1. Refer to page 7 for further detail on derivation of ML current equity value reference ranges. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization. E refers to Estimated. FY refers to Fiscal Year. Source: SC and ML managements; 4/4/22 preliminary discussion materials based on ML Projections prepared as of February 2022; cur rent discussion materials based on ML Projections prepared as of May 2022; Capital IQ; Bloomberg; public filings. (dollars in millions, except per share amounts) April 4, 2022 Discussion Materials June 12, 2022 Discussion Materials Selected Companies Analysis Metric Capitalized LTM Ended 1/31/22 Adjusted EBITDA [Illustrative Only] FY 2022E Adjusted EBITDA FY 2023E Adjusted EBITDA LTM Ended 4/30/22 Adjusted EBITDA [Illustrative Only] FY 2022E Adjusted EBITDA FY 2023E Adjusted EBITDA Base Amount $8.3 $12.5 $17.5 $9.6 $10.9 $17.5 Selected Multiple Range 4.0x - 6.0x 4.0x - 6.0x 4.0x - 6.0x 4.0x - 6.0x 4.0x - 6.0x 4.0x - 6.0x Implied Equity Value [1] $50.9 - $67.4 $68.1 - $93.2 $87.9 - $122.9 $53.2 - $72.3 $58.4 - $80.2 $84.9 - $119.9 Selected Transactions Analysis Metric Capitalized FY 2022E Adjusted EBITDA [Illustrative Only] FY 2022E Adjusted EBITDA Base Amount $12.5 $10.9 Selected Multiple Range 4.5x - 6.5x 5.0x - 7.0x Implied Equity Value [1] $74.3 - $99.4 $69.3 - $91.1 Discounted Cash Flow Analysis Terminal Metric Unlevered Free Cash Flow Unlevered Free Cash Flow Perpetual Growth Rate Range 0.0% - 2.0% 0.0% - 2.0% Discount Rate Range 13.0% - 15.0% 13.0% - 15.0% Implied Equity Value [1] $95.1 - $119.9 $92.4 - $117.5 18
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Selected Market Changes ModusLink Selected Companies Note: No company used in this analysis for comparative purposes is identical to ModusLink. 1. Enterprise Value equals equity market value + debt outstanding + preferred stock + minority interests – cash and cash equivalent s. 2. Multiples based on forward looking financial information have been calendarized to ModusLink’s fiscal year end of July 31 for all of the selected companies, except for Jabil Inc., whose fiscal year end is August 31. 3. Clipper Logistics plc removed from selected companies due to closing of acquisition by GXO Logistics, Inc. 4. Financial information for GXO Logistics, Inc. is presented on a standalone basis, excluding the impact of the acquisition of Cli pper Logistics plc, due to the lack of pro forma historical financial information being publicly available and consensus estimates that are not pro forma for the acquisition. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. E refers to Estimated. FY refers to Fiscal Year. LTM refers to the most recently completed 12 - month period for which financial information has been made public. Source: Bloomberg, Capital IQ and public filings. Pricing As of 3/31/22 Pricing As of 6/9/22 Change Versus Prior Materials Enterprise Value [1] to Adjusted EBITDA Enterprise Value [1] to Adjusted EBITDA Enterprise Value [1] to Adjusted EBITDA Selected Company LTM FY 2022E[2] FY 2023E[2] LTM FY 2022E[2] FY 2023E[2] LTM FY 2022E[2] FY 2023E[2] Celestica Inc. 6.7x 5.0x 4.6x 5.7x 5.3x 4.2x -1.0x 0.3x -0.3x CJ Logistics Corporation 5.4x 4.9x 4.6x 5.2x 5.3x 4.8x -0.2x 0.4x 0.1x Clipper Logistics plc [3] 27.0x 13.4x 12.1x NA NA NA NA NA NA Deutsche Post AG 5.6x 4.6x 4.5x 5.7x 5.4x 4.8x 0.1x 0.8x 0.4x FedEx Corporation 7.3x 6.8x 6.3x 6.9x 6.5x 6.0x -0.4x -0.3x -0.3x Flex Ltd. 6.5x 6.5x 6.0x 6.4x 6.0x 5.1x -0.1x -0.5x -0.9x GXO Logistics, Inc. [4] 15.0x 11.3x 10.2x 11.2x 10.4x 8.7x -3.8x -0.9x -1.5x Jabil Inc. 5.3x 4.5x 4.3x 5.2x 4.5x 4.3x -0.1x -0.1x 0.0x Kerry Logistics Network Limited 5.2x 6.0x 5.5x 5.2x 5.3x 5.9x 0.0x -0.7x 0.4x Kuehne + Nagel International AG 9.3x 9.3x 10.9x 6.3x 6.8x 7.1x -3.0x -2.5x -3.8x United Parcel Service, Inc. 12.3x 11.3x 11.1x 9.9x 9.9x 9.4x -2.5x -1.4x -1.7x Wincanton plc 7.5x 4.7x 4.4x 6.1x 5.2x 3.9x -1.3x 0.5x -0.4x Low 5.2x 4.5x 4.3x 5.2x 4.5x 3.9x 0.0x -0.1x -0.4x High 27.0x 13.4x 12.1x 11.2x 10.4x 9.4x -15.8x -3.0x -2.7x Median 7.0x 6.2x 5.8x 6.1x 5.4x 5.1x -0.8x -0.9x -0.7x Mean 9.4x 7.4x 7.0x 6.7x 6.4x 5.8x -2.7x -0.9x -1.2x 19
Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 6. Disclaimer 42
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Fiscal Year Ended July 31, LTM Ended Fiscal Year Ending July 31, CAGR CAGR 2019 2020 2021 4/30/2022 2022E 2023E 2024E 2025E 2019 to 2021 2021 to 2025E Revenue $332.9 $338.5 $226.3 $197.9 $201.0 $240.3 $249.5 $259.3 -17.6% 3.5% Growth % 1.7% -33.1% -11.1% 19.5% 3.8% 3.9% Cost of Materials (191.4) (190.3) (109.0) (91.9) (89.2) (116.8) (121.3) (126.0) VAR $141.5 $148.2 $117.2 $106.0 $111.8 $123.5 $128.3 $133.3 -9.0% 3.3% Growth % 4.7% -20.9% -4.6% 10.4% 3.8% 3.9% % of Revenue 42.5% 43.8% 51.8% 53.6% 55.6% 51.4% 51.4% 51.4% Cost of Goods Sold (106.0) (84.4) (69.5) (68.0) (72.4) (74.1) (77.0) (80.0) Gross Profit $35.5 $63.8 $47.7 $38.0 $39.4 $49.4 $51.3 $53.3 15.9% 2.8% % of Revenue 10.7% 18.8% 21.1% 19.2% 19.6% 20.6% 20.6% 20.6% % of VAR 25.1% 43.0% 40.7% 35.8% 35.2% 40.0% 40.0% 40.0% Operating Expenses (39.3) (35.8) (39.1) (33.0) (30.8) (35.4) (35.4) (35.4) Depreciation and Amortization 5.6 4.1 3.4 2.5 2.2 3.5 3.5 3.5 Total Adjustments [1] 7.2 2.4 5.3 2.1 0.0 0.0 0.0 0.0 Adjusted EBITDA $9.1 $34.4 $17.3 $9.6 $10.9 $17.5 $19.4 $21.4 38.1% 5.5% Growth % 279.7% -49.8% -37.0% 60.9% 10.8% 10.3% % of Revenue 2.7% 10.2% 7.6% 4.8% 5.4% 7.3% 7.8% 8.3% % of VAR 6.4% 23.2% 14.7% 9.0% 9.7% 14.2% 15.1% 16.1% Depreciation and Amortization (5.6) (4.1) (3.4) (2.5) (2.2) (3.5) (3.5) (3.5) Adjusted EBIT $3.4 $30.3 $13.9 $7.1 $8.7 $14.0 $15.9 $17.9 101.7% 6.6% Growth % 788.2% -54.2% -37.4% 61.4% 13.5% 12.6% % of Revenue 1.0% 8.9% 6.1% 3.6% 4.3% 5.8% 6.4% 6.9% ModusLink Historical and Projected Financial Information 1. Total Adjustments: Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms; CAGR refers to Compound Annual Growth Rate; E refers to Estimated; FY refers to Fiscal Year; VAR refers to Value - Added Revenue. Source: SC and ML managements, historical figures per SC and ML managements and public filings; projected figures per ML Proj ect ions. (dollars in millions) Severance 1.0 3.1 (0.1) 0.0 (0.0) 0.0 0.0 0.0 Provision for Asset Impairment 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Bad Debt Expense 0.9 0.2 (0.0) 0.1 (0.0) 0.0 0.0 0.0 Cyber-Attack Impact 1.5 (0.7) 0.0 0.0 0.0 0.0 0.0 0.0 Penalties & Fines 0.8 (0.2) (0.0) (0.1) (0.0) 0.0 0.0 0.0 SAP Project Costs 0.0 0.0 2.6 0.8 0.0 0.0 0.0 0.0 France / Hungary non-cash charge 0.0 0.0 1.6 0.0 0.0 0.0 0.0 0.0 eBusiness PCL charge 0.0 0.0 1.2 0.8 (0.5) 0.0 0.0 0.0 Other Income 0.0 0.0 0.0 0.5 0.5 0.0 0.0 0.0 Total Adjustments $7.2 $2.4 $5.3 $2.1 $0.0 $0.0 $0.0 $0.0 21
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink: Selected Companies Analysis (dollars in millions, except per share values) Note: No company used in this analysis for comparative purposes is identical to ModusLink. 1. Enterprise Value equals equity market value + debt outstanding + preferred stock + minority interests – cash and cash equivalent s. 2. Based on closing prices as of 6/9/22. 3. Based on diluted shares. 4. Multiples based on forward looking financial information have been calendarized to ModusLink’s fiscal year end of July 31 for al l of the selected companies, except for Jabil Inc., whose fiscal year end is August 31. 5. Financial information for GXO Logistics, Inc. is presented on a standalone basis, excluding the impact of the acquisition of Cli pper Logistics plc, due to the lack of pro forma historical financial information being publicly available and consensus estimates that are not pro forma for the acquisition. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. E refers to Estimated. FY refers to Fiscal Year. LTM refers to the most recently completed 12 - month period for which financial information has been made public. Source: Bloomberg, Capital IQ and public filings. Share Equity Market Enterprise Enterprise Value [1] to Adjusted EBITDA Selected Company Price [2] Value [2,3] Value [2,3] LTM FY 2022E [4] FY 2023E [4] Celestica Inc. $11.02 $1,509.7 $1,814.4 5.7x 5.3x 4.2x CJ Logistics Corporation $95.90 $1,912.7 $3,568.5 5.2x 5.3x 4.8x Deutsche Post AG $38.15 46,619.7 62,525.9 5.7x 5.4x 4.8x FedEx Corporation $217.00 56,999.0 71,443.0 6.9x 6.5x 6.0x Flex Ltd. $16.85 8,111.5 9,422.5 6.4x 6.0x 5.1x GXO Logistics, Inc. [5] $52.12 6,064.2 6,725.2 11.2x 10.4x 8.7x Jabil Inc. $60.97 9,108.5 10,897.5 5.2x 4.5x 4.3x Kerry Logistics Network Limited $2.30 4,160.4 4,190.3 5.2x 5.3x 5.9x Kuehne + Nagel International AG $231.99 27,944.9 25,212.0 6.3x 6.8x 7.1x United Parcel Service, Inc. $176.55 154,671.5 164,025.5 9.9x 9.9x 9.4x Wincanton plc $4.65 583.4 578.8 6.1x 5.2x 3.9x Low 5.2x 4.5x 3.9x High 11.2x 10.4x 9.4x Median 6.1x 5.4x 5.1x Mean 6.7x 6.4x 5.8x 22
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink : Selected Benchmarking Data Note: No company shown for comparative purposes is identical to ModusLink; certain selected companies do not report VAR. Note: Financial information for GXO Logistics, Inc. is presented on a standalone basis, excluding the impact of the acquisiti on of Clipper Logistics plc, due to the lack of pro forma historical financial information being publicly available and consensus estimates that are not pro forma for the acquisition. 1. Based on public trading prices of common stock. 2. Represents FY 2022E Capital Expenditures to FY 2022E Revenue. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non - recurring items. Depr. refers to Depreciation. E refers to Estimated. FY refers to Fiscal Year. LTM refers to the most recently completed 12 - month period for which financial information has been made public, other than for M odusLink, in which case LTM refers to Latest 12 Months. Source: Bloomberg, Capital IQ, SC and ML managements, public filings, and ML Projections. Size Size [1] Revenue Growth Revenue Growth (LTM Revenue, millions) (Enterprise Value as of 6/9/22, millions) (FY 2019 to FY 2021 Revenue) (FY 2021 to FY 2023E Revenue) Name Value Name Value Name Value Name Value United Parcel Service, Inc. $98,757.0 United Parcel Service, Inc. $164,025.5 Kerry Logistics Network Limited 20.3% GXO Logistics, Inc. 8.9% FedEx Corporation $91,683.0 FedEx Corporation $71,443.0 Kuehne + Nagel International AG 15.6% Kuehne + Nagel International AG 7.9% Deutsche Post AG $91,130.1 Deutsche Post AG $62,525.9 United Parcel Service, Inc. 12.1% Celestica Inc. 6.1% Kuehne + Nagel International AG $37,739.5 Kuehne + Nagel International AG $25,212.0 FedEx Corporation 10.9% Kerry Logistics Network Limited 5.7% Jabil Inc. $30,744.0 Jabil Inc. $10,897.5 GXO Logistics, Inc. 8.9% Wincanton plc 5.6% Flex Ltd. $26,041.0 Flex Ltd. $9,422.5 Jabil Inc. 7.6% Jabil Inc. 5.2% Kerry Logistics Network Limited $10,059.3 GXO Logistics, Inc. $6,725.2 Deutsche Post AG 7.5% Flex Ltd. 4.9% CJ Logistics Corporation $9,120.5 Kerry Logistics Network Limited $4,190.3 Wincanton plc 3.3% FedEx Corporation 4.9% GXO Logistics, Inc. $8,201.0 CJ Logistics Corporation $3,568.5 CJ Logistics Corporation 2.2% Deutsche Post AG 4.3% Celestica Inc. $5,966.7 Celestica Inc. $1,814.4 Flex Ltd. 1.2% United Parcel Service, Inc. 4.2% Wincanton plc $1,779.9 Wincanton plc $578.8 Celestica Inc. -4.3% CJ Logistics Corporation 3.6% ModusLink $197.9 ModusLink -17.6% ModusLink 3.1% Adjusted EBITDA Growth Adjusted EBITDA Growth Profitability Profitability (FY 2019 to FY 2021 Adjusted EBITDA) (FY 2021 to FY 2023E Adjusted EBITDA) (LTM Adjusted EBITDA to LTM Revenue) (FY 2022E to FY 2023E Average Adjusted EBITDA Margin) Name Value Name Value Name Value Name Value Kuehne + Nagel International AG 38.4% Wincanton plc 21.3% United Parcel Service, Inc. 16.8% United Parcel Service, Inc. 16.6% ModusLink 38.1% Celestica Inc. 16.3% Deutsche Post AG 12.0% Deutsche Post AG 13.6% Kerry Logistics Network Limited 24.3% GXO Logistics, Inc. 14.6% FedEx Corporation 11.3% FedEx Corporation 11.9% Deutsche Post AG 18.9% Kuehne + Nagel International AG 13.2% Kuehne + Nagel International AG 10.6% Kuehne + Nagel International AG 10.0% United Parcel Service, Inc. 18.3% Deutsche Post AG 11.9% Kerry Logistics Network Limited 8.0% GXO Logistics, Inc. 8.0% FedEx Corporation 12.2% Jabil Inc. 9.1% CJ Logistics Corporation 7.5% CJ Logistics Corporation 7.5% Jabil Inc. 12.0% Flex Ltd. 7.1% GXO Logistics, Inc. 7.4% Jabil Inc. 7.4% Celestica Inc. 10.0% United Parcel Service, Inc. 7.0% Jabil Inc. 6.8% Kerry Logistics Network Limited 7.4% Flex Ltd. 8.2% FedEx Corporation 6.3% Flex Ltd. 5.6% Wincanton plc 7.0% GXO Logistics, Inc. 7.4% CJ Logistics Corporation 5.2% Celestica Inc. 5.4% ModusLink 6.4% CJ Logistics Corporation 3.3% Kerry Logistics Network Limited 4.6% Wincanton plc 5.3% Flex Ltd. 6.2% Wincanton plc -2.2% ModusLink 0.7% ModusLink 4.8% Celestica Inc. 5.9% Profitability Profitability Relative Depreciation Internal Investment (LTM Adjusted EBIT to LTM Revenue) (FY 2022E to FY 2023E Average Adjusted EBIT Margin) (LTM Depr. to LTM Adjusted EBITDA) (LTM Capital Expenditures to LTM Revenue) Name Value Name Value Name Value Name Value United Parcel Service, Inc. 13.8% United Parcel Service, Inc. 13.6% Kuehne + Nagel International AG 6.5% Kuehne + Nagel International AG 0.5% Kuehne + Nagel International AG 9.9% Deutsche Post AG 9.5% Kerry Logistics Network Limited 11.7% Wincanton plc 0.8% Deutsche Post AG 9.8% Kuehne + Nagel International AG 8.2% Wincanton plc 14.1% Celestica Inc. 0.9% Kerry Logistics Network Limited 7.1% FedEx Corporation 7.6% United Parcel Service, Inc. 18.0% Flex Ltd. 1.7% FedEx Corporation 7.0% Kerry Logistics Network Limited 5.9% Deutsche Post AG 18.4% CJ Logistics Corporation 1.7% Wincanton plc 4.6% ModusLink 5.1% ModusLink 25.9% ModusLink [2] 1.9% Jabil Inc. 3.8% Wincanton plc 4.7% Celestica Inc. 31.2% Kerry Logistics Network Limited 2.6% Flex Ltd. 3.8% Jabil Inc. 4.5% Flex Ltd. 32.9% GXO Logistics, Inc. 3.0% Celestica Inc. 3.7% Flex Ltd. 4.4% FedEx Corporation 37.9% Jabil Inc. 3.9% ModusLink 3.6% GXO Logistics, Inc. 4.3% Jabil Inc. 43.6% United Parcel Service, Inc. 4.0% CJ Logistics Corporation 3.4% Celestica Inc. 4.2% CJ Logistics Corporation 55.0% Deutsche Post AG 4.4% GXO Logistics, Inc. 3.3% CJ Logistics Corporation 3.5% GXO Logistics, Inc. 55.1% FedEx Corporation 6.6% 23
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink : Selected Transactions Analysis Note: No company used in this analysis for comparative purposes is identical to ModusLink, and no transaction used in this an aly sis for comparative purposes is identical to the Transaction. 1. Transaction Value refers to the implied enterprise value of target company, based on the announced transaction equity pric e a nd other public information available at the time of the announcement. 2. Based on reported metric for the most recent LTM period prior to the announcement of the transaction. 3. Per Wall Street equity research, the intermodal business of XPO Logistics, Inc. has an estimated EBITDA of ~$70 million, w hic h implies an EBITDA multiple of ~10.1x. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. NA refers to Not Available. NMF refers to Not Meaningful Figure. Sources: Capital IQ, public filings, press releases. (dollars in millions) Transaction Value / LTM Adjusted Transaction LTM Adjusted EBITDA Announced Effective Target Acquiror Value [1] EBITDA [2] Margin % [2] CLG3/25/2022 Intermodal Business of XPO Logistics, Inc. STG Logistics, Inc. $710.0 # NANA NA [3] CLG5/24/2022 Clipper Logistics plc GXO Logistics, Inc. $1,257.7 # 20.0x 5.8% KLI4/4/2022 Kane Logistics, Inc. ID Logistics Group SA $240.0 # NANA NA LFLPending LF Logistics Holdings Limited A.P. Møller - Mærsk A/S $3,860.0 # 16.4x 18.1% WHIP1/1/2022 Whiplash Inc. Ryder System, Inc. $480.0 # NANA NA ECHO11/23/2021 Echo Global Logistics, Inc The Jordan Company, L.P. $1,340.4 # 13.2x 3.2% BCEH10/1/2021 B2C Europe Holding B.V. A.P. Møller - Mærsk A/S $86.0 # 11.0x NA VSCM8/6/2021 Visible Supply Chain Management, LLC A.P. Møller - Mærsk A/S $838.0 # 13.0x NA Trans11/15/2021 Transplace Inc Uber Freight LLC $2,250.0 # NMFNMF NA IPLPending Imperial Logistics Limited DP World Limited $1,237.4 # 6.1x 5.6% Syncreon Syncreon.Us Inc. DP World Limited $1,200.0 NA NA 6/30/2021 Quad Logistics Services, LLC Mullen Group Ltd. $40.0 8.0x NA AGI Agility Global Integrated Logistics DSV Panalpina A/S $4,200.0 16.3x 6.4% Lasership Lasership, Inc. American Securities LLC $1,700.0 13.0x NA AIT AIT Worldwide Logistics, Inc. The Jordan Company, L.P. $1,200.0 NA NA Ingram Ingram Micro Inc. Platinum Equity, LLC $7,200.0 6.9x 2.3% Performance Performance Team LLC A.P. Møller - Mærsk A/S $545.0 6.1x 17.1% PDS Prime Distribution Services, Inc. C.H. Robinson Worldwide, Inc. $225.0 NA NA CaseStack CaseStack, Inc. Hub Group, Inc. $255.0 11.6x 9.1% APL APL Logistics Ltd Kintetsu World Express, Inc. $1,200.0 15.0x 4.8% FSCDS FedEx Supply Chain Distribution System, Inc. FedEx Corporation $1,380.0 NA NA New Breed New Breed Holding Company XPO Logistics, Inc. $615.0 8.0x 12.9% Low $40.0 6.1x 2.3% High $7,200.0 20.0x 18.1% Median $1,200.0 12.3x 6.1% Mean $1,457.2 11.8x 8.5% 1/30/2015 9/2/2014 3/2/2020 7/7/2021 1/4/2020 12/3/2018 5/29/2015 12/9/2020 02/19/2020 1/28/2020 11/5/2018 2/17/2015 12/15/2014 7/29/2014 5/12/2021 5/12/2021 3/17/2021 3/17/2021 7/1/2021 Pending 4/27/2021 8/16/2021 6/30/2021 7/22/2021 7/8/2021 8/6/2021 8/6/2021 9/10/2021 3/25/2022 2/20/2022 2/14/2022 12/22/2021 12/13/2021 24
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW ModusLink: Discounted Cash Flow Analysis (dollars in millions) Note: Present values as of 6/12/22; mid - year convention applied. 1. Represents a 3.0 - month stub period. 2. Tax at 25.0%, per SC and ML managements. 3. Implied from corresponding discount rate and perpetual growth rate applied to 2025 unlevered free cash flow. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization, adjusted for certain non - recurring ite ms. Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non - recurring items. E refers to Estimated. PV refers to Present Value. Source: SC and ML managements, ML Projections. Projected Fiscal Year Ending July 31, Terminal Value 2022E [1] 2023E 2024E 2025E Assumptions Revenue $50.8 $240.3 $249.5 $259.3 $259.3 Growth % -11.1% 19.5% 3.8% 3.9% Cost of Materials (20.1) (116.8) (121.3) (126.0) (126.0) Cost of Sales (Goods Sold) (20.8) (74.1) (77.0) (80.0) (80.0) Operating Expenses (8.1) (35.4) (35.4) (35.4) (36.9) Depreciation and Amortization 0.5 3.5 3.5 3.5 5.0 Total Adjustments 0.1 0.0 0.0 0.0 0.0 Adjusted EBITDA $2.3 $17.5 $19.4 $21.4 $21.4 % of Revenue 4.6% 7.3% 7.8% 8.3% 8.3% Depreciation and Amortization (0.5) (3.5) (3.5) (3.5) (5.0) Adjusted EBIT $1.8 $14.0 $15.9 $17.9 $16.4 Taxes [2] (0.5) (3.5) (4.0) (4.5) (4.1) Discount Rate 0.00% 1.00% 2.00% Unlevered Earnings $1.4 $10.5 $11.9 $13.4 $12.3 13.00% 4.4x 4.8x 5.3x Depreciation and Amortization 0.5 3.5 3.5 3.5 5.0 13.50% 4.3x 4.7x 5.1x Capital Expenditures (1.0) (5.0) (5.0) (5.0) (5.0) 14.00% 4.1x 4.5x 4.9x Change in Net Working Capital (0.6) (0.1) (0.7) (0.7) (0.7) 14.50% 4.0x 4.3x 4.7x Unlevered Free Cash Flows $0.3 $8.9 $9.8 $11.2 $11.6 15.00% 3.9x 4.2x 4.6x DCF Assumptions Present Value PV of Terminal Value Based of Cash Flows on Perpetual Growth Rate for Implied Enterprise Value (2022 - 2025) 2025 Unlevered Free Cash Flow Discount Rate 0.00% 1.00% 2.00% 0.00% 1.00% 2.00% Discount Rate 0.00% 1.00% 2.00% 13.00% $24.7 $64.6 $70.7 $77.9 $89.3 $95.4 $102.6 13.00% 72.4% 74.1% 75.9% 13.50% $24.5 $61.5 $67.1 $73.6 $86.0 $91.6 $98.1 13.50% 71.5% 73.2% 75.0% 14.00% $24.3 + $58.6 $63.8 $69.8 = $82.9 $88.1 $94.1 14.00% 70.7% 72.4% 74.1% 14.50% $24.2 $55.9 $60.7 $66.2 $80.1 $84.8 $90.4 14.50% 69.8% 71.5% 73.3% 15.00% $24.0 $53.5 $57.9 $62.9 $77.5 $81.8 $86.9 15.00% 69.0% 70.7% 72.4% PV of Terminal Value as a % of Enterprise Value Implied 2025E Adjusted EBITDA Terminal Multiple [3] 25
Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 6. Disclaimer 42
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Transaction Implied Premiums to Historical Stock Trading Prices (dollars per share in actuals) 1. Closing prices per Capital IQ. VWAP based on trading information, per Bloomberg as of 6/9/22. 2. Reflects the closing stock price on June 1, 2022, immediately prior to public announcement of the Final Proposal. “Final Proposal” refers to final, non - binding expression of interest from Steel Partners on May 27, 2022 (based on cash consider ation of $1.35 per share and ModusLink CVR), which was publicly announced on 6/1/22 after market close. “Revised Proposal” refers to the revised, non - binding expression of interest from Steel Partners on March 24, 2022 (based on cas h consideration of $1.30 per share), which was publicly announced on 3/28/22 after market close. “Initial Proposal” refers to the initial, non - binding expression of interest from Steel Partners on November 19, 2020 (based on consideration per share of $0.65 to $0.72), which was publicly announced the same day after market close. VWAP refers to Volume - Weighted Average Price. Source: Capital IQ and Bloomberg. Implied Premium of Per Share Cash Trading Period Selected Merger Consideration As of 6/9/22 Metric [1] over Selected Metric Unaffected Date Closing (6/1/22) $1.22 10.7% [2] 1-Day Closing Price $1.27 6.3% 10-Day VWAP $1.25 7.8% 20-Day VWAP $1.21 11.4% 30-Day VWAP $1.23 10.1% 2-Month VWAP $1.25 8.1% 3-Month VWAP $1.24 8.9% 6-Month VWAP $1.28 5.2% 12-Month VWAP $1.64 (17.6%) Since Final Proposal (6/1/22) VWAP $1.27 6.1% Since Revised Proposal (3/28/22) VWAP $1.25 8.4% Since IWCO Disposition (2/25/22) VWAP $1.25 7.6% Since Initial Proposal (11/19/20) VWAP $1.91 (29.5%) 52-Week High - 10/14/21 Closing $2.40 (43.8%) 52-Week Low - 2/23/22 Closing $1.00 35.0% 27
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 0.0% 15.3% 84.2% 0.5% 0.0% 0.0% 0.0 0.0 0.1 0.0 0.0 0.0 $1.05- $1.15 $1.15- $1.25 $1.25- $1.35 $1.35- $1.45 $1.45- $1.55 $1.55- $1.65 0.6% 50.1% 46.4% 2.8% 0.0% 0.0% 0.0 2.4 2.2 0.1 0.0 0.0 $1.05- $1.15 $1.15- $1.25 $1.25- $1.35 $1.35- $1.45 $1.45- $1.55 $1.55- $1.65 3 - Month High: $1.50 3 - Month Low: $1.13 0.0 5.0 10.0 15.0 20.0 25.0 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 11/19/20 12/19/20 1/19/21 2/19/21 3/19/21 4/19/21 5/19/21 6/19/21 7/19/21 8/19/21 9/19/21 10/19/21 11/19/21 12/19/21 1/19/22 2/19/22 3/19/22 4/19/22 5/19/22 Volume (millions) Closing Price ($) Volume Price Recent Stock Performance Stock Performance Since Initial Proposal (11/19/20) Last Three Months 1 Since Final Proposal (6/1/22) 1 (shares in millions) (shares in millions) Intraday High : $ 1 . 50 Intraday Low : $ 1 . 13 Intraday High : $ 1 . 36 Intraday Low : $ 1 . 20 1. Based on the closing price in one - minute intervals as provided by Bloomberg and the amount of volume transacted during that i ntraday window. 2. Per Bloomberg, reflects the number of shares traded over the period that are included for purposes of the VWAP calculation s. FY refers to Fiscal Year. Q refers to Quarter. VWAP refers to Volume - Weighted Average Price. Source: Bloomberg and Capital IQ as of 6/9/22. Indicates Earnings Announcement Q1 FY 21 Q2 FY 21 Q3 FY 21 Q4 FY 21 Q2 FY 22 Announcement of IWCO Disposition (2/25/22) VWAP Volume 2 : 4.7 million VWAP: $1.24 VWAP Volume 2 : 0.1 million VWAP: $1.27 Q1 FY 22 Announcement of Revised Proposal (3/28/22) Announcement of Final Proposal (6/1/22) 28
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Relative Total Shareholder Return Information (Last 3 Years) 1. Since March 28, 2022, the last trading day prior to public announcement of the Revised Proposal. 2. Since June 1, 2022, the last trading day prior to public announcement of the Final Proposal. 3. ModusLink Selected Companies Index includes Celestica, Inc., CJ Logistics Corporation, Deutsche Post AG, FedEx Corporation, Flex Ltd., GX O Logistics, Inc., Jabil Inc., Kerry Logistics Network Limited, Kuehne + Nagel International AG, United Parcel Service, Inc., and Wincanton plc. Source: Capital IQ as of 6/9/22. Total Shareholder Return -100% -75% -50% -25% 0% 25% 50% 75% 100% 125% 150% 175% 200% 225% 250% Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Steel Connect, Inc. S&P 500 Index (Total Return) Steel Partners Holdings L.P. ModusLink Selected Companies Index [3] Three-Year Two-Year One-Year Since Revised Since Final Return Return Return Proposal (3/28/22) [1] Proposal (6/1/22) [2] Steel Connect, Inc. -30.2% 76.0% -40.7% 9.5% 4.1% S&P 500 Index (Total Return) 46.3% 29.1% -3.4% -11.9% -2.0% Steel Partners Holdings L.P. 203.7% 545.6% 52.6% -1.7% -1.7% ModusLink Selected Companies Index [3] 42.6% 35.7% -27.3% -14.9% -4.1% 29
Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 Supplemental Financial Analysis Schedule 31 NOL Information 33 Weighted Average Cost of Capital Calculation 36 Selected Ownership Information 39 6. Disclaimer 42
Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 Supplemental Financial Analysis Schedule 31 NOL Information 33 Weighted Average Cost of Capital Calculation 36 Selected Ownership Information 39 6. Disclaimer 42
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Present Value of Corporate Expenses Note: Present values as of 6/12/22; mid - year convention applied. Discount Rate range informed by 13% to 15% discount rate range used for ModusLink. 1. Represents a 3.0 - month stub period. 2. Reflects salaries of Steel Partners employees based on allocation of time for functions performed for the benefit of Steel Co nnect. 3. Includes legal fees, auditor fees, investor relations fees, and stock market fees, among other professional fees. 4. Tax at 26.0%, per SC management. E refers to Estimated. Source: SC management, Corporate Expense Projections. (dollars in millions) Projected Fiscal Year Ending July 31, 2022E [1] 2023E 2024E 2025E Management Salary and Wages [2] ($0.3) ($2.2) ($2.3) ($2.3) Board Fees ($0.3) ($1.0) ($1.0) ($1.0) Other Professional Fees [3] ($0.9) ($1.6) ($1.6) ($1.6) Tax and Other Expenses ($0.3) ($0.8) ($0.8) ($0.8) Total Corporate Operating Expenses ($1.7) ($5.6) ($5.7) ($5.8) Taxes @ 26.0% [4] $0.4 $1.5 $1.5 $1.5 Tax-Effected Corporate Expenses ($1.3) ($4.1) ($4.2) ($4.3) Present Value PV of Terminal Value Based of Cash Flows on Perpetual Growth Rate for (2022 - 2025) 2025 Tax-Effected Corporate Expenses Discount Rate 0.00% 1.00% 2.00% 0.00% 1.00% 2.00% 13.00% ($11.7) ($24.0) ($26.3) ($29.0) ($35.7) ($38.0) ($40.7) 13.50% ($11.6) ($22.9) ($25.0) ($27.4) ($34.5) ($36.6) ($39.0) 14.00% ($11.5) + ($21.8) ($23.7) ($26.0) = ($33.3) ($35.3) ($37.5) 14.50% ($11.5) ($20.8) ($22.6) ($24.6) ($32.3) ($34.1) ($36.1) 15.00% ($11.4) ($19.9) ($21.5) ($23.4) ($31.3) ($32.9) ($34.8) Implied Present Value of Tax-Effected Corporate Expenses 32
Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 Supplemental Financial Analysis Schedule 31 NOL Information 33 Weighted Average Cost of Capital Calculation 36 Selected Ownership Information 39 6. Disclaimer 42
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW NOL Projections Source: SC management, Consolidated Projections. (dollars in millions) Projected Fiscal Year Ending July 31, 2022E 2023E 2024E 2025E Steel Connect Estimated Pretax Income ($9.9) ($8.3) ($8.4) ($7.8) Book to Tax Adjustments 0.1 0.6 0.0 (0.7) IWCO Worthless Stock Deduction Estimate (97.0) 0.0 0.0 0.0 Estimated Taxable Income (Loss) ($106.8) ($7.7) ($8.4) ($8.5) ModusLink Corporation (U.S. Only) Earnings Before Taxes $7.9 $13.8 $15.7 $17.7 % Related to U.S. NA 20.0% 25.0% 30.0% Estimated Pretax Income ($0.3) $2.8 $3.9 $5.3 Tax Adjustments (GILTI) 2.0 2.0 2.0 2.0 Estimated Taxable Income (Loss) $1.7 $4.8 $5.9 $7.3 Consolidated Consolidated Taxable Income (Loss) ($105.1) ($2.9) ($2.5) ($1.1) IRC 163(j) Disallowed Interest Expense 1.4 1.3 1.3 1.3 Total Taxable Income / (Loss) ($103.7) ($1.6) ($1.2) $0.2 34
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Year Generated NOL Amount Illustrative Maximum Tax Shelter [1] Expiration Date FY 2003 $1,786.0 $375.1 7/31/2023 FY 2004 $48.3 $10.2 7/31/2024 FY 2007 $19.4 $4.1 7/31/2027 FY 2008 $39.7 $8.3 7/31/2028 FY 2009 $4.8 $1.0 7/31/2029 FY 2011 $14.6 $3.1 7/31/2031 FY 2012 $5.3 $1.1 7/31/2032 FY 2013 $44.0 $9.2 7/31/2033 FY 2015 $12.7 $2.7 7/31/2035 FY 2016 $40.9 $8.6 7/31/2036 FY 2017 $13.1 $2.7 7/31/2037 FY 2018 $30.7 $6.4 7/31/2038 FY 2022 $97.0 $20.4 NA [3] Total $2,156.4 $452.8 Illustrative Federal NOL Observations Note: Does not reflect $73.4 million of foreign NOLs or $111.1 million of state NOLs, which SC management has indicated it do es not project utilizing over the projection period. 1. Calculated by multiplying corresponding gross NOL amount by the current federal tax rate of 21.0%. Shown for illustrative pur pos es only. 2. Reflects $97 million worthless stock deduction from disposition of IWCO, per SC management. Additional NOLs may be generated in FY 2022 depending on final year - end results. 3. NOLs generated after FY 2018 are not expected to expire, per SC management. FY refers to Fiscal Year; NA refers to Not Available; NOL refers to Net Operating Loss. Source: SC management, Consolidated Projections. (dollars in millions) Schedule of Steel Connect Federal NOLs [2] 35
Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 Supplemental Financial Analysis Schedule 31 NOL Information 33 Weighted Average Cost of Capital Calculation 36 Selected Ownership Information 39 6. Disclaimer 42
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Weighted Average Cost of Capital Calculation ModusLink Note: No company used in this calculation for comparative purposes is identical to ModusLink. 1. Total Cap refers to total capitalization, which equals Equity Market Value + Total Debt + Pfd. Stock. 2. Total Debt refers to total debt amount based on most recent public filings as of 6/9/22. 3. Dd refers to Implied Tax - Deductible Debt, which equals the lesser of (a) 30% of Adjusted Taxable Income/Cost of Debt, or (b) Total Debt. LTM Adjusted EBITDA, based on most recent public filings as of 6/9/22, is assumed to be a valid proxy for Adjusted Taxable I ncome for the selected companies. 4. Dnd refers to Implied Non - Tax - Deductible Debt, which equals Total Debt minus Dd. 5. Equity Market Value based on closing price on 6/9/22 and on diluted shares as of 6/9/22. 6. Pfd. Stock refers to preferred stock, which is the amount as stated in most recent public filings as of 6/9/22. 7. Financial information for GXO Logistics, Inc. is presented on a standalone basis, excluding the impact of the acquisition of Clipper Logistics plc, due to the lack of pro forma historical financial information being publicly available. 8. Based on actual levered 5 - year weekly beta per Bloomberg as of 6/9/22. 9. Unlevered Beta = Levered Beta/(1 + ((1 – tax rate) * Dd to Equity Market Value) + ( Dnd to Equity Market Value) + (Pfd. Stock to Equity Market Value)). 10. Based on review of studies measuring the historical returns between stocks and bonds, theoretical models such as supply - side and demand - side models and other materials. 11. Duff & Phelps Cost of Capital Navigator ("Navigator"). 12. Cost of Equity = Risk - Free Rate of Return + (Levered Beta * Equity Risk Premium) + Size Premium. Risk - Free Rate of Return a s of 6/9/22, based on 20 - year U.S. Treasury Bond Yield. 13. Based on selected company weighted average interest rate per most recent public filings as of 6/9/22 (for consistency). 14. Based on selected company weighted average preferred dividend per most recent public filings as of 6/9/22. *Excluded from median and mean data due to low r - squared of observed beta and/or limited trading history, among other factors. NA refers to not available. Sources: Bloomberg, Capital IQ. Total Debt to Dd to Dnd to Total Debt to Dd to Equity Dnd to Equity Pfd. Stock to Equity Market Pfd. Stock to Total Cap Total Cap Total Cap Equity Market Market Value Market Value Total Cap Value to Total Equity Market Selected Company [1] [2] [1] [3] [1] [4] Value [2] [5] [3] [5] [4] [5] [1] [6] Cap [1] [5] Value [5] [6] Celestica Inc. 30.1% # 30.1% # 0.0% # 43.1% # 43.1% # 0.0% # 0.0% # 69.9% # 0.0% CJ Logistics Corporation 45.0% # 45.0% # 0.0% # 81.7% # 81.7% # 0.0% # 0.0% # 55.0% # 0.0% Deutsche Post AG 32.2% # 32.2% # 0.0% # 47.5% # 47.5% # 0.0% # 0.0% # 67.8% # 0.0% FedEx Corporation 26.5% # 26.5% # 0.0% # 36.0% # 36.0% # 0.0% # 0.0% # 73.5% # 0.0% Flex Ltd. 34.1% # 34.1% # 0.0% # 51.7% # 51.7% # 0.0% # 0.0% # 65.9% # 0.0% GXO Logistics, Inc. [7] 13.4% # 13.4% # 0.0% # 15.5% # 15.5% # 0.0% # 0.0% # 86.6% # 0.0% Jabil Inc. 24.0% # 24.0% # 0.0% # 31.6% # 31.6% # 0.0% # 0.0% # 76.0% # 0.0% Kerry Logistics Network Limited 16.3% # 16.3% # 0.0% # 19.4% # 19.4% # 0.0% # 0.0% # 83.7% # 0.0% Kuehne + Nagel International AG 1.5% # 1.5% # 0.0% # 1.6% # 1.6% # 0.0% # 0.0% # 98.5% # 0.0% United Parcel Service, Inc. 12.4% # 12.4% # 0.0% # 14.1% # 14.1% # 0.0% # 0.0% # 87.6% # 0.0% Wincanton plc 5.1% # 5.1% # 0.0% # 5.4% # 5.4% # 0.0% # 0.0% # 94.9% # 0.0% Median 24.0% 24.0% 0.0% 31.6% 31.6% 0.0% 0.0% 76.0% 0.0% Mean 21.9% 21.9% 0.0% 31.6% 31.6% 0.0% 0.0% 78.1% 0.0% Debt Levered Unlevered Equity Risk Size Cost of Cost of Cost of Pfd. Selected Company Beta [5] Beta [8] Beta [9] Premium [10] Premium [11] Equity [12] Debt [13] Stock [14] WACC Celestica Inc. 1.42 # 1.07 # 6.07% 1.34% 13.4% # 4.1% # NANA 10.2% CJ Logistics Corporation Input 0.30 * 0.19 * 6.07% 1.34% 6.6% # 2.5% # NANA 4.4% Deutsche Post AG Input 0.92 # 0.68 # 6.07% -0.22% 8.8% # 1.5% # NANA 6.3% FedEx Corporation Input 1.18 # 0.92 # 6.07% -0.22% 10.3% # 3.4% # NANA 8.3% Flex Ltd. 1.77 # 1.27 # 6.07% 0.54% 14.7% # 4.3% # NANA 10.8% GXO Logistics, Inc. [7] Input 2.11 * 1.88 * 6.07% 0.54% 16.7% # 2.4% # NANA 14.7% Jabil Inc. 1.64 # 1.32 # 6.07% 0.55% 13.9% # 3.5% # NANA 11.2% Kerry Logistics Network Limited Input 0.69 # 0.61 # 6.07% 0.89% 8.5% # 1.4% # NANA 7.3% Kuehne + Nagel International AG Input 0.61 # 0.60 # 6.07% 0.43% 7.5% # 0.1% # NANA 7.4% United Parcel Service, Inc. 0.90 # 0.81 # 6.07% -0.22% 8.7% # 3.3% # NANA 7.9% Wincanton plc Input 0.73 # 0.70 # 6.07% 2.10% 9.9% # NANA NANA 9.4% Median 0.92 0.81 9.9% 2.9% NA 8.3% Mean 1.10 0.89 10.8% 2.7% NA 8.9% 37
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Weighted Average Cost of Capital Calculation (cont.) ModusLink 1. Risk - Free Rate of Return as of 6/9/22, based on 20 - year U.S. Treasury Bond Yield. 2. Based on a review of studies measuring the historical returns between stocks and bonds, theoretical models such as supply sid e and demand side models and other materials. Adjusted by correlation between the S&P 500 TR Index and the MSCI Daily TR Gross World Index. 3. Navigator. 4. Forward tax rate, per Steel Connect and ModusLink management. 5. ModusLink LTM Adjusted EBITDA is assumed to be a valid proxy for ModusLink Adjusted Taxable Income. 6. ModusLink Total Debt refers to total debt amount of ModusLink as of 6/9/22. 7. ModusLink Dd refers to Implied Tax - Deductible Debt of ModusLink, which equals the lesser of (a) 30% of ModusLink Adjusted Taxable Income/Cos t of Debt, or (b) ModusLink Total Debt. Based on Capital Structure Assumptions. 8. ModusLink Dnd refers to Implied Non - Tax - Deductible Debt of ModusLink, which equals ModusLink Total Debt minus ModusLink Dd. 9. Based on review of corresponding metrics of selected companies listed on previous page. 10. Based on ModusLink’s Dd and Dnd and the Capital Structure Assumptions regarding Total Debt to Total Capitalization and Equity Market Value to Total C ap italization. 11. Based on review of selected companies’ unlevered betas listed on previous page. 12. Computed Levered Beta = Selected Unlevered Beta * (1 + ((1 – Tax Rate) * Dd to Equity Market Value) + (Dnd to Equity Market Value) + (Preferred Stock to Equity Market Value)). Based on Market and Capital Structure Assumptions. 13. Cost of Equity = Risk - Free Rate of Return + (Computed Levered Beta * Equity Risk Premium) + Size Premium. Based on Market As sumptions. Sources: Bloomberg, Capital IQ. (dollars in millions) Market Capital Structure Cost of Equity for Assumptions Assumptions Computed WACC Risk-Free Rate of Return [1] 3.40% ModusLink Adjusted Taxable Income [5] $9.6 Selected Unlevered Beta [11] 0.81 Equity Risk Premium [2] 6.07% ModusLink Total Debt [6] $0.0 Computed Levered Beta [12] 1.07 Size Premium [3] 7.89% ModusLink Dd [7] $0.0 Cost of Equity [13] 17.8% Tax Rate [4] 25.00% ModusLink Dnd [8] $0.0 Debt Beta [15] Total Debt to Total Capitalization [9] 24.0% Dd to Total Capitalization [10] 0.0% Dnd to Total Capitalization [10] 24.0% Total Debt to Equity Market Value 31.6% Dd to Equity Market Value [10] 0.0% Dnd to Equity Market Value [10] 31.6% Preferred Stock to Total Capitalization [9] 0.0% Equity Market Value to Total Capitalization [9] 76.0% Preferred Stock to Equity Market Value 0.0% Cost of Debt [9] 2.9% Cost of Preferred Stock [9] NA Computed Weighted Average Cost of Capital 14.2% Selected Weighted Average Cost of Capital Range 13.0% -- 15.0% 38
Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 Supplemental Financial Analysis Schedule 31 NOL Information 33 Weighted Average Cost of Capital Calculation 36 Selected Ownership Information 39 6. Disclaimer 42
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Ownership Summary Steel Connect 1. Includes (i) 17.9 million shares of common stock underlying the Company’s Series C Convertible Preferred Stock and (ii) 6.3 m ill ion shares of common stock underlying the Company’s Convertible Senior Notes, both of which are owned by Steel Partners, presented on an as - converted basis. Based on total common s hares outstanding as of June 1, 2022, per SC management. 2. Source: Capital IQ. Denotes ownership of Steel Partners’ 13D group. Source: Capital IQ, Bloomberg, public filings, SC management. (shares outstanding in millions) As-Converted Shares [1] Holder Shares % Outstanding Steel Partners Holdings L.P. [1] 42.3 50.1% Warren Lichtenstein (Executive Chairman & Interim CEO) 1.6 1.9% Jack Howard (Director) 0.9 1.0% Glen Kassan (Vice Chairman) 0.4 0.5% Other Current / Former Directors and Executive Officers [2] 1.7 2.0% Steel Partners and Other Insiders 46.8 55.4% GAMCO Investors, Inc. (NYSE:GBL) 2.6 3.0% 6.8% Renaissance Technologies LLC 2.2 2.6% 5.8% The Vanguard Group, Inc. 1.9 2.2% 5.0% BlackRock, Inc. (NYSE:BLK) 1.0 1.2% 2.7% Bridgeway Capital Management, LLC 0.3 0.3% 0.7% Bank of America Corporation 0.2 0.3% 0.6% Geode Capital Management, LLC 0.2 0.3% 0.6% Other Public Shareholders 29.3 34.6% 77.7% Total Public Float [2] 37.7 44.6% 100.0% Total As-Converted Shares [1] 84.5 100.0% % of Unafilliated 40
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW Recent Trading Activity by Shareholder Largest Steel Connect Shareholders (Excluding Steel Partners and Other Insiders) Note: Net Shares Added / (Deducted) is shown through Q1 CY 2022. CY refers to Calendar Year; Q refers to Quarter; VWAP refers to Volume - Weighted Average Price. Source: Capital IQ, Bloomberg, public filings. (dollars and shares in actuals) % of Latest Total Net Shares Added / (Deducted) by Quarter Stockholder Shareholdings Float Q2 CY 2020 Q3 CY 2020 Q4 CY 2020 Q1 CY 2021 Q2 CY 2021 Q3 CY 2021 Q4 CY 2021 Q1 CY 2022 GAMCO Investors, Inc. 2,553,000 6.8% 552,000 1,610,920 (7,422) (511,799) (278,050) 19,351 - - % of Holdings Traded 47.3% 93.7% (0.2%) (15.4%) (9.9%) 0.8% 0.0% 0.0% Renaissance Technologies LLC 2,199,315 5.8% 283,239 121,943 293,441 (91,033) (102,444) (114,404) (125,800) (97,881) % of Holdings Traded 13.9% 5.3% 12.0% (3.3%) (3.9%) (4.5%) (5.2%) (4.3%) The Vanguard Group, Inc. 1,901,359 5.0% (102,386) (146,947) (21,801) 1,228,031 31,156 61,779 54,115 (8,108) % of Holdings Traded (12.7%) (20.9%) (3.9%) 229.8% 1.8% 3.4% 2.9% (0.4%) BlackRock, Inc. 1,024,979 2.7% (81,325) 15 1,275 2,180 (72,226) (599) 6,497 (13,540) % of Holdings Traded (6.9%) 0.0% 0.1% 0.2% (6.5%) (0.1%) 0.6% (1.3%) Bridgeway Capital Management, Inc. 262,845 0.7% (250,600) (43,000) (35,200) (46,155) 68,700 - - (12,000) % of Holdings Traded (43.1%) (13.0%) (12.2%) (18.3%) 33.3% 0.0% 0.0% (4.4%) Bank of America Corporation 243,500 0.6% - 1,220 (1,220) - 310 12,216 157,303 73,671 % of Holdings Traded 0.0% New Position (100.0%) 0.0% New Position 3940.6% 1255.8% 43.4% Geode Capital Management, LLC 232,624 0.6% - - - 29,080 13,335 - - - % of Holdings Traded 0.0% 0.0% 0.0% 15.3% 6.1% 0.0% 0.0% 0.0% VWAP During Quarter $0.58 $0.56 $0.74 $2.14 $2.01 $1.90 $1.79 $1.25 High Closing Stock Price During Quarter $0.87 $0.67 $0.98 $2.67 $2.21 $2.07 $2.40 $1.57 Low Closing Stock Price During Quarter $0.46 $0.51 $0.51 $0.77 $1.79 $1.64 $1.31 $1.00 41
Page 1. Executive Summary 3 2. Selected Updates Since Prior Discussion Materials 8 3. Financial Analyses: ModusLink 20 4. Selected Public Market Observations 26 5. Appendices 30 6. Disclaimer 42
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW This presentation, and any supplemental information (written or oral) or other documents provided in connection therewith (collectively, the “materials”), are provided solely for the information of the Special Committee (the “Committee”) of the Board of Directors (the “Board”) of Steel Connect, Inc . (the “Company”) by Houlihan Lokey in connection with the Committee’s consideration of a potential transaction (the “Transaction”) involving the Company . This presentation is incomplete without reference to, and should be considered in conjunction with, any supplemental information provided by and discussions with Houlihan Lokey in connection therewith . Any defined terms used herein shall have the meanings set forth herein, even if such defined terms have been given different meanings elsewhere in the materials . The materials are for discussion purposes only . Houlihan Lokey expressly disclaims any and all liability, whether direct or indirect, in contract or tort or otherwise, to any person in connection with the materials . The materials were prepared for specific persons familiar with the business and affairs of the Company for use in a specific context and were not prepared with a view to public disclosure or to conform with any disclosure standards under any state, federal or international securities laws or other laws, rules or regulations, and none of the Committee, the Company or Houlihan Lokey takes any responsibility for the use of the materials by persons other than the Committee . The materials are provided on a confidential basis solely for the information of the Committee and may not be disclosed, summarized, reproduced, disseminated or quoted or otherwise referred to, in whole or in part, without Houlihan Lokey’s express prior written consent . 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If the Company plans to disclose information pursuant to the first sentence of this paragraph, the Company shall inform those to whom it discloses any such information that they may not rely upon such information for any purpose without Houlihan Lokey’s prior written consent . Houlihan Lokey is not an expert on, and nothing contained in the materials should be construed as advice with regard to, legal, accounting, regulatory, insurance, tax or other specialist matters . Houlihan Lokey’s role in reviewing any information was limited solely to performing such a review as it deemed necessary to support its own advice and analysis and was not on behalf of the Committee . The materials necessarily are based on financial, economic, market and other conditions as in effect on, and the information available to Houlihan Lokey as of, the date of the materials . 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The materials do not constitute any opinion, nor do the materials constitute a recommendation to the Board, the Committee, the Company, any security holder of the Company or any other party as to how to vote or act with respect to any matter relating to the Transaction or otherwise or whether to buy or sell any assets or securities of any company . Houlihan Lokey’s only opinion is the opinion, if any, that is actually delivered to the Committee . In preparing the materials Houlihan Lokey has acted as an independent contractor and nothing in the materials is intended to create or shall be construed as creating a fiduciary or other relationship between Houlihan Lokey and any party . The materials may not reflect information known to other professionals in other business areas of Houlihan Lokey and its affiliates . 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Selecting portions of the analyses, analytic methods and factors without considering all analyses and factors could create a misleading or incomplete view . The materials reflect judgments and assumptions with regard to industry performance, general business, economic, regulatory, market and financial conditions and other matters, many of which are beyond the control of the participants in the Transaction . Any estimates of value contained in the materials are not necessarily indicative of actual value or predictive of future results or values, which may be significantly more or less favorable . Any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which any assets, businesses or securities may actually be sold . The materials do not constitute a valuation opinion or credit rating . The materials do not address the consideration to be paid or received in, the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the Transaction or otherwise . Furthermore, the materials do not address the fairness of any portion or aspect of the Transaction to any party . In preparing the materials, Houlihan Lokey has not conducted any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (contingent or otherwise) of the Company or any other party and has no obligation to evaluate the solvency of the Company or any other party under any law . Disclaimer 43
CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW All budgets, projections, estimates, financial analyses, reports and other information with respect to operations (including estimates of potential cost savings and expenses) reflected in the materials have been prepared by management of the relevant party or are derived from such budgets, projections, estimates, financial analyses, reports and other information or from other sources, which involve numerous and significant subjective determinations made by management of the relevant party and/or which such management has reviewed and found reasonable . The budgets, projections and estimates (including, without limitation, estimates of potential cost savings and synergies) contained in the materials may or may not be achieved and differences between projected results and those actually achieved may be material . 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CONFIDENTIAL - PRELIMINARY DRAFT - SUBJECT TO FURTHER REVIEW 45 CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCI AL AND VALUATION ADVISORY HL .com
Exhibit 107
Exhibit Fee Table
Calculation of Filing Fee Table
Schedule 13E-3
(Form Type)
Steel Connect, Inc.
(Name of registrant as specified in its charter)
Steel Connect, Inc.
Steel Partners Holdings L.P.,
SP Merger Sub, Inc.
Handy & Harman Ltd.
WHX CS Corp.
Steel Partners, Ltd.
SPH Group LLC
SPH Group Holdings LLC
Steel Partners Holdings GP Inc.
Steel Excel Inc.
Warren G. Lichtenstein
Jack L. Howard
(Name of persons filing statement)
Table 1: Transaction Value
| Proposed Maximum Aggregate Value of Transaction | Fee Rate | Amount of Filling Fee | ||||||||||
| Fees to be Paid | $ | 57,642,441.75 | (1) | 0.0000927 | $ | 5,343.45 | (2) | |||||
| Fees Previously Paid | $ | – | $ | – | ||||||||
| Total Transaction Valuation | $ | 57,642,441.75 | ||||||||||
| Total Fees Due for Filing | $ | 5,343.45 | ||||||||||
| Total Fees Previously Paid | $ | – | ||||||||||
| Total Fee Offsets | $ | – | ||||||||||
| Net Fee Due | $ | 5,343.45 | ||||||||||
Table 1: Fee Offset Claims and Sources
| Registrant or Filer Name |
Form or Filing Type |
File Number | Initial Filing Date |
Filing Date | Fee Offset Claimed |
Fee Paid with Fee Offset Source | ||||||||||||
| Fee Offset Claims | PREM14A | 001-35319 | July 7, 2022 | $ | 5,343.45 | |||||||||||||
| Fee Offset Sources | Steel Connect Inc. | PREM14A | 001-35319 | July 7, 2022 | $5,343.45(3) | |||||||||||||
| (1) | Solely for purposes of calculating the filing fee in accordance with Rule 0-11(b)(1) under the Securities Exchange Act of 1934 (as amended, “Exchange Act Rule 0-11”), this amount represents (i) the sum of (a) 60,398,784 shares of common stock of Steel Connect, Inc. (the “Company”), par value $0.01 per share (the “Shares”), minus (b) 18,182,705 Shares held by Steel Partners Holdings L.P. and its wholly owned subsidiaries, plus (c) 482,026 restricted Shares held by directors and officers of the Company, multiplied by (ii) the Per Share Merger Consideration of $1.35 per Share. |
| (2) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): Estimated solely for the purposes of calculating the filing fee, the underlying value of the transaction was based on the total maximum consideration to be received by the registrant in the transaction ($57,642,441.75). In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying $57,642,441.75 by 0.0000927. |
| (3) | The Company previously paid $5,343.45 upon the filing of its Preliminary Proxy Statement on Schedule 14A on July 7, 2022 in connection with the transaction reported hereby. |