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TRX, Inc.

: Initial Public Offering

History
TRX initially planned to do IPO back in 2001 to raise money to invest in the firms growth Attempt at the IPO in 2001 failed in light of the dot-com bubble Instead turned to strategic investors to raise capital

Options
TRX is now seeking to raise capital to support growth, and mainly to recapitalize the current ownership structure because strategic investors are looking to exit on investment The companys three options for raising capital: 1 IPO 2 Private placement of equity 3 Private placement of debt

TRX Proposed IPO Filing Range


Total 6.8M shares $3.4M primary shares, $3.4M secondary shares $11-$13 per share

Factors Affecting IPO Success


Positive
Strong cash flow generation through EBITDA expansion and working capital management Pro forma PE and Enterprise value multiples validate valuation Transitioning from customer care to focus on more profitable opportunities Positive net income projected in 2006 Active and prepared management team

Negative
Company had negative earnings Positive growth prospects were not easily seen by investors since it involved the companys behind the scenes plans Very capital intensive compared to to other companies in industry Ratio of secondary shares being offered was at maximum limit allowed by CSFB Recovering IPO market, but still relatively slow Events such a bankruptcy of Delta and Northwest Airlines raised concerns about the industry

Post Roadshow
CSFB determined pricing of shares would need to go down to $9 a share Investors were not interested in listening to managements proposal on future plans for company growth and profitability Investors distracted by factors adding risk to the investment:
The ratio of secondary shares to total shares offered was unattractive Post-IPO, minority stakeholders would be given option to sell a total of 1.02M shares, increasing shares outstanding Future prospects were inconsistent with historical performance Negative earnings impact the price of the stock, despite strong cash flows Health of airline industry was tied to profitability of TRX; two airlines recently went bankrupt

TRX Valuation based on multiples


Using comparable companies from primary comparable industries (Online travel and payment processing) Using median and lower quartile of comparable companies multiple to reflect discount of TRX due to high capital intensity compared to industry Using TRX estimated financials by CSFB for year 2006

Conclusion
Fair price per share range should be $10 - $12 Compared to both the median and lower quartile of the multiples, $9 per share is a significant discount on the value of TRX However, TRX always has the option to postpone the offering until market and industry conditions improve to maximize valuation
Aligned with interests of exiting minority shareholders to not take a loss on their investments

Exhibit: Valuations

2006E Adjusted EBITDA Median EV/EBITDA Multiple Enterprise Value

20.3 10.3x 209.09

2006E Net Income 2006E EPS Median P/E Multiple

10.7 0.60 19.0x

Net Debt
Equity Value Shares Out Implied Share Price

0
209.09 17.7 $ 11.81

Equity Value Net Debt Enterprise Value Shares Out Implied Share Price

203.3 0 203.3 17.7 $ 11.49

Exhibit: Implied Multiples


At $12 Share Price Share Price Shares Out Equity Value Net Debt Enterprise Value Implied EV/EBITDA Multiple $ 12 17.7 212.4 0 212.4 10.5x Equity Value Net Debt Enterprise Value Implied EV/EBITDA Multiple Implied P/E 159.3 0 159.3 7.8x 14.9x Share Price Shares Out At $9 Share Price $ 9 17.7

Implied P/E

19.9x

*Multiples based off CSFB 2006E Net Income & EBITDA

Exhibit: Comparable Company Set


EV/EBITDA 2004E 2005E April July April July Online Travel IAC/Interactive Corp Priceline CTRIP Median Mean Payment Processors First Data Corp Fiserv Inc Total System Services Alliance Data Systems Global Payment Certegy IPAYMENT Median Mean 9.8x 15.6x 20.2x 15.6x 15.2x 12.1x 13.5x 34.1x 13.5x 19.9x 8.9x 13.3x 14.7x 13.3x 12.3x 10.5x 11.0x 24.8x 11.0x 15.4x P/E 2004E April July 21.3x 20.7x 29.1x 21.3x 23.7x 22.9x 18.7x 41.4x 22.9x 27.7x 2005E April July 18.3x 17.4x 22.1x 18.3x 19.3x 19.7x 16.0x 31.2x 19.7x 22.3x

10.5x 9.0x 11.5x 10.5x 12.3x 9.6x 8.6x 10.5x 10.3x

11.1x 9.4x 11.4x 11.5x 11.7x 10.8x 7.9x 11.1x 10.5x

9.4x 8.2x 10.2x 9.0x NM 8.6x 7.9x 8.8x 8.9x

10.4x 8.7x 10.5x 10.2x 10.2x 10.0x 7.2x 10.2x 9.6x

16.3x 18.6x 26.0x 20.5x 24.4x 18.1x 22.3x 20.5x 20.9x

17.5x 19.9x 25.0x 22.1x 25.5x 20.9x 20.0x 20.9x 21.6x

14.3x 16.4x 22.4x 17.7x 21.1x 15.9x 19.1x 17.7x 18.1x

15.4x 17.6x 21.9x 19.2x 22.6x 18.3x 17.2x 18.3x 18.9x

Comparable Company Multiples Median EV/EBITDA Mean EV/EBITDA Lower Quartile EV/EBITDA Median P/E Mean P/E Lower Quartile P/E

10.3x 12.5x 10.2x 19.0x 20.6x 17.5x