UNITED STATES
SECURITIES EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o     Preliminary Proxy Statement

o     Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ     Definitive Proxy Statement

o     Definitive Additional Materials

o     Soliciting Material Pursuant to §240.14a-12

GENERAL FINANCE CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

o     No fee required.

þ     Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

	1)		Title of each class of securities to which transaction applies:
			Common stock, par value $0.001 per share, of Mobile Office Acquisition Corp.

     

	2)		Aggregate number of securities to which transaction applies:
			Acquisition of all outstanding common stock of Mobile Office Acquisition Corp.

     

	3)		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):
			$48 million (Holders of Mobile Office Acquisition Corp. common stock will receive an aggregate of (1) up to $21.5 million in cash, (2) 4,000,000 shares of common stock of General Finance Corporation valued at an aggregate of $25 million as of July 31, 2008 and (3) a subordinated promissory note in the amount of $1.5 million)

     

	4)		Proposed maximum aggregate value of transaction:
			$48 million

     

	5)		Total fee paid:
			$1,866.40

     

o     Fee paid previously with preliminary materials.

x		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

1)

Amount Previously Paid: $5,189.66

     

2)

Form, Schedule or Registration Statement No.: Preliminary Proxy Statement (PREM 14A)

     

3)

Filing Party: General Finance Corporation

     

4)

Date Filed: October 20, 2006

     

 

39 East Union Street
Pasadena, California 91103

 

To the Stockholders of General Finance Corporation:

 

You are cordially invited to attend a special meeting of our stockholders to be held at 9:00 a.m., local time, on September 30, 2008, at the offices of General Finance Corporation, or General Finance, located at 39 East Union Street, Pasadena, California 91103.

 

At the special meeting, you will be asked to consider and vote upon our proposed acquisition of Mobile Office Acquisition Corp., or MOAC, and its wholly-owned subsidiary Pac-Van, Inc. and the issuance of 4,000,000 shares of restricted General Finance common stock, or the Shares, in connection with the acquisition. Pac-Van, Inc. leases and sells modular buildings, mobile offices and storage containers in 31 states across the United States. MOAC and Pac-Van, Inc. are referred to collectively in this proxy as Pac-Van.

 

At the closing of the acquisition, we will acquire MOAC through a merger, or Merger, of MOAC into our wholly-owned subsidiary, GFN North America Corp., or GFNA. The purchase price for the MOAC shares will be approximately $158.8 million, which will consist of up to $21.5 million in cash, a $1.5 million senior subordinated note of GFNA, or the Note, $30 million in Shares, which are valued at $7.50 per share for the purposes of the acquisition, and the assumption of indebtedness. The amount of cash paid for the MOAC shares will depend on the amount of indebtedness assumed, but will not exceed $21.5 million in any event. The indebtedness to be assumed consists of outstanding principal as of June 30, 2008 under Pac-Van’s existing senior secured credit facility of approximately $80.4 million and a senior subordinated secured note, or the Subordinated Debt, of approximately $25 million. The actual amount of indebtedness outstanding as of the closing of the Merger will be different, but will in no event exceed $86 million of principal under the senior secured credit facility and $25 million of original principal under the Subordinated Debt. For more information about the Merger consideration, see the “Agreement and Plan of Merger — Merger Consideration” beginning on page 45. As a result of the Merger, Pac-Van, Inc. will become a direct, wholly owned subsidiary of GFNA.

 

Enclosed is a notice of special meeting and proxy statement containing detailed information concerning the acquisition. Whether or not you plan to attend the meeting, we urge you to read these materials carefully.

 

A special committee of independent members of the board of directors of General Finance was formed to determine whether to acquire Pac-Van because Ronald F. Valenta, our President, Chief Executive Officer and director, is a stockholder of General Finance and a stockholder and director of MOAC. The special committee comprised only of independent directors, which did not include Mr. Valenta, was therefore created to formulate an independent determination as to whether the acquisition of Pac-Van would achieve our strategic goals and enhance stockholder value. The special committee has determined that the acquisition of Pac-Van is in the best interests of General Finance and our stockholders. The factors considered by the special committee in arriving at its determinations are described in the enclosed proxy statement. The special committee believes that the acquisition is fair to General Finance and its stockholders. The special committee of our board of directors has unanimously approved the acquisition of Pac-Van. The special committee of our board of directors unanimously recommends that you vote or give instruction to vote “FOR” approval of the acquisition and the issuance of restricted General Finance common stock pursuant to the merger agreement.

 

We can complete the acquisition only if it is approved by the affirmative vote of the holders of a majority of the shares of our common stock present and entitled to vote at the special meeting. Your vote is important. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided.

 

I look forward to seeing you at the meeting.

 

Sincerely,

John O. Johnson
Chief Operating Officer

 

GENERAL FINANCE CORPORATION
39 East Union Street
Pasadena, California 91103

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 30, 2008

 

To the Stockholders of General Finance Corporation:

 

NOTICE IS HEREBY GIVEN that a special meeting of stockholders of General Finance Corporation, a Delaware corporation, or General Finance, will be held at 9:00 a.m., local time, on September 30, 2008 at the offices of General Finance, located at 39 East Union Street, Pasadena, California, for the following purposes:

 

(1) to consider and vote upon a proposal to approve our acquisition of Mobile Office Acquisition Corp., or MOAC, and its wholly-owned subsidiary, Pac-Van, Inc., via a merger, or the Merger, into our subsidiary GFN North America Corp. pursuant to an agreement and plan of merger;

 

(2) to approve the issuance of 4,000,000 shares of restricted General Finance common stock pursuant to the Merger; and

 

(3) in the event that there are insufficient votes present at the meeting for approval of the MOAC acquisition, to consider and act upon a proposal to grant our board of directors discretionary authority to adjourn the special meeting to solicit additional votes for approval of the Merger.

 

These items of business are described in the attached proxy statement, which we encourage you to read in its entirety before voting. Only holders of record of our common stock at the close of business on September 3, 2008 are entitled to notice of and to vote at the meeting and any adjournment or postponement of the meeting.

 

All stockholders are cordially invited to attend the meeting in person. However, to ensure your representation at the meeting, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. Proxy cards that are returned to us in time for the special meeting will be voted by the proxy holders named therein as instructed on the proxy cards. If no instructions are given, they will be voted “FOR” approval of the MOAC acquisition and the other proposal described above. By returning the enclosed proxy card, you also will be granting the proxy holders discretionary authority to consider and act upon such other matters incident to the conduct of the meeting as may be properly presented at the meeting and any adjournment or postponement of the meeting.

 

By Order of the Board of Directors

 

John O. Johnson
Chief Operating Officer

 

September 2, 2008

 

YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IN ORDER TO ENSURE THAT YOUR SHARES ARE VOTED, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. IF GIVEN, YOU MAY REVOKE YOUR PROXY BY FOLLOWING THE INSTRUCTIONS IN THE PROXY STATEMENT.

 

THIS SPECIAL COMMITTEE OF OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF EACH OF THE PROPOSALS DESCRIBED IN THE ATTACHED PROXY STATEMENT.

GENERAL FINANCE CORPORATION
39 East Union Street
Pasadena, California 91103

 

PROXY STATEMENT

 

This proxy statement is furnished in connection with the solicitation of proxies on behalf of the board of directors of General Finance Corporation for use at the special meeting of our stockholders to be held at 9:00 a.m., local time, on September 30, 2008, at the offices of General Finance Corporation located at 39 East Union Street, Pasadena, California. The accompanying notice of special meeting describes the purposes of the meeting. The proxies will be used at the meeting and at any postponement or adjournment of the meeting.

 

This proxy statement and accompanying proxy solicitation materials were first mailed on or about September 5, 2008 to our stockholders entitled to vote at the meeting.

TABLE OF CONTENTS

 

 

This Summary Term Sheet, together with the sections entitled “Questions and Answers About the Acquisition and the Special Meeting” and “Summary of the Proxy Statement,” summarizes certain material information contained in this proxy statement. You should carefully read this entire proxy statement for a more complete understanding of the matters to be considered at the special meeting of stockholders.

 

 

 

The following questions and answers address briefly some commonly asked questions regarding our proposed acquisition of Mobile Office Acquisition Corp. or MOAC, and its wholly-owned subsidiary Pac-Van, Inc., and the special meeting of our stockholders. These questions and answers may not address all questions that may be important to you as a stockholder. The answers below are qualified by reference to the more detailed information contained elsewhere in this proxy statement.

 

References in this proxy statement to “General Finance,” “we,” “us,” “our,” and “ours” mean General Finance Corporation and its subsidiaries, including Pac-Van following the acquisition. References in this proxy statement to “Pac-Van” mean MOAC collectively with Pac-Van, Inc.

 

The stockholders of MOAC at the closing include Ronald F. Valenta, Ronald L. Havner, Jr., D. E. Shaw Laminar Portfolios, L.L.C., or D. E. Shaw, whose shares will be canceled in the Merger, and six members of the management team of Pac-Van, Inc., which includes Theodore M. Mourouzis and who are referred to collectively in this proxy statement as the management stockholders. Messrs. Valenta and Havner, D. E. Shaw and the management stockholders are sometimes referred to in this proxy statement as the sellers.

 

On July 28, 2008, General Finance, GFN North America Corp., or GFNA, MOAC and certain stockholders of MOAC entered into an agreement and plan of merger, or Merger Agreement, under which we agreed to acquire MOAC. The terms of the Merger Agreement were determined by arm’s-length negotiations among the special committee of our independent board of directors, MOAC and the stockholders of MOAC.

 

The Following Questions and Answers are of Interest to All Stockholders

 

 

 

 

 

 

 

This summary highlights selected information regarding our proposed acquisition of Pac-Van that is more fully discussed elsewhere in this proxy statement. This summary may not contain all of the information that is important to you. You should carefully read this entire proxy statement for a more complete understanding of the acquisition. You also should read the acquisition agreement, which is referred as a Merger Agreement, attached as Annex A to this proxy statement, as well as the opinion of RBC Capital Markets Corporation, or RBC, attached as Annex B, and excerpts from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 attached as Annex C. The Merger Agreement is the legal contract that governs the acquisition.

 

The Companies

 

General Finance Corporation

 

We are a holding company whose strategy and business plan is to acquire and operate specialty finance and portable services businesses in North America, Europe and Asia-Pacific.

 

To date our only operating subsidiary is Royal Wolf Trading Australia Pty Ltd., or Royal Wolf. Royal Wolf is the leading provider in Australia and New Zealand of portable storage containers, portable container buildings and freight containers, which we refer to collectively as storage container products. Royal Wolf had approximately 24,000 units in its lease fleet and sales inventory as of March 31, 2008. We believe Royal Wolf has the largest lease fleet of storage container products in Australia. Royal Wolf leases and sells storage container products through its 18 customer service centers located in every state in Australia. Royal Wolf acquired Royal Wolf Trading New Zealand, or Royal Wolf New Zealand, on April 30, 2008. Royal Wolf New Zealand has 5,000 units and five customer service centers. Royal Wolf’s storage container products are used by a broad range of industries. Royal Wolf’s storage container products provide secure, accessible temporary storage for a diverse client base of over 12,000 large and small customers who conduct business in industries that include mining, road and rail, construction, moving and storage, manufacturing, transportation and defense. During the nine months ending March 31, 2008, we generated revenues of approximately $62.9 million and net income of approximately $3.6 million.

 

Our units, warrants and common stock trade on the American Stock Exchange under the symbols GFN.U, GFN.US and GFN respectively. Our principal executive offices are located at 39 East Union Street, Pasadena, California, our telephone number is (626) 584-9722, and our Internet website address is www.generalfinance.com. Information displayed on our website does not constitute part of this proxy statement.

 

Pac-Van

 

Pac-Van leases and sells modular buildings, mobile officers, and storage containers in 31 states across the United States. Pac-Van has a lease fleet of approximately 12,000 units and 26 branch locations. Pac-Van’s permanent and temporary modular buildings provide usable space for the construction, government, education, industrial and retail sectors. Pac-Van’s mobile offices provide temporary office space for construction, industrial commercial, government, education, healthcare and retail applications.

 

Pac-Van’s storage containers provide on-site storage for the construction, retail, education and government sectors. For the twelve months ended June 30, 2008, Pac-Van projected revenues of approximately $70.5 million and adjusted earnings before interest, taxes, depreciation and amortization of $22.7 million.

 

The Sellers

 

The stockholders from whom we will purchase the shares of MOAC include Ronald F. Valenta, Ronald F. Havner, Jr., D. E. Shaw and certain officers and members of the senior management team of Pac-Van. Under the Merger Agreement, GFNA will acquire MOAC.

The Acquisition

 

The Merger (Page 31)

 

On July 28, 2008, we entered into an agreement and plan of merger, which we refer to as the Merger Agreement, with GFN North America Corp., or GFNA, our wholly-owned subsidiary, MOAC and certain stockholders of MOAC. The stockholders from whom we will acquire MOAC include Ronald F. Valenta, Ronald F. Havner, Jr., D. E. Shaw Laminar Portfolios, L.L.C., or D. E. Shaw, and certain officers and members of the senior management team of Pac-Van. Pursuant to the Merger Agreement, MOAC will merge with and into GFNA, and GFNA will be the surviving corporation. Under the Merger Agreement, in exchange for the acquisition of all the capital stock of MOAC, we will:

 

 

The amount of cash paid for the MOAC shares will depend on the amount of indebtedness assumed, but will not exceed $21.5 million in any event. The 4,000,000 Shares will represent a fully diluted ownership of General Finance of approximately 22.4% as of June 30, 2008.

 

The assumed debt as of June 30, 2008 consists of unpaid principal of approximately $80.4 million outstanding under Pac-Van’s Credit Facility and $25 million outstanding under Pac-Van Subordinated Debt.

 

Why you are receiving this Proxy Statement (page 27)

 

In order to complete the Merger at the special meeting of General Finance stockholders to be held on September 30, 2008 holders of General Finance common stock must approve the Merger Agreement, the Merger, the issuance by General Finance of restricted common stock in connection the Merger and the other proposals set forth in this proxy statement. A list of the proposals follows:

 

Proposal 1:  The Merger Agreement and Plan of Merger (page 30)

 

We are asking holders of General Finance common stock to approve and adopt the Merger Agreement and the Merger.

 

Proposal 2:  Issuance of common stock in connection with the Merger (page 30)

 

We are asking holders of General Finance common stock to approve the issuance of 4,000,000 Shares to the former stockholders of MOAC in consideration for the sale of their capital stock to GFNA. If approved by General Finance stockholders, this issuance would increase the number of issued and outstanding shares of common stock from 13,826,052 to 17,826,052.

 

Proposal 3:  Approval of adjournments or postponements of the Special Meeting (page 30)

 

We are asking holders of General Finance common stock to approve adjournments or postponements of the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting in favor of the foregoing proposals.

 

Recommendation of the Special Committee of the Board of General Finance (page 27); Reasons for the Merger (page 35)

 

After careful consideration of the business and operations of Pac-Van and the terms and conditions of the Merger Agreement, the special committee of our board of directors has unanimously determined that the acquisition of Pac-Van is in the best interest of General Finance and its stockholders. The special committee has unanimously approved the acquisition of Pac-Van and unanimously recommends a vote “For” each of the proposals described

above. Each of proposals 1 and 2 must be approved for any of them to be implemented and the Merger to be consummated.

 

In considering the acquisition, the special committee of our board of directors, in working with management and the special committee’s outside legal and due diligence advisors:

 

 

During the course of reaching its decision to recommend the acquisition, the special committee considered a number of factors. The factors considered by the special committee of our board of directors included, the factors set out in the section entitled “Reasons for the Merger: Recommendations of the special committee of the board of General Finance” beginning on page 35.

 

The terms of the acquisition agreement, include:

 

 

In the course of its deliberations, the special committee also considered a variety of risks and other countervailing factors, including the risks relating to Pac-Van’s business set out in this proxy statement in the section entitled “Risk Factors” beginning on page 21.

 

Opinion of the Special Committee’s Financial Advisor (page 36)

 

In connection with the evaluation of the proposed merger by the special committee, the special committee’s financial advisor, RBC Capital Markets Corporation, or RBC, rendered to the special committee a written opinion dated July 24, 2008 as to the fairness, from a financial point of view and as of such date, to General Finance of the aggregate merger consideration (which representatives of General Finance directed RBC to assume was $52.6 million) to be paid by General Finance. The full text of RBC’s written opinion, dated July 24, 2008, is attached to this Proxy Statement as Annex B and describes the procedures followed, assumptions made, matters considered and limitations on the review undertaken. RBC’s opinion was addressed to, and provided for the information and assistance of, the special committee in connection with the Merger and does not constitute a recommendation to any stockholder as to how such stockholder should vote with respect to the Merger or any other matter in connection with the Merger.

 

Expected timing of the Merger (page 46)

 

We anticipate that the closing of the Merger will occur promptly after the date of the special meeting of the stockholders of General Finance to approve the Merger and the other proposals set forth in this proxy, provided that the requisite stockholder vote in favor of the Merger and the other proposals is obtained and the other conditions to closing of the Merger are satisfied or waived.

Conditions to completion of the Merger (page 50)

 

Completion of the Merger is subject to various conditions, including among others:

 

 

Each of the conditions to General Finance’s and Pac-Van’s obligations to complete the Merger may be waived, in whole or in part, to the extent permitted by applicable law, by the agreement of General Finance and Pac-Van if the condition is a condition to both GFN’s and Pac-Van’s obligation to complete the Merger, or by the party for whom such condition is a condition of its obligation to complete the Merger. The boards of directors of General Finance and Pac-Van may evaluate the materiality of any such waiver to determine whether amendment of this proxy statement and re-solicitation of proxies is necessary. However, General Finance and Pac-Van do not expect any such waiver to be significant enough to require an amendment of this proxy statement and re-solicitation of stockholders. In the event that any such waiver is not determined to be significant enough to require re-solicitation of stockholders, we will have the discretion to complete the Merger without seeking further General Finance stockholder approval.

 

Accordingly, the special committee of our board of directors unanimously recommends that stockholders vote “FOR” approval of the acquisition.

 

Management (page 42)

 

After the acquisition, all of our current directors and officers will continue to serve in the capacities described under “Management of General Finance After the Merger.” Our management team will continue to execute our business plan and strategy of identifying, acquiring and consolidating under our holding company other specialty finance and portable service businesses in North America, Europe and Asia-Pacific. Pac-Van, Inc. also will continue to be managed largely by its management team lead by Theodore M. Mourouzis, its President.

 

Mr. Mourouzis is a party to an employment agreement which is terminable upon advance notice by either party.

 

In connection with the acquisition, Ronald L. Havner, Jr. will be appointed as a member of the board of directors of General Finance. In connection with the acquisition, Ronald F. Valenta, John O. Johnson, Charles E. Barrantes and Theodore M. Mourouzis will be appointed as directors of GFNA and Pac-Van.

 

Our Inside Stockholders (page 87)

 

On July 28, 2008 our officers and directors owned an aggregate of 2,563,522 shares of our common stock, or approximately 18.5% of our outstanding shares

Date, Time and Place of Special Meeting of Our Stockholders (page 27)

 

The special meeting of our stockholders will be held at 9:00 A.M., local time, on September 30, 2008 at the offices of General Finance Corporation located at 39 East Union Street, Pasadena, California.

 

Record Date; Voting Power (page 27)

 

You will be entitled to vote or direct votes to be cast at the special meeting if you owned shares of our common stock at the close of business on September 3, 2008, which is the record date for the special meeting. You will have one vote for each share of our common stock you owned at the close of business on the record date. On the record date, there were 13,826,052 shares of our common stock outstanding.

 

Approval of the MOAC Stockholders (page 46)

 

The stockholders of MOAC approved the Merger Agreement immediately following its execution. No further action by the MOAC stockholders is needed for approval of the acquisition.

 

Quorum and Vote of General Finance Stockholders (page 27)

 

A quorum of our stockholders is necessary to hold a valid stockholders meeting. A quorum will be present at the special meeting if a majority of the shares of our common stock outstanding as of the record date are presented in person or by proxy. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum. The approval of the acquisition will require the approval of the holders of a majority of the shares of our common stock present and entitled to vote at the meeting with respect to the acquisition.

 

Abstentions and broker non-votes will have the same effect as a vote against approval of the acquisition.

 

Appraisal Rights (page 29)

 

Our stockholders do not have appraisal rights in connection with the acquisition.

 

Proxies (page 28)

 

Proxies may be solicited by mail, telephone or in person. We have engaged MacKenzie Partners, Inc. to assist us in the solicitation of proxies.

 

If you grant a proxy, you may still vote your shares in person if you revoke your proxy at or before the special meeting.

 

Interest of Our Directors and Officers in the Acquisition (page 89)

 

You should keep in mind that certain of our officers and directors have interests in the acquisition that are different from, or in addition to, your interests as a stockholder.

 

In particular:

 

 

Indemnification Provisions (page 53)

 

Certain representations and warranties of Pac-Van under the Merger Agreement for corporate authorization of the Merger, board approval, non-contravention of charter documents, taxes, environmental matters and title to personal property and intellectual property will survive until the third anniversary of the closing of the Merger. Subject to certain exceptions, all other representations and warranties of Pac-Van will survive until 20 months after the closing.

 

The stockholders of MOAC that signed the Merger Agreement have agreed in the Merger Agreement to indemnify General Finance against claims on a several basis due to breach of the representations and warranties, subject to certain limitations. With limited exceptions, these limitations provide that the MOAC stockholders are not required to indemnify General Finance until the damages from a claim exceed $500,000, the Indemnity Deductible. With certain exceptions, the indemnification obligations of each stockholder shall not exceed such stockholder’s pro-rata share of $10 million. The MOAC stockholders will be therefore have no liability for a claim unless the amount of the claim is at least the Indemnity Deductible, in which event we would be entitled to seek reimbursement for the whole amount of the claim, up to a maximum of $10 million, or the Indemnity Cap.

 

The Merger Agreement provides that $10 million of the consideration paid to the MOAC stockholders will secure satisfaction of the indemnification obligations of the MOAC stockholders. Of the $10 million securing the indemnity obligations, Messrs. Valenta and Havner (and their affiliates) and D.E. Shaw will pledge the shares of restricted General Finance common stock received pursuant to the Merger Agreement and that are valued at $8.5 million in the aggregate, or $7.50 per share, under the Merger Agreement, and D. E. Shaw will pledge the $1.5 million Note. If either Messrs. Valenta or Havner or D. E. Shaw are required to surrender shares pursuant to their indemnification obligations under the Merger Agreement, they will receive $7.50 of credit per share surrendered against such obligations regardless of the value of the common stock of General Finance in the public markets.

 

Under the Merger Agreement, General Finance and GFNA have agreed to indemnify the MOAC stockholders for losses arising in connection with the breach of any representation or warranty of General Finance or GFNA made pursuant to Merger Agreement, the breach of any covenant or agreement in the Merger Agreement or arising out of any claim by a General Finance stockholder relating to the Merger. General Finance and GFNA will be responsible for any taxes that result from the Merger not qualifying as a tax-free reorganization. The obligation to pay such taxes and to indemnify for losses arising from lawsuits by General Finance stockholders are not subject to the Indemnity Deductible or the Indemnity Cap.

 

Stockholders Agreement (page 55)

 

At the closing under the Merger Agreement, we and the former MOAC stockholders will enter into a stockholders agreement setting forth our rights and obligations with respect to their restricted shares of General Finance. Under the stockholders agreement, the former MOAC stockholders will have the right to require us to register for public trading the General Finance common stock.

 

Employment Agreements (page 52)

 

In connection with the acquisition, Theodore M. Mourouzis, the President of Pac-Van, Inc., entered into an amendment to his employment agreement that extended its term to July 31, 2010. A copy of the amendment to Mr. Mourouzis’ employment agreement is attached hereto as part of Annex A to this proxy statement.

 

Termination, Amendment and Waiver (pages 53 and 54)

 

The Merger Agreement may be terminated by mutual consent of General Finance and MOAC, and the Merger Agreement may be terminated by either party after November 1, 2008 if any of the conditions to the closing has not been satisfied and the terminating party has used reasonable effects to satisfy the conditions.

There is no termination or breakup fee payable in connection with the termination of the Merger Agreement.

 

If permitted under applicable law, either we or MOAC may waive any inaccuracies in the representations and warranties made to us or the sellers contained in the Merger Agreement and waive compliance with any agreements or conditions for the benefit of us or MOAC contained in the Merger Agreement. We cannot assure you that any or all of the conditions will be satisfied or waived.

 

Listing on AMEX

 

Our outstanding common stock, warrants and units are listed for trading on the American Stock Exchange.

 

Tax Consequences

 

There will be no tax consequences to our stockholders directly resulting from the acquisition.

 

Finder’s Fees (page 47)

 

No finder’s fees will be paid in connection with the acquisition.

 

Accounting Treatment (page 43)

 

The Merger will be accounted for using the purchase method of accounting with us treated as the acquirer. Under this method of accounting, Pac-Van’s assets and liabilities will be recorded by us at their respective fair values as of the closing date of the Merger (including any identifiable intangible assets). Any excess of purchase price over the net fair values of Pac-Van’s assets and liabilities will be recorded as goodwill. Our financial statements after the Merger will reflect these values and the results of operations of Pac-Van will be included in our results of operations beginning upon the completion of the Merger.

 

Regulatory Matters (page 43)

 

We do not believe that the acquisition is subject to review by the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements of 1976, as amended, or HSR, or is subject to any other regulatory review.

 

No Appraisal Rights (page 43)

 

Holders of General Finance common stock are not entitled to appraisal rights in connection with the Merger under Delaware law or General Finance’s certificate of incorporation.

 

Risk Factors (page 21)

 

Before you grant your proxy or vote or instruct the vote with respect to the Merger, you should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement could have a material adverse effect on us and Pac-Van.

FORWARD-LOOKING STATEMENTS

 

We believe that some of the information in this proxy statement constitutes forward-looking statements within the definition of the Private Securities Litigation Reform Act of 1995, although the safe-harbor provisions of that act do not apply to statements made in this proxy statement. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. We have based these forward-looking statements on our current expectations about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us and Pac-Van that may cause the actual future business and financial results of us and Pac-Van to be materially different from prior results or any results expressed or implied by such forward-looking statements. Factors that might cause or contribute to such a difference include, but are not limited to, those described in the “Risk Factors” section and elsewhere in this proxy statement. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement.

 

All forward-looking statements included in this proxy statement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events.

 

The summary historical consolidated financial data set forth below are derived from the audited consolidated financial statements of Royal Wolf (as our Predecessor) for the years ended June 30, 2007 and 2006, the six months ended June 30, 2005 and the year ended December 31, 2004; and from our unaudited condensed consolidated financial statements for the nine months ended March 31, 2007 (Predecessor), the period from July 1, to September 13, 2007 (Predecessor) and the nine months ended March 31, 2008 (Successor). The summary historical financial data for the periods ended March 31, 2008 and 2007 are derived from our unaudited consolidated financial statements, have been prepared on the same basis as the audited consolidated financial statements referred to above and, in the opinion of management, include all significant normal, recurring adjustments necessary to state fairly the data included therein in accordance with generally accepted accounting principles in the United States, or GAAP, for interim financial information. Interim results are not necessarily indicative of the results to be expected for any other interim period or any fiscal year.

 

The selected financial data presented below should be read in conjunction with our consolidated financial statements and the notes to the consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Post-Effective Amendment on Form S-1 declared effective March 31, 2008, Transition Report on Form 10-K for the six months ended June 30, 2007 and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008, which are all hereby incorporated by reference. The full text of all such filings with the SEC referenced above, as well as the other documents General Finance has filed with the SEC prior to, or will file with the SEC subsequent to, the filing of this proxy statement can be accessed electronically on the SEC’s website at www.sec.gov.

 

The information as of and for the year ended December 31, 2003 was derived from the audited financial statements of Royal Wolf Trading Australia Pty Limited, or Royal Wolf, the principal operating subsidiary.

Consolidated Statement of Operations Information:

 

 

Consolidated Balance Sheet Information:

 

 

The following tables set forth the selected historical financial data of Mobile Office Acquisition Corp. and Pac-Van, Inc. for the periods indicated. Pac-Van, Inc. was acquired by Mobile Office Acquisition Corp., or MOAC, on August 2, 2006. The financial data for periods prior to August 2, 2006 are derived from the financial statements of Pac-Van, Inc. (Predecessor) prior to its acquisition by MOAC (Successor). The selected historical financial data for the years ended December 31, 2007 and 2005, the periods from January 1, 2006 to August 1, 2006, and from August 2, 2006 to December 31, 2006; and the consolidated balance sheet information as of December 31, 2006 and 2007 are derived from the audited financial statements included in this proxy statement. The selected historical consolidated financial data for the six months ended June 30, 2008 and 2007, and the consolidated balance sheet information as of June 30, 2008 are derived from the unaudited consolidated financial statements also included in this proxy statement. The selected historical financial data as of and for the years ended December 31, 2003 and 2004 and the balance sheet information as of December 31, 2005 are derived from the audited consolidated financial statements of Pac-Van not included in this proxy statement. The financial information set forth below should be read in conjunction with the financial statements and the related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in this proxy statement.

 

Statement of Operations Information:

 

 

Balance Sheet Information:

 

 

The following tables present, as of March 31, 2008, and for the fiscal year ended June 30, 2007 and the nine months ended March 31, 2008, selected unaudited pro forma condensed combined financial data and have been prepared using the purchase method of accounting. The unaudited pro forma condensed combined statements of operations data gives effect to the acquisition of Pac-Van as if it had occurred on the first day of the period and the unaudited pro forma condensed combined balance sheet data gives effect to the acquisition as if it had occurred on the date of such balance sheet.

 

You should read this information in conjunction with (i) our separate historical consolidated financial statements and accompanying notes incorporated by reference into this proxy statement, (ii) the separate historical consolidated financial statements and accompanying notes of Pac-Van included in this proxy statement and (iii) the unaudited pro forma condensed combined financial statements and accompanying notes included elsewhere in this proxy statement (see “Unaudited Pro Forma Condensed Combined Financial Statements” and “Where You Can Find More Information”).

 

The selected unaudited pro forma condensed combined financial data is provided for illustrative purposes only and do not purport to represent what our actual consolidated results of operations or the consolidated financial position would have been had the business combination with Pac-Van occurred on the respective date assumed, nor are they necessarily indicative of future consolidated operating results or financial position.

 

 

 

Our units, common stock and warrants are listed on the American Stock Exchange under the symbols “GFN.U,” “GFN” and “GFN.WS,” respectively. The following table sets forth for the periods indicated the range of high and low sales prices for the units, common stock and warrants:

 

 

Record Holders

 

As of August 1, 2008, there were eight stockholders of record of our common stock. We believe that there are hundreds of beneficial owners of our common stock, units and warrants.

 

Dividend Policy

 

We have not paid any dividends on our common stock to date. The payment of dividends in the future will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within the discretion of our board of directors. It is the present intention of our Board of Directors to retain all earnings, if any, for use in our business operations and, accordingly, our board does not anticipate declaring any dividends in the foreseeable future.

 

The following table shows our capitalization as of March 31, 2008 on an actual and pro forma basis. The “actual” column reflects our capitalization as of March 31, 2008 on a historical basis, without any adjustments to reflect subsequent or anticipated events. The “pro forma” column reflects our capitalization as of March 31, 2008 with adjustments to reflect:

 

(a) borrowings under the Pac-Van Credit Facility and the 13.0% Subordinated Debt to be assumed in connection with the Merger;

 

(b) the issuance by GFNA of an 8.0% Note to D. E. Shaw;

 

(c) the issuance of 4,000,000 restricted shares of our common stock to certain of the MOAC stockholders at the market price at March 31, 2008 of $7.07 per share;

 

(d) borrowings under the ANZ senior secured credit facility in connection with the acquisition of Royal Wolf Trading New Zealand Limited on April 30, 2008 and a 13.5% secured subordinated promissory note; and

 

(e) proceeds received under our warrant exercise program completed on May 30, 2008.

 

 

You should carefully consider the following risk factors, together with all of the other information included in this proxy statement, before you vote or instruct your vote with respect to the approval of the acquisition.

 

Risks Related to Our Business and Operations Following Our Acquisition of Pac-Van

 

General or localized economic downturns or weakness may adversely affect Pac-Van’s customers, in particular those in the construction industry, which may reduce demand for Pac-Van’s products and services and negatively impact our future revenues and results of operations.

 

A significant portion of Pac-Van’s revenues is derived from customers who are in industries and businesses that are cyclical in nature and subject to changes in general economic conditions, including the construction industry, which constituted approximately 50% of Pac-Van’s revenues in the fiscal year ended December 31, 2007. Although the variety of Pac-Van’s products, the breadth of its customer base and its geographic diversity throughout the United States limits its exposure to economic downturns, general economic downturns or localized downturns in markets where its operates could reduce demand for Pac-Van’s products, especially in the construction industry, and negatively impact our future revenues and results of operations.

 

Pac-Van faces significant competition in the modular buildings and portable storage industries. Pac-Van also faces potentially significant competition from modular buildings companies who have portable storage product offerings, especially from several national competitors in the United States who have greater financial resources and pricing flexibility than Pac-Van does. If Pac-Van is unable to compete successfully, it could lose customers and our future revenues could decline.

 

Although Pac-Van’s competition varies significantly by market, the modular buildings markets in which Pac-Van competes are dominated by three or four large participants and are highly competitive. In addition, Pac-Van competes with a number of large to mid-sized regional competitors, as well as many smaller, full and part-time operators in many local regions. The modular building industry is highly competitive and almost all of the competitors have portable storage product offerings. The primary modular national competitors with portable storage product offerings are less leveraged than Pac-Van, and have greater financial resources and pricing flexibility than Pac-Van does. If they focus on portable storage, Pac-Van could lose customers and our future revenues could decline. If Pac-Van is unable to compete successfully, it could lose customers and our future revenues could decline.

 

We will incur indebtedness in connection with the acquisition of Pac-Van, and we may need additional debt or equity financing to sustain our growth. We do not have commitments for any such financing.

 

In conjunction with our acquisition of Pac-Van, we will incur assume approximately $80.4 million of indebtedness under Pac-Van’s Credit Facility and $25 million of Subordinated Debt. The Subordinated Debt will bear interest at the annual rate of 13%, will be payable quarterly in arrears and will mature in February 2013. We will rely on cash flow from operations of Pac-Van to make payments under this subordinated indebtedness, and there is no assurance that Pac-Van’s cash flow will be sufficient to service Pac-Van’s indebtedness. Payment of interest and other expenses relating to this indebtedness may adversely affect our financial condition and results of operations.

 

We also may finance Pac-Van’s growth through a combination of borrowings, cash flow from operations and equity financing. The ability of Pac-Van to grow will depend in part on our ability to obtain either additional debt or equity financing to fund the costs of such growth. The availability and terms of any debt and equity financing will vary from time to time, and will be influenced by Pac-Van’s performance and by external factors, such as the economy generally and developments in the market, that are beyond our control. Also, additional debt financing or the sale of additional equity securities may adversely affect the market price of our securities. If we are unable to obtain additional debt or equity financing on acceptable terms, we may have to curtail Pac-Van’s growth by delaying new customer service center openings or the expansion of its lease fleet.

Because Pac-Van has depended to a large extent on the success of its leasing operations, the failure of Pac-Van to effectively and quickly remarket lease units that are returned could materially and adversely affect our results of operations.

 

Pac-Van’s average monthly lease fleet utilization has averaged between 70% and 85%, with the typical lease being for an average period of over twelve months. The high utilization rate and the length of the average lease have provided Pac-Van with a predictable revenue stream. However, should a significant number of Pac-Van’s lease units be returned during any short period of time, Pac-Van would have to re-lease a large supply of units at similar rates in order to maintain historic revenues from these operations. Pac-Van’s failure to effectively remarket a large influx of units returning from leases could have a material adverse effect on our results of operations.

 

Pac-Van operates with a high amount of debt, a substantial portion of which is secured by all or substantially all of the company’s assets and is subject to variable interest rates.

 

As of June 30, 2008, Pac-Van had outstanding approximately $80.4 million of indebtedness under its existing Credit Facility with LaSalle, which bears interest at variable rates equal to LIBOR plus 1.5% to 2.25% (or the prime rate or prime rate plus 0.25%) based upon the ratio of senior debt to EBITDA, and approximately $25 million of Subordinated Debt which bears interest at the rate of 13% per year. Pac-Van’s debt obligations require it to dedicate a significant portion of its cash flow from operations to payments on this indebtedness, which could reduce the availability of cash flow for future working capital, capital expenditures, acquisitions and other general corporate purposes. In addition, Pac-Van’s debt load increases its vulnerability to general adverse economic and industry conditions, limits its flexibility in planning for, or reacting to, changes in its business and its industry, and subjects it to certain restrictive covenants that influence its operations and its ability to borrow additional funds. These periodic interest rate adjustments could expose Pac-Van’s operating results and cash flows to periodic fluctuations. Failing to comply with its debt service obligations and the debt covenants could result in an event of default under its Credit Facility or Subordinated Debt which, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations. In addition, since Pac-Van’s bank loans are secured by a lien on all or substantially all of Pac-Van’s modular buildings, mobile offices and storage container fleet and other assets, a default under Pac-Van’s bank debt could result in the foreclosure of all of these assets, which would materially and adversely affect Pac-Van’s operations and ability to continue its current operations.

 

Sales of modular buildings, mobile offices and storage units constitute a significant portion of Pac-Van’s revenues. Failure to continue to sell units at historic rates could adversely affect our ability to grow Pac-Van’s lease fleet.

 

Sales of modular buildings, mobile offices and storage units constituted approximately 30.1% of Pac-Van’s total revenues for the year ended December 31, 2007. Revenues from sales of modular buildings, mobile offices and storage units have been used to fund increases in the size of our lease fleet. As a result, the failure to continue to sell a significant number of units may adversely affect our ability to increase the size of Pac-Van’s lease fleet or to otherwise take advantage of business and growth opportunities available to it.

 

Governmental regulations could impose substantial costs and restrictions on Pac-Van’s operations that could harm our future results of operations.

 

Pac-Van is subject to various federal, state and local environmental, transportation, health and safety laws and regulations in connection with its operations. Any failure to comply with these laws or regulations could result in capital or operating expenditures or the imposition of severe penalties or restrictions on its operations. In addition, these laws and regulations could change in a manner that materially and adversely affects Pac-Van’s ability to conduct its business. More burdensome regulatory requirements in these or other areas may increase our general and administrative costs. If Pac-Van is unable to pass these increased costs on to its customers, our future operating results could be negatively impacted.

Pac-Van may not be able to facilitate its growth strategy by identifying or completing transactions with attractive acquisition candidates, which could impair the growth and profitability of its business.

 

Since August 2006, Pac-Van has completed six small acquisitions. An important element of our growth strategy for Pac-Van is to continue to seek additional acquisitions in order to add new customers within existing geographic markets and branch locations, and to expand Pac-Van’s operations into new markets. Any future growth through acquisitions will be partially dependent upon the continued availability of suitable acquisition candidates at favorable prices, upon advantageous terms and conditions and upon successful integration of the acquired businesses. However, future acquisitions may not be available at advantageous prices or upon favorable terms and conditions. In addition, acquisitions involve risks that the businesses acquired will not perform in accordance with expectations, that business judgments concerning the value, strengths and weaknesses of businesses acquired will prove incorrect, that the acquired businesses may not be integrated successfully and that the acquisitions may strain Pac-Van’s management resources. Future acquisitions and any necessary related financings also may involve significant transaction-related expenses. If Pac-Van is unable to complete additional acquisitions or successfully integrate any businesses that it does acquire, our future growth and operating results would be adversely impacted.

 

Failure to retain key personnel could adversely affect Pac-Van’s operations and could impede our ability to execute our business plan and growth strategy.

 

After the completion of the acquisition, Pac-Van will continue to be managed largely by its existing officers, including Theodore M. Mourouzis, the President of Pac-Van, Inc., and six senior managers. The continued success of Pac-Van will depend largely on the efforts and abilities of Mr. Mourouzis and these senior managers who have served at Pac-Van for an average of ten years. These officers and employees have knowledge and an understanding of Pac-Van and its industry that cannot be readily duplicated. Mr. Mourouzis has an employment agreement which is terminable under certain circumstances upon notice to or by him. The loss of any member of Pac-Van’s senior management team could impair our ability to execute our business plan and growth strategy, cause a loss of customers, reduce revenues and adversely affect employee morale.

 

Any failure of Pac-Van’s management information systems could disrupt our business and result in decreased rental or sale revenues and increased overhead costs, which could negatively impact our results of operations.

 

Pac-Van depends on its management information systems to actively manage its lease fleet, control new unit capital spending and provide fleet information, including leasing history, condition and availability of our units. These functions enhance Pac-Van’s ability to optimize fleet utilization, rentability and redeployment. The failure of Pac-Van’s management information systems to perform as we anticipate could disrupt its business and could result in, among other things, decreased leases or sales and increased overhead costs, which could negatively impact our results of operations.

 

Significant increases in raw material costs could increase our operating costs significantly and harm our stockholders’ equity.

 

Pac-Van purchases raw materials, including metals, lumber, siding and roofing and other products, to construct and modify modular buildings and to modify containers to its customers’ requirements. Pac-Van also maintains a truck fleet to deliver units to and return units from customers. During periods of rising prices for raw materials, especially oil and fuel for delivery vehicles, and in particular when the prices increase rapidly or to levels significantly higher than normal, Pac-Van may incur significant increases in operating costs and may not be able to pass price increases through to customers in a timely manner, which could harm our future results of operations.

 

Failure by Pac-Van’s manufacturers to sell and deliver products to Pac-Van in timely fashion may harm Pac-Van’s reputation and our financial condition.

 

Pac-Van currently purchases new modular buildings and components, mobile offices and storage container products directly from manufacturers. Although Pac-Van is not dependent on any one manufacturer and is able to purchase products from a variety of suppliers, the failure of one or more of its suppliers to timely manufacture and

deliver storage containers to Pac-Van could adversely affect its operations. Pac-Van purchases new modular buildings and components, mobile offices and storage containers under purchase orders issued to various manufacturers, which the manufacturers may or may not accept or be able to fill. Pac-Van has no contracts with any supplier. If these suppliers do not timely fill Pac-Van’s purchase orders, or do not properly manufacture the ordered products, our reputation and financial condition also could be harmed.

 

Pac-Van’s planned growth could strain our management resources, which could disrupt our development of new Pac-Van customer service centers.

 

Our future performance will depend in large part on our ability to manage Pac-Van’s planned growth. Pac-Van’s growth could strain our existing management, human and other resources. To successfully manage this growth, we must continue to add managers and employees and improve Pac-Van’s operating, financial and other internal procedures and controls. We also must effectively motivate, train and manage Pac-Van’s employees. If we do not manage Pac-Van’s growth effectively, some of its new customer service centers and acquisitions may lose money or fail, and we may have to close unprofitable locations. Closing a branch would likely result in additional expenses that would adversely affect our future operating results.

 

Some zoning laws restrict the use of Pac-Van’s storage units and therefore limit its ability to offer its products in all markets.

 

Many of Pac-Van’s customers use Pac-Van’s storage units to store goods on their own properties. Local zoning laws in some of Pac-Van’s geographic markets prohibit customers from maintaining mobile offices or storage containers on their properties or require that mobile offices or storage containers be located out of sight from the street. If local zoning laws in one or more of Pac-Van’s geographic markets were to ban or restrict mobile offices or storage containers stored on customers’ sites, Pac-Van’s business in that market will suffer.

 

Unionization by some or all of Pac-Van’s employees could cause increases in operating costs.

 

Pac-Van’s employees are not presently covered by collective bargaining agreements. Unions may attempt to organize Pac-Van’s employees in the future. We are unable to predict the outcome of any continuing or future efforts to organize Pac-Van’s employees, the terms of any future labor agreements, or the effect, if any, those agreements might have on our operations or financial performance.

 

Risks Related to the Acquisition

 

In its review of Pac-Van, our management relied on projections for Pac-Van provided by Pac-Van’s management. No assurance can be made that these projections will be achieved.

 

Pac-Van provided projections to our management in connection with our management’s analysis of the acquisition, and the projections were not prepared with intent for public disclosure or prepared in accordance with GAAP, the published guidelines of the SEC or the American Institute of Certified Public Accountants’ guidelines for projections or forecasts. These projections were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of our management, including, without limitation, factors related to general economic and industry conditions and competitive activity. Actual results could vary significantly from those set forth in the projections used by our management. For all of these reasons, stockholders should not place undue reliance on these projections as summarized elsewhere in this proxy statement.

 

A substantial number of our shares will become eligible for future resale in the public market after the acquisition, which could result in dilution and an adverse effect on the market price of our common stock.

 

If the Merger is completed, we will issue 4,000,000 shares of restricted General Finance common stock, or the Shares. We will enter into a stockholders agreement in connection with the Merger Agreement which will require us to register the Shares for resale in the public markets upon demand at any time after June 30, 2009 from certain holders a majority of the Shares. Consequently, at various times after completion of the acquisition, a substantial

number of additional shares of our common stock will be eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market prices of our securities.

 

There can be no assurance that the Merger will be deemed by governmental authorities to constitute a tax-free “reorganization” or that General Finance will not be required to indemnify the MOAC stockholders if the Merger is not deemed to constitute a tax-free “reorganization.”

 

The Merger is intended to constitute a tax-free “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code. None of the parties are requesting and will not be requesting a ruling from the IRS in connection with the Merger. None of the tax consequences set forth in this discussion are binding on the IRS or the courts and no assurance can be given that contrary positions will not be successfully asserted by the IRS or adopted by a court. A successful IRS challenge to the tax-free reorganization status of the Merger would result in MOAC stockholders recognizing taxable gain or loss with respect to each share of common stock of MOAC surrendered. This gain or loss would be measured by the difference between (i) the sum of the fair market value of the General Finance common stock received by MOAC stockholders, and (ii) the adjusted tax basis in the shares of MOAC common stock surrendered. Under the Merger Agreement, General Finance has agreed to indemnify the MOAC stockholders if the IRS or governmental authorities conclude that the Merger does not constitute a tax-free “reorganization.” Payment by General Finance of such indemnification claims could adversely affect our financial condition and results of operations.

 

The proposed acquisition of Pac-Van may result in additional Sarbanes-Oxley Act of 2002 costs, issues and control procedures of our combined reporting company.

 

Pac-Van is a private company that to date has not been subject to the requirements of the Sarbanes-Oxley Act of 2002, as amended, or the Act. Pac-Van’s existing internal controls and procedures are not compliant with the Act, in general, or Section 404 of the Act, in particular. Although we are not aware of any significant weaknesses in internal controls and procedures or in the disclosure controls and procedures of Pac-Van, it is possible that such weaknesses may exist. Also, management of Pac-Van may not have the expertise or time to properly document, assess, test and remedy the control structure of Pac-Van, to timely identify any material control weaknesses or to disclose to us any such weaknesses in time to comply with our reporting requirements under the Act. We expect to incur significant costs in implementing additional controls and procedures at Pac-Van in order to comply with the Act.

 

We may have difficulty establishing adequate management, legal and financial controls over Pac-Van.

 

Pac-Van is a private company that has been not been subject to the requirements of the Act. Accordingly, we will have to implement public company financial control systems. We may have difficulty in hiring, training and retaining a sufficient number of qualified employees with the required expertise. In addition, no assurance can be given that Pac-Van will be able to prepare and deliver to us the quarterly and annual financial information necessary for us to prepare consolidated financial statements in time to meet the SEC filing deadlines.

 

Risks Related to our Substantial Indebtedness

 

The investment agreement governing the Subordinated Debt and the terms of the Pac-Van Credit Facility contain various covenants which limit the discretion of our management in operating our business and could prevent us from engaging in some beneficial activities.

 

The investment agreement governing the Subordinated Debt and the terms of the Pac-Van Credit Facility contain various restrictive covenants that limit our management’s discretion in operating our business. In particular, these agreements include covenants relating to limitations on:

 

 

 

In addition, both the Pac-Van Credit Facility and the Subordinated Debt require us, under certain circumstances, to maintain certain financial ratios and limit our ability to make capital expenditures. See Note 5 of the Notes to Audited Consolidated Financial Statements.

 

If we fail to comply with the restrictions of the investment agreement governing the Subordinated Debt or the terms of the Pac-Van Credit Facility or any other subsequent financing agreements, a default may allow the creditors, if the agreements so provide, to accelerate the related debt as well as any other debt to which a cross-acceleration or cross-default provision applies. In addition, the lenders may be able to terminate any commitments they had made to supply us with further funds. Accordingly, we may not be able to fully repay our debt obligations, if some or all of our debt obligations are accelerated upon an event of default.

 

General

 

We are furnishing this proxy statement to our stockholders in connection with the solicitation of proxies by our board of directors for use at the special meeting of stockholders and at any adjournment or postponement of the meeting. This proxy statement provides you with the information we believe you should know to be able to vote or instruct your vote at the special meeting.

 

Date, Time and Place

 

The special meeting of stockholders will be held at 9:00 a.m. local time, on September 30, 2008 at the offices of General Finance located at 39 East Union Street, Pasadena, California 91103.

 

Purpose of the Special Meeting

 

At the special meeting, we are asking stockholders to:

 

(1) to consider and vote upon a proposal to approve our acquisition of Mobile Office Acquisition Corp., or MOAC, via a merger, the Merger, with our subsidiary GFN North America Corp;

 

(2) to approve the issuance of 4,000,000 shares of restricted General Finance common stock, the Shares, pursuant to the Merger; and

 

(3) in the event that there are insufficient votes present at the meeting for approval of the MOAC acquisition, to consider and act upon a proposal to grant our board of directors discretionary authority to adjourn the special meeting to solicit additional votes for approval of the Merger.

 

Recommendation of Our Special Committee

 

The special committee of our board of directors:

 

 

Record Date; Who is Entitled to Vote

 

We have fixed the close of business on September 3, 2008, as the record date for determining the stockholders entitled to notice of and to attend and vote at the special meeting. As of the close of business on August 21, 2008, there were 13,862,052 shares of our common stock outstanding. Each share of our common stock is entitled to one vote with respect to each of the matters to be acted upon at the special meeting.

 

Quorum

 

The presence, in person or by proxy, of a majority of the shares of our common stock outstanding as of the record date constitutes a quorum for the transaction of business.

 

Abstentions and Broker Non-Votes

 

Proxies that are marked “abstain” and proxies relating to “street name” shares that are returned to us but marked by brokers as “not voted” with respect to the acquisition or other proposal will be treated as shares present for purposes of determining the presence of a quorum on all matters. The latter, however, will not be treated as shares entitled to vote any proposal to which authority to vote is withheld by the broker. If you do not give the broker voting instructions, under the rules of the National Association of Securities Dealers, Inc., your broker may not vote your shares with respect to the acquisition.

 

Vote of Our Stockholders Required

 

The approval of the acquisition will require the approval of the holders of a majority of the shares of our common stock present and entitled to vote at the meeting with respect to the Merger.

 

The approval of the proposal to grant our board of directors discretionary authority to adjourn the special meeting to solicit additional votes for approval of the Merger and the issuance of 4,000,000 Shares pursuant to the Merger Agreement in the event that there are insufficient votes for the approval of such proposals present at the special meeting will require the affirmative vote of the holders of a majority of our common stock present and entitled to vote at the meeting. Abstentions are deemed entitled to vote on this proposal. Therefore, they will have the same effect as a vote against the proposal. Broker non-votes, however, are not deemed entitled to vote on this proposal and will have no effect on the outcome of the vote on this proposal.

 

Voting Your Shares

 

Each share of our common stock that you own in your name entitles you to one vote. Your proxy card shows the number of shares of our common stock that you own.

 

There are two ways to vote your shares of our common stock at the special meeting:

 

 

Proxies must be received prior to the voting at the special meeting. Any proxies or other votes received after this time will not be counted in determining whether the acquisition has been approved.

 

Revoking Your Proxy

 

If you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

 

 

Who Can Answer Your Questions About Voting Your Shares

 

If you have any questions about how to vote or direct a vote in respect of your shares of our common stock, you may call John O. Johnson, our Chief Operating Officer, at (626) 584-9722, extension 1009. You also may call MacKenzie Partners, Inc. toll-free at (800) 322-2885 or (212) 929-5500 (call collect).

 

Adjournment

 

In the event there are an insufficient number of shares of our common stock present in person or by proxy at the special meeting to approve our acquisition of Pac-Van, our board of directors intends to adjourn the special meeting to a later date provided a majority of the shares present and voting on the motion vote is in favor of such adjournment. The place and date to which the special meeting would be adjourned would be announced at the special meeting. Proxies voted against the approval of the acquisition will not be voted to adjourn the special meeting. Abstentions and broker non-votes also will not be voted on this matter. If it is necessary to adjourn the special meeting and the adjournment is for a period of not more than 30 days from the original date of the special meeting, no notice of the time and place of the adjourned meeting need be given to our stockholders, other than by an announcement made at the special meeting.

The effect of any such adjournment would be to permit us to solicit additional proxies for approval of the acquisition. Such an adjournment would not invalidate any proxies previously filed as long as the record date remains the same for the subsequent meeting. We do not anticipate that we would change the meeting’s record date if we seek an adjournment of the special meeting. In the unlikely event that our board of directors exercised its right under the Delaware General Corporation Law to set a new record date for the meeting, we would mail notices of the new meeting date to our stockholders of record.

 

No Additional Matters May Be Presented at the Special Meeting

 

The special meeting has been called only to consider the approval of our acquisition of Pac-Van via the Merger between our subsidiary GFNA and MOAC, the issuance of the 4,000,000 Shares pursuant to the Merger Agreement and the related proposal described in this proxy statement. Under our by-laws, other than procedural matters incident to the conduct of the meeting, no other matters may be considered at the special meeting.

 

By signing and returning the enclosed proxy card, you will be deemed to grant the proxy holders discretionary authority to consider and act upon such other matters as may properly presented incident to the conduct of the meeting and any adjournment or postponement of the meeting.

 

No Appraisal Rights

 

General Finance stockholders have no appraisal rights in connection with the acquisition under applicable Delaware General Corporation Law or otherwise.

 

Proxy Solicitation Costs

 

We are soliciting proxies on behalf of our board of directors. This solicitation is being made by mail, but also may be made by telephone or in person. We and our directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. These persons will not be compensated for these solicitation activities.

 

We have engaged Mackenzie Partners, Inc. to assist in the mailing of this proxy statement and responding to questions from stockholders. For these services, we will pay Mackenzie Partners, Inc. a fee of $5,000, plus reasonable out-of-pocket charges.

 

We will ask banks, brokers and other institutions, nominees and fiduciaries to forward our proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. We will reimburse them for their reasonable expenses.

 

Householding of Special Meeting Materials

 

Some banks, brokers, and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of this notice and proxy statement may have been sent to multiple stockholders in your household. If you would prefer to receive separate copies of a proxy statement or annual report either now or in the future, please contact your bank, broker or other nominee. Upon written or oral request to John O. Johnson, our Chief Operating Officer, at General Finance Corporation, 39 East Union Street, Pasadena, California 91103, (626) 584-9722, extension 1009, we will provide a separate copy of the annual reports and proxy statements. In addition, stockholders sharing an address can request delivery of a single copy of annual reports or proxy statements if you are receiving multiple copies upon written or oral request to our Chief Operating Officer at the address and telephone number stated above.

 

YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU MAY OWN. WE SINCERELY DESIRE YOUR PRESENCE AT THE SPECIAL MEETING. HOWEVER, SO THAT WE MAY BE SURE THAT YOUR VOTE WILL BE INCLUDED, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE SPECIAL MEETING.

 

Stockholders who have questions concerning the proposed acquisition or any other aspect of the special meeting should contact John O. Johnson at (626) 584-9722, extension 1009 or MacKenzie Partners, Inc. toll-free at (800) 322-2885 or (212) 929-5500 (call collect).

 

Proposal One

 

Approval of the Merger Agreement and the Merger

 

General Finance is asking its stockholders to consider and vote upon a proposal to authorize and approve the Merger Agreement, pursuant to which MOAC will merge with and into GFN North America Corp., or GFNA, with GFNA as the surviving corporation, and to approve and adopt the Merger.

 

Proposal Two

 

Approval of Issuance of 4,000,000 shares of restricted General Finance common stock

 

General Finance is seeking the approval of holders of common stock to issue 4,000,000 shares of restricted General Finance common stock pursuant to the Merger Agreement.

 

Proposal Three

 

Approval of Adjournments or Postponements of the Special Meeting

 

General Finance is asking holders of common stock to approve adjournments or postponements of the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting in favor of the foregoing proposals.

 

Approval of Proposal 3 is not a condition to the completion of the Merger.

 

Background of the Merger

 

The management team of General Finance has presented from time to time full and partial reviews to the General Finance board of directors of the competitive landscape for the storage container, mobile office and modular office industry in North America, Asia-Pacific and Europe. These reviews have included an overview of market share, positioning, acquisition targets and valuations. These reviews have included discussions covering the length of time that would be required for General Finance to build a new business in the United States based entirely on organic growth and the time required to acquire a business. The board of directors reached a general consensus that the more efficient method was to acquire a business that was capable of meeting General Finance’s objective of ultimately becoming a leader in the markets it serves. The General Finance board of directors directed the management team to develop a short list of candidates to be discussed at future meetings.

 

Between December 2007 and June 2008, several firms were contacted directly by General Finance management or indirectly through other intermediaries. The firms contacted were all in the rental services industry and included storage container, modular and mobile office and other more general equipment rental companies. All of the companies, except Pac-Van, stated that they were not currently interested in a sale. Two of these companies were also viewed as too large or required too much leverage to be acquired by General Finance and were set-aside for those reasons. In addition, it was General Finance management’s assessment that the potential acquisition targets that were large enough to provide an adequate infrastructure and systems platform and yet were also financeable were unlikely to be interested in a sale in the next twelve month period.

 

Several companies were discussed in the European theater as well and were also considered to be too large to acquire currently or were smaller in size and would necessitate building a management team and infrastructure around them to support the growth expectations and market leadership requirements of the General Finance board of directors.

 

On February 20, 2008, the possibility of acquiring Pac-Van was discussed with the General Finance board of directors. The board of directors noted that the acquisition of Pac-Van would be an interested party transaction because MOAC was owned by Ronald F. Valenta, the President, Chief Executive and a director of General Finance. The board of directors had previously discussed Pac-Van as an acquisition target in June and July of 2006 before MOAC acquired the business, but had rejected the idea because securities laws relating to the initial public offering of General Finance prohibited General Finance management from being aware of a specific target prior to the initial public offering. General Finance management presented a general overview of Pac-Van, including a summary of its financial position, operating locations, depth of management, a review of historic information and the competitive landscape. A broad and general discussion of public company multiples and previous sale transactions ensued. Several strengths and weaknesses were discussed as was the prospective impact of Pac-Van on the General Finance organization and capital structure. The board of directors suggested that, excluding Ronald F. Valenta, the management team gather additional information about Pac-Van and also continue to pursue other possible acquisition targets in the United States and European markets.

 

On March 5, 2008, General Finance contacted D. E. Shaw, one of the significant stockholders of MOAC, to discuss an interest in a merger and possible deal structures. D. E. Shaw wanted to know more about General Finance and asked for copies of public filings in addition to hearing a brief overview of General Finance. D. E. Shaw suggested talking directly with Theodore M. Mourouzis, President of Pac-Van, about gathering additional background information on Pac-Van.

 

On March 6, 2008, General Finance contacted Mr. Mourouzis of Pac-Van to request additional financial information and ask permission to gather other tax and operating information. Charles E. Barrantes, the Chief Financial Officer and Executive Vice President of General Finance, and John O. Johnson, the Chief Operating Officer of General Finance, discussed the terms of the engagement of Pascarella & Wiker, LLP who would perform due diligence services on behalf of General Finance.

 

On March 11, 2008, the independent directors of GFN convened in a meeting, excluding Mr. Valenta, to discuss additional information gathered by General Finance management relating to Pac-Van and to determine

whether to continue to move forward with additional due diligence requests and a preliminary non-binding indication of interest, or IOI. General Finance management presented a more detailed discussion of the business overview of Pac-Van, a review of previous due diligence and Pac-Van’s historic performance over an extended period of time, including the last recession period of 2001-2003. Projections for the fiscal year ending December 31, 2008 were provided by Pac-Van and incorporated into the discussion.

 

On March 18, 2008, General Finance management then presented a draft IOI for discussion by the independent General Finance board of directors which outlined a $154 million offer based upon the trailing twelve months results and seven times earnings before interest, income taxes, depreciation and amortization and other non-operating costs, or EBITDA, of approximately $22 million, as adjusted for non-recurring items, as of December 31, 2007. The basic structure included $21.5 million of cash, $21.5 million of restricted General Finance common stock (then valued at $7.30 to $7.55 per share), a $15 million subordinated promissory note bearing eight percent interest per year and payable in two years to secure the indemnification obligations of the MOAC stockholders and the assumption of debt. After discussion and several changes, the independent board directed General Finance management to issue the IOI to D. E. Shaw.

 

The independent members of the General Finance board of directors again inquired about the possibility of other acquisitions, excluding the New Zealand transaction that was ultimately approved and completed on May 1, 2008. Several other potential targets were discussed and some of these were not large enough to warrant extraordinary discussion. Similar to Pac-Van, other larger possible transactions were in early stages of discussion, but had not progressed to preliminary deal term discussions.

 

The credentials of three separate financial advisors with specific industry experience were reviewed by the independent board members. Based upon this information, the independent board members decided to gather additional data from two of the potential advisors and based upon further review decided to phone interview RBC Capital Markets Corporation, or RBC.

 

On March 25, 2008, the draft IOI was delivered to D. E. Shaw and a phone conversation followed between a representative of D. E. Shaw and Mr. Johnson. The discussion centered on the amount, tenor and structural placement of the subordinated promissory note along with the basic valuation of the enterprise. D. E. Shaw stated it would take time to review the document with the other stockholders of MOAC while General Finance continued its preliminary due diligence process.

 

On March 31, 2008, General Finance, Pac-Van and their advisors held a conference call to review an outline for performing tax due diligence and tax structuring work.

 

On April 7, 2008, Mr. Mourouzis of Pac-Van and Mr. Johnson met while at the Modular Building Institute conference in Florida to discuss the preliminary due diligence performed to date as well as review the organization structure and growth plans of Pac-Van.

 

On May 1, 2008, General Finance and Pac-Van held a conference call to discuss the current structure of the Pac-Van Credit Facility and the amendments that would be required to allow a potential Pac-Van transaction to occur. Mr. Barrantes, Mr. Johnson and Christopher Wilson, Vice President and General Counsel of General Finance, participated in the call on behalf of General Finance. Mr. Mourouzis and James Dunmyer, Vice President of Finance of Pac-Van, participated in the call on behalf of Pac-Van.

 

On May 7, 2008, Mr. Barrantes and Mr. Johnson met with Pac-Van at its offices along with representatives of Union Bank of California to review a bank creditor’s presentation and ask questions about the financial position of Pac-Van. RBC was also present.

 

On June 3, 2008, Mr. Mourouzis of Pac-Van hosted a conference call with the lead bank for Pac-Van and Mr. Johnson in order to provide an overview of General Finance and discuss potential amendments that would be required to proceed with a transaction.

On June 5, 2008, Lawrence Glascott, Chairman of the General Finance board of directors, Manuel Marrero, a member of the General Finance board of directors, and Messrs. Barrantes, Johnson and Wilson participated in two phone interviews with corporate law firms to provide them with background details as to the status of discussions with Pac-Van and to interview them for a position as legal advisor to the special committee of the independent members of the General Finance board of directors. O’Melveny & Myers, LLP, or O’Melveny, was chosen as counsel to the special committee.

 

On June 10, 2008, the General Finance board of directors met to authorize the establishment of the special committee for the purposes of controlling the discussions of the Pac-Van process and negotiations. Mr. Valenta was excused after the board approved the creation of the special committee. Mr. Valenta was neither present for nor participated in, any of the subsequent meetings of the special committee. The engagement of O’Melveny as counsel to the special committee was approved. James Levin and John Laco of O’Melveny gave the independent directors a summary of their duties and responsibilities. RBC, which had been requested to act as the special committee’s financial advisor, also participated in the meeting by phone. The preliminary IOI was then discussed. General Finance management was tasked with engaging in a dialogue with Pac-Van to solicit a response to the IOI draft dated March 25, 2008.

 

On June 12, 2008, several conversations took place among Mr. Johnson, Ronald L. Havner, Jr., a director of Pac-Van, and Mr. Mourouzis. There were a number of suggested changes to the IOI dated March 25, 2008, most notably including a change in the mix of consideration so that no cash would be received by Messrs. Havner or Mourouzis as stockholders of MOAC, a reduction in the subordinated promissory note from $15 million to $10 million, adding Mr. Havner as a member of the General Finance board of directors and changing the indemnification survival periods and the several nature of the indemnification obligations.

 

On June 13, 2008, the special committee met telephonically to discuss the proposed changes and agreed to respond to Pac-Van with acceptance of several of the key changes, except the several nature of the indemnification and the composition of the consideration given. The lock-up period of the restricted General Finance common stock portion of the consideration was increased from one year to two years and a two-year standstill agreement for Mr. Havner and Mr. Valenta were added. A response was delivered to Mr. Mourouzis by Mr. Johnson in person in Indianapolis after a telephonic meeting with the Pac-Van bank group to request certain amendments in the Pac-Van Credit Facility.

 

On June 17, 2008, Mr. Johnson and a representative of RBC received a response from Mr. Mourouzis stating their request to receive a greater amount of stock as part of the consideration, the elimination of any indemnity obligations of D. E. Shaw, a reduction in the indemnification survival periods, a deductible of $1 million, an increase in the purchase price to $160 million, and reductions in the lock-up period of the restricted stock to six months and a standstill period of one year.

 

On June 19, 2008, the special committee held a meeting to review changes to the IOI suggested by Pac-Van. The special committee discussed D. E. Shaw’s request that it not be required to indemnify General Finance under the Merger Agreement.

 

On June 21, 2008, the special committee held a meeting to discuss the responses from MOAC and deliberated several of the key points with the assistance of the special committee’s advisors. The special committee approved changes to the consideration to be paid to acquire Pac-Van: an increase in the purchase price to $158.8 million, an increase in the amount of the General Finance common stock from $21.5 million to $30 million and a reduction of $7.8 million in the principal amount of the subordinated promissory note, resulting in a $2.2 million subordinated promissory note. The value assigned to the General Finance common stock was also modified from a 110% moving average prior to close to a price of the greater of $7.50 per share or the 110% 30-day moving average prior to closing. The General Finance common stock was trading in the $5.50 to $5.75 range at that time. A provision providing for several indemnification, as opposed to joint and several liability, was agreed, but the deductible was reduced to $250,000. The term of the lock-up and standstill were returned to two years.

 

On June 23, 2008, Pac-Van responded to the IOI with agreement to the purchase price, but a change in the $30 million in restricted General Finance common stock share price to $6.30. The lock-up and standstill terms were

shortened to six months and one year, respectively. A deductible of $800,000 was inserted and a shortened indemnification provision to two years for certain representations and warranties and three years on all others.

 

On June 24, 2008, the General Finance board of directors met in a regularly scheduled meeting. Mr. Valenta was excused for a portion of the meeting so that the special committee could discuss the Pac-Van response in addition to hearing a brief presentation from Mr. Mourouzis of Pac-Van about the current operations and results of operations of Pac-Van. RBC discussed with the special committee publicly available trading information for selected public companies in the sector and announced transaction values of selected precedent transactions in the sector. The special committee agreed to respond to MOAC by returning the restricted stock price to $7.50 along with the lock-up to one year and the standstill to two years. The deductible was moved to $500,000 while the indemnity survival periods were limited to 20 months for basic representations and warranties, two years for environmental and taxes and three years for fraud and title. The subordinated promissory note maturity was reduced to 20 months as well. The survival periods for representations and warranties of Messrs. Havner and Valenta were modified to three years for environmental and taxes and five years for breaches of representations and warranties due to fraud or related to title.

 

On June 30, 2008, Pac-Van requested that the duration of the lockup be shortened to six months and that the indemnification survival periods be the same for all MOAC shareholders. Pac-Van also asked for either a change in the purchase price to $160 million or a reduction in the price of the restricted stock to $7.00 per share. The working capital condition was also revised.

 

On July 2, 2008, the special committee held a conference call to discuss the Pac-Van counter-offer and agreed to the indemnification survival periods. The special committee elected to keep the purchase price and the restricted stock price the same as the previous General Finance offer. The special committee asked for a draft version of the definitive agreement to be distributed for comments and review. A set of draft definitive agreements was also sent to counsel for Pac-Van for initial comments.

 

On July 6, 2008, counsel for Pac-Van, General Finance management and RBC held a conference call to discuss the definitive agreement. Several key points arose including the indemnification for pre-closing liabilities, the request for General Finance to provide certain representations and warranties for its financial statements and indemnification of same, the lock-up period of six months and certain adjustments to working capital.

 

On July 14, 2008, Pac-Van delivered comments on the definitive agreement in several areas including pre-closing liabilities, indemnification provisions, representations and warranties and the working capital calculation.

 

On July 17, 2008, the special committee met to review the requests of Pac-Van for changes in the Merger Agreement and ancillary agreements. General Finance management reported to the special committee on the status of documentation governing the amendments to the Credit Facility and the Subordinated Debt. RBC updated the special committee concerning the financial review it was undertaking.

 

On July 24, 2008, General Finance management reviewed with the special committee the terms of the proposed Merger Agreement and ancillary agreements for the purpose of securing special committee approval of the Merger Agreement and ancillary agreements. The special committee’s legal counsel reviewed the terms of the Merger Agreement and ancillary agreements with the special committee. Also at this meeting, RBC reviewed with the special committee its financial analysis of the consideration to be paid by General Finance pursuant to the Merger Agreement and delivered to the special committee an oral opinion (which was confirmed by delivery of a written opinion dated July 24, 2008), to the effect that, as of such date and subject to the assumptions, qualifications and limitations described in its written opinion, the aggregate merger consideration (which representatives of General Finance directed RBC to assume was $52.6 million) to be paid by General Finance pursuant to the Merger Agreement was fair, from a financial point of view, to General Finance. After discussion of the special committee, the special committee unanimously determined that the transactions contemplated in the Merger Agreement and the ancillary agreements are advisable, fair and in the best interests of General Finance. The special committee then approved the Merger Agreement, the ancillary agreements, the issuance of the Shares pursuant to the Merger Agreement and resolved to recommend to General Finance stockholders for approval and adoption the Merger Agreement, the ancillary agreements, the Merger and the issuance of the Shares.

On July 28, 2008, General Finance, GFNA, MOAC, Pac-Van and certain MOAC stockholders executed the Merger Agreement. General Finance issued a press release concerning the signing of the Merger Agreement by all the parties on July 28, 2008.

 

Reasons for the Merger: Recommendations of the Special Committee of the Board of General Finance

 

In evaluating the Merger, the special committee of the Board of Directors of General Finance consulted with our senior management and its independent legal counsel, O’Melveny, and its independent financial advisors, RBC. In reaching its decision to approve and adopt the Merger Agreement and recommend that our stockholders vote “FOR” approval and adoption of the Merger Agreement and the Merger, the special committee of the board of directors of General Finance considered the following material factors:

 

 

The special committee of the board of directors also considered potential risks and costs relating to the Merger, including:

 

 

 

The foregoing discussion addresses certain material information and factors considered by the special committee in evaluating the Merger, including factors that support the Merger as well as those that may weigh against it. In view of the variety of factors and the quality and amount of information considered, the special committee did not find it practicable to, and did not make specific assessments of, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination. In addition, the special committee did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination. The determination to approve the Merger was made after consideration of all of the factors in the aggregate. In addition, individual members of the special committee may have given different weights to different factors.

 

The actual benefits from the Merger could differ materially from the estimates and expectations discussed above. Accordingly, the potential benefits described above or the potential benefits described in this proxy statement may not be realized.

 

Opinion of the Special Committee’s Financial Advisor

 

General Information Regarding RBC’s Opinion

 

On July 24, 2008, as financial advisor to the special committee, RBC rendered its written opinion to the special committee to the effect that, as of that date and subject to the assumptions, qualifications and limitations described in its opinion, the aggregate merger consideration (which representatives of General Finance directed RBC to assume was $52.6 million) to be paid by General Finance pursuant to the Merger Agreement was fair, from a financial point of view, to General Finance. The full text of RBC’s written opinion, dated July 24, 2008, is attached to this Proxy Statement as Annex B and describes the procedures followed, assumptions made, matters considered and limitations on, the review undertaken. This summary of RBC’s opinion is qualified in its entirety by reference to the full text of the opinion.

 

RBC’s opinion did not address the merits of General Finance’ underlying decision to engage in the Merger or the relative merits of the Merger compared to any alternative business strategy or transaction in which General Finance might engage. RBC’s opinion was addressed to, and provided for the information and assistance of, the special committee in connection with the Merger and does not constitute a recommendation to any stockholder as to how such stockholder should vote with respect to the Merger or any other matter in connection with the Merger.

 

The type and amount of consideration payable in the Merger were determined through negotiation between General Finance and Pac-Van, and the decision to enter into the transaction was solely that of the special committee. RBC’s opinion to the special committee and related financial analysis were only two of many factors taken into consideration by the special committee in evaluating the Merger and should not be viewed as determinative of the views of the special committee or management with respect to the Merger or the aggregate merger consideration.

 

RBC’s opinion addressed solely the fairness of the aggregate merger consideration, from a financial point of view, to General Finance. RBC’s opinion did not in any way address other terms of, or arrangements contemplated by, the Merger or the Merger Agreement, including, without limitation, the form or structure of the Merger or the

aggregate merger consideration (or any adjustments to the aggregate merger consideration), the financial or other terms of the $1.5 million promissory note or any other agreement contemplated by, or to be entered into in connection with, the Merger Agreement, nor did RBC’s opinion address, and RBC expressed no opinion with respect to, the solvency of General Finance or Pac-Van. Further, in rendering its opinion, RBC expressed no opinion about the fairness of the amount or nature of the compensation (if any) to any of General Finance’s officers, directors or employees, or class of such persons, relative to the aggregate merger consideration.

 

In rendering its opinion, RBC assumed and relied upon the accuracy and completeness of all the information that was publicly available to RBC and all of the financial, legal, tax, operating, and other information provided to or discussed with RBC by General Finance or Pac-Van (including, without limitation, the financial statements and related notes thereto of each of General Finance and Pac-Van, respectively) and did not assume responsibility for independently verifying, and did not independently verify, this information. RBC assumed that the financial projections and forecasts of General Finance prepared by its management and of Pac-Van prepared by its management provided to RBC by General Finance and Pac-Van, as the case may be, were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the future financial performance of General Finance or Pac-Van (as the case may be), respectively, and also assumed that such financial projections and forecasts would be realized in the amounts and at the times projected. RBC expressed no opinion as to such financial projections and forecasts or the assumptions upon which they were based.

 

In rendering its opinion, RBC did not assume any responsibility to perform, and did not perform, an independent evaluation or appraisal of any of the assets or liabilities, contingent or otherwise, of General Finance or Pac-Van and, except for a third party appraisal of certain assets of Pac-Van, Inc., RBC was not furnished with any such valuations or appraisals. RBC did not assume any obligation to conduct, and did not conduct, any physical inspection of the property or facilities of General Finance or Pac-Van. RBC did not investigate, and made no assumption regarding, any litigation or other claims affecting General Finance or Pac-Van.

 

RBC assumed, in all respects material to its opinion, that all conditions to the consummation of the Merger would be satisfied, and all terms of the Merger Agreement would be complied with, without waiver or modification and that all governmental, third party or other consents and approvals necessary for the consummation of the Merger would be obtained without adverse effect on General Finance, Pac-Van or the contemplated benefits of the Merger. RBC also assumed that the executed version of the Merger Agreement would not differ, in any respect material to RBC’s opinion, from a draft dated July 24, 2008 of the Merger Agreement reviewed by RBC. RBC further assumed that the Merger would qualify for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. In addition, RBC assumed that the actual aggregate consideration payable by General Finance in the Merger would not differ from the estimate that RBC was directed to assume by representatives of RBC in any respect material to RBC’s opinion.

 

RBC’s opinion spoke only as of the date it was rendered, was based on the conditions as they existed and information which RBC was supplied or reviewed as of such date, and was without regard to any market, economic, financial, legal or other circumstances or event of any kind or nature which may exist or occur after such date. RBC has not undertaken to reaffirm or revise its opinion or otherwise comment upon events occurring after the date of its opinion and does not have an obligation to update, revise or reaffirm its opinion. RBC does not express any opinion as to the actual value of General Finance common stock or the $1.5 million promissory note to be issued in the Merger or prices at which General Finance common stock would trade following the announcement of the Merger or at which General Finance common stock or the $1.5 million promissory note might otherwise be transferable at any time.

 

For the purpose of rendering its opinion, RBC undertook the review and inquiries it deemed necessary and appropriate under the circumstances, including:

 

 

 

In arriving at its opinion, RBC performed the following analyses in addition to the review, inquiries and analyses referred to in the preceding paragraph:

 

 

RBC was advised that financial projections and forecasts relating to General Finance and Pac-Van for periods beyond June 30, 2009 had not been prepared by the managements of General Finance and Pac-Van and, accordingly, RBC did not undertake an analysis of the future financial performance of General Finance and Pac-Van for periods beyond June 30, 2009. With respect to the $1.5 million promissory note to be issued in the Merger, RBC assumed that the value of such $1.5 million promissory note would be equal to the face value of the $1.5 million promissory note.

 

In connection with the rendering of its opinion to General Finance’ board of directors, RBC prepared and delivered to General Finance’ board written materials containing the analyses listed above and other information material to the opinion. The summary of the analyses used by RBC contained in this section includes information presented in tabular format. To fully understand the summary of the analyses used by RBC, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the analyses.

 

Pac-Van Analyses

 

For purposes of the “Selected Companies Analysis” and “Selected Precedent Transactions Analysis” summarized below, the “implied aggregate merger consideration value” refers to the implied value of the aggregate consideration payable by General Finance in the Merger which representatives of General Finance directed RBC to assume would be $52.6 million, after giving effect to adjustments specified in the Merger Agreement, consisting of the following:

 

 

Selected Companies Analysis.  RBC reviewed financial and stock market information for the following six selected publicly held companies in the modular space and storage sector of the rental services industry:

 

 

RBC reviewed, among other things, enterprise values of the selected companies, calculated as fully-diluted market value based on closing stock prices on July 23, 2008, plus debt, minority interest and preferred stock, less cash and cash equivalents, as multiples of latest 12 months (ended on March 31, 2008) earnings before interest, taxes, depreciation and amortization, referred to as EBITDA, and latest 12 months (ended on June 30, 2008) and forward 12 months (ending on June 30, 2009) estimated EBITDA. RBC then applied a range of multiples of 6.3x to 11.0x latest 12 months (ended on March 31, 2008) EBITDA, 5.7x to 11.9x latest 12 months (ended on June 30, 2008) estimated EBITDA and 4.3x to 7.0x forward 12 months (ending on June 30, 2009) estimated EBITDA derived from the selected companies for which information was publicly available to corresponding data of Pac-Van (as adjusted, in the case of latest 12 months (ended on June 30, 2008) estimated EBITDA, to reflect the pro forma full year impact of acquisitions effected during the period and, in the case of latest 12 months (ended on June 30, 2008) and forward 12 months (ending on June 30, 2009) estimated EBITDA, to add back stock-based compensation expense and certain charges identified by General Finance’s management). Financial data for the selected companies were based on public filings and publicly available research analysts’ consensus estimates. Financial data for Pac-Van were based on internal data provided by Pac-Van’s management. This analysis indicated the following implied equity reference ranges for Pac-Van, as compared to the implied aggregate merger consideration value:

 

Selected Precedent Transactions Analysis.  RBC reviewed, to the extent publicly available, transaction values in the following 13 selected transactions involving companies in the rental services industry:

 

 

RBC reviewed, among other things, transaction values in the selected transactions, calculated as the equity value implied for the target company based on the consideration payable in the selected transaction, plus debt, minority interest and preferred stock, less cash and cash equivalents, as multiples of latest 12 months EBITDA to the extent such financial data were publicly available at the time of announcement of the relevant transaction. RBC then applied a range of multiples of 8.0x to 11.3x latest 12 months EBITDA derived from the selected transactions to Pac-Van’s latest 12 months (ended on March 31, 2008) EBITDA. This analysis indicated the following implied equity reference range for Pac-Van, as compared to the implied aggregate merger consideration value:

 

 

General Finance Selected Companies Analysis

 

RBC reviewed financial and stock market information for the selected publicly held companies referred to above under “Pac-Van Financial Analyses — Selected Companies Analysis.” RBC reviewed, among other things, enterprise values of the selected companies as multiples of latest 12 months (ended on June 30, 2008) and forward 12 months (ending on June 30, 2009) estimated EBITDA. RBC applied the range of low to high multiples of 5.7x to 11.9x latest 12 months (ended on June 30, 2008) estimated EBITDA and 4.3x to 7.0x forward 12 months (ending on June 30, 2009) estimated EBITDA derived from the selected companies for which information was publicly available to General Finance’s estimated EBITDA for fiscal years ended on June 30, 2008 and ending on June 30, 2009 (as adjusted, in the case of fiscal year 2008 EBITDA, to reflect the pro forma full year impact of acquisitions effected during the period and, in the case of fiscal years 2008 and 2009 estimated EBITDA, to add back stock-based compensation expense and certain charges identified by General Finance’s management). Financial data for the selected companies were based on publicly available research analysts’ consensus estimates. Financial data for General Finance were based on internal data provided by General Finance’s management. This analysis indicated

the following implied per share equity reference ranges for General Finance, as compared to the $7.50 stated value per share of General Finance common stock provided for in the Merger Agreement:

 

 

Pro Forma Combination Analysis

 

RBC reviewed the potential pro forma effect of the Merger on General Finance’s fiscal year 2009 estimated earnings per share, referred to as EPS, before giving effect to potential synergies, if any, resulting from the Merger. Estimated financial data of General Finance were based on internal estimates of General Finance’s management, and estimated financial data of Pac-Van were based on internal estimates of Pac-Van’s management. Based on an illustrative Merger closing date of June 30, 2008 and other assumptions relating to the Merger and the financing for the Merger provided by General Finance’s management, this analysis indicated that the Merger could be accretive to General Finance’s fiscal year 2009 estimated EPS. RBC’s pro forma combination analysis does not represent a prediction on RBC’s part of the actual financial effect of the Merger on the stock price, financial performance or any other metrics of General Finance following the Merger and was based on the assumptions used by RBC.

 

Overview of Analyses; Other Considerations

 

In reaching its opinion, RBC did not assign any particular weight to any one analysis or the results yielded by that analysis. Rather, having reviewed these results in the aggregate, RBC exercised its professional judgment in determining that, based on the aggregate of the analyses used and the results they yielded, the aggregate merger consideration was fair, from a financial point of view, to General Finance. RBC believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the analyses and, accordingly, also made qualitative judgments concerning differences between the characteristics of General Finance and Pac-Van respectively, and the Merger, and the data selected for use in its analyses, as further discussed below.

 

No single company or transaction used in the above analyses as a comparison is identical to General Finance or Pac-Van, or the Merger, and an evaluation of the results of those analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies, businesses, or transactions analyzed. The analyses were prepared solely for purposes of RBC providing an opinion as to the fairness of the aggregate merger consideration, from a financial point of view, to General Finance and do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be acquired, which are inherently subject to uncertainty.

 

The opinion of RBC as to the fairness, from a financial point of view, to General Finance of the aggregate merger consideration was necessarily based upon market, economic, and other conditions that existed as of the date of its opinion and on information available to RBC as of that date.

 

The preparation of a fairness opinion is a complex process that involves the application of subjective business judgment in determining the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Several analytical methodologies were employed by RBC and no one method of analysis should be regarded as critical to the overall conclusion reached. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. The overall conclusions RBC reached were based on all the analyses and factors presented, taken as a whole, and also on application of RBC’s own experience and judgment. Such conclusions may involve significant elements of subjective judgment and qualitative analysis. RBC therefore gives no opinion as to the value or merit standing alone of any one or more parts of its analyses and believes that its analyses must be considered as a whole and that selecting portions of the analyses and of the factors considered, without considering all factors and analyses, could create an incomplete or misleading view of the processes underlying its opinion.

In connection with its analyses, RBC made, and was provided by General Finance’ management with, numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of General Finance. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of General Finance or its advisors, none of General Finance, RBC or any other person assumes responsibility if future results or actual values are materially different from these forecasts or assumptions.

 

RBC’s opinion was approved by the RBC Fairness Opinion Committee. General Finance selected RBC to serve as its financial advisor with respect to the Merger and render its opinion based on RBC’s experience in mergers and acquisitions and in securities valuation generally.

 

RBC is an internationally recognized investment banking firm and is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, corporate restructurings, underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. In the ordinary course of business, RBC may act as a market maker and broker in the publicly-traded securities of General Finance and receive customary compensation, and may also actively trade the securities of General Finance for its own account and the accounts of its customers and, accordingly, RBC and its affiliates may hold a long or short position in such securities.

 

Under its June 16, 2008 engagement agreement with General Finance, RBC agreed to advise the special committee concerning the structure and terms of the acquisition, to advise the special committee in the course of negotiations and, if requested by the special committee, to participate in the negotiations. Under the engagement agreement RBC became entitled to receive a fee of $100,000 upon RBC’s engagement and a fee of $300,000 upon the delivery of RBC’s opinion. In addition, if the Merger is consummated, RBC will become entitled to an additional fee of $475,000 against which the fees payable upon RBC’s engagement and delivery of RBC’s opinion will be credited. General Finance also will reimburse RBC for its reasonable expenses and indemnify it for certain liabilities that may arise out of RBC’s engagement. The terms of the engagement letter were negotiated at arm’s-length between General Finance and RBC and the special committee was aware of this fee arrangement at the time of its approval of the Merger Agreement.

 

The Board of Directors of General Finance Following the Merger

 

As required by the stockholders agreement, upon consummation of the Merger, General Finance will expand the size of the Board of Directors of General Finance from five to six and will appoint Ronald L. Havner to fill the vacancy.

 

Ronald L. Havner, Jr. has been the Vice-Chairman, Chief Executive Officer and a director of Public Storage, Inc. since November 2002 and its President since July 2005. Mr. Havner has been Chairman of PS Business Parks, Inc. since March 1998 and was Chief Executive Officer of PS Business Parks, Inc. from March 1998 until August 2003. Mr. Havner joined Public Storage in 1986. He is also a member of the Board of Governors and the Executive Committee of the National Association of Real Estate Investment Trusts, Inc. (NAREIT) and a director of Union BanCal Corporation. Mr. Havner is also a director of Mobile Office Acquisition Corporation, the parent company of Pac-Van, Inc., a U.S. office modular and portable storage company and a former director of Mobile Storage Group, Inc.

 

Management of General Finance After the Merger

 

Upon completion of the Merger, the executive management team of the combined company will include senior executives from General Finance and from Pac-Van. Ronald F. Valenta will continue to serve as a Director, President and Chief Executive Officer and John Johnson, Charles Barrantes and Christopher Wilson will continue to serve as Chief Operating Officer, Chief Financial Officer and General Counsel of General Finance, respectively. Theodore M. Mourouzis, President of Pac-Van, will continue to manage Pac-Van as a subsidiary of General Finance along with his entire management team, including six senior executives who have served on the Pac-Van management team for an average of ten years.

Governmental and Regulatory Matters

 

We do not believe the consummation of the Merger is subject to review by the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission under HSR.

 

Anticipated Accounting and Tax Treatment

 

General Finance intends to account for the Merger as a purchase of Pac-Van in accordance with generally accepted accounting principles in the United States. Pac-Van will be treated as the acquired entity for such purposes. Accordingly, the aggregate fair value of the consideration paid by General Finance in connection with the Merger will be allocated to Pac-Van’s assets based on their fair values as of the completion of the Merger. The difference between the fair value of Pac-Van’s assets, liabilities and other items and the aggregate fair value of the consideration paid by General Finance will be recorded as goodwill and other assets and intangibles. The results of operations of Pac-Van will be included in General Finance’s consolidated results of operations only for periods subsequent to the completion of the Merger.

 

For U.S. federal income tax purposes, General Finance will not be entitled to allocate the aggregate fair market value of the consideration paid by General Finance in connection with the Merger with Pac-Van to Pac-Van’s assets. Instead, General Finance will inherit the Pac-Van’s tax basis in its assets and will not be able to increase that tax basis to reflect the value of the aggregate consideration paid or the fair market value of the assets. As a result, General Finance’s tax-deductible depreciation of the former Pac-Van assets will be less than if those assets had been purchased at the time of the Merger for their fair value. In addition, in the event that General Finance resells any of the former Pac-Van assets, it will calculate taxable gain by reference to their tax basis.

 

No Appraisal Rights

 

Under Delaware law, General Finance stockholders will not have appraisal rights pursuant to the Merger and the other transactions contemplated by the Merger Agreement.

 

Financing

 

In anticipation of the Merger, Pac-Van has received commitment letters, or collectively the Commitment Letter, from LaSalle Bank National Association, as Administrative Agent, BancAmerica Securities, LLC, as Arranger, Wells Fargo Bank, and National City Bank, collectively, the “Commitment Parties.” The commitment letter from LaSalle dated June 16, 2008 describes a senior secured credit facility under which Pac-Van, Inc. may borrow up to $90 million, subject to a borrowing base. Pac-Van has also received commitments from the Commitment Parties and Union Bank of California to increase the Credit Facility to $120 million upon the closing of this transaction. We will assume this indebtedness as part of the transaction. In connection with the Commitment Letter, Pac-Van has agreed to pay to the Commitment Parties an Upfront Fee of $25,000 and a $20,000 fee to the Arranger. Such fees are included as part of the costs of the transaction and will not recur. In addition, Pac-Van has agreed to pay to LaSalle an annual administration fee of $5,000 per lender to act as administrative agent. We do not have any current plans to repay the Credit Facility.

 

General Finance organized a wholly owned subsidiary, General Finance North America Inc., or GFNA, as the party that will own Pac-Van and will guarantee certain Pac-Van indebtedness. General Finance Corporation and Royal Wolf Australia will not be parties to the Pac-Van credit agreement.

 

The Credit Facility has a remaining term of approximately four years, and the Credit Facility has a scheduled expiration date of August 23, 2012. The availability of borrowings under the Credit Facility will be subject to a borrowing base calculated as a discount to the value of certain pledged collateral. The Credit Facility has optional and mandatory prepayment provisions. Repayment of all amounts owed under the Credit Facility will be secured by a first priority perfected security interest in substantially all existing and after acquired assets (real and personal) of Pac-Van and GFNA and all products and proceeds thereof.

 

Borrowings under the Credit Facility will bear interest at a rate equal to, at our option, either LIBOR plus an applicable margin or the prime rate plus an applicable margin. We expect that the initial applicable margin for borrowings will be .25% with respect to prime rate borrowings and 2.25% with respect to LIBOR borrowings. The

applicable margins may adjust from time to time based on our senior leverage ratio, which is expected to start at the highest level. In addition to paying interest on outstanding principal under the Credit Facility, we will be required to pay an unused line fee to the lenders under the revolving credit facilities in respect of the unutilized commitments thereunder. The unused line fee rate is 0.25% per annum. We must also pay customary letter of credit fees.

 

The increased commitments of the banks under the Commitment Letter are subject to, among other things, the consummation of the Merger, including that since December 31, 2007, there has occurred no event, fact or circumstance that has caused or could reasonably be expected to have a material adverse effect on Pac-Van nor any current event of default. The definitive financing agreement includes (i) a borrowing base limiting indebtedness to the lesser of the commitment amount or the combination of 85% of eligible receivables and net book value of modular buildings, mobile offices, storage containers and capitalized freight and set-up costs and 75% of rolling stock, limited to $1 million, (ii) representations and warranties, affirmative and negative covenants and events of default customarily found in credit agreements for transactions of this nature, (iii) financial covenants also customary for credit agreements for transactions of this nature, but including the following:

 

(a) Maximum Senior Funded Debt to trailing twelve month Adjusted EBITDA of 5.00 to 1.00.

 

(b) Maximum Total Funded Debt to trailing twelve month Adjusted EBITDA of 5.50 to 1.00.

 

(c) Minimum Interest Coverage Ratio of 1.25:1.00.

 

(d) Minimum trailing twelve month Adjusted EBITDA of $15,726,000 plus 80% of EBITDA in connection with any acquisition on a TTM basis.

 

(e) Minimum Utilization of the fleets on an average dollar basis of 70%.

 

(f) Maximum Annual Shareholder Distributions of $1,500,000 to be paid to GFNA, with an additional $2,000,000 to be paid in the first two years post-closing related to the Holdback Note.

 

The Subordinated Debt has a maturity date of February 2, 2013.

 

The following summary describes the material provisions of the Merger Agreement. This summary may not contain all of the information about the Merger Agreement that is important to you and is qualified in its entirety by reference to the Merger Agreement, which is included as Annex A to this proxy statement. We urge you to read the entire Merger Agreement and the other annexes to this proxy statement carefully and in their entirety.

 

The Merger Agreement has been included to provide you with information regarding its terms. The terms and information in the Merger Agreement should not be relied on as disclosure about General Finance, GFNA or Pac-Van without consideration of the information provided elsewhere in this document and in the excerpts from the periodic reports included as Annex C, which information is incorporated by reference into this proxy statement. The terms of the Merger Agreement (such as the representations and warranties) govern the contractual rights and relationships, and allocate risk, among the parties in relation to the Merger. In particular, the representations and warranties made by the parties to each other in the Merger Agreement have been negotiated among the parties with the principal purpose of setting forth their respective rights with respect to their obligation to close the Merger should events or circumstances change or be different from those stated in the representations and warranties. Matters may change from the state of affairs contemplated by the representations and warranties. None of the parties to the Merger Agreement undertakes any obligation to publicly release any revisions to the representations and warranties, except as required under U.S. federal or other applicable securities laws.

 

Structure of the Merger

 

On July 28, 2008, we entered into the Merger Agreement with GFN North America Corp., a wholly-owned subsidiary of General Finance, or GFNA, MOAC, Pac-Van, Inc. and certain stockholders of MOAC, pursuant to which MOAC will merge with and into GFNA.

 

Conversion of Stock held by Stockholders of MOAC.  Each share of MOAC’s common stock issued and outstanding immediately prior to the effective time of the Merger and held by the stockholders of MOAC, and all rights in respect thereof shall, by virtue of the Merger and without any action on the part of the stockholder, forthwith cease to exist and be converted into and represent the right to receive an amount, of cash, a subordinated promissory note of GFNA and 4,000,000 shares of restricted General Finance common stock, or Shares.

 

Conversion of GFNA Stock.  At the effective time of the Merger, by virtue of the Merger and without any action on the part of any party, each share of GFNA’s common stock issued and outstanding immediately prior to the effective time of the Merger, will be converted into and exchanged for one validly issued, fully paid, and nonassessable share of the surviving corporation’s common stock.

 

Effect on Options.  Immediately prior to the effective time of the Merger, all vested options issued under the stock option plans of MOAC will be cancelled and will cease to exist, and the holder of such options will cease to have any rights with respect thereto and will receive cash for such cancelled options as set forth in the Merger Agreement.

 

No Further Ownership Rights in MOAC Common Stock.  At and after the effective time of the Merger, each stockholder of MOAC shall cease to have any rights as a stockholder of MOAC, except as otherwise required by applicable law and except for the right of each stockholder of MOAC to surrender his or her stock certificate or lost stock certificate affidavit in exchange for payment of the applicable consideration payable under the Merger Agreement, and no further transfer of MOAC common stock shall be made on the stock transfer books of the surviving corporation.

 

Merger Consideration

 

Merger Consideration.  Upon completion of the Merger, the stockholders of MOAC shall be entitled to receive the amount, or Merger Consideration, equal to $158.8 million plus the aggregate purchase price and transaction costs of any acquisitions completed by Pac-Van during the period commencing on the date of the Merger Agreement and ending at the Closing, minus the total indebtedness of Pac-Van which is borrowed under Pac-Van’s Credit Facility (which principal amount shall not exceed $86 million plus any new acquisition related debt), minus the subordinated debt of Pac-Van which is borrowed from Laminar (which original principal amount shall not

exceed $25 million), minus the aggregate value of indebtedness (other than indebtedness borrowed under the Credit Facility and the Subordinated Debt), minus the aggregate value of the warrants of MOAC. The Merger Consideration will be paid to the MOAC stockholders with up to $21.5 million in cash, a $1.5 million senior unsecured subordinated note of GFNA, or the Note, $30 million in Shares, which are valued at $7.50 per share for the purposes of the acquisition. The amount of cash paid for the MOAC shares will depend on the amount of indebtedness assumed but will not exceed $21.5 million in any event. The MOAC stockholders will receive different percentages of each form of Merger Consideration, as further described in the Merger Agreement.

 

Surviving Corporation, Governing Documents and Officers and Directors

 

At the effective time of the Merger, the certificate of incorporation and by-laws of GFNA, as in effect immediately prior to such effective time, will be the certificate of incorporation and by-laws respectively of the surviving corporation of the Merger. The officers and directors of GFNA prior to the effective time of the Merger will continue to be the officers and directors of the surviving corporation of the Merger, subject to the applicable provisions of the certificate of incorporation and by-laws of the surviving corporation.

 

Closing

 

Unless the parties agree otherwise, the completion of the Merger will occur on the first business day following the day on which the last of the closing conditions (other than any conditions that by their nature are to be satisfied at the closing) is satisfied or waived. See “— Conditions to the Merger” beginning on page 50. The parties currently expect to complete the Merger in the fourth quarter of 2008.

 

Approval of the MOAC Stockholders

 

The holders of MOAC Class A Common Stock, the class of common stock with voting rights, approved the Merger Agreement immediately following its execution. No further action by the MOAC Stockholders is needed for approval of the acquisition.

 

Effective Time of the Merger

 

The Merger will become effective upon the acceptance of the filing of a certificate of merger in accordance with Section 251 of the Delaware General Corporation Law with the Secretary of State of the State of Delaware, or at such other subsequent date or time as General Finance, GFNA, MOAC, Pac-Van, Inc. and certain stockholders of MOAC may agree and specify in the certificate of merger. General Finance and MOAC will file the certificate of merger on the closing date of the Merger.

 

Representations and Warranties

 

The Merger Agreement contains representations and warranties made by MOAC to General Finance and GFNA relating to a number of matters, including the following:

 

 

 

The Merger Agreement also contains representations and warranties made by General Finance and GFNA to MOAC and the MOAC stockholders relating to a number of matters, including the following:

 

 

 

The representations and warranties contained in the Merger Agreement were made for purposes of the Merger Agreement and are subject to qualifications and limitations agreed to by the respective parties in connection with negotiating the terms of the Merger Agreement. In addition, certain representations and warranties were made as of a specific date, may be subject to a contractual standard of materiality different from what might be viewed as material to stockholders, or may have been used for purposes of allocating risk between the respective parties rather than establishing matters as facts. This description of the representations and warranties, and their reproduction in the copy of the Merger Agreement attached to this proxy statement as Annex A, are included solely to provide investors with information regarding the terms of the Merger Agreement. Accordingly, the representations and warranties and other provisions of the Merger Agreement should not be read alone, but instead should only be read together with the information provided elsewhere in this proxy statement and in the excerpts from the periodic reports included in Annex C, which such information is incorporated by reference into this proxy statement. See “Where You Can Find More Information” beginning on page 89.

 

Certain of these representations and warranties are qualified by “materiality” or “material adverse effect”. For purposes of the Merger Agreement, a “material adverse effect” with respect to MOAC or Pac-Van, Inc., as the case may be, means one or more events, changes, circumstances or effects, a material adverse effect on the business, operations, assets, liabilities or financial condition of MOAC or Pac-Van, Inc. taken as a whole, other than events, changes, circumstances or effects that arise out of or result from economic factors generally affecting the economy or financial markets as a whole or the industries in which either of MOAC or Pac-Van, Inc. operates which do not disproportionately impact MOAC or Pac-Van, Inc.

 

The representations and warranties in the Merger Agreement related to corporate authorization, board approval, noncontravention of MOAC’s charter documents, taxes, environmental matters, the real property leases of Sellers being valid leaseholds free and clear of all liens, the personal property of Sellers being free and clear of all liens and intellectual property of Pac-Van, Inc. being valid, enforceable and free of all liens, or the Excluded Representations and breaches of representations and warranties including fraud or intentional tortious conduct, will survive until the third anniversary of the Closing. All representations and warranties in the Merger Agreement other than the Excluded Representations or as described herein will survive until 20 months after the closing date of the Merger. If the Merger Agreement is validly terminated, there will be no liability under the representations and warranties of the parties, or otherwise under the Merger Agreement, except as described below under “— Effect of Termination” and “— Termination Fees and Expenses” beginning on page 54.

 

Covenants and Agreements

 

Conduct of Business of Pac-Van Pending the Merger.  Pac-Van has agreed that, except as set forth in the Merger Agreement, during the period commencing on July 28, 2008 and ending at the earlier of the completion of the Merger or the termination of the Merger Agreement, Pac-Van will carry on its business in the ordinary and usual course and use all commercially reasonable efforts to preserve intact its present business organizations, keep available the services of its officers and employees and maintain satisfactory relationships with licensors, suppliers, distributors, customers and others with which it has a business relationship.

 

Additionally, Pac-Van has agreed that, except as may be approved in writing by General Finance or as expressly permitted or required by the Merger Agreement, prior to the completion of the Merger, Pac-Van will not, and will cause each of its subsidiaries to, refrain from the following:

 

 

 

Exclusivity.  From July 28, 2008 and until the earlier of the completion of the Merger or the termination of the Merger Agreement, Pac-Van has agreed not to engage in any discussions or negotiations with, or provide any

information to, any person or entity (other than General Finance and its affiliates and representatives), concerning any purchase of any capital stock of Pac-Van or any merger, consolidation or other business combination, asset sale, recapitalization or similar transaction involving Pac-Van. Pac-Van has agreed to notify General Finance as soon as practicable after Pac-Van has knowledge of any person making any proposal, offer, inquiry, or contact with Pac-Van, with respect to any such proposal for purchase of capital stock, merger, consolidation, asset sale, recapitalization or similar transaction involving Pac-Van and to describe the identity of the person making such proposal and the substance and material terms of such contact and such proposal.

 

Access to Information.  The Merger Agreement provides mutual rights to each of General Finance and Pac-Van to access the properties, books and records of the other party, and obligates each party to provide information regarding its business and properties to the other party to the extent permitted by law. Each of General Finance and Pac-Van agree to permit the other party and its representatives to have reasonable access during normal business hours and on reasonable written advance notice, to its premises and to its properties, books and records and shall cause its officers, employees counsel, accountants, consultants and other representatives to furnish the other party with such financial and operating data and other information with respect to its business and properties as such other party shall request from time to time. Such investigation and assistance shall not unreasonably disrupt the operations of the party providing access to such investigation, cause the loss of attorney/client privilege, and any information provided pursuant to such investigation by either General Finance or Pac-Van or their respective subsidiaries shall be subject to the terms of the mutual confidentiality provisions contained in the Merger Agreement.

 

Notification of Certain Matters.  Pac-Van agrees to provide prompt written notice to General Finance of (i) any notice of, or other communication relating to, a default or event of default under any material contact, (ii) any representation or warranty made by Pac-Van in the Merger Agreement becoming untrue or inaccurate in any material respect and (ii) the failure of any condition precedent to either party’s obligations.

 

MOAC’s Stock Option Plans.  Except as provided below, MOAC agrees, as of the time of the completion of the Merger, to take all actions necessary to terminate all stock option plans, stock incentive plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of Pac-Van. Immediately prior to the effective time of the Merger, all options issued under the option plans of MOAC will be cancelled and will cease to exist, and the holder of such options will cease to have any rights with respect thereto and will receive cash for such cancelled options as set forth in the Merger Agreement.

 

Certain Other Covenants.  The Merger Agreement also contains additional covenants, including covenants relating to the filing of this proxy statement, Pac-Van’s cooperation with General Finance in connection with the debt financing, cooperation and consultation regarding filings and proceedings with governmental and other agencies and organizations and obtaining required consents, cooperation and consultation regarding public statements with respect to transactions contemplated by the Merger Agreement and cooperation with respect to contesting or defending any legal proceedings brought by a third party in connection with the transactions contemplated by the Merger Agreement.

 

Conditions to the Merger

 

Conditions to Each Party’s Obligations.  The respective obligations of each of General Finance and Pac-Van to effect the Merger are conditioned upon the satisfaction or waiver by General Finance and Pac-Van of the following conditions:

 

 

 

Conditions to Obligations of General Finance.  The obligations of General Finance to complete the Merger are conditioned upon the satisfaction or waiver by General Finance of the following conditions:

 

 

 

Conditions to Obligations of Pac-Van.  The obligations of Pac-Van to complete the Merger are conditioned upon the satisfaction or waiver by Pac-Van of the following conditions:

 

 

Each of the conditions to General Finance’s and Pac-Van’s obligations to complete the Merger may be waived, in whole or in part, to the extent permitted by applicable law, by agreement of General Finance and Pac-Van if the condition is a condition to both General Finance’s and Pac-Van’s obligation to complete the Merger, or by the party for whom such condition is a condition of its obligation to complete the Merger. The boards of directors of General

Finance and Pac-Van may evaluate the materiality of any such waiver to determine whether amendment of this proxy statement and re-solicitation of proxies is necessary. However, General Finance and Pac-Van generally do not expect any such waiver to be significant enough to require an amendment of this proxy statement and re-solicitation of stockholders. In the event that any such waiver is not determined to be significant enough to require re-solicitation of stockholders, General Finance will have the discretion to complete the Merger without seeking further General Finance stockholder approval.

 

Indemnification

 

Certain of MOAC’s stockholders have agreed to hold General Finance and its affiliates, successors and assigns harmless for any losses which arise from or in connection with any breach by Pac-Van of any of its representations, warranties or covenants under the Merger Agreement or in any ancillary agreement or in any instrument, certificate or writing delivered pursuant to the Merger Agreement. General Finance or GFNA has agreed to hold harmless MOAC’s stockholders and their affiliates for any losses which arise from or in connection with (i) any breach by General Finance or GFNA of any of their representations, warranties or covenants under the Merger Agreement or in any agreement delivered pursuant to the Merger Agreement or (ii) with certain limitations, any claim brought by a stockholder of General Finance relating to the Merger.

 

The obligations to indemnify and hold harmless for breaches of representations and warranties relating to corporate authorization, board approval, noncontravention of Pac-Van’ charter documents, taxes, environmental matters, finders’ fees, the real property leases of Pac-Van, the personal property of Pac-Van and intellectual property of Pac-Van, or the Excluded Representations, will survive until the third anniversary of the Closing. All representations and warranties in the Merger Agreement other than the Excluded Representations will survive until 20 months after the closing date of the Merger, except for claims for indemnification asserted prior to the end of such period, which claims shall survive until final resolution thereof. With limited exceptions, the maximum amount of General Finance’s or the MOAC stockholders’ indemnification liabilities under the Merger Agreement is $10 million. Indemnification claims may be asserted only if each individual indemnifiable loss exceeds $500,000; provided, that if the amount of indemnifiable losses exceeds the $500,000, the indemnified party shall be entitled to recover the entire amount of losses.

 

All claims for indemnification by General Finance shall first be satisfied from the pledged Shares and the Note. The indemnification obligations of MOAC’s stockholders are several and not joint.

 

General Finance will be responsible for the taxes of the MOAC stockholders in the event that the Merger does not qualify as a tax-free reorganization firm under Section 368 of the Internal Revenue Code of 1986, as amended.

 

Termination

 

The Merger Agreement may be terminated at any time before the completion of the Merger, in any of the following circumstances:

 

 

 

 

 

Termination Fees and Expenses

 

If the Merger Agreement is terminated each party will bear its own expenses, provided that General Finance will reimburse Pac-Van for the costs of certain appraisals undertaken in connection with its due diligence investigation, which costs are estimated at $18,000.

 

Effect of Termination

 

If the Merger Agreement is terminated in accordance therewith, upon written notice, the Merger Agreement shall be terminated, without any liability (other than liability for any willful breach) on the part of General Finance or Pac-Van; provided, that the provisions of the Merger Agreement relating to public announcements, termination, effects of termination, expenses, transfer taxes and certain confidentiality obligations will survive any termination thereof and, provided further that no such termination shall relieve any party of any liability resulting from the breach of the Merger Agreement by such party.

 

Specific Performance

 

Each of General Finance and Pac-Van are entitled to an injunction or injunctions to prevent actual breaches of the Merger Agreement by the other party and to enforce specifically the terms and provisions of the Merger Agreement.

 

Amendments

 

The Merger Agreement may not be changed, and any of the terms, covenants, representations, warranties and conditions cannot be waived, except pursuant to an instrument in writing signed by all the parties to the Merger Agreement or, in the case of a waiver, by the party waiving compliance.

 

The following is a summary of the material provisions of the stockholders agreement to be entered into by and among General Finance and certain stockholders of MOAC upon completion of the Merger. The stockholders agreement is included as Exhibit C to Annex A and is incorporated by reference into this proxy statement. We encourage you to read the stockholders agreement carefully.

 

Transfer of Equity Securities

 

Transfer Restrictions.  No MOAC stockholder party to the stockholders agreement shall, voluntarily or involuntarily, directly or indirectly, transfer in any manner, the restricted General Finance common stock issued pursuant to the Merger Agreement, or the Shares, except pursuant to a transfer permitted under the stockholders agreement. Any attempt to transfer any security in violation of the transfer restrictions shall be null and void and General Finance will not permit or give any effect to any such transfer to be made on its books and records.

 

Permitted Transfers.  A MOAC stockholder who is a party to the stockholders agreement may carry out any of the following transfers:

 

 

Customary Black-out Periods.  Subject to certain exceptions, none of the MOAC stockholders shall sell any Shares other than during any period when the MOAC stockholders are not prohibited from selling securities pursuant to the written policies and procedures of General Finance governing transfers of securities by such officers and directors as may be in effect from time to time.

 

Standstill.  Except for the exercise of warrants owned as of the closing date of the Merger (which shall not be covered by the stockholders agreement) or as agreed by General Finance in advance, for the period commencing on the closing date and ending on June 30, 2009, Ronald F. Valenta and Ronald L. Havner, Jr. shall, and shall cause their controlled affiliates to, refrain from directly or indirectly:

 

 

 

Registration Rights

 

Shelf Registration Statement.  General Finance shall use all commercially reasonable efforts to file a registration statement under the U.S. Securities Act of 1933, as amended, or Securities Act, no later than June 30, 2009 to enable the resale of such registrable securities on a delayed or continuous basis.

 

Required Registrations.  At any time after the date, if any, that (x) General Finance is not permitted to file or maintain a Form S-3 in connection with the shelf registration in accordance with the terms of the stockholders agreement or (y) the registration statement expired in accordance with the terms of the stockholders agreement and not all registrable securities registered in such shelf registration have been sold, D. E. Shaw, Mr. Havner and Mr. Valenta shall each have the right to request General Finance to effect a registration under the Securities Act of registrable securities held by such stockholders. General Finance shall not be required to comply with more than one such demand request during any 12 month period and shall only be obligated to comply with three demand requests in total. If a managing underwriter engaged in connection with such registration concludes that the amount of securities requested to be included in such registration statement would adversely affect the public offering and sale of such securities, then the securities to be included in such registration may be reduced, provided that the securities proposed to be sold by General Finance will be reduced before the shares sought to be registered by the selling stockholders shall be reduced.

 

Incidental Registration.  If, at any time after the first anniversary of the completion of the Merger, General Finance proposes to register any of its securities under the Securities Act for sale to the public, any party to the stockholders agreement shall have the right at each such time to include registrable securities held by it that are not otherwise covered by the shelf registration statement or a required registration statement in such registration statement subject to any underwriters’ customary cut back.

 

Distribution Black-Out Period.  Subject to certain exceptions and limitations if the board of directors of General Finance reasonably determines that the registration and distribution of registrable securities (i) would reasonably be expected to impede, delay or interfere with, or require premature disclosure of, any material financing, offering, acquisition, merger, corporate reorganization, segment reclassification or discontinuation of operations, or other significant transaction or any negotiations, discussions or pending proposals with respect thereto, involving the General Finance or any of its subsidiaries or (ii) would require disclosure of non-public material information, the disclosure of which would reasonably be expected to adversely affect General Finance, General Finance shall be entitled to postpone the filing or effectiveness or suspend the effectiveness of a registration statement and/or the use of any prospectus for a period of time not to exceed 120 days. General Finance shall promptly give the stockholders party to the stockholders agreement written notice of such postponement or suspension (which notice need not specify the nature of the event giving rise to such suspension); provided, that General Finance shall not utilize this deferral right more than once in any 12 month period.

 

Registration Expenses.  General Finance will pay all registration expenses in connection with each registration of securities pursuant to the stockholders agreement, including, without limitation, any such registration not effected by General Finance. General Finance shall not be required, however, to reimburse the counsel of the MOAC stockholders for legal fees and expenses in excess of $50,000.

 

Holdback Agreements.  The MOAC stockholders party to the stockholders agreement (and General Finance and its executive officers if requested by the underwriters) shall not sell, make any short sale of, grant any option for the purchase of, or otherwise dispose of any securities, other than those securities included in a registration

described above for the seven days prior to and the 90 days after the effectiveness of the registration statement pursuant to which such offering shall be made (or such longer periods as may be advised by the underwriter).

 

Board of Directors of General Finance

 

Composition.  At the effective time, General Finance shall expand the size of the Board of Directors of General Finance so that the number of members on the Board of Directors of General Finance is equal to six.

 

The following Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2008 and the Unaudited Pro Forma Condensed Combined Statement of Operations for the nine months ended March 31, 2008 and the year ended June 30, 2007 give effect to the business combination and certain other transactions and are based upon:

 

(a) the historical consolidated financial statements of Pac-Van included in this proxy statement:

 

(b) our unaudited consolidated balance sheet as of March 31, 2008, which is included in our historical consolidated financial statements incorporated by reference into this proxy statement; and

 

(c) the unaudited pro forma condensed combined statements of operations of us and Royal Wolf for the nine months ended March 31, 2008 and the year ended June 30, 2007, which are included in this proxy statement (see “Unaudited Pro Forma Condensed Combined Financial Statements of General Finance Corporation and Royal Wolf”)

 

The Unaudited Pro Forma Condensed Combined Statements of Operations gives effect to the business combination as if it had occurred on the first day of the period and the Unaudited Pro Forma Condensed Combined Balance Sheet gives effect to the business combination as if it had occurred on the date of such balance sheet. The unaudited statements of operations of Pac-Van for the year ended June 30, 2007 were derived by combining the results for the six-month period from July 1, 2006 to December 31, 2006 with the six-month period from January 1, 2007 to June 30, 2007, and the unaudited statements of operations of Pac-Van for the nine months ended March 31, 2008 were derived by combining the results for the six-month period from July 1, 2007 to December 31, 2007 with the three-month period from January 1, 2008 to March 31, 2008; as Pac-Van’s fiscal year end is December 31.

 

The Unaudited Pro Forma Condensed Combined Financial Statements do not purport to represent what our actual consolidated results of operations or the consolidated financial position would have been had the business combination with Pac-Van occurred on the respective dates assumed, nor are they necessarily indicative of our future consolidated operating results or the future consolidated financial position.

 

The Unaudited Pro Forma Condensed Combined Financial Statements should be read in conjunction with our audited consolidated financial statements and the accompanying notes, the unaudited condensed consolidated financial statements and the accompanying notes incorporated by reference into this proxy statement and the separate historical consolidated financial statements and accompanying notes of Pac-Van included in this proxy statement. See “Where You Can Find More Information”.

 

We intend to account for the business combination as a purchase of Pac-Van in accordance with generally accepted accounting principles in the United States. Pac-Van will be treated as the acquired entity for such purposes. Accordingly, the aggregate fair value of the consideration paid by us will be allocated to Pac-Van’s assets based on their fair values as of the completion of the business combination. The difference between the fair value of Pac-Van’s identifiable tangible and intangible assets, liabilities and other items and the aggregate fair value of the consideration paid will be recorded as goodwill. The results of operations of Pac-Van will be included in our consolidated results of operations only for periods subsequent to the completion of the business combination.

 

Purchase Accounting Adjustments

 

Purchase accounting adjustments include adjustments necessary to allocate the purchase price to the identifiable tangible and intangible assets and liabilities of Pac-Van based on their estimated fair values. A description of each of these purchase accounting adjustments follows:

 

Fair Market Value Adjustments:  The pro forma financial statements reflect the purchase price allocation based on a preliminary assessment of fair market values and lives assigned to the assets, liabilities and other items being acquired. Fair market values in the pro forma financial statements were determined by preliminary discussions with independent valuation consultants and upon available information and assumptions that we believe are reasonable. After the closing of the business combination, we will complete the evaluation of the fair values of assets and liabilities in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations, with the assistance of the independent valuation

consultants. Fair market value adjustments reflected in the pro forma financial statements may be subject to significant revisions and adjustments pending finalization of those valuation studies.

 

Transaction Costs:  We estimate that we will incur approximately $1.0 million of transaction costs, consisting primarily of financial advisory, legal and accounting fees, financing costs and financial printing and other charges related to the purchase of Pac-Van. A portion of these transaction costs will be recorded as deferred charges on the unaudited pro forma condensed combined balance sheet and a portion will be recorded as part of the cost to purchase Pac-Van. These estimates are preliminary and, therefore, are subject to change.

 

Purchase Price Allocation:  The purchase consideration was determined based on the fair value (market price at the balance sheet date) of our shares of common stock to be issued upon the closing of the transaction, cash consideration to be paid to the stockholders of Pac-Van, the issuance of the Note (that bears interest at 8.0%), the long-term debt to be assumed (which would include borrowings under the Credit Facility for the satisfaction of the warrant obligation to SPV Capital Funds, L.L.C. and of vested stock options) and the transaction costs we estimate to incur in connection with the business combination. The following table summarizes the estimated purchase consideration (dollars in thousands):

 

 

 

 

The following table summarizes the pro forma net assets acquired and liabilities assumed in connection with the business combination and the preliminary allocation of the purchase consideration at March 31, 2008 (dollars in thousands):

 

 

Income Taxes:  Upon completion of the business combination, we will evaluate whether there is any adjustment necessary to deferred taxes. Any such adjustment would be recorded as an offset to goodwill. Due to the change in ownership upon completion of the business combination, the annual usage of any attributes that were generated prior to the business combination may be substantially limited.

 

Reclassification:  The historical financial statements of Pac-Van reflect reclassifications of certain balances in order to conform to our financial statement presentation.

 

Warrant Exercise Program:  We offered the holders of all of our outstanding, publicly-traded warrants and the privately-placed warrants issued to two executive officers (one of whom is also a director) the opportunity to exercise those warrants for a limited time at a reduced exercise price of $5.10 per warrant. Proceeds totaling approximately $21,100,000 received under this warrant exercise program completed on May 30, 2008 have been reflected in the pro forma financial statements since the proceeds will be required to pay the cash consideration to the Pac-Van stockholders.

Unaudited Pro Forma Condensed Combined Balance Sheet
At March 31, 2008