Shamrock Capital Advisors, Inc.

Reddy Ice Holdings, Inc.

Leveraged Recapitalization

Proposal

July 2007

Exhibit 3

2

Table of content

I.

Leveraged recapitalization proposal

II.

Packaged ice market characteristics

III.

Reddy Ice performance

IV.

Operational improvement opportunities

V.

Reddy Ice valuation

3

Leveraged recapitalization is a better option for current

shareholders

•

GSO Capital Partners buyout offer for Reddy Ice substantially

undervalues the business; our DCF shows that the intrinsic

value of Reddy Ice is ~$42-$44 per share

•

Our proposal:

Pursue a leverage recapitalization

Raise $110M of debt

Do a self-tender for 3.3M shares (~15% of outstanding

shares) at $33 per share

Allow

some

shareholders

to

exit

at

a

higher

valuation

than

the

GSO

offer,

while

allowing

shareholders

who

appreciate

the

long-term

potential

of

the

business

to

have

the

opportunity

to

capture

a

significantly

higher

return

4

Reddy Ice business is attractive, with significant future

valuation creation opportunities

•

Reddy

Ice

business

is

attractive,

as

the

packaged

ice

market

is

stable

and

has

many favorable characteristics

Recession

proof,

market

dominance,

low

price

sensitivity,

highly

accretive

acquisition landscape, and high barriers to entry

•

While Reddy Ice management has grown the business and delivered above average

returns

to

shareholders,

significant

improvement

opportunities

still

exist

that

can

be achieved in a relatively short period of time and as a publicly traded company

Given pricing dynamics, we believe prices could be raised; a 5% increase above

current levels would increase shareholder value by ~15%

Internal efficiency opportunities and competitor’s EBITDA margin suggest that

Reddy Ice could improve its margins to ~30% in the next several years; this would

increase shareholder value by ~28%

Value creation opportunity from smaller acquisitions is significant and many

accretive deals are still available

Monetizing advertising opportunities on the bags and trucks are two other creative

ways to increase value

5

The packaged ice market is stable and has many attractive

characteristics (1 of 2)

0

20

40

60

80

100%

Market

share

Rest

of

players

Leading

player

Typical

market

share

in

focus

areas

0.0

1.0

2.0

$3.0B

2002

2.0B

2006

2.5B

Packaged

ice

market

retail

revenue

5.7%

(02-05)

CAGR

$92M

$219M

Arctic

Glacier

revenue

$236M

$333M

Reddy

Ice

revenue

Market has consistently grown in recent

years; experts think market is recession

resistant

Three largest players

dominate the market in

their territories

“Packaged ice consumption does not get impacted by

recession

as people tend to spend more of their leisure time

close to home, which increases demand for ice.”

Market expert, International packaged ice association

Pricing environment is

attractive

“Event”

driven

purchase

Ice represents a

small cost in

overall “event”

cost

Low price elasticity

Highly profitable

product for

retailers

Source: International Packaged Ice Association; Company presentations

Low

High

6

0

3

5

8

10

13X

Acquisitions

since

IPO

5.03X

2007

acquisitions

5.65X

Reddy

Ice

valuation

(pre

deal)

11.00X

EV/EBITDA

multiple

Fragmented market leads to highly accretive tuck-in

acquisitions

~200 mom and pop acquisition

targets still available

~5.3x

Multiple

arbitrage

High barriers to entry

$300M in PP&E

Estimated $400M in

replacement cost

Long term relationships

(10+ years) with high

quality customers (Wal-

Mart, 7-Eleven, etc.)

The packaged ice market is stable and has many attractive

characteristics (2 of 2)

Source:

Company

conference

calls;

Company

presentations;

Capital

IQ

7

0

100

200

300

$400M

2004

$268M

2005

$305M

2006

$333M

Reddy

Ice

ice

revenue

11.5%

(04-06)

CAGR

Revenue grew at 11.5% CAGR since

2004

0

20

40

$60M

2004

$31.8M

2005

$33.9M

2006

$51.7M

Reddy

Ice

free

cash

flow*

27.5%

(04-06)

CAGR

Reddy Ice management has significantly grown the business

since 2004

With free cash flow also showing growth

of 27.5% CAGR

Source:

Capital

IQ;

Yahoo

finance;

*

Free

cash

flow

=

cash

flow

from

operations

-

CAPEX

8

There are still significant improvement opportunities that can

be achieved and create significant value for public shareholders

Pricing

Operational efficiencies

Asset monetization

1

2

3

9

Price increase could increase revenue and EBITDA, and create

significant additional shareholder value; given pricing dynamics,

this can be achieved in the next 12-18 months

23%

15%

10%

Share price delta (%)

$38.41

$35.86

$34.38

$31.25

Implied share price

21.8

21.8

21.8

21.8

Shares outstanding (M)

$837.3

$781.8

$749.5

$681.2

Implied market

capitalization (M)

11.9

11.9

11.9

11.9

Deal Multiple

$101.1

$96.5

$93.8

$88.0

EBITDA (M)

$339.1

$333.9

$330.9

$324.5

Total Ice Revenue (M)

10% Price

increase

5% Price

increase

3% Price

increase

2006

1

Assumptions

Volume decline of 1,

2, and 5% in the 3,

5, and 10% price

increase scenarios

respectively

Incremental revenue

margin of 90%

10

EBITDA margin comparison suggests significant improvement

opportunity exists to increase EBITDA margin; we think

improvements can be achieved in the next 24-36 months

0.0

10.0

20.0

30.0%

Reddy

Ice

25.4%

Arctic

Glacier

27.0%

Arctic

Glacier

(3

year

goal)

30.0%

EBITDA

margin

Cross plant utilization of best practices could result in significant value creation

Reaching Arctic Glacier margin goal could result in additional value of ~$8.50

per share (~28%)

Production process opportunities:

Production cost and packaging

speeds per bag ranges

significantly between plants

Up to 150% and 35%

improvement opportunity

respectively

Plant automation is in early

stages

Delivery routing is not as

sophisticated as can be, as

decisions are based on driver

feedback and the process is not

systemized or computerized

~450 BPS

opportunity

2

Source: Capital IQ; Interviews

11

Other asset monetization opportunities also exist to create

additional shareholder value

Opportunity:

Bag monetization

Truck monetization

Rationale:

Potential

partners:

Sell advertising on ice bags

Sell advertising on trucks

Large reach at low cost

Attractive “shelf space”

as

packages located behind the glass

freezer door, making impressions

even to consumers not buying ice

Attractive target demographics

Low cost mobile billboard that

generates high number of

impressions

Allows partner to brand itself with

a high quality related product

Beverage companies

Theme parks

Sports teams

3

Grocery stores

Entertainment companies

Other national advertisers

12

Our analysis shows that Reddy Ice intrinsic value is $42-$44

per share

Current deal value does not maximize shareholder value and transfers

majority of the upside potential to GSO Capital Partners

Assumptions:

Organic Ice revenue growth of 6.5%

CAGR through 2011

Pricing increase of 6% in 2008

and 2009, 2.5% after

Volume growth of 2.5% CAGR

$60M of revenue and $15M of

EBITDA purchased through 2011 at

7x EV/EBITDA multiple

EBITDA margin improving to 30% by

2010

Debt at 5.3x 2007 EBITDA, 4.5x

2008 EBITDA

Terminal year 2011; exit multiple

10x EBITDA, Discount rate 10%

DCF:

20

2007

2008

2009

2010

2011

Revenue

360.30

$   

403.73

$   

451.91

$   

488.80

$   

527.55

$   

Growth

4.1%

12.1%

11.9%

8.2%

7.9%

EBITDA

94.87

115.06

134.22

146.64

158.26

Margin

26.3%

28.5%

29.7%

30.0%

30.0%

Net Income

24.81

39.18

44.31

49.25

56.30

Margin

6.9%

9.7%

9.8%

10.1%

10.7%

Free Cash Flow

53.59

84.75

60.37

53.18

58.66

Growth

58.1%

-28.8%

-11.9%

10.3%

Equity Value

805.04

$   

Outstanding Shares

18.53

Implied Share Value

43.44

$     

Deal share price

31.25

$     

% Upside

39.0%

13

0

10

20

30

$40

30

day

average

$29.46

Pre

announ-

cement

$28.52

Deal

price

$31.25

Reddy

Ice

share

price

6.1%

(30

day

average)

9.6%

(Pre

announ-

cement)

In addition, deal timing resulted in a small deal premium while

long-term prospect of business are still strong

Q2 2007 weather was weaker than

2006, but inline with 2005

GSO Capital leveraged the soft

weather to pay a small premium

While weather

impacts short term

sales, it is not a big

driver of long term

value

Long term

temperatures are

expected to be stable

Source: University of Dayton, Yahoo finance

0%

78.3

78.6

78.5

77.8

Jun

-3%

71.1

73.3

70.8

72.2

Avg.

0%

72.1

72.4

70.1

74.2

May

-9%

63.0

68.9

63.9

64.6

Apr

07 to 06

variance

2007

2006

2005

2004

Additionally, precipitation was higher

in 2007 than 2006, further impacting

outdoor events