ČSOB Acquisition Finance Československá obchodní banka, a. s. Prague, Kampa, March 3, 2008

2 Acquisition Finance Models Financing of Transactions 1.Direct M&A 2.LBOs

3 AD 1. Direct M&A Model Elements and Characteristics: Direct purchase of a Target and held directly by Investor in its books; Investor directly bears 100% risk of potential failure and all liabilities resulting from an acquisition loan; This model is typical for industry (strategic) Investors; Bank provides the financing within the framework of the whole group;

4 AD 1. Direct M&A Model Elements and Characteristics: Investor may not valuate the acquisition based on a direct capital gain, but rather prefer other positive impacts; Positive impacts – synergy resulting in increase in sales, decrease in costs, or buying new markets; Bank evaluates the risk of the whole corporation; The financing model typically includes existing financing, acquisition financing and operational loans provided to the Target;

5 AD 1. Direct M&A Model Scheme of a direct acquisition: Investor Target Bank Customers Market Explanation: 1 – bank loans 2 – payment of P. Price 3 – ownership 4 – sales 5 – loan repayments Seller 2

6 AD 2. Leveraged Buy-outs Elements and Characteristics: Using an SPV; Financing of the purchase price is based on future CF generated by the Target; Investor is secluded from direct transaction and financing risks; Bank evaluates the risk of the Target; LBO is typically used by: Financial Investors Corporations already leveraged Intra-shareholders settlements

7 AD 2. Leveraged Buy-outs Elements and Characteristics: Low equity ratios = high leverage; Positive impacts on the tax cost and on WACC; Significantly reduced risk of Investor (limited to equity contribution); Well-proven, and well-developed transaction structuring; Tested according to the LMA standards;

8 AD 2. Leveraged Buy-outs Scheme of LBO: Investor (Buyer) Seller SPV Target Bank Explanation 1 – forming SPV and equity 2 – bank loan 3 – payment of Purch. Price 4 – ownership 5 – loan repayments Post Merger

9 Acquisition Finance Models Financing of Transactions

10 Financing of Transactions M&ALBO Corporate risk Capital gain is often indirect (purchase of market, synergy effects) Financed typically via several tranches, combining LT amortized and ST bullet term loans, bonds, and operating overdrafts, etc. The security includes assets of Investor inclusive the acquired shares Repayments are generated by the operations of the Investor corporation Corporate reputation of Investor Equity contribution in cash approximately 30% of the transaction Borrower is to be restructured via a merger (upside) enabling the access to the asset collateral and C/F for repayment The security includes the acquired shares and assets of the target post merger Repayments are generated by the future C/F of the Target post merger

11 Financing of Transactions M&ALBO Pricing is derived from the corporate rating of Investor The advantages for Investor: Lower tax cost No Investor´s liability Leverage providing better IRR Are compensated by higher price rewarding bank for increased risk

12 Contact Dalibor Jeřábek Acquisition Finance phone mob