ČSOB Acquisition Finance

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

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

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: 5 4 Customers Market Bank Investor 1 2 3 Explanation: 1 – bank loans 2 – payment of P. Price 3 – ownership 4 – sales 5 – loan repayments Target Seller

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) 5 1 Bank SPV Seller 2 3 Explanation 1 – forming SPV and equity 2 – bank loan 3 – payment of Purch. Price 4 – ownership 5 – loan repayments 4 Target Post Merger

9. Acquisition Finance Models Financing of Transactions

10. Financing of Transactions M&A LBO • 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&A LBO • 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 +420 224 114 391 mob. +420 603 151 561 e-mail djerabek@csob.cz