Shandong Linglong Rubber Co., LTD Building For a Successful Future

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Shandong Linglong Rubber Co., LTD Building For a Successful Future Proposal for a $US 100 Million Pre-IPO Recapitalization By Grand Avenue Capital and Etech Securities, Inc. Members NASD SIPC November 20, 2005. Confidential Presentation to the Board of Directors of the - PowerPoint PPT Presentation

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  • ()(2005)

  • Example of Pre-IPO Recapitalization of Actual Project in Process (November, 2005)

    ELEMENTS

    $US 140 million being raised for specialty chemical company in Chongqing

    Shareholders are diverse: SOE, US, Saudi Arabia

    Valuation of company matched shareholders expectations

    World-wide search of over 250 financially qualified private equity groups (US, HK, Singapore, Japan, UK) with over 40 responding initially positive and receiving financial materials.10 facility meetings with highly qualified investors, each with funds in excess of $US 1 billion

    Client limited Etech to only 3 strategic prospectsone in active discussions

    ETECH is selling only a substantial minority interest in effort to keep primary shareholder in control situation for financial consolidation purposes.

  • (2005)25040()10

  • Valuation ParametersEtech has suggested that a value for Linglong would be in the range of 4-6 times EBITDA, adjusted for non-recurring expenses of the last 2 years.An Enterprise Valuation (debt plus equity) of 3.6 Billion RMB is possible based on EBITDA reported to Etech of:

    200 million RMB after tax income150 million RMB income taxes160 million RMB depreciation 70 million RMB interest580 million RMB EBITDA

    Valuation could be in the range: 3.6 billion RMBshort and long term debt (1.3 billion RMB)Equity value of business 2.3 billion RMB

    An 800 million RMB post-acquisition value could result in an equity participation on the part of the new investor of 25% to 40%. Etechs responsibility is to maximize shareholder value and minimize dilution.

    Note that the ultimate valuation is based on a thorough review of financials and assessment of Linglongs financial plan.Etech has had an opportunity to review neither at this time.

  • EBITDA()

    36 EBITDA ()

    4.536

    361323

    825%40%

  • WL Ross

    10

  • 6.5%3015153%5

  • ()

    125

  • (2005)25040()10

    WL Ross10

    6.5%3015153%5

    ()

    125

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