Presentation Brussels May, 2012 1
Executive summary Deminor and NPEX have joined forces to develop a highly efficient trading platform for distressed securities Holders of distressed securities now have the possibility to offer their securities for sale anonymously and at a minimum ask price within a chosen timeframe By setting up a transparent on-line auction process and putting buyers in competition, the ensures investors can obtain a fair price for their distressed securities Deminor and NPEX will fully manage the disposal of distressed assets with minimal intervention from the investor and act as gate keeper to protect investors 2
Content Slide I. Deminor and NPEX 4 II. 9 III. Contacts 16 3
I. Deminor and NPEX 4
1 DEMINOR Deminor is a Belgian company that specializes in services to investors, defending their best interests since 1991 Presentation of Deminor Organisation of Deminor Description of Deminor Partnership Deminor International S.c.r.l. is a company with registered office in Brussels, Belgium; it was founded in 1991 Damage Recovery Corporate Finance Deminor International Corporate Governance Investment Management Deminor is specialized in services to investors in the field of investor protection, corporate governance and shareholder activism In its activity of investor protection, Deminor assists investors with recovering their losses suffered on investments in European companies as a result of corporate wrongdoing, misrepresentation, violation of securities laws or any other type of wrongful conduct triggering possible claims for damages Deminor also assists investors in connection with restructurings, bankruptcies or other forms of collective reorganization and with selling distressed securities 5
1 DEMINOR Deminor has a long track record in recovering investments on a pan-european basis History and geographical footprint of Deminor Key events in the history of Deminor Countries where Deminor is active 1991 Creation of Deminor and first recovery case 1992 Launch of Corporate Finance activity 1993 Launch of first cases/activities France 1995 Launch of the Corporate Governance, voting and rating activity 1997 Launch of activities in The Netherlands 2002 First cases/ activities in Italy 2005 Sale of Corporate Governance, Voting and rating activity 2006 Launch of Investment Management activity 2008 Creation of separate business unit for Investment Recovery activity 2012 Launch of Distressed Trading Platform with NPEX Pending cases 6
1 NPEX NPEX is a regulated Dutch company that specializes in designing and operating on-line trading platforms for illiquid assets NPEX at a glance General information on NPEX NPEX short for Nederlandsche Participation Exchange is a Dutch company based in The Hague and was founded in 2009. It specializes in designing and operating on-line platforms which enable investors to trade in illiquid and distressed assets It benefits from a specific license from the Dutch financial regulators, namely the Dutch central bank (DNB) and The Netherlands Authority for the Financial Market (AFM) allowing it to define its own listing rules For the purpose of its main activity, NPEX created its own custody foundation, the Foundation Stichting Bewaarbedrijf NPEX (SBN) which is completely segregated from NPEX and responsible for registering and preserving the investors securities and other assets Services of NPEX NPEX services focus on listing and cover three market segments : Listing of small and medium enterprises Listing of investment funds Listing of entities for internal markets NPEX is therefore suitable for internal markets, pre- IPOs and IPOs which makes it unique in the world The NPEX auction is enhanced in that trading takes place anonymously, all changes in the bidding process and in securities are reported via e-mail, and settlement takes place in SBN It is possible to create a segregated area on NPEX platform for a given security that results in an internal market per security 7
1 PARTNERSHIP Deminor and NPEX have joined forces to develop a fully-integrated solution for the trading of distressed securities Description of the partnership between Deminor and NPEX Deminor Deminor assists investors with preparing the sale of their distressed securities on the Platform and completing the sale Deminor will pre-select the buyers who will be given full access to the Platform and who will be authorized to make bids on all outstanding offers Deminor will function as a hub between sellers and buyers for the purpose of conducting due diligence and completing the sale Deminor will take care of all transaction closing formalities NPEX Distressed Trading Platform NPEX NPEX has all the required licences to operate the NPEX Platform, has received special approval of the Dutch regulator of Financial markets (the AFM, Autoriteit Financiële Markten), the Dutch National Bank (the DNB, De Nederlandsche Bank) and is fully compliant with all (financial) legislation NPEX provides access to its platform, takes care of all the operational aspects of the online tool and will create dedicated areas on its platform for distressed securities NPEX manages all the transfers of securities, certificates and cash between the vendor and the potential buyer 8
II. 9
2 DISTRESSED SECURITIES Distressed securities are those of companies or governments in default, under bankruptcy or heading to such conditions Description of distressed securities Definition of distressed securities A security is said to be distressed when its value has been reduced significantly as a result of its issuer being under severe financial pressure Typically, distressed securities are those of companies or government entities that are either already in default, under bankruptcy protection or in distress, or that are heading toward such a condition While there is no precise definition, fixed income instruments with a yield to maturity in excess of 1000 basis points (10%) over the risk-free rate of return (e.g. Treasuries) are commonly thought of as being distressed and carry ratings of CCC or below The liquidity on this type of securities becomes very low making them very difficult to sell and often requiring specialized brokers and intermediaries Example of distressed assets Distressed securities include: bank loans high yield bonds busted convertible bonds trade claims held by suppliers public and private senior and junior debt non-performing loans distressed real estate distressed equity securities Famous distressed cases are : Lehman Brothers Holdings Inc. Bernard L. Madoff Investment Securities LLC MF Global Holdings Ltd. Greek bonds 10
2 ISSUES Non-professional investors disposing of their distressed securities are well advised to seek professional support Overview of the issues related to holding and disposing of distressed securities Low liquidity Limited pricing transparency High risk To the extent a market still exists, distressed securities are know to be very illiquid and difficult to trade Most of the time theses securities are no longer tradable at all No clear pricing like on a stock market and uncertainty concerning the trustworthiness and solvency of potential buyers The recovery of a distressed security can drag on for years since the timeframe of liquidation is unknown No guarantee to recover something from distressed securities which could eventually become worthless Non-professional investors holding distressed securities face unusual risks which they may not be able to manage properly When disposing of these securities, they should seek the support of specialized intermediaries who can ensure a fair, transparent and secure sales process 11
2 NPEX PLATFORM NPEX and Deminor have set up a platform allowing holders of distressed securities to sell their securities anonymously Presentation of the Description of the NPEX trading platform Illustrations The NPEX Platform is an on-line platform where investors can offer distressed securities for sale at a minimum price and subsequently sell them at the highest offered price. Set-Up Monitor NPEX Platform Identify Bid The NPEX Platform works according to the principle of an on-line auction : The investor indicates a minimum price for which he would like to sell certain distressed securities - such as Lehman Brothers He indicates a period during which the offer is open Throughout this period, buyers are able to make bids on the offer At the end of the bidding period the securities are sold to the highest bidder, provided the minimum asking price has been reached Investors NPEX foundation Potential Buyers 12
2 NPEX ADVANTAGES The platform offers unique advantages to investors willing to dispose of their distressed assets Presentation of the unique aspects of the platform 2 Offers safety mechanisms 1 Guarantees Transparency Advantages of NPEX platform 3 Ensures competition on price 1 2 3 Transparency The participation, trading and advisory costs are fully known in advance and the trading process can be followed on-line Safety All buyers having access to the platform are selected on the basis of criteria of reliability, solvency and professionalism; legal mechanisms are in place to protect investors Competition Because of the possibility of competition between interested buyers, the chance of a market-conform price is maximized A minimum asking price can be set to avoid selling below expectations 13
2 TRADING PROCESS Once registered on-line, the investor opens an account, transfers its securities after a short due diligence and receives certificates Description of the trading process (1/2) 1 On-line 2 Preliminary 3 Account 4 Exploratory 5 registration contact opening Due Diligence Issue of NPEX Certificates An interested investor registers on-line and fills in a standard form on the website of the NPEX Platform The investor is contacted by Deminor who may ask additional information on the distressed securities to be sold The investor signs an agreement with NPEX, NPEX Foundation and Deminor to open an NPEX Securities account and assign his securities to NPEX Foundation Deminor performs a vendor due diligence of securities to be transferred which, in case of positive outcome, will lead to the execution of the transfer NPEX Foundation issues certificates on the NPEX Securities account that embody the transferred securities and result in a direct right towards NPEX Foundation 14
2 TRADING PROCESS Based on defined sales criteria, the securities are auctioned online and sold to the highest bidder Description of the trading process (2/2) 6 Definition of sales 7 Auction 8 Buyer s Due 9 conditions Diligence Payment and delivery The investor can decide to auction his NPEX Certificates over a defined period for a minimum price Alternatively, he may keep the Certificates or ask for their cancellation (in the latter case the distressed securities are restituted) The investor may monitor at any time all bids on-line on NPEX Platform At the end of the auction period the buyer with the highest bid has the right to buy and the investor has the obligation to sell The buyer may ask to perform a due diligence regarding the investor and the securities At this stage the identity of the investor is disclosed to the buyer who receives all documentation needed for the due diligence Upon positive due diligence, the buyer transfers the required cash on his NPEX Securities account NPEX Foundation then transfers and delivers NPEX Securities to buyer and the cash to the investor 15
V. Contact 16
Contact us Deminor S.A. Avenue Van Nieuwenhuyse 6 box 8 BE-1160 Brussels www.deminor.com www.npexds.com distressed@deminor.com Tel. +32 (2) 674 71 12 and ask for Debbie Gysemans Fax +32 (2) 674 71 20 17
Disclaimer This presentation is meant for information purposes only. Investors interested in offering their distressed securities for sale on the platform or buyers interested in making offers on the NPEX Platform are advised to contact Deminor in order to receive a full information package as well as all relevant legal documentation. NPEX and Deminor do not offer any guarantee that investors will effectively be able to sell their distressed securities on the NPEX Platform, nor do they guarantee that the best possible price will be obtained through a sale on the Platform. The possibility of buying/selling distressed securities and the sale conditions will depend on many circumstances, such as, but without limitation to, the size of the security, the chance of recovery, the existence of interested buyers for the security, market and other economic conditions. NPEX and Deminor do not offer any investment advice nor do they assist with negotiating the sale or purchase conditions. Each interested seller and buyer will have to assess the opportunity to buy or sell securities on the Platform and may want to consult an investment advisor to receive personalized investment advice regarding the sale, holding or purchase of such securities. 18
Disclaimer This presentation can never supersede the agreement(s) between investor and NPEX, NPEX Foundation and/or Deminor and/or the NPEX Distressed Rules. Should this presentation contradict with any provision of the aforementioned documents, the provisions of the aforementioned documents will prevail at all time. This presentation cannot be regarded as legal advice. NPEX, NPEX Foundation nor Deminor can be held liable for the consequences of the use of this document by any party. 19