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Hunter

I am concerned about what happens if we win the Hanson deal Saw no sense
in prematurely ringing the alarm in light of the fact we still I have no
knowledge of exactly what a success means here to BHR.

We have a problem with Jonathan and his team on a number of fronts

A fix is not easy but if we hope to get BHR moving forward we had better
get a plan in place.

Do you guys have time for a call before Wednesday mornings Aleris call? I
know you are both out of town but a half hour call prior to our next
conversation with BHR would help us handle the Aleris call . Lay some
ground rules down for the crew in Beijing

You guys have time tomorrow for a quick chat?
Jimmy

On Monday, March 23, 2015, Hunter Biden <hbiden@rosemontseneca.com> wrote:

> Jimmy-
> I couldn't agree more. What I don't understand is why they wouldn't want
> us directly involved. I understand after 10 years of this the cultural
> differences blah, blah... But, in this case it defies all reason and logic.
> It's almost as if they are trying to keep us away from the deal. After our
> last board meeting where we expressly asked to be included I followed up
> with emails asking for information about the company to see if we had any
> connections to the board etc... And heard nothing. Another concern is that
> they do buy a US company and offshore it and we are caught blindsided by
> negative press. Anyway- we have to begin to change their behavior for this
> to work.
>
> RHB
> 202.333.1880
>
> On Mar 23, 2015, at 3:21 PM, James Bulger <jbulger@thorntonai.com
> <javascript:_e(%7B%7D,'cvml','jbulger@thorntonai.com');>> wrote:
>
> Gentlemen,
>
> I am sending you this brief note about the car parts manufacturer, code
> named the Hanson (AVIC is co-investor) deal in order for you to get an
> understanding of how I think we "might" help BHR management.
>
> During our call with Xin today (which neither Jonathan nor anyone else
> from BHR besides Xin joined) we learned that BHR/AVIC lost the Dickson bid
> to a Japanese firm. If you recall this was a bid on another auto parts
> manufacturer that BHR was very keen on winning. We've been briefed for
> months about how the Dickson deal was coming along and, when I've had a
> chance, I've volunteered the American sides' assistance in order to help
> with that deal. This was often met with nods and words of approval by the
> BHR team but no real effort was made to seek our help. Well when we stopped
> hearing about this deal recently I feared the worst and now today we have
> had it confirmed by a subordinate of Jonathan's in an off-handed comment on
> a conference call that our bid was not accepted and that the deal had
> died...
>
> Unfortunately this pattern of behavior is more of the same from the BHR
> side.
>
> Now I point that out just because, while BHR lost the Dickson deal, there
> is another auto-parts deal that is ongoing and that is the Hanson project.
> We learned today on the phone call that the final binding offer on the
> Hanson deal is due on April 6th and three other competitors remain. Xin
> believed this project could close as early as May if our bid was accepted.
> Xin also mentioned that AVIC is very keen on winning the Hanson deal
> especially since we lost the Dickson bid.
>
> During previous calls and meetings in Beijing I learned that Xinzhong has
> been working on this deal and he has spent weeks in Detroit with the AVIC
> team reviewing documents and interviewing Hanson executives generally
> conducting DD.
>
> I have tried many times to get information regarding this project, but in
> true Chinese fashion information is not readily shared with us. This
> despite the fact that the seller is based in the USA and that the bidding
> process is being conducted by the seller's investment bank whom we might
> have direct connections to. However, this is a very large deal in dollar
> terms and after the SINOPEC snafu closing a large deal in April would be
> very beneficial to BHR.
>
> The seller is based in the Detroit area. At this time in the process it
> might be too late to help BHR from the US side particularly in light of the
> fact that there is a bidding process being conducted by an Investment Bank
> on behalf of the seller.
>
> It is my belief that I and perhaps one or both of you might still be able
> to assist in the process. For example, having a large Chinese entity such
> as AVIC trying to purchase a large manufacturing entity in the US might be
> disconcerting to local stakeholders such as Unions and local elected
> officials concerned about job losses to an overseas buyer. In order to
> mitigate such valid concerns it would be wise for me to meet local elected
> officials (through SLLF contacts) and brief them on our plans for the
> business post purchase. At the very least having us associated with the
> buyer would help allay some fears in the mind of the seller and other stake
> holders. Consider for a moment that one of the other 3 bidders is a US
> based company. It is plausible then that they are prodding the seller to
> stay onshore etc..... The other 3 bidders have not been disclosed to me and
> yes I have asked in the past for their names. Perhaps there is a consultant
> hired by Hanson on the Federal level, if there is such a consultant then
> perhaps he is friendly and perhaps he should be made aware we all are
> stakeholders in this endeavor, that would be good information for Hanson
> (the seller) to have in hand.
>
> One of BHR's strong points is that we have excellent partners/owners in
> the US. Here we have a situation where BHR coupled with AVIC is bidding to
> buy a large US based firm and the US based owners/ Board members of BHR are
> kept in the dark.
>
> I believe we could have helped a company we OWN win a significant piece of
> business. Perhaps it is too late in the process, and maybe BHR management
> has a very good reason for not involving any of us in the process but here
> are a few final thoughts to consider:
>
> #1. I don't know how the deal is structured so I don't even know how BHR
> gets compensated. Clearly our Fund is not fully funded so we likely will
> not invest alongside AVIC, unless of course this is a deal where if we win
> it Gouxin would come into our fund as a large LP.
>
> #2. I'm pretty sure Lazard is acting as the BHR /AVIC banking consultant.
> I know you guys have relationships over at Lazard. I think Lazard would be
> wise enough to know how, or if we as individuals, might be able to assist
> in this process. Do you think it might be wise to speak to someone at
> Lazard? With the full knowledge of Jonathan and management of course, not
> looking to upset the apple cart here. Lazard should at least be made aware
> that we have an interest in helping.
>
> #3. Without seeing a budget and projections from Management I have no way
> to determine what fee etc.... This Hanson deal actually means to BHR.
> Clearly though a win is a win, and Burnham for instance, would be happy to
> mention a win other than SINOPEC while they are out fundraising.
>
> I hope you take the time to read my note. I am using this deal as an
> example of how our management team needs to open up the communications.
> There is no excuse for the 3 of us not to be involved at some level in the
> Hanson project. We own BHR, furthermore we want it to succeed as much as
> anyone. The BHR management team has kept us in the dark. It troubles me
> that the management team at BHR never asked for our thoughts, advice or
> insight while chasing a buy out of a very large US firm.
>
> I suggest that we all have a call about this before the BHR conference
> call on Wednesday so that we can make sure that we as Americans are all on
> the same page. Let me know when you guys are free.
>
> Thanks,
> Jimmy
>
> --
> James J. Bulger
> Chairman
> Thornton Group LLC
> 14 Beacon Street, Suite 804A
> Boston, MA 02108
> Office tel: 617.248.9440
>
>

--
James J. Bulger
Chairman
Thornton Group LLC
14 Beacon Street, Suite 804A
Boston, MA 02108
Office tel: 617.248.944