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Ulf-

Great seeing you yesterday. Per our discussion, below are some bullets and an attachment on Telecom Serbia. Please don’t distribute the email or attachment to anyone else - this is for your information. We would love your feedback and if you think there are any groups we should take this to. I can get our partners on the phone with anyone at any time.

We believe there is some flexibility in the dates and there is a chance we could put together a placeholder bid to meet the RFP deadline and get a PE firm in a few months later. So, even an expression of interest would be helpful and we can see if we can make it work.

Thanks,

Eric


Eric D. Schwerin
Rosemont Seneca Advisors, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-1880
eschwerin@rosemontseneca.com <x-msg://59/eschwerin@obblaw.com>
P Consider the environment before printing this email.

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> Here are some bullet points regarding Telekom Serbia.
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> · One of the largest telecom groups in South Eastern Europe with over 10 million subscribers
> · Offering mobile and fixed telephony as well as broadband, multimedia services and e-banking
> · Over €1B revenue last 3 years with EBITDA of 38% and cash on hands growth
> · Number one operator in Serbia, number one in Republika Srpska (Bosnia) and number two in Montenegro (behind T-Mobile),
> · Company is being privatized with deadline to submit offers being November 15th. Several companies expressed interest to participate in the process. Notable are Apollo Global Management, Advent International, ADIA and CVC Capital Partners.
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> Evaluation of the group by Government of Serbia (“GoS”) advisor (Lazard) on this project is € 2.2 billion based on 5.75 multiple EBITDA of €384million. Shareholders of the TS are:
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> · GoS with 58.1%,
> · TS 20% treasury shares (TS purchased 20% from the Greek OTE which was minority owner at one point)
> · Employees of TS with 6.94% and
> · Citizens of Serbia with 14.95%.
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>
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> GoS is selling their majority stake of 58% but buying this stake will include 20% treasury shares in possession of TS so new owner will have 78% ownership with possibility to take out 22% owned by employees and citizens as well. GoS is open for any model, majority or minority (PPP) purchase.
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> Depending on the model approximate required funding for majority stake of 58%+22% is €1.5B based on 5 times EBITDA that we believe GoS will accept. Also we believe that 6 months or year after acquisition rest of the shares ( 22% ) can be acquired for cheaper price.
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> In the case of partnership with GoS plan would be to acquire 42% of the shares and to have all managerial and decision making rights via financial model (20% treasury shares and 22% citizens and employees via offering and squeeze out). For this model we would need approximately € 800 million. I’m attaching this model we did back in August (so disregard the dates) that requires actually less money through financial engineering (HY Bond, etc.), it is based on 4.75 multiple but I think we will have to increase it to 5 times EBITDA as GoS would not accept less and exit will be at 5.75.
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