EFTA02408571.pdf

r PROJECT KENNEDY PROJECT KENNEDY Private and Confidential EFTA_R1_01468377 EFTA02408571  = NI ON II IIII UM III EN MI MI MI lig MI IIII INI IIII IN III IN MI MI r Performance Update PROJECT KENNEDY ■ Market conditions for the luxury sports car sector continue to remain extremely challenging for all manufacturers ■ Kennedy continues to perform below budget, on both a wholesale and retail basis ■ Wholesales to date total 1,215 units versus a budget of 1,825 units, prompting Management to reduce 2010 wholesale budget from 6,000 sales to 5,053. Management are preparing the business for a potential further reduction to 4,800 units ■ Kennedy continues to underperform not only against budget but also the market Units Kennedy Bentley Ferrari Lamborghini Maserati May-10 202 165 223 43 172 May-09 228 179 200 37 137 Variance -11.4% -7.8% 11.5% 16.2% 25.5% ■ Poor preparation for the launch of the Rapide has significantly impacted sales nits Rapide Flying Spur Panamera Quattroporte May-10 21 57 907 73 1 EFTA_R1_01468378 EFTA02408572  = IN III in lin in On In in ni r Financial Pressure PROJECT KENNEDY • As the deterioration of Kennedy's performance continues, additional pressure continues to build on the financial position of the Company is The risk remains that Kennedy fails to comply with its financial covenants or struggles to refinance its debt upon maturity 6,500 90 85 6,000 Accounting 80 EBITDA 5,500 F 75 Mar 10 - forecast revised to 5,825 Wholesale .•••• 70 Volumes 5,000 • • Financial fm May 10— forecast •••.. Engineering £23m 65 Dec 09 — Mgmt revised to 5,385 4,500 60 forecast volumes of 6,000 for 2010 Apr 10 - forecast Operating revised to 5,385 SS EBITDA 4,000 50 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Volume (LHS) EBITDA (RHS) 2 EFTA_R1_01468379 EFTA02408573  M In IIII In III • NI IN NI • IS • • • In • IN IN IN IN IN IN r What Kennedy needs: PROJECT KENNEDY 1. Stable and secure shareholders 2. Revamp of Management team to take advantage of the strengths within the existing team. Critically needs a strong, experienced CEO and to upgrade the sales and marketing 3. Empowering the Management team to make the necessary changes to develop new markets 4. Rationalisation of product ranges, through the elimination of the "low" priced entry models, to once again position the Company as aspirational and more up-market 5. Agree a coherent and dynamic fuel economy programme built around the core stable of products 3 EFTA_R1_01468380 EFTA02408574 a se a in a NB Ilil IN IN OM MI MI IN a IN 1N UM III MI a a III MI IN III MI III NI n ON a III MI a r Capital Requirement PROJECT KENNEDY ■ Total committed capital of up to £500 million, over 3 years, could be required to fully implement the strategy. This would include: — £200 million to acquire the Company's debt — £300 million to develop the business through capital expenditure ■ The new capital would allow Kennedy to: — Design and develop new models, re-positioning the Company as the most exclusive sports car provider — Repatriation of production of the new Rapide model from Graz in Austria, to the Kennedy production facility in Gaydon — Bring the Lagonda model into production, allowing the Company to access new markets, both sectorally and geographically — Focus on developing environmental options, especially hybrid — Expand the dealership network into new, faster growth, emerging markets 4 EFTA_R1_01468381 EFTA02408575 so Ng a a IN Ii Nei MI IN MI UM IN • • IN III MI IN IN • IN NI NMI NI NI • IN r Scenario Analysis PROJECT KENNEDY Post-acquisition of the debt, the following scenarios could play out... Leverage Covenant ' PASS FAIL (difficulty envisaged Q3/Q4 2010) • Company enters Administration Liquidity Covenant PASS FAIL 1 (difficulty envisaged O2/Q3 2011) • Pre-pack sale to Consortium Refinance of Debt Refinance Unable to fully (May 2012) Refinance Debt holders repaid in full plus coupon • Should Kennedy pass all covenants and be able to refinance the Debt facility, then Debt holders will be repaid in full plus the annual coupon (375bps above LIBOR) • If not the Company will enter Administration and a pre-pack sale will allow the Consortium the opportunity to take full ownership 5 EFTA_R1_01468382 EFTA02408576 ow m m in NI in MI IN III II MI NI III IN IN II■ IN III IN II • IN MI II • MI III • IN III IN NI MI MI r Next Steps PROJECT KENNEDY The key steps to execution are: 1. Agree Consortium and the capital commitment 2. Mandate Jon Moulton to represent Consortium, to buy Kennedy's debt from banking syndicate, seeking to achieve the purchase of 66.7% of the facility 3. The possible breach of Kennedy's covenants could be in Q4 2010 for leverage covenants and Q2 2011 for cash flow covenants 4. Upon breach of covenants, accelerate repayment of the debt facility under terms of the loan agreement 5. Appoint Administrator upon inability of Company to re-pay debt facility to Consortium 6. Administrator to conduct pre-pack sale of Kennedy to the Consortium 6 EFTA_R1_01468383 EFTA02408577