CONFIDENTIAL

Private Bank &

Financing in Africa

Private Bank &

Financing in Africa

Henry K. Hall, CFAManaging Director

GEM Equity Derivative Sales, Structuring and Financing

24 June 2008

24 June 2008

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Equity Linked Financing

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Collateral Value Liquid Shares: possible to use market trading value Illiquid shares: need to rely on a new valuation based on trading levels of comparable companies. Market price used as reference only.

This method has been recently applied by Merrill Lynch share financings in the CIS1 region

Margining If the value of the portfolio decreases below a pre-determined value, the borrower would be expected to post margin payments (cash

and/or acceptable securities). In special circumstances the bank may allow for the first call to be made in shares, and then switch to cash The deadline for posting cash of share collateral in most cases shall be 1 or 2 days If the secured shares are not a reliable margining benchmark, a proxy index or basket of shares can be used Alternatively - margining is based on audited accounts as a function of EBITDA, Sales or other financial indication multiple If the share value drops substantially, then the bank has the right to accelerate the loan

Legal Structure The most simple version is the pledge of the local shares by the owner to the lender, but this works if the legal system in the jurisdiction if

robust enough to allow easy and immediate enforcement of the pledge To ease the legal issues of the pledge, investors prefer an outright sale and repurchase of shares by the pledgor to the lender (assurances

can be given for dividend pass through and proxy voting) in a Repo (Sale and Repurchase) transaction. Alternatively, if the holding company is in an offshore jurisdiction with English or similar law (e.g. Cyprus, BVI), a combination of local law

pledge onshore and English law pledge of the shares in holding company can be used. The due diligence process shall specifically focus on the shareholder agreements and any side agreements that might contain pre-emptive

shareholders rights.

Note: 1 CIS region means Commonwealth of Independent States and include former USSR countries

Basic Concept

Equity Linked Financing

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Financing is provided to the holding company (or SPV), which owns or intends to own (in the case of acquisition financing) a portfolio of shares in an operating company(ies)

In general such structures centre around the shareholder’s aim to obtain financing for developing new parts of the portfolio by unlocking value of the more developed parts of the portfolio

Furthermore this type of loan does not interfere with the business of the operating asset itself

We assume that the financing is provided at the holding company (HoldCo) level without recourse to the operating company (OpCo).

This means that there is usually no operating company guarantee and the shares are the only security available to the lenders

These structures generally require share collateral and participation in equity upside in addition to usual credit terms

$ Loan

Hold Co

[]% Ownership

[]% Share Pledge

Op. Co.

Interest,Principal & Equity Upside

Sub 2Sub 1 Sub 3

$ Project or Acquisition

Potential Share Pledge

Financing Structure

Equity Linked Financing

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If the shares are not liquid

The loan needs higher collateral coverage: ([3]x-[4]x of the loan amount)

A specific exit strategy is evaluated

Dividends commitment

Expected liquidity event, such as the sale of the investment project or an acquired asset

Expected IPO of the operating company / assets

Sale for a strategic buyer

Block sale of some assets if there’s a strategic buyer available

Put option from a strategic buyer or an investor

If the shares are liquid, the sale and repurchase of shares in the open market may be possible

Loan size equivalent to approximately [10] business days of average trading volume.

The trading volume would normally include the aggregate volume of the local currency markets and the Global and/or American Depositary Receipts if applicable.

Leverage Restrictions Financing amount may be influenced by the

amount of debt at the operating company level The leverage of the operating company also

has effect on the valuation of the shares After the financing is in place, certain

covenants will be put on the loan The Bank will also look at the total leverage (at

the holding and operating company)

Upside If the borrower is not prepared to pay a higher

spread, one way to achieve an equitable return for investors would be to give them some equity upside, for example, a call option on a portion of the shares in the secured portfolio

This component becomes essential if the financing is extended for more than 1-1.5 year

Repayment of Loan Deal Parameters

Equity Linked Financing

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KES Senior Unsecured Loan

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KES Senior Unsecured LoanStructure and Benefits

Transaction Description

Client receives a loan of KES [6.7] billion for [3] years from Merrill Lynch

Client pays [16.00]% per annum, calculated on the KES Loan Amount paid in USD using the then spot FX rate

Client redeems the loan at the then equivalent USD Loan Amount

[16.00]% x KES Loan Amountpaid in USD at

thethen KES/USD

rate

[6.7] billion KES Loan

ClientClient Merrill LynchMerrill Lynch

Salient Features

Client borrows in local currency (KES)

Long Term Funding – 3 to 5 year maturities available from Merrill Lynch

Attractive rate and size

Financing from an International Institution

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KES Senior Unsecured Loan

Summary of Terms

Borrower: Kenyan bank or a Corporate

Ranking: Senior unsecured borrowed money obligation of the Borrower

KES Loan Amount: KES [6.7] billion equivalent to USD 100 million on the Loan start date

Drawdown Date: No later than 30 days after Trade Date. Should the Loan not be drawn on or before the Maximum Drawdown Date, the Commitment Fee will be paid by the Borrower to the Lender upon request

Business Days: London, New York and Nairobi, Following business day convention

Tenor / Repayment: [3] years / Bullet at maturity

Repayment Amount: KES Loan Amount / Periodic FX Rate set 5 Business Days before Repayment Date

Periodic FX Rate: On any Business Day, the USD/KES bid exchange rate (quoted as KES per 1 USD)

Interest Rate: [16.00]% p.a (Quarterly, Act/360) calculated on the KES Loan Amount but paid in USD using the then Periodic FX Rate

Arrangement Fee: USD equivalent of [2.00]% of the KES Loan Amount, to be paid on the Drawdown Date

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Dual Currency KES/USD Senior Unsecured Loan

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Dual Currency (KES/USD) Senior Unsecured LoanStructure and Benefits

Transaction Description

Client receives a loan of KES [6.7] billion for 3 years

Client pays

[14.00]% per annum, calculated on the KES Loan Amount paid in USD using the then FX rate; or

USD Libor +[2.00%] on the USD Loan Amount, at Merrill Lynch’s option

Client redeems the loan at

the then equivalent USD Loan Amount in KES; or

the USD Loan Amount; at Merrill Lynch’s option

[14.00]% x KES Loan Amount

paid in USD OR

(LIBOR +[2.00%] x USD Notional Amount

[6.7] billion KES Loan

ClientClientMerrill LynchMerrill Lynch

Redemption KES [6.7] billion

ORUSD 100 million

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Dual Currency (KES /USD) Senior Unsecured LoanStructure and Benefits

Salient Features

Client borrows in local currency (KES)

Lower cost of financing due to dual currency optionality given to Merrill Lynch

ML can choose one of the two coupon options on the Interest Payment Date, therefore making the whole loan cheaper for the borrower

This loan has a tighter margin than either borrowing in just USD or borrowing in just KES

If the KES devalues strongly, loan repayments nominated by Merrill Lynch are likely to be in USD. If this is the case, it is more cost efficient than a straight USD Loan as the interest payments under the proposed structure are lower than interest payments that would be due under a straight USD Loan

No risk of mismatch between Client’s assets and liabilities, as Client likely has revenues both in USD and in KES. Client is therefore monetising the optionality to use KES or USD balances that are prevalent on their balance sheet by lowering their cost of funding

Financing from an International Institution

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KES Dual Currency Senior Unsecured Loan

Summary of Terms

Borrower: Kenyan bank, or Corporate

Ranking: Senior unsecured borrowed money obligation of the Borrower

KES Loan Amount: KES [6.7] billion

USD Loan Amount: USD 100 million

Drawdown Date: No later than 30 days after Trade Date. Should the Loan not be drawn on or before the Maximum Drawdown Date, the Commitment Fee will be paid by the Borrower to the Lender upon request

Business Days: London, New York and Nairobi, Following business day convention

Tenor / Repayment: 3 years / Bullet at maturity

Repayment Amount: (i) USD Loan Amount; or

(ii) KES Loan Amount / Periodic FX Rate at Maturity, At ML’s option

Periodic FX Rate: On any Business Day, the USD/KES bid exchange rate (quoted as KES per 1 USD)

Interest Rate: (i) 3 month USD LIBOR + [2.00]% (p.a., Actual/360) calculated on the USD Loan Amount; OR

(ii) [14.00]% (p.a., 30/360) calculated on the KES Loan Amount divided by the then Periodic FX Rate,

as selected by Merrill Lynch by notifying the Borrower at least 5 Business Days in advance

Arrangement Fee: USD equivalent of [2.00]% of the NGN Loan Amount, to be paid on the Drawdown Date

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Convertible Loan Financings

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Convertible Financing

Basic Structure

Convertible loans, which convert to a fixed number of shares at maturity, at the option of the lender

A typical maturity would be for 3-5 years

By providing a call option on the shares of the company to the Lender through a convertible structure, the funding cost is more attractive than senior unsecured funding levels

At maturity the borrower will have the obligation to either repay the Loan to the Lenders in Cash or Shares

The strike price of the convertible is generally set above current market level which allows the Borrower to sell his stock in the future at higher prices, should the convertibility option at maturity be exercised by the Lender

Lenders generally require that the Borrower facilitates the borrowing of the shares from the Company to the Lenders

The structure also generally provides for protection to the Lenders against any change in dividend policies and anti-dilution and takeover protection

In come structures investors may put the convertible bond back to the Issuer prior to maturity at a predefined Put Price

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Convertible FinancingKey Indicative Deal Terms

Issuer

Issue Size

Maturity

Security

Selling Restrictions

Coupon

Conversion Rights

Early Redemption

Put Option

Currency

Governing Law

A Kenyan registered commercial banking company, or a Corporate

US$ [100],000,000 preferred stock/convertible loan (the “Loan")

2012 (5 year tenor)

Shares pledged of the issued share capital of Issuer

None. Private transaction between Kenyan bank or a Corporate and Merrill Lynch

[●]% paid semi annually

Lenders can choose to be repaid by receiving shares at a conversion price equal to [110]% of current share price

None

Puttable at year [3] at the Put Price (to be determined) by the Lenders

US Dollars

English

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Benefits

Cheaper cost of financing, than senior unsecured loan

Sale of company stock at higher prices that the current stock price

Treatment as senior unsecured debt

Additional leverage for existing shareholders

Compared to an equity issuance, the dilution effect is deferred until maturity of the Financing

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Typical Deal Timeline

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Indicative Timetable: 6 – 8 weeks

Typical Deal Timeline

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7

Discuss the Structure Mandate & Term Sheet Credit Due Diligence Legal Due Diligence Documentation Internal Approvals Signing Conditions Precedent Funding

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Trade Ideas and Equity SecuredFinancing Case Studies

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Case Study

Majority owner of a private metal sector company seeks 1 year bridge financing to purchase shares in a listed company

Other commitments require funding solution using only his private equity stake in company

1 year financing is arranged using control stake of private equity worth 4 times the value of the loan

Legal structure and multiple layers of pledge – onshore and offshore ensure full creditor access to collateral

Offshore

Onshore

Blocking Share of OpCo

Pledged &

Portion of HoldCo Pledged

Ownership

Offshore Holding

CompanyClean SPV

Onshore Operating Company

Interest + Principal

Loan

Target Company

Use of Proceeds

Payback

Financing Trade Ideas and Equity SecuredFinancing Case Studies

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Iron Ore Mining Rights Financing

ML’s structuring expertise and openness to non-standard risks can lead to attractive deals for investors

Example:

Majority owner of speculative natural resource company sought financing to buyout minority shareholders

Company’s sole assets are iron ore mining rights premium

Exit from the loan through international auction of mining rights by Merrill Lynch

Merrill Lynch receives interest payment + equity upside determined at the time of the auction

30% Shareholding

20% Shareholding

SPV purchases

30% stake

Before Funding:50% shareholding

After Funding:100% shareholding

SPV purchases

20% stake

Selling Shareholder

1

Company (Limited

Company)

Selling Shareholder

2

Borrower(Panamian SPV)

Loan

Pledge of 100% of

Company shares

Cash paid directly by ML to shareholder

Cash paid directly by ML to shareholder

Loan

Financing Trade Ideas and Equity SecuredFinancing Case Studies

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Private Equity / Mezzanine Finance - Iron Ore Mining Rights Financing

Financing for LBO in attractive agro-business sector

The exit is in three years via an IPO or trade sale

Merrill Lynch arranging:

USD30m Private Equity; and USD70m Mezzanine Debt financing in partnership with the management team

2-3 year trade with high risk/high reward characteristics

Equity target ROE is >30% Management

to augment or replace existing

team with experienced individuals

Merrill Lynch- Agent

And/or Partial investor

$30m Equityinvestment

$70 MMMezzanine

Financing+ Principal repayment

+ Asset security

Debt

Equity

AgribusinessCompany

Financing Trade Ideas and Equity SecuredFinancing Case Studies

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Case Study: Oceanic Bank Bilateral Loan

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Oceanic Bank – US$175m Bilateral LoanTransaction Summary

Summary Terms & ConditionsTransaction Overview

Geographical Distribution of Allocations

Investor Type Distribution of Allocations

In May 2007, Merrill Lynch closed a US$175m bi-lateral financing with Oceanic Bank International Plc

Financing in both Nigerian Naira (NGN) and US dollars

First ever multi currency loan in Sub Saharan Africa

Longest maturity bank financing to date from Nigeria

The orderbook encompassed hedge funds, banks and asset managers from 6 countries

Orders were received from the United States, UK, Asia, and Scandinavia

Hedge Funds77%

Bank3%

Investment Manager

11%

Asset Management

9%

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Oceanic Bank – US$175m Bilateral LoanTransaction Structure

Merrill Lynch International

Hedge Funds /Asset Managers

Counterparties

Oceanic Bank

Nigeria

Risk Syndication

Dual Currency Loan

Interest & Principal Payments

Loan Agreement

Offshore

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May 2007

Oceanic Bank – US$175mn Bilateral Dual Currency LoanPress Coverage

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Merrill Lynch - Africa Credentials

Merrill Lynch Africa Credentials, 2000-2007

2005

US$1,553 million

Multi-Tranche OilReceivables Securitisation

EGPC

2004

€450 million

Due April 2011Joint Lead Manger

Republic of Tunisia

2003

€400 million

Due July 2008Joint Lead Manager

Kingdom of Morocco

2004

Advisor on Securitisationof Future Flows

National Bank of Egypt

2003

€330 million

Due Feb 2013Joint Lead Manger

Republic of Tunisia

2001

¥20 billion

4.2% Global Samurai BondDue 2031

Sole Bookrunner

Central Bank of Tunisia

2001

US$1.5 billion

Inaugural BondJoint Lead Manager

Government of Egypt

2004

¥15 billion

First Ever 4.3% Global Samurai Bond Due 2030

Sole Bookrunner

Central Bank of Tunisia

2002

US$650 million

7.325% Global BondDue 2012

Lead Manager

Central Bank of Tunisia

2001

¥35 billion

2.27% Global Samurai Bond Due 2006

Sole Bookrunner

Central Bank of Tunisia

2000

¥35 billion

3.3% Global Samurai Bond Due 2010

Sole Bookrunner

Central Bank of Tunisia

March 2007

$480,000,000

Federal Republicof Nigeria

Final London Club Debt Repayment

March 2007

$175,000,000

First Bank of Nigeria

9.750% LT2 10NC5

2001

€500 million

7.000% due April 2008Joint Lead Manager

Republic of South Africa

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Discussion Parameters The preceding information is intended to you with general market views and information, and is not based on the individualized characteristics of any

particular plan(s). It is not intended for further dissemination in its present form and may not be disseminated to other parties. It is for your private information and is for discussion purposes only. The preceding information is intended solely to provide you with a general overview on risk management products.

The information was prepared by Merrill Lynch Sales personnel (ML Sales) and is not a publication of Merrill Lynch Research (ML Research) although a ML Research report may be referenced as a link or as an attachment hereto. Actual ML Research Reports can be found at www.mlx.ml.com.

Bid and/or ask prices are estimated values only. The values given for "reference" reflect closing prices of the underlying security as indicated in the presentation. There can be no assurance that actual trades in the securities, or their underlying reference securities, could be completed at such values. The information was obtained from various sources and is not guaranteed for accuracy or completeness.

The estimated values may vary significantly from actual trade prices as a result of various factors, may not be representative of any internal valuations employed by Merrill for its own purposes, may vary during the course of any particular day and may vary significantly from the estimates or quotations that would be given by another dealer. You should consult with your own accounting or other advisors as to the adequacy of this information for your purposes. Merrill Lynch makes no representation and shall have no liability in any way to you or any other entity for any loss or damage, direct or indirect, arising from the use of this information.

Neither the information nor any views expressed constitutes a solicitation for the purchase or sale of any securities or other financial instruments. Merrill Lynch and any affiliate may trade for their own accounts in any of the products mentioned herein or in related investments, and also from time to time perform or solicit investment banking or other services for, or from, any entity mentioned herein.

In preparing these materials, we were cognizant of potential conflicts between the interests of certain parties such as plan sponsors and plan participants. Corporate employees who are also plan fiduciaries must become adept at managing that conflict, seeking independent fiduciary advice where the conflict is too severe. However, at least in respect of the matters considered in these materials, it is our perspective that the interests of sponsors and participants often converge. Each individual must evaluate the factors considered in reaching any decision with respect to trade execution or risk management techniques in view of his or her unique role(s) in making the decision.

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Disclaimer

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In connection with any swap or over-the-counter (“OTC”) derivative transaction Merrill Lynch acts solely as a broker, or solely in the capacity of an arm’s length counterparty. Merrill Lynch is not acting as a fiduciary in respect of the investor and has no responsibility under the standards governing the conduct of fiduciaries, investment advisers or investment managers. Any information conveyed by Merrill Lynch in connection with this presentation or any transaction is and will be merely incidental to the provision of Merrill Lynch’s services as a broker or role as counterparty and does not and will not serve as a primary basis of any investment decision by the investor.

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