某咨询结构咨询报告课件

D. RestructuringoptionsSHA-4309-03690-08-15d.PPT-xD. RestructuringoptionsSHA-4D1. Generaloptionsandpre-selectionSHA-4309-03690-08-15d.PPT-xD1. Generaloptionsandpre-sInChina,asfarasforeigninvestmententerpriseisconcerned,thereexistthreemainrestructuringcategoriesRestructuringofinvestmentprojects

inChinaTurnaroundofJVEquitystructurerestructuringWithdrawalSHA-4309-03690-08-15d.PPT-xInChina,asfarasforeigninOnthebasisoffavorableresultsofmarketandcompetitiveanalysis,optioncategoryIandIIaremostcommonlyusedforcompanies’long-termdevelopmentCharact

-eristicOption1:TurnaroundofJVOption2:

EquitystructurerestructuringPerformanceimprovementwithoutchangingtheequitystructurePerformanceimprovementwithequitystructurechangeBuyoutOption3:WithdrawalWithdrawalfromexistinginvestmentprojectsSelloutequityTerminationBankruptcyFreezing(walkaway)ExamplesBoschSiemensSiemensBayerHenkelABBDinovaBOSCHThermoTechnikLindeforklifterWhirlpool’srefrigeratorJVinBeijingPeugeotGuangzhouLiebherrSiemensSHA-4309-03690-08-15d.PPT-xOnthebasisoffavorableresuThegeneralmethodologyistofilteroptionswithkillercriteriaandhardcriteriatoscreenoutrestructuringalternativesPotentialoptionsPre-selectionIn-depthevaluationConclusionRestructuringalternativesKillercriteriaHardcriteriaSolvekeyproblemsSecurefuturesuccessGeneralCostTimeRiskIntegration(GSHA-GDAI)Sales&marketingManagementOthersProcedureImplementationSHA-4309-03690-08-15d.PPT-xThegeneralmethodologyistoAtpre-selectionstage,turnaround,selloutequityandfreezingcanbeeliminatedwithkillercriteriaPre-selectionChinesePartnerin?KillercriteriaSolvekeyproblemsSecurefuturesuccessPass?RemarksI.TurnaroundII.Equitystructurerestructuring-EquitybuyoutIII.Withdrawal(1)Selloutequity(2)Termination(3)Bankruptcy(4)FreezingYesNoYesNoNoYesNoYesNoYesYesNoNoYesNoYesYesNoNoYesNoYesYesNoIt’sveryhardtoimplementfutureintegrationandconsolidationwithoutfullcontroltheboardofdirectorsGeberitgainsfullcontrolIt’salmostimpossibletofindabuyerItopensthewayforanewstartItopensthewayforanewstartFreezingwillruinGeberit’srelationwithlocalgovernment,thuscausingpotentialhurdleforfuturepresenceandtroubletoGDAISHA-4309-03690-08-15d.PPT-xAtpre-selectionstage,turnarTerminationToceaseoperationandliquidatetheJVFreezingWithdrawallforeignmanagementteamandexpatriateemployeesandleavetheJVtoChinesepartnerwithoutfileterminationorbankruptcy.It‘sanillegalbutwidelyadoptedpracticeinChinaBuyoutTobuyouttheequityownershipfromChinesepartner,thusturningtheJVintoawhollyforeignownedenterprise(WFOE)BankruptcyTofilebankruptcyandliquidatetheJV.IfthecreditorisJV’sforeignparentcompany,tofilebankruptcybycreditoristheoreticallypossiblebutpracticallyinfeasibleinChinaBack-upDefinitionofsomeoptionsSHA-4309-03690-08-15d.PPT-xTerminationToceaseoperationSomekeyproblemsofGSHAarecloselylinkedtotheChinesepartner.AcleanbreakcanonlybeassuredbyaseparationTheVGMofLidamaintainsanunofficialnetworkconsistingofformerLida-employees.HeoftenusesthisnetworktosecurehispersonalinterestsSincethisVGMhasdirectaccesstopersonnelfiles(Fuehrungszeugnis)someemployeeswereblackmailediftheydidn’tcooperatewithhimIncontextwiththeNanxiangproductionsitetheVGMshouldhaveacceptedaconsiderableamountofkickbacks,saidsomeformerGSHA’semployeesBack-upSHA-4309-03690-08-15d.PPT-xSomekeyproblemsofGSHAareKeystatementfromsomeformerGSHAemployeesonMr.Cai(1)Thereisnocooperationbetweentwopartnersfromtheverybeginning.Mr.Caisaid"wemakethisjointventurebankruptin3years.Wecanrestartagainbyourselves.""ItdoesnotmatterthatGeberitislosingmoneyinChina.IttookGeberit10yearstomakeprofitsoverseas,itneedsthesametimeinChinaaswell.Anyhow,itisGeberit'smoney."Mr.CaihasextensivenetworkintheindustrybuthedoesnotuseitforGeberitproducts.Incontrast,heintroducedthebusinessforothercompaniesthathavecloserelationshipwithhim.AlltheimportantdecisionsregardingpersonnelrecruitingaremadebyMr.Cai.MrSchuettedoesnotandisnotabletoinfluencethesedecisions.SomeofthesedecisionsareagainstGeberit'sinterests,forexample,someChineseemployeesintendnottodotheworkproperlyandsomekeypersonsinkeypositionsarenotqualified,suchasproduction,stockcontrol,CCSetc.Thecontrolsysteminthecompanyistotallyscrapped.Atthebeginningofthejointventure,aboutRMB600Kmachinesand100mouldswerelostwithoutanyrecord.Thewarehouseonlychecksthebookrecordsratherthanrealgoods.Asaresultthereisdifferencebetweenthebooknumberandtherealamount.Thisisespeciallyseriousontheincomingrawmaterials.Theysuspectthatsomefinancialaccounts,especiallydonebyMr.Changdaohua,arefalse.Theso-calledscrappedproductsandthewasterawmaterialsaresoldinanottransparentway,i.e.nospecificpriceandnoinvoice.TheresponsiblepersonisappointedbyMr.Cai.Duetothepoorcontrolsysteminallareaswasteishigh.Auditingisextremelynecessary.Back-upSHA-4309-03690-08-15d.PPT-xKeystatementfromsomeformerKeystatementfromsomeformerGSHAemployeesonMr.Cai(2)Geberitproducts'technologicalknow-howisobtainedbyLida.Mr.CaiassignedonepersoninCCS(Ms.YingHua)andhasobtainedrelevanttechnologicalinformation.ItispossibleforLidatoproducesimilarproductsifGeberitwithdrawsfromthejointventure.Moreseriously,itisbelievedthattheknow-howofDuofixhasbeenreleasedtoTOTO.Thebusinessoriginalplantlocationis100metersfurthernorth,withoutanyworkinvolvedforthenewlocation.MorethanRMB100khasbeenspentonworkmentionedabove.AndMr.CaiinsistedoncontractingtheelectricitysupplysystemtoonelocalelectricengineeringcompanywithacostofRMB1560K.TheformermanufacturingplantofLidainChangpingRoadwasleasedtoanothercompanywithannualrentofaroundRMB1millionwhichishandedtoMr.Hong/SBMCInyear1998,Mr.Caiusedcompany’smoneytobuy5Peonycards(debitcards)withvalueofRMB30keachandsenttofivekeypersonsaspresents,includingMr.HongandhimselfBack-upSHA-4309-03690-08-15d.PPT-xKeystatementfromsomeformerAlthoughLida’sproductsaccountfor52%ofGSHA’stotalsalesvolume,theiractualgrossprofitmarginis-7%.Meanwhile,Lidaproducts’salesvolumesharplydeclined60%from1999to2000GSHAsalesvolume(2000)Lidaproducts’salesvolumeGrossprofitmargin-7%LidaGSHA’productsImportedGrossprofitmargin-7%Grossprofitmargin36%Unit:RMB‘000WatertankPipe&fittingBack-upActualgrossprofitmargin:4%SHA-4309-03690-08-15d.PPT-xAlthoughLida’sproductsaccouThereasonbehindLidaproducts’sharpdeclineisthechangeingovernmentpolicyonresidentialbuildingconstructionandtheshrinkageinlowendsanitarywaremarketGovernmentTheoriginalpolicythatrequiredallwelfareresidentialbuildingtohavesanitaryware(lowend)includedatconstructionstageisinvalidWelfarehouseallocationsystemisdisappearingShrinkageoflowendmarketHousedecorationbecomesapopularconsumptiontrendMediumandhighendsanitarywareproducts’brandawarenessimprovedwhichincreasebrandsensitivitysubstantiallyConsumerswithgrowingpurchasingpowerareturningtomediumandhighendsanitarywareproductsBack-upSHA-4309-03690-08-15d.PPT-xThereasonbehindLidaproductD2.In-depthevaluationSHA-4309-03690-08-15d.PPT-xD2.In-depthevaluationSHA-Cost,time,riskandpotentialimpactonfutureintegrationconstitutehardcriteriaindeterminingwhichoptiontochooseOptionsHardcriteriaEquitybuyoutTerminationBankruptcyCostRiskTimeInte-

grationSHA-4309-03690-08-15d.PPT-xCost,time,riskandpotentialD.2.1EquitybuyoutSHA-4309-03690-08-15d.PPT-xD.2.1EquitybuyoutSHA-4309BuyingoutLida’sequityisfavorabletofutureintegrationbutthebuyoutpricehavetobeagreedbyChinesepartnerExplana-tionTotalCriteriaCostBuyoutprice:USD149,0001)Employeedismissalfee:

USD80,000~USD340,0002) (90%ofemployeeswillbedismissed)Auditfirm:

USD20,000249,000~509,000USDRiskLidaisnotwillingtoselloutequityLidaasksfortoohighprice,andpricenegotiationbreaksdownGovernment’sconcernonunemploymentNanxiangdisagreestoselloutequity-to--TimeNegotiationperiod

-max.2monthsExecutiontime

-1monthMax.3monthsIntegrationGeberithasfullcontroloveritsChinaoperationFreechoiceofhowtorestructureandconsolidatetheoperationsinChinaNoneedtocloseShanghai’soperation+++1):UnderthepremisethattheChinesepartneragreewiththisprice2):WhethertotakeLidaemployees’servicetimeinShanghaiLidaintoaccountresultsindifferentamountofemployeedismissalfeeSHA-4309-03690-08-15d.PPT-xBuyingoutLida’sequityisfaProvidingLidaandNanxiangagreeonequitytransfer,thewholetransferprocedureconsistsof3majorstepsandlastfor2~3months1TheinvestorsofanFIE1)(andthethirdparties)agreeontheequitychange(ortransfer)Awrittenagreementmustbesignedbyallparties2TheFIEsubmitstheapplicationforequitychangetothelocalForeignInvestmentCommission(FIC)TheFICmustreplywithin30daysaftersubmission3UponapprovaltheFIEmustcompleteallregistrationproceduresattheAdministrationforIndustryandCommerceandotherrelatedGovernmentalbodieswithin30days1):ForeignInvestedEnterpriseBack-upSHA-4309-03690-08-15d.PPT-xProvidingLidaandNanxiangagAnequitytransferagreementmustcoverthefollowingcontentsBack-upEquitytransferagreementName,addressandlegalrepresentativeofboththetransferorandthetransfereeSharesandpriceofthetransferredequityDateandwayofequitytransferRightandresponsibilitiesofthetransfereeConsequencesincaseofviolationApplicablelawsandconflictresolutionValidationperiodandterminationoftheagreementDateandplaceoftheagreementsingingSHA-4309-03690-08-15d.PPT-xAnequitytransferagreementmForGeberit,thebottomlineofbuyoutpricecouldbedeterminedonthebasisoffinancialcomparisonanalysisBack-up

Buyout

Dismissalfee: USD250,000

(90%ofemployeesdismissed)Auditfee: USD20,000Buyoutprice: USD149,000

Dismissalfee: USD360,000Auditfirm: USD20,000lawfirm: USD20,000Tariffreturn: USD19,000Total: USD419,000BankruptcySHA-4309-03690-08-15d.PPT-xForGeberit,thebottomlineoD.2.2TerminationSHA-4309-03690-08-15d.PPT-xD.2.2TerminationSHA-4309-0Generallyspeaking,terminationisunfavorabletoChinesepartner,however,itcanbeusedinsomecasestoachievetheforeignpartner’sobjectiveveryquickly(personalincentive)Explana-tionTotalCriteriaCostEmployeedismissalfee:

USD100,000~USD360,0001)Auditfirm:

USD20,000Tariffreturn:

USD19,000Personalincentive139,000~399,000USDRiskLidaisnotwillingtoselloutequityDismissalfeedisputeGovernment’sconcernonunemployment-to---Negotiationperiod

-max2monthsTerminationperiod

-within4monthsTime3~6monthsIntegrationUndercurrentsituation,providingChinesepartneragrees,terminationcanbethemostfavorableoptionforGeberitbutit’sveryhardtoreachagreementwithChinesepartnerwithoutincentiveterms++1):WhethertotakeLidaemployees’servicetimeinShanghaiLidaintoaccountresultsindifferentamountofemployeedismissalfeeSHA-4309-03690-08-15d.PPT-xGenerallyspeaking,terminatioComparedtobankruptcy,terminationgenerallyhaslowercost,shorterexecutionperiodandmoresimpleprocedureinliquidationTerminationBankruptcyInitiatepartyJointventure(Boardofdirectors)Jointventure(Boardofdirectors)LiquidationprocedureRegularliquidationBankruptcyliquidationBoardofdirectorsGovernmentCourtAuditfirmLawfirmLiquidationcommitteeOthercostAuditfirmcostLawfirmcostOthercostLiquidationcostTime3~6months6~18monthsSHA-4309-03690-08-15d.PPT-xComparedtobankruptcy,terminD.2.3BankruptcySHA-4309-03690-08-15d.PPT-xD.2.3BankruptcySHA-4309-036Inviewofcost,time,riskandfutureintegration,bankruptcyshouldbethelastchoiceforGeberitExplana-tionTotalCriteriaRiskCan’tgetgovernmentapprovalLida’soppositionDismissalfeedisputeNegativepressLoseeverythingincluding:investmentloan,accountreceivableandstaffs---Time6~18months (AlthoughtheChina’sBankruptcyLawprovisionthattheliquidationshouldbecompletedwithin6months,manycasesactuallylastformorethan1year6~18monthsIntegrationComplicatedprocesstokeepthebusinessrunningTotransferequipmenttoDaishanorNingbocouldbeverydifficult-CostEmployeedismissalfee:

USD100,000~USD360,0001)Auditfirm:

USD20,000Lawfirm:

USD20,000Tariffreturn:

USD19,000159,000~419,000USD1):WhethertotakeLidaemployees’servicetimeinShanghaiLidaintoaccountresultsindifferentamountofemployeedismissalfeeSHA-4309-03690-08-15d.PPT-xInviewofcost,time,riskanBankruptcyprocedureincaseofthedecisionmadebyboardofdirector1AllthemembersofBoD1)agreetobankruptthecompany.TheBoD

andthesupervisingbodyoftheChinesepartnersincaseofJVagreetodissolvetheFIE2)TheFIEappliestothelocalForeignInvestmentCommissioninordertoformallybegintheliquidationprocedure1):BoardofDirectors 2):ForeignInvestedEnterpriseLiquidationprocedure23456UponapprovaltheBoDmustorganizealiquidationcommitteewithin15daysofthebeginningofliquidationTheFIEmustprovidewrittennotificationofthenameandaddressoftheFIEandreasonsforliquidationtocustoms,taxauthority,bankswithwhomtheFIEhasanaccount,andetc.within7daysfromthestartoftheliquidationTheliquidationcommitteemustdisposeofassetsandthecreditsanddebtsoftheFIEPriorityforpayingoutdebts:liquidationexpenses;wagesandsocialinsurancepremiums;statetaxes;otherdebtsAftercompletingalltheliquidationworktheliquidationcommitteemustsubmitafinalliquidationreporttotheBoDforapprovalUponapprovalthereportmustalsobesubmittedtothesupervisingbodyandthelocalForeignInvestmentCommissionTheliquidationcommitteegoesthroughallthecancellationprocedureswiththecustoms,thetaxbureau,thelocalAdministrationforIndustryandCommerceandmakesandAnnouncementBack-upSHA-4309-03690-08-15d.PPT-xBankruptcyprocedureincaseoTheliquidationvalue(marketprice)ofGSHAwouldbeUSD2.51millionNon-currentassetsCurrentassetsItemsDevaluatedtotalassetsafterliquidated

Property,plant,equipment:USD2,142,000

Inventory:USD1,002,000

AccountPayable:USD524,000

Totalcashandsecurity:USD208,000Totalassets

Totalassets(Bookvalue):

USD

3,951,000Liquidationvalue(Marketprice):

USD2,510,000Devalutedproperty,plant,equipment:

USD2,142,000x0.6=USD1,285,000USD1,002,000x0.6=USD601,000524,000x0.8=USD419,000208,000XI=USD208,000Back-upSHA-4309-03690-08-15d.PPT-xTheliquidationvalue(marketD.2.4ComparisonofthealternativesSHA-4309-03690-08-15d.PPT-xD.2.4ComparisonofthealteEquitybuyoutisclearlythebestchoiceforGeberit.TerminationcanbeveryattractiveifbothpartiescanachievemutualunderstandingCostRiskEquitybuyoutTimeIntegrationTerminationBankruptcyMax.3months-to--+++USD249,000~

USD509,0001)3~6months-to---++USD139,000~

USD399,000+Personalincentive6~18months----USD159,000~

USD419,0001):UnderthepromisethattheChinesepartneragreeandthefigurealreadyincluderedundancyrestructuringcostSHA-4309-03690-08-15d.PPT-xEquitybuyoutisclearlythebBuyoutisnotonlythemostbeneficialoptiontoGeberit,butalsototherestofpartiesaswell1):Personalincentives 2):Re-investmentBuyoutTerminationBankruptcyMr.CaiMr.Hong/SBMCNanxiangGovernmentMunicipalGovernmentGSHAemployeesGeberitoto++oto+++++++++++to++++to+++--/++--/++---+---------------o+++:best ---:worst1)1)2)2)1)1)SHA-4309-03690-08-15d.PPT-xBuyoutisnotonlythemostbD3. FeasiblescenariosSHA-4309-03690-08-15d.PPT-xD3. FeasiblescenariosSHA-4309Geberitshouldstartthenegotiationquickly.Ifnoagreementcanbereached,bankruptcycouldbethelastoutcomewiththeconsequenceoflosingeverything(investment,loans,machines,staffetc.)

Negotiation2monthsStartImplementation1monthScenarioI:BuyoutImplementation3monthsScenarioII:TerminationExecution6~18monthsFall-back:BankruptcyAgreementAgreementNoagreementMin.time3monthsMin.time5monthsMin.time8~20monthsSHA-4309-03690-08-15d.PPT-xGeberitshouldstartthenegotEachscenariowillresultindifferentorganizationalrestructure

Dismissalfee(90%employee)BuyoutLidaClosingcost(Ningbo)LocationMachine

PotentialhighermarginSynergyPricetoohighNoagreementwithLidaUprisingofemployees,sabotageFindingmanagementteamScenarioI:BuyoutScenarioII:TerminationFall-back:BankruptcyBuyoutofSBMCHeadquartersSales&MarketingCCSProductionClosedProduction

Dismissalfee(allemployees)Write-offinvestmentLoweroperatingcostLogisticManagementteamLay-offeasierLongerthanbuyoutLossofallloansandaccount

receivableNegativepressSharpdropinbusiness

Dismissalfee(allemployees)Write-offinvestmentTransfercostManagementteamLogisticLoweroperationexpensesPotentialhighermarginMuchlongerthanbuyoutLossofallloansandaccount

receivableNegativepress

DropinbusinessTerminationofGSHARepofficeofGDAISales&MarketingCCSHeadquartersandimportProductionBankruptcyofGSHARepofficeofGDAISales&MarketingCCSHeadquartersandimportProductionShanghaiNingboDaquCostBenefitRiskSHA-4309-03690-08-15d.PPT-xEachscenariowillresultindHowevertheorganizationalstructureforscenarioIshouldbeaimedforasGeberit’sfuturestructureinChinaNoagreementAgreementonterminationAgreementonbuyoutCloseNingboNingboasheadquartersScenarioIFall-backScenarioIIGDAIRe-openRe-openGSHASHA-4309-03690-08-15d.PPT-xHowevertheorganizationalstrrbaddressesARGENTINARolandBergeryAsociadosS.A.InternationalManagementConsultantsTte.Gral.J.D.Peron346-Piso5°1038BuenosAiresPhone ++54-11-43421498Fax ++54-11-43455758AUSTRIARolandBerger&PartnerGes.m.b.HInternationalManagementConsultantsFreyung3/2/10A-1010ViennaPhone ++43-1-536020Fax ++43-1-5360260BELGIUMRolandBergerInternationalManagementConsultantsS.A.100,BoulevardduSouverainB-1170BrusselsPhone ++32-2-6790170Fax ++32-2-6729222BRAZILRolandBerger&PartnersS/CLtda.RuaAlexandreDumas,2220-5°andar04717-004SãoPaulo/S.P.Phone ++55-11-51818366Fax ++55-11-51816919CHINARolandBerger(Shanghai)InternationalManagementConsultantsLtd.72XingGuoRoad3FBusinessBuildingShanghai200052,P.R.C.Phone ++86-21-62126411Fax/Phone ++86-21-621274716/F.EastLakeVillasOfficeBuilding35DongzhimenwaiStreetBeijing100027,P.R.C.Phone ++86-10-64677069 or7093or7094Fax ++86-10-64677628CZECHREPUBLICRolandBerger&PartnerGmbHInternationalManagementConsultantsVsehrdova2/560CS-11000Prague1-MaláStranaPhone ++420-2-57311161Fax ++420-2-57311163FRANCERolandBerger&PartnerGmbHInternationalManagementConsultants16,avenueGeorgeVF-75008ParisPhone ++33-1-53670320Fax ++33-1-53670375GERMANYRolandBerger&PartnerGmbHInternationalManagementConsultantsAltMoabit101bD-10559BerlinPhone ++49-30-3992750Fax ++49-30-39927303Georg-Glock-Straße3D-40474DüsseldorfPhone ++49-211-438901Fax ++49-211-4389140BockenheimerLandstraße42D-60323FrankfurtPhone ++49-69-170030Fax ++49-69-17003502Stadthausbrücke7D-20355HamburgPhone ++49-40-376310Fax ++49-40-37631102Arabellastr.33D-81925MunichPhone ++49-89-92230Fax ++49-89-9223202Löffelstraße40D-70597StuttgartPhone ++49-711-76730Fax ++49-711-7673401GREATBRITAINRolandBerger&PartnersLtd.InternationalManagementConsultants12StratfordPlaceGB-London

W1N9AFPhone ++44-207-2904800Fax ++44-207-4999938HUNGARYRolandBerger&PartnerKft.InternationalManagementConsultantsAndrássyút64H-1062BudapestPhone ++36-1-3530229Fax ++36-1-3532434ITALYRolandBerger&PartnerS.R.L.InternationalManagementConsultantsViaSirtori,32I-20129MilanPhone ++39-02-295011Fax ++39-02-29524837ViaLudovisi,35I-00187RomePhone ++39-06-4882119Fax ++39-06-48919483JAPANRolandBerger&PartnerLtd.InternationalManagementConsultantsARKMoriBuilding22ndFloor1-12-32,AkasakaMinato-ku,Tokyo107-6022Phone ++81-3-35876660Fax ++81-3-35876670LATVIA

RolandBerger&PartnerGmbHInternationalManagementConsultantsBrivibasStr.197-5,4thFloorLV-1050RigaPhone ++371-7360169Fax ++371-7370590PORTUGALRolandBerger&PartnerLda.InternationalManagementConsultantsEdificioMonumentalAv.FontesPereiradeMelo,51-4°EP-1050LisbonPhone ++351-21-3567600Fax ++351-21-3524360ROMANIARolandBerger&PartnerSRLInternationalManagementConsultantsStr.EmanoilPorumbaru10,Sect.1RO-71263BucharestPhone ++40-1-2221905Fax ++40-1-2226271RUSSIARolandBerger&PartnerGmbHInternationalManagementConsultants1.Tverskaja-Jamskajaul.23RF-125047MoscowPhone ++7ax ++7PAINRolandBergerS.A.InternationalManagementConsultantsAvda.Diagonal,567,3rdFloorE-Barcelona08029Phone ++34-93-4947440Fax ++34-93-4947420PaseodelaCastellana,140,3rdFloorE-Madrid28046Phone ++34-91-5647361Fax ++34-91-5647275SWITZERLANDRolandBergerAGInternationalManagementConsultantsDufourstr.56CH-8008ZurichPhone ++41-1-2674111Fax ++41-1-2674119UKRAINERolandBerger&PartnerGmbHInternationalManagementConsultants19PanasaMymogoStr.252011KievPhone ++380-44-2904330Fax ++380-44-2904346USARolandBerger&Partner,LLCInternationalManagementConsultants2401WestBigBeaverRoad,Suite500Troy,MI48084Phone ++1-248-7295000Fax ++1-248-6491794350,ParkAvenue,27thFloorNewYork,N.Y.10022Phone ++1-212-6519660Fax ++1-212-7568750SHA-4309-03690-08-15d.PPT-xrbaddressesARGENTINACZECHREPD. RestructuringoptionsSHA-4309-03690-08-15d.PPT-xD. RestructuringoptionsSHA-4D1. Generaloptionsandpre-selectionSHA-4309-03690-08-15d.PPT-xD1. Generaloptionsandpre-sInChina,asfarasforeigninvestmententerpriseisconcerned,thereexistthreemainrestructuringcategoriesRestructuringofinvestmentprojects

inChinaTurnaroundofJVEquitystructurerestructuringWithdrawalSHA-4309-03690-08-15d.PPT-xInChina,asfarasforeigninOnthebasisoffavorableresultsofmarketandcompetitiveanalysis,optioncategoryIandIIaremostcommonlyusedforcompanies’long-termdevelopmentCharact

-eristicOption1:TurnaroundofJVOption2:

EquitystructurerestructuringPerformanceimprovementwithoutchangingtheequitystructurePerformanceimprovementwithequitystructurechangeBuyoutOption3:WithdrawalWithdrawalfromexistinginvestmentprojectsSelloutequityTerminationBankruptcyFreezing(walkaway)ExamplesBoschSiemensSiemensBayerHenkelABBDinovaBOSCHThermoTechnikLindeforklifterWhirlpool’srefrigeratorJVinBeijingPeugeotGuangzhouLiebherrSiemensSHA-4309-03690-08-15d.PPT-xOnthebasisoffavorableresuThegeneralmethodologyistofilteroptionswithkillercriteriaandhardcriteriatoscreenoutrestructuringalternativesPotentialoptionsPre-selectionIn-depthevaluationConclusionRestructuringalternativesKillercriteriaHardcriteriaSolvekeyproblemsSecurefuturesuccessGeneralCostTimeRiskIntegration(GSHA-GDAI)Sales&marketingManagementOthersProcedureImplementationSHA-4309-03690-08-15d.PPT-xThegeneralmethodologyistoAtpre-selectionstage,turnaround,selloutequityandfreezingcanbeeliminatedwithkillercriteriaPre-selectionChinesePartnerin?KillercriteriaSolvekeyproblemsSecurefuturesuccessPass?RemarksI.TurnaroundII.Equitystructurerestructuring-EquitybuyoutIII.Withdrawal(1)Selloutequity(2)Termination(3)Bankruptcy(4)FreezingYesNoYesNoNoYesNoYesNoYesYesNoNoYesNoYesYesNoNoYesNoYesYesNoIt’sveryhardtoimplementfutureintegrationandconsolidationwithoutfullcontroltheboardofdirectorsGeberitgainsfullcontrolIt’salmostimpossibletofindabuyerItopensthewayforanewstartItopensthewayforanewstartFreezingwillruinGeberit’srelationwithlocalgovernment,thuscausingpotentialhurdleforfuturepresenceandtroubletoGDAISHA-4309-03690-08-15d.PPT-xAtpre-selectionstage,turnarTerminationToceaseoperationandliquidatetheJVFreezingWithdrawallforeignmanagementteamandexpatriateemployeesandleavetheJVtoChinesepartnerwithoutfileterminationorbankruptcy.It‘sanillegalbutwidelyadoptedpracticeinChinaBuyoutTobuyouttheequityownershipfromChinesepartner,thusturningtheJVintoawhollyforeignownedenterprise(WFOE)BankruptcyTofilebankruptcyandliquidatetheJV.IfthecreditorisJV’sforeignparentcompany,tofilebankruptcybycreditoristheoreticallypossiblebutpracticallyinfeasibleinChinaBack-upDefinitionofsomeoptionsSHA-4309-03690-08-15d.PPT-xTerminationToceaseoperationSomekeyproblemsofGSHAarecloselylinkedtotheChinesepartner.AcleanbreakcanonlybeassuredbyaseparationTheVGMofLidamaintainsanunofficialnetworkconsistingofformerLida-employees.HeoftenusesthisnetworktosecurehispersonalinterestsSincethisVGMhasdirectaccesstopersonnelfiles(Fuehrungszeugnis)someemployeeswereblackmailediftheydid