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Transparent Privatization - 2016 Opportunities for Investors

Igor Bilous Chairman of the State Property Fund of Ukraine

To"start"Transparent"Priva/za/on"

we"had"hard"work"to"improve:"""

1 Management"Team"

2 Valua/on"Methodology"

3 Legisla/on""

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4 Promo/on"&"Marke/ng"

LEGISLATION CHANGES FOR FOREIGN INVESTORS

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Investment"advisors"for"big"deals"

No"minority"sale,"only"control"stake"for"priva/za/on"

Foreign"companies"with"state"interest"are"welcomed"

Interna/onal"arbitrage"is"possible"

Disclosure"down"to"ul/mate"beneficiary"owner"

No"bidders"from"aggressor"countries"""

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Landing page PRIVATIZATION.GOV.UA

“One-stop-shop” of all assets for privatization""

Link to Commodity Exchanges for bidders ""

Multi-language web-site ""

Direct assistance line ""

Search by region and type of assets:"

- SOEs - Real Estate - Movable Assets

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SPFU PRIVATIZATION PRINCIPLES

•  TRANSPARENCY OF PROCEDURES •  Transparent procedure from announcement to auction •  No specific constrains to participate

•  COMPLIANCE WITH NATIONAL LEGISLATION •  Clear regulation exceptions for process •  Investment obligation taken by investor •  Funds origination.

•  RISK MITIGATION •  Information disclosure •  Access to assets and mitigation •  Clear sale & purchase agreement

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PRIVATIZATION PROCEDURE (approx. 8 months)

Decision(on((SOE(Priva0za0on((

(CMU(act)(

1(

Tender(Commi<ee((TC)((forma0on(to(prepare(

requirements(for(investor((

SOE(inventory,((independent(audit(

(&(valua0on((

CMU(act(approves((TC(proposi0ons(

TC(approves((the(announcement(date((and(the(auc0on(date(((

Announcement((publica0on(in((

the(SPFU(Bulle0n((

Auc0on(Day((&(Winner((Selec0on(

Closing(Period(((agreement(&((AMC(approval)((

2( 3( 5(4(

TC(mee0ngs(to(define((star0ng(price(&((

fixed(requirements.(((

Approval(by(Interna0onal((Priva0za0on(Group((

7(6( 9(8(

≈"1"month"

≈"3"months"

≈"1"months" ≈"5"days" ≈"2"months"≈"2"weeks"

≈"1"week" ≈"1"week" 30O45"aPer"announcement"

CMU$–$Cabinet$of$Ministers$of$Ukraine$TC$–$Tender$Comission$

PRIVATIZATION-2016: Calendar

Q2$2016$ Q3$2016$ Q4$2016$Biggest"Enterprises"(controlling"State"Stake"in"%)""

Orion"Ternopil"

Plan"(99%)"Engineering$

Mykolaivoblenergo"(70%)"

Ternopiloblenergo"(51%)"Energy$Distribu@on$

Khmeknitskoblenergo"(70%)"Energy$Distribu@on$

Kharkivoblenergo"(70%)"

Dniprodzerzhinsk"CHP"(99%)"

Sumyhimprom"(99%)"Chemical$

IvanoOFrankivsk"Lokomo/v"

Repair"Plant"(100%)"Transporta@on$

Cherkasyoblenergo"(71%)"

Gaivoronskiy"Lokomi/v"

Repair"Plant"(99%)"

Mykolaivska"CHP"(99%)"

Zaporizhyaoblenergo"(60%)"

Odeska"CHP"(99%)"

Energy$Genera@on$

Energy$Genera@on$

Energy$Distribu@on$

Energy$Distribu@on$

Energy$Distribu@on$

Energy$Distribu@on$

Energy$Genera@on$

Energy$Genera@on$

Transporta@on$

Odesa"Port"Plant"(100%)"Chemical$

Q1$2017$

Tsentrenergo"(78%)"

Khersonska"CHP"(99%)"Energy$Genera@on$

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“Odesa Portside Plant” Privatization

Advisory)Group:)

OPP"–"the"leading"CEE"nitrogen"fer/lizer"producer"

Assistance:)

Key)Workstreams:)• Lead"Advisor""• Valua/on"&"Modeling"

• Communica/on"with"bidders"

• Legal"VDR"&"VDD"• Input"in"Terms"&"Condi/ons"of"Priva/za/on"

• Assistance"in"DD"

• Financial"and"Tax"DD"• Prepara/on"of"Virtual"Data"Room"

• Prepara/on"of"Reports"

• Coordina/on"of"work"with"OPP"on"the"ground"• Assistance"in"analysis"and"marke/ng"

Partners)to)Winner:)

• Financial"Assistance"for"Priva/za/on"on""""Interna/onal"Standards"

• Possible"financial"coopera/on"for"the"plant"development"(with"the"buyer"of"OPP)"

“Odesa Portside Plant” Privatization

Announcement for privatization

June 13, 2016 Auction Day

July 26, 2016

44$days$for:$

Personal"SPFU"assistant"to"each"bidder""

SPA"draPing"together"with"each"bidder""

Mee/ng"with"state"officials"and"plant"

management""

Due"Diligence"and"advisors"assistance"

Assistance"in"receiving"An/monopoly"

Commission"approval""9"

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“Energy DISCOs” Privatization

Kharkivoblenergo( Mykolayivoblenergo(

Zaporizhyaoblenergo( Termopiloblenergo(

Cherkasyoblenergo( Khmelnitskoblenergo(

Regional"Energy"Distribu/on"Companies"with"

controlling"state"stake"(51O71%)"

Advisor:)

Assistance:)

Key)Workstreams:)• PreOpriva/za/on"advice""• Review"of"Contracts"and"Obliga/ons"• Energy"Priva/za/on"Communica/on"Strategy"

• Financial"&"Legal"Priva/za/on"Advisory"• VDD"and"Data"Room"

• Teasers"• Informa/on"memorandum"

• Financial"Assistance"for"Priva/za/on"on""""Interna/onal"Standards"

Energy DISCOs Timeline for Privatization

Ternopiloblenergo"(51%)"

May" June" July" Aug" Sept" Oct"

Khmelnitskoblenergo"(70%)"

Mykolaivoblenergo"(70%)"

Kharkivoblenergo"(65%)"

Cherkasyoblenergo"(71%)"

Zaporizhyoblenergo"(60%)"

Nov" Dec"

Announcement"Publica/on"""""""""""""""""""""Auc/on"Day" Closing"Period"

Jan"

2016" 2017"

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%$I$state$stake$for$sale$

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“Tsentrenergo” Privatization

Advisory)Group:)

Produce"about"10%"of"electricity"in"Ukraine""

Assistance:)

Key)Workstreams:)• Lead"Advisor""• Valua/on"&"Modeling"

• Communica/on"with"bidders"

• Legal"VDR"&"VDD"• Input"in"Terms"&"Condi/ons"of"Priva/za/on"

• Assistance"in"DD"

• Financial"and"Tax"DD"• Prepara/on"of"Virtual"Data"Room"

• Prepara/on"of"Reports"

Partners)to)Winner:)

• Financial"Assistance"for"Priva/za/on"on""""Interna/onal"Standards"

• Possible"financial"coopera/on"

TBD(

TBD(

TBD(

TBD(

Invited speakers:$$V."Groisman"–"PrimeOminister"of"Ukraine"

S."Acuner"–"EBRD"Regional"Director"

Y."Kovaliv"–"First"Deputy"Minister,"MEDT"

G."Pyaj"–"US"Ambassador"to"Ukraine"

I."Nasalyk"–"Minister"of"Energy"&"Coal"

D."Vovk"–"NERC"Director"

Yu."Hnatyuk"–"SOE"“Energorynok”"Director"

6"Oblenergo"CEOs""

4"CHP"CEOs""

Tsentrenergo"CEO""

Q&A"session"

with"investors"

SPFU""

Deloije"""

PwC"

Q&A"session"

with"investors"

www.noblesfortune.com/energydt"

Registra@on:$13"

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STEPS TO BUY THE STATE-OWNED ENTERPRISE •  APLICATION PROCESS

- due-diligence - visit the plant and meet management teem - make security deposit

•  PARTICIPATE IN AUCTION - verification of compliance - propose the best price in auction - win the auction

•  AGREEMENT & PAYMENT - signing the contract for sale - permission from Antimonopoly Committee - payment

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Enjoy Privatization in Ukraine!

Contact details: igor.bilous@spfu.gov.ua +38 (044) 200-33-93