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Offer 2 -Advantages:
 S$100,000m is certainly more valuable than the S$90,985m for Strategy 2 and even more

so than the EV of Strategy 1 or 2 which are still prone to risk anyway.
 Being a share offer, we become part of the seller mostly likely a bigger group hence we will

not relinquish strategic space to Bartini as Offer 1 does.

Offer 2 -Disadvantages:

 Being a share offer as opposed to cash offer it will hardly help with our long-term capital
structure problems occasioned by the Nakolia fine.
 We know very little about the seller and will remain exposed to the political and legal risks in

this market.

Recommendation

Proceed with Strategy 2: Stay the course.

Justification:

Strategy 1 has a higher EV (S$83,989m) than Strategy 2 (S$70,091m) but is too risky. At best
we achieve S$122,400 (51% of 240,000) but at worse, say in the event of indenginisation, we

loose everything whereas scenario 2 delivers a best case scenario of S$90,985m and a worse
case of S$21,172m. The return dispersion is much smaller and more consistent with our 2015-
revised risk appetite to moderate. Moreover Strategy 1 will require that we raise S$2140m and a

further S$2000m for undefined costs (most likely retrenchment costs to release synergies)
which could strain our capital structure even more. Strategy 2 does not require extra finance

and still leaves us open to pursue our Middle East ambitions. It captures our value which is
already reflected in our share price. There is a residual political risk but we believe this is
inherent in most of the emerging markets we operate in any way! Besides it does not put us in

controlling interest position which is what is most likely to attract the most severe loss as in
Strategy 1. Strategy 3: Offer 1 undervalues our holding by up to 25% and Option 2 though the
most valuable of all is not a cash offer to relax our capital structure strain and we know next to

nothing about the seller.

Actions:

1. Respond to JV-Cellular advising that we will rather pursue Strategy 2 -Stay the course.
2. Respond to Bartini thanking them for their offer but politely declining.

3. Design an effective legal defense strategy on the data privacy issues.
4. Monitor political risk developments and proactively manage the Ilania government.
Developed by The CharterQuest Institute for 'The CFO Business Case Study Competition 2016'
www.charterquest.co.za | Email: thecfo@charterquest.co.za