TMA European Conference

2. Update on Restructuring Regimes in Eastern European Economies June 11, 2010 Gordon Johnson EM Advisors LLC, USA Valeriu Nistor SOAR, Romania Alexander Yerofeyev Ernst & Young, Russia Candas Gulez Nexia, Turkey TMA European Conference

3. Advanced Economies Czech Republic – 5.3 France – n/a Germany – n/a Greece – 7.2 Ireland – 7.5 Italy – 6.2 Spain – 5.1 United Kingdom – 3.3 (June) United States – 5.4 Germany – n/a Global Outlook: NPL Hot Spots(Q4 or end 2009) Emerging Economies: CEE Albania – 9.7 Bulgaria - 6 Croatia – 6.4 Estonia – 5.2 Hungary – 5.9 Latvia – 16.4 Lithuania – 19.4 Macedonia – 9.5 Montenegro – 12.4 Poland - 7 Romania – 14.8 Serbia – 15.5 Turkey – 5.7 Source: IMF GFSR 2010

4. Russia & CIS Georgia – 7.3 Kazakhstan – 21.2 Moldova – 16.6 Russia – 9.6 Ukraine – 33.8 Developing Asia Pakistan – 12.2 Middle East / North Africa Egypt – 14.7 Jordan – 6.4 Lebanon – 6 Morocco – 5.5 Global Outlook: NPL Hot Spots (Q4 or end 2009) Sub-saharan Africa Gabon – 9.8 Ghana – 14.9 Kenya – 8 Nigeria – 6.6 Rwanda – 13.6 Senegal – 18.7 Sierra Leone – 10.6 South Africa – 5.5 Swaziland – 8.1 Latin America Brazil – 4.5 Colombia – 4.6 El Salvador 4.4 Source: IMF GFSR 2010

5. Update on Restructuring Regimes in Eastern European Economies June 11, 2010 Gordon Johnson EM Advisors LLC, USA Valeriu Nistor SOAR, Romania Alexander Yerofeyev Ernst & Young, Russia Candas Gulez Nexia, Turkey TMA European Conference

6. TMA EUROPE CONFERENCEUpdate On Restructuring Regime in TurkeyAS / NEXIA TURKEY11 June 2010

7. CONTENTS • Introduction: Turnaround Management in Turkey • Features of Debtors & Creditors • Corporate Debt-Restructuring Methods • Out-of-Court Restructuring • Court Restructuring – Postponement of the Bankruptcy • Postponement of Bankrutpcy – Practices • Positive Results of the Postponement of Banktrupcy • Evaluation of the PoB Process • Other Features of the Turkish Restructuring Regime

8. TURNAROUND MANAGEMENT IN TURKEY • In essence, corporate debt restructuring is the main service provided by turnaround professionals. • Corporate restructuring (business reviews, SWOT analysis, etc.) • Restructuring of financial and trade debt of companies (negotiations with creditors, projecting cash flows, etc.) • Lender advisory

9. FEATURES OF DEBTORS & CREDITORS • Major features of the Turkish debtors and creditors • SME-MME business segment companies are major targets for turnaround management: • Industrial sectors: Textile, Iron&Steel, Construction Materials,etc. • Family owned – narrow shareholder base • High financial debt relative to equity & too many creditors • Reasons of distress: • Wrong investment decisions, lack of feasibility analyses and low equity • Problems of liquidity and working capital management rather than solvency issues • Vulnerability to domestic and external demand shocks • Low penetration of external advisory services regarding turnaround management • Creditors, especially financial institutions have in-house remedial management teams for NPLs or exit accounts.

10. CORPORATE DEBT RESTRUCTURING-METHODS • Out-of-court restructuring • Turnaround under the provisions of Execution and Bankruptcy Law (EBL): After the Turkish financial crisis in 2001, EBL has changed in order to permit rehabilitation of the companies without engendering terminal insolvency. • Postponement of bankruptcy (PoB) (aka Turkish Chapter 11) • Reorganization by way of the abandonment of the debtor’s assets

11. OUT-OF-COURT RESTRUCTURING • In Turkey, both creditors and debtors prefer out-of-court restructuring against court restructuring, since • Less legal interference • More customized restructuring plans • Turnaround professionals may have greater involvement in the out-of-court restructuring process. • Successful out-of court restructuring involves: • Creditors receive additional security (e.g.lien against guarantor’s real estate, receivables, etc.) or shareholders are induced to sell personal valuable assets in order to raise equity • Revolving and overdraft lines are converted into middle-long term loans in order to oversee the debtors’ cash flow • Revolving lines are rolled over after the interest is paid, in order to provide a grace period • Interest rates on loans are revised downwards

12. COURT RESTRUCTURING – POSTPONEMENT OF BANKRUPTCY • Most frequent way of debt restructuring. Approval conditions: • Major goal is to preserve company assets and to gradually diminish company debt with a viable development plan in order to prevent terminal insolvency. • Major requirements: Liabilities excess company assets and company must present a viable development plan for the future. However, the plan need not be submitted to creditors’ approval or without the opinion of any third party turnaround management company. • Automatic stay is granted after the court has examined the company’s compliance to the requirements stated above and trustee is appointed immediately. • Duration: 1+4 years, subject to trustee recommendation and court approval.

13. POSTPONEMENT OF BANKRUPTCY-PRACTICES • Company and its guarantors pool their tangible assets (including individual if necessary) as collateral for all the financial creditors. • Temporary suspension of litigations. • All financial debt are pooled and restructured as a single amortizing loan and paid periodically (quarterly or semi-annual) pro-rata. • Cash flow projections and debt repayment capacity are analyzed by the leader creditor or an external advisor. • Role of the trustee: Trustee had to approve the whole process.

14. EVALUATION OF THE PoB PROCESS • Problems in the “institution of trusteeship”: • Trustees are not turnaround professionals and do not have the necessary skills and experience to manage the troubled company. • They are not able to yield the neccessary power to manage the company. Most of the time, the same management which has brought the company to the brink of bankruptcy continues to manage the company. Trustees only signs off the management’s decisions. • Courts grant PoBs and automatic stays rather hastily and without consulting neither to the company’s creditors nor to the third party turnaround proffesionals. • Courts are not specialized in assesing the bankruptcy process. • When company files for the PoB, it is not announced to creditors, hence creditors’ views are not sought regarding the proposed development plan. • Distressed companies exploit the automatic stay provisions in order to protect shareholder assets from the creditors.

15. OTHER FEATURES OF THE TURKISH REGIME • Lack of distressed lending: Banks and other non-bank financial institutions are hesitant in lending to companies under distress or under the PoB protection. • Immature secondary market for NPLs: Lack of dedicated, expert investment banking companies eager to buy NPLs. • The legal framework is lenient on debtors. • Low recovery rates • High costs regarding restructuring, including taxes and administrative fees

16. THANK YOU… Candas Gulez– +090.212.225 68 78 cgulez@nexiaturkey.com.tr

17. A Romanian Turnaround Perspective Valeriu Nistor Managing Partner SOAR Management si Investitii Romania June 11, 2010

18. OUTLINE Current situation Overview of the main actors Regulatory framework Key challenges

19. Current situation Total value of non-performing loans as % of total loans

20. Current situation Total number of companies that entered insolvency procedures

21. Current situation Unavoidable capital destruction

22. Current situation Great deal of uncertainty and lack of decision making/expertise

23. Overview of the main actors

24. Overview of the main actors Banks and leasing companies Suppliers Authorities Labor Judicial administrators Consultants Turnaround firms (in very short supply) Sources of capital

25. Regulatory framework Insolvency Law 85/2006 • Key player: judicial administrator • Two main types of procedures: • Common procedure • Simplified procedure • Hurdle claim of EUR 7,500 for filling an insolvency petition • Four classes of claims: • Secured claims • Budgetary claims • Unsecured claims from essential creditors • Other unsecured claims • The reorganization plan proposed by: • The debtor • The judicial administrator • The creditors holding together at least 20% of the claims

26. Key challenges Large number of stakeholders with conflicting interests Very slow decision making Shortage of turnaround practitioners Limited experience and history of successful reorganizations Lack of turnaround financing (banks, private investors, investment funds etc)

27. CONTACT Valeriu Nistor Managing Partner SOAR Management şi Investiţii S.A. 9 Tokio Street,011765 Bucharest, Romania T : +40 31 102 57 46F : +40 31 102 57 47 E : valeriu.nistor@soar.ro W: www.soar.ro