23 April, 2004 – Solvay Business School

1. 23 April, 2004 – Solvay Business School Discovering Investment Banking

2. Morgan Stanley Team • Antoine de Spoelberch • Executive Director • Belgian Banking Group • Coverage and Execution • 10 years of Banking experience • Relevant notable transactions include • Sale of Fafer to Usinor • Sale of UGB to Hoogovens • Sale of Meneba to CVC • Sale of Motorola Telco • Creation of Diageo (Guinness/GrandMet) • Creation of Dexia (CCB/CLF partnership) • Acquisition of Polygram by Seagram • Belgacom strategic partnership • Solvay Business School (1993) • Thibault Biebuyck • Analyst • Financial Institutions Group • Coverage and Execution • 2 years of Banking experience • Relevant notable transactions include • Sale of Inmarsat to Apax/Permira • Sale of Egg (in process) • Solvay Business School (2002) • Darden Graduate School of Business Administration 1

3. Kingdom of Belgium U:\2002 Analyst\Recruiting Belgium\de Keuleneer\Cours de Keuleneerv3.ppt\A2XP\26 APR 2004\9:01 PM\3 Selected Belgian/Luxembourg Clients 2

4. Introduction • Organisational Structure • Investment Banking Activity • What is investment banking? • Overview of main roles • Transaction Overview • Types of M&A transactions • Typical phase of auction process • Case Study: Inmarsat 3

5. Section 1 Organisational Structure

6. Organisational Structure Divisional Structure Morgan Stanley Securities AssetManagement Infrastructure Foreign Exchange Commodities InvestmentBanking Fixed Income (inc. Research) Equity (inc. Research) InvestmentManagement PrivateWealthManagement PrivateEquity Information Technology Institutional Finance & Operations Global Capital Markets CorporateFinance Mergers &Acquisitions Securitised Products Group Real Estate Group Banking Group 4

7. Organisational Structure Overview of Business Divisions (cont’d) • Industry specialists • Product specialists • Designed to support sales and trading Research (Equity, Fixed Income and Asset Management) • Distributes underwritten and agented securities • Market making for institutional clients • Proprietary trading • Instruments include equities, bonds, derivatives, bank loans, FX, etc. Sales and Trading • Manage and administer assets for • Institutions (IM) • Wealthy individuals (PWM) Investment Management & Individual Investor Group 5

8. Organisational Structure Chinese Wall Between IBD & Sales and Trading Chinese Wall(1) Investment Banking Division (IBD) Institutional Equity Division (IED) & Fixed Income Division (FID) Joint Ventures IED – GCM FID – GCM Sales Banking Trading Mergers & Acquisitions Equity & FixedIncome Research Global Capital Markets(GCM) Real Estate Note: (1) Chinese Wall: Organisational and physical barrier between the investment banking division, the research divisions and the sales and trading divisions to prevent misuse of confidential and sensitive information and to guarantee the independence of the various services provided 6

9. Section 2 Investment Banking Activity

10. Investment Banking Activity Whatis Investment Banking? Suppliers of Capital Morgan Stanley Investment Banking Division Users of Capital & Advisory Services • Institutions • Pension Funds • Insurance Companies • Investment Trusts • Unit Trusts • Individuals • Corporations • Governments • Sovereign • Local • Financial Institutions Advisory Services Money Securities 7

11. UK/Ireland Nordic France BNS Italy Spain/ Portugal Germany Russia EMG Israel South Africa Turkey Middle East Financial Sponsors Energy / Utilities Commun-ications Media Technology Financial Institutions Health Care Consumer Products Retail Transport GIG Chemicals Natural Resources Real Estate Investment Banking Activity Investment Banking Division – Europe European Banking Mergers and Acquisitions Securitised Products Group Global Capital Markets Corporate Finance Execution 8

12. Stockholm Luxembourg Moscow Amsterdam Frankfurt London Zurich Milan Paris Rome Toronto Madrid Geneva Montreal Denver Chicago Boston Seoul Tokyo San Francisco Beijing Menlo Park New York Houston Los Angeles Shanghai Osaka Hong Kong Taipei Mumba Bangkok Mexico City Singapore Johannesburg Sao Paulo Sydney Buenos Aires Melbourne Investment Banking Activity A Global Bank with a Local Presence • 700 offices in 28 countries • Over 65,850 employees world-wide • Over 5,720 employees in 12 European office(1) • Individuals from 120 nationalities, speaking 97 languages Note: (1) Excluding retail offices 9

13. Investment Banking Activity Overview of Business Divisions • Maintain and develop client relationships • Market full range of investment banking services to clients • Ongoing strategic discussions and development of new transaction opportunities • Execute acquisitions, divestitures, mergers, JVs and corporate restructurings • Capital structure and financing advice and execution (IPO, privatisation, acquisition financing) • Provide strategic and tactical advice • Valuation, fairness opinions Banking Group (Corporate Finance, M&A) • Monitor capital market conditions and develop new financing products and raise capital for corporates/institutions • Intermediate between clients and sales/trading in new issuesand trading • Market coverage of users of capital Global Capital Markets 10

14. Section 3 Transactions

15. Transactions The Buyside/Sellside Transaction What? • Acquisition of controlling shareholding • Private/Public • Acquisition of assets or of a division • Minority investments • Joint ventures • How? • Full auction process • Limited auction • Bilateral discussion • Hostile Buyer? • Strategic buyer • Financial buyer • Seller? • Large company • Family shareholders • Public shareholders 11

16. Capital Markets Reaction Assessment Exploring Strategic Alternatives Valuation and Pricing Assistance in Due Diligence Review Fairness Opinion Signing and Announcement Structuring Negotiation Transactions Illustrative M&A Advisory Assignment • Understand the client company’s objectives • Identify and screen possible strategic alternatives • Apply knowledge of mergers/ acquisitions market • Analyze strategic and financial implications • Review of market valuations of comparable companies • Insight into precedent transactions • Discounted cash flow analyses, including sensitivity studies • Pro forma analyses • Judgement, experience and market knowledge • Conventional structures • Creative structures • Financing • Tax issues • Assisting team in investigation, as appropriate • Coordination and coaching of various teams (financial, technical, legal, etc.) • Price, structure, contract • Coordinate details and tactics • Balance price with other terms • Equity markets • Rating agencies • Communications strategy • Ongoing advice on closing conditions, regulatory review and potential interlopers 12

17. Transactions Typical Phases of an Auction Process • Invitation • Seller sends out invitations • Buyers sign Confidentiality Agreement • Phase I • Seller sends out information memorandum and process letter • Buyers submit non-binding preliminary bids by deadline • Phase II • Seller selects [usually 3-6] Phase II bidders • Due diligence • Buyers submit final bid and marked-up Sale and Purchase Agreement • Completion • [Confirmatory due diligence] • Negotiation of final Sale and Purchase Agreement • Signing • Closing 13

18. January February March April May Week Starting 1 8 15 22 29 5 12 19 26 5 12 19 26 2 9 16 23 30 7 14 Transactions Typical Buyside Timetable Receive Teaser Invitation Negotiate Confidentiality Agreement Receive Offering Memorandum Phase I Evaluate Offering Memorandum Submit Non-binding Bid Announcement of Phase II Bidders Attend Management Presentation/Data Room Continue Due Diligence/Revise Offer  Valuation Phase II  Structuring  Financing  Legal/Accounting Submit Final Bid Announcement of “Winners” Confirmatory Due Diligence Completion Negotiation of Sales and Purchase Agreement Signing 14

19. Transactions Teaser 15

20. Transactions Confidentiality Agreements Key or Sensitive Clauses in Seller/Potential Buyer Confidentiality Agreements: • Definition of confidential information • Includes analyses, compilations, forecasts, studies, etc. • Buyer will return (or destroy) all information at seller’s request • Buyer not entitled to rely on accuracy and completeness of information, but solely on the representations and warranties of Sale and Purchase Agreement • Buyer will not hire (or solicit) any employees from the company or seller for [3] years • Buyer agrees in advance to grant injunctive relief to seller without proof of damages • Governing law of agreement 16

21. Transactions Confidential Information Memorandum Executive Summary Industry Overview Business Description • Overview of the opportunity • Business description • Key investment considerations • Summary financials • Indemnity and key contacts • History • Competitive landscape • Market characteristics and structure • Government regulation (if applicable) • Key trends and statistics • Products and brands • Customers • Sales, marketing and distribution • Manufacturing process • Raw materials and suppliers • Research & development • Product pricing policy Typical Information Memorandum Structure Management & Employees Financial Overview Appendices • Organisation charts • Senior management team • Responsibilities • Experience • Employees • By division, location and rank • Employee benefits • Board of directors (if applicable) • Historical financials • 3-5 years • Commentary • [Management projections] • 3-5 years • Commentary • Current year budget vs. year-to-date performance • Product brochures • Advertisements • List of shareholders • Management biographies • (Audited) financial statements • Borrowing arrangements (if applicable) • Property and facilities • Country/industry economic outlook • Any other relevant information 17

22. Transactions The Work…. • Review IM • Valuation • Develop assumptions • Build financial model • Pro forma analysis • Bid structure • Legal/tax issues • Strategic and operational issues • Insight on competitive landscape • Bid letter 18

23. Transactions Preliminary Bid Letter • Not binding: Subject to… • Seller’s requirements • Typical content: • Price (amount or range, consideration) • Assumptions • Financing • Conditions • Required approvals and consents • Scope and extent of due diligence • Strategic Rationale/Plans for the Business • Overview of Acquiring Entity • Advisers and Contact Name • Approach: • Tactical pricing • Fair pricing 19

24. Transactions Dataroom 20

25. Transactions Site Visits 21

26. Transactions Management Presentation • Executive Summary • Industry Overview • Business Description • Management & Employees • Financial Overview • Questions & Answers 22

27. Transactions Valuation Due Diligence input Company Projected Earnings and Cash Flow (including Synergies) Discounted Cash Flow Corporate Governance Other valuation methodologies (Comps, Prepaids, LBO, Synergies, etc.) Value Range Strategic and other qualitative issues Pro Forma Analysis Agreed Value Legal/Tax Aspects CompetitiveDynamics Price Tactical Considerations 23

28. Transactions Sale and Purchase Agreement • Price and price adjustments • Completion audit • Price adjustment mechanism • Deferral/escrow of purchase price • Warranty provisions • Seller’s representations and warranties • Limits on seller’s liability • Conditions • What they are • Responsibility • Conduct of business pending completion/closing • Completion/closing obligations • Transfer of title to shares • Change of directors/officers • Repayment of inter-company debts • Clearance from relevant competition authorities • Post-completion obligations, e.g. • Transfer of pension schemes • Unwinding of other arrangements with related parties • Confidentiality and public announcements • Restriction on competition by seller • Cost and expenses • Governing law and disputes forum 24

29. Transactions Final Bid Letter • Key content: • Price • Financing: • source(s) and proposed timing of financing • attach letters from financial institutions proposing to provide external financing detailing the Buyer’s financial ability, if applicable • Strategic rationale/plans for business • Social undertakings • Indication of timetable and next steps • List of all proposed amendments to the Sale & Purchase Agreement • Conditions • To signing • additional due diligence • To closing • regulatory approval 25

30. Transactions The Deal 26

31. Section 4 Case Study: Inmarsat

32. Case Study: Inmarsat Activity Sectors Maritime Land Aeronautical Leasing & Navigation • Service launched: 1982 • Commissioned terminals(1): 134,800 • Revenues (2001): US$269 MM • Established enterprise users including 52% of deep water merchant shipping • Only provider of GMDSS • Service launched: 1982 • Commissioned terminals(1 ): 96,500 • Revenues (2001): US$97 MM • Only provider of mobile broadband service with global footprint • Service launched: 1990 • Commissioned terminals(1): 7,200 • Revenues (2001): US$12 MM • Established enterprise users including 50% of long-haul commercial aircraft • Leasing satellite capacity • Revenues (2001): US$37 MM • Attractive revenue opportunity for unused network capacity in second and third generation satellites • Growing, predictable revenue stream 27 Note: (1) As of June 2002

33. Case Study: Inmarsat Sale of Inmarsat to Apax and Permira • Inmarsat Ventures plc changed its IGO status and was privatised on April 15, 1999 • 86 shareholders representing most PTOs worldwide • Shareholders subject to a 15% shareholding and voting cap • Some shareholders (e.g. Telenor, FT, Xantic), are its largest customers or LESOs (“Land Earth Station Operators”) • The commercial relationship between the shareholders is regulated in the “LESO Agreement” • The company is a provider of global wireless voice and data communications services through its satellite constellation (Inmarsat-2 and Inmarsat-3) • Strong market position; does not sell directly to end users but to LESOs, and Service Providers • High operational leverage as demonstrated by the positive impact over the last couple of years of Global Security Revenues (GSR) • I-4 Satellite launches expected for 2004 and 2005 28

34. Illustrative Satellite Cash Flow Life Cycle Cumulative Cash Flow (€ MM) Case Study: Inmarsat Illustrative Satellite Cash Flow Life Cycle 10 Year Contract 600 400 Launch 200 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (200) ProcurementPeriod Satellite Life(Years) Revenue Generating Period (400) 29

35. Case Study: Inmarsat Morgan Stanley Role • Morgan Stanley acted as exclusive financial advisor to Inmarsat from early 2000 • Originally engaged to do an IPO to comply with US ORBIT Act(1), also aimed at offering liquidity to shareholders • Assisted in preparations for IPO during 2000-02 • In July 2002, the prevailing state of equity markets and valuation levels led the Board to explore a private equity process alternative • Morgan Stanley organised a process in which process integrity and competitive tension were paramount considerations • Established a Steering Group (“SG”) with some of the largest shareholders (representing 52%) to provide forum for shareholder input and convey credibility to buyers • Protected process integrity by obtaining confidentiality commitments from SG shareholders and standstill and confidentiality commitments from bidders • Prevented bidder collusion by not allowing teaming up by private equity bidders in their first round bids • Bidder consortia were only allowed into the second round after testing • Valuation levels • Convincing buyers of business case Note: (1) ORBIT Act was passed in March 2000 and stands for Open-market Reorganisation for the Betterment of International Telecommunications Act, requiring Inmarsat and other satellite companies to conduct and IPO before October 1, 2000 amongst other requirements 30

36. Section 5 Summer Internships

37. U:\2002 Analyst\Recruiting Belgium\de Keuleneer\Cours de Keuleneerv3.ppt\A2XP\26 APR 2004\9:01 PM\37 Summer Internships Summer Internships • Morgan Stanley is offering each year summer internship positions for students in its Investment Banking Division in London. Please apply online from November 2004 onwards on www.morganstanley.com/careers/recruiting • For any questions regarding this presentation, the internship programme or Morgan Stanley in general, please contact: • Thibault Biebuyck: +44 20 7425 3775 thibault.biebuyck@morganstanley.com • Augustin Bataille : +44 20 7425 3202 augustin.bataille@morganstanley.com • Edouard Janssen: +44 20 7677 9736 edouard.janssen@morganstanley.com 31

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