HOTEL INDUSTRY RUSSIA 2010 FINANCING REFINANCING A. Bourdin 2/12/10

HOTEL INDUSTRY RUSSIA 2010 DOING NOTHING AND PAY OR TAKING 2 ASPIRINES AND START WORKING WITH BANKS

CRISIS ? As Mr. Kudrin comment on the Russian Financial Forum “CRISIS is not over and 2011 will be a difficult year”

HOTEL INDUSTRY RUSSIA 2010 What about Today : was the end of the Crisis - We can start to see some type of competition between Banks and opportunities in refinancing - But things are not so easy as they used to be before Crisis

HOTEL INDUSTRY RUSSIA RISK ANALYSIS is now the main topic - No more “RATE ANALISYS” without “CREDIT ANALISYS” Banking Sector Balance Sheets will shrink to avoid the TOO BIG TO SAVE

HOTEL INDUSTRY RUSSIA the Banks announced 1 Trillion Rubles is the after Crisis consolidated bad debt amount - PLEDGE & SECURITY should cover minimum 50% and up to 70% of your debt. It was 30% before Crisis - Currency Risk (Hard Currencies or not ) ? - Strong Market evolution for 2011 and 2012

HOTEL INDUSTRY RUSSIA 2010 OUR ADVANTAGE NOW: - Banks are actually loosing Main Borrowers - Banks expect a growth of 15% of the loan Portfolio next year - New control of central banks regarding the risk - Russian Bank are facing a problem of excess of liquidities

HOTEL INDUSTRY RUSSIA 2010 Start analyzing competitive advantages between Local Banks and European Banks DUMPING of the market corporate Loans

HOTEL INDUSTRY RUSSIA 2010

NEW BASEL III Rules - Required a high Security level in the books of the Banks - No Cuts on debts in Banking Books - Strong Analysis of the System Risk

On what we have to focus on: - Avoid “ZOMBIE” Banks who promise large opportunities and request a lot of work for nothing. And where the main risk to Call Back Capital after few years in case of Bankruptcy. - Find a proper balance between the Risk and the Opportunity for each proposal - Targeting the bank and insuring that the bank strategy reach your expectations

HOTEL INDUSTRY RUSSIA 2010 RUSSIAN or EUROPEAN BANKS: - With Russian Banks the Restructuring term is too Short and does not allow any potential developments - Interests rates are higher in the Russian Bank “If we consider than 40% of the bank profit is generated by the interests rate - Extra Judicial procedure clause

HOTEL INDUSTRY RUSSIA Personal Guaranty ????? (What is behind this) - Possibility to change Interests rates based on Market - Loans in Rubles at fixed rate are considered as risky ones for the bank - Possible devaluation of the Ruble ???????

HOTEL INDUSTRY RUSSIA LIBOR is actually very LOW - Now Western Banks are offering up to 30 years Loan in order to generate more revenues from long term Investments - Attract Funds from Russian Market covered by European Banks - Placing Bond in Rubles

HOTEL INDUSTRY RUSSIA 2010 WHAT WE DID and DO in KORSTON ?

HOTEL INDUSTRY RUSSIA 2010 OAO KORSTON A Finance Consulting Hospitality Retail IT services Development Security Services KAZAN Moscow

HOTEL INDUSTRY RUSSIA Our work is based on Corporate Policies - Always analyzing the market, Local and European, to restructure our Credit Portfolio - Always in Contact with the Banking Sector

HOTEL INDUSTRY RUSSIA We are Long term Investor and not targeting Micro Credits and short term advantages - Optimize our Credit Portfolio in order to decrease our Interest Cost and Optimize our Cash flow - In 2010 we saved more than 60 MRubles on interests

HOTEL INDUSTRY RUSSIA 2010 OUR PLAN for In 2009 we faced a double Crisis : 1)Casino Closing 2)Financial Crisis - In 2010 we were able to restructure our complete Debt Portfolio and decrease interest rate to 5 points - In 2011 we plan to work and optimize our Credit Portfolio and are actually talking with European and Russian Banks

HOTEL INDUSTRY RUSSIA 2010 Actual Proposals received: Russian Banks Term : 7 to 10 years Interest Rate : 8 to 9% European Banks Term : Up to 15 years Interest Rate : 6 to 7%

HOTEL INDUSTRY RUSSIA 2010 OUR TARGET and STRATEGY : -Refinance Complete Portfolio with Long Term Loan and Interest Rate between 3 to 5% - Finance new projects in Region in partnership with Banks - Develop our Private Equity System - Placing Bonds and become Public Company