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

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 :

- 2010 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 2010

- 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 2010

- 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

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2006 2007 2008 2009 2010

Usd

Euro

Ruble

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 2010

- 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 2010

- 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 KORSTONA

Finance Consulting

Hospitality Retail

IT services Development

Security Services

KAZAN Moscow

HOTEL INDUSTRY RUSSIA 2010

- 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 2010

-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 2011

- In 2009 we faced a double Crisis :1)Casino Closing2)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