Latin America High Yield

> Latin America High Yield: Comprehensive Analysis of ‘B+’ Issuers and Below

Volume II 2010-2011 Corporates

Analysts Table of Contents

Joe Bormann, CFA Executive Summary ...... 2 +1 312 368-3349 [email protected] Sovereign Forecasts...... 6 Domestic Indicators ...... 7 Ana P. Ares Commodity Prices ...... 8 +54 11 5235-8121 Rating Transition Statistics ...... 9 [email protected] AES Dominicana Energia Finance ...... 10 Lucas Aristizabal Alestra, S. de R.L. de C.V...... 15 +1 312 263-10321 [email protected] Alto Palermo S.A...... 21 Bio-PAPPEL, S.A.B. de C.V...... 28 Gabriela A. Catri BR Properties S.A...... 36 +54 11 5235-8111 [email protected] C.A. La Electricidad de Caracas S.A...... 43 Cablevisión S.A...... 48 Jay Djemal Ceagro Agrícola Ltda...... 58 +1 312 263-1032 [email protected] CEMEX, S.A.B. de C.V...... 65 Clarendon Alumina Production Limited (CAP)...... 81 Rogelio Gonzalez Compania de Transporte de Energia en Alta Tension Transener S.A. +52 81 8399-9134 [email protected] (Transener) ...... 86 Copamex, S.A. de C.V...... 92 Cecilia Minguillón Corporacion Geo, S.A. de C.V...... 96 +54 11 5235-8123 [email protected] Digicel Limited ...... 104 Empresa Generadora de Elctricidad Haina, S.A...... 111 Gisele Paolino Empresa Generadora de Electricidad Itabo, S.A...... 117 +55 21 4503-2624 [email protected] Even Construtora e Incorporadora S.A...... 123 Gruma S.A.B. de C.V...... 127 Hilario Ramirez Grupo Posadas S.A.B. de C.V...... 135 +58 21 2286-3356 [email protected] Grupo Senda Autotransporte, S.A. de C.V...... 142 Independência S.A...... 150 Fernanda Rezende Industrias Metalúrgicas Pescarmona S.A.I.C. y F. (IMPSA) ...... 160 +54 11 4504-2600 x2618 [email protected] Inversiones y Representaciones S.A. (IRSA)...... 167 Marfrig S.A...... 174 Sergio Rodríguez, CFA Minerva S.A...... 180 +54 81 8399-9100 [email protected] Petroleos de Venezuela S.A. (PDVSA) ...... 187 Rede Energia S.A. (Celpa and Cemat) ...... 192 Jose R. Romero Servicios Corporativos Javer, S.A.P.I. de C.V...... 198 +55 11 4504-2601 [email protected] Siderúrgica del Turbio, S.A. (Sidetur)...... 206 TAM, S.A...... 213 Mauro Storino Telecom Argentina, S.A. (Telecom Personal S.A.) ...... 221 +55 21 4503-2625 [email protected] Telefonica de Argentina S.A. (TASA) ...... 228 Transportadora de Gas del Norte (TGN) ...... 234 Jose Vertiz Transportadora de Gas del Sur (TGS)...... 241 +1 202 908-0641 x1641 [email protected] Fitch Analyst Directory...... 247

Managing Director of Latin America Corporates Daniel R. Kastholm, CFA +1 312 368-2070 [email protected]

Editorial Advisors Traci Dixon, Editor Yolanda Calvillo and Diana Barriga, Latin America Administrative Assistants

Corporates

Executive Summary The Latin America corporate issuers have performed well since the financial crisis began in the middle of 2007. Only eight cross-border issuers defaulted during this time period. A lack of competitiveness and weak capital structures were the most common reasons for defaults. These characteristics describe Durango, Transtel, Vitro, and SANLUIS. The fast-moving dynamics of the Brazilian beef industry have also been difficult to navigate, as reflected by the low ratings for this sector and the defaults of Arantes and Independencia. The overall credit quality of Fitch’s lowest rated companies in the region is healthy, and the trends are positive. Short-term debt is low in relation to cash and marketable securities plus cash flow from operations on an aggregate level, as is leverage. Combined, the group of Latin America corporates rated ‘B+’ or lower has USD7.0 billion of cash and marketable securities versus USD19.6 billion of total debt obligations, of which USD6.7 billion is classified as short-term debt. These figures exclude the two Venezuelan government-owned entities, EDC and PDVSA. During the latest 12 months (LTM), these corporates generated approximately USD9.0 billion of EBITDA. While this represents an improvement from USD8.9 billion of EBITDA during 2009, it remains below the 2008 record of USD10.3 billion. With a return to growing sales volumes, working capital needs are increasing as the companies build inventories and receivables. As a result, cash flow from operations has declined to USD5.3 billion for the LTM from USD5.6 billion during 2009. The record amount of money moving toward emerging-markets (EM) debt has also been positive for many of the lowest rated corporates in Latin America and has allowed them to refinance existing debt. The growth in demand for emerging markets corporate debt has been driven by a confluence of factors. They include attractive EM spreads relative to comparatively rated developed market corporate spreads, low levels of sovereign debt issuances, and a sharp decline in structured credit products. Improving underlying economic fundamentals in Latin America and Asia due to attractive economic growth rates have also led to higher EM allocations for many bond funds.

Liquidity Solid Across Rating Spectrum (x)

LTM 2010 2009 2008 2007 2006 Average Investment Grade Cash/Short-Term Debt 2.2 2.1 1.1 1.2 1.9 1.7 Short-Term Debt/Long-Term Debt (%) 14 14 22 21 14 17 Cash + EBITDA/Short-Term Debt 6.6 5.9 4.5 4.6 5.8 5.5

Speculative Grade Cash/Short-Term Debt 1.7 1.5 1.4 1.6 1.7 1.6 Short-Term Debt/Long-Term Debt (%) 18 21 19 22 28 21 Cash + EBITDA/Short-Term Debt 4.2 3.3 4.0 3.7 3.9 3.8

Highly Speculative Grade Cash/Short-Term Debt 1.0 1.2 0.8 1.0 0.9 1.0 Short-Term Debt/Long-Term Debt (%) 22 21 17 15 15 18 Cash + EBITDA/Short-Term Debt 3.1 3.1 2.8 3.8 3.4 3.2 Source: Company reports and Fitch calculations.

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Corporates

Liquidity Returns to Latin American Debt Markets

International Domestic Total Latin America Issuance

(USD Bil.) 30,000

25,000

20,000

15,000

10,000

5,000

5 5 6 6 7 7 7 8 8 8 9 9 0 0 0 0 0 0 0 0 0 0 0 1 1 Q Q Q Q Q Q Q Q08 Q Q09 Q Q09 Q Q 1Q05 2 3Q05 4 1Q06 2 3Q06 4 1Q07 2 3Q0 4 1Q0 2 3Q0 4 1 2 3 4 1 2Q10 3

Source: Dealogic.

Sovereigns have also been active in supporting corporates. The most active government in the region has been Brazil. Its development bank, BNDES, has played a crucial role in the government’s strategy of attempting to minimize the effects of the international financial crisis upon the Brazilian economy. The bank reduced the interest rates charged on its financing, in particular stimulating the capital goods and innovation sectors and intensifying its support to micro-, small-, and medium-sized companies. It also expanded its trade finance lines and special credit program for working capital to small- and medium-sized companies. In addition to lending aggressively to corporates, BNDES has taken an equity stake in companies in crucial sectors of the economy such as agriculture and forestry. While the support of BNDES has allowed many of the companies to achieve global economies of scale, there are limits to the credit enhancement associated with its involvement in a company, as reflected by the bankruptcy of Independência, a beef processor in which BNDES owns a minority stake. The 37 lowest rated companies can be subdivided into various groups for analytical purposes. The first group is composed of 18 companies that are domiciled in countries whose sovereign ratings are ‘B+’ or lower. The breakout of this group is as follows: Argentina (10), Venezuela (3), the Dominican Republic (3), and Jamaica (2). Most of these companies are more vulnerable to systemic default risk associated with the imposition of exchange controls rather than idiosyncratic risks.

BNDES Loan Growth (Years Ended Dec. 31)

6/30/10 2009 2008 2007 2006 2005 BNDES Total Loans (BRL Bil.) 322 288 220 169 151 139 Total Loans Brazilian Bank System (BRL Bil.) 1,529 1,410 1,227 936 733 607 BNDES Loans as Percentage of Brazilian Bank System (%) 21.06 20.43 17.93 18.06 20.60 22.90 BNDES Loan Growth (%) 11.81 30.91 30.18 11.92 8.63 ⎯ Brazilian Bank System Loan Growth (%) 8.44 14.91 31.09 27.69 20.76 ⎯ Source: BNDES and Brazilian Central Bank.

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Corporates

Three other groups make up a disproportionate number of the ‘B+’ and lower ratings. They are the Mexican paper and corrugated box producers (2), Brazilian and Mexican homebuilders (4), and the Brazilian agriculture companies (4). The Mexican paper and box companies have struggled as a result of having little control over their production costs. The long-term prognosis for these companies is relatively poor as their operating cash flow remains extremely vulnerable to energy costs and elevated prices for pulp and recycled paper. The leading homebuilders in Mexico and Brazil managed tumultuous times during 2008 and 2009 without defaulting due to shrewd inventory management, as well as the direct and indirect support for their sector by both governments. In Mexico, where there is a large shortage of low-income housing, the primary support for the sector was provided by Infonavit and Fovissste, government agencies that provide mortgages to private sector, and government employees. In Brazil, the government implemented a housing program called, “My House, My Life” and increased the limit for institutional financing to homebuyers through the Brazilian Housing Financial System. The low ratings of the Brazilian agriculture companies are reflective of tight profit margins, high mergers and acquisition (M&A) risk, and vulnerability to external factors such as quotas and diseases. Defaults have been widespread among small- and medium- sized nonrated entities. They would have been even higher if BNDES had not actively lent money to several of the leading companies in the industry, and had not participated in several equity issuances. From a macro perspective, the outlook for all corporates in Latin America is positive due to slow but steady global GDP growth in combination with strong regional growth. The relationship between upgrades and downgrades started to turn during the first half of 2010 as upgrades outpaced downgrades for Latin America corporates by a ratio of more than 2:1. During 2010 and 2011, the economies in Latin America are projected to grow by 4.3% and 4.1%, respectively. Leading the way will be Brazil. Fitch is projecting growth in Brazil to be at 7.0% during 2010 and 4.5% during 2011. Brazil’s above-average growth for the region during 2010 is supported by sound economic policies, continued increases in consumer confidence, a recovery in credit growth, and strong labor market conditions. The lower projected growth rate for Brazil during 2011 is due to the withdrawal of most countercyclical fiscal measures and monetary policy tightening.

Strength of Latin America Currencies vs. the U.S. Dollar

Mexican Peso Argentine Peso Brazilian Real Chilean Peso Colombian Peso 50

(10)

(30)

(50) Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10

Source: Bloomberg.

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Corporates

There are several key credit risks that potentially could negatively Brazil Quarterly Steel Imports and Exports affect the credit quality of many corporates in Latin America. At the Exports Imports top of the list is the credit quality of (In Million Metric Tons) 3.5 the governments in Argentina and 3.0 2.9 Venezuela. Following closely is the 2.8 appreciation of many currencies in 2.5 2.2 the region versus the U.S. dollar, 2.0 2 1.6 particularly the Brazilian real. The 1.5 1.4 strengthening currencies in the 1.0 region threaten the competitive 0.5 positions of companies in export 0.3 0.0 industries such as steel, pulp, beef, soybeans, iron ore, and copper. It 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 also creates fear, which can lead to Source: ISSB. irrational derivative transactions, as witnessed in Brazil and Mexico during 2008. Strong currencies also make imports into the region more attractive, as do improvements in ports and roads. This risk has been highlighted during 2010 as Brazilian steel imports have risen sharply. A final variable that needs monitoring is China. Exports to China are very important for Latin American companies and have facilitated the growth of government reserve levels during the past decade. If the Chinese government fails to curtail the growth rate of lending, global capacity could expand beyond demand for many products, resulting in a flood of Chinese exports and falling global prices. Conversely, if the government tightens its credit-fueled stimulus too quickly and too harshly, China’s demand for Latin American export products could wane rapidly. Fitch rates approximately 550 nonfinancial corporate issuers in Latin America. International credit ratings have been assigned to 146 of these issuers, of which 83 are rated in the high yield category.

Percentage of Exports to China and the U.S.

Share of Total Exports to U.S. Share of Total Exports to China (%) Uruguay Argentina Brazil Peru Ecuador Chile Guatemala Colombia Mexico

0 102030405060708090 Source: Fitch Ratings.

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Corporates

Sovereign Forecasts

Sovereign Indicators Point Toward Growth

Regional Aggregates 2007 2008 2009 2010F 2011F 2012F GDP (%) 5.4 3.8 (2.4) 5.0 3.9 4.1 GDP per Capita (USD, Market Exchange Rate) 6,918 7,977 7,343 8,315 8,885 9,478 Average Inflation (%) 5.2 7.6 6.1 5.8 6.5 6.2 Government Balance (%) (1.2) (1.5) (3.1) (2.8) (2.5) (2.4) Government Debt (% of GDP) 42.7 42.7 46.2 47.7 46.6 45.3 Current Account Deficit (% of GDP) 0.4 (0.7) (0.4) (1.1) (1.6) (1.9) F − Forecast. Source: Fitch and various Central Banks.

GDP Growth Forecasts

Country IDR Outlook 2010F 2011F 2012F Chile A Stable 4.3 5.5 5.5 Aruba BBB Stable (2.5) 1.5 2.0 Mexico BBB Stable 4.2 3.5 3.8 Brazil BBB− Positive 7.0 4.5 5.0 Panama BBB− Positive 4.5 5.7 6.1 Peru BBB− Positive 6.0 6.0 5.8 Colombia BB+ Positive 2.9 3.8 4.1 Guatemala BB+ Stable 2.3 2.7 3.5 Uruguay BB Positive 5.1 4.4 4.2 Costa Rica BB Stable 3.8 4.2 4.5 El Salvador BB Negative 1.0 1.8 2.5 Bolivia B+ Stable 4.3 4.5 4.4 Venezuela B+ Stable (3.1) 0.0 0.2 Suriname B Positive 3.8 4.0 3.9 Argentina B Stable 4.8 3.7 3.3 Dominican Republic B Stable 4.5 6.0 6.0 Jamaica B− Stable 0.0 1.3 1.5 Ecuador CCC Stable 2.5 3.1 2.0 F − Forecast. Source: Fitch.

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Corporates

Domestic Indicators

Consumer Confidence (Jan. 2008 = 100)

Mexico Brazil Chile

140 120 100 80 60 40 20 0 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10

Source: Bloomberg and CB of Chile.

Unemployment Rate

Brazil Chile Colombia Mexico Peru (%) 15

0 Jun-08 Sep-08 Jan-09 May-09 Aug-09 Dec-09 Apr-10 Aug-10

Source: IBGE, Central Banks, Bloomberg, and Fitch.

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Corporates

Commodity Prices

CRB INDEX CRB (Points) 500 400 300 200 100 0 1/08 3/08 5/08 7/08 9/08 11/08 1/09 3/09 5/09 7/09 9/09 11/09 1/10 3/10 5/10 7/10 9/10

Source: Bloomberg.

Oil Oil (USD/Barrel) 200

150 100 50 0 1/08 3/08 6/08 9/08 11/08 2/09 5/09 8/09 10/09 1/10 4/10 7/10 9/10

Source: Bloomberg.

Copper Copper (USD/lb) 5 4 3 2 1 0 1/08 3/08 6/08 9/08 11/08 2/09 5/09 8/09 10/09 1/10 4/10 7/10 9/10

Source: Bloomberg.

Soybean Soybean (Cents/Bushel) 1,750 1,600 1,450 1,300 1,150 1,000 850 700 1/08 3/08 6/08 9/08 11/08 2/09 5/09 8/09 10/09 1/10 4/10 7/10 9/10

Source: Bloomberg.

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Corporates

Rating Transition Statistics

Fitch Latin America and Caribbean Nonfinancial Transition Rates Across the Major Rating Categories ⎯ 2009a (%)

AAA AA A BBB BB B CCC to C D Total AAA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 AA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 A 0.00 0.00 90.91 9.09 0.00 0.00 0.00 0.00 100.00 BBB 0.00 0.00 0.00 94.59 5.41 0.00 0.00 0.00 100.00 BB 0.00 0.00 0.00 2.94 79.41 17.65 0.00 0.00 100.00 B 0.00 0.00 0.00 0.00 6.25 81.25 6.25 6.25 100.00 CCC to C 0.00 0.00 0.00 0.00 0.00 0.00 66.67 33.33 100.00 aIncludes long-term IDRs, which may include both parent and subsidiary ratings, where a subsidiary has rated debt or securities by Fitch. Source: Fitch Credit Market Research.

Fitch-Developed Market Nonfinancial Transition Rates Across the Major Rating Categories ⎯ 2009a (%)

AAA AA A BBB BB B CCC to C D Total AAA 100.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 100.00 AA 0.00 78.13 21.88 0.00 0.00 0.00 0.00 0.00 100.00 A 0.00 0.38 91.22 8.40 0.00 0.00 0.00 0.00 100.00 BBB 0.00 0.00 1.06 95.76 3.18 0.00 0.00 0.00 100.00 BB 0.00 0.00 1.44 5.04 82.73 7.91 1.44 1.44 100.00 B 0.00 0.00 2.19 0.00 6.57 70.80 5.84 14.60 100.00 CCC to C 0.00 0.00 0.00 0.00 0.00 3.85 19.23 76.92 100.00 aIncludes long-term IDRs, which may include both parent and subsidiary ratings, where a subsidiary has rated debt or securities by Fitch. Source: Fitch Credit Market Research.

Fitch Emerging Market Nonfinancial Transition Rates Across the Major Rating Categories ⎯ 2009a (%)

AAA AA A BBB BB B CCC to C D Total AAA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 AA 0.00 75.00 25.00 0.00 0.00 0.00 0.00 0.00 100.00 A 0.00 0.00 92.68 4.88 2.44 0.00 0.00 0.00 100.00 BBB 0.00 0.00 1.14 82.95 15.91 0.00 0.00 0.00 100.00 BB 0.00 0.00 0.00 5.41 81.08 12.16 1.35 0.00 100.00 B 0.00 0.00 0.00 0.00 4.35 79.71 7.25 8.70 100.00 CCC to C 0.00 0.00 0.00 0.00 0.00 0.00 57.14 42.86 100.00 aIncludes long-term IDRs, which may include both parent and subsidiary ratings, where a subsidiary has rated debt or securities by Fitch. Source: Fitch Credit Market Research.

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Corporates

Electric-Corporate AES Dominicana Energia Finance, Dominican Republic Full Rating Report S.A. (AES Dominicana)

Ratings Current Rating Rationale Security Class Rating • AES Dominicana Energia Finance, S.A.’s (AES Dominicana) ratings reflect the Long-Term IDR B− USD160 Mil. Sr. Unsecured Notes company’s dependence on government subsidies for its financial sustainability. due 2015 B− Notwithstanding recent improvements in the timeliness of government payments, IDR − Issuer default rating. the risks of operating electric generation assets in the Dominican Republic remain high and reflect the distribution companies’ low collections and high losses. These Rating Outlook risks translate into high cash flow volatility for all generation companies. Stable • The Dominican Republic power sector is characterized by low collections from end Financial Data users and high electricity losses. Such conditions have kept distribution companies from effectively transferring cash to the country’s generation companies and the AES Dominicana Energia Finance, S.A. (USD Mil.) government subsidies have covered this gap during recent years. This links the LTM credit quality of the distribution and generation companies in the country to that of 6/30/10 12/31/09 the sovereign. Total Assets 745 713 Total Equity 486 459 Net Income 37 5 • The sector trends are favorable, mainly as a result of the Dominican Republic’s new EBITDA 144 82 stand-by arrangement with the International Monetary Fund (IMF). This agreement Total Debt 156 161 seeks to gradually eliminate the tariff deficit; increase the cash recovery index (CRI) to 70%, from the historical 50%, by incorporating approximately 600,000 Analysts nonpaying users into paying and metered users; and eliminate free electricity (PRA) Lucas Aristizabal zones. The agreement should also result in focused subsidies and the creation of a +1 312 368-3260 central account to pay all generation companies. Under terms of the agreement, [email protected] electricity generators should now be paid by the government within 45 days.

Hilario Ramirez • AES Dominica has a strong standalone credit profile for the rating category. The +58 212 286-3356 [email protected] company generated approximately USD144 million of EBITDA during the LTM ended June 30, 2010, an increase from USD81 million during the 2009. AES Dominicana’s cash flow measures have also improved. For the LTM ended June 30, 2010, the company reported FFO of approximately USD6 million, down from USD19 million and as of year-end 2009. The company can meet its annual debt service of approximately USD18 million using some of its USD105 million cash holdings. Liquidity for the company’s bonds is further enhanced by AES Corporation’s (AES Corp.) USD23.5 million guarantee and the six-month interest reserve account. With only USD156 million of total debt, AES Dominicana’s leverage, as measured by total debt to EBITDA, is low at 1.1x. • The ratings also reflect the company’s solid portfolio of assets. Andres and DPP, AES Dominicana’s two main electricity generation assets, enjoy a competitive advantage due to their favorable power purchase agreements (PPAs) and the use of liquefied natural gas (LNG), as the company controls the only LNG import terminal in the Dominican Republic. Andres is the newest and most efficient power plant in the country and ranks among the lowest cost electricity generators in the country. Andres’ combined-cycle plant burns natural gas and is expected to be fully dispatched as a base-load unit as long as the LNG price is not more than 15% higher than the price of imported fuel oil No. 6.

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Corporates

Key Rating Drivers • High sector dependence upon government subsidies links AES Dominica’s credit quality to that of the sovereign. A reduction of government subsidies before the sector reaches financial self sustainability would weaken the credit quality of distribution and generation companies. Rating Issues Please refer to Fitch’s full company report, “AES Dominicana Energia Finance, S.A.,” dated Sept. 9, 2010, for more information regarding:

• Recent events. • Financial performance. • Company overview. Recovery Analysis AES Dominicana’s senior notes issuance has been assigned a recovery rating of ‘RR4’. The average recovery rating reflects the Dominican Republic’s recovery rating cap of RR4. Fitch’s recovery analysis consists of a variety of valuation techniques. Fitch notes these valuations are stressed (i.e. possible recoveries in a liquidation scenario). They are not reflective of the company’s value as a going concern. AES Dominicana’s recovery rating of ‘RR4’ is constrained by the Dominican Republic’s recovery rating cap.

Organizational Structure — AES Dominicana (USD Mil., As of March 31, 2010)

The AES Corporation (100% Equity Owner) $23.5 Guarantee IDR — B+ LTM March 31, 2010 Combined Summary Statistics

EBITDA 108 AES Andres B.V. Dominican Power Partners Cash and Marketable Securities 114 Operating Subsidiary Operating Subsidiary Total Debt 156 (100% Equity Owner)

AES Dominicana Energia Finance, S.A. IDR — B– $156 Senior Unsecured Debt Outstanding

Source: AES Dominicana.

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Corporates

Recovery Analysis ⎯ AES Dominicana Energia Finance, S.A. (AES Dominicana) (USD Mil., As of June 30, 2010)

Enterprise Value EBITDA 143.5 EBITDA Discount (%) 80.5 Distressed EBITDA 28 Market Multiple (x) 5.0 Enterprise Value 140

Interest Expense 20 Rent Expense ⎯ Maintenance Capital Expenditures 8

Recovery Available to Liquidation Value Balance Rate (%) Creditors Cash 103.5 0 ⎯ A/R 125.0 10 12.5 Inventory 18.2 0 ⎯ Net PP&E 461.8 20 92.4 Total 708.5 ⎯ 104.9

Distribution of Value by Priority Greater of Enterprise or Liquidation Value 140.0 Less Administrative Claims 14.0 Less Concession Payments 0.0 Adjusted Value 126.0

Amount Outstanding and Available R/C Value Recovered Recovery Rate (%) ‘RR’ Rating Notching Credit Ratings Issuer Default Rating ⎯ ⎯ ⎯ ⎯ ⎯ B− First-Priority Secured 0.0 0.0 0 ⎯ ⎯ ⎯ Second-Priority Secured 0.0 0.0 0 ⎯ ⎯ ⎯ Senior Unsecured 156.0 126.0 81 RR2 +2 B+ Senior Subordinated 0.0 0.0 0 ⎯ ⎯ ⎯ Preferred Stock 0.0 0.0 0 ⎯ ⎯ ⎯ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Dominican Republic corporates are capped at ‘RR4’. Source: Fitch.

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Corporates

Debt and Covenant Synopsis ⎯ AES Dominicana Energia Finance, S.A. (AES Dominicana) (Foreign Currency Notes)

Overview Issuer AES Dominicana Energia Finance, S.A. Guarantors AES Andres B.V. & Dominican Power Partners Document Date Dec. 6, 2005 Maturity Date Dec. 13, 2015 Description of Debt Senior Unsecured Notes

Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) 3.5x Interest Coverage (Minimum) 2.25x

Acquisitions/Divestitures Change of Control Provision Change of control clause at 101% of principal. Sale of Assets Restriction Generally permits asset sales as long as it is divested at least equal to fair market value, it received at least 75% cash payment and the proceeds are used to reduce debt or are reinvested.

Limitation on Secured Debt AES Dominican’s guarantors’ are not permitted to issue senior secured debt or to create any lien on any asset, property, or income without providing the same security to the existing notes Restricted Payments The issuer is not permitted to pay any dividends or make any other distribution to its shareholders. The guarantors are not permitted to make any restricted payments if, among other clauses, it can not incur additional debt according to its limitation on indebtedness, an event of default has occurred, or if such payment exceed 100% of combined net income. Other Cross Default If the issuer, either guarantor or any restricted subsidiary defaults on any indebtedness of at least USD10.0 million. Acceleration If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Events of default include, but are not limited to, a cancellation of AES Corp.’s guarantee, if the interest reserve is not fully funded for more than five days and if the issuer, either guarantor or any restricted subsidiary, defaults in any indebtedness of at least USD10.0 million. Intercompany Loans As of March 31, 2010, AES Andres had USD413 million of intercompany subordinated debt with its shareholder that amortizes Dec. 31, 2016. This debt accrues interest at an annual rate of 9.125%, which can be paid under certain conditions, or else capitalized at Dec. 31 of each year. Restriction on Purchase of Notes The issuer is allowed to redeem the notes in whole or in part at a preset redemption price. N.A. − Not applicable. Source: Company and Fitch Ratings.

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Corporates

Financial Summary ⎯ AES Dominicana Energia Finance, S.A. (AES Dominicana) (USD 000, Years Ended Dec. 31)

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 143,528 82,438 112,253 69,902 72,494 Operating EBITDAR 143,528 82,438 112,253 69,902 72,494 Operating EBITDA Margin (%) 46.1 35.1 31.3 24.6 30.0 Operating EBITDAR Margin (%) 46.1 35.1 31.3 24.6 30.0 FFO Return on Adjusted Capital (%) (0.7) 7.6 9.1 11.4 14.7 Free Cash Flow Margin (%) (2.5) (2.0) (5.1) (9.5) 30.3 Return on Average Equity (%) 8.0 1.0 4.8 0.2 4.7 Coverage (x) FFO Interest Coverage (0.3) 1.9 2.9 3.8 5.0 Operating EBITDA/Interest Expense 8.4 3.4 5.6 3.8 4.1 Operating EBITDAR/Interest Expense + Rents 8.4 3.4 5.6 3.8 4.1 Operating EBITDA/Debt Service Coverage 8.4 2.8 2.5 3.8 4.1 Operating EBITDAR/Debt Service Coverage 8.4 2.8 2.5 3.8 4.1 FFO Fixed Charge Coverage (0.3) 1.9 2.9 3.8 5.0 FCF Debt Service Coverage 0.5 0.7 0.0 (0.5) 5.2 (FCF + Cash and Marketable Securities)/Debt Service Coverage 6.7 2.8 0.9 2.4 9.3 Cash Flow from Operations/Capital Expenditures 0.4 0.8 (1.7) (1.2) 14.3 Capital Structure and Leverage (x) FFO Adjusted Leverage (32.9) 3.4 3.1 2.5 1.8 Total Debt with Equity Credit/Operating EBITDA 1.1 2.0 1.6 2.5 2.2 Total Net Debt with Equity Credit/Operating EBITDA 0.4 1.2 1.3 1.7 1.2 Total Adjusted Debt/Operating EBITDAR 1.1 2.0 1.6 2.5 2.2 Total Adjusted Net Debt/Operating EBITDAR 0.4 1.2 1.3 1.7 1.2 Implied Cost of Funds (%) 10.4 14.3 11.3 11.0 11.0 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt ⎯ 0.0 0.1 ⎯ ⎯ Balance Sheet ⎯ ⎯ ⎯ ⎯ ⎯ Total Assets 745,498 713,071 718,418 690,417 676,054 Cash and Marketable Securities 104,705 63,040 40,450 53,409 72,574 Short-Term Debt ⎯ 5,000 25,000 ⎯ ⎯ Long-Term Debt 156,000 156,000 156,000 171,404 160,000 Total Debt 156,000 161,000 181,000 171,404 160,000 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 156,000 161,000 181,000 171,404 160,000 Off-Balance Sheet Debt 0 0 0 0 0 Total Adjusted Debt with Equity Credit 156,000 161,000 181,000 171,404 160,000 Total Equity 485,688 459,488 454,676 433,105 442,166 Total Adjusted Capital 641,688 620,488 635,676 604,509 602,166 Cash Flow Funds from Operations (21,756) 22,474 37,850 50,629 71,010 Change in Operating Working Capital 27,457 (3,616) (49,343) (59,945) 7,831 Cash Flow from Operations 5,701 18,858 (11,493) (9,316) 78,841 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (13,403) (23,479) (6,743) (7,825) (5,499) Dividends 0 0 0 (10,000) 0 Free Cash Flow (7,702) (4,621) (18,236) (27,141) 73,342 Net Acquisitions and Divestitures 0 0 0 0 0 Other Investments, Net 32,517 47,304 12,155 (17,744) (88) Net Debt Proceeds 21,509 (20,000) 9,596 11,404 0 Net Equity Proceeds 0 0 0 0 0 Other Financing, Net (1,108) (1,286) (1,473) (628) (1,651) Total Change in Cash 45,216 21,397 2,042 (34,109) 71,603 Income Statement Net Revenues 311,401 234,536 358,249 284,229 241,810 Revenue Growth (%) 16 (35) 26 18 6 Operating EBIT 126,856 66,900 97,500 50,708 56,348 Gross Interest Expense 17,021 24,399 19,910 18,227 17,600 Rental Expense 0 0 0 0 0 Net Income 37,117 4,678 21,378 686 19,517 Source: Fitch Ratings.

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Corporates

Telecommunications Alestra, S. de R.L. de C.V. Mexico Full Rating Report

Rating Rationale Ratings • Alestra, S. de R.L. de C.V. (Alestra) is a niche provider of data, Internet, and local Security Class Current Rating Local Currency IDR B+ services (DILS) and long-distance service in Mexico. The company’s DILS business has Foreign Currency IDR B+ grown considerably in recent years. This segment now accounts for about 80% of the USD200 Mil. Sr. Notes due 2014 BB−/RR3 company’s EBITDA and has helped to compensate for the revenue and cash flow declines from long-distance services. IDR − Issuer default rating. • Alestra’s ratings reflect low to moderate business risk, stable cash flow generation, Rating Outlook continued positive free cash flow, and sound credit metrics. The ratings are Stable tempered by challenges in the long-distance market and increased competition in DILS segment. Financial Data • The strategy of growing its DILS segment has resulted in moderate EBITDA growth Alestra, S. de R.L. de C.V. on a consolidated basis despite revenue declines. For the 12 months ended (USD Mil.) 12/31/09 12/31/08 June 30, 2010, total consolidated EBITDA declined 3%, which was attributed to Total Assets 468.4 468.4 higher expenses when compared with the same period of the previous year. Total Equity 163.7 163.7 However, EBITDA for full-year 2010 is expected to remain relatively flat, in Mexican Revenues 419.5 419.5 Funds from peso terms, when compared to the level registered during 2009. Operations (FFO) 102.0 102.0 FFO Margin (%) 24.3 24.3 • Fitch Ratings expects that over the next few years, Alestra should continue growing Debt 234.4 234.4 and introducing convergent services, such as Internet protocol (IP) telephony, FFO Adjusted Leverage (x) 2.0 2.0 security, hosting, managed services, and virtual private networks (VPNs) to offer FFO Interest integrated solutions to corporate customers, which account for approximately 75% Coverage (x) 4.9 4.9 of revenues and 85% of cash flow. The company also looks to increase the contribution of consumer revenue with growth from voice over Internet protocol Analysts (VOIP) services. Sergio Rodriguez, CFA +52 81 3299-9100 Key Rating Drivers [email protected] • Factors that could lead to a positive rating action include an expectation that the John C. Culver, CFA company’s total debt-to-EBITDA ratio would remain stable over time in the range of +1 312 368-3216 2.0x−2.5x in conjunction with a strong liquidity position. [email protected] • The rating could be downgraded or placed on Watch Negative if the company fails

to refinance significant bullet maturities, such as the 2014 notes, well in advance of the maturity dates. Negative rating actions could also result from a sustained increase in Alestra’s total-debt-to-EBITDA ratio close to approximately 3.0x, driven by either operating pressures or an adverse economic environment. Rating Issues Please refer to Fitch’s full company report, “Alestra, S. de R.L. de C.V.,” dated Oct. 11, 2010, for more information regarding:

• Business mix evolution. • Long-distance versus DILS profit mix.

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Company OverviewLiquidity and Debt Structure Alestra’s credit protection measures have remained relatively stable over the past few years and are strong for the rating category. As of June 30, 2010, the company had USD246 million of total debt. The debt is composed of USD200 million of senior notes due 2014, USD36 million of vendor financing, and a USD10 million bank facility. Short-term debt is tight but should be manageable. Alestra had USD29 million of cash and marketable securities and USD21 million of short-term debt as of June 30, 2010. Additional liquidity is provided by a USD10 million unused committed credit facility. Alestra’s cash flow generation should enable it to pay all upcoming maturities until 2013. Fitch expects Alestra to maintain a stable financial profile, with efforts being made to refinance ahead upcoming debt maturities over the next few years. Absent any refinancing, Fitch estimates Alestra’s cash flow generation enables it to pay all upcoming maturities until 2013, but the company will need to refinance a small portion of the 2014 senior notes. Recovery Ratings Due to Alestra’s financial position, the recovery prospects for secured debt and unsecured debt are 100% and 89%, respectively. These anticipated recovery levels imply a recovery rating of ‘RR1’ and ‘RR2’. The recovery ratings for Alestra, however, have been capped by Mexico’s soft cap at ‘RR3’. Securities rated ‘RR3’ have characteristics consistent with credits that have historical ultimate recovery rates of 51%−70%.

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Corporates

Recovery Analysis ⎯ Alestra S. de R.L. de C.V. (MXN Mil., As of June 30, 2010)

Going Concern Enterprise Value EBITDA 1,390 Discount (%) 50 Distressed EBITDA 695 Multiple (x) 4.5 Going Concern Enterprise Value 3,125

Post-Restructuring EBITDA Estimation Guidelines Interest Expense ⎯ Rent Expense ⎯ Est. Maintenance Capital Expenditures ⎯ Total ⎯

Recovery Available to Liquidation Value Balance Rate Creditors Cash 317.4 0 ⎯ Accounts Receivable 494.2 75 370.7 Inventory ⎯ 50 ⎯ Net PP&E 5,204.8 50 2,602.4 Total 6,016.4 ⎯ 2,973.1

Distribution of Value by Priority Greater of Enterprise or Liquidation Value 3,125 Less Administrative Claims 312 Less Concession Payments 0.0 Adjusted Enterprise Value for Claims 2,813

Amount Outstanding & Available R/C Value Recovered Recovery Rate Recovery Rating Notching Rating Issuer Default Rating ⎯ ⎯ ⎯ ⎯ ⎯ B+ First-Priority Secured 296.3 296.3 100 RR3 1 BB− Senior-Priority Secured 0.0 0.0 0 ⎯ ⎯ ⎯ Senior Unsecured 2,815.2 2,519.1 89 RR3 1 BB− Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, Mexico has a soft cap at ‘RR3’, which results in a maximum one-notch benefit over the issuer default rating. Source: Fitch.

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Corporates

Organizational Structure — Alestra S. de R.L. de C.V. (MXN Mil., As of June 30, 2010)

Grupo Alfa S.A. B. de AT&T Telecom Mexico C.V. S.A.

58% 42% Summary Statistics (MXN Mil.)

EBITDA 1,390 Alestra S. de R.L. de Cash Marketable Securities 376 C.V. Total Debt 3,111 USD200 Mil. 2014 Senior Notes

100%

Servicios Alestra

Source: Fitch and Alestra S. de R.L. de C.V. financial statements.

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Corporates

Debt and Covenant Synopsis ⎯ Alestra S. de R.L. de C.V. (Foreign Currency Notes)

Overview Issuer Alestra S. de R.L. de C.V. Document Date Aug. 11, 2009 Maturity Date Aug. 11, 2014 Description of Debt Senior Unsecured Notes

Financial Covenants Consolidated Leverage (Maximum) 3.50 to 1.00 Fixed-Charge Coverage (Minimum) 2.0 to 1.0

Acquisitions/Divestitures Change-of-Control Provision Upon the occurrence of a change of control, each holder will have the right to require that the company purchase all or a portion of the holder’s notes at a purchase price equal to 101% of the principal amount thereof, plus any accrued and unpaid interest thereon through the purchase date. Sale of Assets Restriction The company will not, and will not permit any of its restricted subsidiaries to, consummate an asset sale unless: the company or such restricted subsidiary, as the case may be, receives consideration at the time of the asset sale at least equal to the fair market value of the assets sold or otherwise disposed of; and at least 75% of the consideration received for the assets sold by the company or the restricted subsidiary, as the case may be, in the asset sale is in the form of cash or cash equivalents; assets (other than current assets as determined in accordance with Mexican financial reporting standards or capital stock) to be used by the company or any restricted subsidiary in a permitted business; capital stock in a person engaged solely in a permitted business that will become a restricted subsidiary as a result of such asset sale or a combination of cash, cash equivalents, and such assets.

Certain Covenants Limitation on Liens The company will not, and will not cause or permit any of its restricted subsidiaries to, directly or indirectly, incur any liens of any kind (except for permitted liens) against or upon any of their respective properties or assets, whether owned on the issue date or acquired after the issue date, or any proceeds thereof, to secure any indebtedness or trade payables, unless contemporaneously therewith effective provision is made to secure the notes, any subsidiary guarantees, and all other amounts due under the indenture equally and ratably with such indebtedness or other obligation (or, in the event that such indebtedness is subordinated in right of payment to the notes or any subsidiary guarantee prior to such indebtedness or other obligation) with a lien on the same properties and assets securing such indebtedness or other obligation for so long as such indebtedness or other obligation is secured by such lien. Limitation on Restricted Payments The company will not, and will not cause or permit any of its restricted subsidiaries to, directly or indirectly, take any of the following actions : (a) Declare or pay any dividend or return of capital or make any distribution on or in respect of shares of capital stock of the company or any restricted subsidiary to holders of such capital stock, other than: dividends or distributions payable in qualified capital stock of the company; dividends or distributions payable to the company and/or a restricted subsidiary; or dividends, distributions, or returns of capital made on a pro rata basis to the company and its restricted subsidiaries, on the one hand, and minority holders of capital stock of a restricted subsidiary, on the other hand (or on a less than pro rata basis to any minority holder); (b) Purchase, redeem or otherwise acquire or retire for value: • any capital stock of the company; or any capital stock of any restricted subsidiary held by an affiliate of the company or any preferred stock of a restricted subsidiary, except for capital stock held by the company or a restricted subsidiary or purchases, redemptions, acquisitions, or retirements for value of capital stock on a pro rata basis from the company and/or any restricted subsidiaries, on the one hand, and minority holders of capital stock of a restricted subsidiary, on the other hand; (c) Make any principal payment on, purchase, defease, redeem, prepay, decrease, or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, as the case may be, any subordinated indebtedness; or (d) Make any investment other that permitted investments. Limits on Consolidations or The company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Mergers person (whether or not the company is the surviving or continuing person), or sell, assign, transfer, lease, convey, or otherwise dispose of (or cause or permit any restricted subsidiary to sell, assign, transfer, lease, convey, or otherwise dispose of) all or substantially all of the company’s properties and assets (determined on a consolidated basis for the company and its restricted subsidiaries), to any person unless it meets certain exemptions. Optional Redemption The company will have the right, at its option, to redeem the notes, in whole but not in part, at any time prior to their maturity at a redemption price equal to the greater of 100% of the principal amount of such notes and the sum of the present value of each remaining scheduled payment of principal and interest thereon discounted to the redemption date on a semi-annual basis at the treasury rate plus 50 basis points, plus in each case any accrued interest on the principal amount of the notes to the date of redemption. At any time, or from time to time, prior to or on Aug. 11, 2012, the company may, at its option, use an amount not to exceed the net cash proceeds of one or more eligible equity offerings to redeem up to 35% of the aggregate principal amount of the outstanding notes (including any additional notes) at a redemption price equal to 111.75% of the principal amount on the redemption date, plus any accrued and unpaid interest to the redemption date; provided that: (a) After giving effect to any such redemption at least 65% of the aggregate principal amount of the notes (including any additional notes) issued under the Indenture remains outstanding; and (b) The company will make such redemption not more than 60 days after the consummation of such eligible equity offering. Source: Alestra S. de R.L. de C.V. and Fitch Ratings.

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Corporates

Financial Summary ⎯ Alestra, S. de R.L. de C.V. (MXN 000, As of June 30, 2010) LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 1,390,306 1,417,547 1,331,811 1,325,028 1,270,995 Operating EBITDAR 1,497,593 1,517,525 1,417,173 1,407,894 1,354,423 Operating EBITDA Margin (%) 30.5 30.3 28.5 26.2 28.0 Operating EBITDAR Margin (%) 32.9 32.4 30.3 27.8 29.9 FFO Return on Adjusted Capital (%) 28.0 28.3 25.3 22.9 24.4 Free Cash Flow Margin (%) 14.9 19.1 10.6 9.1 14.6 Return on Average Equity (%) 12.0 12.9 (16.0) 7.5 (4.3)

Coverage (x) FFO Interest Coverage 4.4 5.0 4.9 4.2 3.7 Operating EBITDA/Interest Expense 3.6 4.3 4.5 4.2 3.0 Operating EBITDAR/Interest Expense + Rents 3.1 3.5 3.7 3.5 2.6 Operating EBITDA/Debt Service Coverage 2.1 2.7 1.4 1.7 1.3 Operating EBITDAR/Debt Service Coverage 2.0 2.5 1.4 1.7 1.3 FFO Fixed-Charge Coverage 3.7 4.1 4.0 3.5 3.2 FCF Debt Service Coverage 1.6 2.4 0.8 1.0 1.1 (FCF + Cash and Marketable Securities)/Debt Service Coverage 2.2 3.0 1.1 1.6 2.0 Cash Flow from Operations/Capital Expenditures 2.0 2.2 1.6 1.9 2.7

Capital Structure and Leverage (x) FFO Adjusted Leverage 2.2 2.2 2.5 2.5 2.7 Total Debt with Equity Credit/Operating EBITDA 2.2 2.3 2.4 2.2 3.0 Total Net Debt with Equity Credit/Operating EBITDA 2.0 2.0 2.2 1.9 2.3 Total Adjusted Debt/Operating EBITDAR 2.6 2.6 2.7 2.5 3.3 Total Adjusted Net Debt/Operating EBITDAR 2.3 2.4 2.5 2.2 2.6 Implied Cost of Funds (%) 12.5 10.4 9.6 9.3 9.9 Short-Term Debt/Total Debt 0.1 0.1 0.2 0.2 0.1

Balance Sheet Total Assets 7,062,310 6,915,483 6,341,411 6,544,107 7,258,290 Cash and Marketable Securities 375,934 317,429 202,805 449,075 905,875 Short-Term Debt 271,414 185,665 650,262 449,867 561,364 Long-Term Debt 2,840,050 3,022,887 2,524,127 2,524,472 3,257,355 Total Debt 3,111,464 3,208,552 3,174,389 2,974,339 3,818,719 Total Debt with Equity Credit 3,111,464 3,208,552 3,174,389 2,974,339 3,818,719 Off-Balance Sheet Debt 751,009 699,846 597,534 580,062 584,005 Total Adjusted Debt with Equity Credit 3,862,473 3,908,398 3,771,923 3,554,401 4,402,724 Total Equity 2,504,939 2,313,721 2,216,845 2,597,883 2,392,514 Total Adjusted Capital 6,367,412 6,222,119 5,988,768 6,152,284 6,795,238

Cash Flow Funds from Operations 1,296,017 1,328,016 1,136,369 1,011,876 1,144,871 Change in Operating Working Capital 188,341 440,466 146,515 (14,410) (80,057) Cash Flow from Operations 1,484,358 1,768,482 1,282,884 997,466 1,064,814 Total Non-Operating/Non-Recurring Cash Flow ⎯ ⎯ ⎯ ⎯ ⎯ Capital Expenditures (742,043) (808,373) (788,159) (537,961) (401,110) Dividends (64,490) (64,490) ⎯ ⎯ ⎯ Free Cash Flow 677,825 895,619 494,725 459,505 663,704 Net Acquisitions and Divestures ⎯ ⎯ ⎯ ⎯ ⎯ Other Investments, Net (74,644) (90,212) (45,744) (77,415) (101,719) Net Debt Proceeds 100,231 (128,502) (460,610) (844,381) (672,930) Net Equity Proceeds ⎯ ⎯ ⎯ ⎯ ⎯ Other Financing, Net (245,472) (244,079) (234,641) ⎯ (137,397) Total Change in Cash 457,940 432,826 (246,270) (462,291) (248,342)

Income Statement Net Revenues 4,553,535 4,683,637 4,672,549 5,056,040 4,535,633 Revenue Growth (%) (5) 0 (8) 12 3 Operating EBIT 537,023 564,037 575,124 454,891 186,979 Gross Interest Expense 380,917 333,336 294,575 314,231 428,973 Rental Expense 107,287 99,978 85,362 82,866 83,428 Net Income 293,525 291,465 (384,322) 188,036 (105,334) Source: Alestra, S. de R.L. de C.V. and Fitch Ratings.

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Corporates

Property/Real Estate Alto Palermo S.A. (APSA) Argentina Full Rating Report

Ratings Rating Rationale Current • Alto Palermo S.A.’s (APSA) ‘B+’ local currency issuer default rating (IDR) reflects Security Class Rating Foreign Currency IDR B the company’s strong business position in the Argentine shopping center industry, Local Currency IDR B+ its property revenue diversification, and positive operating trends. The ratings also Senior Unsecured Notes B/RR4 take into consideration the cyclicality of the shopping mall industry in Argentina, as IDR − Issuer default rating. well as APSA’s exposure to devaluation risk and its declining liquidity. Further factored into APSA’s ‘B+’ local currency IDR is the company’s aggressive growth Rating Outlook strategy, which is partially mitigated by its large pool of unencumbered assets. The Stable company’s foreign currency IDR continues to be constrained at ‘B’ by the ‘B’

country ceiling assigned to Argentina by Fitch Ratings. Financial Data • Further factored into the local currency IDR are APSA’s high operating margins, Alto Palermo S.A. occupancy rates in excess of 97%, and improving leasing conditions. The company’s (ARS Mil.) LTM shopping centers have historically presented margins above 70% of rent income. 3/31/10 6/30/09 This is possible because of the company’s leases with tenants, which result in the Total Revenues 731,212 642,565 tenants paying direct expenses and a percentage of the common expenses. Tenants EBITDAR 409,088 183,421 Cash from also must contribute to promotional and marketing activities. APSA’s revenues are Operations 151,551 71,458 partially hedged against consumer inflation as the company receives a percentage Cash and Marketable of the sales made by tenants of its malls. Securities 48,978 64,537 Total Adjusted • For the LTM period ended March 2010, APSA generated revenues and EBITDA of Debt 745,085 748,634 USD192 million and USD107 million, respectively. These figures represent Total Adjusted Debt/EBITDAR (x) 1.8 4.1 improvements from USD188 million and USD54 million, respectively, for the LTM FFO Adjusted ended June 30, 2009. The improvement in the company’s cash flow generation was Leverage (x) 2.2 2.8 due to the stabilization of APSA’s consumer financing subsidiary, Tarshop S.A. (Tarshop). Analysts • APSA’s operating results are closely correlated with the performance of its shopping Gabriela Catri +54 11 5235-8129 center tenants’ sales, which in turn are a function of the volatile local economy. [email protected] The ratings also incorporate concern about the short-term concentration of the company’s lease-contract maturity profile. Approximately 32% of the company’s José Vertiz lease contracts expire before the end of 2010. While this ratio is high for the +1 212 908-0641 [email protected] industry, the quality of the company’s shopping centers, which have sales per square meter, exceed the market average by 59%, which somewhat mitigates this

risk. Ratings incorporate Fitch’s expectations that APSA’s occupancy rates will remain above 97% in the medium term. • Also factored into the ratings is the company’s exposure to devaluation risk due to the currency mismatch between its dollar-denominated debt and peso-denominated cash flow generation. The ratings also incorporate APSA’s high dividend payout ratio, which represents one of the main sources of funds of its main shareholder, IRSA Inversiones y Representaciones S.A. (IRSA). Key Rating Drivers • The Stable Outlook reflects Fitch’s expectations that APSA will manage its balance sheet to a targeted debt-to-EBITDA ratio below 2.5x and that the sale of Tarshop (see Recent Events) will help stabilize the company’s cash flow generation. Fitch expects the company’s EBITDA margins to stabilize above 70% and for it to maintain

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high occupancy rates in the near-to-medium term. Under a conservative scenario, Fitch estimates the company’s interest coverage to be above 3.5x. • Any significant increase in APSA’s targeted leverage ratio would threaten credit quality and could result in a negative rating action. Conversely, the local currency IDR could be positively affected by a better-than-expected cash flow generation during 2010. APSA’s foreign currency IDR could also be affected by an upgrade or downgrade of the ‘B’ Argentine country ceiling. Rating Issues Please refer to Fitch’s full company report, “Alto Palermo S.A.’s (APSA),” dated Sept. 10, 2010, for more information regarding:

• Recent events. • Company overview. • Credit card operations. Liquidity and Debt Structure APSA’s leverage metrics are adequate for the rating category. For this industry, the emphasis of Fitch’s methodology is on portfolio quality and diversity as well as size of the asset base. APSA’s portfolio of assets is strong with an estimated USD644 million of undepreciated book capital as of March 2010. These assets are mostly unencumbered as secured debt accounted for less than 5% of the company’s total debt load. Consequently, APSA’s large pool of unencumbered assets provides financial flexibility in a stress case scenario. The company’s leverage, measured by total debt as a percentage of undepreciated book capital, was 30% at the end of March 2010. On a market value basis, these ratios would be even lower. The company maintains adequate leverage and interest coverage. The company’s total- debt-to-EBITDA ratio was 1.8x, while its EBITDA-to-interest ratio was 4.8x. At the end of March 2010, APSA had USD192 million of total debt, excluding USD48 million of convertible notes that are expected to fully convert at maturity given the current stock price. Only 20% of the company’s debt is short term. Nevertheless, liquidity remains below average as the company had only USD12.6 million of cash and marketable securities as of March 31, 2010. The weakening of the company’s liquidity in relation to short-term debt is a result of high capital expenses and recapitalizing Tarshop. Recovery Rating The recovery ratings for APSA’s capital market debt instruments reflect Fitch’s expectation that the company’s creditors would have an average recovery constrained by the soft cap of ‘RR4’ for bonds issued by Argentine corporates. In deriving a distressed enterprise valuation to determine the recovery under this scenario, Fitch discounts the company’s LTM EBITDA to a level that would cover operating leases, interest expenses, and maintenance capital expenditures. Fitch has applied a 4.0x distressed EBITDA multiple, which is consistent with the value observed in the Buenos Aires stock exchange during the last year.

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Corporates

Recovery Analysis ⎯ Alto Palermo S.A. (USD Mil., As of June 30, 2010)

Enterprise Value EBITDA 86 EBITDA Discount (%) 25 Post-Restructuring EBITDA Estimation 65 Multiple (x) 4.0 Going Concern Enterprise Value 260 Post-Restructuring EBITDA Estimation Guidelines Interest Expense 21 Rent Expense ⎯ Estimated Maintenance Capital Expenditures 20 Total 41

Recovery Available to Liquidation Value Balance Rate (%) Creditors Cash 12.6 0 ⎯ A/R 75.4 80.0 60.3 Inventory ⎯ 50 ⎯ Net PP&E 399.4 20.0 79.9 Total 487.4 ⎯ 140.2

Enterprise Value for Claims Distribution

Greater of Going Concern Enterprise or Liquidation Value 258 Less Administrative Claims (10%) 26 Adjusted Enterprise Value for Claims 232

Distribution of Value Secured Priority Lien Value Recovered Recovery Recovery Rating Notching Rating Senior Secured 0.0 ⎯ 0 ⎯ ⎯ ⎯

Concession Payment Availability Table Adjusted Enterprise Value for Claims 232 Less Secured Debt Recovery ⎯ Remaining Recovery for Unsecured Claims 232 Concession Allocation (5%) 12 Value to be Distributed to Senior Unsecured Claims 220

Value Concession Unsecured Priority Lien Recovered Recovery (%) Allocation (%) ‘RR’ Rating Notching Credit Ratings Senior Unsecured 193.0 193.0 100 100 RR4 ⎯ B Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Argentine corporates are capped at ‘RR4’. Source: Fitch.

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Organizational Structure — Alto Palermo S.A. (As of March 31, 2010)

LTM April 30, 2010 Combined Summary Statistics (ARS Mil.) Alto Palermo S.A. EBITDA 409 USD225 Mil. Senior Guaranteed Notes Due 2014 Cash and Marketable Securities 49 USD50 Mil. (Peso Linked) Senior Unsecured Notes Due 2017 Total Debt 745

100.00% Rents and Services Comercializadora Los Altos S.A. Other

100.00% 98.59% 100.00% Patio Bullrich Tarshop Beruti

100.00% 50.00% 100.00% Alto Avellaneda Metroshop Patio Olmos

100.00% 100.00% Abasto Torres Rosario

100.00% 100.00% Alto Rosario Coto Espacio Aereo

100.00% 100.00% Alto NOA Other 99.90% 100.00% Alto Palermo Proyecto Caballito 99.90% 100.00% Mendoza Plaza SAPSA 99.90% Shopping Villa Cabrera

53.68% 100.00% ERSA Buenos Aires Design

80.00% 100.00% PAMSA DOT

98.10% 100.00% Shopping Neuquen Proyecto Neuquen

99.99% FIBESA S.A.

100.00% Comercializadora Los Altos S.A.

Source: Fitch and Alto Palermo S.A. financial statements.

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Corporates

Debt and Covenant Synopsis ⎯ Alto Palermo S.A.

Overview Issuer Alto Palermo S.A. Guarantors N.A. Document Date April 20, 2007 Maturity Date 2012, 2017; Notes issued under USD400 million program Description of Debt Senior Unsecured Notes Financial Covenants Consolidated Leverage (Maximum) N.A. Interest Coverage (Minimum) N.A. Acquisitions / Divestitures Change of Control Provision Change of control clause at 101% of principal. Sale of Assets Restriction See Limitations on Consolidation or Mergers or Assets Sale Debt Restrictions Additional Debt Restriction The issuer is not allowed to incur additional debt except permitted debt unless the consolidated interest coverage exceeds 1.75x. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations; guarantees; derivatives, as long as used for hedging purposes; debt to finance the acquisition of assets related to the core business of the company, as long as it is below 5% of total consolidated tangible assets; debt related to labor claims; short-term bank debt related to the normal course of business. Restricted Payments With several exceptions, the issuer and restricted subsidiaries are prohibited from making certain investments, including the acquisitions of stocks, bonds, and notes under certain conditions. Limitation on Liens The issuer shall not assume any lien upon its assets (with the expection of “permitted liens”) unless at the same time the obligations of the company under the notes are secured equally.

Other Limits on Consolidations or Mergers or Assets Sale Restrictions on merger or consolidation of issuer. Exceptions include: 1) the merger of other entities with the issuer provided that surving entity will be the issuer; 2) if any entity formed by such merger is organized and validly under existing laws, and the surviving entity assumes responsibility towards the debt service of the existing notes. Transactions with Affiliates Transactions with affiliates are permitted as long as the terms of the transaction are not substantially less favorable than those that could be achieved with a nonrelated party. This limitation does not apply to certain transactions with subsidiaries; management, directors, and other fees; loans to directors, employees, or any subsidiary, that are realted to the core business and do not exceed USD1 million. N.A. − Not applicable. Source: Offering memo of the notes.

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Corporates

Financial Summary ⎯ Alto Palermo S.A. (ARS 000, As of June 30)

Period-End Exchange Rate (ARS/USD) 3.88 3.79 3.02 3.09 3.09

LTM 3/31/10 2009 2008 2007 2006

Profitability Operating EBITDA 409,088 183,421 239,191 224,144 192,843 Operating EBITDA Margin (%) 55.9 28.5 37.4 46.4 53.4 FFO Return on Adjusted Capital (%) 20.2 16.4 17.6 13.7 22.2 Free Cash Flow Margin (%) (4.0) (36.8) (24.9) (5.3) 12.7 Return on Average Equity (%) 11.9 (2.4) 8.8 7.4 5.4

Coverage (x) FFO Interest Coverage 4.0 4.1 5.6 6.7 6.6 Operating EBITDA/Gross Interest Expense 4.8 2.8 4.9 7.2 6.1 Operating EBITDA/Debt Service Coverage 1.6 0.6 1.5 2.0 1.5 FFO Fixed Charge Coverage 4.0 4.1 5.6 6.7 6.6 FCF Debt Service Coverage 0.2 (0.6) (0.7) 0.0 0.6 (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage 0.4 (0.4) 1.1 4.3 1.1 Cash Flow from Operations/Capital Expenditures 1.2 0.3 0.6 1.1 1.8

Capital Structure and Leverage (x) FFO Adjusted Leverage 2.2 2.8 2.3 3.0 0.5 Total Debt with Equity Credit/Operating EBITDA 1.8 4.1 2.7 2.8 0.5 Total Net Debt with Equity Credit/Operating EBITDA 1.7 3.7 1.5 0.6 0.2 Implied Cost of Funds 9.1 7.7 6.4 6.2 13.2 Secured Debt/Total Debt ⎯ ⎯ 0.0 0.0 0.0 Short-Term Debt/Total Debt 0.2 0.3 0.1 0.1 0.4

Balance Sheet Total Assets 2,467,896 2,451,515 2,232,093 2,093,711 1,355,045 Cash and Marketable Securities 48,978 64,537 287,875 492,092 57,983 Short-Term Debt 173,375 235,824 115,778 83,868 97,406 Long-Term Debtb 758,344 692,134 662,302 678,752 145,854 Total Debt 931,719 927,958 778,080 762,620 243,260 Equity Credit 186,634 179,324 142,865 146,076 145,756 Total Debt with Equity Credit 745,085 748,634 635,215 616,544 97,504 Off-Balance Sheet Debta 0 0 0 0 0 Total Equity 745,085 748,634 635,215 616,544 97,504 Total Adjusted Capital 929,622 888,417 926,156 895,336 836,831

Cash Flow Funds from Operations 253,771 203,466 225,223 176,064 175,701 Change in Working Capital (102,220) (132,008) (57,116) 3,648 (9,327) Cash Flow from Operations 151,551 71,458 168,107 179,712 166,374 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (123,504) (247,384) (270,171) (157,815) (91,463) Dividends (57,158) (60,238) (57,088) (47,584) (29,039) Free Cash Flow (29,111) (236,164) (159,152) (25,687) 45,872 Net Acquisitions and Divestures (17,449) 0 0 0 0 Other Investments, Net 67,105 (51,278) (70,477) (26,368) (28,269) Net Debt Proceeds (46,900) 32,499 (11,272) 481,148 (9,443) Net Equity Proceeds 17,292 48,039 21,868 0 0 Other, Financing Activities 0 0 0 0 (1,470) Total Change in Cash (9,063) (206,904) (219,033) 429,093 6,690

Income Statement Net Revenue 731,212 642,565 640,154 483,231 361,356 Revenue Growth (%) 14.3 3.8 32.5 33.7 57.0 Operating EBIT 292,801 90,227 162,208 154,538 128,736 Gross Interest Expense 84,855 65,713 49,061 30,935 31,411 Rental Expense 0 0 0 0 0 Net Income 106,231 (22,060) 79,970 64,057 44,679 aOff-balance sheet debt = 7.0x operating leases. bLong-term debt includes perpetual bonds. Source: Fitch Ratings.

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Corporates

Financial Summary ⎯ Alto Palermo S.A. (USD 000, As of June 30)

Period-End Exchange Rate 3.8765 3.7925 3.0235 3.0905 3.0855 Average Exchange Rate 3.8030 3.4096 3.1247 3.0861 3.0003

LTM 3/31/10 2009 2008 2007 2006 Profitability Operating EBITDA 107,570 53,795 76,548 72,630 64,275 Operating EBITDA Margin (%) 55.9 28.5 37.4 46.4 53.4 FFO Return on Adjusted Capital (%) 20.2 16.4 17.6 13.7 22.2 Free Cash Flow Margin (%) (4.0) (36.8) (24.9) (5.3) 12.7 Return on Average Equity (%) 11.8 (2.4) 8.6 7.4 5.4

Coverage (x) FFO Interest Coverage 4.0 4.1 5.6 6.7 6.6 Operating EBITDA/Gross Interest Expense 4.8 2.8 4.9 7.2 6.1 Operating EBITDA/Debt Service Coverage 1.6 0.7 1.4 2.0 1.5 FFO Fixed Charge Coverage 4.0 4.1 5.6 6.7 6.6 FCF Debt Service Coverage 0.2 (0.6) (0.7) 0 0.6 (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage 0.4 (0.4) 1.1 4.3 1.1 Cash Flow from Operations/Capital Expenditures 1.2 0.3 0.6 1.1 1.8

Capital Structure and Leverage (x) FFO Adjusted Leverage 2.2 2.5 2.4 3.0 0.5 Total Debt with Equity Credit/Operating EBITDA 1.8 3.7 2.7 2.7 0.5 Total Net Debt with Equity Credit/Operating EBITDA 1.7 3.4 1.5 0.6 0.2 Implied Cost of Funds 9.1 7.7 6.2 6.2 13.1 Secured Debt/Total Debt ⎯ 0 0 0 0 Short-Term Debt/Total Debt 0.2 0.3 0.1 0.1 0.4

Balance Sheet Total Assets 636,630 646,411 738,248 677,467 439,165 Cash and Marketable Securities 12,635 17,017 95,213 159,227 18,792 Short-Term Debt 44,725 62,182 38,293 27,137 31,569 Long-Term Debtb 195,626 182,501 219,051 219,625 47,271 Total Debt 240,351 244,683 257,344 246,762 78,840 Equity Credit 48,145 47,284 47,252 47,266 47,239 Total Debt with Equity Credit 192,206 197,399 210,092 199,496 31,601 Off-Balance Sheet Debt 0 0 0 0 0 Total Adjusted Debt with Equity Credit 192,206 197,399 210,092 199,496 31,601 Total Equity 239,810 234,256 306,319 289,706 271,214 Total Adjusted Capital 432,016 431,655 516,411 489,202 302,815

Cash Flow Funds from Operations 66,729 59,674 72,078 57,051 58,561 Change in Working Capital (26,879) (38,717) (18,279) 1,182 (3,109) Cash Flow from Operations 39,850 20,957 53,799 58,233 55,452 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (32,475) (72,555) (86,463) (51,137) (30,485) Dividends (15,030) (17,667) (18,270) (15,419) (9,679) Free Cash Flow (7,655) (69,264) (50,934) (8,323) 15,289 Net Acquisitions and Divestures (4,588) 0 0 0 0 Other Investments, Net 17,645 (15,039) (22,555) (8,544) (9,422) Net Debt Proceeds (12,332) 9,532 (3,607) 155,908 (3,147) Net Equity Proceeds 4,547 14,089 6,998 0 0 Other, Financing Activities 0 0 0 0 (490) Total Change in Cash (2,383) (60,683) (70,097) 139,041 2,230

Income Statement Net Revenue 192,272 188,458 204,869 156,583 120,440 Revenue Growth (%) ⎯ (8.0) 30.8 30.0 54.0 Operating EBIT 76,992 26,463 51,912 50,075 42,908 Gross Interest Expense 22,313 19,273 15,701 10,024 10,469 Rental Expense 0 0 0 0 0 Net Income 27,933 (6,470) 25,593 20,757 14,892 aOff-balance sheet debt = 7.0x operating leases. bLong-term debt includes perpetual bonds. Source: Fitch Ratings.

Latin America High Yield November 2, 2010 27

Corporates

Natural Resources Bio-PAPPEL, S.A.B. de C.V. Mexico Full Rating Report Previously Named Corporación Durango, S.A.B. de C.V.

Ratings Rating Rationale Current • Bio-PAPPEL, S.A.B. de C.V. (Bio-PAPPEL) ‘B’ foreign and local currency issuer default Security Class Rating Foreign Currency IDR B ratings (IDRs) reflect the company’s volatile cash flow and high leverage. The ratings Local Currency IDR B take into consideration the cash flow stress Durango encounters when old corrugated Senior Notes due 2016 B/RR4 containers (OCC) and old newspaper (ONP) prices rise sharply in the U.S. and Mexico IDR − Issuer default rating. due to strong demand for recycled fiber from the Chinese, but prices for linerboard and corrugated boxes in Mexico do not rise at a corresponding rate. Rating Outlook • Energy is Bio-PAPPEL’s second most important production cost after recycled fiber. Stable The ratings factor in the company’s vulnerability to rising electricity and natural gas Financial Data costs. During 2008, the spread between the company’s revenue and cost per ton Bio-PAPPEL, S.A.B. de C.V. dropped to USD40 per ton in 2008 from USD83 and USD93 during 2007 and 2006, (MXN Mil.) respectively. Rising energy and recycled fiber costs were the main reason for the 12/31/09 12/31/08 decline in this spread. Total Revenues 10,288 10,217 EBITDAR 1,149 463 • Bio-PAPPEL is a key supplier of boxes to manufacturing companies in Mexico. Many Cash from Operations 715 216 of the smaller and some of the larger companies require significant working capital Cash and financing, which increases the company’s counter party credit risk. As of Marketable Securities 978 773 June 30, 2010, the company had MXN2.4 billion of accounts receivable. This figure Total Adjusted is more than double the MXN1.008 billion of EBITDA the company generated during Debt 4,942 8,591 the LTM ended June 30, 2010. The risks associated with the collection of these Total Adjusted Debt/EBITDAR (x) 4.3 18.6 receivables during periods of financial distress are factored into the FFO Adjusted company’s ratings. Leverage 4.5 6.0 • Structural weakness within the North American packaging industry caused by Analysts overcapacity, high energy prices, and the disconnect between recycled fiber prices and packaging prices has resulted in a negative cash flow trend for many companies Joe Bormann, CFA +1 312 368-3349 including Bio-PAPPEL during the past decade. This has led to many defaults within [email protected] the sector, including two by Bio-PAPPEL. Credit risk for all industry participants in the industry remains high as troughs in the cycle continue to exceed those achieved Alberto de los Santos +52 81 8399-9100 during prior downturns. [email protected] • Additional credit concerns include the global competitive position of the Mexican manufacturing sector, as weakness hurts the company’s business. In addition, competition within Mexico has increased due to the overall weakness of the U.S. market, which has resulted in increased exports to Mexico. The tight liquidity conditions faced by Bio-PAPPEL during this decade have limited its capital expenditures. In the medium-to-long term, this could diminish the company’s regional and global competitiveness. Key Rating Drivers • A material reduction of debt due to the rebound in the company’s cash flow could lead to a ratings upgrade.

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Corporates

Rating Issues Please refer to Fitch’s full company report, “Bio-PAPPEL, S.A.B. de C.V. (Bio-PAPPEL),” dated Sept. 3, 2010, for more information regarding:

• Company overview. • Management strategy. • Industry risk overview. Liquidity and Debt Structure Bio-PAPPEL had MXN3.416 billion (USD266 million) of total debt as of June 30, 2010 and MXN1.127 billion (USD88 million) of cash and marketable securities. With only MXN46 million (USD4 million) of short-term debt, liquidity is manageable. Bio-PAPPEL’s debt consists almost exclusively of the USD250 million restructured notes. The company also has about USD10 million of secured vendor financing. The interest rate for these notes is 6% during the first year, 7% during years two through four, and 10% during the fifth, sixth, and seventh year. During the first two years, 3% of the coupon can be paid with a PIK coupon, and during the third year 2% of the coupon can be paid with a PIK coupon.

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Corporates

Recovery Analysis ⎯ Bio-PAPPEL, S.A.B. de C.V. (MXN Mil.)

Going Concern Enterprise Value June 30, 2010 LTM EBITDA 1,008 Discount (%) 50 Post-Restructuring EBITDA Estimation 504 Multiple (x) 5.0 Going Concern Enterprise Value 2,520

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 214 Rent Expense 217 Estimated Maintenance Capital Expenditures 130 Total 561

Available to Enterprise Value for Claims Distribution Creditors Greater of Going Concern Enterprise or Liquidation Value 2,520 Less Administrative Claims (10%) 252 Adjusted Enterprise Value for Claims 2,268

Distribution of Value Secured Priority Lien Value Recovered Recovery (%) Recovery Rating Notching Rating Secured 144 144 100 ⎯ ⎯ ⎯

Concession Payment Availability Table Adjusted Enterprise Value for Claims 2,268 Less Secured Debt Recovery 144 Remaining Recovery for Unsecured Claims 2,128 Concession Allocation (5%) 107 Value to be Distributed to Senior Unsecured Claims 2,021

Recovery Unsecured Priority Lien Value Recovered Recovery (%) Concession Allocation (%) Rating Notching Rating Senior Unsecured 3,217 2,021 63 100 RR4 0 B Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, Mexico has a soft cap at ‘RR3’, which results in a maximum one-notch benefit over the issuer default rating. Source: Fitch.

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Corporates

Organizational Structure — Bio-PAPPEL, S.A.B. de C.V. (As of Aug. 24, 2010)

Bio-PAPPEL, S.A.B. de C.V. (Mexican Corporation)

99.96% 99.99% 99.62% 99.99% 100.00% Porteadores de Bio Servicios Corporativos Bio-PAPPEL Packaging, Bio-PAPPEL Printing, Bio-PAPPEL International, Inc. Durango, S.A. de C.V. S.A. de C.V. S.A. de C.V. S.A. de C.V. (New Mexico Corporation) 99.99% 79.38%a 99.99% 99.99%

Reciclajes Centauro Lineas Aéreas Ejecutivas Empresas Titán, Bio Servicios Printing, S.A. de C.V. de Durango, S.A. de C.V. S.A. de C.V. S.A. de C.V. 50.00% 52.64%b 99.99% Sinergia en Reciclados, Bio-PAPPEL Inmobiliaria, Fapatux, S.A. de C.V. S.A. de C.V. S.A. de C.V. 99.99% Bio Servicios de Empaques, S.A. de C.V. 99.99%

Bio Servicios de Papel Kraft, S.A. de C.V. a20.61% is controlled through Bio-PAPPEL, S.A.B. C.V. b47.35% is controlled through Porteadores de Durango, S.A. de C.V. Source: Fitch and Bio-PAPPEL, S.A.B. de C.V.

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Corporates

Debt and Covenant Synopsis — Bio-PAPPEL, S.A.B. de C.V. (As of Dec. 31, 2009)

Overview Issuer Corporación Durango, S.A.B. de C.V. (renamed Bio-Pappel, S.A.B. de C.V.) Guarantors Each direct and indirect subsidiary of Corporación Durango including: Porteadores de Durango, S.A. de C.V., Reciclajes Centauro, S.A. de C.V., Administración Corporativa de Durango, S.A. de C.V. (ACD) (renamed Bio Servicios Corporativos, S.A. de. C.V.) Líneas Aéreas Ejecutivas de Durango, S.A. de C.V. Empaques de Cartón Titán, S.A. de C.V. (Titán) (renamed Bio-Pappel Packaging, S.A. de C.V.) Inmobiliària Industrial Tizayuca, S.A. de C.V. (renamed Bio-Pappel Packaging, S.A. de C.V.) Servicios Industriales Tizayuca, S.A. de C.V. (merged into Bio Servicios de Papel Kraft, S.A. de C.V.) Atenmex, S.A. de C.V., Atensa, S.A. de C.V. (merged into Bio Servicios de Papel Kraft, S.A. de C.V.) Ectsa Industrial, S.A. de C.V. (renamed Bio Servicios de Empaques, S.A. de C.V.) Eyemsa Industrial, S.A. de C.V. (merged into Bio Servicios de Empaques, S.A. de C.V.) Cartonpack Industrial, S.A. de C.V. (Cartónpack) (merged into Bio Servicios de Empaques, S.A. de C.V.) Administración Industrial Centauro, S.A. de C.V. (merged into Bio Servicios de Papel Kraft, S.A. de C.V.) Administradora Industrial Durango, S.A. de C.V. (renamed Bio Servicios de Papel Kraft, S.A. de C.V.) Ponderosa Industrial De México, S.A. de C.V. (PIMSA) (recently sold) Mexpape, S.A. de C.V. (renamed Bio Servicios Printing, S.A. de C.V.) Fapatux, S.A. de C.V., Servicios Pipsamex, S.A. de C.V. (merged into Bio Servicios Printing, S.A. de C.V.) Formatodo Industrial, S.A. de C.V. (merged into Bio Servicios Printing, S.A. de C.V.) Paper International, Inc. (merged into Bio-Pappel International, Inc.) Fiber Management of Texas, Inc. (merged into Paper International which was later merged into Bio Pappel International, Inc.) Pipsamex, (renamed Bio-Pappel Printing, S.A. de. C.V.) McKinley Paper Company (renamed Bio-Pappel International, Inc.) Summafibers Inc. (merged into Bio Pappel International, Inc.) Empresas Titán, S.A. de C.V. (renamed Bio-Pappel Packaging, S.A. de. C.V.) Compañia Norteamericana de Inversiones En Celulosa Y Papel, S.A. de C.V. (merged into Bio Pappel Inmobiliaria, S.A. de C.V.) Document Date Aug. 27, 2009 Maturity Date Aug. 27, 2016 Description of Debt Senior Guaranteed Notes Financial Covenants Consolidated Leverage (Maximum) N.A. Interest Coverage (Minimum) N.A. Acquisitions/Divestitures Change of Control Provision Change of control clause at 101% of principal. Sale of Assets Restriction Neither the issuer nor guarantors can sell assets other than: 1) worn or obsolete assets with an aggregate value of less than USD100,000; 2) assets sales in the ordinary course of business; or 3) asset sales in which the net proceeds are used to repay the notes. If Durango or the guarantors sell capital stock of their subsidiaries, the net proceeds must be used to repay the notes. A fairness opinion is needed if an equity issuance or asset sale of capital stock of a note issuer involves more than 5% of its capital stock, or if more than 1% if the capital stock is sold to an affiliate, obligor, or other related entity of note guarantor. Debt Restrictions Additional Debt Restriction Neither the issuer nor guarantors are allowed to incur additional debt except permitted debt. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations. Durango or its subsidiaries can incur or maintain up to USD30 million of additional indebtedness through 2012. This figure then escalates annually, reaching USD60 million by 2016. Debt can also be incurred for finance trade receivables in connection with hedging agreements and in respect to certain intercompany loans under certain conditions. Limitation on Secured Debt Beyond customary permitted liens, subject to certain conditions, Durango or its subsidiaries may incur liens for: 1) liens securing permitted indebtedness are permitted provided that liens in respect of such refinanced debt existed prior to such refinancing and do not extend beyond the collateral securing such debt prior to its refinancing; 2) liens arising out of letters of credit; or 3) liens arising out of the sale of goods. Restricted Payments With certain exceptions, the issuer or guarantors are prohibited from making certain investments, including the acquisitions of stocks, bonds, and notes, as well as the making of deposits or loans with certain defined persons and entities. The investment restrictions also identify certain financial instruments the company can invest in such as commercial paper of highly rated entities. Other Cross Default Cross default when an uncured event of default occurs for debt of more than USD10 million. Acceleration If any event of default occurs and is continuing the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. Holders of the majority of the outstanding notes may rescind a declaration of acceleration within 60 days. N.A. − Not applicable. Continued on the next page. Source: Company and Fitch Ratings.

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Corporates

Debt and Covenant Synopsis — Bio-PAPPEL, S.A.B. de C.V. (Continued)

PIK Interest Rate Interest rate for notes is 6% during the first year, 7% during years two through four, and 10% during the fifth, sixth, and seventh year. During the first two years, 3% of the coupon can be paid with a PIK coupon, and during the third year 2% of the coupon can be paid with a PIK coupon. Intercompany Loans Intercompany loans are subordinated. Restriction on Purchase of Notes The issuer, guarantor, or affiliates may purchase notes at par provided the notes shall be retired or pledged. Notes purchased shall have no voting rights to the extent permitted by law in bankruptcy or any other situation. Transactions with Affiliates Transactions between issuer or guarantors and affiliates for more than USD100,000 shall require a fairness opinion. Limits on Consolidations or Mergers Restrictions on merger or consolidation of issuer and guarantors. Exceptions include: 1) the merger of guarantors; 2) the merger of other entities with the issuer provided that surviving entity will be the issuer or another corporation existing under the laws of Mexico or the U.S., and that no event of default occurs or is continuing, the company’s pro-forma net worth increases, and that the company’s debt be rated at least ‘B+’ prior to the merger and is affirmed at ‘B+’ or higher; or 3) the merger of other entities with a guarantor provided that surviving entity will be the guarantor or another corporation existing under the laws of Mexico or the U.S., that no event of default occurs or is continuing, the company’s pro forma net worth increases, and that the company’s debt rating be at least ‘B+’ prior to the merger and is affirmed at ‘B+’ or higher. Any surviving entity would assume all obligations of the issuer or guarantor under the indenture. Mandatory Redemption The note will be redeemed on a pro-rata basis if an issuer or guarantors sells assets with a value of at least USD5 million or greater than USD10 million during a 180 day period through a series of lesser sales. Notes will also be automatically redeemed if equity is issued, using 85% of net cash proceeds. N.A. − Not applicable. Source: Company and Fitch Ratings.

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Corporates

Financial Summary — Bio-PAPPEL, S.A.B. de C.V. (MXN 000, Years Ended Dec. 31)

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 1,008,723 931,953 285,061 1,040,758 1,290,619 Operating EBITDAR 1,225,651 1,148,881 462,754 1,190,469 1,421,161 Operating EBITDA Margin (%) 9.4 9.1 2.8 10.3 12.8 Operating EBITDAR Margin (%) 11.4 11.2 4.5 11.8 14.1 FFO Return on Adjusted Capital (%) 12.0 8.3 12.4 9.4 12.9 Free Cash Flow Margin (%) 3.6 5.1 0.6 2.3 6.8 Return on Average Equity (%) 32.6 28.7 (62.2) (5.9) (0.6)

Coverage (x) FFO Interest Coverage 16.7 7.8 1.8 1.3 2.4 Operating EBITDA/Gross Interest Expense 12.1 8.4 0.4 1.4 2.1 Operating EBITDAR/Gross Interest Expense and Rents 4.1 3.5 0.5 1.3 1.9 Operating EBITDA/Debt Service Coverage 7.8 6.1 0.0 1.2 1.5 Operating EBITDAR/Debt Service Coverage 3.5 3.1 0.1 1.1 1.5 FFO Fixed Charge Coverage 5.4 3.3 1.7 1.3 2.2 FCF Debt Service Coverage 3.6 4.1 0.1 1.1 1.5 (FCF + Cash and Marketable Securities)/Debt Service Coverage 12.3 10.5 0.2 1.7 2.1 Cash Flow from Operations/Capital Expenditures 2.2 3.8 1.4 2.0 3.9

Capital Structure and Leverage (x) FFO Adjusted Leverage 3.2 4.5 6.0 6.1 4.4 Total Adjusted Debt/Operating EBITDA 3.4 3.7 25.8 5.8 4.8 Total Adjusted Net Debt/Operating EBITDA 2.3 2.6 23.1 5.2 4.4 Total Adjusted Debt/Operating EBITDAR 4.2 4.3 18.6 5.9 5.0 Total Adjusted Net Debt/Operating EBITDAR 3.3 3.5 16.9 5.5 4.7 Implied Cost of Funds 1.6 2.1 10.1 12.6 8.7 Short-Term Debt/Total Debt 0.0 0.0 1.0 0.0 0.0

Balance Sheet Total Assets 15,627,924 15,009,789 15,465,831 15,659,970 15,728,920 Cash and Marketable Securities 1,126,726 977,874 773,086 539,549 484,143 Short-Term Debt 45,890 42,101 7,094,194 134,227 232,806 Long-Term Debt 3,370,699 3,381,867 253,347 5,867,472 5,982,888 Total Debt 3,416,589 3,423,968 7,347,541 6,001,699 6,215,694 Off-Balance Sheet Debta 1,735,424 1,518,496 1,243,851 1,047,977 913,805 Total Adjusted Debt 5,152,013 4,942,464 8,591,392 7,049,676 7,129,499 Total Equity 8,258,881 8,164,089 2,911,181 5,268,736 5,401,249 Total Adjusted Capital 13,410,894 13,106,553 11,502,573 12,318,412 12,530,748

Cash Flow Funds from Operations 1,307,772 760,118 571,007 241,077 872,101 Change in Working Capital (606,046) (45,533) (354,961) 224,039 49,692 Cash Flow from Operations 701,726 714,585 216,046 465,116 921,793 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (315,806) (189,864) (155,787) (236,900) (235,533) Dividends 0 0 0 0 0 Free Cash Flow 385,920 524,721 60,259 228,216 686,260 Net Acquisitions and Divestures 2,015 2,015 377,747 0 0 Other Investments, Net 97,378 45,514 72,136 (43,475) (40,577) Net Debt Proceeds 13,501 (100,680) (185,612) (132,138) (1,109,185) Net Equity Proceeds 0 0 0 0 328,947 Other, Financing Activities (407,188) (266,782) (92,008) 3,275 (137,667) Total Change in Cash 91,626 204,788 232,522 55,878 (272,222)

Income Statement Net Revenue 10,784,562 10,287,521 10,217,378 10,125,246 10,062,731 Revenue Growth (%) 8 1 1 1 15 Operating EBIT 663,789 567,726 (111,092) 630,499 864,723 Gross Interest Expense 83,342 111,431 677,121 770,680 614,011 Rental Expense 216,928 216,928 177,693 149,711 130,542 Net Income 1,797,163 1,587,859 (2,544,262) (312,616) (31,408) aOff-balance sheet debt = 7.0x operating leases in 2006 and 8.0x operating leases for 2005, 2004, 2003, and 2002. Notes: 1. Figures adjusted for inflation. 2. Numbers may not add due to rounding. Source: Bio-PAPPEL, S.A.B. de C.V.

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Financial Summary ⎯ Bio-PAPPEL, S.A.B. de C.V. (Bio-PAPPEL) (USD Mil., Years Ended Dec. 31)

Period-End Exchange Rate 12.866 13.0903 13.6944 10.9088 10.8188 Average Exchange Rate 12.919 13.5001 11.1635 10.9285 10.906

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 78,081 69,033 25,535 95,233 114,053 Operating EBITDAR 94,872 85,102 41,452 108,933 125,589 Operating EBITDA Margin (%) 9.4 9.1 2.8 10.3 12.8 Operating EBITDAR Margin (%) 11.4 11.2 4.5 11.8 14.1 FFO Return on Adjusted Capital (%) 12.0 8.3 12.4 9.4 12.9 Free Cash Flow Margin (%) 3.6 5.1 0.6 2.3 6.8 Return on Average Equity (%) 32.7 28.1 (65.5) (5.9) (0.6) Coverage (x) FFO Interest Coverage 16.7 7.8 1.8 1.3 2.4 Operating EBITDA/Gross Interest Expense 12.1 8.4 0.4 1.4 2.1 Operating EBITDAR/(Interest Expense + Rental Expenses) 4.1 3.5 0.5 1.3 1.9 Operating EBITDA/Debt Service Coverage 7.8 6.0 0.0 1.1 1.5 Operating EBITDAR/Debt Service Coverage 3.5 3.1 0.1 1.1 1.5 FFO Fixed Charge Coverage 5.4 3.3 1.7 1.3 2.2 FCF Debt Service Coverage 3.6 4.1 0.1 1.1 1.5 (FCF + Cash and Marketable Securities)/Debt Service Coverage 12.4 10.6 0.2 1.7 2.1 Cash Flow from Operations/Capital Expenditures 2.2 3.8 1.4 2.0 3.9 Capital Structure and Leverage (x) FFO Adjusted Leverage 3.2 4.7 4.9 6.1 4.4 Total Debt/Operating EBITDA 3.4 3.8 21.0 5.8 4.9 Total Net Debt/Operating EBITDA 2.3 2.7 18.8 5.3 4.5 Total Adjusted Debt/Operating EBITDAR 4.2 4.4 15.1 5.9 5.1 Total Adjusted Net Debt/Operating EBITDAR 3.3 3.6 13.8 5.5 4.7 Implied Cost of Funds 1.6 2.1 11.2 12.8 9.0 Short-Term Debt/Total Debt 0.0 0.0 1.0 0.0 0.0 Balance Sheet Total Assets 1,214,668 1,146,634 1,129,354 1,435,536 1,401,180 Cash and Marketable Securities 87,574 74,702 56,453 49,460 43,129 Short-Term Debt 3,567 3,216 518,036 12,304 20,739 Long-Term Debt 261,985 258,349 18,500 537,866 532,974 Total Debt 265,552 261,565 536,536 550,170 553,713 Off-Balance Sheet Debta 134,885 116,002 90,829 96,067 81,404 Total Adjusted Debt 400,437 377,567 627,365 646,237 635,117 Total Equity 641,915 623,675 212,582 482,980 481,155 Total Adjusted Capital 1,042,352 1,001,242 839,947 1,129,217 1,116,272 Cash Flow Funds from Operations 101,229 56,305 51,149 22,059 77,068 Change in Working Capital (46,911) (3,373) (31,797) 20,500 4,391 Cash Flow from Operations 54,318 52,932 19,352 42,559 81,459 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (24,445) (14,064) (13,955) (21,677) (20,814) Dividends 0 0 0 0 0 Free Cash Flow 29,872 38,868 5,398 20,883 60,645 Net Acquisitions and Divestures 156 149 33,838 0 0 Other Investments, Net 7,538 3,371 6,462 (3,978) (3,586) Net Debt Proceeds 1,045 (7,458) (16,627) (12,091) (98,020) Net Equity Proceeds 0 0 0 0 29,069 Other, Financing Activities (31,519) (19,761) (8,242) 300 (12,166) Total Change in Cash 7,092 15,169 20,829 5,113 (24,056) Income Statement Net Revenue 834,783 762,033 915,249 926,499 889,251 Revenue Growth (%) 5.1 (16.7) (1.2) 4.2 18.9 Operating EBIT 51,381 42,053 (9,951) 57,693 76,416 Gross Interest Expense 6,451 8,254 60,655 70,520 54,261 Rental Expense 16,791 16,069 15,917 13,699 11,536 Net Income 139,110 117,618 (227,909) (28,606) (2,776) aOff-balance sheet debt = 7.0x operating leases in 2006 and 8.0x operating leases for 2005, 2004, 2003, and 2002. Notes: 1. Figures converted from Mexican pesos using average exchange rates for income statements and free cash flow statement and period-end exchange rates for balance sheet. 2. Numbers may not add due to rounding. Source: Bio-PAPPEL, S.A.B. de C.V.

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Commercial Properties BR Properties S.A. Brazil Full Rating Report

Ratings Rating Rationale Current Security Class Rating • BR Properties S.A.’s (BR Properties) ratings reflect the company’s predictable and Long Term National Scale BBB+(bra) consistent cash generation from lease agreements and its low vacancy rates during Local Currency and Foreign diverse macroeconomic conditions. The ratings also incorporate the company’s Currency IDR B+ Proposed Perpetual Notes B+/RR4 favorable debt amortization schedule, satisfactory liquidity position, and the quality of the management. Further considered in the ratings is the company’s IDR − Issuer default rating. adequate capital structure, strengthened by its October 2009 private placement, Rating Outlook and its March 2010 initial public offering (IPO). Long-Term National Scale Positive Local Currency and Foreign • The ratings are constrained by the cyclicality of the commercial properties Currency IDR Positive business, the vulnerability to fluctuations of the domestic economy, and its reliance upon long-term lines of credit to finance its aggressive expansion plan. Financial Data • The Positive Rating Outlook reflects the expectation that BR Properties’ credit BR Properties S.A. metrics should continue to improve in the short and medium term as the heavy LTM investments made since 2007 continue to generate additional operating cash flow. (BRL Mil.) 6/30/10 12/31/09 Over time these investments should also result in additional economies of scale. Net Revenues 145 117 EBITDA 114 91 • BR Properties raised BRL727 million with its IPO in March 2010, which has improved Funds from its capital structure and liquidity position. Fitch Ratings expects BR Properties to Operations (11) 83 preserve its prudent risk management policy and maintain a loan-to-value ratio Total Debt 896 636 Cash and below 40%. Marketable Securities 396 89 • The growth of the company’s portfolio of properties is highly dependent upon the Total Debt/ availability of long-term lines of credit and access to the capital markets. The EBITDA (x) 7.8 7.0 Number of sustained availability of these financing options continues to be negatively factored Properties 61 47 into the credit ratings of BR Properties. Estimated Market Value • BR Properties has a satisfactory liquidity position. The relatively long-term nature of Properties 2,986 1,719 of the company’s debt profile is consistent with the requirements of the industry. Analysts Fitch expects the company to continue to conservatively manage its liquidity, preserving a cash cushion sufficient to cover annual debt amortization and vacancy Fernanda Rezende costs. +55 11 4504-2600 [email protected] • BR Properties has invested more than BRL2 billion since 2007, resulting in negative Jose Roberto Romero free cash flow. Free cash flow should remain pressured by high investments, and +55 11 4504-2600 Fitch does not expect it to turn positive at least until 2012. However, risks remain [email protected] high that additional acquisitions could occur at a pace higher than cash flow growth beyond 2012. • BR Properties has demonstrated a good operating track record since 2007. The company will continue to be challenged by a very fragmented and competitive market as it seeks to maintain profit margins and occupancy levels. What Could Trigger an Upgrade? • The ratings could be positively affected by a consistent increase in cash flow from operations and by the maintenance of a conservative cash cushion. The ratings could also be upgraded by sustained levels of low debt relative to the value of the company’s portfolio.

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• BR Properties ratings could be downgraded in the case of a significant increase in vacancy and delinquency ratios. The ratings could also be pressured by lower liquidity, higher-than-expected leverage ratios, or a weakening of the debt maturity profile. A significant downturn in the Brazilian economy could also result in negative rating actions. Rating Issues Please refer to Fitch’s full company report, “BR Properties S.A. (BR Properties),” dated Oct. 25, 2010, for more information regarding:

• Recent events. • Sector overview. • Competitors. • Management strategy. Liquidity and Debt Structure BR Properties raised BRL727 million with its IPO in March 2010, which has improved its capital structure and liquidity position. As of June 30, 2010, BR Properties had a strong liquidity position relative to debt, with BRL396 million of cash and marketable securities and BRL896 million of total debt, of which BRL112 million was in the short term. Through the end of 2012, the company faces total debt maturities of only BRL279 million. The relatively long-term nature of the company’s debt profile is consistent with the requirements of the industry. Fitch expects the company to continue to conservatively manage its liquidity, preserving a cash cushion sufficient to cover annual debt amortization and vacancy costs. As of June 30, 2010, the company’s total debt was BRL896 million. This figure compares with BRL636 million as of Dec. 31, 2009 and BRL582 million as of Dec. 31, 2008. Total debt is composed of credit lines to finance the acquisition of the properties. Working capital requirements are funded by the company’s cash generation capacity. As of June 30, 2010, 100% of the company’s debt was secured by an assignment of rights to rental receivables, a deed of trust of the property, a pledge of the quotas of Special Purpose Entities (SPEs) owning the property, and/or written guarantees by BR Properties. Relative to the value of the company’s property, leverage is low. The loan-to-value ratio for BR Properties’ real estate portfolio was 17% as of June 30, 2010, an improvement from 32% at the end of 2009. This ratio is below the company’s goal of preserving the ratio at around 40% and indicates that debt-financed acquisitions could occur in the short term. Leverage as measured by total debt to EBITDA was 7.8x, while net leverage as measured by net debt to EBITDA was 4.4x during the LTM ended June 30, 2010. These ratios compare to 7.0x and 6.0x, respectively, in 2009 and 8.9x and 7.0x in 2008. BR Properties has a relatively predictable and consistent cash flow from lease agreements. Net revenues increased to BRL145 million during the LTM ended June 30, 2010 from BRL117 million during 2009 and BRL87 million during 2008. The company’s EBITDA grew at a slightly higher pace, as EBITDA was BRL114 million during the LTM, an increase from BRL91 million during 2009 and BRL65 million in 2008. BR Properties’ EBITDA margin was 79.1%, 77.8%, and 75.2% during this time period. High EBITDA margins are a characteristic of the segment, as operating costs are low relative to revenues.

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BR Properties has invested more than BRL2 billion since 2007, resulting in negative free cash flow. For the LTM ended June 30, 2010, the company generated BRL114 million of EBITDA. Funds from operations were negative BRL11 million (positive BRL83 million in 2009) due to the company’s strategy of prepaying BRL127 million for property acquisitions during the first half of 2010. Investments totaled BRL934 million in the period, resulting in negative free cash flow of BRL902 million. Free cash flow should remain pressured by high investments, and Fitch does not expect it to turn positive at least until 2012. However, risks remain high that additional acquisitions could occur at a pace higher than cash flow growth beyond 2012.

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Organizational Chart — B.R. Properties 2.66% 11.29% 0.56% 4.18% 4.56% 76.75% GPCM PEPA PEPB REIC Lauger Outros

BR Properties

99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% BRPR BRPR BRPR BRPR BRPR BRPR BRPR BRPR BRPR BRPR ESA SEP BRPR BRPR I II III IV V VIII IX X XI XII Empreendimentos XIV XV Lmobiliarios Ltda. Ed. Cond. Ed Gloria Ed. Ed. Midas Ed. Raja Ed. São Ed. Santo Ed. Icomap RB115 Ed. Souza Aranha Cond. Galpão Alphaville Panamerica Athenas Hills Pedro Antonio Ind São José Itapevi Park dos Camps

BP Ed Plaza Ed Bolsa Isabela Ed. Berrini Galpão Ed. Pres. Ed. São Galpão Jundiai Centenário RJ Plaza Paraná Vargas Jose Araucaria SPE Cld. Jardim 50.00%

BP Ed. Olympic Ed. Paulista Ed. MV9 Itapevi Henrique Tower Park Terrenos Schaumann Cid Jardim Auto Ed. Joaquim Ed. Shopping Number Floriano Comercial Piraporinha One Indaiatuba

Ed. Network Ed. Sylvio BRPR VI Celebration Empresarial Fraga 99.99%

Ed. Paulista Jandira I Plaza

Jandira II

99.99% 99.99% 99.99% 50.00% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 100.00%

BRPR BRPR BRPR PP2 SPE BRPR BRPR BRPR BRPR BRPR BRPR BRPR BRPR BRPR BRPR BRPR XVI XVII XVIII Empreendimentos XX XXI XXII XXIII XXIV XXV XXVII XVIII XXIX A Part. Imobiliarios Ltda. S.A.

DP Galpáo 99.99% Panamerica II Brazilian Ouvidor DP TNU CBOP- Ed. Manchete Ed. Louveira Sorocaba Business 107 Araucaria Jacarandá Alexander I, II BRPR Park Dumas XXVI

CD 99.99% 99.99% 99,.9% 99.99% 99.99% 99.99% 99.99% 99.99% 50.00% Castelo BRPR BRPR BRPR BRPR BRPR BRPR BRPR BRPR Ventura XXX XXXI XXXII XXXIII XXXIV XXXV XXXVII XXXVII II-A-FII

DP DP DP Louveira Louveira Louveira Source: BR Properties. III e IV V/VI VIII/IX

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Recovery Analysis ⎯ BR Properties S.A. (BRL Mil.)

Going Concern Enterprise Value June 30, 2010 LTM EBITDA 114.3 Discount (%) 25.0 Post-Restructuring EBITDA Estimation 85.8 Multiple (x) 6.0 Going Concern Enterprise Value 514.6

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 180.0 Rent Expense ⎯ Estimated Maintenance Capital Expenditures 8.0 Total 188.0

Available to Enterprise Value for Claims Distribution Creditors Greater of Going Concern Enterprise or Liquidation Value 1,821.7 Less Adminstrative Claims (10%) 182.2 Adjusted Enterprise Value for Claims 1,639.5

Distribution of Value Secured Priority Lien Value Recovered Recovery (%) Recovery Rating Notching Rating Senior Secured 896.3 896.3 100 RR4 ⎯ B+

Concession Payment Availability Table Adjusted Enterprise Value for Claims 1,639.5 Less Secured Debt Recovery 896.3 Remaining Recovery for Unsecured Claims 743.2 Concession Allocation (5.0%) 37.2 Value to be Distributed to Senior Unsecured Claims 706.0

Concession Unsecured Priority Lien Value Recovered Recovery (%) Allocation (%) Recovery Ratinga Notching Rating Senior Unsecured 360.0 360.0 100 100 RR4 ⎯ B+ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Brazilian corporates are capped at ‘RR4’. Source: Fitch.

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Debt and Covenant Synopsis ⎯ BR Properties S.A. (Foreign Currency Notes)

Overview Issuer BR Properties S.A. Guarantors BRPR I Empreendimentos e Participações Ltda. BRPR II Empreendimentos e Participações Ltda. BRPR III Empreendimentos e Participações Ltda. BRPR IV Empreendimentos e Participações Ltda. BRPR V Empreendimentos e Participações Ltda. BRPR XVI Empreendimentos e Participações Ltda. BRPR XVIII Empreendimentos e Participações Ltda. BRPR XX Empreendimentos e Participações Ltda. BRPR XXIII Empreendimentos e Participações Ltda. BRPR XXIV Empreendimentos e Participações Ltda. BRPR XXVII Empreendimentos e Participações Ltda. BRPR XXX Empreendimentos e Participações Ltda. BRPR XXXI Empreendimentos e Participações Ltda. BRPR XXXVII Empreendimentos e Participações Ltda. Document Date Oct. 7, 2010 Maturity Date N.A. Description of Debt Perpetual Notes Amount USD200 Million Ranking The notes will be unsecured, unsubordinated obligations of the issuer. The guarantors will unconditionally and irrevocably guarantee the notes on an unsecured basis. The guarantee will rank equally in right of payment with the unsecured and unsubordinated indebtedness. The guarantee will be effectively junior to the secured indebtedness and the indebtedness of any of BR Properties’ subsidiaries. Financial Covenants N.A.

Debt Restriction Limitation on Liens BR Properties will not, and BR Properties will not permit any subsidiary to, create or suffer to exist any lien (except for permitted liens) upon any of its property or assets now owned or hereafter acquired by it, or any proceeds therefrom, or on any capital stock of BR Properties or any subsidiary, securing any debt unless contemporaneously therewith effective provision is made to secure the notes equally and ratably with such obligation for so long as such obligation is so secured.

Others Limitation on Transactions with Affiliates BR Properties will not, and BR Properties will not permit any of its subsidiaries to, enter into any transaction or series of related transactions (including any investment or any purchase, sale, lease, or exchange of any property or the rendering of any service) with or with respect to any affiliate of BR Properties (other than a subsidiary of BR Properties) (an “affiliate transaction”) unless such affiliate transaction is as favorable to BR Properties or such subsidiary as terms that would be obtainable at the time for a comparable transaction or series of related transactions in arm’s-length dealings with an unrelated third person. Limitation on Consolidation, Merger or With certain exceptions, the issuer will not consolidate with or merge with or into, or convey, transfer, or lease Transfer of Assets all or substantially all of its assets to any person.

Additional Note Guarantees If, after the issue date, BR Properties or any subsidiary acquires or creates another significant subsidiary, BR Properties will cause such significant subsidiary to: (1) execute and deliver to the trustee (a) a supplemental indenture as an exhibit to the indenture pursuant to which such Significant Subsidiary shall unconditionally guarantee all of BR Properties’ obligations under the notes and the indenture and (b) a notation of guarantee in respect of its guarantee; and (2) deliver to the trustee one or more opinions of counsel that such supplemental indenture (a) has been duly authorized, executed and delivered by such significant subsidiary and (b) constitutes a valid and legally binding obligation of such significant subsidiary in accordance with its terms. Notwithstanding the foregoing, such significant subsidiary will not be required to guarantee BR Properties’ obligations under the notes and the indenture if (1) the provision of such a guarantee results in a breach or default of an agreement binding on such significant subsidiary (other than an agreement entered into for the purpose of avoiding the obligation to enter into a guarantee) that may not be amended or otherwise modified using commercially reasonable efforts to avoid such breach or default or (2) the other guarantors at the time of determination would directly (a) hold at least 75% of BR Properties’ total assets on a consolidated basis as of the most recent quarterly balance sheet and (b) generate revenues of at least 75% of BR Properties’ total revenues on a consolidated basis for the 12-month period ending on the date of BR Properties’ most recent quarterly consolidated statement of income. N.A. − Not applicable. Source: BR Properties.

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Financial Summary ⎯ BR Properties S.A. (BRL 000, Years Ended Dec. 31)

LTM 6/30/10 2009 2008 2007 Profitability Operating EBITDA 114,347 91,340 65,221 12,182 Operating EBITDAR 114,347 91,340 65,221 12,182 Operating EBITDA Margin (%) 79.1 77.8 75.2 55.7 Operating EBITDAR Margin (%) 79.1 77.8 75.2 55.7 FFO Return on Adjusted Capital (%) 2.3 9.0 11.9 2.2 Free Cash Flow Margin (%) (624.1) (220.3) (199.2) (4071.8) Average Return on Equity (%) 3.6 3.6 (0.2) (3.8)

Coverage (x) FFO Interest Coverage 0.8 2.4 2.2 1.4 Operating EBITDA/Interest Expense 1.7 1.6 1.0 0.7 Operating EBITDAR/Interest Expense + Rents 1.7 1.6 1.0 0.7 Operating EBITDA/Debt Service Coverage 0.6 0.7 0.5 0.2 Operating EBITDAR/Debt Service Coverage 0.6 0.7 0.5 0.2 FFO Fixed Charge Coverage 0.8 2.4 2.2 1.4 FCF Debt Service Coverage (4.6) (1.5) (0.8) (12.6) (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage (2.4) (0.8) 0.1 (8.5) Cash Flow from Operations/Capital Expenditures 0.0 0.3 0.3 0.1

Capital Structure and Leverage (x) FFO Adjusted Leverage 15.4 4.5 3.9 19.5 Total Debt with Equity Credit/Operating EBITDA 7.8 7.0 8.9 41.0 Total Net Debt with Equity Credit/Operating EBITDA 4.4 6.0 7.0 17.9 Total Adjusted Debt/Operating EBITDAR 7.8 7.0 8.9 41.0 Total Adjusted Net Debt/Operating EBITDAR 4.4 6.0 7.0 17.9 Implied Cost of Funds 9.4 9.5 12.4 7.2 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.1 0.1 0.1 0.1

Balance Sheet Total Assets 2,702,427 1,661,995 1,341,373 1,264,849 Cash and Marketable Securities 396,393 89,373 122,707 280,976 Short-Term Debt 111,852 79,921 66,434 51,362 Long-Term Debt 784,484 556,457 515,934 447,701 Total Debt 896,336 636,378 582,368 499,063 Equity Credit ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 896,336 636,378 582,368 499,063 Off-Balance Sheet Debt 0 0 0 0 Total Adjusted Debt with Equity Credit 896,336 636,378 582,368 499,063 Total Equity 1,682,783 930,419 687,162 686,737 Total Adjusted Capital 2,579,119 1,566,797 1,269,530 1,185,800

Cash Flow Funds from Operations (10,808) 83,063 83,800 7,728 Change in Operating Working Capital 46,435 16,550 (11,209) 70,793 Cash Flow from Operations 35,627 99,613 72,591 78,521 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 Capital Expenditures (937,871) (358,125) (245,345) (969,096) Dividends 0 0 0 0 Free Cash Flow (902,244) (258,512) (172,754) (890,575) Net Acquisitions and Divestitures (35,217) 0 0 93,372 Other Investments, Net 5,689 5,134 0 0 Net Debt Proceeds 244,658 (1,744) 14,096 481,145 Net Equity Proceeds 971,437 221,788 389 597,033 Other Financing, Net (25,305) 0 0 0 Total Change in Cash 259,018 (33,334) (158,269) 280,975

Income Statement Net Revenues 144,568 117,349 86,708 21,872 Revenue Growth (%) 36 35 296 ⎯ Operating EBIT 95,619 74,880 49,602 6,735 Gross Interest Expense 69,198 57,825 67,146 17,918 Rental Expense 0 0 0 0 Net Income 42,510 28,999 (1,579) (13,154) Source: BR Properties S.A.

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Electric-Corporate C.A. La Electricidad de Caracas Venezuela Full Rating Report (EDC)

Ratings Rating Rationale Current • C.A. La Electricidad de Caracas’ (EDC) ratings reflect the company’s strong credit Security Class Rating Foreign Currency IDR B+ linkage with its majority shareholders, Petroleos de Venezuela S.A. (PDVSA) and the Local Currency IDR B+ Bolivarian Republic of Venezuela, its ultimate shareholder. The company receives Senior Unsecured Notes B+ National Long-Term Rating AAA(ven) support from both PDVSA and the government in the form of subsidized fuel costs, National Short-Term Rating F1+(ven) access to foreign currency, and government assistance with capital expenditure

IDR− Issuer default rating. programs. Transfers from the government reached approximately USD459 million during 2009 and are expected to continue to increase in the future. Rating Outlook • Fitch Ratings expects EDC’s credit metrics to continue to deteriorate sharply due to Stable the lack of tariff increases since 2006, the recent devaluation of the local currency, Financial Data and high inflation levels. Tariff increases remain dismal due to the government’s efforts to curb inflation, particularly in 2010, which was an election year. Since EDC C.A. La Electricidad de Caracas was nationalized by the government in 2007, the company has begun several (USD Mil.) investment projects aimed at increasing its generation capacity and improving its 2009 2008 Net Revenue 922 974 distribution and transmission assets. During 2009, capital expenditures were Operating EBITDA (47) 210 USD1.0 billion, up from USD671 million and USD252 million in 2008 and 2007, Free Cash Flow (996) (663) respectively. Capital Expenditures (1,008) (671) Total Debt 681 863 • The tariff freeze and rise in costs due to high inflationary pressure explain the Total Debt/EBITDA (14.49) 4.11 Cash and Marketable significant deterioration in cash flow generation experienced since 2006. During Securities 173 454 2009, EDC’s EBITDA was negative USD47 million during 2009, a sharp decline from USD210 million in 2008 and USD415 million in 2007. Absent a tariff increase, EBITDA Analysts margins are likely to fall deeper into negative territory in the following years. Daniel Kastholm, CFA During 2009, funds from operations (FFO) were not enough to cover working capital +1 312 368-2070 needs and CAPEX, and as a result free cash flow was negative USD996 million. The [email protected] expected future increase in EDC’s capital expenditure is only sustainable with the

Hilario Ramirez continuing support of the Venezuelan government given the current tariff freeze +58 212 286-3232 and weakening free cash flow. As a result, Fitch expects the Venezuelan [email protected] government to transfer funds in excess of USD500 million per year to the company in order to finance its working capital needs and capex. • EDC had USD173 million in cash and USD2 million in short-term debt at the end of 2009. The company’s solid cash position, despite its negative free cash flow generation, is explained by the transfer of public sector funds and could improve if accounts receivable on prior asset sales to PDVSA are honored. Furthermore, a tariff increase would strengthen EDC’s profitability and allow it to become financially self sufficient once again. Total debt of USD681 million is comprised primarily of the USD650 million notes due in 2018 that were issued during 2008. • The Venezuelan government is currently spinning off EDC from PDVSA. In the future, it will be owned and consolidated by Corpoelec, a state-owned entity that will consolidate all of the country’s power assets. The Venezuelan government directly controls 75% of Corpoelec, while PDVSA controls the remaining 25%. Fitch Ratings expects the government to continue supporting EDC and the sector due to its strategic importance to the country regardless of the final structure of the industry.

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Key Rating Drivers • Catalysts for a downgrade include: a downgrade of the Bolivarian Republic of Venezuela, a sustained leverage increase, liquidity deterioration, absence of a tariff increase within the next year, and/or weaker government support to finance operations/investments of the company. • Catalysts for an upgrade include: an upgrade of the Bolivarian Republic of Venezuela, lower leverage levels, and/or the implementation of a tariff structure that reflects inflation increases and fuel costs. Rating Issues Please refer to Fitch’s full company report, “C.A. La Electricidad de Caracas (EDC),” dated Oct. 13, 2010, for more information regarding:

• Company overview. • Recent events. • Key projects and capex plans. • The crisis in the Venezuelan electricity sector. • Devaluation of the Bolivar. Liquidity and Debt Structure EDC posted very weak results in 2009 with total revenues down 5.3% to USD922 million and EBITDA declining to negative USD47 million. The drop in revenues is explained by the deconsolidation of Genevapca due to its transfer to PDVSA and flat tariffs, as sales volumes increased by 4%. The significant deterioration in EBITDA was the result of lower volumes and higher costs due to EDC’s increased participation in social programs, as well as an inflation rate of close to 25% during 2009. EDC’s free cash flow (FCF) after investments was negative USD996 million. The company financed its USD1.0 billion of capital expenses with USD459 million of funds transferred by the government, as well as cash on hand. The government transfers came from PDVSA (USD21 million), CORPOELEC (USD64 million), FONDEN (USD172 million), and Fondo Chino ⎯ Venezolano (USD202 million). Total debt decreased to USD681 million at the end of 2009 from USD863 million in 2008, while cash on hand declined to USD173 million in 2009 from USD454 million in 2008. All the company’s debt is denominated in USD and is unsecured. The Bolivarian Republic of Venezuela and PDVSA do not guarantee EDC’s debt. Almost all of the company’s debt is related to the USD650 million notes due in 2018. EDC had USD344 million of accounts receivable on its balance sheet at the end of 2009 related to the sale of affiliates to PDVSA. The most important of these was the transfer of Genevapca to the Oil National company for USD286 million. Given the company’s status as an indirectly owned company of the government, it remains hard to predict when and if the company will collect this money.

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Organizational Structure — C.A. La Electricidad de Caracas (As of June 30, 2010)

LTM June 30, 2010 Combined Summary Statistics

Bolivarian Republic of Venezuela

100% Ownership

PDVSA

93.62% Ownership

EDCa

100% 100% 80% 100%

C.A. Luz Electrica Administradora EDC Network C.A. Luz Electrica Del Yaracuy Serdeco C.A. Comunicaciones de Nueva Esparta S.C.S.

aOn Dec. 31, 2009, EDC sold Genevapca C.A. and Phoenix International C.A. to PDVSA. Source: Fitch and C.A. La Electricidad de Caracas financial statements.

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Debt and Covenant Synopsis ⎯ C.A. La Electricidad de Caracas (EDC) (Foreign Currency Notes)

Overview Issuer EDC Finance B.V. Guarantors EDC Document Date April 10, 2008 Maturity Date April 10, 2018 Description of Debt Senior Unsecured Notes Amount USD650 Million Acquisitions/Divestitures Consolidation, Merger, Conveyance, or EDC will not, in one or a series of transactions, consolidate or amalgamate with or merge into any corporation or Sale convey, lease, or transfer substantially all of its properties, assets, or revenues to any person or entity (other than a direct or indirect subsidiary of the issuer) or permit any person (other than a direct or indirect subsidiary of the issuer) to merge with or into it unless:

1. Either the issuer is the continuing entity, or the person (the “successor company”) formed by the consolidation or into which the Issuer is merged or that acquired or leased the property or assets of the issuer will assume (jointly and severally with the Issuer unless the Issuer will have ceased to exist as a result of that merger, consolidation or amalgamation), by a supplemental indenture (the form and substance of which will be previously approved by the trustee), all of the issuer’s obligations under the indenture and the notes; 2. The successor company (jointly and severally with the issuer unless the issuer will have ceased to exist as part of the merger, consolidation, or amalgamation) agrees to indemnify each holders of notes against any tax, assessment, or governmental charge thereafter imposed on the holders of notes solely as a consequence of the consolidation, merger, conveyance, transfer, or lease with respect to the payment of principal, or interest, of the notes; 3. Immediately after giving effect to the transaction, no default or event of default has occurred and is continuing; 4. The issuer has delivered to the trustee an officer’s certificate and an opinion of counsel, each stating that the transaction and the supplemental indenture comply with the terms of the indenture and that all conditions precedent provided for in the indenture and relating to the transaction have been complied with.

Debt Restriction Limitation on Liens EDC will not, and will not cause or permit any of its subsidiaries to, incur, permit, or suffer to exist any liens (the “initial lien”), other than permitted liens, of any kind against or upon any property or assets of the issuer or any of its subsidiaries whether owned on the issue date or acquired after the issue date, to secure any indebtedness, unless it has made or will make effective provision whereby 1) the notes will be secured by such lien equally and ratably with (or prior to, in the event such indebtedness is subordinated in right of payment to the notes) all other indebtedness of the issuer or any of its subsidiaries secured by such lien and 2) if such lien secures obligations subordinated to the notes in right of payment, such lien shall be subordinated to a lien securing the notes in the same property as that securing such lien to the same extent as such subordinated obligations are subordinated to the notes. Source: Company and Fitch Ratings.

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Financial Summary ⎯ C.A. La Electricidad de Caracas S.A. (EDC) (USD Mil., Years Ended Dec. 31.)

Period-End Exchange Rate 2,147.3 2,147.3 2,147.3 2,147.3 2,147.3 Average Exchange Rate 2,147.3 2,147.3 2,147.3 2,147.3 2,147.3

2009 2008 2007 2006 2005 Profitability Operating EBITDA (47) 210 415 689 734 Operating EBITDAR (47) 296 515 706 747 Operating EBITDA Margin (%) (5.10) 21.56 32.9 47.2 49.4 Operating EBITDAR Margin (%) (5.10) 30.39 40.7 48.4 50.3 FFO Return on Adjusted Capital (%) 9.27 11.52 15.3 16.3 20.7 Free Cash Flow Margin (%) (108.03) (68.07) (5.1) 11.1 18.8 Return on Average Equity (%) 0.03 (0.01) 2.1 6.4 6.0

Coverage (x) FFO Interest Coverage 4.28 2.47 6.4 6.6 5.5 Operating EBITDA/Gross Interest Expense (0.54) 1.30 5.1 6.5 4.2 Operating EBITDAR/(Interest Expense + Rental Expenses) (0.54) 1.20 2.8 5.8 4.0 Operating EBITDA/Debt Service Coverage (0.53) 1.27 4.6 3.6 2.2 Operating EBITDAR/Debt Service Coverage (0.53) 1.17 2.7 3.4 2.1 FFO Fixed Charge Coverage 4.28 1.96 3.4 5.8 5.2 FCF Debt Service Coverage (10.21) (3.02) 0.2 1.4 1.3 (FCF + Cash and Marketable Securities)/Debt Service Coverage (8.27) (0.29) 2.8 3.4 2.6 Cash Flow from Operations/Capital Expenditures 0.01 0.07 1.7 3.3 4.4

Leverage (x) FFO Adjusted Leverage 1.83 1.79 0.9 1.0 1.1 Total Debt with Equity Credit/Operating EBITDA (14.49) 4.11 1.0 0.9 1.3 Total Net Debt with Equity Credit/Operating EBITDA (10.81) 1.95 0.5 0.3 0.7 Total Adjusted Debt/Operating EBITDAR (14.49) 2.92 1.1 1.0 1.4 Total Adjusted Net Debt/Operating EBITDAR (10.81) 1.38 0.7 0.4 0.8 Implied Cost of Funds 11.27 0.08 12.80 8.50 9.60 Short-Term Debt/Total Debt 0.00 0.01 0.00 0.10 0.20

Balance Sheet Total Assets 5,773 5,418 4,594 4,99 5,158 Cash and Marketable Securities 173 454 231 383 430 Short-Term Debt 2 5 7 84 186 Long-Term Debt 679 858 420 524 733 Total Debt 681 863 427 608 919 Total Equity 3,333 3,331 3,514 3,698 3,657 Total Adjusted Capital 4,014 4,194 4,084 4,377 4,672

Cash Flow Funds from Operations 285 236 443 592 783 Change in Working Capital (273) (192) (24) 30 (87) Cash Flow from Operations 12 44 420 623 696 Capital Expenditures (1,008) (671) (252) (190) (160) Common Dividends 0 (36) (231) (271) (257) Free Cash Flow (996) (663) (64) 162 279 Net Acquisitions and Divestures 299 41 12 9 (41) Other Investments, Net 0 0 0 94 324 Net Debt Proceeds (8) 495 (65) (218) (882) Net Equity Proceeds 0 0 0 73 0 Other, Financing Activities 425 349 (34) (69) 127 Total Change in Cash (280) 222 (150) 51 (192)

Income Statement Net Revenue 922 974 1,263 1,460 1,486 Revenue Growth (%) (5.34) (99.92) (13.5) (1.8) 54.9 Operating EBIT (448) (177) 40 286 310 Gross Interest Expense 87 161 82 106 173 Rental Expense 0 86 100 17 13 Net Income 1 (176) 76 237 186 Source: C.A. La Electricidad de Caracas (EDC).

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Telecommunications Cablevisión S.A. Argentina Full Rating Report

Ratings Rating Rationale Current Security Class Rating • Cablevisión S.A.’s (Cablevisión) ratings are supported by the company’s solid Foreign Currency IDR B business position, the expectation for continued free cash flow generation, a high Local Currency IDR B+ level of financial flexibility and strong credit protection measures. They take into Senior Unsecured Debt B/RR4 consideration increasing regulatory risk and political interference within the cable IDR − Issuer default rating. industry. Other credit concerns include the lack of revenue diversity, an evolving

and competitive landscape, and currency mismatch and costs pressures derived Rating Outlook from double-digit inflation. Cablevisión’s foreign currency issuer default rating (IDR) Stable is capped by Argentina’s country ceiling of ‘B’, while its recovery rating of ‘RR4’ is

Financial Data constrained by the soft cap of ‘RR4’ for bonds issued by Argentine corporates. Cablevisión S.A. • The ratings consider the size and scale of Cablevisión’s operations as the largest (USD Mil.) pay-TV provider in Argentina and the resilience of its business during the recent LTM 3/31/10 12/31/09 global economic downturn. The company generated USD1.140 billion of revenues Revenues 1,140 1,131.7 and USD415 million of EBITDA during the LTM ended March 31, 2010. These figures Total Adjusted compare with USD1.124 billion of revenues and USD377 million of EBITDA for the Debt 550 539.3 Funds from LTM ended March 31, 2009. Fitch Ratings projects that the company will pay about Operations 363.3 356 USD40 million of dividends and will generate more than USD120 million of free cash EBITDAR 415.2 394.2 Cash and flow during 2010, which will be used to reduce debt. The lack of access to local and Marketable international debt capital markets by Cablevisión is offset by its low leverage, Securities 55.1 37.8 FFO Adjusted manageable debt maturity profile, and strong free cash flow. Leverage (x) 1.3 1.3 Adjusted Net • The company’s solid business performance in the midst of an economic crisis was the Debt/EBITDAR (x) 1.2 1.3 result of its strategy of targeting high-quality subscribers, preserving first-class EBITDA/Debt Service programming, and leading the offering of new technologies such as high definition Coverage (x) 3.7 3.6 (HD) programming. These strategies have positioned the company to effectively compete with the quasi triple play service offered by the telephony companies Analysts through joint ventures with DirecTV. They have permitted Cablevisión to improve average revenue per user (ARPU), operating margins, subscriber loyalty, and cash Cecilia Minguillón +54 11 5235-8123 flows while lowering subscriber churn levels. Cablevisión operating margins within the [email protected] range of 33%−36% during the last five years remain consistent with those of its peers.

Alberto Moreno Arnaiz • The political climate in Argentina continues to present challenges for cable and +52 81 8399-9132 media companies. Issues undergoing a judicial process are the government’s [email protected] attempt to regulate cable TV prices, the nullification of Cablevisión’s merger with Multicanal S.A. and, most recently, the announcement of the expiration of its Fibertel internet license. While many of the regulatory and legal actions have yet to be implemented or are undergoing a judicial review, they indicate a challenging and highly politicized regulatory environment for the industry that is not expected to cease until 2011. Key Rating Drivers • In Fitch’s opinion Cablevisión’s key credit concern is related with the regulatory framework. A new broadcasting law could negatively affect the company’s existing revenues and internal cash flow generation by limiting the market share of each industry player. Although it has been recently implemented, final application is subject to undergoing legal procedures.

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• Other factors that could lead to a downgrade of Cablevisión’s ratings include, but are not limited to, a final ruling that negatively affects the company’s credit quality. Among the riskiest legal actions faced by Cablevisión is the action that would nullify its merger with Multicanal S.A. and require a divestment of Multicanal S.A. within a one-year period and those that that threaten its Internet business. Rating Issues Please refer to Fitch’s full company report, “Cablevisión S.A.,” dated Sept. 14, 2010, for more information regarding:

• Company overview. • Subscriber growth. • Management strategy. Liquidity and Debt Structure Cablevisión merged with Multicanal S.A. in 2006, and the merger was authorized in December 2007. However, it still needs to be registered by the Inspeccion General de Justicia. The company’s total financial debt as of March 31, 2010 was USD550 million, of which USD60 million was classified as a current portion of the long-term debt. After the seller notes were totally paid off in December 2009, the company’s outstanding notes, which are senior unsecured, were placed in the global capital markets. They are the result of Cablevisión and Multicanal debt restructurings back in 2005. In the past, the restrictive payment provisions contained within the company’s senior unsecured notes have restricted Cablevisión’s ability to make dividend payments and larger capital expenditures. Consequently, over the past few years Cablevisión has applied most of its operating cash flow to prepay debt. The increase in operating cash flow has permitted the company to announce on June 18, 2010 a dividend payment of ARS145 million and is expecting to continue with a 15% payout going forward. Cablevisión’s liquidity position is supported by expected free cash flow generation (after dividend payments) above USD120 million and approximately USD50 million of cash on hand as of March 31, 2010. During the remainder of 2010 approximately USD33 million of debt is scheduled to mature, followed by approximately USD50 million during 2011. The debt maturity profile is well within Cablevisión’s expected free cash flow generation. Cablevisión’s leverage metric as of the LTM period ended March 31, 2010 was 1.3x, a reduction from 2.0x and 2.6x in 2008 and 2007, respectively. Although the company’s leverage is lower than its target level, Fitch considers it to be appropriate due to the continued regulatory and political threats against Grupo Clarin and its subsidiaries (Cablevisión) that make it difficult to plan and execute new long-term projects.

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Recovery Rating The recovery ratings for Cablevisión’s capital markets debt instruments reflect Fitch’s expectation that the company’s creditors would have an average recovery, constrained by the soft cap of ‘RR4’ for bonds issued by Argentine corporates. In deriving a distressed enterprise valuation to determine the recovery under this scenario, Fitch discounts the company’s LTM EBITDA to a level that would cover operating leases, interest expenses, and maintenance capital expenditures. Although the LTM level of EBITDA is vulnerable to the continued legal actions against Cablevisión, it should be noted that the company has sufficient financial flexibility as interests and minimum capital expenditures are marginal compared to its distressed cash flow generation considering the negative impact of any of the existing legal actions. Fitch has applied a 5.0x distressed EBITDA multiple, which is below the multiple used in the industry.

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Recovery Analysis ⎯ Cablevisión S.A. (USD Mil., As of March 31, 2010)

Going Concern Enterprise Value EBITDA 415 EBITDA Discount (%) 35 Post-Restructuring EBITDA Estimation 270 Multiple (x) 5.0 Going Concern Enterprise Value 1,350

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 36 Rent Expense ⎯ Estimated Maintenance Capital Expenditures 25 Total 61

Advance Available to Liquidation Value Balance Rate (%) Creditors Cash 55.0 0 ⎯ A/R 49.4 80 39.5 Inventory ⎯ 50 ⎯ Net PP&E 522.0 20 104.4 Total 626.4 ⎯ 143.9

Enterprise Value for Claims Distribution

Greater of Going Concern Enterprise or Liquidation Value 1,350 Less Administrative Claims (10%) 135 Adjusted Enterprise Value for Claims 1,215

Distribution of Value Value Recovery Rate Concession Recovery Secured Priority Lien Recovered (%) Allocation Rating Notching Rating Senior Secured 0.0 ⎯ 0 ⎯ ⎯ ⎯ ⎯ Secured 0.0 ⎯ 0 ⎯ ⎯ ⎯ ⎯

Concession Payment Available Table Adjusted Enterprise Value for Claims 1,215 Less Secured Debt Recovery ⎯ Remaining Recovery for Unsecured Claims 1,215 Concession Allocation (5%) 61 Value to be Distributed to Senior Unsecured Claims 1,154

Value Recovery Rate Concession Recovery Lien Recovered (%) Allocation Rating Notching Rating Senior Unsecured 533.0 533.0 100 100 RR4 ⎯ B Unsecured 0.0 ⎯ 0 0 ⎯ ⎯ ⎯ Subordinated 0.0 ⎯ 0 0 ⎯ ⎯ ⎯ Junior Subordinated 0.0 ⎯ 0 0 ⎯ ⎯ ⎯ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Argentine corporates are capped at ‘RR4’. Source: Fitch.

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Organizational Structure — Cablevisión S.A. (ARS Mil., LTM As of March 31, 2010)

Summary Statistics Cablevisión S.A. EBITDA 1,579 IDR — B /Stable Outlook Cash and Marketable Securities 214 (ARS 2,068 Mil.) Total Debt 2,132 Amount Outstanding Rating Senior Unsecured Notes Due 2012 100.0 B Senior Unsecured Notes Due 2013 100.4 B Senior Unsecured Notes Due 2015 235.1 B Senior Unsecured Notes Due 2016 80.3 B Other 17.2 Total Debt 533.0

100% 70% 100% PEM S.A. Television Dirigida SAECA Adesol S.A.

70% 70% CV Verasategui S.A. Cablevision Comunicaciones SAECA Uruguay

100% 70% Cable Imagen SRL Consorcio Multipunto S.A.

100% 100% Wolves Television S.A. Teledeportes Paraguay S.A.

60% Aire Vision Internacional S.A. Paraguay

100% Prima S.A.

100% Fintelco S.A.

Argentina

Source: Fitch and Cablevision S.A. financial statements.

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Debt and Covenant Synopsis ⎯ Cablevisión S.A.

Overview Issuer Cablevisión S.A. Multicanal S.A.a Multicanal S.A.a Guarantors N.A. N.A. N.A. Document Date Indenture as of Sept. 6, 2005; Amendment Indenture as of July 19, 2006; Second Indenture as of July 19, 2006; Second at Dec.15, 2006 Amendment at July 20, 2006; Third Amendment at July 20, 2006; Third Amendment at Sept. 20, 2006; Fourth Amendment at Sept. 20, 2006; Fourth Amendment at Dec. 18, 2006; Fifth Amendment at Dec. 18, 2006; Fifth Amendment at March 30, 2007; Sixth Amendment at March 30, 2007; Sixth Amendment at Dec. 21, 2007; Seventh Amendment at Dec. 21, 2007; Eighth Amendment at June 30, 2009; Ninth Amendment at June 30, 2009. Amendment at Dec. 22, 2009. Maturity Date Oct. 7, 2012 and Oct. 7, 2015 June 20, 2013 July 20, 2016 Description of Debt USD150 million Step Up Sr. Unsecured USD139.9 million, 7% Sr. Unsecured Notes USD80.3 million Step Up Sr. Unsecured Notes due 2012 due 2013 (seven-year notes) Notes due 2016 (10-year notes) USD235.1 million Step Up Sr. Unsecured Notes due 2015 Financial Covenants Consolidated Leverage (Maximum) N.A. N.A. N.A. Interest Coverage (Minimum) N.A. N.A. N.A. Acquisitions / Divestitures Change of Control Change of control clause at 100% of N.A. N.A. Provision principal plus accrued and unpaid interests. Sale of Assets Neither the issuer nor subsidiaries can sell Neither the issuer nor subsidiaries cannot Same as Multicanal seven-year notes. Restriction assets other than asset sales at fair sell assets that will result in a material market value if it represents less than adverse effect and if such sale is higher 25% of the issuer’s consolidated than USD10 million, unless an operating cash flow. If after six months independent financial advisor has of the sale the asset is not replaced by delivered a valuation to the board of another asset, the proceeds of the sale directors and at a price consistent with will be considered as excess proceeds such valuation. and should be applied to repay the notes. There are no restrictions if proceeds are reinvested in the same industry. Debt Restrictions Additional Debt Neither the issuer nor subsidiaries are Neither the issuer nor subsidiaries are Same as Multicanal seven-year notes. Restriction allowed to incur additional debt except allowed to incur additional debt except permitted debt if total consolidated permitted debt if total consolidated debt to annualized pro forma debt to annualized pro forma consolidated operating cash flow is consolidated operating cash flow is lower than or equal to 5.5x. Permitted lower than or equal to 6.5x. Permitted debt includes debt used to refinance debt includes debt used to refinance existing or permitted indebtedness if it existing or permitted indebtedness if it is made pari passu or subordinated to is made pari passu or subordinated to the notes, subject to standard the notes, subject to standard limitations. Debt can also be incurred if limitations. Debt can also be incurred if it is related to performance bonds, it is related to performance bonds, obligations under the interest rate and obligations under the interest rate and currency agreements. currency agreements, and any other debt for USD25 million or less. Limitation on Secured Cablevisión and its subsidiaries may not Liens may not be incurred by issuer or any Same as Multicanal seven-year notes. Debt create any lien of any kind, other than significant subsidiary, unless: 1) such customary permitted liens, except: 1) subsidiary simultaneously executes and liens securing subordinated debt if the delivers a supplemental indenture to notes are secured by a lien that is senior the notes’ indenture providing for a to such lien and; 2) in the case of any guarantee by such subsidiary of other lien, if the notes are equally payment of the notes and 2) such secured. subsidiary waives and will not claim or take any right against the issuer or any other subsidiary as a result of any payment by such subsidiary under its subsidiary guarantee. aMulticanal S.A. merged with Cablevisión S.A. in 2006, and the merger was authorized in December 2007. Still, the merger needs to be registered by the Inspección General de Justicia. N.A. − Not applicable. Continued on next page. Source: Company and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ Cablevisión S.A. (Continued)

Restricted Payments If an event of default occured and is continuing, No material provision noted. No material provision noted. the issuer or subsidiaries are prohibited from making certain investments, including share repurchases and redeemption of subordinated debt, as well as replacing subordinated debt with new debt if the principal amount is higher than the one it is replacing or if average life is shorter. Dividend payments do not have to exceed the portion of consolidated operating cash flow that is not required to be applied as excess cash to redeem the notes. Excess cash means 85% of consolidated operating cash flow, capex, taxes paid, debt redemption, next six month of interest, and taxed change in working capital amounts transferred to the reserve account. Other Cross Default Cross default when an uncured event of default Cross default when an uncured Same as Multicanal seven-year notes. occurs for debt of more than USD10 million. event of default occurs for debt of more than USD10 million. Acceleration If any event of default occurs and is continuing, If any event of default occurs and is Same as Multicanal seven-year notes. the trustee or the holders of at least 50% of the continuing, the trustee or the outstanding notes may declare the notes to be holders of at least 25% of the due and payable. Notes become automatically outstanding notes may declare due and payable upon certain events of the notes to be due and payable. insolvency or bankruptcy. Holders of the Notes become automatically due majority of the outstanding notes may rescind a and payable upon certain events declaration of acceleration within 30 days. of insolvency or bankruptcy. Holders of the majority of the outstanding notes may rescind a declaration of acceleration within 30 days. Capital Expenditures Neither the issuer nor its subsidiaries can make Same as Cablevisión’s notes. N.A. capital expenditures for an amount that exceeds the greater than USD120 million or 70% of cash flow plus the accumulated and unused amount of permitted capex from previous periods. Reserve Account Cablevisión may maintain with the trustee outside The issuer may transfer any excess N.A. Argentina a reserve account for as long as the cash, calculated on a semi-annual notes are outstanding and may transfer basis, to two reserve accounts: amounts, so that the balance in the reserve 1) interests and principal due account at any time shall not exceed the over the next 12 months related greater of 1) 15% of the initial principal amount to seven-year notes; and of the Notes or 2) the aggregate amount of the 2) interests due over the next 12 interest and principal payments on the notes months related to 10-year notes. due within the 12 months following the date of measurement. In the event of a failure by Cablevisión to make an interest payment in part or in full on a timely basis on any of the notes, the trustee will promptly draw on any funds from the reserve account to cover such payment shortfall pro rata among any notes. The drawing by the trustee on any reserve account will not give rise to a cefault or an event of default under the notes. Amounts placed in the reserve account may not be withdrawn by Cablevisión. Notwithstanding the foregoing, for so long as no default or event of default under the notes shall have occurred and be continuing, Cablevisión may instruct the trustee to transfer funds that were deposited by Cablevisión in the reserve account to pay the purchase price for notes purchased in the open market or redeemed. N.A. − Not applicable. Continued on next page. Source: Company and Fitch Ratings.

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Debt and Covenant Synopsis — Cablevisión S.A. (Continued)

Cash Sweep The issuer will apply 100% of excess cash The issuer shall redeem the seven-year N.A. to prepay seven-year notes and after notes on a proportional basis by that note is fully paid, excess cash will applying: 1) 70% of any excess cash over be applied to prepay 10-year notes. the amount at the reserve account plus USD35 million; and 2) 100% of the net proceeds of any asset sale that has not been applied (there is a period of 181 days to reinvest such proceeds). Transactions with Transactions between issuer and affiliates Transactions between issuer and Same as Multicanal seven-year notes. Affiliates or subsidiaries, other than payments shareholders, affiliates, or subsidiaries, related to programming and technical other than payments related to assistance fees for more than programming agreements for more than USD10 million, shall require a fairness USD10 million shall require a fairness opinion. opinion. Limits on Restrictions on merger or consolidation of Restrictions on the merger or consolidation Same as Multicanal seven-year notes. Consolidations or issuer and subsidiaries. Exceptions of issuer and subsidiaries. Exceptions Mergers include 1) the merger of other entities include 1) merger with a fully owned with the issuer provided that surving subsidiary that has positive net worth entity will be the issuer or 2) another and the transaction does not imply any corporation existing under the laws of other delivery to shareholders other than Argentina or the U.S. provided that 1) no ordinary shares representative of the event of default occurs or is continuing, transaction; 2) any surving entity would 2) the company’s pro forma net worth assume all obligations of the issuer under increases, and 3) such transaction the indenture; 3) inmediatly after giving involves another cable-related business effect to the emrge no event of default that has an EBITDA greater than occurs. USD25 million for the four fiscal quarters immediately preceding such transaction. Any surving entity would assume all obligations of the issuer under the indenture. N.A. − Not applicable. Source: Company and Fitch Ratings.

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Financial Summary ⎯ Cablevisión S.A. (USD 000, Years Ended Dec. 31)

Period-End Exchange Rate 3.8765 3.799 3.4538 3.15 3.061 3.03 Average Exchange Rate 3.803 3.7279 3.1631 3.1165 3.0745 2.9224

LTM 3/31/10 2009 2008 2007 2006 2005 Profitability Operating EBITDA 415,206 394,166 366,067 276,870 155,437 111,264 Operating EBITDA Margin (%) 36.4 34.8 33.9 33.0 34.8 36.8 FFO Return on Adjusted Capital (%) 31.1 32.0 26.2 21.1 11.8 23.3 Free Cash Flow Margin (%) 17.3 17.1 6.5 6.5 20.6 21.7 Return on Average Equity (%) 23.2 18.2 9.8 7.4 5.9 403.9

Coverage (x) FFO Interest Coverage 8.0 7.1 5.0 3.9 4.6 2.0 Operating EBITDA/Gross Interest Expense 8.0 6.8 4.6 3.5 4.1 1.0 Operating EBITDA/Debt Service Coverage 3.7 3.6 2.3 2.0 1.7 0.7 Operating EBITDAR/Debt Service Coverage 3.7 3.6 2.3 2.0 1.7 0.7 FFO Fixed Charge Coverage 8.0 7.1 5.0 3.9 4.6 2.0 FCF Debt Service Coverage 2.2 2.3 0.9 1.0 1.4 1.2 (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage 2.7 2.6 1.3 1.3 2.1 1.8 Cash Flow from Operations/Capital Expenditures 2.3 2.3 1.3 1.3 2.4 2.7

Capital Structure and Leverage (x) FFO Adjusted Leverage 1.3 1.3 1.9 2.6 4.9 1.7 Total Debt with Equity Credit/Operating EBITDA 1.3 1.4 2.0 2.9 5.5 3.5 Total Net Debt with Equity Credit/Operating EBITDA 1.2 1.3 1.9 2.7 5.0 2.7 Implied Cost of Funds 8.2 9.1 10.4 9.6 6.1 14.6 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.1 0.1 0.1 0.1 0.1 0.1

Balance Sheet Total Assets 1,560,520 1,499,868 1,599,954 1,606,992 1,614,547 1,030,647 Cash and Marketable Securities 55,138 37,849 53,690 50,343 69,288 95,213 Short-Term Debt 60,469 51,638 80,607 57,887 55,611 42,070 Long-Term Debt 489,524 487,671 658,951 736,100 795,527 352,279 Total Debt 549,993 539,309 739,558 793,987 851,138 394,349 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 549,993 539,309 739,558 793,987 851,138 394,349 Off-Balance Sheet Debt 0 0 0 0 0 0 Total Adjusted Debt with Equity Credit 549,993 539,309 739,558 793,987 851,138 394,349 Total Equity 757,313 729,366 652,581 647,791 609,070 566,727 Total Adjusted Capital 1,307,306 1,268,675 1,392,139 1,441,778 1,460,208 961,076

Cash Flow Funds from Operations 363,349 355,927 319,097 228,069 134,397 117,934 Change in Working Capital (12,916) (8,532) (13,188) (9,306) 21,086 (13,339) Cash Flow from Operations 350,433 347,395 305,909 218,763 155,483 104,595 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 0 Capital Expenditures (152,758) (153,548) (236,194) (163,979) (63,751) (39,111) Dividends 0 0 0 0 0 0 Free Cash Flow 197,675 193,846 69,715 54,785 91,732 65,484 Net Acquisitions and Divestures (4,216) (107) (4,168) (4,986) (75,221) 0 Other Investments, Net 4,864 4,962 2,258 1,622 0 0 Net Debt Proceeds (131,264) (157,076) (40,871) (63,824) (53,211) (149,599) Net Equity Proceeds (19) (20) 0 0 0 54,014 Other, Financing Activities (39,861) (50,288) (18,152) (6,315) 85 (18,429) Total Change in Cash 27,179 (8,683) 8,781 (18,718) (36,615) (48,531)

Income Statement Net Revenue 1,139,981 1,131,729 1,080,420 838,432 446,289 302,309 Revenue Growth (%) (73.0) 4.7 28.9 87.9 47.6 19.8 Operating EBIT 300,716 277,902 255,824 178,187 99,210 67,911 Gross Interest Expense 51,715 57,895 79,562 78,971 37,822 113,925 Rental Expense 0 0 0 0 0 0 Net Income 159,626 125,546 63,448 46,205 34,948 698,647 Source: Fitch Ratings and Cablevsión S.A. financial statements.

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Financial Summary ⎯ Cablevisión S.A. (ARS 000, Fiscal Year Ended December)

Period-End Exchange Rate (ARS/USD) 3.88 3.80 3.47 3.15 3.06 3.03

LTM 3/31/10 2009 2008 2007 2006 2005 Profitability Operating EBITDA 1,579,029 1,469,412 1,157,905 862,865 477,892 325,159 Operating EBITDA Margin (%) 36.4 34.8 33.9 33.0 34.8 36.8 FFO Return on Adjusted Capital (%) 31.1 32.0 26.2 21.1 11.8 23.3 Free Cash Flow Margin (%) 17.3 17.1 6.5 6.5 20.6 21.7 Return on Average Equity (%) 23.2 18.6 9.3 7.4 6.0 384.9

Coverage (x) FFO Interest Coverage 8.0 7.1 5.0 3.9 4.6 2.0 Operating EBITDA/Gross Interest Expense 8.0 6.8 4.6 3.5 4.1 1.0 Operating EBITDA/Debt Service Coverage 3.7 3.6 2.2 2.0 1.7 0.7 FFO Fixed Charge Coverage 8.0 7.1 5.0 3.9 4.6 2.0 FCF Debt Service Coverage 2.2 2.3 0.9 1.0 1.4 1.1 (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage 2.7 2.6 1.2 1.3 2.1 1.8 Cash Flow from Operations/Capital Expenditures 2.3 2.3 1.3 1.3 2.4 2.7

Capital Structure and Leverage (x) FFO Adjusted Leverage 1.4 1.3 2.0 2.6 4.9 1.8 Total Debt with Equity Credit/Operating EBITDA 1.4 1.4 2.2 2.9 5.5 3.7 Total Net Debt with Equity Credit/Operating EBITDA 1.2 1.3 2.0 2.7 5.0 2.8 Implied Cost of Funds 8.2 9.4 10.0 9.6 6.1 14.2 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.1 0.1 0.1 0.1 0.1 0.1

Balance Sheet Total Assets 6,049,354 5,697,998 5,525,921 5,062,025 4,942,128 3,122,861 Cash and Marketable Securities 213,743 143,788 185,434 158,581 212,092 288,496 Short-Term Debt 234,409 196,174 278,399 182,343 170,226 127,472 Long-Term Debt 1,897,640 1,852,661 2,275,885 2,318,716 2,435,108 1,067,406 Total Debt 2,132,049 2,048,835 2,554,284 2,501,059 2,605,334 1,194,878 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 2,132,049 2,048,835 2,554,284 2,501,059 2,605,334 1,194,878 Off-Balance Sheet Debt 0 0 0 0 0 0 Total Adjusted Debt with Equity Credit 2,132,049 2,048,835 2,554,284 2,501,059 2,605,334 1,194,878 Total Equity 2,935,724 2,770,863 2,253,883 2,040,541 1,864,364 1,717,183 Total Adjusted Capital 5,067,773 4,819,698 4,808,167 4,541,600 4,469,698 2,912,061

Cash Flow Funds from Operations 1,381,816 1,326,859 1,009,335 710,777 413,204 344,650 Change in Working Capital (49,118) (31,808) (41,714) (29,001) 64,828 (38,983) Cash Flow from Operations 1,332,698 1,295,051 967,621 681,776 478,032 305,667 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 0 Capital Expenditures (580,939) (572,411) (747,104) (511,040) (196,001) (114,298) Dividends 0 0 0 0 0 0 Free Cash Flow 751,759 722,640 220,517 170,736 282,031 191,369 Net Acquisitions and Divestures (16,034) (400) (13,185) (15,540) (231,266) 0 Other Investments, Net 18,499 18,499 7,142 5,056 0 0 Net Debt Proceeds (499,198) (585,565) (129,280) (198,906) (163,598) (437,189) Net Equity Proceeds (74) (74) 0 0 0 157,850 Other, Financing Activities (151,591) (187,468) (57,418) (19,681) 260 (53,856) Total Change in Cash 103,361 (32,368) 27,776 (58,335) (112,573) (141,826)

Income Statement Net Revenue 4,335,346 4,218,974 3,417,476 2,612,972 1,372,115 883,469 Revenue Growth (%) 18.3 23.5 30.8 90.4 55.3 19.0 Operating EBIT 1,143,622 1,035,990 809,196 555,321 305,020 198,462 Gross Interest Expense 196,671 215,827 251,661 246,113 116,284 332,934 Rental Expense 0 0 0 0 0 0 Net Income 607,058 468,022 200,691 143,997 107,447 2,041,725 Source: Fitch Ratings and Cablevisión S.A. financial statements.

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Agribusiness Ceagro Agrícola Ltda. Brazil Full Rating Report

Ratings Rating Rationale Current Security Class Rating • Ceagro Agrícola Ltda.’s (Ceagro) ratings reflect the company’s small but growing Foreign Currency IDR B− position in the highly competitive Brazilian agricultural services sector, as well as Local Currency IDR B− its low operating margins and high working capital requirements. The company’s National Scale Rating BB+(bra) Senior Secured Notes B−/RR4 business primarily relates to the trading, transportation, and storage of grains. Physical trading volumes are facilitated by Ceagro, providing the farmer with its IDR − Issuer default rating. main inputs, fertilizers, and chemicals at planting. In return for the indirect financing of these key inputs, the farmer agrees to deliver a fixed volume of its Outlook harvest to Ceagro at predetermined prices. This business model has resulted in Stable strong growth in trading volumes and other related services, and has increased leverage and working capital needs over the last two years. Financial Data • The company sells the majority of delivered purchases to several large, financially Ceagro Agrícola Ltda. (BRL Mil.) strong domestic and multinational food producers and beverage companies. This LTM limits the company’s exposure to commodity price and counterparty risks. Spot 6/30/10 12/31/09 purchases are hedged to reduce exposure to commodity prices. Net Revenues 670.9 719.8 EBITDA 24.0 33.8 • Ceagro’s leverage is currently low, and the debt schedule is manageable. As of Funds from December 2009, Ceagro’s adjusted ratio of net debt/EBITDAR was 1.5x, and Fitch Operations 45.4 7.9 Total Debt 73.7 59.9 Ratings expects it to exceed 4.0x over the next year following the completion of Cash and the issue of secured notes. Ceagro’s net leverage ratio is then expected to Marketable Securities 20.4 6.2 gradually decline as the company’s operating cash flow should benefit from some of Adjusted Debt/ the additional working capital it will be able to extend to farmers with the EBITDA (x) 1.5 1.8 proceeds of the proposed notes. Analysts • Ceagro operates in a highly competitive industry characterized by low operating margins. Ceagro is small in comparison to some of the large trading companies it Gisele Paolino +55 21 4503-2600 competes with such as Cargill, Archer Daniels Midland (ADM), and Bunge. Although [email protected] improving over the last several years, the operating earnings of Ceagro are exposed Ricardo Carvalho to the supply and demand characteristics of the Brazilian agricultural industry. +55 21 4503-2600 Given the size of any particular crop, the price of logistical and trading services will [email protected] fluctuate as the demand to purchase the grain is influenced by these large multinational companies. The company’s EBITDAR margins have fluctuated between 3.5% to 5.0% over the last five years, which reflects the impacts of volume traded, the price of the commodity, and exchange rates. • Ceagro’s business model of financing the key agricultural inputs to farmers has allowed Ceagro to strengthen its ability to source trading volumes. While this model has been successful in securing new trading volumes, it results in large working capital needs. These requirements have pressured the company’s free cash flow, which has been negative over the last few years. Ceagro’s growth strategy and higher trading volumes should result in negative free cash flow through 2013, resulting in increasing debt levels and tighter liquidity levels. Key Rating Drivers • The ratings could be positively affected by sustainable improvement in Ceagro’s business profile and consistent reduction in its net leverage or increasing liquidity.

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• The ratings could be downgraded in the case of increased leverage levels or deterioration in Ceagro’s liquidity position beyond expectations. Significant changes in Ceagro’s risk management strategies resulting in a higher exposure to commodity prices and exchange rate volatility could also cause a negative rating action.

Credit Statistics for Processors and Traders Because of the large amount of debt incurred to finance operations ⎯ inventories and growers’ agricultural inputs ⎯ and the industry’s low margins compared to other food sectors, credit statistics for processors and traders are generally lower for a given rating level than industrial firms. However, agricultural commodity inventories are highly liquid and generally hedged against price risk. Liquid inventories plus cash and marketable securities may provide financial flexibility during periods of earnings volatility associated with agricultural cycles. This partially mitigates financial risk. Credit analysis for agricultural firms considers leverage ratios that excludes short- term debt used to finance rapidly marketable inventories (RMIs) that are hedged against price risk. Similarly, the interest expense on short-term debt used to finance RMIs and the interest income on the advance to suppliers are reclassified as cost of goods sold and operational income, respectively, when calculating adjusted EBITDA and EBITDA-to-interest coverage ratios. Rating Issues Please refer to Fitch’s full company report, “Ceagro Agrícola Ltda.,” dated Oct. 25, 2010, for more information regarding:

• Its business position. • Strategy. • Competitors. Liquidity and Debt Structure As of June 2010, Ceagro’s debt, adjusted by the RMIs, was BRL35 million. Ceagro’s main debt corresponds to working capital lines to finance its business ⎯ purchase of fertilizers and chemicals. A significant part of Ceagro’s debt is secured by assets and CPRs (Cedula do Produto Rural). The debt maturity schedule is manageable. A sizeable part of its financial debt is due beyond the next 12 months. Also, the company would benefit from refinancing its debt through a bullet transaction, which should increase its financial flexibility to support growth. Liquidity is tight. As of Dec. 31, 2009, Ceagro’s cash position was BRL6.2 million, while short-term debt was BRL17.3 million. However, if we consider the company’s RMIs of about BRL8 million as liquidity, the ratio of cash versus short-term obligations is adequate. Ceagro’s balance sheet reflects the seasonality of its business. As of June 2010, its cash position increased due to the harvest period. However, this cash should be used to finance fertilizer purchased during the subsequent quarter. Company Profile Founded in 1991 by Mr. Antonio Gonçalves Jr., who holds 99.8% of the company’s shares, Ceagro is engaged in the commercialization of grains, mainly soybean and corn. Ceagro’s operations are based on the purchase, sale, and storage of grains, mainly

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soybean and corn. This activity accounted for 85% of its net revenues in 2009 (45% soybean and 40% corn). Ceagro also crushes soy in rented industrial facilities, selling the meal and oil in the market, which complements the trading activity. This activity accounted for 13% of the company’s revenues in 2009. The remaining 2% are related to the sale of other products such as wheat, sorghum, and oils of animal origin. Approximately 60% of Ceagro’ sales are destined to the domestic market, particularly to the food and beverage industries as well as other crushers and traders. Sales are strongly linked to the level of economic activity and the performance of the agribusiness in Brazil. Ceagro’s strategy is to maintain a balanced relation between domestic sales and exports, thus mitigating risks. The company’s main domestic clients are the large companies within this sector such as Corn Products, BRFoods, AmBev, ADM, and Bunge, among others. Business Model As a general characteristic of the sector, Ceagro faces strong competition in grain origination. It competes with important traders and crushers in the regions where it operates. The advance to suppliers’ policy, also practiced by Ceagro, is an important competitive advantage of the traders in the region of Mato Grosso, the company’s main origination state. On the other hand, Ceagro could be in a less privileged position versus its competitors given that its logistics costs tend to be higher than the larger traders that count on their own networks. Currently, around 60% of Ceagro’s soybean purchases are concentrated in the state of Mato Grosso (MT), with the remaining portion coming from Mato Grosso do Sul (MS), Goiás (GO) and Paraná (PR). Ceagro has an origination portfolio comprised of approximately 450 producers. Aiming at guaranteeing the supply, the company advances resources to producers, generally by supplying fertilizers. Its credit policy is conservative, and all of its suppliers are registered and monitored. Moreover, each individual producer receives advances equivalent to a maximum 40% of the respective expected production. Repayment is secured for these advances with physical delivery of the crop at harvest. The delivery obligation of the farmer to Ceagro is secured by a CPR contract and is also sometimes supported by a mortgage on the farmer’s land as additional collateral. Ceagro has originated approximately 70% of its grain needs through advances to producers, and the remaining 30% have been purchased in the spot market. Logistics Ceagro is strongly dependent upon third-party assets to run various aspects of its business, which could limit the trading capacity as well as pressure its operational margins. Storage and transportation capacity are leased through take-or-pay contracts and fixed rental prices. The freight and storage costs are the main operating expenses of Ceagro. Before each crop season begins, the company contracts freight services at fixed prices to transport the grain to leased and owned storage facilities and then ultimately to the off-taker’s desired destination. Ceagro currently has 540,000 tons and 105,000 tons of leased and owned storage capacity, respectively, which meets 100% of its current trading requirements. Competition Ceagro faces strong competition in grain origination. It competes with important traders and crushers, such as ADM, Cargill, Bunge, and Amaggi, among others. Logistics costs and financial flexibility to support high working capital requirements are key factors within the sector.

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Organizational Chart — Ceagro Agrícola Ltda.

Antônio Carlos Gonçalves Jr. and Family 100%

Ceagro Participações e Empreendimentos Ltda. 100%

Ceagro Agricola Ltda.

99.99% 99.99%

Ceagro Exp. E Imp. Ceagro Armazens Ltda. Gerais Ltda.

Source: Ceagro.

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Recovery Analysis ⎯ Ceagro Agrícola Ltda. (USD Mil.)

Going Concern Enterprise Value June 30, 2010 LTM EBITDA 13.3 Discount (%) 25 Post-Restructuring EBITDA Estimation 10.0 Multiple (x) 4.0 Going Concern Enterprise Value 39.9

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 12.4 Rent Expense 1.3 Estimated Maintenance Capital Expenditures 0.4 Total 14.1

Available to Enterprise Value for Claims Distribution Creditors Greater of Going Concern Enterprise or Liquidation Value 40.6 Less Administrative Claims (10%) 4.1 Adjusted Enterprise Value for Claims 36.5

Distribution of Value Secured Priority Lien Value Recovered Recovery (%) Recovery Rating Notching Rating Secured ⎯ ⎯ ⎯ ⎯ ⎯ ⎯

Concession Payment Availability Table Adjusted Enterprise Value for Claims 36.5 Less Secured Debt Recovery ⎯ Remaining Recovery for Unsecured Claims 36.5 Concession Allocation (5%) ⎯ Value to be Distributed to Senior Unsecured Claims ⎯

Concession Recovery Unsecured Priority Lien Value Recovered Recovery (%) Allocation (%) Rating Notching Rating Senior Unsecured a 100 36.5 37 100 RR4 0 B− Unsecured 0 ⎯ 0 ⎯ ⎯ ⎯ ⎯ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Brazilian corporates are capped at ‘RR4’. Source: Fitch.

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Debt and Covenant Synopsis ⎯ Ceagro Agrícola Ltda.

Overview Issuer Ceagro Agrícola Ltda Guarantors Ceagro Participações e Empreendimentos Ltda. Document Date Oct. 20, 2010 Maturity Date May 16, 2016 Description of Debt Senior Secured Notes Amount USD100 Million

Limitation on Indebtedness Financial Covenant The issuer will not, and will not permit any restricted subsidiary to, incur any indebtedness; provided, however, that the issuer or any restricted subsidiary may incur indebtedness if on the date of such incurrence and after giving effect thereto and the application of the proceeds therefrom, the issuer’s net debt-to-EBITDA ratio would not be greater than 3.25x. Limitation on Additional Debt Neither the issuer nor the issuer may incur indebtedness that is subordinate in right of payment to other indebtedness of the issuer or the issuer unless such indebtedness is also subordinate in right of payment to the notes or the note guarantee on substantially identical terms, provided, however, that no indebtedness will be deemed to be subordinated in right of payment to any other indebtedness solely by virtue of being unsecured or by virtue of being secured on a senior or subordinated basis.

Limitation on Lien Lien on the Collateral Except as provided for under the Indenture and the other collateral documents, the issuer shall not, and shall not permit any of its subsidiaries to, create or permit to exist any lien on the collateral. Lien Upon Assets The issuer will not, and will not permit any restricted subsidiary to, issue, assume, or guarantee any indebtedness secured by a lien upon any property or assets of the issuer or any restricted subsidiary without effectively providing that the notes together with, if the issuer so determines, any other indebtedness or obligations then existing or thereafer created or, in respect of liens on any property or assets of the issuer, the note guarantee, shall be secured equally and ratably with or prior to such indebtedness for so long as such indebtedness shall be so secured; provided, however, that any lien created for the benefit of the noteholders (and, if applicable, holders of such other indebtedness or obligations) pursuant to the foregoing shall provide by its terms that such lien will be automatically and unconditionally released and discharged upon release and discharge of the initial lien. Limitation on Sales of Assets and Sale and Lease-Back Transactions Asset Disposition Restriction The issuer will not, and will not permit any restricted subsidiary to, make any asset disposition unless: (a) the asset disposition is for fair market value; (b) at least 75% of the consideration consists of all or part of any of cash and temporary cash investments or additional assets; (c) within 365 days after the receipt of any net available cash from an asset disposition, the net available cash is used to permanently repay indebtedness, other than subordinated obligations, of the issuer or of any of its restricted subsidiaries; to acquire all or substantially all of the assets of a related business, or a majority of the voting stock of another person that thereupon becomes a restricted subsidiary engaged in a related business, or to make capital expenditures or otherwise acquire long-term assets that are to be used in a related business; or to acquire additional assets for the issuer or its restricted subsidiaries. Sale and Lease-Back The issuer will not, and will not permit any restricted subsidiary to, enter into any sale and lease-back transaction. Transactions Restriction

Limitation on Transactions with Affiliates and Dividens Distribution Transactions with Affiliates The issuer will not, and will not permit any restricted subsidiary to, enter into any transaction (or series of related Restriction transactions) with any affiliates, including any investment, either directly or indirectly, unless (a) such transaction or series of related transactions are on terms no less favorable to the issuer or such restricted subsidiary, as the case may be, than those that could have been obtained in a comparable arm’s-length transaction with an unrelated third party; and (b) the issuer delivers to the trustee with respect of any affiliate transaction or series of related affiliate transactions involving aggregate consideration in excess of USD2 million, an officer’s certificate stating that such affiliate transaction complies with this covenant and that such affiliate transaction has been approved by the management of the issuer; and with respect of any affiliate transaction or series of related affiliate transactions involving aggregate consideration in excess of USD10 million, an opinion as to the fairness to the issuer, or such restricted subsidiary of such affiliate transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of recognized standing. Dividends Restriction The issuer will not, and will not permit any restricted subsidiary to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any restricted subsidiary to pay dividends or make any other distributions on its capital stock to the issuer or any restricted subsidiary; pay any indebtedness owed to the issuer or any restricted subsidiary; make loans or advances to the issuer or any restricted subsidiary; or transfer any of its properties or assets to the issuer or any restricted subsidiary. Source: Company and Fitch Ratings.

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Financial Summary ⎯ Ceagro Agrícola Ltda. (BRL Mil.)

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 24,002 33,757 21,075 16,747 6,934 Operating EBITDAR ⎯ 35,932 22,723 17,529 7,360 Operating EBITDA Margin (%) 3.6 4.7 3.2 4.4 4.5 Operating EBITDAR Margin (%) ⎯ 5.0 3.4 4.6 4.8 Funds from Operations Return on Adjusted Capital (%) (23.3) 8.7 26.4 ⎯ ⎯ Free Cash Flow Margin (%) (12.1) (3.2) (1.4) ⎯ ⎯ Average Return on Equity (%) 14.6 36.1 31.8 ⎯ ⎯ Coverage (x) FFO Interest Coverage ⎯ 4.2 9.8 ⎯ ⎯ Operating EBITDA/Interest Expense ⎯ 13.9 9.3 13.7 5.1 Operating EBITDAR/Interest Expense + Rents ⎯ 7.8 5.8 8.8 4.1 Operating EBITDA/Debt Service Coverage ⎯ 1.7 3.9 1.6 1.1 Operating EBITDAR/Debt Service Coverage ⎯ 1.6 3.2 1.5 1.1 FFO Fixed Charge Coverage ⎯ 2.7 6.1 ⎯ ⎯ FCF Debt Service Coverage ⎯ (1.0) (1.3) ⎯ ⎯ (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage ⎯ (0.7) (0.7) ⎯ ⎯ Cash Flow from Operations/Capital Expenditures 194.0 (29.6) (7.3) ⎯ ⎯ Capital Structure and Leverage (x) FFO Adjusted Leverage (1.6) 5.7 1.7 ⎯ ⎯ Total Debt with Equity Credit/Operating EBITDA 1.5 1.5 1.0 0.3 0.5 Total Net Debt with Equity Credit/Operating EBITDA 0.6 1.3 0.9 (0.1) (0.2) Total Adjusted Debt/Operating EBITDAR ⎯ 1.7 1.3 0.6 0.8 Total Adjusted Net Debt/Operating EBITDAR ⎯ 1.5 1.2 0.1 0.1 Implied Cost of Funds ⎯ 5.3 11.0 15.8 21.5 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.4 0.3 0.1 0.9 0.9 Balance Sheet Total Assets 198,997 138,635 84,325 49,196 29,908 Cash and Marketable Securities 20,391 6,213 3,097 7,263 4,841 Short-Term Debt 26,479 17,339 3,157 9,321 5,212 Long-Term Debt 47,268 42,607 28,212 524 398 Total Debt 73,747 59,946 31,369 9,845 5,610 Equity Credit (38,736) (8,602) (8,864) (4,168) (2,176) Total Debt with Equity Credit 35,011 51,344 22,505 5,677 3,434 Off-Balance Sheet Debt ⎯ 10,875 8,240 3,910 2,130 Total Adjusted Debt with Equity Credit ⎯ 62,219 30,745 9,587 5,564 Total Equity 120,912 72,999 50,651 36,756 22,881 Total Adjusted Capital 194,659 143,820 90,260 50,511 30,621 Cash Flow Funds from Operations (45,364) 7,857 19,946 ⎯ ⎯ Change in Operating Working Capital (36,514) (30,105) (27,997) ⎯ ⎯ Cash Flow from Operations (81,878) (22,248) (8,051) ⎯ ⎯ Total Non-Operating/Non-Recurring Cash Flow 0 0 0 ⎯ ⎯ Capital Expenditures 422 (751) (1,096) ⎯ ⎯ Dividends 0 0 0 ⎯ ⎯ Free Cash Flow (81,456) (22,999) (9,147) ⎯ ⎯ Net Acquisitions and Divestitures 0 (27) (14,511) ⎯ ⎯ Other Investments, Net 0 0 0 ⎯ ⎯ Net Debt Proceeds 8,911 26,142 19,491 ⎯ ⎯ Net Equity Proceeds 30,001 0 0 ⎯ ⎯ Other Financing, Net 0 0 0 ⎯ ⎯ Total Change in Cash (42,544) 3,116 (4,167) ⎯ ⎯ Income Statement Net Revenues 670,909 719,820 661,412 381,145 154,566 Revenue Growth (%) ⎯ 9 74 147 79 Operating EBIT 23,923 33,668 20,739 16,747 6,934 Gross Interest Expense N.A 2,437 2,269 1,219 1,349 Rental Expense N.A 2,175 1,648 782 426 Net Income 14,588 22,349 13,894 13,875 4,925 N.A. − Not available Source: Fitch Ratings.

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Building Materials CEMEX, S.A.B. de C.V. Mexico Full Rating Report CEMEX España and Rinker Materials Corporation

Ratings Rating Rationale Current Security Class Rating • The ‘B’ ratings of CEMEX, S.A.B. de C.V. (CEMEX) and its subsidiary, CEMEX España, CEMEX, S.A.B. de C.V. reflect the company’s high leverage and the weak, near-term cash flow prospects Foreign Currency IDR B Local Currency IDR B for two of the company’s three key markets ⎯ the United States and Spain. The Senior Unsecured Debt B+/RR3 ratings take into consideration CEMEX’s ability to refinance its bank debt if needed Senior Secured Debt B+/RR3 Long-Term National Scale BB−(mex) and its access to the debt capital markets. Programa Dual Revolvente de Certificados Bursatiles (PDRCB) BB−(mex) • Fitch expects CEMEX to generate USD2.550 billion of EBITDA during 2010, a decline Unsecured Debt Issued Through from USD2.678 billion during 2009. The drop in operating cash flow is due to weaker the Local Debt Programs BB−(mex) Short-Term National Scale B(mex) demand for cement in Mexico and key markets in Europe such as Spain. The Short-Term Portion of PDRCB B(mex) weakness of the euro and British pound will also diminish the company’s 2010 U.S. CEMEX España Foreign Currency IDR B dollar results. Fitch projects that CEMEX will end 2010 with USD17.9 billion of total Senior Unsecured Debt B+/RR3 debt and USD17.2 billion of net debt, declines from USD19.3 billion and Rinker Materials Corporation Senior Unsecured Debt B+/RR3 USD18.3 billion, respectively, during 2009. These figures would result in a total debt-to-EBITDA ratio of 6.8x and a net debt-to-EBITDA ratio of approximately 6.5x. IDR − Issuer default rating. • CEMEX’s ratings reflect a manageable near-term liquidity profile due to multiple Rating Outlook financial undertakings during the past year that resulted in the prepayment of Positive USD5.0 billion of debt subject to the financing agreement, in addition to about USD300 million of Mexican capital markets (certificados bursatiles) debt due Financial Data between 2010 and 2012. CEMEX had USD752 million of cash and marketable CEMEX, S.A.B. de C.V. securities as of June 30, 2010 and USD485 million of debt falling due before the end (MXN Mil.) 12/31/09 12/31/08 of 2010. CEMEX faces maturities of approximately USD382 million in 2011, Revenues 197,801 243,201 Total Adjusted Debt 276,228 317,085 USD1.3 billion in 2012, USD2.4 billion in 2013 and USD8.2 billion in 2014. All but FFO 29,732 30,564 USD1.3 billion of the debt due in 2013 and 2014 is related to the financing EBITDAR 39,458 50,987 agreement. Cash and Market Securities 14,104 13,604 FFO Adjusted • The ratings take into consideration the aggressive measures taken by CEMEX to Leverage (x) 5.9 7.4 deleverage and improve its liquidity profile and build in an expectation that the Adjusted Net company will continue to lower absolute debt. Steps taken by CEMEX to improve its Debt/EBITDAR (x) 6.6 6.0 EBITDA/Debt Service capital structure since signing the financing agreement in August 2009 include: the Coverage (x) 1.7 0.5 issuance of USD1.9 billion of equity (September 2009); the sale of assets in Australia

for USD1.7 billion (October 2009); the exchange of USD320 million of certificados Analysts bursatiles for mandatory convertible notes; the issuance of approximately Joe Bormann, CFA USD2.2 billion of USD and euro notes (December 2009−January 2010); the issuance +1 312 368-3349 of USD715 million of subordinated convertible notes (March 2010); and the [email protected] exchange of USD1.559 billion of perpetual bonds for USD1.222 billion of fixed notes (May 2010). • The ratings continue to reflect CEMEX’s strong business position in several markets and its ability to generate free cash flow during 2009 despite the sharp contraction in the demand for cement. The company’s operating and free cash flow should increase sharply once underlying business conditions improve due to its operating leverage. A rebound that would be substantial enough to accelerate debt reduction is not expected to occur until at least 2012. • During 2009, CEMEX generated USD1.160 billion of EBITDA in Mexico, USD143 million in the United States, and USD204 million in Spain. These results are significantly

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below EBITDA levels of approximately USD1.4 billion in Mexico and the United States during 2007 and USD600 million in Spain. The outlook for a rebound in Spain in the near term is poor. Government infrastructure spending should improve public sector demand for cement in the U.S. during 2010 and 2011. Cement demand for residential, commercial, and industrial projects is expected to remain weak in the company’s key markets of California, Arizona, Texas, and Florida during 2010 and 2011. • Fitch expects CEMEX to seek and obtain an amendment to its Aug. 14, 2009 financing agreement within the next few months to alleviate a potential covenant pressure. According to the financing agreement, the financial covenant for the maximum funded debt-to-EBITDA ratio declines from 7.75x as of June 30, 2010 to 6.75x as of Dec. 31, 2010, to 5.75x as of June 30, 2011, and to 5.25x as of Dec. 31, 2012. Excluded from the definition of debt for this calculation is USD715 million of convertible subordinated notes issued by the company during March 2010, as well as approximately USD320 million of mandatory convertible debentures issued during December 2009. Fitch’s projections indicate the company could exceed the covenant at the end of 2010 (6.78x projected by Fitch). • Covenants to several debt agreements will be suspended if CEMEX receives two investment grade ratings and no default or events of default have occurred. The strong negative correlation that many of the company’s markets displayed during 2008 and 2009 has reduced some of the benefits CEMEX’s ratings have received historically for geographic diversification. As a result, Fitch will expect the company’s credit protection measures to exceed historical levels before an upgrade to investment grade. What Could Trigger a Rating Action? • Positive rating actions could result from: o Debt reduction due to strong free cash flow generation, an equity issuance, and/or asset sales. o A refinancing of the company’s financing agreement that would reschedule the company’s 2013 and 2014 debt obligations of USD2.4 billion and USD6.9 billion, respectively. • Negative rating actions could result from: o A sustained deterioration of the company’s business in the U.S., the U.K., and Spain and a sharp downturn in the company’s businesses in Mexico. o A change in the relationship of the company with its key banks and the Mexican government. Rating Issues Please refer to Fitch’s full company report, “CEMEX, S.A.B. de C.V. (CEMEX),” dated Aug. 31, 2010, for more information regarding:

• Company profile and management strategy. • Industry risk. • Operating environment and performance. • Cash flow outlook.

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Debt Structure CEMEX ended June 30, 2010 with USD752 million of cash and marketable securities. During the last six months of 2010, the company faces USD485 million of debt maturities; it has USD382 million of obligations maturing during 2011.The company’s total debt as of June 30, 2010 totals USD17.970 billion, of which about USD300 million is secured by property, plant, and equipment. The company has about USD500 million of operating company bank debt outside of its financing agreement. Its capital markets debt and the debt subject to the financing agreement principally consist of the following: Debt Subject to the Aug. 14, 2009 Financing Agreement On Aug. 14, 2009, CEMEX reached an agreement with 75 bank and private placement note holders for the comprehensive refinancing of USD15 billion of debt. As of June 30, 2010, USD9.6 billion of this debt remained outstanding. The original debt associated with the financing agreement was tied together through an intercreditor agreement. The original debt obligors and guarantors, with the exception of CEMEX Inc. and CEMEX Australia, provide cross guarantees over all of the debt associated with the agreement. The debt is secured by a first priority interest over a collateral package that consists of all of the shares of CEMEX México, CEMEX España, New Sunward Holding B.V., and numerous other subsidiaries. The amortization schedule for this debt is USD616 million in 2012, USD2.312 billion in 2013, and USD6.634 billion on Feb. 14, 2014. CEMEX, S.A.B. de C.V. CEMEX had USD1.6 billion of debt issued in the Mexican capital markets in pesos, most of which falls due between 2010 and 2013. More than USD200 million of this debt was prepaid during May 2010 with proceeds from the subordinated convertible bond. This debt has been issued by CEMEX, S.A.B. de C.V. in Mexico and is guaranteed by CEMEX México, S.A. de C.V. and Empresas Tolteca de México, S.A. de C.V. As a result of the financing agreement, it now has the same collateral package as the debt subject to that agreement. CEMEX, S.A.B. de C.V. issued USD715 million of optionally convertible subordinated notes due 2015 during March 2010. These notes are structurally subordinated to all operating company debt. They are not guaranteed by any subsidiary nor do they have a collateral package attached to them. This debt does not count as debt in the leverage covenant of the financing agreement. In addition to the aforementioned, CEMEX, S.A.B. de C.V. issued MXN4.126 billion (USD330 million) of mandatory convertible notes. These convertible notes mature in 2019. This debt also does not count as debt in the leverage covenant of the financing agreement. New Sunward New Sunward Holding B.V. is an intermediated holding company domiciled in the Netherlands that is located directly above CEMEX España and indirectly below CEMEX México, S.A. de C.V. Through a British Virgin Island SPV it has issued four series of debentures. Following an exchange offering completed during May 2010, USD964 million and EUR266 million of these callable perpetual debentures remain outstanding. The notes are not guaranteed by CEMEX, S.A.B. de C.V. or its subsidiaries. They only have recourse to a similar amount of callable perpetual dual-currency notes issued by New Sunward Holding Financial Ventures B.V. The note issuer’s obligations are guaranteed unconditionally and irrevocably by CEMEX, S.A.B. de C.V., CEMEX México, S.A. de C.V., and New Sunward Holding B.V. These notes have the same collateral package as the financing agreement debt.

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CEMEX España, S.A. On May 12, 2010, CEMEX España issued USD1.068 billion of senior secured notes due in 2020 and EUR115 million of senior secured notes due in 2017 through its Luxembourg branch. These notes are guaranteed by CEMEX, S.A.B. de C.V., CEMEX México, S.A. de C.V., and New Sunward Holding B.V. These notes also have the same collateral package as the financing agreement debt. CEMEX Finance Europe B.V. CEMEX España’s Dutch subsidiary, Cemex Finance Europe B.V., issued EUR900 million of notes due March 5, 2014 during 2007. These notes are guaranteed by CEMEX España. They are not secured by the security package created with the financing agreement. CEMEX Finance LLC CEMEX Finance LLC is a limited liability corporate incorporated in the U.S. It issued USD1.750 billion of notes due in 2016 and EUR350 million of notes due in 2017. This debt is guaranteed by CEMEX, S.A.B. de C.V. and its Mexican subsidiaries ⎯ CEMEX México, S.A. de C.V., CEMEX Concretos, S.A. de C.V., and Empresas Tolteca de México. It has also been guaranteed by CEMEX España and its United States subsidiary, CEMEX Corp. S.A. de C.V., as well as New Sunward Holding B.V., a Dutch intermediate holding company. This debt is secured by the same security package as the financing agreement. Cemex Materials LLC Cemex Materials LLC, formerly known as Rinker Materials LLC, has a USD150 million bond due June 21, 2025. These notes are guaranteed by CEMEX Corp., a United States subsidiary of CEMEX España. This bond is not secured by the security package created with the financing agreement. Recovery Rating The recovery ratings for CEMEX’s capital markets debt instruments reflect Fitch’s expectation that the company’s creditors would have an above average recovery consistent with a recovery rating of RR3. CEMEX and its subsidiaries have issued debt instruments from Mexico, the U.S., the Netherlands, and Spain. The guarantors of these instruments are also domiciled in various countries, and there has not been a consistent guarantor group for all of the company’s capital markets debt. As a result of the complexity of the company’s capital structure and the various legal jurisdictions, Fitch does not envision a bankruptcy scenario for CEMEX in the event of additional financial distress. Consequently, a liquidation analysis was not performed. The most likely scenario would be a negotiated restructuring of the debt subject to the financing agreement and the company’s additional capital markets debt. In deriving a distressed enterprise valuation to determine the recovery under this scenario, Fitch discounts the company’s LTM EBITDA to a level that would cover operating leases and interest expenses, as well as maintenance capital expenditures. This level of EBITDA is consistent with the weak position of the company during 2009 ⎯ especially in the U.S. and Spain ⎯ and would reflect an additional drop of about USD300 million in EBITDA that would most likely come from the company’s Mexican operations, which performed relatively well during 2009. Fitch has applied a 5.0x distressed EBITDA multiple. This is a very conservative multiple, approximately half of the multiple of which the company sold its Australian operations to Holcim for during September 2009. This multiple reflects the uncertainty about the cement industry and CEMEX’s future cash flow that would have to exist for the banks to decide to forego an extension of the 2013 and 2014 debt obligations. A low multiple also reflects high leverage within the sector and a view that there would not

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be a competitive bidding environment for the company’s if the view of the company and the industry was so negative that the banks refused to extend the company’s 2013 and 2014 financing agreement obligations. Despite using a conservative multiple and an EBITDA consistent with the recovery rating of RR3 that has been assigned to the company’s capital markets, debt reflects an above average recovery for the creditors.

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Recovery Analysis ⎯ CEMEX, S.A.B. de C.V. (USD Mil.)

Going Concern Enterprise Value June 30, 2010 LTM EBITDA 2,419 Discount (%) 10 Post-Restructuring EBITDA Estimation 2,177 Multiple (x) 6.0 Going Concern Enterprise Value 13,063

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 1,320 Rent Expense 250 Estimated Maintenance Capital Expenditures 700 Total 2,270

Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value 13,063 Less Adminstrative Claims (10%) 1,306 Adjusted Enterprise Value for Claims 11,756

Distribution of Value Value Recovery Recovery Secured Priority Lien Recovered (%) Rating Notching Rating Debt Secured by PPE 250 250 100 RR1 +3 BB

Concession Payment Availability Table Adjusted Enterprise Value for Claims 11,756 Less Secured Debt Recovery 250 Remaining Recovery for Unsecured Claims 11,506

Value Recovery Concession Recovery Unsecured Priority Lien Recovered (%) Allocation (%) Rating Notching Rating Issuer Default Rating ⎯ ⎯ ⎯ ⎯ ⎯ ⎯ B Senior Secured and Unsecured 17,720 11,506 65 100 RR3 +1 B+ Note: The amount of concession payments is highly dependent on circumstances, but Fitch typically allows up to 5% of the recovery value available to senior unsecured creditors to be allocated to concession payments. Concession payments allocated to subordinated debt should never result in higher recoveries than those of senior unsecured debt. Source: Fitch Ratings.

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Organizational Structure — CEMEX, S.A.B. de C.V. (USD/Euro Mil., Unless Otherwise Stated)

2009 Summary Statistics CEMEX, S.A.B. de C.V. (Mexico) USD2.7 Bil. EBITDA USD1,174 Mexico USD1.4 Bil. Certificados Bursatiles USD131 U.S. (as of March 31, 2009) USD203 Spain USD39 United Kingdom 100% USD386 Rest of Europe CEMEX Mexico, S.A. de C.V. 100% CEMEX Mexico, S.A. de C.V. USD533 Central and South America, (Mexico) (Mexico) Caribbean USD347 Africa and Middle East 100% USD129 Asia USD(264) Others Centro Distribuidor de Cement, USD1.1 Bil. Cash and Marketable S.A. de C.V. Securities (Mexico) New Sunward Holding Financial Ventures B.V. USD19.3 Bil. Total Debt 100% (Netherlands) USD10.8 Bil. Subject to Financing 100% Agreement New Sunward Holding B.V. C-10, Perpetual, EUR730 Dual Currency Notes (EUR266 Outstanding) EUR900 Cemex Finance Europe Note Due (Netherlands) C-8, Perpetual, USD750 Dual Currency Notes (USD369 Outstanding) 2014 100% C-5, Perpetual, USD350 Dual Currency Notes (USD147 Outstanding) USD1.5 Bil. of CEMEX S.A.B de C.V. C-10, Perpetual, USD900 Dual Currency Notes (USD449 Outstanding) Certificados Bursatiles CEMEX España, S.A. USD166 Rinker Notes Due 2025 (Spain) USD500 Other Subsidiary Bank Debt USD1.068 Bil. Notes Due 2020 Multiple International Subsidiaries USD1.8 Bil. Capitalized Operating Leases EUR115 Notes Due 2017

100% 100% 100%

CEMEX Finance LLC CEMEX FinanceEuropeB.V. (USA) (The Netherlands) CEMEX Corp. USD1.750 Bil. Note Due 2016 EUR900 Note Due 2014 (USA) EUR350 Note Due 2017 Both notes were issued in May 2010.

100%

CEMEX Inc. (USA)

100%

CEMEX Materials LLC (USA) Guarantee of USD150 Rinker Notes Due 2025

Source: Fitch and CEMEX, S.A.B. de C.V. financial statements.

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Debt and Covenant Synopsis ⎯ CEMEX

Overview Issuer CEMEX, S.A.B. de C.V.a CEMEX España Cemex Finance LLC CEMEX España Finance LLCa CEMEX España, S.A.a CEMEX Materials LLCa New Sunward Holding B.V.a

Guarantors CEMEX, S.A.B. de C.V.b CEMEX, S.A.B. de C.V. CEMEX, S.A.B. de C.V. CEMEX España Finance LLCb CEMEX México, S.A. de C.V. CEMEX México, S.A. de C.V. CEMEX España, S.A.b New Sunward Holding B.V. CEMEX España CEMEX Australia Holdings PTY Ltdb CEMEX Corp. CEMEX Concretos, S.A. de C.V.b CEMEX Concretos, S.A. de C.V. CEMEX Corp.b Empresas Tolteca de México, S.A. de C.V. CEMEX, Inc.b New Sunward Holding B.V. CEMEX México, S.A. de C.V.b Empresas Tolteca de México, S.A. de C.V.b New Sunward Holding B.V.b Document Date 8/14/09 5/12/10 12/14/09 Maturity Date Amortizing between 2009 and 2013 5/12/17 and 5/12/20 12/14/16 and 12/14/17 Description of Debt Syndicated and Bilateral Bank Loans, as well as USD1.068 Bil., 9.250%, New Senior Secured USD1.750 Bil., 9.500% due 12/14/16. Private Placements. Note due 5/12/20. USD15 Bil. Originally. EUR115 Mil., 8.875%, New Senior Secured EUR350 Mil., 9.625% due 12/14/17. Note due 5/12/17. USD10.2 Bil. outstanding as of 3/31/10 ⎯ USD190 Mil. (2010), USD790 Mil. (2011), USD2.382 Bil. (2012), and USD6.835 Bil. (2013). Financial Covenants Consolidated Maximum leverage not to exceed 7.5x for the period No material provision noted. No material provision noted. Leverage ending 6/30/10, decreasing incrementally in semi- (Maximum) annual periods to 3.5x by 12/31/13. Near-term maximum ratios are 6.75x (12/10), 5.75x (6/11) and 5.25x (12/12). Interest Coverage Minimum consolidated EBITDA coverage of not less than No material provision noted. No material provision noted. (Minimum) 1.75x for each semi-annual period through 6/30/11; 2.00x through 12/31/12; and 2.25x through the remaining semi-annual periods through 12/31/13. Acquisitions/Divestitures Change of Change of control is an event of default if 1) the Holders of notes have the right to require Holders of notes have the right to require Control Provision beneficial ownership of 20% or more of the voting the issuer to purchase all or a portion of the issuer to purchase all or a portion power of CEMEX is acquired by anyone other than notes at 101% of principal, plus accrued of notes at 101% of principal, plus Lorenzo Zambrano or any member of his immediate and unpaid interest, upon occurrence of accrued and unpaid interest, upon family; 2) all or substantially all of the assets of CEMEX change of control. Change of control is occurrence of change of control. and its consolidated subsidiaries are sold; or 3) any defined as the acquisition of 20% or more Change of control is defined as the borrower or guarantor is sold and the proceeds are not of the voting stock of Cemex by anyone acquisition of 20% or more of the used to repay financing agreement debt. other than Lorenzo Zambrano or any voting stock of Cemex by anyone member of his immediate family. other than Lorenzo Zambrano or any member of his immediate family. Sale of Assets Numerous customary asset dispositions are included in 1) At least 80% of the proceeds in cash and 1) At least 80% of the proceeds in cash Restriction permitted disposals. Asset dispositions beyond those noncash consideration does not exceed and noncash consideration does not specified in agreement can occur if approved by 66.67% 3.0% of total assets; 2) proceeds must be exceed 3.0% of total assets; 2) of creditors of outstanding debt subject to financing reinvested or used to repay debt within proceeds must be reinvested or used agreement. In addition, larger assets or share sales are 365 days, otherwise, an offer to to repay debt within 365 days, permitted to occur if: 1) at least 85% of the repurchase notes or pari pasu debt if otherwise, an offer to repurchase consideration for permitted disposals of shares or assets cumulative unused proceeds exceeds notes or pari pasu debt if cumulative is received in cash or marketable securities; 2) if the USD100 Mil. must be offered. unused proceeds exceeds USD100 Mil. company is in compliance with its financial covenants must be offered. on a pro forma basis if the aggregate consideration for a disposal is equal to 5.0% or more of the consolidated assets of the group; and 3) disposal proceeds, adjusted for any shortfall of a USD650 Mil. minimum cash maintenance threshold minus unutilized commitments, are used to prepay debt. aOriginal borrowers of debt subject to the Aug. 14, 2009 financing agreement and intercreditor agreement. bOriginal guarantors of debt subject to the Aug. 14, 2009 financing agreement and intercreditor agreement. Note: All the financing agreement debt obligors and guarantors, with the exception of CEMEX Inc. and CEMEX Australia, have provided joint and several guarantees over all the financing agreement debt. N.A. − Not applicable. Continued on next page. Source: Company and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ CEMEX (Continued)

Debt Restrictions Additional Beyond customary permitted debt, the company may Language noted. Language noted. Debt incur debt for additional reasons including: 1) debt Restriction that will be used to replace or refinance existing debt provided that the terms of the debt are no more restrictive or onerous than the terms of existing facilities; 2) that qualifies as a permitted liquidity facility; 3) debt related to permitted acquisitions to the extent the aggregate amount does not exceed USD100 Mil.; 4) debt arising under capital leases, factoring arrangements, inventory agreements, export agreement up to a maximum USD350 Mil.; 5) additional debt up to an aggregate of USD200 Mil. Limitation on Liens may not be incurred except for certain exceptions. Liens may not be incurred except for certain Liens may not be incurred except for certain Secured Debt Exception beyond the normal include: 1) liens exceptions. Exception beyond the normal exceptions. Exception beyond the normal permitted by the trustee on instruction of at least 50% include: 1) liens permitted by the trustee include: 1) liens permitted by the trustee on of the holders of notes; 2) liens on permitted on instruction of at least 50% of the instruction of at least 50% of the holders of receivables assets; 3) liens to secure indebtedness holders of notes; 2) liens on permitted notes; 2) liens on permitted receivables under a permitted liquidity facility provided that the receivables assets; 3) liens to secure assets; 3) liens to secure indebtedness lien is not granted in respect of collateral and the indebtedness under a permitted liquidity under a permitted liquidity facility provided maximum amount of such indebtedness secured by facility provided that the lien is not that the lien is not granted in respect of such liens does not exceed USD500 Mil.; and 4) granted in respect of collateral and the collateral and the maximum amount of such security granted in favor of a Mexican development maximum amount of such indebtedness indebtedness secured by such liens does not bank with a limit of USD250 Mil.; 5) security for assets secured by such liens does not exceed exceed USD500 Mil.; and 4) liens securing up to USD200 million in aggregate value for permitted USD500 Mil.; and 4) liens securing obligations of the company and it restricted derivative treasury transactions; 6) additional security obligations of the company and it subsidiaries that in the aggregate secure not in excess of USD500 Mil. restricted subsidiaries that in the obligations in an amount not in excess of aggregate secure obligations in an amount the greater of 5% of assets and USD700 Mil. not in excess of the greater of 5% of assets and USD700 Mil. Restricted Cash dividends are prohibited, other than for Cash dividends are prohibited, other than for Cash dividends are prohibited, other than for Payments Qualified Capital Stock, as are share repurchases. qualified capital stock, as are share qualified capital stock, as are share repurchases. repurchases. Other Cross Default A cross default in relation to financial indebtedness of Failure of Cemex or any restricted subsidiary Failure of Cemex or any restricted subsidiary USD50 Mil. All existing facilities that are part of the due to a failure to pay principal when due due to a failure to pay principal when due financing agreement also contain cross default or interest before the expiration of the or interest before the expiration of the provisions, which allow acceleration. applicable grace period for any amount applicable grace period for any amount equal to or greater than USD50 Mil. equal to or greater than USD50 Mil. Acceleration If an event of default has occurred and is continuing, If an event of default has occurred and is If an event of default has occurred and is upon the authorization of creditors representing at continuing, the trustee or holders of 25% continuing, the trustee or holders of 25% of least 66.67% of the outstanding exposure of the debt of the principal amount of the notes may the principal amount of the notes may subject to the financing agreement, the creditors declare the notes to be immediately due declare the notes to be immediately due have the right to accelerate all amounts then and payable. An acceleration is automatic and payable. An acceleration is automatic outstanding. An acceleration is automatic under under certain bankruptcy events affecting under certain bankruptcy events affecting certain bankruptcy events affecting the company or the company or any of its significant the company or any of its significant any of its significant subsidiaries. subsidiaries. subsidiaries. Capital Limited to USD700 Mil. in 2010 and USD800 Mil. per year N.A. N.A. Expenditure thereafter until the financing agreement debt is Restrictions repaid. Cash USD650 Mil. N.A. N.A. Maintenance Release of Guarantees or indemnities can only be released upon the Each note guarantor will be released if Each note guarantor will be released if 1) Guarantees consent of creditors representing 85% of the 1) there is a legal defeasance of notes or there is a legal defeasance of notes or 2) outstanding indebtedness of debt subject to the 2) there is a sale or disposition of the there is a sale or disposition of the capital financing agreement. capital stock of the guarantor. stock of the guarantor. ⎯ In addition, New Sunward guarantee will be In addition, the additional note guarantors released 1) if the financing agreement (New Sunward, CEMEX Concretos, and indebtedness has been paid in full and New Empresas Tolteca) will be released 1) if the Sunward is not a guarantor of the financing agreement indebtedness has been indebtedness to refinance the financing paid in full and these additional guarantors agreement or 2) at least 85% of the do not guarantee any indebtedness to outstanding indebtedness of CEMEX S.A.B. refinance the financing agreement or 2) at de C.V. and its restricted subsidiaries is least 85% of the outstanding indebtedness of not guaranteed by New Sunward. CEMEX S.A.B. de C.V. and its restricted subsidiaries is not guaranteed by the additional note guarantors. N.A. − Not applicable. Continued on next page. Source: Company filings, Fitch Ratings.

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Debt and Covenant Synopsis — CEMEX (Continued)

Release of ⎯ New Sunward’s guarantee can also be released The additional note guarantors can also be Guarantees upon the occurrence of a partial covenant released from their guarantee upon the (Cont.) suspension event or covenant suspension occurrence of covenant suspension event. event. Security Secured by first priority interest over a collateral Notes are secured by first priority interest over a Notes are secured by first priority interest over a Package package consisting of substantially all of the collateral package consisting of substantially collateral package consisting of substantially shares of CEMEX México, Centro Distribuidor de all of the shares of CEMEX México, Centro all of the shares of CEMEX México, Centro Cemento, S.A. de C.V., Mexcement Holdings, Distribuidor de Cemento, S.A. de C.V., Distribuidor de Cemento, S.A. de C.V., S.A. de C.V., Corporación Gouda S.A. de C.V., Mexcement Holdings, S.A. de C.V., Mexcement Holdings, S.A. de C.V., Corporación Sunward Investments B.V., Sunward Corporación Gouda S.A. de C.V., CEMEX Gouda S.A. de C.V., CEMEX Trademarks Acquisitions N.V., Sunward Holdings B.V., Trademarks Holdings Ltd., New Sunward, and Holdings Ltd., New Sunward, and CEMEX CEMEX Dutch Holdings B.V., New Sunward CEMEX España. España. Holding B.V., CEMEX Trademarks Holdings Ltd., and CEMEX España. Release of Collateral can be released in whole or in part by Collateral can be released in whole or part by Collateral can be released in whole or part by Collateral 1) creditors under the financing agreement and 1) creditors under the financing agreement 1) creditors under the financing agreement and any refinancing thereof representing at least and any refinancing thereof representing at any refinancing thereof representing at least 85% of the amount owned of the financing least 85% of the amount owned of the 85% of the amount owned of the financing agreement and any refinancing and 2) creditors financing agreement and any refinancing and agreement and any refinancing and 2) creditors under the financing agreement representing at 2) creditors under the financing agreement under the financing agreement representing at least 66.67% of the amounts owned under the representing at least 66.67% of the amounts least 66.67% of the amounts owned under the financing agreement. owned under the financing agreement. financing agreement. The collateral consisting of shares issued by The collateral consisting of CEMEX México, Centro The collateral consisting of CEMEX México, Centro Mexican entities will automatically be released Distribuidor de Cemento, S.A. de C.V., Distribuidor de Cemento, S.A. de C.V., at any time when 1) no default is continuing, Mexcement Holdings, S.A. de C.V., and Mexcement Holdings, S.A. de C.V., and 2) 41.4% (approximately USD6.2 Bil.) of the Corporación Gouda S.A. de C.V. will Corporación Gouda S.A. de C.V. will amounts owed in respect to the financing automatically be released at any time when automatically be released at any time when agreement has been repaid, and 3) the 1) no default is continuing, 2) 41.4% 1) no default is continuing, 2) 41.4% company’s total debt/EBITDA ratio does not (approximately USD6.2 Bil.) of the amounts (approximately USD6.2 Bil.) of the amounts exceed 3.5x for one semi-annual test period. owed in respect to the financing agreement owed in respect to the financing agreement has been repaid, and 3) the company’s total has been repaid, and 3) the company’s total debt/EBITDA ratio does not exceed 3.5x for debt/EBITDA ratio does not exceed 3.5x for one semi-annual test period. one semi-annual test period. The remaining collateral will automatically be The collateral consisting of CEMEX Trademarks The collateral consisting of CEMEX Trademarks released at any time when 1) no default is Holdings Ltd., New Sunward, and CEMEX Holdings Ltd., New Sunward, and CEMEX continuing, 2) 50.96% (USD7.6 Bil.) of the España will automatically be released at any España will automatically be released at any amounts owed in respect to the financing time when 1) no default is continuing, 2) time when 1) no default is continuing, 2) agreement has been repaid, and 3) the 50.96% (USD7.6 Bil.) of the amounts owed in 50.96% (USD7.6 Bil.) of the amounts owed in company’s toal debt/EBITDA ratio does not respect to the financing agreement has been respect to the financing agreement has been exceed 3.5x for two consecutive semi-annual repaid, and 3) the company’s total repaid, and 3) the company’s total test periods. debt/EBITDA ratio does not exceed 3.5x for debt/EBITDA ratio does not exceed 3.5x for two consecutive semi-annual test periods. two consecutive semi-annual test periods. Foreclosure Share security can be enforced if: 1) an event of Only creditors under the financing agreement Only creditors under the financing agreement on Collateral default has occurred and is continuing under have the right to enforce collateral. Need have the right to enforce collateral. Need the financing agreement; 2) the debt has been 1) continuing event of default and 1) continuing event of default and accelerated under the financing agreement authorization of acceleration from creditors authorization of acceleration from creditors (which requires a 66.67% majority decision by representing at least two-thirds of the amount representing at least two-thirds of the amount the participating creditors); and 3) 75% by owed under financing agreement and owed under financing agreement and 2) exposure of creditors participating in the 2) determination to enforce the security from determination to enforce the security from an financing agreement and those that have an “instructing group” that consists of “instructing group” that consists of creditors provided refinancing and 66.67% by exposure of creditors that represent 75% of the amount that represent 75% of the amount owed to the participating creditors. owed to the financing agreement and any financing agreement and any refinancing, and refinancing, and at least two-thirds of the at least two-thirds of the amount owed with amount owed with respect to the financing respect to the financing agreement. agreement. Suspension of Certain covenants will be suspended or amended Certain covenants will be suspended if the senior Certain covenants will be suspended if the senior Covenants if the senior notes receive two investment notes receive two investment grade ratings notes receive two investment grade ratings and grade ratings; no default or events of default and no default or events of default have no default or events of default have occurred. have occurred; the amount of debt under the occurred. Some of the covenants that would Some of the covenants that would be financing agreement is reduced by 50.96% be suspended include: limitation on asset suspended include: limitation on asset sales; (USD7.6 Bil.); and the consolidated leverage is sales; limitation on restricted payment; limitation on restricted payment; limitation on less than 3.5x for two consecutive semi-annual limitation on incurrence of additional incurrence of additional indebtedness; testing periods. Some of the covenants that indebtedness; limitation on dividends, and limitation on dividends, and limitation on would be suspended or amended include: limitation on layered indebtedness. layered indebtedness. limitation on asset sales; limitation on restricted payment; capital expenditure limits; quarterly free cash flow sweep; certain mandatory prepayment provisions; and limitations on dividends. N.A. − Not applicable. Continued on next page. Source: Company and Fitch Ratings.

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Debt and Covenant Synopsis — CEMEX (Continued)

Suspension of ⎯ Some covenants could also be suspended during ⎯ Covenants any time period in which the notes do not have (Cont.) two investment-grade ratings, but the consolidated leverage of the company is less than 3.5x and no default or event of default has occurred and is continuing. Some of these covenants include: limitations on asset sales, and limitations on dividends and other payments. Other The terms of the financing agreement can be ⎯ ⎯ amended or waived by creditors representing 66.67% of the outstanding debt. Must prepay the refinancing agreement debt with ⎯ ⎯ free cash flow if cash and marketable securities is USD650 Mil. In addition, proceeds from equity or debt issuances will trigger mandatory prepayments with certain limitations. Base LIBOR and Euribor rates stay in effect for all ⎯ ⎯ bank financing. The Margin above these rates increased to 4.5%. If unable to pay 31.86% (USD4.8 Bil.) by December 2010, the rate will increase by up to 1.0%, as will the rate if unable to repay at least 50.96% (USD7.6 Bil.) by December 2011. N.A. − Not applicable. Continued on next page. Source: Company and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ CEMEX

Overview Issuer Debenture Issuers Cemex Finance Europe B.V. Cemex S.A. de C.V. C10-EUR Capital (SPV) Ltd. C8 Capital (SPV) Ltd. C5 Capital (SPV) Ltd. C10 Capital (SPV) Ltd. (All incorporated in British Virgin Islands) Dual Currency Note Issuers New Sunward Holding Financial Ventures B.V. Guarantors Guarantors of Dual Currency Notes CEMEX España CEMEX México, S.A. de C.V. CEMEX, S.A.B. de C.V. Empresas Tolteca de México, S.A. de C.V. CEMEX México, S.A. de C.V. New Sunward Holding B.V. Document Date 5/07, 2/07, 12/06 3/5/07 Multiple Maturity Date Perpetual Dual Currency Notes. 3/5/14 Multiple Description C-10 EUR730 Mil., 6.277%, Perpetual Dual EUR900 million, 4.75% notes, due 5/5/14. Certificados Bursatiles Programs ⎯ CB Short of Debt Currency Notes, Callable in 2017 (€266 Mil. Term, CEMEX 07, CEMEX07-2, CEMEX07-2U, outstanding following exchange). CEMEX08-2, CEMEX 08U, CEMEX 06-3, CEMEX 000105, CEMEX06-2. C8 USD750 Mil., 6.640%, Perpetual Dual Currency Notes, Callable in 2015 (USD369 Mil. Amount of these programs as of 3/31/10 was outstanding following exchange). USD1.4 Bil. C5 USD350 Mil., 6.196%, Perpetual Dual (Certificados Bursatiles Programs ⎯ CMX002 06, Currency Notes, Callable in 2011 (USD147 Mil. CEMEX 06, CEMEX 07U and CEMEX 08 that were outstanding following exchange). outstanding at the end of March with a combined value of approximately USD500 Mil. were prepaid in June with proceeds from convertible notes). C10 USD900 Mil., 6.722%, Perpetual Dual Currency Notes, Callable in 2016 (USD449 Mil. outstanding following exchange). Financial Covenants Consolidated No material provision noted. No material provision noted. No material provision noted. Leverage (Maximum) Interest No material provision noted. No material provision noted. No material provision noted. Coverage (Minimum) Acquisitions/Divestitures Change of Debentures and dual currency notes will receive Redemption due to change of control of Cemex No change of control provision related to Control an additional 5% interest rate upon a change Espana or CEMEX S.A.B. de C.V. and a ratings ordinary shares. Nationalization of the Provision of control and a downgrade by Fitch or S&P to downgrade. Change of control is designated by company or state intervention would trigger below ‘BBB−’. Change of control is defined as more than 50% of the ordinary shares of CEMEX an early amortization however. In the event of the acquisition of more than 50% of the capital S.A.B de C.V. or at least 50% of the capital and a merger, as long as the resulting company stock of CEMEX S.A.B. de C.V., or the sale, voting rights of Cemex España. assumes all financial obligations, an early transfer, or conveyance of substantially all of amortization of the certificados bursatiles the assets of CEMEX S.A.B. de C.V. would not be triggered. Sale of Assets No material provision noted. No material provision noted. No material provision noted. Restriction Debt Restrictions Additional Debt No material provision noted. No material provision noted. No material provision noted. Restriction Limitation on As long as the dual currency notes are Neither the issuer nor guarantor will create or Cemex, S.A.B. de C.V. and its subsidiaries shall Secured Debt outstanding, CEMEX S.A.B de C.V. shall not, have outstanding any security interest, other abstain from creating any lien other than a and shall not permit, any of its subsidiaries to than those permitted, upon, or with respect permitted lien on or with respect to any create, incur, assume, or permit to exist any to, any of its present or future businesses, present or future property of CEMEX, S.A.B. lien, other than a permitted lien, on or with undertakings, assets, or revenues to secure de C.V. or any subsidiary without securing the respect to any present or future property of any indebtedness or any guarantee of certificados bursatiles equally. As a result of CEMEX, S.A.B. de C.V. or any subsidiary relevant indebtedness, unless the issuer or this covenant, the certificados bursatiles have without securing the dual currency notes guarantor take steps to ensure that the notes the same collateral package as the financing equally and ratably. As a result of this are secured equally or ratably. The issuer and agreement; the perpetual debentures; and covenant, the dual currency notes have the guarantor will also ensure that no principal the notes due 2016, 2017, and 2020. same collateral package as the financing subsidiary will also create or have agreement; the certificados bursatiles; and outstanding a security interest. the notes due 2016, 2017, and 2020. N.A. − Not applicable. Continued on next page. Source: Company and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ CEMEX (Continued)

Restricted N.A. N.A. ⎯ Payments Other Cross Default The note debenture does not include an event of If any indebtedness of CEMEX Finance Europe, Failure of Cemex or any restricted subsidiary due default related to payment or covenant default B.V., CEMEX España, or a principal subsidiary to a failure to pay principal when due or with respect to other instruments, or comes due and repayable prematurely due to interest before the expiration of the acceleration of any other instrument. An event an event of default for an amount of at least applicable grace period for any amount equal of default under the dual currency notes EUR45 Mil. or greater than USD50 Mil. becomes an event of default for the debentures. Acceleration Acceleration upon a bankruptcy-related event of No material provision noted. If an event of default has occurred and is default of the debenture issuer. Any other continuing, the trustee or holders of 25% of event of default that is continuing could be the principal amount of the notes may declare accelerated at the discretion of debenture the notes to be immediately due and payable. holders owning at least 25% of the outstanding An acceleration is automatic under certain principal. bankruptcy events affecting the company or any of its significant subsidiaries. Capital N.A. N.A. N.A. Expenditure Restrictions Cash N.A. N.A. N.A. Maintenance Release of The debentures are not guaranteed. They have no N.A. N.A. Guarantees direct claim against CEMEX, the note guarantors nor the note issuer. Security Debentures are secured by a first-priority interest N.A. Secured by first-priority interest over a collateral Package in the issuers’ rights and obligations under the package consisting of substantially all of the dual currency notes, the note indenture and shares of CEMEX México, Centro Distribuidor de the extinguishable coupon swap. Recourse of Cemento, S.A. de C.V., Mexcement Holdings, debenture holders is only to the issuer and its S.A. de C.V., Corporación Gouda S.A. de C.V., assets, which is principally the dual currency Sunward Investments B.V., Sunward notes. Notes are also secured by first priority Acquisitions N.V., Sunward Holdings B.V., interest over a collateral package consisting of CEMEX Dutch Holdings B.V., New Sunward substantially all of the shares of CEMEX México, Holding B.V., CEMEX Trademarks Holdings Centro Distribuidor de Cemento, S.A. de C.V., Ltd., and CEMEX España. Mexcement Holdings, S.A. de C.V., Corporación Gouda S.A. de C.V., Sunward Investments B.V., Sunward Acquisitions N.V., Sunward Holdings B.V., CEMEX Dutch Holdings B.V., New Sunward Holding B.V., CEMEX Trademarks Holdings Ltd., and CEMEX España. Release of Collateral can be released in whole or in part by N.A. Collateral can be released in whole or in part by Collateral 1) creditors under the financing agreement and 1) creditors under the financing agreement any refinancing thereof representing at least and any refinancing thereof representing at 85% of the amount owned of the financing least 85% of the amount owned of the agreement and any refinancing, and financing agreement and any refinancing, and 2) creditors under the financing agreement 2) creditors under the financing agreement representing at least 66.67% of the amounts representing at least 66.67% of the amounts owned under the financing agreement. owned under the financing agreement. The collateral consisting of CEMEX México, ⎯ The collateral consisting of CEMEX México, Centro Centro Distribuidor de Cemento, S.A. de C.V., Distribuidor de Cemento, S.A. de C.V., Mexcement Holdings, S.A. de C.V., and Mexcement Holdings, S.A. de C.V., and Corporación Gouda S.A. de C.V. will Corporación Gouda S.A. de C.V. will automatically be released at any time when automatically be released at any time when 1) no default is continuing, 2) 41.4% 1) no default is continuing, 2) 41.4% (approximately USD6.2 Bil.) of the amounts (approximately USD6.2 Bil.) of the amounts owed in respect to the financing agreement has owed in respect to the fnancing agreement has been repaid, and 3) the company’s total been repaid, and 3) the company’s total debt/EBITDA ratio does not exceed 3.5x for one debt/EBITDA ratio does not exceed 3.5x for semi-annual test period. one semi-annual test period. The collateral consisting of CEMEX Trademarks ⎯ The collateral consisting of CEMEX Trademarks Holdings Ltd., New Sunward, and CEMEX España Holdings Ltd., New Sunward, and CEMEX will automatically be released at any time España will automatically be released at any when 1) no default is continuing, 2) 50.96% time when 1) no default is continuing, (USD7.6 Bil.) of the amounts owed in respect to 2) 50.96% (USD7.6 Bil.) of the amounts owed in the financing agreement has been repaid, and respect to the financing agreement has been 3) the company’s total debt/EBITDA ratio does repaid, and 3) the company’s total not exceed 3.5x for two consecutive semi- debt/EBITDA ratio does not exceed 3.5x for annual test periods. two consecutive semi-annual test periods. N.A. − Not applicable. Continued on next page. Source: Company and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ CEMEX (Continued)

Foreclosure N.A. N.A. N.A. on Collateral Suspension of N.A. N.A. N.A. Covenants Other The note issuer, subject to certain conditions ⎯ ⎯ including cash dividend payments, may defer the payment of interest to the debenture issuer at any time without limit. N.A. − Not applicable. Source: Company and Fitch Ratings.

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Financial Summary ⎯ CEMEX, S.A.B. de C.V. (USD Mil., As of Dec. 31)

Period-End Exchange Rate 12.8659 13.0811 13.6944 10.9088 10.8188 Average Exchange Rate 12.9186 13.5002 11.1635 10.9285 10.9060

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 2,419 2,678 4,367 4,586 4,097 Operating EBITDAR 2,675 2,923 4,567 4,780 4,274 Operating EBITDA Margin (%) 17.1 18.3 20.0 21.2 22.7 Operating EBITDAR Margin (%) 18.9 19.9 21.0 22.1 23.6 FFO Return on Adjusted Capital (%) 9.6 9.4 8.4 12.7 18.2 Free Cash Flow Margin (%) 13.5 14.2 1.2 7.3 11.9 Return on Average Equity (%) (4.1) 0.7 1.4 16.4 19.7

Coverage (x) FFO Interest Coverage 2.6 3.2 4.0 6.1 8.2 Operating EBITDA/Gross Interest Expense 2.0 2.7 4.8 5.7 8.2 Operating EBITDAR/(Interest Expense + Rental Expenses) 1.8 2.3 4.1 4.8 6.3 Operating EBITDA/Debt Service Coverage 1.5 1.7 0.6 1.1 2.3 Operating EBITDAR/Debt Service Coverage 1.3 1.6 0.6 1.1 2.2 FFO Fixed Charge Coverage 2.4 2.8 3.5 5.1 6.3 FCF Debt Service Coverage 1.8 1.9 0.2 0.6 1.5 (FCF + Cash and Marketable Securities)/Debt Service Coverage 2.2 2.6 0.3 0.8 2.4 Cash Flow from Operations/Capital Expenditures 8.4 5.2 1.5 2.1 3.0

Capital Structure and Leverage (x) FFO Adjusted Leverage 5.7 6.1 6.0 4.8 2.4 Total Debt/Operating EBITDA 7.4 7.2 5.0 5.0 2.1 Total Net Debt/Operating EBITDA 7.1 6.8 4.8 4.8 1.8 Total Adjusted Debt/Operating EBITDAR 7.4 7.2 5.1 5.1 2.3 Total Adjusted Net Debt/Operating EBITDAR 7.1 6.9 4.9 4.9 2.0 Implied Cost of Funds 6.2 4.8 4.1 5.1 5.5 Short-Term Debt/Total Debt 0.0 0.0 0.3 0.1 0.1

Balance Sheet Total Assets 43,084 44,514 45,538 49,713 29,920 Cash and Marketable Securities 752 1,078 993 795 1,576 Short-Term Debt 513 594 6,957 3,324 1,249 Long-Term Debta 17,457 18,754 15,053 19,629 7,526 Off-Balance-Sheet Debtb 1,798 1,769 1,144 1,366 1,244 Total Adjusted Debt 19,768 21,117 23,154 24,319 10,019 Total Equity 16,345 16,643 14,296 15,646 13,505 Total Adjusted Capital 36,113 37,760 37,450 39,965 23,524

Cash Flow Funds from Operations 1,991 2,202 2,738 4,075 3,573 Change in Working Capital 189 372 63 99 460 Cash Flow from Operations 2,180 2,574 2,801 4,174 4,033 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (259) (493) (1,903) (1,993) (1,358) Dividends 0 0 (628) (607) (526) Free Cash Flow 1,921 2,081 270 1,575 2,149 Net Acquistions and Divestitures 1,532 1,564 971 (13,420) 250 Other Investments, Net (740) (648) (123) (1,588) (919) Net Debt Proceeds (3,011) (2,653) (494) 11,991 (1,403) Net Equity Proceeds 1,854 1,774 609 586 527 Other, Financing Activities (1,747) (2,030) (792) (42) 309 Total Change in Cash (191) 89 442 (899) 914

Income Statement Net Revenue 14,183 14,652 21,785 21,656 18,072 Revenue Growth (%) (92.8) (32.7) 0.6 19.8 21 Operating EBIT 929 1,173 2,498 2,969 2,917 Gross Interest Expense 1,218 1,001 916 806 499 Rental Expense 256 245 201 195 176 Net Income (634) 104 204 2,389 2,344 aLong-term debt includes perpetual bonds. bOff-balance sheet debt = 7.0x operating leases. Source: Fitch Ratings.

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Financial Summary ⎯ CEMEX, S.A.B. de C.V. (MXP Mil.)

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 31,250 36,153 48,748 50,114 46,366 Operating EBITDAR 34,555 39,458 50,987 52,243 48,360 Operating EBITDA Margin (%) 17.1 18.3 20.0 21.2 22.7 Operating EBITDAR Margin (%) 18.9 19.9 21.0 22.1 23.6 FFO Return on Adjusted Capital (%) 9.6 9.4 8.4 12.7 18.2 Free Cash Flow Margin (%) 13.5 14.2 1.2 7.3 11.9 Return on Average Equity (%) (4.1) 0.7 1.2 16.2 19.6

Coverage (x) FFO Interest Coverage 2.6 3.2 4.0 6.1 8.2 Operating EBITDA/Gross Interest Expense 2.0 2.7 4.8 5.7 8.2 Operating EBITDAR/Gross Interest Expense and Rents 1.8 2.3 4.1 4.8 6.3 Operating EBITDA/Debt Service Coverage 1.4 1.7 0.5 1.1 2.4 Operating EBITDAR/Debt Service Coverage 1.3 1.6 0.5 1.1 2.2 FFO Fixed Charge Coverage 2.4 2.8 3.5 5.1 6.3 FCF Debt Service Coverage 1.8 2.0 0.1 0.6 1.5 (FCF + Cash and Marketable Securities)/Debt Service Coverage 2.2 2.6 0.3 0.8 2.4 Cash Flow from Operations/Capital Expenditures 8.4 5.2 1.5 2.1 3.0

Capital Structure and Leverage (x) FFO Adjusted Leverage 5.7 5.9 7.4 4.8 2.3 Total Adjusted Debt/Operating EBITDA 7.4 7.0 6.2 5.0 2.1 Total Adjusted Net Debt/Operating EBITDA 7.1 6.6 5.9 4.8 1.7 Total Adjusted Debt/Operating EBITDAR 7.4 7.0 6.2 5.1 2.3 Total Adjusted Net Debt/Operating EBITDAR 7.1 6.6 6.0 4.9 2.0 Implied Cost of Funds 6.1 4.9 3.7 5.0 5.3 Short-Term Debt/Total Debt 0.0 0.0 0.3 0.1 0.1

Balance Sheet Total Assets 554,315 582,286 623,622 542,314 335,866 Cash and Marketable Securities 9,674 14,104 13,604 8,670 17,692 Short-Term Debt 6,595 7,768 95,270 36,257 14,022 Long-Term Debta 224,594 245,325 206,142 214,124 84,488 Total Debt 231,189 253,093 301,412 250,381 98,510 Off-Balance Sheet Debtb 23,135 23,135 15,673 14,903 13,960 Total Adjusted Debt 254,324 276,228 317,085 265,284 112,470 Total Equity 210,297 217,711 195,772 170,683 151,603 Total Adjusted Capital 464,621 493,939 512,857 435,967 264,073

Cash Flow Funds from Operations 25,716 29,732 30,564 44,539 40,432 Change in Working Capital 2,446 5,019 708 1,086 5,210 Cash Flow from Operations 28,162 34,751 31,272 45,625 45,642 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (3,346) (6,655) (21,248) (21,779) (15,371) Dividends 0 0 (7,009) (6,636) (5,956) Free Cash Flow 24,816 28,096 3,015 17,210 24,315 Net Acquistions and Divestitures 19,792 21,115 10,845 (146,663) 2,830 Other Investments, Net (9,558) (8,745) (1,371) (17,356) (10,396) Net Debt Proceeds (38,902) (35,812) (5,511) 131,046 (15,874) Net Equity Proceeds 23,953 23,953 6,794 6,399 5,963 Other, Financing Activities (22,565) (27,403) (8,838) (460) 3,502 Total Change in Cash (2,464) 1,204 4,934 (9,824) 10,340

Income Statement Net Revenue 183,224 197,801 243,201 236,669 204,502 Revenue Growth (%) ⎯ (18.7) 2.8 15.7 16.4 Operating EBIT 11,997 15,840 27,884 32,448 33,010 Gross Interest Expense 15,741 13,513 10,223 8,809 5,647 Rental Expense 3,305 3,305 2,239 2,129 1,994 Net Income (8,190) 1,409 2,278 26,108 26,520 aLong-term debt includes perpetual bonds. bOff balance sheet debt = 7.0x operating leases. Source: Fitch Ratings.

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Metals and Mining Clarendon Alumina Production Jamaica Full Rating Report Limited (CAP)

Ratings Current Rating Rationale Security Class Rating • Clarendon Alumina Production Limited’s (CAP) ratings are linked to those of Foreign Currency IDR B− Local Currency IDR B− Jamaica’s and reflect its 100% ownership by the government of Jamaica (GoJ), Unsecured Notes B−/RR4 without whose support it could not continue to operate. CAP is the holding company IDR − Issuer default rating. for the GoJ’s approximately 45% ownership interest in an unincorporated joint venture with a subsidiary of Alcoa Inc. (Alcoa) called Jamalco, which is a bauxite Rating Outlook mining and alumina refining operation in Jamaica. This joint venture involves the proportionate sharing of production costs and the alumina output of the Clarendon Stable Alumina Refinery (CAR). The long-term foreign currency issuer default rating (IDR) Financial Data of Jamaica is rated ‘B−’ by Fitch Ratings with a Stable Outlook. CAP’s Stable Clarendon Alumina Production Limited Outlook mirrors the sovereign rating outlook on Jamaica, to which its ratings are (USD Mil.) 3/31/09 3/31/08 tied. Net Revenues 131.8 117.2 EBITDA (67.7) (60.3) • CAP’s USD200 million, 8.5% unsecured notes due November 2021 are also rated at Funds from Operations (64.8) (45.7) ‘B−/RR4’. The 15-year notes continue to be supported by an explicit, unconditional, Cash and Marketable and irrevocable guarantee by the GoJ for timely interest and principal on the notes. Securities 0.9 16.1 Total Debt 417.4 326.2 • On a stand-alone basis, CAP has an extremely weak financial profile for its rating Total Debt/ EBITDA (x) (6.2) (5.4) category. Total debt increased to USD417 million in fiscal 2009 from USD166 million FFO Adjusted in fiscal 2006, while EBITDA deteriorated to negative USD67.7 million from Leverage (x) (11.8) (16.9) Short-Term USD5 million over the same period. Cash for the period was USD0.9 million, a Debt/Total Debt (x) 0.1 0.1 significant reduction from USD16 million in 2008.

Analysts Key Rating Drivers

Jay Djemal • CAP’s future rating actions are directly linked to Fitch’s actions taken on Jamaica. +1 312 368-3134 If Fitch were to downgrade the ratings on the sovereign due to concerns regarding [email protected] macroeconomic pressures, or upgrade the ratings due to liquidity improvement, then CAP’s ratings would also mirror this action. This rating linkage will continue as Joe Bormann, CFA +1 312 368-3349 long as the company remains 100% owned by the GoJ. [email protected] • Should the GoJ successfully sell CAP and its corresponding 45% interest in Jamalco, Shelly Shetty the change of control regarding the USD200 million, 8.5% unsecured notes could be +1 212 908-0324 triggered. [email protected]

Rating Issues Please refer to Fitch’s full company report, “Clarendon Alumina Production Limited (CAP),” dated Sept. 3, 2010, for more information regarding:

• Recent financial performance. • GoJ’s attempt to sell its interest in Jamalco. Liquidity and Debt Structure Without the GoJ’s support, CAP has an extremely weak financial profile for its rating category, and its capital structure would not be sustainable on a stand-alone basis. Total debt increased to USD417 million in fiscal 2009 from USD166 million in fiscal 2006, while the company generated EBITDA of negative USD67.7 million in fiscal 2009 ⎯ a

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further deterioration on negative USD60.3 million in fiscal 2008. USD59 million of fiscal 2009 debt reflects a GoJ advance representing the GoJ’s loan servicing on behalf of CAP. Fiscal 2009’s cash on balance sheet at USD0.9 million was insufficient to meet short- term debt requirements of USD39 million. As of Sept. 30, 2009, approximately 70% of CAP’s debt of USD380 million was guaranteed by the GoJ. Most of CAP’s long-term debt is comprised of the USD200 million notes issued in November 2006. CAP, via its affiliate, Jamaica Bauxite Mining Limited (JBM), also has a USD37.7 million principal obligation to Glencore, CAP’s main customer. The proceeds of this loan were used to fund CAP’s share of an expansion project with Alcoa in 2002 to increase the production capacity of CAR to 1.25 million tons per year.

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Organizational Chart — Clarendon Alumina Production Limited (CAP)

Alcoa Alumina Limited Government of Jamaica (United States) (Australia) 60% 40%

100% 100% Alcoa World Alumina and Alcoa Caribbean Alumina Holdings 100%

Alcoa Minerals CAP JBM and BATCO (Jamaica) 55% 45%

Jamalco/CAR Source: CAP.

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Debt and Covenant Synopsis ⎯ Clarendon Alumina Production Limited (CAP) (Foreign Currency Notes)

Overview Issuer Clarendon Alumina Production Limited Guarantors The Government of Jamaica Document Date Nov. 9, 2006 Maturity Date Nov. 16, 2021 Description of Debt Senior Unsecured Notes Amount USD200 million Acquisitions/Divestitures Change of Control Provision Occurs when CAP’s interest in the Jamalco joint venture falls below 50% if at such time the amount of alumina production of the Jamalco joint venture that CAP is entitled to receive in a calendar year is less than 625,000 metric tons.

Debt Restriction Limitation on Liens CAP will not, and will not permit any subsidiary to, directly or indirectly, issue, assume or guarantee to exist any lien of any nature whatsoever on any of its properties or assets without effectively providing that the notes are secured equally and ratably with the obligations so secured for so long as such obligations are so secured. Security interests may be permitted if they: (1) are existing or permitted under any existing facility; (2) secure the costs of the acquisition, construction, development, or expansion of any property or asset; (3) exist on any property or asset at the time of its acquisition or arising after such acquisition; (4) are granted by CAP to any person with whom CAP enters into a hedging arrangement; or (5) secure indebtedness not expressly permitted above, provided that the aggregate outstanding principal amount of such secured Indebtedness does not exceed USD,10 millon or its equivalent. Source: CAP Ltd. offering memo and Fitch Ratings.

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Financial Summary ⎯ Clarendon Alumina Production Limited (CAP) (USD Mil., Years Ended March 31)

2009 2008a 2007 2006 2005 Profitability Operating EBITDA (67.7) (60.3) (11) 5 37 Operating EBITDA Margin (%) (67.7) (60.3) (8.5) 3.9 33.0 Funds from Operations (FFO) Return on Adjusted Capital (%) (16.4) (8.1) 6.4 10.2 17.9 Free Cash Flow (FCF) Margin (%) (58.6) (123.7) (40.3) 12.8 (11.3) Coverage (x) FFO Interest Coverage (1.2) (0.7) 0.6 0.9 1.8 Operating EBITDA/Gross Interest Expense (2.3) (2.3) (0.4) 0.2 1.6 Operating EBITDA/Debt Service Coverage (1.0) (1.1) (0.1) 0.1 0.5 Operating EBITDAR/Debt Service Coverage (1.0) (1.1) (0.1) 0.1 0.5 FFO Fixed-Charge Coverage (1.2) (0.7) 0.6 0.9 1.8 FCF Debt Service Coverage (0.7) (2.1) (0.3) 0.5 0.1 (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage (0.7) (1.8) 0.3 0.8 0.3 Cash Flow from Operations/Capital Expenditures (1.4) (0.1) 0.2 2.0 0.1 Capital Structure and Leverage (x) FFO Adjusted Leverage (11.8) (16.9) 17.0 8.7 4.4 Total Debt with Equity Credit/Operating EBITDA (6.2) (5.4) (25.5) 33.9 4.8 Total Net Debt with Equity Credit/Operating EBITDA (6.2) (5.1) (21.3) 29.4 4.5 Implied Cost of Funds 7.9 8.6 12.2 12.8 12.8 Short-Term Debt/Total Debt 0.1 0.1 0.2 0.3 0.3 Balance Sheet Total Assets 370.8 362.5 332 257 264 Cash and Marketable Securities 0.9 16.1 47 22 14 Short-Term Debt 39.3 30.4 50 56 50 Long-Term Debt 378.1 295.8 236 110 131 Total Debt 417.4 326.2 286 166 181 Off-Balance Sheet Debt 417.4 326.2 0 0 0 Total Adjusted Debt with Equity Credit (200.9) (87.6) 286 166 181 Total Equity 216.6 238.7 (24) 21 50 Total Adjusted Capital 370.8 362.5 262 187 231 Cash Flow Funds from Operations (64.8) (45.7) (11) (3) 18 Change in Working Capital 19.9 27.3 24 35 (17) Cash Flow from Operations (44.9) (18.4) 13 32 2 Capital Expenditures (32.3) (126.7) (67) (16) (14) Dividends 0 0 0 0 0 Free Cash Flow (77.2) (145.1) (53) 16 (13) Net Acquisitions and Divestitures 0.0 19.1 1 0 0 Other Investments, Net 0.7 0.7 0 0 0 Net Debt Proceeds 87.2 38.5 114 (15) (1) Net Equity Proceeds 0 0 0 2 6 Other, Financing Activities (25.8) (25.1) 0 1 0 Total Change in Cash (15.1) (111.8) 61 2 (14) Income Statement Net Revenue 131.8 117.2 132 125 114 Revenue Growth (%) 0 (0) 0 0 0 Operating EBIT (87.2) (77.6) (21) (8) 25 Gross Interest Expense 29.3 26.4 27 22 23 Net Income (113.3) (49.9) (45) (31) (26) aRestated. Source: CAP.

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Electric-Corporate Compañía de Transporte de Argentina Full Rating Report Energía Eléctrica en Alta Tensión Transener S.A. (Transener)

Ratings Rating Rationale Current Security Class Rating • Compañía de Transporte de Energía Eléctrica en Alta Tensión Transener S.A.’s Foreign Currency IDR B− (Transener) ratings reflect the prevailing weak regulatory environment in Argentina, Local Currency IDR B− Senior Notes due 2016 B−/RR4 as evidenced by a material lag in tariff adjustments. The company’s exposure to growing inflation in Argentina and the mismatch between the currency of its IDR − Issuer default rating. revenues and debt are also factored into the ratings, as are the concentration of its assets in Argentina. Positive credit considerations include Transener’s first priority Rating Outlook of payment from the wholesale electricity market administrator (CAMMESA) and its Stable manageable debt amortization schedule.

Financial Data • Transener’s Stable Outlook reflects the company’s success in reducing its debt Transener S.A. levels, its conservative credit metrics, and sound operating metrics, all within a (USD Mil.) challenging environment of frozen tariffs and rising costs. LTM 3/31/10 12/31/09 • As of March 31, 2010, Transener had USD158 million of total debt, excluding Total Revenues 149 156 USD11 million of notes in the hands of its subsidiary, Transba S.A. During the LTM, EBITDA 46 49 Cash from the company had a total-debt-to-EBITDA ratio of 3.4x and an EBITDA-to-interest- Operations 36 41 expense ratio of 2.4x. Almost 100% of Transener’s debt is denominated in U.S. Cash and Marketable dollars, while its revenues are generated in Argentine pesos, exposing the company Securities 21 16 to exchange rate volatility. The company’s debt is well structured in the long term Total Adjusted with its most relevant maturity being USD40 million in 2013. Debt 158 158 Total Adjusted Debt/EBITDA (x) 3.4 3.2 • Fitch Ratings anticipates a decrease in EBITDA to approximately USD40 million in FFO Adjusted 2010 from USD48 million in 2009, absent any tariff increases and subject to the peso Leverage (x) 3.0 2.8 devaluation. Capital expenditures are expected to remain around USD20 million and the interest payment at approximately USD15 million. A further deterioration in Analysts EBITDA could pressure Transener’s credit quality, but the availability of existing Federico Sandler loans from the administrator of the wholesale electric market (CAMMESA) to fund +54 11 5235-8122 capex could potentially ease near-term pressures. Additional concerns include [email protected] delays in collections of its regulated revenues from CAMMESA due to the deficit of

Ana Paula Ares the electric system. +54 11 5235-8121 [email protected] Key Rating Drivers

• Positive rating actions could result from the completion of a full tariff review. • Negative rating actions could result from: o Delays in collections of its regulated revenues from the administrator of the wholesale electric market. o The continued delay in tariff adjustments and/or recognition of cost increases. o Any additional intervention of the government in Transener’s business, including its attitude as a shareholder.

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Rating Issues Please refer to Fitch’s full company report, “Compañía de Transporte de Energía Eléctrica en Alta Tensión Transener S.A. (Transener),” dated Oct. 14, 2010, for more information regarding:

• Regulated business unit update. • Nonregulated business unit update. Liquidity and Debt Structure As of March 2010, consolidated debt was USD158 million. During 2009 and the first quarter of 2010, Transener purchased and cancelled USD69 million of series one notes with its own cash generation and proceeds from an ARS60 million loan granted by Banco Nacion in February 2009. Transener does not have any significant debt maturities until 2013 when the USD220 million notes begin to amortize in four equal annual installments. The interest rate for the notes is 8.875%. The peso-denominated debt is amortized in monthly installments beginning in September 2009. Transener has a limitation on new indebtedness of USD30 million. Recovery Rating Transener’s recovery rating of ‘RR4’ indicates that the company’s creditors would have an average recovery prospect in the range of 31%−50% of current principal and related interest in the event of default. This rating reflects a recovery rating cap for Argentine issuers of ‘RR4’, whereas Transener’s bespoke recovery analysis suggests a higher recovery level consistent with ‘RR2’, suggesting a recovery in the range of 71%−90%. Fitch has performed a liquidation analysis in the event of a bankruptcy, although this scenario seems very unlikely and has also estimated the enterprise valuation in the event of financial distressed. In deriving a distressed enterprise valuation, Fitch discounts the company’s LTM EBITDA to a level that incorporates the prevalence of frozen tariffs and cost increases ranging from 15%−20%. The annual interest expense of USD15 million per annum could be adequately covered with the anticipated distressed EBITDA. Fitch has applied a 5.0x distressed EBITDA multiple, which reflects the uncertainty about future tariff adjustments. Fitch anticipates that under a distressed scenario, the amount of capital expenditures could potentially be adjusted to the financing available from CAMMESA.

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Recovery Analysis ⎯ Compañía de Transporte de Energía Eléctrica en Alta Tensión Transener S.A. (Transener) (USD Mil., As of March 31, 2010)

Enterprise Value EBITDA 46.2 Discount (%) 35 Post-Restructuring EBITDA Estimation 30 Market Multiple (x) 5.0 Going Concern Enterprise Value 150.2

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 14.1 Rent Expense ⎯ Maintenance Capital Expenditures 20.0 Total 34.1

Advance Available to Liquidation Value Balance Rate (%) Creditors Cash 20.8 0 ⎯ A/R 18.2 65 11.8 Inventory ⎯ 55 ⎯ Net PP&E 281.0 40 112.4 Total 320.0 ⎯ 124.2

Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value 150.2 Less Administrative Claims (10%) 15 Adjusted Enterprise Value for Claims 135.1

Distribution of Value Secured Priority Lien Value Recovered Recovery ‘RR’ Rating Notching Credit Ratings Senior Secured 0 ⎯ 0 ⎯ ⎯ ⎯ Secured 0 ⎯ 0 ⎯ ⎯ ⎯

Concession Payment Availability Table Adjusted Enterprise Value for Claims 135.1 Less Secured Debt Recovery ⎯ Remaining Recovery for Unsecured Claims 135.1 Concession Allocation (5%) 6.8 Value to be Distributed to Senior Unsecured Claims 128.4

Value Recovery Rate Concession Unsecured Priority Lien Recovered (%) Allocation ‘RR’ Rating Notching Credit Ratings Senior Unsecured 159 135.1 85 100 RR4 +2 B− Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Argentine corporates are capped at ‘RR4’. Source: Fitch.

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Organizational Structure — Compañía de Transporte de Energía Eléctrica en Alta Tensión Transener S.A. (Transener)

Summary Statistics Transener S.A. (March 31, 2010) USD220 Million 8.875% Senior Unsecured USD46 Million of EBITDA Notes Due 2016 USD21 Million of Cash and Marketable (ARS864 Million) Securities USD159 Million of Total Debt

90% 99%

Transba S.A. Transener Internacional

Source: Fitch and Compañía de Transporte de Energía Eléctrica en Alta Tensión Transener S.A. (Transener) financial statements.

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Debt and Covenant Synopsis ⎯ Compañía de Transporte de Energía Eléctrica en Alta Tensión S.A. (Transener) (Foreign Currency Notes)

Overview Issuer Compañía de Transporte de Energia Electrica en Alta Tension S.A. (Transener) Guarantors N.A. Document Date Dec. 1, 2006 Maturity Date Dec. 15, 2016 Description of Debt Senior Unsecured Notes

Financial Covenants Consolidated Net Leverage (Maximum) N.A. Interest Coverage (Minimum) N.A. Acquisitions/Divestitures Change of Control Provision Change of control clause at 100% of principal. Change of control means that the Argentine government directly or indirectly owns over 50% of Transener’s voting rights. Limitation on Asset Sales The company and its affiliates might sell assets as long as 75% of the asset sale is paid in cash.

Debt Restriction Additional Debt Restriction The issuer is not allowed to incur additional debt except permitted debt. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations. Transener can incur or maintain up to USD30 million of additional indebtedness if following such transaction interest coverage is above 2.0x and consolidated debt to EBITDA is below 3.75x. This figure is USD10 million for Transener’s subsidiaries. Debt can also be incurred to finance trade receivables in connection with hedging agreements and in respect to certain intercompany loans under certain conditions. Limitation on Secured Debt The issuer and its subsidiaries are allowed to incur customary permitted liens related to the normal course of business. These include a maximum outstanding debt of USD10 million. Restricted Payments The issuer is prohibited from making dividend payments and from making certain investments, including the acquisition of stocks. The issuer is allowed to make restricted payments for up to USD20 million as long as it is in full compliance with the terms and conditions of the notes.

Other Cross Default N.A. Acceleration If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. PIK Interest Rate N.A. Intercompany Loans Intercompany loans are permitted and are not subordinated to the notes. Restriction on Purchase of Notes The issuer may repurchase the notes after Dec. 15, 2011 at par value plus 0.5x of annual interest rate in 2011, par value plus 0.25x of annual interest rate in 2012, at par value plus 0.125x of annual interest rate in 2013, and at par value in 2014 and beyond. Transactions with Affiliates Transactions between the issuer and affiliates for over USD5 million require approval from the board of directors, and transactions above USD20 million require a fairness opinion.

Limitation on Asset Sales Limits on Consolidations or Mergers Restrictions on the merger of issuer and subsidiaries. Exceptions include that the surviving entity will be a corporation existing under the laws of Argentina or the U.S., no event of default occurs or is continuing, the company’s pro forma debt levels allow it to incur additional indebtedness. Any surviving entity would assume all obligations of issuers under the indenture. N.A. − Not applicable. Source: Company and Fitch Ratings.

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Financial Summary ⎯ Compañía de Transporte de Energía Eléctrica en Alta Tensión Transener S.A. (ARS 000, As of Dec. 31)

Period-End Exchange Rate (ARS/USD) 3.88 3.80 3.47 3.15 3.06

LTM 3/31/10 2009 2008 2007 2006 Profitability Operating EBITDA 175,848 181,926 149,328 189,091 197,717 Operating EBITDAR 175,848 181,926 149,328 189,091 197,717 Operating EBITDA Margin (%) 31.0 31.2 32.7 37.5 45.0 Operating EBITDAR Margin (%) 31.0 31.2 32.7 37.5 45.0 FFO Return on Adjusted Capital (%) 11.9 12.6 10.3 10.9 15.1 Free Cash Flow Margin (%) 10.5 13.3 (3.3) 11.2 42.6 Return on Average Equity (%) (0.6) 4.3 (6.0) (0.5) 0.1 Coverage (x) FFO Interest Coverage 2.8 2.9 2.6 2.8 3.5 Operating EBITDA/Gross Interest Expense 2.4 2.5 2.1 2.6 2.4 Operating EBITDAR/(Interest Expense + Rental Expenses) 2.4 2.5 2.1 2.6 2.4 Operating EBITDA/Debt Service Coverage 1.1 1.5 2.0 2.4 2.1 Operating EBITDAR/Debt Service Coverage 1.1 1.5 2.0 2.4 2.1 FFO Fixed Charge Coverage 2.8 2.9 2.6 2.8 3.5 FCF Debt Service Coverage 0.8 1.2 0.7 1.6 2.9 (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage 1.3 1.7 1.0 2.6 3.1 Cash Flow from Operations/Capital Expenditures 1.8 2.0 0.9 1.9 4.9 Capital Structure and Leverage (x) FFO Adjusted Leverage 3.0 2.8 4.0 3.6 2.6 Total Debt with Equity Credit/Operating EBITDA 3.5 3.3 4.9 3.9 3.7 Total Net Debt with Equity Credit/Operating EBITDA 3.0 3.0 4.8 3.5 3.6 Total Adjusted Debt/Operating EBITDAR 3.5 3.3 4.9 3.9 3.7 Total Adjusted Net Debt/Operating EBITDAR 3.0 3.0 4.8 3.5 3.6 Implied Cost of Funds 11.1 11.0 9.7 10.0 10.6 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.1 0.1 0.0 0.0 0.0 Balance Sheet Total Assets 2,014,937 2,011,862 2,029,811 2,071,804 2,073,782 Cash and Marketable Securities 80,996 62,348 21,565 72,426 25,871 Short-Term Debt 86,497 51,737 4,811 5,351 12,993 Long-Term Debta 527,788 548,281 730,154 730,111 717,906 Total Debt 614,285 600,018 734,965 735,462 730,899 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 614,285 600,018 734,965 735,462 730,899 Off-Balance Sheet Debtb 0 0 0 0 0 Total Adjusted Debt with Equity Credit 614,285 600,018 734,965 735,462 730,899 Total Equity 1,088,366 1,104,242 1,060,732 1,127,753 1,133,662 Total Adjusted Capital 1,702,651 1,704,260 1,795,697 1,863,215 1,864,561 Cash Flow Funds from Operations 130,374 140,601 114,078 130,547 200,509 Change in Working Capital 5,991 12,168 (21,320) (7,589) 35,079 Cash Flow from Operations 136,365 152,769 92,758 122,958 235,588 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (76,983) (75,554) (107,642) (66,267) (48,254) Dividends 0 0 (191) (369) (157) Free Cash Flow 59,382 77,215 (15,075) 56,322 187,177 Net Acquisitions and Divestures 0 0 0 0 0 Other Investments, Net 235 266 5,556 (4,118) 9,366 Net Debt Proceeds (50,699) (76,663) (37,956) (10,945) (193,605) Net Equity Proceeds 0 0 0 0 0 Other, Financing Activities 39,607 39,607 0 0 0 Total Change in Cash 48,525 40,425 (47,475) 41,259 2,938 Income Statement Net Revenue 568,042 582,548 457,046 504,722 439,498 Revenue Growth (%) 13.2 27.5 (9.4) 14.8 17.0 Operating EBIT 52,469 59,200 35,157 83,266 94,408 Gross Interest Expense 72,808 73,461 71,560 73,256 80,864 Rental Expense 0 0 0 0 0 Net Income (6,656) 46,786 (65,883) (5,745) 999 aLong-term debt includes perpetual bonds. bOff-balance sheet debt = 7.0 x operating leases. Source: Fitch Ratings.

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Consumer Copamex, S.A. de C.V. Mexico Full Rating Report

Ratings Rating Rationale Current Security Class Rating • The ratings of Copamex, S.A. de C.V. (Copamex) are supported by its leading Local Currency IDR B+ position in several paper products within Mexico and its moderate financial Foreign Currency IDR B+ National Scale Long Term BBB(mex) leverage. The company’s credit quality was enhanced recently when the company National Scale Short Term F3(mex) entered into a large syndicated loan. This loan allowed Copamex to repay much of IDR − Issuer default rating. its long-term debt and has dramatically lowered near-term liquidity risk. • The positive associate with the new financing agreement is somewhat balanced by Rating Outlook Copamex’s recent sale of its diaper division. This sale will result in a loss of revenue Stable diversification. It will also lead to an increase in leverage in the near term to about

Financial Data 4.5x−5.0x as the proceeds will be primarily used for investments in the Pondercel plant. Leverage should then begin to return to levels of about 4.0x as the Copamex, S.A. de C.V. (USD Mil.) investments in Pondercel start to improve operating cash flows. 6/30/10 12/31/09 Revenues 491 472 • Copamex’s ratings are constrained by the company’s exposure to volatile energy EBITDA 40.6 46.7 and pulp prices. For the LTM ended June 30, 2010, virgin pulp and recycled fiber Debt 150 142 accounted for about 40% of the company’s cost of goods sold. Due to the lack of Short-Term Debt/ Total Debt (%) 57.0 38.0 correlation between recycled fiber and market pulp prices and the strength of the Mexican economy, Copamex is not always able to pass through price increases in its Analysts key raw materials. The company’s exposure to fuel oil and natural gas prices has also pressured margins during periods of high energy prices, as reflected by the Sergio Rodríguez, CFA +52 81 8399-9100 drop in the company’s operating profit during 2008. [email protected] • The weakness in the U.S. market has increased exports to Mexico and heightened Victor Villarreal competition for Copamex and other producers of paper products in Mexico. Many of +52 81 8399-9100 these international competitors have greater financial resources than Copamex. [email protected] • For the LTM ended June 30, 2010, Copamex posted MXN514 million of EBITDA, which compares to MXN527 million obtained for the same period of the prior year. Fitch expects the company’s operating performance to gradually improve during the second half of 2010 due to the slight softening of pulp prices. Key Rating Drivers • Factors that could pressure credit quality include a failure to decrease leverage, as measured by the total debt-to-EBITDA ratio, to about 4.0x in the next two years. A sustained weakening of operating cash flow generation due to the country’s economic situation, pricing pressures, or raw material volatility could also lead to a ratings downgrade or Watch Negative. • Strong liquidity plus sustained leverage below 4.0x over a period of time could support an upgrade or Outlook Positive. An improvement in the company’s market position could also lead to positive rating actions.

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Rating Issues Please refer to Fitch’s full company report, “Copamex, S.A. de C.V. (Copamex),” dated Oct. 27, 2010, for more information regarding:

• Recent financial performance. • Sale of Mexican and Central America diaper business. Liquidity and Debt Structure Copamex announced on Sept. 2, 2010 that it had entered a five-year syndicated loan agreement with Rabobank. Proceeds from this loan, which has an average life of 3.8 years, will be used to refinance the company’s current debt. Copamex has also increased a USD40 million factoring facility by USD10 million and rolled the facility over for an additional five years. These transactions enable Copamex to improve its debt maturity profile and allow it to focus on improving its operating cash flow. Copamex has prepaid all three outstanding certificados bursatiles programs with the proceeds from the syndicated loan.

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Organizational Structure — Copamex, S.A. de C.V. (As of June 30, 2010)

Copamex, S.A. de C.V. MXN1893.7 Million on CBs and Bank Loans

Copamex Papeles Copamex Empaque, Other Para Escritura e S.A. de C.V. Impresión, S.A. de C.V. (99.99%) 31.08% (99.99%)

Comercializador a Copamex Industrias, Higiene Infantil de Copamex, S.A. de C.V. S.A. de C.V. Mexico, S.A. de C.V. (99.99%) (99.99%) (99.99%)

Pondercel, S.A. de C.V. Papelera de Corporativo Copamex, (99.99%) Chihuahua, S.A. de S.A. de C.V. C.V. (99.99%) (99.99%)

Master Fibers, Inc. Inpamex Planta Michoacána Industrial (99.99%) Huehetoca, S.A. de Papelera, S.A. de C.V. C.V. (99.99%) (99.99%)

Comercial Recicladora, S.A de C.V. (99.99%) Taloquimia, S.A. de Servicios Industriales C.V. (99.99%) Copamex, S.A. de C.V. (99.99%)

Copamex Corrugados, S.A. de C.V. (99.99%) MXN5.5 Million

Note :Includes former CDE employees’ share. Does not include intermediate holding companies. CB – Certificados bursatiles. Source: Fitch and Copamex, S.A. de C.V. financial statements.

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Financial Summary ⎯ Copamex, S.A. de C.V. (MXN Mil.)

Period-End Exchange Rate (MXN/USD) 12.66 13.06 13.54 10.87 10.88

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 514 610 432 456 491 Operating EBITDA Margin (%) 8.3 9.9 7.4 8.2 9.0 FFO Return on Adjusted Capital 5.1 5.2 3.9 6.7 7.1 Free Cash Flow Margin (%) 0.0 0.5 2.2 2.2 2.6 Return on Average Equity (%) 3.4 3.4 1.7 2.0 2.9

Coverage (x) FFO Interest Coverage 2.6 2.6 1.8 2.7 2.5 Operating EBITDA/Gross Interest Expense 4.1 5.0 3.0 3.2 3.1 Operating EBITDA/Debt Service Coverage 0.4 1.0 0.5 0.7 0.7 FFO Fixed Charge Coverage 2.6 2.6 1.8 2.7 2.5 FCF Debt Service Coverage 0.1 0.2 0.3 0.4 0.4 (FCF + Cash and Marketable Securities)/Debt Service Coverage 0.2 0.4 0.4 0.6 0.5 Cash Flow from Operations/Capital Expenditures 1.0 1.3 2.3 2.4 2.4 Leverage (x) FFO Adjusted Leverage 5.9 5.8 7.4 4.7 4.6 Total Debt with Equity Credit/Operating EBITDA 3.7 3.0 3.3 2.9 2.9 Total Net Debt with Equity Credit/Operating EBITDA 3.6 2.9 3.2 2.6 2.9 Total Adjusted Debt/Operating EBITDA 3.7 3.0 4.6 3.9 3.8 Total Adjusted Net Debt/Operating EBITDA 3.6 2.9 4.4 3.6 3.8 Implied Cost of Funds (%) 7.7 7.4 10.5 10.3 10.4 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.6 0.3 0.5 0.4 0.4 Balance Sheet Total Assets 9,730 9,621 9,659 7,730 7,755 Cash and Marketable Securities 74 110 74 125 19 Short-Term Debt 1,078 505 647 553 542 Long-Term Debt 821 1,349 789 770 883 Total Debt 1,899 1,854 1,436 1,323 1,425 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 1,899 1,854 1,436 1,323 1,425 Off-Balance Sheet Debt 0 0 542 436 451 Total Adjusted Debt with Equity Credit 1,899 1,854 1,978 1,759 1,876 Total Equity 4,338 4,304 4,897 3,849 3,865 Total Adjusted Capital 6,237 6,158 6,875 5,608 5,741 Cash Flow Funds from Operations 196 199 121 236 247 Change in Working Capital (62) (72) 107 37 (7) Cash Flow from Operations 134 127 228 273 240 Capital Expenditures (131) (99) (99) (115) (100) Common Dividends 0 0 0 (38) 0 Free Cash Flow 3 28 129 120 140 Net Acquisitions and Divestures 0 0 0 0 0 Other Investments, Net (20) (4) 17 (21) 31 Net Debt Proceeds (112) (100) (23) 7 (108) Net Equity Proceeds 0 0 0 0 0 Other (Invesments and Financing) 55 55 (174) 0 (61) Total Change in Cash (74) (21) (51) 106 2

Income Statement Revenue 6,214 6,162 5,847 5,563 5,429 Revenue Growth (%) 3.0 5.4 5.1 2.5 6.4 Operating EBIT 318 416 231 262 267 Gross Interest Expense 124 122 145 141 160 Net Income 160 157 75 76 110 Note: Audited, consolidated financial statements (U.S. GAAP). Source: Copamex, S.A. de C.V.

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Corporates

Homebuilding Corporacion Geo, S.A.B. de C.V. Mexico Full Rating Report (Geo)

Ratings Rating Rationale Current Security Class Rating • The ratings reflect Corporacion Geo, S.A.B. de C.V.’s (Geo) strong market position Foreign Currency IDR B+ Local Currency IDR B+ in the highly fragmented and dynamic Mexican homebuilding industry as one of the Senior Unsecured Debt BB−/RR3 largest homebuilders in terms of home units sold. The company’s size results in Long-Term National Scale BBB+(mex) both product and geographic diversification, which can eliminate some of the risks Programa Dual Revolvente de Certificados Bursatiles BBB+(mex) related to revenue concentration by location or type of home sold. IDR − Issuer default rating. • Geo’s significant land reserves and moderate leverage are also positively factored into its credit ratings. As of June 30, 2010, the company had land reserves Rating Outlook equivalent to 350,265 homes, which represents around five years of production. Stable These land reserves have been built up using different financing alternatives. They include the company’s cash flow, outsourcing, purchase options, and a joint Financial Data venture with Prudential, among other funds. Geo’s strategy of obtaining land not Corporación Geo, S.A.B. de C.V. only provides for growth, but it also improves the company’s financial flexibility by (MXN Mil.) 12/31/09 12/31/08 reducing working capital requirements, allowing it to use cash flow for other Revenues 19,211 17,453 purposes. Total Adjusted Debt 8,247 8,068 • The ratings also take into consideration Geo’s high working capital requirements Funds From and the cyclicality of the construction industry. These factors are exacerbated by Operations 2,195 3,989 EBITDAR 4,415 4,123 an adverse economic environment, which is characterized by credit restrictions Cash and that could affect Geo’s financial position. Marketable Securities 3,393 2,578 • Historically, refinancing risk has remained high, but it has declined over the past FFO Adjusted Leverage (x) 2.9 1.2 two years. As of June 30, 2010, Geo’s short-term debt represented approximately Adjusted Net 39% of its total debt, down from 64% by year-end 2008. On a pro forma basis, Debt/EBITDAR (x) 1.1 1.3 FFO/Debt Service considering debt repayments with proceeds from issuance of the USD250 million Coverage (x) 0.9 0.8 9.25% senior notes in June, this percentage has been lowered to about 30% or approximately MXN2,869 million. The high use of short-term debt by the Mexican Analysts homebuilding industry relative to other industries is explained by the industry’s practice of financing construction projects with bridge loans associated with each José Vertiz +1 312 368-3349 project, which on average have tenures for low-income houses ranging between [email protected] 12 to 18 months. As of June 30, 2010 Geo had MXN2,140 million in bridge loans.

• The Mexican homebuilding industry and Geo depends on government support to housing for the low-income sector. During the second quarter of 2010, approximately 90% of the homes sold by Geo were financed with mortgages provided by INFONAVIT and FOVISSSTE. • Geo’s ratings incorporate an expectation that the company’s total debt-to-EBITDA ratio will remain below 2.5x under the INIF-14 accounting standard (the company began implementing this accounting method in 2010), which recognizes revenues based on titling rather than percentage of completion method. On a pro forma basis, considering LTM EBITDA under INIF-14, total debt to EBITDA was 2.8x as of June 30, 2010 as Geo ended the quarter with more indebtedness and cash due to its bond placement at the end of the month. Taking into account debt repayments during the third quarter of 2010 with proceeds from the bond, the ratio of total debt to EBITDA is 2.1x.

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• The ‘BB–/RR3’ rating of the senior unsecured debt reflects above-average recovery prospects in the range of 50%–70% in the event of default. What Could Trigger a Rating Action? • Positive rating actions could result from some combination of the following factors: a prolonged strengthening of credit protection measures, a decrease in short-term debt relative to total debt and cash flow, improved availability of financing for the housing sector, higher free cash flow generation, and a larger land inventory. • A negative rating action could be triggered by a deterioration of the company’s credit protection measures and a decline of government funding programs. Weaker sales resulting from increased violence within Mexico could also lead to a ratings downgrade or Negative Watch. Rating Issues Please refer to Fitch’s full company report, “Corporacion Geo, S.A.B. de C.V. (Geo),” dated Oct. 27, 2010, for more information regarding:

• Recent financial performance. • Market position. Liquidity and Debt Structure Geo had a cash balance of MXN4.7 billion as of June 30, 2010. A significant portion of this cash was used during July to repay short-term debt. On a pro forma basis, after the prepayment of the aforementioned debt, Geo had MXN9.5 billion of total debt, excluding nonrecourse revolving factoring (sales) of receivables. This debt level is 21% higher than during the same period of 2009, reflecting higher working capital requirements associated with the normal business operation, acquisition of land reserve, as well as the homebuilding factory and mega project investments. In addition to the USD250 million (MXN3.2 billion) note, the company has about MXN2.1 billion of short- term construction loans and a commercial paper program for USD200 million, of which USD174 million is still available. Recovery Rating Fitch considers the higher of liquidation value or going concern approach when calculating recovery ratings for the Mexican homebuilding industry. Given Geo’s high land reserves and accounts receivables, the liquidation value approach results in higher recovery prospects. Additionally, Fitch uses soft caps on its recoveries in certain markets to reflect concern about creditor rights or weak enforcement of existing laws. In Mexico, the soft cap for recovery ratings is ‘RR3’, and Mexican companies with recovery prospects higher than 70% are constrained by this cap. This recovery level was assigned to the 2014 and 2020 notes issued by Geo, which reflects recovery of between 51%−70% of principal in the event of a default.

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Recovery Analysis ⎯ Corporacion Geo, S.A.B. de C.V. (MXN Mil., As of Dec. 31, 2009)

Going Concern Enterprise Value EBITDA 4,415 Discount (%) 40 Distressed EBITDA 2,649 Multiple (x) 3.0 Going Concern Enterprise Value 7,947

Post-Restructuring EBITDA Estimation Guidelines Interest Expense ⎯ Rent Expense ⎯ Estimated Maintenance Capital Expenditures ⎯ Total ⎯

Available to Liquidation Value Balance Recovery Rate Creditors Cash 3,393 0 ⎯ A/R 10,951 80 8,760.8 Inventory 12,247 65 7,960.6 Net PP&E 2,021.3 50 1,010.7 Total 28,612.3 ⎯ 17,732.0

Distribution of Value by Priority Greater of Enterprise or Liquidation Value 17,732 Less Administrative Claims 1,773.2 Less Concession Payments 0.0 Adjusted Enterprise Value for Claims 15,958.8

Amount Outstanding and Available R/C Value Recovered Recovery Rate Recovery Rating Notching Rating Issuer Default Rating ⎯ ⎯ ⎯ ⎯ ⎯ B+ First-Priority Secured 2,869 2,869 100 RR3 +1 BB− Senior-Priority Secured 334 334 100 RR3 +1 BB− Senior Unsecured 13,297 12,755.8 96 RR3 +1 BB− Senior Subordinated 0 ⎯ ⎯ ⎯ ⎯ ⎯ Preferred Stock 0 ⎯ ⎯ ⎯ ⎯ ⎯ According to Fitch Ratings’ country-specific treatment of recovery ratings, Mexico has a soft cap at ‘RR3’, which results in a maximum one-notch benefit over the issuer default rating. Source: Fitch.

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Organizational Structure — Corporacion GEO, S.A.B. de C.V.

Corporacion GEO, S.A.B. de C.V.

USD250 Mil. Step-Up Senior Guaranteed Notes Due Sept. 25, 2014 (MXN3,330 Mil.) USD250 Mil. Step-Up Senior Guaranteed Notes Due June 30, 2020 (MXN3,164 Mil.)

100% 100% Consolidado de Nuevos Negocios GEO Casas del Bajio, S.A. de C.V.

100% 100% Construcciones BIPE, S.A. de C.V. GEO Tamaulipas, S.A. de C.V.

100% 100% CRELAM, S.A. de C.V. Tiendas GEO, S.A. de C.V.

100% 100% EVITAM, S.A. de C.V. GEO Veracruz, S.A. de C.V.

100% 100% GEO Baja California, S.A. de C.V. Inmobiliaria ANSO, S.A. de C.V.

99% 100% GEO DF, S.A. de C.V. GEO Produccion Industrial, S.A. de C.V.

100% 100% GEO Edificaciones, S.A. de C.V. Maquinaria Especializada Mxo S.A. P.I de C.V.

100% 100% GEO Urbanizadora Valle de las Palmas Lotes y Fraccionamientos S.A. de C.V.

100% 100% Administradora Profesional de Inmuebles Bienestar, GEO Guerrero, S.A. de C.V. S.A. de C.V.

100% 100% GEO Hogares Ideales, S.A. de C.V. Promotora Turistica Playa Vela, S.A. de C.V.

100% 100% GEO Importex, S.A. de C.V. Sistemas y Promociones de Servicios, S.A. de C.V.

100% 99% GEO Jalisco, S.A. de C.V. Geopolis, S.A. de C.V.

100% 100% GEO Laguna, S.A. de C.V. Geopolis Temixco, S.A.P.I de C.V.

100% 100% GEO Monterrey, S.A. de C.V. Geopolos Zumpango, S.A.P.I de C.V.

100% 100% GEO Morelos, S.A. de C.V. K-BE Diseno y Funcionalidad, S.A. de C.V.

100% 98% GEO Oaxaca, S.A. de C.V. GEO ALPHA, S.A. de C.V.

100% 100% GEO Puebla, S.A. de C.V. Administradora ALPHA, S.A. de C.V.

100% FIN Mexico Servicios, S.A. de C.V. Source: Fitch and Corporation GEO, S.A.B. de C.V. financial statements.

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Debt and Covenant Synopsis ⎯ Corporación Geo, S.A.B. de C.V.

Overview Issuer Corporación Geo, S.A.B. de C.V. Corporación Geo, S.A.B. de C.V. Guarantor GEO Baja California, S.A. de C.V., GEO Baja California, S.A. de C.V., GEO Casas del Bajío, S.A. de C.V., GEO Casas del Bajío, S.A. de C.V., GEO D.F., S.A. de C.V., GEO D.F., S.A. de C.V., GEO Edificaciones, S.A. de C.V., GEO Edificaciones, S.A. de C.V., GEO Guerrero, S.A. de C.V., GEO Guanajuato, S.A. de C.V., GEO Hogares Ideales, S.A. de C.V., GEO Guerrero, S.A. de C.V., GEO Jalisco, S.A. de C.V., GEO Hogares Ideales, S.A. de C.V., GEO Laguna, S.A. de C.V., GEO Jalisco, S.A. de C.V., GEO Monterrey, S.A. de C.V., GEO Laguna, S.A. de C.V., GEO Morelos, S.A. de C.V., GEO Monterrey, S.A. de C.V., GEO del Noroeste, S.A. de C.V., GEO Morelos, S.A. de C.V., GEO Puebla, S.A. de C.V., GEO Oaxaca, S.A. de C.V., GEO Tamaulipas, S.A. de C.V., GEO Puebla, S.A. de C.V., GEO Urbanizadora Valle de las Palmas, S.A. de C.V., GEO Tamaulipas, S.A. de C.V., GEO Veracruz, S.A. de C.V. and GEO Veracruz, S.A. de C.V. and Promotora Turística Playa Vela, S.A. de C.V. Promotora Turística Playa Vela, S.A. de C.V. Document Date June 25, 2010 Sept. 18, 2009 Maturity Date June 30, 2020 Sept. 25, 2014 Description of Debt USD250 million aggregate principal amount of 9.25% senior USD250 million aggregate principal amount of 8.875% senior guaranteed notes. guaranteed notes. Acquisitions/Divestitures Change of Control Provision If they experience a change of control, subject to certain conditions, they must give holders of the notes the opportunity to sell them their notes at 101% of the principal amount, plus accrued and unpaid interest. Within 30 days following the date upon which the change of control occurred, the company must send, by first-class mail, a notice to each holder, with a copy to the trustee, offering to purchase the notes as described above and publish the change of control offer in a newspaper having a general circulation in Luxembourg (which is expected to be the Luxembourg Worth). The change of control offer shall state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date the notice is mailed, other than as may be required by law. Sale of Assets Restrictiona The company will not, and will not permit any of its restricted subsidiaries to, consummate an asset sale unless: (a) the company or the applicable restricted subsidiary, as the case may be, receives consideration at the time of the asset sale at least equal to the fair market value of the assets or capital stock sold or otherwise disposed of; and (b) at least 75% of the consideration received for the assets or capital stock sold by the company or the restricted subsidiary, as the case may be, in the asset sale shall be in the form of cash or cash equivalents received at the time of such asset sale. For purposes of the immediately preceding clause (b), each of the following will be deemed to be cash. The company or such restricted subsidiary, as the case may be, may apply the net cash proceeds of any such asset sale within 365 days thereof to: (a) repay any senior indebtedness of the company or a restricted subsidiary or indebtedness of any restricted subsidiary that is not a subsidiary guarantor (including, in each case without limitation, capitalized lease obligations); (b) make capital expenditures or acquire real property used in a permitted business; or (c) to purchase (1) assets (other than current assets, as determined in accordance with GAAP, or capital stock) to be used by the company or any restricted subsidiary in a permitted business or (2) all or substantially all of the assets of, or any capital stock of, a person engaged in a permitted business if, after giving effect to any such acquisition of capital stock, the permitted business is or becomes a restricted subsidiary. Debt Restrictions Additional Debt Restrictiona The company will not, and will not cause or permit any of its restricted subsidiaries to, directly or indirectly, incur any indebtedness, including acquired indebtedness, except that: (a) the company and any subsidiary guarantor may Incur indebtedness, including acquired indebtedness, and (b) any restricted subsidiary that is not a subsidiary guarantor may incur acquired indebtedness not Incurred in connection with, or in anticipation or contemplation of, the relevant acquisition, merger or consolidation, if, at the time of and immediately after giving pro forma effect to the incurrence thereof and the application of the proceeds therefrom, the consolidated fixed charge coverage ratio of the company is greater than 2.0:1.0. The company and its restricted subsidiaries, as applicable, may incur the following indebtedness: notes and note guarantees excluding additional notes and any guarantees of additional notes; indebtedness incurred by the company or any subsidiary guarantor under credit facilities in an aggregate principal amount at any time outstanding not to exceed the greater of USD100 million and 10% of consolidated tangible assets; indebtedness of the company or any of its restricted subsidiaries arising from the honoring by a bank or other financial institution; indebtedness in order to provide security for workers’ compensation claims; indebtedness for the purpose of acquiring or financing all or any part of the purchase price or cost of construction or improvement of property or equipment used in the business of the company or such restricted subsidiary in an aggregate amount at any time not to exceed the greater of USD30 million and 3.0% of consolidated tangible assets, permitted acquisition indebtedness in an aggregate principal amount not to exceed the greater of USD175 million and 17.5% of consolidated tangible assets at any one time outstanding; additional indebtedness of the company or any restricted subsidiary in an aggregate principal amount not to exceed USD15 million at any one time outstanding (which amount may, but need not, be incurred, in whole or in part, under credit facilities). For purposes of determining compliance with, and the outstanding principal amount of, any particular indebtedness Incurred pursuant to and in compliance with this covenant, the amount of indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with GAAP. aApplies to both issuances. Continued on next page. Source: Corporación GEO, S.A.B. de C.V. and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ Corporación Geo, S.A.B. de C.V. (Continued)

Limitation on Secured Debt Restricted Paymentsa The company will not, and will not cause or permit any of its restricted subsidiaries to, directly or indirectly, take any of the following actions (each, a “restricted payment”): (a) declare or pay any dividend or return of capital or make any distribution on or in respect of shares of capital stock other than: dividends or distributions payable in qualified capital stock of the company, dividends or distributions payable to the company and/or a restricted subsidiary; (b) purchase, redeem, or otherwise acquire or retire for value: any capital stock of the company; (c) make any principal payment on, purchase, defease, redeem, prepay, decrease, or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment, or scheduled sinking fund payment; or (d) make any Investment (other than permitted investments). This covenant does not prohibit:(1) The payment of any dividend or the consummation of any irrevocable redemption of subordinated indebtedness within 60 days after the date of declaration of such dividend or giving of the redemption notice; (2) the making of any restricted payment, in exchange for qualified capital stock of the company, or through the application of the net proceeds received by the company from a substantially concurrent sale of qualified capital stock of the company; (3) the voluntary prepayment, purchase, defeasance, redemption, or other acquisition or retirement for value of any subordinated indebtedness; (4) the repurchase of capital stock deemed to occur upon the exercise of stock options or warrants; (5) upon the occurrence of a change of control and within 60 days after the completion of the offer to repurchase the notes pursuant to the covenant described under “change of control”; (6) if no default or event of default shall have occurred and be continuing, the purchase by the company of fractional shares arising out of stock dividends, splits or combinations, or business combinations. Other Optional Redemption Except as stated below, the company may not redeem the The company will have the right, at its option, to redeem any notes prior to June 30, 2015. The company may redeem the of the notes, in whole or in part, at any time or from time to notes, at its option, in whole at any time or in part from time prior to their maturity, on at least 30 days’ but not time to time, on and after June 30, 2015, at the following more than 60 days’ notice, at a redemption price equal to redemption prices, expressed as percentages of the the greater of (1) 100% of the principal amount of such notes principal amount thereof, if redeemed during the 12-month and (2) the sum of the present value of each remaining period commencing on June 30 of any year set forth below: scheduled payment of principal and interest thereon (exclusive of interest accrued to the date of redemption) Year Percentage discounted to the redemption date on a semi-annual basis 2015...... 104.625% (assuming a 360-day year consisting of twelve 30-day 2016...... 103.083% months) at the treasury rate plus 50 basis points (the make- 2017...... 101.542% whole amount), plus in each case accrued interest on the 2018 and Thereafter...... 100.000% principal amount of the notes to the date of redemption.

Prior to June 30, 2015, the company will have the right, at its option, to redeem any of the notes, in whole or in part, at any time or from time to time prior to their maturity, on at least 30 days’ but not more than 60 days’ notice, at a redemption price equal to the greater of (1) 100% of the principal amount of such notes and (2) the sum of the present value of each remaining scheduled payment of principal and interest thereon (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the treasury rate plus 50 basis points (the make-whole amount), plus in each case accrued interest on the principal amount of the notes to the date of redemption. Accelerationa If an event of default (other than an event of default specified in clause 7 (certain events of bankruptcy affecting the company or any of its restricted subsidiaries that are significant subsidiaries) above with respect to the company) shall occur and be continuing, the trustee or the holders of at least 25% in principal amount of outstanding notes may declare the unpaid principal of (and premium, if any) and accrued and unpaid interest on all the notes to be immediately due and payable by notice in writing to the company and the trustee specifying the event of default and that it is a “notice of acceleration.” If an event of default specified in clause 7 above occurs with respect to the company, then the unpaid principal of (and premium, if any) and accrued and unpaid interest on all the notes will become immediately due and payable without any declaration or other act on the part of the trustee or any holder. At any time after a declaration of acceleration with respect to the notes as described in the preceding paragraph, the holders of a majority in principal amount of the notes may rescind and cancel such declaration and its consequences. aApplies to both issuances. Continued on next page. Source: Corporación GEO, S.A.B. de C.V. and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ Corporación Geo, S.A.B. de C.V.

Capital Expenditurea Geo’s operations do not require substantial capital expenditures, as they own or lease on a short-term basis most of the construction equipment they use, excluding those owned or leased by their subcontractors. They also subcontract a substantial portion of the services necessary to build the infrastructure of their developments. They spent approximately MXN67 million in the three-month period ended March 31, 2010, and MXN636 million in 2009 on capital expenditures, primarily for the development of their Oracle ERP program and the implementation of Project Alpha. These expenditures have been capitalized. Their management expects to incur approximately MXN400 million of capital expenditures for growth and renovation of equipment for the remainder of 2010. Intercompany Loansa Intercompany indebtedness is permitted between the company and any restricted subsidiary or between any restricted subsidiaries; provided that: (1) If the company or any subsidiary guarantor is the obligor on such indebtedness and the payee is not the company or any subsidiary guarantor, such indebtedness must be expressly subordinated to the prior payment in full of all obligations under the notes and the indenture, in the case of the company, or such subsidiary guarantor’s note guarantee, in the case of any such subsidiary guarantor; and (2) in the event that at any time any such indebtedness ceases to be held by the company or a restricted subsidiary, such indebtedness shall be deemed to be incurred and not permitted by this clause (f) at the time such event occurs. Restriction on Purchase of The company will comply with the requirements of Rule 14e-1 under the exchange act and any other applicable securities laws Notesa in connection with the purchase of notes pursuant to an asset sale offer. To the extent that the provisions of any applicable securities laws or regulations conflict with the “Asset Sale” provisions of the indenture, the company will comply with these laws and regulations and will not be deemed to have breached its obligations under the “Asset Sale” provisions of the indenture by doing so. The purchase of notes pursuant to an asset sale offer will occur not less than 20 business days following the date of the asset sale offer, or any longer period as may be required by law, nor more than 45 days following the 365th day following the asset sale. The company may, however, defer an asset sale offer until there is an aggregate amount of unapplied net cash proceeds from one or more asset sales equal to or in excess of USD20 million. At that time, the entire amount of unapplied net cash proceeds, and not just the amount in excess of USD20 million, will be applied as required pursuant to this covenant. Pending application in accordance with this covenant, net cash proceeds may be applied to temporarily reduce revolving credit borrowings that can be reborrowed or invested in cash equivalents. Transaction with Affiliatesa (1) The company will not, and will not permit any of its restricted subsidiaries to, directly or indirectly, enter into any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its affiliates (each an “Affiliate Transaction”), unless: (a) The terms of such affiliate transaction are no less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arm’s-length basis from a person that is not an affiliate of the company; (b) In the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD5 million, the terms of such affiliate transaction will be approved by a majority of the members of the board of directors of the company (including a majority of the disinterested members thereof), the approval to be evidenced by a board resolution stating that the board of directors has determined that such transaction complies with the preceding provisions; and (c) In the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD25 million, the company will, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such affiliate transaction to the company and the relevant restricted subsidiary (if any) from a financial point of view from an independent financial advisor and file the same with the trustee. (2) Paragraph (1) above will not apply to: (a) Affiliate transactions with or among the company and any restricted subsidiary or between or among restricted subsidiaries; (b) Reasonable fees and compensation (whether in cash or capital stock of the company) paid to, and any indemnity provided on behalf of, officers, directors, employees, consultants, or agents of the company or any restricted subsidiary as determined in good faith by the company’s board of directors; (c) Affiliate transactions undertaken pursuant to any contractual obligations or rights in existence on the issue date and any amendment, modification, or replacement of such agreement (so long as such amendment, modification or replacement is not materially more disadvantageous to the holders of the notes, taken as a whole, than the original agreement as in effect on the issue date); (d) Any restricted payments made in compliance with “limitation on restricted payments” or any permitted investments; (e) Loans and advances to officers, directors, and employees of the company or any restricted subsidiary for travel, entertainment, moving, and other relocation expenses, in each case made in the ordinary course of business and not exceeding USD2.5 million outstanding at any one time; and (f) Any issuance of capital stock (other than disqualified stock) of the company to affiliates of the company or to any director, officer, employee or consultant of the company, and the granting and performance of registration rights. aApplies to both issuances. Source: Corporación Geo, S.A.B. de C.V. and Fitch Ratings.

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Financial Summary ⎯ Corporacion Geo, S.A. de C.V. (MXN 000)

a 6/30/10 2009 2008 2007 2006

Profitability Operating EBITDA 1,990,171 4,415,398 4,122,966 3,556,720 3,146,576 Operating EBITDAR 1,990,171 4,415,398 4,122,966 3,556,720 3,146,576 Operating EBITDA Margin (%) 22.2 23.0 23.6 23.8 24.2 Operating EBITDAR Margin (%) 22.2 23.0 23.6 23.8 24.2 FFO Return on Adjusted Capital (%) 12.3 14.4 30.1 22.4 22.9 Free Cash Flow Margin (%) (26.5) (2.5) (0.4) (16.1) (5.6) Return on Average Equity (%) 14.2 14.7 15.5 17.8 23.8 Coverage (x) FFO Interest Coverage 5.4 4.3 3.6 2.6 3.0 Operating EBITDA/Interest Expense 6.5 6.6 2.7 3.0 3.2 Operating EBITDAR/Interest Expense + Rents 6.5 6.6 2.7 3.0 3.2 Operating EBITDA/Debt Service Coverage 0.8 1.3 0.6 0.8 0.8 Operating EBITDAR/Debt Service Coverage 0.8 1.3 0.6 0.8 0.8 FFO Fixed Charge Coverage 5.4 4.3 3.6 2.6 3.0 FCF Debt Service Coverage (0.8) 0.1 0.2 (0.3) 0.1 (FCF + Cash and Marketable Securities)/Debt Service Coverage 0.1 1.1 0.6 0.2 0.8 Cash Flow from Operations/Capital Expenditures (9.8) 0.4 0.9 (1.4) (1.5) Capital Structure and Leverage (x) FFO Adjusted Leverage 3.7 2.9 1.5 1.7 1.8 Total Debt with Equity Credit/Operating EBITDA 3.0 1.9 2.0 N.A. 1.6 Total Net Debt with Equity Credit/Operating EBITDA 1.8 1.1 1.3 N.A. 0.6 Total Adjusted Debt/Operating EBITDAR 3.0 1.9 2.0 1.5 1.7 Total Adjusted Net Debt/Operating EBITDAR 1.8 1.1 1.3 0.9 0.8 Implied Cost of Funds (%) 5.1 8.2 23.2 N.A. 21.5 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.4 0.3 0.6 0.6 0.6 Balance Sheet Total Assets 32,692,860 30,227,136 25,765,036 19,619,394 17,044,246 Cash and Marketable Securities 4,743,457 3,393,374 2,578,338 2,129,620 2,993,281 Short-Term Debt 4,649,019 2,659,512 5,147,251 3,378,292 2,855,029 Long-Term Debt 7,374,204 5,587,235 2,920,665 1,835,338 2,086,324 Total Debt 12,023,223 8,246,747 8,067,916 5,213,630 4,941,353 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 12,023,223 8,246,747 8,067,916 5,213,630 4,941,353 Off-Balance Sheet Debt 0 0 0 0 470,033 Total Adjusted Debt with Equity Credit 12,023,223 8,246,747 8,067,916 5,213,630 5,411,386 Total Equity 9,628,457 11,617,910 10,320,333 8,684,908 7,539,511 Total Adjusted Capital 21,651,680 19,864,657 18,388,249 13,898,538 12,950,897 Cash Flow Funds from Operations 1,329,138 2,195,088 3,989,274 1,915,579 1,969,166 Change in Operating Working Capital (3,072,405) (1,915,325) (3,415,259) (3,302,406) (2,406,633) Cash Flow from Operations (1,990,420) 279,763 574,015 (1,386,827) (437,467) Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (204,066) (756,993) (651,082) (1,025,621) (285,529) Dividends 0 0 0 0 0 Free Cash Flow (2,375,226) (477,230) (77,067) (2,412,448) (722,996) Net Acquisitions and Divestures 0 0 0 409,436 129,516 Other Investments, Net (180,740) (159,937) (257,209) (131,789) (229,582) Net Debt Proceeds 3,819,333 1,110,404 2,159,807 1,207,470 50,430 Net Equity Proceeds 0 1,130 763 (92,382) 760,813 Other Financing, Net (188,220) 358,933 (1,377,576) 156,312 0 Total Change in Cash 1,350,083 833,300 448,718 (863,401) (11,819) Income Statement Net Revenues 8,970,994 19,210,864 17,453,015 14,975,647 13,012,152 Revenue Growth (%) N.A. 10 17 15 19 Operating EBIT 1,427,127 4,125,118 3,841,547 3,241,638 2,902,888 Gross Interest Expense 305,358 667,208 1,541,920 1,202,622 992,940 Rental Expense 0 0 0 0 0 Net Income 685,231 1,614,189 1,473,215 1,447,998 1,551,185 aINIF-14 Mexican accounting changes. Since the first quarter of 2010, the company has been presenting financial information based on the Mexican Accounting Principle INIF-14 “Construction Contracts, Sale and Delivery of Services Relating to Property,” which requires recognition of housing revenues based on homes titled rather than a “percentage of completion” method. N.A. − Not applicable. Source: Corporacion Geo, S.A. de C.V. and Fitch Ratings.

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Telecommunications Digicel Group Limited Jamaica Full Rating Report And Digicel Limited

Ratings Rating Rationale

Current • The ratings of Digicel Group Limited (DGL), Digicel Limited (DL), and Digicel Security Class Rating International Finance Limited (DIFL) (collectively Digicel) reflect a solid operating Digicel Limited performance, its position as the leading provider of wireless services in most of its Foreign Currency Issuer Default Rating B− markets, strong brand recognition, increasingly diversified revenue and cash flow, a USD510 Mil. 2014 Sr. Notes B−/RR4 manageable debt maturity profile, and positive free cash flow (FCF) generation. USD500 Mil. 2017 Sr. Notes B−/RR4 The ratings are constrained by high leverage and exposure to politically unstable Digicel Group Limited USD1.0 Bil. 2015 Sr. Notes CCC+/RR5 countries and economies. USD415 Mil. 2015 Sr. Notes CCC+/RR5 USD775 Mil. 2018 Sr. Notes CCC+/RR5 • Digicel’s operating performance continues to be strong. The company maintains Digicel International Finance Limited leading market shares in most of the markets served, holding the first or second USD1.04 Bil. Secured Facility B/RR3 position by market share as a result of successfully executing a strategy of Outlook launching operations with extensive initial geographic coverage, good customer service, effective branding, and strong product offerings. High wireless penetration Stable rates are the result of low fixed-line penetration, long waiting periods to get fixed- Financial Data line connections, good network coverage by wireless service providers, and substitution of fixed-line services by mobile. Digicel Group Limited ($ Mil.) • The transaction to acquire Digicel Pacific Limited (DPL) by DGL should increase the LTM Ended 12/31/09 3/31/09 diversification of the company despite moderately increasing leverage. DGL Revenues 1,717 1,732 Operating acquired DPL, a sister company, in its entirety for approximately USD825 million, EBITDA 726 676 which was funded with proceeds of the USD775 million senior notes due 2018, Operating EBITDA placed in March 2010, and cash balances. Margin (%) 42.3 39.0 Debt with • With regard to Digicel’s capital structure and the associated ratings, debt at DIFL is Equity Credit 3,239 3,140 Total Debt with rated one notch higher than the group’s issuer default rating (IDR), reflecting its Equity Credit/ above-average recovery prospects and security on assets. The DL IDR reflects the Oper. EBITDA (x) 4.5 4.6 Mobile Users increased burden the DGL subordinated notes place on the operating assets and the (Mil.) 7.5 7.1 loss of financial flexibility. The ratings of DGL’s 2015 and 2018 notes incorporate

their subordination to debt at DIFL and DL, as well as their below-average recovery Analysts prospects in an event of default. Sergio Rodriguez, CFA • Digicel’s broadband strategy is expected to pursue offerings using WiMAX as the +52 81 8399-9100 [email protected] main technology for delivering broadband services to take advantage of the low fixed penetration rates in most of its markets. However, it is possible that it may John C. Culver, CFA elect to rollout 3G offerings selectively in some markets. Its first WiMAX launches in +1 312 368-3216 [email protected] Jamaica and the Cayman Islands should continue to support increase in data

revenues, which accounted for 8.8% of service revenues for the quarter ended Dec. 31, 2009. Key Rating Drivers • Factors that could trigger a negative rating action are consolidated leverage at DGL approaching at 6.0x, expected to be maintained over time, or an inability to refinance in advance sizeable bullet maturities, especially those maturing in 2015. • Conversely, positive factors for credit quality would be if leverage at DGL reached 4.0x or below and was expected to stay in that range. Increased diversification of the company’s operating income in more stable markets would also be positive.

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Rating Issues Please refer to Fitch’s full company report, “Digicel Group Limited (DGL),” dated Sept. 22, 2010, for more information regarding:

• DPL acquisition. • The impact of the Haiti earthquake. Liquidity and Debt Structure Liquidity is reasonable for Digicel considering the acquisition of DPL, FCF generation, and recent efforts by the company to extend its debt maturity profile. As of Dec. 31, 2009 on a pro forma basis, total cash was approximately USD500 million with maturities within the next three years of approximately USD500 million. Over the past few months, Digicel has successfully refinanced its 2012 notes and more recently has extended and upsized by USD75 million, USD533 million of the USD795 million from the existing secured facility into a new facility. The most significant bullet maturities are during April 2014 (USD510 million) and January 2015 (USD1.4 billion). Pro forma the financing and acquisition of DPL as of Dec. 31, 2009, the company’s total-debt-to-EBITDA ratio will be approximately 5.3x before starting to decline in the next few years, as EBITDA is expected to moderately grow, assuming debt from the secured credit facilities are paid as they mature. FCF should increase due to slightly higher EBITDA, stable capital expenditures, and dividend payments of USD40 million per year., Digicel has mentioned that for the next 12 months, the company does not intend to raise its 43.4% stake in Digicel Holdings (Central America) Limited (DHCAL).

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Debt and Covenants Synopsis

Debt Class Security Financial Covenants Other DIFL Existing Facility First-priority lien on all Total Debt/EBITDA < 4.5x Sr. Restrictions on investments, debt liens, acquisitions, and restricted assets. Secured debt/EBITDA <3.0x payments. EBITDA/Interest Expense > 3.0x DIFL New Extended First-priority lien on all Total Debt/EBITDA < 4.0x Sr. Restrictions on investments, debt liens, acquisitions, and restricted Facility assets. Secured debt/EBITDA <2.25x payments. EBITDA/Interest Expense > 3.0x DL 2014 Sr. Notes Senior unsecured guaranteed Total Debt/EBITDA < 3.25x Sr. The indenture governing the 2014 notes, among other things, restricts on a senior subordinated Secured debt/EBITDA <1.75x DL’s ability and the ability of certain of its subsidiaries to incur basis by certain wholly additional indebtedness and issue preferred stock, pay dividends, owned Digicel subsidiaries. make investments or certain other restricted payments, create liens, engage in sale-leaseback transactions, guarantee debt and engage in mergers, consolidations and certain sales or leases of properties and assets. DL 2017 Sr. Notes Senior unsecured guaranteed Total Debt/EBITDA < 4.0x Sr. The indenture governing the 2017 notes, among other things, restricts on a senior subordinated Secured debt/EBITDA <2.25x DL’s ability and the ability of certain of its subsidiaries to incur basis by certain wholly additional indebtedness and issue preferred stock, pay dividends, owned Digicel subsidiaries. make investments or certain other restricted payments, create liens, engage in sale-leaseback transactions, guarantee debt and engage in mergers, consolidations and certain sales or leases of properties and assets. Digicel Pacific Finance All shares and assets of DPL Total Debt/EBITDA < 1.75x by Customary project finance covenants and USD28 million contingent Limited (DPFL) and restricted subsidiaries March 2012 EBITDA/Interest equity commitment. Facility of Samoa, Tonga, Vanuatu, Expense > 4.25x and Fiji. Digicel PNG All shares and assets of Total Debt/EBITDA < 2.0x by March Customary project finance covenants and USD30 million contingent Digicel PGN. 2012 EBITDA/Interest Expense > equity commitment. 4.0x DGL 2015 Sr. Notes & Senior unsecured and Total Debt/EBITDA < 6.0x Total Certain covenants limit the company’s ability to incur additional Toggle Notes structurally subordinated. Debt/EBITDA of restricted indebtedness, pay dividends, or other distributions with respect to subsidiaries < 4.5x capital stock, provide guarantees, consolidate, merge or transfer substantially all assets. The notes also have a change-of-control clause at 101% of the principal and the same optional redemption for up to 35%of the aggregate principal at a redemption price of 108.875% for the senior notes and 108.125% for the toggle notes starting in 2010. DGL 2018 Sr. Notes Senior unsecured and Total Debt/EBITDA < 6.0x Certain covenants limit the company’s ability to incur additional structurally subordinated. indebtedness, pay dividends, or other distributions with respect to capital stock, provide guarantees, consolidate, merge or transfer substantially all assets. The notes also have a change-of-control clause at 101% of the principal and an optional redemption for up to 35% of the aggregate principal at 110.5% of par value prior to April 15, 2013. On and after April 15, 2014, the notes are redeemable at 105.25% of par value declining at a rate of 1.75% per year until 2017. Source: Digicel and Fitch.

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Recovery Analysis ⎯ Digicel Group Limited (Pro Forma DPL) (USD Mil., As of Dec. 31, 2009)

Enterprise Value Liquidation Value Balance as of Recovery Available to EBITDA (LTQ Annualized including DPL) 825.0 12/30/09 Rates (%) Creditor EBITDA Discount (%) 30.0 Cash 499.0 100 499.0 Distressed EBITDA 578 Accounts Receivable 274.8 75 206.1 Market Multiple 5.0 Inventory 16.8 50 8.4 Enterprise Value 2,887.5 PP&E, Net 1,614.5 50 807.2 Total 2,405.0 ⎯ 1,520.7

Interest Expense ⎯ Rent Expense ⎯ Maintenance Capital Expenditures ⎯ Principal Amortization (Next 12 Months) ⎯ Distribution of Value by Priority

Greater of Enterprise or Liquidation Value 2,887.5 Less Administrative Claims 288.8 Less Concession Payments 0.0 Adjusted Value 2,598.8

Amount Outstanding Value Recovery and Available R/C Recovered Rate (%) RR Rating Notching Credit Ratings IDR ⎯ ⎯ ⎯ ⎯ ⎯ B− First-Priority Secured 1,211.0 1,211.0 100 RR3 +1 Ba Second-Priority Secured 0.0 0.0 0 ⎯ ⎯ ⎯ Senior Unsecured 1,010.0 1,010.0 100 RR4 0 B−a Senior Subordinated 2,190.0 377.8 17 RR5 −1 CCC+ Preferred Stock 0.0 0.0 0 ⎯ ⎯ ⎯ aRecovery rating constrained. Source: Digicel.

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Corporate Structure — DGL Proforma DPL (As of Dec. 31, 2009, pro forma debt drawn in March 2010, USD Mil.)

Digicel Group Limited (Bermuda) Uncons. Debt 2,190 Cons. Debt 4,411 EBITDA Cons. 836 Debt to EBITDA (x) 5.3

43.4% 100% 100% Digicel Pacific Limited Digicel Holdings (Central Digicel Limited (Bermuda) America) Limited Debt 298 (DHCAL) Unconsolidated Debt 1,010 EBITDA 84 Consolidated Debt 1,923 Debt to EBITDA (x) 3.5 EBITDA 752 Debt to EBITDA (x) 2.6 100% Digicel Holdings (Bermuda) Ltd (Bermuda)

100%

Digicel International Finance Limited (St. Lucia) Debt 913 EBITDA 752 Debt to EBITDA (x) 1.2

Operating Companies

Debt 0 EBITDA 752 Debt to EBITDA (x) N.M.

N.M. — Not meaningful. Note: Debt data as of Dec. 31, 2009 is adjusted for additional debt at DGL plus the DIFL facility drawn in March 2010, and Fitch’s EBITDA estimate for fiscal 2010 ending March 31, 2010 for DL and DPL pro forma financials. Source: Fitch and Digicel financial statements.

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Financial Summary ⎯ Digicel Group Limited (USD 000, Fiscal Years Ended March 31) LTM 12/31/09 2009 2008 2007 2006

Profitability Operating EBITDA 726,416 676,134 504,517 213,488 193,929 Operating EBITDAR 750,623 700,341 533,249 235,256 202,230 Operating EBITDA Margin (%) 42.3 39.0 32.4 18.9 31.1 Operating EBITDAR Margin (%) 43.7 40.4 34.2 20.9 32.4 FFO Return on Adjusted Capital (%) 35.7 28.5 21.7 10.7 35.1 FCF Margin (%) 13.8 7.3 (10.5) (109.7) 3.5 Return on Average Equity (%) 2.9 (4.3) 8.1 26.7 113.4

Coverage (x) FFO Interest Coverage 2.2 2.7 1.7 1.8 3.3 Operating EBITDA/Interest Expense 2.0 2.9 2.0 1.9 2.7 Operating EBITDAR/Interest Expense + Rents 1.9 2.7 1.9 1.8 2.5 Operating EBITDA/Debt Service Coverage 1.0 1.2 1.8 1.8 1.4 Operating EBITDAR/Debt Service Coverage 1.0 1.1 1.7 1.7 1.4 FFO Fixed Charge Coverage 2.1 2.6 1.7 1.6 3.0 FCF Debt Service Coverage 0.8 0.6 0.3 (9.7) 0.7 FCF + Cash and Marketable Securities)/Debt Service Coverage 1.4 1.5 0.8 (7.1) 1.9 Cash Flow from Operations/Capital Expenditures 2.5 1.5 0.5 ⎯ 1.1

Capital Structure and Leverage (x) FFO Adjusted Leverage 4.1 5.0 6.7 13.5 3.0 Total Debt with Equity Credit/Operating EBITDA 4.5 4.6 5.7 12.8 3.4 Total Net Debt with Equity Credit/Operating EBITDA 3.8 3.9 5.4 11.4 2.6 Total Adjusted Debt/Operating EBITDAR 4.6 4.8 5.8 12.4 3.6 Total Adjusted Net Debt/Operating EBITDAR 4.0 4.1 5.5 11.1 2.8 Implied Cost of Funds (%) 12.0 7.9 9.0 6.4 21.9 Secured Debt/Total Debt ⎯ ⎯ ⎯ 0.3 0.6 Short-Term Debt/Total Debt 0.1 0.1 0 0 0.1

Balance Sheet Total Assets 2,683,643 2,633,028 2,421,746 2,467,762 1,026,066 Cash and Marketable Securities 465,410 492,010 151,335 297,406 167,970 Short-Term Debt 395,107 349,690 30,854 6,912 65,040 Long-Term Debt 2,844,214 2,790,449 2,823,147 2,729,732 597,559 Total Debt 3,239,321 3,140,139 2,854,001 2,736,644 662,599 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 3,239,321 3,140,139 2,854,001 2,736,644 662,599 Off-Balance Sheet Debt 193,656 193,656 229,856 174,144 66,408 Total Adjusted Debt with Equity Credit 3,432,977 3,333,795 3,083,857 2,910,788 729,007 Total Equity (1,072,924) (983,198) (953,905) (888,561) (33,594) Total Adjusted Capital 2,360,053 2,350,597 2,129,952 2,022,227 695,413

Cash Flow FFO 448,564 409,633 182,699 84,679 163,374 Change in Operating Working Capital (50,262) (41,720) (12,086) (88,692) 102,320 Cash Flow from Operations 398,302 367,913 170,613 (4,013) 265,694 Total Non-Operating/Non-Recurring Cash Flow ⎯ ⎯ ⎯ ⎯ ⎯ Capital Expenditures (160,594) (241,378) (333,433) (475,226) (244,139) Dividends ⎯ ⎯ ⎯ (757,438) ⎯ Free Cash Flow 237,708 126,535 (162,820) (1,236,677) 21,555 Net Acquisitions and Divestitures (302,459) (72,493) (39,217) (655,058) (92,949) Other Investments (Net) 26,770 ⎯ ⎯ 11,880 (11,880) Net Debt Proceeds 279,209 278,065 39,752 2,033,863 152,583 Net Equity Proceeds 244 ⎯ ⎯ 3,938 738 Other Financing, Net (16,235) 7,178 16,570 (28,914) 12,746 Total Change in Cash 225,237 339,285 (145,715) 129,032 82,793 Continued on next page. Source: DGL financial statements and Fitch.

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Financial Summary ⎯ Digicel Group Limited (Continued) (USD 000, Fiscal Years Ended March 31)

LTM 12/31/09 2009 2008 2007 2006 Income Statement Net Revenues 1,717,298 1,731,679 1,557,366 1,127,135 623,257 Revenue Growth (%) (1) 11 38 81 ⎯ Operating EBIT 481,373 444,835 240,113 40,276 111,194 Gross Interest Expense 368,820 236,759 250,654 109,526 72,502 Rental Expense 24,207 24,207 28,732 21,768 8,301 Net Income (30,428) 41,381 (74,418) (122,896) (19,049) Source: DGL financial statements and Fitch.

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Electric-Corporate Empresa Generadora de Dominican Republic Full Rating Report Electricidad Haina, S.A.

Ratings Rating Rationale Current • Empresa Generadora de Electricidad Haina, S.A.’s (EGE Haina) ratings reflect the Security Class Rating Foreign Currency IDR B− company’s dependence upon government subsidies for its financial sustainability. Local Currency IDR B− Notwithstanding recent improvements in the timeliness of government payments, USD175 Mil. Sr. Unsecured Notes due 2017 B− the risks of operating electric generation assets in the Dominican Republic remain high and reflect the distribution companies’ low collections and high losses. These IDR − Issuer default rating. risks translate into high cash flow volatility for all generation companies. Rating Outlook • The Dominican Republic power sector is characterized by low collections from end Stable users and high electricity losses. Such conditions have kept distribution companies from effectively transferring cash to the country’s generation companies, and the Financial Data government subsidies have covered this gap during recent years. This links the Empresa Generadora de Electricidad credit quality of the distribution and generation companies in the country to that of Haina, S.A. the sovereign. (USD Mil.) 6/30/10 12/31/09 Total Assets 548 554 • The sector trends are mostly favorable as a result of the Dominican Republic’s new Total Equity 299 292 Net Income 15 14 stand-by arrangement with the International Monetary Fund (IMF). This agreement EBITDA 66 45 seeks to gradually eliminate the tariff deficit, increase the cash recovery index (CRI) Total Debt 202 202 to 70% (from the historical 50%) by incorporating approximately 600,000 nonpaying users into paying and metered users, and eliminate free electricity (PRA) zones. The Analysts agreement should also result in focused subsidies and the creation of a central Lucas Aristizabal account to pay all generation companies. Under terms of the agreement, electricity +1 312 368-32604 generators should now be paid by the government within 45 days. [email protected] • EGE Haina’s credit metrics are currently adequate for the rating category. Hilario Ramirez However, they have been weakening during the past year and a half due to the fall +58 212 286-3356 [email protected] of hydrocarbon prices. For the LTM ended June 30, 2010 and year-end 2009, the company reported EBITDA of USD66 million and USD45 million, respectively, down from USD74 million reported during 2008. Cash flow from operations (CFFO) has been trending positive due to efforts by the company to accelerate account receivables collections and an improvement in the payment track record of distribution companies. For the LTM ended June 30, 2010, EGE Haina reported CFFO of approximately USD55 million, up from negative USD17 million during 2009. This translates into a strong liquidity position with cash on hand of approximately USD111 million as of June 30, 2010. As of June 30, 2010, EGE Haina’s leverage ratio, as measured by total debt to EBITDA, of 3.1x was adequate for the rating category. Net leverage of 1.4x is considered strong. • The company benefits from its diversified portfolio of assets using different fuel sources to generate electricity, its strong market position, and its operating efficiency. EGE Haina’s generation assets are composed of fuel oil-, diesel-, and coal-powered generation plants scattered throughout the country. This gives the company different positions on the dispatch merit list. EGE Haina’s operating efficiency compares well with other generation companies in the country. The company has an average heat rate of 9,526 British thermal units (Btu)/kilowatt hour (KWh), and its most efficient generation unit has a heat rate of 7,800 Btu/KWh, burning heavy fuel oil also known as fuel oil No. 6.

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Key Rating Drivers • The dependence of the sector upon government subsidies links EGE Haina’s credit quality to that of the sovereign. Reduction of government subsidies before the sector reaches financial self sustainability would weaken distribution and generation companies’ credit quality. Rating Issues Please refer to Fitch’s full company report, “Empresa Generadora de Electricidad Haina, S.A.’s (EGE Haina),” dated Sept. 9, 2010, for more information regarding:

• Recent financial performance. • Dominican Republic IMF agreement and implications on electricity sector. • Management strategy. Liquidity and Debt Structure The company’s liquidity is supported by USD111 million of cash on hand. The return to positive cash flow from operations also supports EGE Haina’s liquidity. Total debt of approximately USD202 million is composed of USD165 million of senior unsecured notes due 2017 and USD30 million of local bonds due through December 2012. The balance is debt with local banks. As of June 30, 2010, EGE Haina’s leverage ratio, as measured by total debt to EBITDA, of 3.1x was adequate for the rating category, and its net leverage of 1.4x is considered strong. Recovery Analysis EGE Haina’s issuance has been assigned a recovery rating of ‘RR4’. Fitch’s recovery analysis consists of a variety of valuation techniques. Fitch notes these valuations are stressed (i.e., possible recoveries in a liquidation scenario) as they are not reflective of the company’s value as a going concern. EGE Haina’s recovery rating of ‘RR4’ is constrained by the Dominican Republic’s recovery rating cap. The company’s recovery analysis is based on its average EBITDA reported during the past five years.

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Recovery Analysis ⎯ Empresa Generadora de Electricidad Haina, S.A. (USD Mil., As of June 30, 2010)

Enterprise Value EBITDA 65.9 EBITDA Discount (%) 62.1 Distressed EBITDA 25 Market Multiple (x) 5.0 Enterprise Value 125.0

Interest Expense 17 Rent Expense ⎯ Maintenance Capital Expenditures 8 Principal Amortization (Next 12 months) ⎯

Recovery Available to Liquidation Value Balance Rate (%) Creditors Cash 110.8 0 ⎯ A/R 93.6 10 9.4 Inventory 34.9 0 ⎯ Net PP&E 249.9 20 50.0 Total 489.2 ⎯ 59.3

Distribution of Value by Priority

Greater of Enterprise or Liquidation Value 125.0 Less Administrative Claims 12.5 Less Concession Payments 0.0 Adjusted Value 112.5

Amount Outstanding and Available R/C Value Recovered Recovery Rate (%) ‘RR’ Rating Notching Credit Ratings Issuer Default Rating ⎯ ⎯ ⎯ ⎯ ⎯ B− First Priority Secured 0.0 0.0 0 ⎯ ⎯ ⎯ Second Priority Secured 0.0 0.0 0 ⎯ ⎯ ⎯ Senior Unsecured 202.0 112.5 56 RR4 ⎯ B− Senior Subordinated 0.0 0.0 0 ⎯ ⎯ ⎯ Preferred Stock 0.0 0.0 0 ⎯ ⎯ ⎯ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Dominican Republic corporates are capped at ‘RR4’. Source: Company financials and Fitch assumptions.

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Organizational Structure — Empresa Generadora de Electricidad Haina, S.A. (USD Mil., As of June 30, 2010)

Basic Energy Caribe Energy, Ltd. Other 31.08% 44.51% 24.41%

Dominican Republic LTM June 30, 2010 (IDR — B) Combined Summary Statistics Haina Investment Company, Ltd. Through Fondo Patrimonial EBITDA 60 de las Empresas Reformadas Cash and Marketable Securities 110 50.00% 50.00%a Total Debt 202

Empresa Generadora de Electricidad Haina, S.A. Operating Company (Guarantor) IDR — B–

100.00% EGE Haina Finance Company (Issuer) USD175 Senior Unsecured Notes Rating — B–

aIncludes former CDE employees share. Does not include intermediate holding companies. Source: Fitch and Empresa Generadora de Electricidad Haina, S.A. financial statements.

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Debt and Covenant Synopsis ⎯ Empresa Generadora de Electricidad Haina, S.A. (Foreign Currency Notes)

Overview Issuer EGE Haina Finance Company Guarantors Empresa Generadora de Electricidad Haina, S.A. Document Date May 11, 2007 Maturity Date April 26, 2017 Description of Debt Senior Unsecured Notes

Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) 3.5x Interest Coverage (Minimum) 2.5x Acquisitions/Divestitures Change of Control Provision Change of control clause at 101% of principal. Sale of Assets Restriction Generally permits asset sales as long as it is divested at least equal to fair market value, it received at least 75% cash payment and the proceeds are used to reduce debt or are reinvested.

Debt Restriction Additional Debt Restriction The issuer is not allowed to incur additional debt. The guarantor is not allowed to incur additional debt except permitted debt. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations. The guarantor can incur additional indebtedness in an aggregate principal amount not to exceed USD25 million. Limitation on Secured Debt EGE Haina is not permitted to issue senior secured debt or to create any lien on any asset, property, or income without providing the same security to the existing notes. Restricted Payments The issuer is not permitted to pay any dividends or make any other distribution to its shareholders. The guarantor is not permitted to make any restricted payments if, among other clauses, it can not incur additional debt according to its limitation on indebtedness, an event of default has occurred, or if such payment exceed 100% of combined net income. Other Cross Default If the issuer, guarantor, or any restricted subsidiary defaults on any indebtedness of at least USD20 million. Acceleration If any event of default occurs and is continuing the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Events of default include, but are not limited to, the interest reserve not being fully funded for more than five days and if the issuer, guarantor or any restricted subsidiary defaults in any indebtedness of at least USD20 million. Restriction on Purchase of Notes The issuer is allowed to redeem the notes in whole or in part at a preset redemption price. N.A. − Not applicable. Source: Company and Fitch Ratings.

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Financial Summary ⎯ Empresa Generadora de Electricidad Haina, S.A. (USD 000, As of Dec. 31)

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 65,872 44,555 74,174 70,535 61,114 Operating EBITDAR 65,872 44,555 74,174 70,535 61,114 Operating EBITDA Margin (%) 17.7 14.5 16.1 20.5 19.7 Operating EBITDAR Margin (%) 17.7 14.5 16.1 20.5 19.7 FFO Return on Adjusted Capital (%) 11.9 9.1 18.0 13.2 14.1 Free Cash Flow Margin (%) 13.8 (14.1) (6.7) (0.6) 3.5 Return on Average Equity (%) 5.1 4.7 12.6 13.5 8.3

Coverage (x) FFO Interest Coverage 2.9 1.7 3.7 4.6 3.7 Operating EBITDA/Interest Expense 3.2 1.7 3.1 5.0 4.0 Operating EBITDAR/Interest Expense + Rents 3.2 1.7 3.1 5.0 4.0 Operating EBITDA/Debt Service Coverage 1.7 1.4 2.9 2.7 1.8 Operating EBITDAR/Debt Service Coverage 1.7 1.4 2.9 2.7 2.1 FFO Fixed Charge Coverage 2.9 1.7 3.7 4.6 4.7 FCF Debt Service Coverage 1.8 (0.5) (0.3) 0.4 0.8 (FCF + Cash and Marketable Securities)/Debt Service Coverage 4.6 0.7 0.6 3.0 1.0 Cash Flow from Operations/Capital Expenditures 4.1 (2.9) 0.4 0.4 12.0

Capital Structure and Leverage (x) FFO Adjusted Leverage 3.4 4.5 2.0 2.9 1.9 Total Debt with Equity Credit/Operating EBITDA 3.1 4.5 2.4 2.7 1.8 Total Net Debt with Equity Credit/Operating EBITDA 1.4 3.7 2.1 1.7 1.6 Total Adjusted Debt/Operating EBITDAR 3.1 4.5 2.4 2.7 1.8 Total Adjusted Net Debt/Operating EBITDAR 1.4 3.7 2.1 1.7 1.6 Implied Cost of Funds (%) 10.0 13.6 13.1 9.5 13.8 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.1 0.0 0.0 0.1 0.2

Balance Sheet Total Assets 547,884 554,309 584,234 531,494 437,912 Cash and Marketable Securities 110,833 39,548 22,340 67,053 7,423 Short-Term Debt 19,500 6,000 1,703 12,442 18,275 Long-Term Debt 182,867 196,367 175,000 175,000 88,713 Total Debt 202,367 202,367 176,703 187,442 106,988 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 202,367 202,367 176,703 187,442 106,988 Off-Balance Sheet Debt 0 0 0 0 0 Total Adjusted Debt with Equity Credit 202,367 202,367 176,703 187,442 106,988 Total Equity 299,445 291,804 316,687 299,914 261,942 Total Adjusted Capital 501,812 494,171 493,390 487,356 368,930

Cash Flow Funds from Operations 39,450 19,021 65,116 50,282 40,933 Change in Operating Working Capital 15,066 (36,323) (58,979) (49,058) (28,953) Cash Flow from Operations 54,516 (17,302) 6,137 1,224 11,980 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (13,330) (5,881) (17,098) (3,329) (997) Dividends 10,003 (20,003) (20,000) 0 0 Free Cash Flow 51,189 (43,186) (30,961) (2,105) 10,983 Net Acquisitions and Divestitures 0 0 0 0 0 Other Investments, Net 41,788 32,978 16,986 (16,043) (537) Net Debt Proceeds 2,525 27,737 (10,738) 57,779 (7,951) Net Equity Proceeds 136 0 0 0 0 Other Financing, Net (30) (322) 0 0 0 Total Change in Cash 95,608 17,207 (24,713) 39,631 2,495

Income Statement Net Revenues 372,248 307,198 460,567 344,519 309,605 Revenue Growth (%) 3 (33) 34 11 24 Operating EBIT 50,037 29,015 58,870 55,211 34,008 Gross Interest Expense 20,299 25,837 23,792 13,985 15,180 Rental Expense 0 0 0 0 0 Net Income 14,502 14,403 38,934 37,973 20,942 Source: Fitch Ratings.

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Electric-Corporate Empresa Generadora de Dominican Republic Full Rating Report Electricidad Itabo, S.A. (Itabo)

Ratings Rating Rationale Current Security Class Rating • The Dominican Republic power sector is characterized by low collections from end Foreign Currency IDR B− users and high electricity losses. Such conditions have kept distribution companies Local Currency IDR B− from effectively transferring cash to the country’s generation companies and the USD125 Mil. Sr. Unsecured Notes due 2013 B− government subsidies have covered this gap during recent years. This links the National Long-Term Rating BBB(dom) credit quality of the distribution and generation companies in the country to that of IDR − Issuer default rating. the sovereign.

• Empresa Generadora de Electricidad Itabo, S.A.’s (Itabo) ratings reflect the Rating Outlook company’s dependence upon government subsidies for its financial sustainability. Stable Notwithstanding recent improvements in the timeliness of government payments,

the risks of operating electric generation assets in the Dominican Republic remain Financial Data high and reflect the distribution companies’ low collections and high losses. These Empresa Generadora de Electricidad risks translate into high cash flow volatility for all generation companies. Itabo, S.A. (Itabo) • The sector trends are favorable, mainly as a result of the Dominican Republic’s new LTM stand-by arrangement with the International Monetary Fund (IMF). This agreement (USD Mil.) 6/30/10 12/31/09 Total Assets 461 504 seeks to gradually eliminate the tariff deficit; increase the cash recovery index Total Equity 273 305 (CRI) to 70%, from the historical 50%, by incorporating approximately 600,000 Net Income 24 32 EBITDA 16 70 nonpaying users into paying and metered users; and eliminate free electricity (PRA) Total Debt 125 125 zones. The agreement should also result in focused subsidies and the creation of a central account to pay all generation companies. Under terms of the agreement, Analysts electricity generators should now be paid by the government within 45 days. Lucas Aristizabal • Itabo’s current financial profile is considered adequate for the rating. During the +1 312 368-32604 first half of 2010, EBITDA was negatively affected by lower sale prices and higher [email protected] fuel costs due to the tariff adjustment lag under the company’s power purchase Hilario Ramirez +58 212 286-3356 agreements (PPAs) and unfavorable coal contracts. For the LTM ended [email protected] June 30, 2010, Itabo reported an EBITDA of approximately USD16 million, down from USD70 million during 2009. Going forward EBITDA is expected to marginally increase but stay below historical levels. The company’s total debt of USD125 million was composed of senior unsecured notes maturing in 2013. This translated into a leverage ratio of approximately 8.0x and 1.8x for the LTM ended June 30, 2010 and Dec. 31, 2009, respectively. FFO adjusted leverage was strong for the rating category at 1.4x and 0.8x for the same periods, respectively. • Itabo has benefited from the distribution companies’ improved payment track record during recent months, and as of LTM June 30, 2010 and year-end 2009, the company’s FFO increased to USD67 million and USD134 million, respectively, from negative USD12 million during 2008. This translated into a solid liquidity position for the company supported by its cash on hand position of approximately USD71 million as of June 30, 2010. • Itabo’s ratings are supported by its strong competitive position as the lowest cost thermoelectric generator in the country. Itabo operates two low-cost, coal-fueled electric generation units and sells electricity to three distribution companies through well-structured, long-term, U.S. dollar-denominated PPAs.

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Key Rating Drivers • The sector’s high dependence upon government subsidies links Itabos’s credit quality to that of the sovereign. Reduction of subsidies before the sector reaches financial self sustainability will weaken the credit quality of distribution and generation companies. Rating Issues Please refer to Fitch’s full company report, “Empresa Generadora de Electricidad Itabo, S.A. (Itabo),” dated Sept. 9, 2010, for more information regarding:

• Recent financial performance. • Dominican Republic IMF agreement and implications on electricity sector. • Management Strategy. Liquidity and Debt Structure Itabo has benefited from the distribution companies’ improved payment track record during recent months. The company’s FFO increased to USD67 million as of the LTM ended June 30, 2010 from negative USD12 million during 2008. This translated into a solid liquidity position for the company supported by its cash on hand position of approximately USD71 million as of June 30, 2010. Total debt of USD125 million was solely composed of senior unsecured notes due 2013. Recovery Analysis Itabo’s recovery rating of ‘RR4’ is constrained by the Dominican Republic recovery rating cap. Itabo’s recovery analysis is based on the lowest EBITDA reported by the company during the past three years to estimate a stress enterprise value. Fitch’s recovery analysis consists of a variety of valuation techniques. Fitch notes these valuations are stressed valuation (i.e., possible recoveries in a liquidation scenario). They are not reflective of the value of the company as a going concern.

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Recovery Analysis ⎯ Empresa Generadora de Electricidad Itabo, S.A. (USD Mil., As of June 30, 2010)

Enterprise Value EBITDA (Normalized) 30 EBITDA Discount (%) 28.0 Distressed EBITDA 22 Market Multiple (x) 5.0 Enterprise Value 108.0

Interest Expense 14 Rent Expense ⎯ Maintenance Capital Expenditures 8 Principal Amortization (next 12 months) ⎯

Recovery Available to Liquidation Value Balance Rate (%) Creditors Cash 67.0 0 ⎯ A/R 97.9 10 9.8 Inventory 6.8 0 ⎯ Net PP&E 227.0 20 45.4 Total 395.7 ⎯ 55.2

Distribution of Value by Priority

Greater of Enterprise or Liquidation Value 108.0 Less Administrative Claims 10.8 Less Concession Payments 0.0 Adjusted Value 97.2

Amount Outstanding and Available R/C Value Recovered Recovery Rate (%) ‘RR’ Rating Notching Credit Ratings Issuer Default Rating ⎯ ⎯ ⎯ ⎯ ⎯ B— First Priority Secured 0.0 0.0 0 ⎯ ⎯ ⎯ Second Priority Secured 0.0 0.0 0 ⎯ ⎯ ⎯ Senior Unsecured 125.0 97.2 78 RR4 ⎯ B Senior Subordinated 0.0 0.0 0 ⎯ ⎯ ⎯ Preferred Stock 0.0 0.0 0 ⎯ ⎯ ⎯ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Dominican Republic corporates are capped at ‘RR4’. Source: Fitch.

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Organizational Structure — Empresa Generadora de Electricidad Itabo, S.A. (USD Mil., As of March 31, 2010)

Dominican Republic The AES Corporation IDR — B IDR — B+ Through Fondo Patrimonial de las Empresas Reformadas 50% 50%a LTM March 31, 2010 Combined Summary Statistics EBITDA 52 Empresa Generadora de Electricidad Itabo, S.A. Cash and Marketable Securities 88 Operating Company Guarantor Total Debt 125 IDR — B– 100% Itabo Finance, S.A. (Issuer) USD125 Senior Unsecured Notes Rating — B–

aIncludes former CDE employees’ share of approximately 0.03%. Does not include intermediate holding companies. Source: Fitch and Empresa Generadora de Electricidad Itabo, S.A. financial statements.

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Debt and Covenant Synopsis ⎯ Empresa Generadora de Electricidad Itabo, S.A. (Foreign Currency Notes)

Overview Issuer Itabo Finance. S.A. Guarantors Empresa Generadora de Electricidad Itabo, S.A. (Itabo) Document Date Sept. 29, 2006 Maturity Date Oct. 5, 2013 Description of Debt Senior Unsecured Notes

Financial Covenants Consolidated Net Debt/ 3.5x EBITDA (Maximum) Interest Coverage (Minimum) 2.5x

Acquisitions/Divestitures Change of Control Provision Change of control clause at 101% of principal. Sale of Assets Restriction Generally permits asset sales as long as it is divested at least equal to fair market value, it received at least 75% cash payment, and if the proceeds are used to reduce debt or are reinvested.

Limitation on Secured Debt Itabo is not permitted to issue senior secured debt or to create any lien on any asset, property, or income without providing the same security to the existing notes. Restricted Payments The issuer is not permitted to pay any dividends or make any other distribution to its shareholders. The guarantor is not permitted to make any restricted payments if, among other clauses, it cannot incur additional debt according to its limitation on indebtedness, an event of default has occurred, or if such payment exceeds 100% of combined net income. Other Cross Default If the issuer, guarantor, or any restricted subsidiary defaults on any indebtedness of at least USD20.0 million. Acceleration If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Events of default include, but are not limited to, the interest reserve not being fully funded for more than five days and if the issuer, guarantor, or any restricted subsidiary defaults in any indebtedness of at least USD20.0 million. Restriction on Purchase of Notes The issuer is allowed to redeem the notes in whole or in part at a preset redemption price. Source: Company and Fitch Ratings.

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Financial Summary ⎯ Empresa Generadora de Electricidad Itabo, S.A. (USD 000, As of Dec. 31) LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 15,694 70,484 73,461 32,303 39,479 Operating EBITDA Margin (%) 8.2 32.9 29.2 16.1 21.3 FFO Return on Adjusted Capital (%) 22.1 36.3 1.3 5.4 7.3 Free Cash Flow Margin (%) 9.8 16.9 (0.2) (27.0) (25.7) Return on Average Equity (%) 4.1 10.4 14.1 2.9 9.1

Coverage (x) FFO Interest Coverage 4.3 7.2 0.3 1.6 6.2 Operating EBITDA/Interest Expense 0.8 3.2 4.2 2.4 7.2 Operating EBITDA/Debt Service Coverage 0.8 3.2 4.2 2.4 2.0 FFO Fixed Charge Coverage 4.3 7.2 0.3 1.6 6.2 FCF Debt Service Coverage 1.9 2.7 1.0 (3.0) (2.2) (FCF + Cash and Marketable Securities)/Debt Service Coverage 5.4 6.3 2.2 (2.6) 2.1 Cash Flow from Operations/Capital Expenditures 5.2 6.4 0.9 (0.6) 2.2

Capital Structure and Leverage (x) FFO Adjusted Leverage 1.4 0.8 21.9 5.6 4.3 Total Debt/Operating EBITDA 8.0 1.8 1.7 3.9 3.7 Total Net Debt/Operating EBITDA 3.4 0.7 1.4 3.7 1.6 Implied Cost of Funds (%) 16.4 17.4 14.1 10.1 6.8 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt ⎯ ⎯ ⎯ ⎯ 0.1 Balance Sheet Total Assets 461,673 503,710 505,639 459,631 513,948 Cash and Marketable Securities 71,155 79,150 20,792 4,659 82,572 Short-Term Debt 0 ⎯ ⎯ ⎯ 13,800 Long-Term Debt 125,000 125,000 125,000 125,000 131,667 Total Debt 125,000 125,000 125,000 125,000 145,467 Total Equity 272,707 305,389 310,924 286,657 319,111 Total Adjusted Capital 397,707 430,389 435,924 411,657 464,578

Cash Flow Funds from Operations 67,264 134,635 (11,905) 8,772 28,591 Change in Operating Working Capital 3,204 (75,304) 15,831 (13,676) (3,037) Cash Flow from Operations 70,468 59,331 3,926 (4,904) 25,554 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (13,474) (9,282) (4,410) (8,101) (11,870) Dividends (38,175) (13,790) 0 (41,208) (61,261) Free Cash Flow 18,819 36,259 (484) (54,213) (47,577) Net Acquisitions and Divestitures 0 850 20,100 365 729 Other Investments, Net 9,082 21,269 (3,453) (3,376) (13) Net Debt Proceeds 0 0 0 (20,524) 130,497 Net Equity Proceeds 0 0 0 0 0 Other Financing, Net (153) (16) (20) (157) (95) Total Change in Cash 27,748 58,362 16,143 (77,905) 83,541

Income Statement Net Revenues 192,371 214,370 251,778 200,465 185,247 Revenue Growth (%) (26) (15) 26 8 3 Operating EBIT (2,708) 51,028 54,080 13,379 25,664 Gross Interest Expense 20,454 21,747 17,622 13,593 5,463 Rental Expense 0 0 0 0 0 Net Income (11,828) 32,003 42,095 8,733 30,310 Source: Fitch Ratings.

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Homebuilding Even Construtora e Incorporadora Brazil Full Rating Report S.A.

Ratings Rating Rationale Current • The ratings of Even Construtora e Incorporadora S.A. (Even) reflect its rapid growth Security Class Rating Local Currency IDR B+ and position as one of the seven largest Brazilian real estate construction Foreign Currency IDR B+ companies. The company’s consistent results, adequate capital structure, and National Scale A−(bra) liquidity position versus industry peers are also factored into the ratings. The Senior Unsecured Debentures, 2nd Issuance (BRL100 million) ratings are also supported by the company’s solid growth prospects due to its recent due 2012 A−(bra) equity issuance, which assures it of adequate funding for the continuity of its Senior Unsecured Debentures, 3rd Issuance (BRL75 million) expansion in the highly competitive and volatile Brazilian homebuilding market. due 2013 A−(bra) • Further factored into Even’s ratings is its capacity to adapt to the challenges IDR − Issuer default rating. imposed by the recent economic environment and improve its sales performance.

Rating Outlook This flexibility has enabled the company to maintain margins in line with market averages while dramatically lowering inventory levels and refocusing the production Foreign Currency IDR Stable mix. The ratings also consider Even’s relatively low land bank, in comparison with Local Currency IDR Stable Long-Term National Scale Stable industry peers, for the high volume of projects that it plans to launch over the next three years. Financial Data • The ratings also take into consideration the risk of the construction sector as well as Even Construtora e Incorporadora S.A. (BRL Mil.) 6/30/10 12/31/09 the leverage of the company and its growth plans. To manage leverage and its Total Revenues 1,538.8 1,168.2 growth plans, Even raised BRL326 million of capital during April 2010. The EBITDA 315.7 230.7 company’s strong cash position should be gradually consumed to support the Cash Flow from Operations (271.6) (328.2) development of projected product launches with a potential sales value (PSV) of Cash and BRL1.5 billion during 2010. Even has a land bank with a PSV of BRL3.4 billion and Marketable Securities 562.5 313.8 will need to invest in land to support an investment plan that calls for BRL6 billion Total Debt 1,061.0 895.4 in PSV of project launches in the next three years. As a result of the development Net Debt/ EBITDA (x) 1.6 2.5 of these projects and the investment in land, Even’s cash balance and cash flow will FFO Adjusted continue to remain under pressure and could require additional equity issuances. Leverage (x) 2.7 3.3 • Even reported consistent operating strategy and results during 2009. The company Analysts responded to the limited impact of the global crisis upon the Brazilian economy by reducing project launches and increasing inventory sales. During the second half of José Romero the year, Even returned to growth in project launches with an increased focus on +55 11 4504-2600 [email protected] middle- to low-middle-income residential projects. This contrasts with the company’s prior strategy of targeting the middle-to-higher income segment of the Fernanda Rezende population. The change in strategy was partially a result of the introduction of a +55 11 4504-2600 [email protected] federal government program in April 2009 that was aimed to stimulate housing construction and financing for the low- to middle-income segments. In the future, the company will be challenged to maintain margins due to its increasing presence in the low-income housing segment. • The company’s capital structure has improved since 2008 due to an increase in credit lines from the Brazilian Housing Financial System (SFH). These credit lines are liquidated by the delivery of receivables of ready units to the banks and have enabled the company to preserve cash flow.

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Key Rating Drivers • The ratings could be negatively affected by a combination of the following factors: increased leverage, slower-than-expected sales that could lead to price discounting, a weakening of the company’s liquidity position, and/or a decreased access to financing. • Other factors that could lead to the consideration of a Negative Outlook or ratings downgrade include a sharp economic downturn that would negatively affect employment and income or a prolonged scarcity of long-term funding sources. • The ratings could be positively affected by the reduction in growth and consistent generation of free cash flow. Rating Issues Please refer to Fitch’s full company report, “Even Construtora e Incorporadora S.A. (Even),” dated Sept. 15, 2010, for more information regarding:

• Brazilian homebuilding sector. • Management strategy. • Evolution of project launches. Liquidity and Debt Structure As of June 30, 2010, Even had BRL562 million of cash and marketable securities, and total debt was BRL1,061 million. The high cash balance is a result of the BRL326 million capital subscription in April 2010. These numbers compare to BRL314 million and BRL895 million, respectively, in 2009. Liquidity was further supported by BRL23 million of receivables of concluded units not linked to debt. This is a comfortable liquidity position since more than 90% of the company’s BRL359 million of short-term debt consisted of SFH financings at the end of June 2010, with principal repayable through the transfer of receivables of ready units. Debt maturities of BRL243 million in 2011 (excluding SFH credit lines) will likely be refinanced as the company is expected to keep its liquidity position above BRL200 million. Even aims to gradually reduce its corporate debt through the increased use of SFH financings for the development of residential projects, which is positive. Even had BRL1,061 million of total debt as of June 30, 2010, an increase from BRL570 million at the end of 2008. About 56% of Even’s total debt was related to SFH financing, an increase from 28% at the end of 2008. Even’s corporate debt consists of BRL332 million of debentures and BRL133 million of land acquisition financing. The maturity schedule of the debentures is BRL27 million in 2010, BRL115 million in 2011, BRL130 million in 2012, and BRL60 million in 2013. Leverage reduced since 2008 despite higher debt due to stronger cash flow. During the LTM ended June 2010, the company’s total debt/EBITDA ratio decreased to 3.4x from 4.3x in 2008, while its net debt/EBITDA ratio reduced to 1.6x from 1.9x, respectively. Excluding SFH financing, Even’s leverage ratio was 1.5x at the end of June. Fitch Ratings expects the total debt excluding SFH loans/EBITDA ratio to be below 1.0x by 2011.

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Debt and Covenant Synopsis ⎯ Even Construtora e Incorporadora S.A.

Overview Issuer Even Construtora e Incorporadora S.A. Even Construtora e Incorporadora S.A. Guarantors ⎯ ⎯ Document Date Jan. 3 , 2008 Jan. 30, 2008 Maturity Date Oct. 1, 2012 Nov. 15, 2013 Description of Debt Unsecured and Unsubordinated Debt Unsecured and Unsubordinated Debt Amount BRL100 Mil. BRL75 Mil. Financial Covenants (compliance to be checked within 15 days after release of quarterly financial statements) Covenant (1) Net debt plus accounts payable for property and land acquisition/net equity, lower or equal to the table multiples: Multiples 1.0x in 2007 1.2x in 2008 1.4x in 2009 1.2x in 2010 1.0x in 2011 Covenant (2) Total receivables (booked and to be be booked) plus inventories/net debt plus accounts payable for properties and land acquisitions plus construction cost and expenses to be booked, higher or equal to: 1.5x

Relevant Early Amortization Events: If the chairman of the board and CEO Carlos Eduardo Terepins leave to participate: (1) in the management of Even as a member of the board and in the executive management; (2) in the coordination of Even’s management; (3) in the determination of the business line to be followed by Even; (4) actively participate in relevant business decision making of Even’s normal course of activity. Split, merger or incorporation of Even without express agreement of debenture holders representing at least 75% of the debentures in circulation through a debenture holders meeting for this purposes; corporate reorganizations that may result in equity reduction for Even or its extinction; merges that may result in downgrading of rating or negative outlook of the debenture. In case Even is transformed into a private limited company. In case Even changes its core business, leaving to operate in real estate development and construction. Note: To date, Even has fully complied with debt covenants related to the 2nd and 3rd debentures. Local currency debentures: 2nd and 3rd issuances. Source: Even’s 2nd and 3rd debenture deeds.

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Financial Summary ⎯ Even Construtora e Incorporadora S.A. (BRL 000, Years Ended Dec. 31)

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 315,738 230,709 133,077 75,507 33,324 Operating EBITDAR 315,738 230,709 133,077 75,507 33,324 Operating EBITDA Margin (%) 20.5 19.7 16.1 17.6 16.2 Operating EBITDAR Margin (%) 20.5 19.7 16.1 17.6 16.2 FFO Return on Adjusted Capital (%) 16.3 15.0 7.9 2.0 57.5 Free Cash Flow Margin (%) (19.4) (28.5) (54.0) (108.3) (52.8) Average Return on Equity (%) 18.0 14.5 8.0 7.4 28.1 Coverage (x) FFO Interest Coverage 3.4 2.5 1.9 1.4 13.1 Operating EBITDA/Interest Expense 2.8 2.1 2.3 6.2 3.4 Operating EBITDAR/Interest Expense + Rents 2.8 2.1 2.3 6.2 3.4 Operating EBITDA/Debt Service Coverage 0.7 0.9 0.8 1.8 0.4 Operating EBITDAR/Debt Service Coverage 0.7 0.9 0.8 1.8 0.4 FFO Fixed Charge Coverage 3.4 2.5 1.9 1.4 13.1 FCF Debt Service Coverage (0.4) (0.8) (2.4) (10.8) (1.1) (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage 0.8 0.3 (0.4) (6.4) (0.8) Cash Flow from Operations/Capital Expenditures 77.7 36.4 (16.4) (115.1) (25.8) Capital Structure and Leverage (x) FFO Adjusted Leverage 2.7 3.3 5.2 11.9 0.7 Total Debt with Equity Credit/Operating EBITDA 3.4 3.9 4.3 2.8 2.7 Total Net Debt with Equity Credit/Operating EBITDA 1.6 2.5 1.9 0.3 2.1 Total Adjusted Debt/Operating EBITDAR 3.4 3.9 4.3 2.8 2.7 Total Adjusted Net Debt/Operating EBITDAR 1.6 2.5 1.9 0.3 2.1 Implied Cost of Funds 13.0 15.2 14.8 8.2 13.0 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ 0.1 Short-Term Debt/Total Debt 0.3 0.2 0.2 0.1 0.9 Balance Sheet Total Assets 2,865,947 2,272,767 1,715,386 1,105,636 415,317 Cash and Marketable Securities 562,464 313,791 322,131 182,428 22,865 Short-Term Debt 358,697 156,746 103,676 29,606 81,628 Long-Term Debt 702,292 738,673 466,234 178,486 9,960 Total Debt 1,060,989 895,419 569,910 208,092 91,588 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 1,060,989 895,419 569,910 208,092 91,588 Off-Balance Sheet Debt 0 0 0 0 0 Total Adjusted Debt with Equity Credit 1,060,989 895,419 569,910 208,092 91,588 Total Equity 1,333,569 917,852 803,997 672,810 134,774 Total Adjusted Capital 2,394,558 1,813,271 1,373,907 880,902 226,362 Cash Flow Funds from Operations 276,915 161,396 51,080 5,218 120,304 Change in Operating Working Capital (548,51)3 (489,623) (465,799) (459,834) (224,750) Cash Flow from Operations (271,598) (328,227) (414,719) (454,616) (104,446) Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures 3,495 9,009 (25,363) (3,950) (4,042) Dividends (29,733) (14,258) (6,897) (5,566) 0 Free Cash Flow (297,836) (333,476) (446,979) (464,132) (108,488) Net Acquisitions and Divestures 0 0 0 0 0 Other Investments, Net 0 0 0 0 (3,207) Net Debt Proceeds 357,014 350,198 336,881 115,678 57,235 Net Equity Proceeds 325,907 2 150,005 506,866 87,538 Other Financing, Net (11,983) 2,668 1,200 1,151 (18,463) Total Change in Cash 373,102 19,392 41,107 159,563 14,615 Income Statement Net Revenues 1,538,759 1,168,205 827,523 428,436 205,450 Revenue Growth (%) 70 41 93 109 178 Operating EBIT 313,759 227,261 127,217 74,312 33,183 Gross Interest Expense 113,782 111,279 57,518 12,251 9,925 Rental Expense 0 0 0 0 0 Net Income 196,421 124,454 59,091 30,073 22,399 Source: Even and Fitch.

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Food Gruma, S.A.B. de C.V. Mexico Full Rating Report

Ratings Rating Rationale Current • The ratings for Gruma, S.A.B. de C.V. (Gruma) are supported by its solid business Security Class Rating Foreign Currency IDR B+ profile as one of the leading producers of corn flour and tortillas in the United Local Currency IDR B+ States and corn flour in Mexico and Central America. The company’s competitive Senior Unsecured Notes BB−/RR3 advantages include strong brand equity, broad distributions systems, proprietary IDR − Issuer default rating. technology, economies of scales, and diversified product lines.

Rating Outlook • The ratings take into consideration the geographic diversification of revenues and cash flows. The company’s U.S. subsidiary, Gruma Corp., is the most important Stable contributor to total revenues and EBITDA. For the last 12 months (LTM) ended Financial Data June 30, 2010, it had revenues of MXN48 billion and EBITDA of MXN4.6 billion, Gruma, S.A.B. de C.V. accounting for 47% of revenues and 52% of EBITDA. (MXN Mil.) LTM • Gruma’s rating reflects the high uncertainty and volatility of the cash flow coming 6/30/10 12/31/09 from Venezuela derived from the nationalization of its assets. The ratings take into Total Revenues 48,225 50,489 consideration the limited pricing flexibility in some of its markets (such as Mexico), EBITDAR 5,314 6,036 Cash from continued competitive pressures, the high volatility in the prices of corn and wheat, Operations 2,838 3,841 and high leverage. Cash and Marketable • The company’s liquidity position is adequate with MXN1.6 billion in cash and Securities 1,599 2,008 Total Adjusted marketable securities versus short-term debt of MXN2.1 billion. Although its debt Debt 25,192 26,308 burden remains high, its maturity profile is manageable with no debt amortizations Total Adjusted Debt/EBITDAR (x) 4.7 4.4 higher than MXN2.5 billion in the following nine years. Funds from operations (FFO) FFO Adjusted and EBITDA have averaged more than MXN3.1 billion and MXN4.1 billion, Leverage (x) 5.0 5.1 respectively, during the past four years. Analysts • Going forward Fitch Ratings expects that FFO should remain above MXN3.0 billion and EBITDA above MXN4.0 billion after excluding the Venezuela operations and Rogelio Gonzalez +52 81 8399-9100 considering a more challenging operating environment in 2010, which would be [email protected] enough to face maturity debt. In addition to that, capital expenditures and dividends have also been significantly reduced from historical levels and are Joe Bormann, CFA expected to remain at more conservative levels, which should free up cash flow to +1 312 368-3349 [email protected] be used towards debt service.

Key Rating Drivers • Debt reduction due to strong cash flow generation and reception of funds from the forced sale of Venezuela’s assets. Rating Issues Please refer to Fitch’s full company report, “Gruma, S.A.B. de C.V. (Gruma),” dated Sept. 20, 2010, for more information regarding:

• Expropriation of Venezuelan assets. • Recent financial performance.

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Liquidity and Debt Structure Gruma had MXN20.7 billion of total debt as of June 30, 2010, of which 75% was dollar denominated. Total debt was composed of the following: MXN8.6 billion of term loan due 2017, MXN3.8 billion of perpetual bonds, a MXN2.3 billion facility due 2014, a MXN3.4 billion Bancomext facility due 2019, MXN835 million of term loans due 2010, MXN514 million of Gruma Corporation revolving facility, and MXN1.2 billion of other debt. Gruma’s liquidity position is adequate. As of June 30, 2010, it had only MXN2.1 billion of short-term debt with MXN1.6 billion of cash and marketable securities and LTM free cash flow generation of MXN1.5 billion. Recovery Rating The recovery rating for Gruma reflects Fitch’s belief that under a distressed scenario, the company’s enterprise value, and hence recovery rates for its creditors, will be maximized in a restructuring (going concern) rather than a liquidation scenario. In deriving a distressed enterprise value, Fitch discounted Gruma’s LTM EBITDA as of June 30, 2010 by 40% to arrive at an estimated sustainable profitability level exiting reorganization and applies a 7.0x distressed EBITDA multiple. The resultant recovery estimate is 86%, which leads to a ‘RR2’ scale; however, as in Mexico, the cap is at ‘RR3’, a ‘BB−/RR3’ supports the USD300 million perpetual note. Despite the fact that the nationalization of Venezuelan operations does have a negative effect on the recovery rating, the impact does not change the above mentioned rating given that it represented about 21% of Gruma’s total EBITDA during 2009 and 14% in 2010.

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Recovery Analysis ⎯ Gruma, S.A.B. de C.V. (USD Mil., As of June 30, 2010)

Going Concern Enterprise Value LTM EBITDA 364 Discount (%) 40 Post-Restructuring EBITDA Estimation 218 Multiple (x) 7 Going Concern Enterprise Value 1,528

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 121 Rent Expense 48 Estimated Maintenance Capital Expenditures 89 Total 258

Advance Rate Available to Enterprise Value for Claims Distribution (%) Creditors Greater of Going Concern Enterprise or Liquidation Value ⎯ 1,528 Less Administrative Claims 10 153 Adjusted Enterprise Value for Claims ⎯ 1,375

Distribution of Value Secured Priority Lien Value Recovered Recovery Recovery Rating Notching Rating Secured ⎯ ⎯ ⎯ ⎯ ⎯ ⎯

Concession Payment Availability Table Adjusted Enterprise Value for Claims 1,375 Less Secured Debt Recovery ⎯ Remaining Recovery for Unsecured Claims 1,375

Concession Recovery Unsecured Priority Lien Value Recovered Recovery (%) Allocation (%) Rating Notching Rating Senior Unsecured 1,609 1,375.9 86.0 100.0 RR3 +1 BB− Source: Fitch.

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Organizational Structure — Gruma, S.A. B. de C.V. (USD Mil., As of June 30, 2010)

Gruma, S.A.B. de C.V. Foreign Currency IDR B+ Local Currency IDR B+

Perpetual Bonds (7.75%) 300.0 (B+/RR3) Term Loan 668.3 Three-Year and BNP Term Loans 65.5 BANCOMEXT Facility 262.2 Syndicated Loan 178.6 Other Loans 94.6 Total Debt 1,569.27

100% 83% 100% Gruma Corporation Grupo Industrial Maseca, Gruma International S.A.B. de C.V. Foods, S.L. 73% Molinos Nacionales, C.A.a Revolving Facility 40.0

100%

Derivados de Maíz Alimenticio, S.A. 80% 60% 57% Derivados de Maíz Azteca Milling, L.P. Molinera de México, Derivados de Maíz Guatemala, S.A. S.A. de C.V. Seleccionado, C.A.a Derivados de Maíz El Salvador, S.A Derivados de Maíz de Honduras, S.A. Gruma Oceanía Pty. Ltd. Mission Foods Co. Sdn. Bhd. Investigación de Tecnología 100% Gruma Saham, Ltd Avanzada, S.A. de C.V. Mission Foods (Shangai), Co. Ltd. Altera. LLC Altera 11, LLC

55% Productos y Distribuidora 45% Azteca, S.A. de C.V.

aIndirectly owned through a subsidiary in Spain. Source: Company filings and Fitch estimates.

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Debt and Covenant Synopsis ⎯ Gruma, S.A.B. de C.V.

Overview Issuer Gruma, S.A.B. de C.V. Gruma, S.A.B. de C.V. Gruma, S.A.B. de C.V. Gruma, S.A.B. de C.V. Gruma Corporation Document Date Nov. 30, 2004 Oct. 16, 2009 Oct. 16,2009 Nov. 12, 2008 October 2006 Maturity Date Perpetual bonds with Jan. 21, 2017; July 12, Oct. 21, 2014 Sept. 18, 2019 October 2011 no fixed final 2012; and May 1, maturity date and 2011 no sinking fund provisions. Description of Debt USD300 million, Senior USD668 million, USD58 USD179 million USD262 million USD40 million Unsecured million, and USD7 Refinanced 2005 Bancomext Facility Revolving Facility Obligations million Term Loans Facility Financial Covenants Consolidated Leverage (Maximum; N.A. 2010: 5.6x 2010: 5.6x N.A. Less than 3.0x Total Funded Debt/EBITDA) 2011: 5.0x 2011: 5.0x 2012: 4.5x 2012: 4.5x 2013: 4.0x 2013: 4.0x 2014: 3.6x 2014: 3.6x 2015: 3.0x 2016−2017: 2.5x Interest Coverage (Minimum; N.A. Prior to Dec. 31, 2010: Prior to Dec. 31, 2010: N.A. Greater than 2.0x EBITDA/Consolidated Interest 2.5x; thereafter: 2.5x; thereafter: Charges) 2.75x. 2.75x. Capital Expenditures (Maximum) N.A. 2010: USD80 million 2010: USD80 million N.A. N.A. 2011: USD120 million 2011: USD120 million 2012: USD140 million 2012: USD140 million From 2013 onwards: From 2013 onwards: USD150 million USD150 million Excess Cash N.A. If leverage ratio If leverage ratio is N.A. N.A. greater than or greater than or equal to 3.5x, equal to 3.5x, prepay 75% of prepay 75% of excess of cash. excess of cash. Acquisitions/Divestitures Change of Control Provision N.A. N.A. N.A. N.A. N.A. Limitation on Sale-Leaseback Other than when In certain cases, limits In certain cases, limits N.A. N.A. Transactions permitted, the the company and the company and company shall not any subsidiary to any subsidiary to permit any sell substantially all sell substantially all subsidiary to enter of its assets. of its assets. into a sale- leaseback transaction with respect to any property. Limitations on Liens Other than when In certain cases, limits In certain cases, limits N.A. In certain cases, limits permitted, the the company and the company and the company and company shall not any subsidiary to any subsidiary to any subsidiary to permit any of its create liens. create liens. create liens subsidiaries to create any lien upon or with respect to any of its present or future properties, unless the company shall have made or caused to be made effective provision whereby the bonds are at least equally and ratably secured. N.A. − Not applicable. Continued on next page. Source: Company filings and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ Gruma, S.A.B. de C.V. (Continued)

Limitation on Merger or Consolidation 1) The resulting shall In certain cases, In certain cases, In certain cases, In certain cases, with Other Companies be a person limits the company limits the company limits the company limits the company organized and and any subsidiary and any subsidiary and any subsidiary and any subsidiary existing under the to merge or to merge or to merge or to merge or laws of Mexico or consolidate with consolidate with consolidate with consolidate with the U.S. and shall other companies. other companies. other companies. other companies. expressly assume all the obligations of the company under the bonds and the indenture; 2) no default or event of default shall occurred after the effect of such transaction; 3) the company shall deliver to the trustee an officer’s certificate and an opinion of counsel, each stating that such transaction and supplemental indenture comply with the indenture. Debt Restrictions Additional Debt Restrictions The indenture does In certain cases, In certain cases, In certain cases, In certain cases, not limit the limits the company limits the company limits the company limits the company company’s ability and any subsidiary and any subsidiary and any subsidiary and any subsidiary to incur additional to incur in to incur in to incur in to incur in indebtedness. additional debt. additional debt. additional debt. additional debt. Limitation on Secured Debt N.A. N.A. N.A. N.A. N.A.

Other Event of Default 1) Default in the N.A. N.A. N.A. N.A. payment of principal of any bond or interest; 2) failure in covenants; 3) the failure to pay the principal of any debt in excess, individually or in the aggregate of USD35 million; 4) file a petition seeking reorganization or concurso mercantil; 5) shall consent to the appointment of a liquidator or sindico. N.A. − Not applicable. Source: Company filings and Fitch Ratings.

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Financial Summary ⎯ Gruma, S.A.B. de C.V. (MXN Mil., As of Jun. 30, 2010)

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 4,667 5,455 4,699 3,053 3,435 Operating EBITDAR 5,314 6,036 5,259 3,612 3,966 Operating EBITDA Margin (%) 9.7 10.8 10.5 8.5 11.2 Operating EBITDAR Margin (%) 11.0 12.0 11.7 10.1 12.9 FFO Return on Adjusted Capital 14.3 13.5 20.0 12.4 14.6 Free Cash Flow Margin (%) 3.1 5.0 (2.7) (7.2) (4.0) Return on Average Equity (%) 7.6 14.6 (88.6) 12.6 9.5 Coverage (x) FFO Interest Coverage 3.0 3.3 6.3 4.7 4.9 Operating EBITDA/Gross Interest Expense 3.2 4.0 6.1 4.5 4.9 Operating EBITDAR/Interest Expense + Rents 2.5 3.1 3.9 2.9 3.2 Operating EBITDA/Debt Service Coverage 1.3 1.5 1.5 1.9 2.2 Operating EBITDAR/Debt Service Coverage 1.3 1.5 1.4 1.7 1.9 FFO Fixed Charge Coverage 2.4 2.6 4.1 3.0 3.2 FCF Debt Service Coverage 0.8 1.1 (0.1) (1.2) (0.3) (FCF + Cash and Marketable Securities)/Debt Service Coverage 1.3 1.7 0.3 (0.9) 0.0 Cash Flow from Operations/Capital Expenditures 2.5 3.4 0.6 0.1 0.8 FFO Adjusted Leverage 5.0 5.1 3.3 3.1 2.6 Total Debt with Equity Credit/Operating EBITDA 4.4 4.1 3.0 2.6 1.9 Total Net Debt with Equity Credit/Operating EBITDA 4.1 3.7 2.7 2.4 1.7 Total Adjusted Debt/Operating EBITDAR 4.7 4.4 3.4 3.3 2.6 Total Adjusted Net Debt/Operating EBITDAR 4.4 4.0 3.2 3.1 2.4 Implied Cost of Funds (%) 8.9 7.5 7.0 9.5 10.4 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.1 0.1 0.2 0.1 0.1 Balance Sheet Total Assets 40,695 43,753 44,407 33,911 30,039 Cash and Marketable Securities 1,599 2,008 1,426 481 569 Short-Term Debt 2,122 2,203 2,419 941 883 Long-Term Debt 18,540 20,040 11,728 6,913 5,605 Total Debt 20,662 22,243 14,147 7,854 6,488 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 20,662 22,243 14,147 7,854 6,488 Off-Balance Sheet Debta 4,530 4,066 3,920 3,913 3,718 Total Adjusted Debt with Equity Credit 25,192 26,308 18,067 11,768 10,206 Total Equity 10,350 11,589 9,180 18,577 16,780 Total Adjusted Capital 35,541 37,898 27,247 30,345 26,986 Cash Flow Funds from Operations 2,975 3,168 4,122 2,535 2,696 Change in Working Capital (137) 674 (2,707) (2,267) (746) Cash Flow from Operations 2,838 3,841 1,415 267 1,950 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (1,141) (1,132) (2,567) (2,221) (2,508) Common Dividends (191) (175) (63) (627) (661) Free Cash Flow 1,506 2,534 (1,215) (2,581) (1,218) Net Acquisitions and Divestures 98 108 (127) 193 593 Other Investments, Net 148 23 (287) 1,435 332 Net Debt Proceeds 8,986 9,318 3,868 982 (705) Net Equity Proceeds 0 0 2,099 0 1,161 Other (Investing and Financing) (10,699) (11,384) (3,586) (146) 65 Total Change in Cash 40 599 753 (118) 228 Income Statement Revenue 48,225 50,489 44,793 35,816 30,644 Revenue Growth (%) (0.0) 0.0 0.0 0.0 0.0 Operating EBIT 3,083 3,807 3,270 1,874 1,790 Gross Interest Expense 1,454 1,369 772 684 699 Rental Expense 647 581 560 559 531 Net Income 788 1,516 (12,292) 2,233 1,469 aOff-balance sheet debt = 7.0x operating leases in 2006. Notes: 1. Figures adjusted for inflation. 2. Numbers may not add due to rounding. Source: Fitch Ratings using company figures.

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Financial Summary ⎯ Gruma, S.A.B. de C.V. (USD Mil., As of June 30, 2010)

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 364 418 347 281 316 Operating EBITDAR 414 462 388 332 365 Operating EBITDA Margin (%) 9.7 10.8 10.5 8.5 11.2 Operating EBITDAR Margin (%) 11.0 12.0 11.7 10.1 12.9 FFO Return on Adjusted Capital 14.3 13.5 20.0 12.4 14.6 Free Cash Flow Margin (%) 3.1 5.0 (2.7) (7.2) (4.0) Return on Average Equity (%) 7.7 14.8 (76.1) 12.6 9.5 Coverage (x) FFO Interest Coverage 3.0 3.3 6.3 4.7 4.9 Operating EBITDA/Gross Interest Expense 3.2 4.0 6.1 4.5 4.9 Operating EBITDAR/Interest Expense + Rents 2.5 3.1 3.9 2.9 3.2 Operating EBITDA/Debt Service Coverage 1.3 1.5 1.5 1.9 2.2 Operating EBITDAR/Debt Service Coverage 1.3 1.5 1.4 1.7 1.9 FFO Fixed Charge Coverage 2.4 2.6 4.1 3.0 3.2 FCF Debt Service Coverage 0.8 1.1 (0.1) (1.2) (0.3) (FCF + Cash and Marketable Securities)/Debt Service Coverage 1.3 1.7 0.3 (0.9) 0.0 Cash Flow from Operations/Capital Expenditures 2.5 3.4 0.6 0.1 0.8 FFO Adjusted Leverage 5.0 5.1 3.3 3.1 2.6 Total Debt with Equity Credit/Operating EBITDA 4.4 4.1 3.0 2.6 1.9 Total Net Debt with Equity Credit/Operating EBITDA 4.1 3.7 2.7 2.4 1.7 Total Adjusted Debt/Operating EBITDAR 4.7 4.4 3.4 3.3 2.6 Total Adjusted Net Debt/Operating EBITDAR 4.4 4.0 3.2 3.1 2.4 Implied Cost of Funds (%) 9.0 7.6 6.4 9.5 10.4 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.1 0.1 0.2 0.1 0.1 Balance Sheet Total Assets 3,171 3,350 3,280 3,121 2,761 Cash and Marketable Securities 125 154 105 44 52 Short-Term Debt 165 169 179 87 81 Long-Term Debt 1,444 1,535 866 636 515 Total Debt 1,610 1,703 1,045 723 596 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 1,610 1,703 1,045 723 596 Off-Balance Sheet Debta 353 311 290 360 342 Total Adjusted Debt with Equity Credit 1,963 2,015 1,334 1,083 938 Total Equity 806 887 678 1,710 1,542 Total Adjusted Capital 2,769 2,902 2,013 2,793 2,480 Cash Flow Funds from Operations 232 243 304 233 248 Change in Working Capital (11) 52 (200) (209) (69) Cash Flow from Operations 221 294 105 25 179 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (89) (87) (190) (204) (230) Common Dividends (15) (13) (5) (58) (61) Free Cash Flow 117 194 (90) (238) (112) Net Acquisitions and Divestures 8 8 (9) 18 54 Other Investments, Net 12 2 (21) 132 31 Net Debt Proceeds 700 714 286 90 (65) Net Equity Proceeds 0 0 155 0 107 Other (Investing and Financing) (834) (872) (265) (13) 6 Total Change in Cash 3 46 56 (11) 21 Income Statement Revenue 3,757 3,866 3,309 3,296 2,816 Revenue Growth (%) (0.0) 0.0 0.0 0.0 0.0 Operating EBIT 240 292 242 172 164 Gross Interest Expense 113 105 57 63 64 Rental Expense 50 44 41 51 49 Net Income 61 116 (908) 206 135 aOff Balance Sheet Debt = 7.0x operating leases in 2006. Notes: 1. Figures adjusted for inflation. 2. Numbers may not add due to rounding. Source: Fitch Ratings using company figures.

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Lodging and Leisure Grupo Posadas, S.A.B. de C.V. Mexico Full Rating Report

Ratings Rating Rationale Current Security Class Rating • Grupo Posadas’ S.A.B. de C.V. (Posadas) ratings are supported by its solid business Foreign Currency IDR B+ position, strong brand name and multiple hotel formats. The company’s presence in Local Currency IDR B+ National Scale BBB+ all of the major urban and coastal locations in Mexico, and its consistent product Senior Notes due 2011 B+/RR4 offering and quality brand image have resulted in occupancy levels that are above Certificados Bursatiles average for the industry in Mexico. The company’s ratings also incorporate Posadas’ Issuances BBB+ liquidity position and relatively manageable debt amortization schedule. IDR − Issuer default rating. • The ratings take into consideration the weakening of the Mexican travel and tourism Rating Outlook industry during the past couple of years due to the outbreak of the A-H1N1 virus in Stable 2009 and the increasing perception of insecurity during 2010. These factors have led to a decline in the company’s funds from operations during the past couple of years Financial Data as well as its credit protection measures. Grupo Posadas, S.A.B. de C.V. LTM • To mitigate some of these risks Posadas uses multiple hotel formats, allowing it to (MXP Mil.) 6/30/10 12/31/09 target domestic and international business travelers of different income levels as Total Revenues 6,760 7,083 well as tourists. The company also benefits from diversification into other business EBITDAR 1,316 1,621 Cash Flow from segments, which reduces some exposure to its hotel business, such as managing its Operations 438 853 loyalty programs and call centers. Cash and Marketable • Posadas’ credit ratings incorporate the travel and tourism industry’s high Securities 422 658 Total Adjusted correlation with economic cycles, which affects operating indicators negatively in Debt 6,142 7,604 downturns. Posadas’ high leverage is another factor that constrains the company’s Total Adjusted Debt/EBITDAR (x) 4.7 4.7 ratings at ‘B+’. FFO Adjusted Leverage (x) 5.8 5.0 • Fitch expects the company’s financial performance to continue to be weak during Total Debt/ 2010 due to weak sales to the vacation club segment. The halt in operations by EBITDA (x) 4.3 4.0 Mexicana, a leading airline in Mexico, should also negatively affect the company. Analysts What Could Trigger a Rating Action? Sergio Rodríguez, CFA • Factors that can lead to negative rating actions include a further deterioration of +52 818 399-9100 operating results and cash flow. Additional indebtedness related to new projects or [email protected] to cover contingencies could also lead to negative rating actions. Alberto de Los Santos • +52 818 399-9100 While the probability of an upgrade is low in the near-term, Fitch would view the [email protected] stabilization of operating trends, particularly in the vacation club segment, as a positive for credit quality. An improvement in revenue per available room (RevPAR), which would

lead to higher EBITDA and cash flow levels, would also be viewed favorably. Rating Issues Please refer to Fitch’s full company report, “Grupo Posadas’ S.A.B. de C.V. (Posadas),” dated Oct. 8, 2010, for more information regarding:

• Sale of 30% stake in Grupo Mexicana. • Management strategy.

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Liquidity and Debt Structure Posada’s near-term liquidity position is manageable with cash balances of MXN422 million (USD33 million) as of June 30, 2010 (excluding margin calls) and short-term debt maturities of MXN27 million. The company’s cash position is supported by MXN539 million (USD42 million) of funds from operations for the LTM ended June 30, 2010. Posadas’ liquidity could be weakened by losses on hedges that would require additional cash if the MXN devalues relative to the USD. As of July 28, 2010 the company had margin calls for approximately USD28 million, an increase from USD26 million at the end of June. Posadas had MXN5.167 billion of on-balance sheet debt as of June 30, 2010. Almost all of the company’s debt is placed in the capital markets. Posadas also has approximately MXN2.646 billion of off-balance sheet debt related to hotel leases. Fitch expects the ratio of total adjusted debt to EBITDAR to be approximately 4.5x to 4.7x by year-end 2010, which is weak for the rating category. As of June 30, 2010, Posadas’ ratio of total adjusted debt to LTM EBITDAR was 4.7x, an increase from 4.0x for the same time period in 2009. For the LTM ended June 30, 2010, Posadas generated MXN6.760 billion of revenues and MXN1.194 billion of EBITDA. This represents a decline in revenues from MXN7.083 billion during 2009 and MXN6.884 billion during 2008 and from MXN 1.243 billion and MXN1.531 million in EBITDA during the two prior years. Recovery Ratings Fitch follows a going concern approach to the recovery ratings of Posadas. A recovery rating of ‘RR4’ has been assigned to the company’s debt. This recovery is consistent with the expectation of an ultimate recovery of principal in the event of default in the range of 31%−50%.

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Recovery Analysis ⎯ Grupo Posadas, S.A.B. de C.V. (MXN Mil., As of June 30, 2010)

Enterprise Value EBITDA 1,194 Discount (%) 0.4 Distressed EBITDA 716 Market Multiple (x) 3.8 Going Concern Enterprise Value 2,722

Interest Expense ⎯ Rent Expense ⎯ Maintenance Capital Expenditures ⎯ Total ⎯

Distribution of Value by Priority Greater of Going Concern Enterprise or Liquidation Value 2,722 Less Administrative Claims (10%) 272 Adjusted Enterprise Value for Claims 2,450

Amount Outstanding and Available R/C Value Recovered Recovery Rate ‘RR’ Rating Notching Credit Ratings Issuer Default Rating ⎯ ⎯ ⎯ ⎯ ⎯ B+ Secured 385.2 385.2 100 RR3 ⎯ BB− Senior Unsecured 4,781.3 2,064.9 43 RR4 0 B+ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, Mexico has a soft cap at ‘RR3’, which results in a maximum one-notch benefit over the issuer default rating. Source: Fitch.

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Organizational Structure — Grupo Posadas S.A.B. de C.V. (As of June 30, 2010)

Grupo Posadas, S.A.B. de C.V.

Certificados Bursátiles Due 2013 MXN2,250 Mil. Senior Notes Due 2015 USD200 Mil. Banco del Bajío MXN74.7 Mil.

100% 100%

Inmobiliaria Hotelera Posadas, S.A. de C.V. Other Subsidiaries Scotia Bank Syndicated Secured Loan USD24.5 Mil. MXN17.6 Mil.

Source: Fitch and Grupo Posadas, S.A.B. de C.V. financial statements.

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Debt and Covenant Synopsis ⎯ Grupo Posadas, S.A.B. de C.V. (Foreign Currency Notes)

Overview Issuer Grupo Posadas, S.A.B. de C.V.

Document Date Feb. 5, 2010 Maturity Date Jan. 15, 2015 Description of Debt USD200 Million aggregate principal amount of 9.250% senior notes.

Financial Covenants Consolidated Net Leverage (Maximum) N.A. Interest Coverage (Minimum) N.A. Acquisitions/Divestitures Change of Control Provision If Posadas experiences a change of control, holders of the notes may require them to repurchase all or part of the notes at 101% of their principal amount, plus accrued and unpaid interest and any additional amounts to the redemption date. Limitation on Asset Sales Under the terms of the indenture, Posadas will not, and will not permit any restricted subsidiary to, consummate any asset sale, unless: (i) The consideration received by Posadas or such restricted subsidiary is at least equal to the fair market value of the assets sold or disposed of as determined in good faith by Posadas’ board of directors (including the value of all noncash consideration); (ii) In the case of any sale of time share, full or fractional ownership, or membership interests in the ordinary course of the Vacation Club Business, at least 75% of the consideration received by Posadas or such restricted subsidiary, as the case may be, from such asset sale shall be in the form of cash or temporary cash investments and is received at the time of such disposition; (iii) An amount equal to 100% of the net cash proceeds from such asset sale is either applied to (a) the repayment of indebtedness of the issuer or any restricted subsidiary that is secured by a permitted lien (with a corresponding reduction in the commitment with respect thereto) or (b) the investment in or acquisition of assets related to a permitted business, in each case, within 365 days from the later of the date of such asset sale or the receipt of the net cash proceeds. Limitation on Indebtedness (a) Under the terms of the indenture, Posadas will not, and will not permit any of its restricted subsidiaries to, directly or indirectly, incur any indebtedness, provided, however, that Posadas may incur indebtedness and any restricted subsidiary may incur indebtedness if on the date of the incurrence of such indebtedness, the consolidated interest coverage ratio would be greater than 2.5x to 1.0x. (b) For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of indebtedness, the U.S. dollar-equivalent principal amount of indebtedness denominated in a non-U.S. currency will be calculated based on the relevant currency exchange rate in effect on the date such indebtedness was incurred or, in the case of revolving credit indebtedness, first committed, provided that if such indebtedness is incurred to refinance other indebtedness denominated in a non-U.S. currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction will be deemed not to have been exceeded so long as the principal amount of such refinancing indebtedness does not exceed the principal amount of such indebtedness being refinanced. (c) For purposes of determining any particular amount of indebtedness: (i) guarantees, liens, or obligations with respect to letters of credit supporting indebtedness otherwise included in the determination of such particular amount shall not be included and (ii) any Liens granted pursuant to the equal and ratable provisions of the Indenture shall not be treated as Indebtedness. d) For purposes of determining compliance with this covenant, in the event that an item of indebtedness meets the criteria of more than one of the types of indebtedness described herein, Posadas, in its sole discretion, shall classify, and from time to time may reclassify, such item of indebtedness provided that all indebtedness of Posadas and its restricted subsidiaries outstanding on the closing date under (i) credit agreements shall be deemed to have been incurred under ) above and any indebtedness outstanding on the closing). (d) For purposes of determining compliance with this covenant, in the event that an item of indebtedness meets the criteria of more than one of the types of indebtedness described herein, Posadas, in its sole discretion, shall classify, and from time to time may reclassify, such item of indebtedness provided that all indebtedness of Posadas and its restricted subsidiaries outstanding on the closing date under (i) credit agreements shall be deemed to have been incurred under above and any indebtedness outstanding on the closing date. N.A. − Not applicable. Continued on next page. Source: Company, note documentation, and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ Grupo Posadas, S.A.B. de C.V. (Continued) (Foreign Currency Notes)

Limitation on Restricted Payments Posadas will not, and will not cause or permit any of the restricted subsidiaries to, directly or indirectly: (a) Declare or pay any dividend or make any distribution (other than (i) dividends or distributions payable in qualified capital stock of Posadas and (ii) in the case of restricted subsidiaries, dividends or distributions to Posadas or any other restricted subsidiary and pro rata dividends or distributions payable to the other holders of the same class of capital stock of such restricted subsidiary) on or in respect of shares of its capital stock to holders of such capital stock; (b) Purchase, redeem or otherwise acquire or retire for value any Capital Stock of Posadas or acquire shares of any class of such Capital Stock other than Capital Stock owned by Posadas or any Wholly Owned Restricted Subsidiary (other than in exchange for its Capital Stock) which is not Disqualified Stock; (c) Make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment (other than the purchase, redemption, prepayment or other acquisition of any such subordinated Indebtedness in anticipation of any such sinking fund obligation, principal installment or final maturity, in each case, due within one year of such purchase, redemption, prepayment, or other acquisition), any indebtedness that is subordinate or junior in right of payment to the notes or the guarantees; or (d) Make any investment (other than permitted investments) (each of the foregoing actions set forth in clauses (a), (b), (c) and (d) being referred to as a “restricted payment”), if at the time of such restricted payment or immediately after giving effect thereto a default or an event of default shall have occurred and be continuing. Acceleration If an event of default occurs and is continuing under the indenture, either the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding, by written notice to Posadas (and to the trustee if such notice is given by the holders), may, and the trustee at the request of such holders shall, declare the principal of, and accrued interest (together with any additional amounts) on, the notes to be immediately due and payable. Upon such a declaration of acceleration, such principal and accrued interest shall be immediately due and payable. Limitation on Transactions with Affiliates Posadas will not, and will not permit any of its restricted subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, or exchange of any property or the rendering of any service) with, or for the benefit of, any affiliate of Posadas (each, an “affiliate transaction”), other than: (i) Affiliate transactions permitted under paragraph (b) below; and (ii) Certain affiliate transactions meeting the following requirements: (a) the terms of such affiliate transaction are no less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arm’s-length basis from a person that is not an affiliate of Posadas; (b) In the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD5.0 million (or the equivalent in other currencies), the terms of such affiliate transaction shall be approved by a majority of the members of the board of directors of Posadas or such restricted subsidiary, as the case may be, such approval to be evidenced by a board resolution stating that such members of the board of directors have determined that such transaction complies with clause (a) immediately above; (c) In the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD15.0 million (or the equivalent in other currencies), the terms of such affiliate transaction will be set forth in an officers’ certificate delivered to the trustee stating that such transaction complies with clauses (a) and (b) immediately above; and (d) in the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD20.0 million (or the equivalent in other currencies), the issuer will, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such affiliate transaction to the issuer and any such restricted subsidiary, if any, from a financial point of view from an independent financial advisor and file the same with trustee. Limits on Consolidations or Mergers Posadas will not: (a) In one or more related transactions, consolidate with or merge into or reorganize with or into, or directly or indirectly, transfer, convey, sell, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety to, any other person; or (b) Permit any guarantor to, in one or more related transactions, consolidate with or merge into or reorganize with or into, or directly or indirectly, transfer, convey, sell, lease, or otherwise dispose of all or substantially all of its properties and assets as an entirety to, any other person in each case. Optional Redemption They may redeem the notes, in whole or in part, at a redemption price based on a “make-whole” premium. Prior to Jan. 15, 2013, they may redeem up to 35% of the aggregate principal amount of the notes with the proceeds from certain qualified equity offerings. Source: Company, note documentation, and Fitch Ratings.

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Financial Summary ⎯ Grupo Posadas, S.A. de C.V. (MXN Mil., Fiscal Years Ended Dec. 31)

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 1,194 1,243 1,531 1,463 1,466 Operating EBITDAR 1,572 1,621 1,864 1,697 1,689 Operating EBITDA Margin (%) 17.7 17.5 22.2 24.5 26.0 Operating EBITDAR Margin (%) 23.3 22.9 27.1 28.4 30.0 FFO Return on Adjusted Capital (%) 11.3 12.5 20.1 18.2 13.4 Free Cash Flow Margin (%) 3.1 9.8 20.3 0.5 9.3 Return on Average Equity (%) 3.5 5.9 (12.8) 2.4 7.6 Coverage (x) FFO Interest Coverage 2.4 3.1 5.0 4.7 3.1 Operating EBITDA/Interest Expense 3.1 3.3 3.6 3.8 3.5 Operating EBITDAR/Interest Expense + Rents 2.0 2.2 2.5 2.7 2.6 Operating EBITDA/Debt Service Coverage 2.9 0.9 1.0 1.9 2.7 Operating EBITDAR/Debt Service Coverage 2.0 1.0 1.0 1.7 2.2 FFO Fixed Charge Coverage 1.7 2.0 3.2 3.3 2.4 FCF Debt Service Coverage 1.4 0.8 1.2 0.6 1.7 (FCF + Cash and Marketable Securities)/Debt Service Coverage 2.4 1.3 1.8 1.1 2.6 Cash Flow from Operations/Capital Expenditures 3.6 6.1 4.6 1.3 3.1 Capital Structure and Leverage (x) FFO Adjusted Leverage 6.0 5.0 3.2 2.9 3.9 Total Debt with Equity Credit/Operating EBITDA 4.3 4.0 3.5 2.9 3.0 Total Net Debt with Equity Credit/Operating EBITDA 4.0 3.5 3.0 2.6 2.7 Total Adjusted Debt/Operating EBITDAR 5.0 4.7 4.1 3.5 3.6 Total Adjusted Net Debt/Operating EBITDAR 4.7 4.3 3.7 3.2 3.3 Implied Cost of Funds (%) 7.8 7.3 8.7 8.9 9.0 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0 0.2 0.2 0.1 0 Balance Sheet Total Assets 13,197 13,261 13,652 13,145 12,989 Cash and Marketable Securities 422 658 831 382 451 Short-Term Debt 27 940 1,057 363 119 Long-Term Debt 5,139 4,018 4,307 3,884 4,322 Total Debt 5,166 4,958 5,364 4,247 4,441 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 5,166 4,958 5,364 4,247 4,441 Off-Balance Sheet Debt 2,646 2,646 2,331 1,638 1,562 Total Adjusted Debt with Equity Credit 7,812 7,604 7,695 5,885 6,003 Total Equity 3,792 4,586 4,398 5,293 5,417 Total Adjusted Capital 11,604 12,190 12,093 11,178 11,420 Cash Flow Funds from Operations 537 769 1,681 1,417 883 Change in Operating Working Capital (101) 84 325 (719) 71 Cash Flow from Operations 436 853 2,006 698 954 Total Non-Operating/Non-Recurring Cash Flow ⎯ ⎯ ⎯ ⎯ Capital Expenditures (122) (139) (433) (540) (308) Dividends (105) (23) (174) (131) (120) Free Cash Flow 209 691 1,399 27 525 Net Acquisitions and Divestures ⎯ ⎯ ⎯ ⎯ ⎯ Other Investments, Net (615) (443) (547) 86 151 Net Debt Proceeds 664 (10) 42 (114) (403) Net Equity Proceeds 6 (1) ⎯ (92) (71) Other Financing, Net (297) (410) (444) (10) (111) Total Change in Cash (33) (173) 450 (103) 92 Income Statement Net Revenues 6,760 7,083 6,884 5,974 5,630 Revenue Growth (%) (3) 3 15 6 (6) Operating EBIT 763 806 1,125 1,032 1,016 Gross Interest Expense 391 375 420 388 422 Rental Expense 378 378 333 234 223 Net Income 152 267 (622) 127 429 Note: Audited, consolidated financial statements (U.S. GAAP). Source: Grupo Posadas, S.A. de C.V.

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Transportation Grupo Senda Autotransporte, S.A. Mexico Full Rating Report de C.V. (Grupo Senda)

Ratings Rating Rationale Current • Grupo Senda Autotransporte, S.A. de C.V.’s (Grupo Senda) ratings reflect the Security Class Rating Foreign Currency IDR B− company’s leading market position in the highly competitive and fragmented Local Currency IDR B− intercity bus passenger transportation in Mexico and its limited financial flexibility Senior Secured Notes B−/RR4 resulting from its high financial leverage and weak liquidity. The company’s ratings IDR − Issuer default rating. also incorporate industry-related risks such as seasonal fluctuations in passengers, cyclicality risk affecting the personnel segment, and volatile fuel costs. Rating Outlook • Positively, the ratings incorporate the importance of bus transportation within Stable Mexico that results from income constraints that limit the ability of many people to Financial Data use more expensive alternative means of transportation such as automobiles or airlines. Grupo Senda is exposed to foreign exchange risks as 90% of its revenues are Grupo Senda Autotransporte, S.A. de C.V. in Mexican pesos and most of its debt is denominated in U.S. dollars. (MXN Mil.) 6/30/10 12/31/09 Net Revenue 3,350 3,148 • The ratings factor in the improving business and economic environment in Mexico as EBITDA 691 528 well as a turnaround in the company’s operating and financial performance Cash and beginning in the second half of 2009. Grupo Senda is expected to continue to Marketable Securities 105 146 benefit from the improvement in the Mexican economy, which is expected to grow Total Debt 2,763 2,968 4.2% and 3.5% during 2010 and 2011, respectively, after a contraction of 6.5% Short-Term Debt 257 375 Total Debt/ during 2009. EBITDA (x) 4.0 5.6 • Higher operating profits over the next several quarters should further reduce the Analysts company’s still high financial leverage. Recent positive operating trends coupled with improving market conditions have help lower the high refinancing risks faced Jose Vertiz by the company during late 2008 and the first half of 2009. +1 212 908-0641 [email protected] • Grupo Senda’s cash flow generation, measured by EBITDA, began trending positive

during the second half of 2009, and it is maintaining a positive trend during the last couple of months. The company’s EBITDA for the LTM periods ended June 2009, December 2009, and June 2010 reached levels of MXN435 million, MXN528 million, and MXN691 million, respectively. EBITDA improvements were driven by tariff increases of approximately 20% during the second half of 2009 and better asset utilization during the first half of 2010, which resulted in EBITDA margins of over 20% during the LTM period ended June 30, 2010. • Grupo Senda’s cash position remains weak and continues to constrain the company’s rating. The company continues to rely upon third parties to cover its liquidity position and to roll over its short-term debt. As of June 30, 2010, Grupo Senda had MXN105 million (MXN146 million as of Dec. 31, 2009) of consolidated cash and marketable securities and MXN275 million (MXN375 million as of Dec. 31, 2009) of short-term debt. Key Rating Drivers • A rating upgrade could occur by some combination of the following factors: continued recovery in the company’s cash flow generation, a more conservative financial profile reflected in an important reduction in the company’s net-debt-to- EBITDA ratio, and a significant improvement in the company’s liquidity position.

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• A rating downgrade could occur for one or more of the following reasons: deterioration in the company’s industry business environment leading to erosion in the company’s market position and credit profile (leverage and liquidity), drastic macroeconomic changes in Mexico, and the company’s lack of capacity to rollover its short-term debt. Rating Issues Please refer to our full company report, “Grupo Senda Autotransporte, S.A. de C.V. (Grupo Senda),” dated Sept. 24, 2010, for more information regarding:

• Business strategy. • Operating margins per bus and kilometer. Liquidity and Debt Structure Grupo Senda’s cash position is low relative to short-term debt. As of June 30, 2010, the company had MXN105 million (MXN146 million as of Dec. 31, 2009) of consolidated cash and marketable securities and MXN275 million (MXN375 million as of Dec. 31, 2009) of short-term debt. The company’s financial strategy is to continue rolling over its short- term debt while trying to achieve a major refinancing, which would allow the company to reduce the debt payments due in 2010 and 2011 of MXN200 million and MXN301 million, respectively. Historically, the company’s cash position has been low relative to short-term debt. The company’s liquidity position, measured by the ratio of cash/short-term debt was 0.38x at the end of June 2010, which compares negatively with the levels the company reached by the end of December 2007 and December 2008 of 0.76x and 0.44x, respectively. By the end of June 2010, the company had unused, uncommitted credit lines for a total amount of approximately MXN150 million, as an alternative source of liquidity. Grupo Senda’s leverage has been trending positively during the last quarters, which mirrors the recovery in the company’s cash flow generation. During the last four quarters ended June 30, 2010, Grupo Senda’s leverage, measured by total net debt/EBITDAR, decreased to 4.0x as of June 30, 2010 from 5.5x as of Dec. 31, 2009. Fitch Ratings expects the company to manage its balance sheet with a net-debt-to- EBITDAR ratio of approximately 4.0x−4.5x over the next two years. On-balance sheet debt totaled MXN2,763 million as of June 30, 2010, which primarily consisted of the senior secured guaranteed notes (MXN1,928 million or USD150 million). The rest of the company’s debt (MXN835 million) is almost entirely secured and is primarily composed of financial leases, long-term facilities with local banks, and used credit lines with local banks. In addition, the company’s annual rental expenses related to operating leases during the LTM period ended in June 2010 totaled approximately MXN36 million. Recovery Rating Grupo Senda’s recovery ratings reflect Fitch’s belief that the company would be reorganized rather than liquidated in a bankruptcy scenario given Fitch’s estimates that the company’s ongoing concern value is significantly higher than its projected liquidation value, due mostly to the significant discount over the company’s assets value in a liquidation scenario. In estimating ongoing concern value, Fitch applies a valuation multiple of 3.5x to the company’s discounted EBITDA. Fitch also discounts Grupo Senda’s normalized operating EBITDAR by approximately 40%, which reflects the sensitivity of the company’s cash flow generation in a distressed scenario as evidenced during the first half of 2009.

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After reductions for administrative and cooperative claims, Fitch arrives at an adjusted reorganization value of approximately MXN1,524 million. Based upon these assumptions, the total senior secured debt of MXN2,763 million ⎯ including the senior secured guaranteed notes, finance leases, and bank loans ⎯ recovers approximately 50%, resulting in ‘RR4’ ratings for the company’s debt.

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Recovery Analysis ⎯ Grupo Senda Autotransporte, S.A. de C.V. (MXN Mil., As of June 30, 2010)

Going Concern Enterprise Value EBITDAR 726 Discount (%) 40 Post-Restructuring EBITDA Estimation 436 Multiple (x) 3.5 Going Concern Enterprise Value 1,526

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 396 Rent Expense 40 Estimated Maintenance Capital Expenditures 60 Total 496

Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value 1,526 Less Administrative Claims (10%) 153 Adjusted Enterprise Value for Claims 1,373

Distribution of Value Secured Priority Lien Value Recovered Recovery (%) Recovery Rating Notching Rating Secured 2,763 1,373 50 RR4 0 B−

Concession Payment Availability Table Adjusted Enterprise Value for Claims 1,372.1 Less Secured Debt Recovery 1,372.1 Remaining Recovery for Unsecured Claims 0.0 Concession Allocation (5%) 0.0 Value to be Distributed to Senior Unsecured Claims 0.0

Value Unsecured Priority Lien Recovered Recovery Concession Allocation Recovery Rating Notching Rating Senior Unsecured ⎯ ⎯ ⎯ ⎯ ⎯ ⎯ ⎯ Note: The amount of concession payments is highly dependent on circumstances, but Fitch typically allows up to 5% of the recovery value available to senior unsecured creditors to be allocated to concession payments. Concession payments allocated to subordinated debt should never result in higher recoveries than those of senior unsecured debt. Source: Fitch Ratings.

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Organizational Structure — Gruopo Senda Autotransporte S.A. de C.V. and Subsidiaries (As of June 30, 2010)

LTM June 2010 Summary Statistics (MXP Mil.) EBITDA 691.20 Cash and Marketable GRUPO SENDA Securities 104.74 USD150 Mil. Senior Secured Guaranteed Notes Due 2015a Short-Term Debt 257.40 Long-Term Debt 2,505.40 On-Balance Debt 2,762.70 LTM Rental Expense 36.00

98% Servicio Industrial Regiomontano, 98% 98% Transportes Tamaulipas, S.A. de C.V. Turimex del Norte S.A. de C.V. S.A. de C.V.

Transportes del Norte Mexico-Laredo Y 98% Servicio Industrial Coahuilense, 98% 98% Turimex, LLC A.S.I., S.A. de C.V. S.A. de C.V.

98% Servicios Integrados de Transporte, 98% Autobuses Coahuilenses, S.A. de C.V. Cross-Border Passenger Transportation Services S.C.

98% Transportes Rodriguez de Saltillo, 98% Multicarga, S.A. de C.V. S.A. de C.V.

90% 98% Servicios T. de N., S.A. de C.V. Senda Servicio Industrial, S.A. de C.V.

Servicios Especializados Senda, 98% Transportes Industriales 98% S.A. de C.V. Chihuahuenses, S.A. de C.V.

Domestic Passenger Transportation and 98% Package Delivery Services Servicio Industrial Potosino, S.A. de C.V.

Transporte Industrial Jalisciense, 98% S.A. de C.V.

Personnel Transportation Services aEach of Grupo Senda’s subsidiaries guarantees notes jointly and severally on a senior secured basis. Source: Fitch and Grupo Senda Autotransportes S.A. de C.V. and subsidiaries’ (Grupo Senda) financial statements.

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Debt and Covenant Synopsis ⎯ Grupo Senda Autotransporte S.A. de C.V. (Grupo Senda) (Foreign Currency Notes)

Overview Issuer Grupo Senda Autotransporte S.A. de C.V. and Subsidiaries (Grupo Senda) Guarantors Payment of principal of, premium, if any, and interest on the notes is guaranteed jointly and severally on a senior secured basis by each of the following Grupo Senda subsidiaries (subsidiary guarantors): Transportes Tamaulipas, S.A. de C.V.; Transportes del Norte México– Laredo y Anexas Servicios Internacionales S.A. de C.V.; Multicarga, S.A. de C.V.; Servicio Industrial Regiomontano, S.A. de C.V.; Servicio Industrial Coahuilense, S.A. de C.V.; Rutas de Saltillo, S.A. de C.V.; Transportes Rodriguez de Saltillo, S.A. de C.V.; Senda Servicio Industrial, S.A. de C.V.; Transportes Industriales Chihuahuenses, S.A. de C.V.; Servicio Industrial Potosino, S.A. de C.V.; Transporte Industrial Jalisciense, S.A. de C.V.; Turimex del Norte, S.A. de C.V.; Turimex LLC, Servicios Integrados de Transporte, S.A. de C.V.; Coach Investments, LLC; Servicios Especializados Senda, S.A. de C.V.; Servicios TDN, S.A. de C.V.; and Autotransportes Adventur, S.A. de C.V.

Document Date 9/26/07 Maturity Date 10/03/15 Description of Debt Senior Secured Guaranteed Notes Amount USD150 Mil. Ranking and Collateral The notes will rank equally with all of the company and the subsidiary guarantors’ existing and future senior secured indebtedness, and senior to all of the company and the subsidiary guarantors’ existing and future subordinated indebtedness. If there are any other nonguarantor subsidiaries in the future, the notes and guarantees will be structurally subordinated to their indebtedness. The notes will be secured on a first-priority basis (subject to certain permitted liens) by liens: 1) on all capital stock held or beneficially owned by Grupo Senda, the subsidiary guarantors, and Autobuses Coahuilenses, S.A. de C.V.; 2) on all of Grupo Senda and the subsidiary guarantors’ inventories and transportation and other equipment; and (3) on all of Grupo Senda and the subsidiary guarantors’ real property, including land and buildings. Under the terms of the indenture governing the notes, Grupo Senda and the subsidiary guarantors may from time to time after the date of issuance of the notes grant liens on the collateral to secure additional permitted secured obligations, which may only consist of certain one or more 1) credit facilities to be limited in the aggregate to a principal amount of USD20.0 million and 2) working capital facilities entered into with one or more Mexican or international financial institutions that are not Grupo Senda’s affiliates at any time prior to or after the date of issuance of the notes and certain trade payables to be limited in the aggregate to a principal amount of USD10.0 million. Financial Covenants Limitation on Incurrence of Grupo Senda will not, and will not cause or permit any of its restricted subsidiaries to, directly or indirectly, incur any indebtedness, Additional Indebtedness including acquired indebtedness (such acquired indebtedness having not been incurred in connection with, or in anticipation or contemplation of, the relevant acquisition, merger, or consolidation), except that 1) any nonguarantor restricted subsidiary may incur acquired indebtedness (other than acquired indebtedness incurred in connection with, or in contemplation of, the merger with such nonguarantor restricted subsidiary) and 2) Grupo Senda and any subsidiary guarantor may incur indebtedness, including acquired indebtedness, if (with respect to this clause [2]), at the time of and immediately after giving pro forma effect to the Incurrence thereof and the application of the proceeds therefrom, the consolidated leverage ratio of Grupo Senda is not greater than 3.25 to 1:00 and no default or event of default shall have occurred and be continuing at the time such additional indebtedness is incurred. Acquisitions/Divestitures Change of Control Provision Upon the occurrence of a change of control, the holders of the notes will have the right ⎯ subject to certain exceptions ⎯ to require the issuer to repurchase some or all of the notes at 101% of their principal amount, plus accrued and unpaid interest, if any, on the repurchase date.

Certain Covenants The indenture governing the notes contains covenants that limit future actions to be taken, or transactions to be entered into, by Grupo Senda and the restricted subsidiaries. The indenture limits Grupo Senda and the restricted subsidiaries’ ability to, among other things: 1) incur additional indebtedness; 2) pay dividends on Grupo Senda’s capital stock or redeem, 3) repurchase or retire Grupo Senda’s capital stock or subordinated indebtedness; 4) make investments or certain other restricted payments; 5) guarantee debts; 6) create liens; 7) create any consensual limitation on the ability of Grupo Senda’s restricted subsidiaries to pay dividends, 8) make loans or transfer property to us; 9) engage in sale-leaseback transactions; 10) engage in transactions with affiliates; 11) sell assets, including capital stock of Grupo Senda’s subsidiaries; and 12) consolidate, merge or transfer assets.

Others Limitation on Grupo Senda will not, and will not permit any of its restricted subsidiaries to, directly or indirectly, enter into any transaction or series of Transactions with related transactions (including, without limitation, the purchase, sale, lease, or exchange of any property or the rendering of any Affiliates service) with, or for the benefit of, any of its affiliates (each an “affiliate transaction”), unless: 1) the terms of such affiliate transaction are no less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arm’s- length basis from a person that is not an affiliate of the company; 2) in the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD5.0 million, the terms of such affiliate transaction will be approved by a majority of the members of the board of directors of Grupo Senda; and, 3) in the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD10.0 million, the company will, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such affiliate transaction to Grupo Senda and the relevant restricted subsidiary (if any) from a financial point of view from an independent financial advisor and file the same with the trustee. Limitation on Grupo Senda will not, in a single transaction or series of related transactions, consolidate or merge with or into any person (whether or not Consolidations or Mergers Grupo Senda is the surviving or continuing person), or sell, assign, transfer, lease, convey, or otherwise dispose of (or cause or permit any restricted subsidiary to sell, assign, transfer, lease, convey, or otherwise dispose of) all or substantially all of Grupo Senda’s properties and assets (determined on a consolidated basis for Grupo Senda and its restricted subsidiaries), to any person unless. This restriction is subject to several exceptions. Continued on next page. Source: Grupo Senda and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ Grupo Senda (Continued) (Foreign Currency Notes)

Other Events of Default The main events of default are: 1) default in the payment when due of the principal of or premium, if any, on any notes, including the failure to make a required payment to purchase notes tendered pursuant to an optional redemption, change of control offer, or an asset sale offer; 2) default for 30 days or more in the payment when due of interest, additional amounts or liquidated damages, if any, on any notes; 3) the failure to perform or comply with certain provisions related to mergers, consolidation and the sale of assets; and 4) the failure by Grupo Senda or any restricted subsidiary to comply with any other covenant or agreement contained in the indenture or in the notes for 30 days or more after written notice to Grupo Senda from the trustee or the holders of at least 25% in aggregate principal amount of the outstanding notes. Cross Default Cross default when an uncured event of default occurs for debt of more than USD10 million. Acceleration If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. Governing Law The indenture, the guarantees, and the notes will be governed by the laws of the state of New York. Optional Redemption On or prior to Oct. 3, 2011, the notes will be redeemable, at the option of the issuer, in whole or in part, on any interest payment date, at a redemption price equal to the greater of 1) 100% of the principal amount of the notes to be redeemed or 2) the sum of the present values of the remaining scheduled payments of principal and interest on such notes. After Oct. 3, 2011, the notes will be redeemable, at the option of the issuer, in whole or in part, on any redemption date, at the redemption prices (expressed as percentages of their principal amount at maturity ⎯ 105.25% in 2011, 103.50% in 2012, 101.75% in 2013, and 100% in 2014 and thereafter. Source: Grupo Senda note documentation and Fitch Ratings.

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Financial Summary ⎯ Grupo Senda Autotransporte, S.A. de C.V. (Grupo Senda) (MXN 000, Years Ended Dec. 31)

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 691,150 527,568 611,438 762,719 612,880 Operating EBITDAR 726,950 567,568 628,038 765,819 657,163 Operating EBITDA Margin (%) 20.6 16.8 19.7 25.7 20.4 Operating EBITDAR Margin (%) 21.7 18.0 20.3 25.8 21.8 FFO Return on Adjusted Capital (%) 15.2 10.0 12.2 19.2 15.2 Free Cash Flow Margin (%) 1.0 (5.8) (5.9) 6.7 (5.3) Coverage (x) FFO Interest Coverage 1.3 0.9 1.4 2.3 2.2 Operating EBITDA/Gross Interest Expense 1.7 1.4 1.7 2.3 2.1 Operating EBITDAR/Interest Expense + Rents 1.7 1.3 1.7 2.2 2.0 Operating EBITDA/Debt Service Coverage 1.1 0.7 0.8 1.2 0.8 Operating EBITDAR/Debt Service Coverage 1.1 0.7 0.8 1.2 0.8 FFO Fixed Charge Coverage 1.3 0.9 1.4 2.3 2.0 FCF Debt Service Coverage 0.7 0.3 0.2 0.9 0.2 (FCF + Cash and Marketable Securities)/Debt Service Coverage 0.8 0.5 0.5 1.2 0.3 Cash Flow from Operations/Capital Expenditures 1.9 (2.2) 0.4 1.9 0.7

Capital Structure and Leverage (x) FFO Adjusted Leverage 5.4 8.2 6.0 3.3 4.4 Total Debt with Equity Credit/Operating EBITDA 4.0 5.6 4.9 3.3 4.3 Total Net Debt with Equity Credit/Operating EBITDA 3.8 5.3 4.6 3.0 4.2 Total Adjusted Debt/Operating EBITDAR 4.1 5.7 5.0 3.3 4.6 Total Adjusted Net Debt/Operating EBITDAR 4.0 5.5 4.7 3.0 4.4 Implied Cost of Funds (%) 14.0 13.0 13.1 13.1 10.7 Short-Term Debt/Total Debt 0.1 0.1 0.1 0.1 0.2

Balance Sheet Total Assets 3,942,875 4,111,073 4,622,169 4,524,584 4,724,252 Cash and Marketable Securities 104,718 146,392 191,581 213,939 101,761 Short-Term Debt 257,351 375,179 431,846 282,263 439,251 Long-Term Debt 2,505,365 2,593,363 2,588,235 2,228,580 2,221,080 Total Debt 2,762,716 2,968,542 3,020,081 2,510,843 2,660,331 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 2,968,542 2,968,542 3,020,081 2,510,843 2,660,331 Off-Balance Sheet Debt 250,600 280,000 116,200 21,700 309,986 Total Adjusted Debt with Equity Credit 3,013,316 3,248,542 3,136,281 2,532,543 2,970,317 Total Equity 627,344 707,812 1,154,169 1,508,959 1,474,172 Total Adjusted Capital 3,640,600 3,956,354 4,290,450 4,041,502 4,444,489

Cash Flow Funds from Operations 121,226 (30,134) 144,475 437,351 346,885 Change in Working Capital (51,694) (95,165) (8,228) (26,174) (34,268) Cash Flow from Operations 69,532 (125,299) 136,247 411,177 312,617 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (37,570) (56,434) (318,674) (213,109) (473,400) Common Dividends 0 0 0 0 0 Free Cash Flow (31,962 (181,733) (182,427) 198,068 (160,783) Net Acquisitions and Divestures 0 0 0 0 (81,961) Other Investments, Net 0 0 0 (29,095) 7,308 Net Debt Proceeds (162,906) (13,389) 39,451 24,927 260,821 Net Equity Proceeds 0 0 0 0 0 Other (Investments and Financing) 0 149,933 120,618 (78,035) (103,096) Total Change in Cash (130,944) (45,189) (22,358) 115,865 (77,711)

Income Statement Net Revenues 3,349,795 3,147,789 3,101,126 2,968,427 3,011,120 Revenue Growth (%) 10.6 1.5 4.5 (1.4) 6.7 Operating EBIT 332,075 161,611 277,964 429,632 270,033 Gross Interest Expense 395,940 388,463 362,445 337,521 290,472 Rental Expense 35,800 40,000 16,600 3,100 44,283 Net Income (220,600) (343,772) (552,222) 101,276 36,658 Note: (1) Numbers may not add due to rounding. (2) Fitch calculates off-balance sheet debt by applying a multiple of 7.0x to the most recent year’s lease rental expenses. Source: Grupo Senda.

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Food Independência S.A. Brazil Full Rating Report

Ratings Rating Rationale Current Security Class Rating • Independência S.A.’s (Independência) ratings were downgraded to ‘D’ from ‘C’ on Local Currency IDR D Sept. 30, 2010, following the announcement by the company that it would not pay Foreign Currency IDR D Unsecured Notes C/RR4 the scheduled interest payment on its USD165 million senior secured notes due in Exchange Notes C/RR6 2015. The company is now trying to renegotiate its debt obligations with creditors. National Scale D(bra) • Independência originally defaulted on its credit and filed for Brazilian bankruptcy IDR − Issuer default rating. protection on Feb. 27, 2009. The default was the result of many factors, including weak demand due to the global recession, the sudden devaluation of the Brazilian Rating Outlook real and the resultant derivative losses, as well as weak internal controls. None Independência’s reorganization plan was approved by the creditors of the company Financial Data on Nov. 5, 2009 and subsequently confirmed by the court in December 2009. Independência S.A. • During March 2010, the company issued USD165 million of first priority, senior secured (BRL Mil.) notes due 2015. These notes are fully and unconditionally guaranteed by 6/30/10 12/31/09 Independência S.A and are secured by a first priority security interest on all tangible Total Revenues 346 616 EBITDA (306) (554) assets of the company. The company also initiated an exchange of the original 2015 Cash Flow from and 2017 notes for secured second lien notes due 2016. The existing note holders Operations N.A. N.A. Cash and received a principal amount equal to USD522 per USD1,000 of the original notes. Marketable Securities 5 12 • Fitch Ratings continues to rate Independência International Ltd.’s USD165 million Total Debt 1,855 1,470 senior secured notes due 2015 at ‘C/RR4’ and its second lien secured exchange notes

due 2016 at ‘C/RR6’. The 'C/RR4' rating of the USD165 million notes due in 2015 is Analysts reflective of defaulted notes whose recovery is anticipated to be in the range of Daniel R. Kastholm, CFA 30%−50%. The senior secured notes are fully and unconditionally guaranteed by +1 312 368-2070 Independência and are secured by a first priority security interest on all tangible [email protected] assets of the company. The bespoke recovery rating analysis for the 2015 notes

Gisele Paolino indicated a recovery higher than 50%. The recovery for the notes was capped at the +55 21 4503-2600 ‘RR4’ category in order to reflect the uncertainties of the Brazilian legal system. [email protected] • The ‘C/RR6’ rating of the company’s second lien secured exchange notes due 2016 is reflective of defaulted notes with poor recovery prospects. Securities rated ‘RR6’ historically have characteristics consistent with securities that are anticipated to have recoveries of between 0%−10% of current principal and related interest. The poor recovery prospect for these notes is due to their subordination to the 2015 notes in terms of security related to tangible assets. • Independência’s financial statements for 2009 and for the first six months of 2010 were reviewed by different accounting companies. Both firms list multiple concerns and qualifications regarding these financial statements. Subject to these limitations, Independência’s financial leverage remains high, and its EBITDA generation continues to be negative. Working capital requirements have increased following the execution of the judicial recovery plan and the resumption of some of the company’s operations. As of June 30, 2010, Independência held BRL5.4 million of cash and equivalents compared to BRL1.9 billion of debt. During the six months ended June 30, 2010, Independência generated negative EBITDA of BRL31.2 million. While this figure is an improvement from a negative EBITDA of BRL554 million during 2009, it remains insufficient to service debt.

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• Independência had BRL1.9 billion of total debt as of June 30, 2010, of which 73% (BRL1.4 billion) is denominated in U.S. dollars. Debt declined from BRL3.1 billion in 2008 due to the 50% haircut assumed by unsecured creditors in the reorganization plan. Debt as of June 30, 2010 was comprised mainly of BRL823 million of notes (exchange notes and senior secured notes,) accounting for 44% of total debt, BRL576 million of working capital lines (31%), and BRL413 million of trade finance debt (22%). • In addition to the company’s poor financial conditions, negative rating constraints include Independência’s current client and geographic concentration, protein price volatility, and the risk of diseases. Long-term industry fundamentals are generally strong. Beef consumption is expected to continue to grow robustly, driven by population growth and higher income per capita in East and Southeast Asia, Latin America, and the Middle East. Brazil should continue to lead the world’s expansion of beef production and beef exports. The country possesses the world’s largest commercial herd and one of the lowest production costs due to ample availability of land, positive weather conditions, and low labor and energy costs. Key Rating Drivers • A rating upgrade is not likely in the short term. Rating Issues Please refer to Fitch’s full company report, “Independência S.A.,” dated Oct. 28, 2010, for more information regarding:

• Ownership. • Capacity and operational data. Liquidity and Debt Structure Independência has a very weak capital structure. As of June 30, 2010, the company had BRL5 million of cash on hand compared to BRL1.853 billion of loans and financing debt. Proceeds from the 2015 DIP notes enabled the company to partially pay most of its suppliers. About 75% of the company’s debt is denominated in U.S. dollars. The debt is comprised primarily of BRL822 million of notes (exchange notes and senior secured notes), BRL576 million of working capital lines, and BRL280 million of ACC debt. The leverage ratio of Independência by the end of 2010 is expected to reach about 30.0x, which has little room for error given the maximum leverage ratio permitted by the senior secured notes of 30.0x in the first quarter of 2011. The maximum leverage covenant decreases over time to 6.5x by March 2014. Other financial covenants in the notes include minimum cash interest coverage, minimum interest coverage, minimum fixed charge, and maximum capex. Fitch believes that covenant violations are likely in 2011. The senior secured notes issued during March by Independência International Ltd., a special-purpose vehicle wholly owned by Independência and incorporated in the Cayman Islands, are fully and unconditionally guaranteed by Independência S.A. and secured by a first priority security interest on a debt service reserve account, a reserve account, and substantially all the assets of the company (except accounts receivables, inventories, cash on hand, and the Santos warehouse). The collateral is encumbered in the form of a chattel mortgage (alienação fiduciária), which assures priority of payment in case of liquidation, as the assets are not considered property of the estate. The notes have principal payments of one-third of the nominal value on March 31, 2013, 50% on March 31, 2014, and the remaining balance on March 31, 2015. Proceeds of

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BRL105 million were used to pay cattle growers and suppliers, and the remaining proceeds were used to finance working capital requirements. According to the agreement, labor liabilities were scheduled to be paid monthly over an 11-month period after a BRL212,000 payment on Feb. 4, 2010. The secured debt was slated to be paid over seven years. The restructuring scheduled allowed for a two-year grace period for interest and four years for principal. Secured debt accrues a real interest rate of 7% and will be collateralized by the Santos warehouse. Unsecured liabilities that were part of the debt restructuring were comprised of unsecured financial debt, cattle suppliers, and other suppliers. The unsecured financial debtors received exchange notes due 2016, representing 50% of the nominal value before bankruptcy and are secured on a second lien basis by the same assets of the chattel mortgage, securing the DIP notes. Cattle suppliers and other suppliers will be paid over two years. The financial debt denominated in local currency accrues at a 14% interest rate, while the debt denominated in U.S. dollars accrues at a 12% interest rate. The minimum cash interest expense will be 1% over the first two years and 4% thereafter. PIK interest will be capitalized, and the outstanding principal amount will be paid in a lump sum payment on Dec. 30, 2016. Debt outside of the bankruptcy debt is comprised of ACC, leases, and Finame. ACC creditors that adhere to the plan are scheduled to be paid in full over seven years with an interest rate of 5%. ACC claims have a grace period of four years for principal payment and two years for interest payment. Minimum cash interest payments are 1% in the first two years and 4% thereafter.

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Recovery Analysis ⎯ Independência S.A. (BRL Mil.)

Advance Rate Available to Going Concern Enterprise Value Liquidation Value (%) Creditors 2010 LTM EBITDA ⎯ Cash 5.4 0 ⎯ Discount (%) 25 A/R 8.3 70 5.8 Post-Restructuring EBITDA Estimation ⎯ Inventory 26.2 20 5.2 Multiple (x) 4.0 Net PP&E 1,031.0 40 412.4 Going Concern Enterprise Value ⎯ Total 1,070.9 ⎯ 423.5

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 47.0 Rent Expense ⎯ Estimated Maintenance Capital Expenditures 3.0 Total 50.0

Available to Enterprise Value for Claims Distribution Creditors Greater of Going Concern Enterprise or Liquidation Value 423.5 Less Adminstrative Claims (10%) 42.3 Adjusted Enterprise Value for Claims 381.1

Distribution of Value Secured Priority Lien Value Recovered Recovery (%) Recovery Ratinga Notching Rating Senior Secured 293.9 293.9 100 RR4 ⎯ C Secured 41.1 41.1 100 RR4 ⎯ C

Concession Payment Availability Table Adjusted Enterprise Value for Claims 381.1 Less Secured Debt Recovery 335.0 Remaining Recovery for Unsecured Claims 46.1 Concession Allocation (5%) 2.3 Value to be Distributed to Senior Unsecured Claims 43.8

Value Concession Unsecured Priority Lien Recovered Recovery (%) Allocation (%) Recovery Rating Notching Rating Senior Unsecured 528.9 46.1 9 100 RR6 ⎯ C Unsecured 990.6 ⎯ 0 0 RR6 ⎯ C Subordinated 0.0 ⎯ 0 0 ⎯ ⎯ ⎯ Junior Subordinated 0.0 ⎯ 0 0 ⎯ ⎯ ⎯ aAccording to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Brazilian corporates are capped at ‘RR4’. Source: Fitch.

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Organizational Structure — Independência S.A.

(As of June 30, 2010)

Roberto Russo Miguel Russo BNDESPAR

50.00% 50.00%

Peroba Participações S.A.

78.18% 0.01% 0.01% Independência 21.80% Participações S.A.

100%

Independência S.A (Operational)

Nova Carne 1.00% 99.00% Indústria de Alimentos Ltda.

1.00% Independência 99.00% Guarani S.A. - PY

Independência 1.00% International Ltd.

Source: Fitch and Independência financial statements.

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Debt and Covenant Synopsis ⎯ Independência S.A.

Overview Issuer Independência International Ltda. Independência International Ltda. Guarantors Independência S.A. Independência S.A. The notes are unconditionally guaranteed, jointly and severally, on a senior secured basis, by any future material subsidiary of Independência S.A. (together with Independência S.A.). Document Date March 11, 2010 March 30, 2010 Maturity Date March 31, 2015 Dec. 30, 2016 On March 31, 2013, the company must repay an amount equal to thirty-three and one-third percent (33⅓%) of the then outstanding principal amount of the notes; On March 31, 2014, the company must pay an amount equal to 50% of the then outstanding principal amount of the notes; On March 31, 2015, the maturity date of the notes, the issuer shall make an aggregate principal payment in respect of the notes, which principal payment shall be allocated pro rata among the holders of the notes, in an amount equal to 100% of the then outstanding principal amount of the notes Description of Debt DIP Notes ⎯ Senior Secured Notes Exchange Notes ⎯ Secured Secon-Lien Notes Collateral The debt service reserve account; the reserve account; all of the issuer’s and the guarantors’ existing and future unencumbered property, plant, equipment, real property other than (1) any equipment that is purchased with the proceeds of purchase money debt to the extent permitted by the indenture, and (2) warehouses mortgaged pursuant to the provisions of the plan; the pledged shares, which consist of all of the capital stock owned from time to time by Independência S.A. and/or each of its subsidiaries in the issuer and any material subsidiary, in each case, to the extent BNDES Participações S.A. (BNDESPAR) has not rejected the pledge of such shares pursuant to the shareholders’ agreement; and the pledged intercompany debt, which consists of any present or future debt of Independência S.A. or any of its present or future subsidiaries issued to Independência S.A., or any of its other present or future subsidiaries. The collateral (other than in respect of intercompany indebtedness, shares and quotas we hold in our subsidiaries) will be encumbered in the form of a chattel mortgage (alienação fiduciária). Amount USD165 million USD396 million Financial Covenants Minimum Consolidated Cash Interest Expense Coverage Ratio See Appendix 1 See Appendix 2 Minimum Interest Coverage Ratio See Appendix 1 See Appendix 2 Minimum Fixed Charge Coverage Ratio See Appendix 1 See Appendix 2 Maximum Total Debt- to-EBITDA Ratio See Appendix 1 See Appendix 2 Continued on next page. Source: Company and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ Independência S.A. (Continued)

Certain Covenants Limitation on Liens Independência S.A. will not, and will not permit any of its Independência S.A. will not, and will not permit any of its subsidiaries to, directly or indirectly, create, incur, subsidiaries to, directly or indirectly, create, incur, assume assume, or otherwise cause or suffer to exist, or become or otherwise cause or suffer to exist, or become effective effective any lien of any kind upon any of their property or any lien of any kind upon any of their property or assets. assets. Limitation on Incurrence of Independência S.A. will not, and will not permit any of its Independência S.A. will not, and will not permit any of its Additional Debt subsidiaries to, directly or indirectly, create, incur, issue, subsidiaries to, directly or indirectly, create, incur, issue, assume, acquire, guarantee or otherwise become directly, assume, acquire, guarantee, or otherwise become directly or indirectly liable, contingently or otherwise, with respect or indirectly liable, contingently or otherwise, with respect to any debt. The provisions of this section shall not apply to any debt. The provisions of this section shall not apply to the debt outstanding on the issue date, including the to debt outstanding, including but not limited to the DIP second priority notes. bond and the pre-petition unsecured financial obligations. Merger, Consolidation, and Sale The issuer or Independência S.A. will not, so long as any of Independência S.A. will not, and will not permit any of its of Assets the notes are outstanding, consolidate with, merge with, or subsidiaries to, consummate an asset sale unless it is a into, any other person or sell, convey, transfer, or lease, in permitted asset sale. one transaction or a series of transactions, directly or indirectly, all or substantially all of its properties or assets to any other person. Limitation on Capital N.A. Independência S.A. will not, and will not cause or permit any Expenditures subsidiary to, directly or indirectly, make consolidated capital expenditures in any fiscal year to the extent that the aggregate consolidated capital expenditures of the Independência parties made in such fiscal year would exceed (in BRL million): 0.75 in 2009, 5.0 in 2010, 4.0 in 2011, 5.0 in 2012, and 5.0 in 2013 (and thereafter). Limitation on Dividend Dividends Restriction Independência S.A. and the issuer will not, and Independência S.A. and the company will not, and Independência S.A. will not permit any of its nonwholly Independência S.A. will not permit any of its nonwholly owned subsidiaries to, directly or indirectly: (1) in any owned subsidiaries to, directly or indirectly in any fiscal fiscal year, declare or pay any dividend or make any year, declare or pay any dividend or make any distribution distribution on or in respect of shares of Independência on or in respect of shares of Independência S.A.’s capital S.A.’s capital stock to holders of such capital stock in stock to holders of such capital stock in excess of 25% of excess of 25% of the consolidated net income of the consolidated net income of Independência S.A. for such Independência S.A. for such fiscal year, provided that, to fiscal year, provided that, to the extent any dividend is the extent any dividend is paid, directly or indirectly, to paid, directly or indirectly, to the holders of the capital the holders of the capital stock of Independência S.A. stock of Independência S.A. (excluding BNDES Participações (excluding BNDES Participações S.A.— BNDESPAR and the S.A.—BNDESPAR and the holders of any subscription holders of any subscription warrants) or any members of warrants) or any members of the Russo family, such the Russo family, such dividends shall be immediately dividends shall be immediately reinvested in Independência reinvested in Independência S.A. (and failure to make such S.A. (and failure to make such reinvestment shall reinvestment shall constitute an immediate event of constitute an immediate event of default). default). N.A. − Not applicable. Continued on next page. Source: Company and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ Independência S.A. (Continued)

Redemption Optional Redemption The notes are not redeemable at the option of the issuer prior The company may redeem the notes issued under this indenture to March 15, 2011. On or after March 15, 2011, the issuer may prior to their maturity at the redemption price (1) as a whole on any one or more occasions redeem all or, provided that at or (2) from time to time in part, provided that at least 33% of least 33% of the aggregate principal amount of notes the aggregate principal amount of notes originally issued originally issued under the indenture remains outstanding under this indenture remains outstanding immediately after immediately after the occurrence of such redemption, a part the occurrence of such redemption. of the notes at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest on the notes redeemed, to the applicable date of redemption, if redeemed during the 12- month period beginning on March 15 of the years indicated below and ending on March 14 of the next succeeding year: Year Percentage 2011...... 107.50% 2012...... 105.00% 2013...... 102.50% 2014 and Thereafter...... 100.00% Mandatory Redemption Upon certain asset sales (other than a permitted asset sale), For so long as any note remains outstanding, the company shall casualty events or equity issuance, the issuer will be required apply the holders’ pro rata share of 100% of any net cash to use the net proceeds of such events to purchase the notes proceeds from any asset sale equal to or in excess of USD10 at 100% of the principal amount thereof, together with million to the redemption of the notes at the redemption accrued and unpaid interest, if any, to the date of the event. price, within 60 days of such asset sale. For so long as any note remains outstanding, the company shall apply to the holders of the notes their pro rata share of not less than 65% of any net cash proceeds from any equity issuance or their pro rata share of 100% of any net cash proceeds from any casualty event to the redemption of the notes at the redemption price, in each case within 60 days of the relevant event.

Acquisitions/Divestitures Change of Control If (1) Independência experiences certain change of control Upon the occurrence of a change of control that is not a events and (2) at any time during the period commencing on permitted change of control, the company will make an offer the date of the first public announcement of such change of to purchase all outstanding notes at a purchase price equal to control (or pending change of control) and ending 60 days 101% of the principal amount thereof plus accrued interest to following consummation of such change of control (which the date of purchase. period will be extended for so long as the rating of the notes, the issuer, Independência S.A. or the successor corporation, as applicable, is under publicly announced consideration for possible downgrade by any rating agency), the rating of the notes, the issuer, Independência S.A. or the successor corporation, as applicable, is decreased or downgraded by any rating agency (provided that such downgrade is in whole or in part in connection with the applicable change of control), each holder of the notes will have the right to require the company to purchase all or a portion of its notes at an offer price in cash equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest, if any, to the date of purchase. Source: Company and Fitch Ratings.

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Appendix

Financial Covenants ⎯ DIP Notes (Senior Secured Notes) (x)

Minimum Cash Minimum Interest Minimum Fixed Minimum Total Debt Interest Coverage Coverage Charge Coverage to EBITDA

1Q11 1.25 1.25 ⎯ 30.0 2Q11 2.00 1.25 0.50 25.0 3Q11 2.50 1.25 0.75 18.0 4Q11 3.00 1.25 1.0 10.5 1Q12 3.00 1.25 0.75 9.0 2Q12 3.00 1.25 1.10 8.0 3Q12 3.00 1.25 1.10 7.5 4Q12 3.00 1.25 1.10 7.0 1Q13 3.00 1.25 1.00 7.0 2Q13 3.00 1.25 1.10 7.0 3Q13 3.00 1.25 1.10 7.0 4Q13 3.00 1.25 1.10 7.0 1Q14 3.00 1.25 1.00 6.5 2Q14 3.00 1.25 1.10 6.5 3Q14 3.00 1.25 1.10 6.5 4Q14+ 3.00 1.25 1.10 6.5 Source: Independência S.A.

Financial Covenants ⎯ Exchange Notes and Secured Second Lien Notes (x)

Minimum Cash Minimum Interest Minimum Fixed Minimum Total Debt Interest Coverage Coverage Charge Coverage to EBITDA 1Q11 1.25 ⎯ ⎯ 30.0 2Q11 2.00 ⎯ 0.50 25.0 3Q11 2.50 ⎯ 0.75 18.0 4Q11 3.00 ⎯ 1.0 10.5 1Q12 3.00 ⎯ 0.75 9.0 2Q12 3.00 ⎯ 1.10 8.0 3Q12 3.00 ⎯ 1.10 7.5 4Q12 3.00 ⎯ 1.10 7.0 1Q13 ⎯ 1.25 1.00 7.0 2Q13 ⎯ 1.25 1.10 7.0 3Q13 ⎯ 1.25 1.10 7.0 4Q13 ⎯ 1.25 1.10 7.0 1Q14 ⎯ 1.25 1.00 6.5 2Q14 ⎯ 1.25 1.10 6.5 3Q14 ⎯ 1.25 1.10 6.5 4Q14 ⎯ 1.25 1.10 6.5 1Q15 ⎯ 1.25 0.75 5.5 2Q15 ⎯ 1.25 1.10 5.5 3Q15 ⎯ 1.25 1.10 5.5 4Q15 and Beyond ⎯ 1.25 1.10 5.5 Source: Independência S.A.

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Financial Summary ⎯ Independência S.A.a (BRL Mil)

LTM 6/30/10 2009 2008 2007 Profitability Operating EBITDA (306,489) (554,370) 317,043 265,594 Operating EBITDAR (306,489) (554,370) 317,043 265,594 Operating EBITDA Margin (%) (88.5) (90.0) 16.4 18.6 Operating EBITDAR Margin (%) (88.5) (90.0) 16.4 18.6 Funds from Operations (FFO) Return on Adjusted Capital (%) ⎯ ⎯ (120.1) 3.6 Free Cash Flow (FCF) Margin (%) ⎯ ⎯ (143.0) (38.8) Average Return on Equity (%) ⎯ ⎯ 662.0 (6.5)

Coverage (x) FFO Interest Coverage ⎯ ⎯ (25.4) 0.7 Operating EBITDA/Interest Expense ⎯ (3.2) 3.0 3.1 Operating EBITDAR/Interest Expense + Rents ⎯ (3.2) 3.0 3.1 Operating EBITDA/Debt Service Coverage ⎯ (0.8) 0.2 0.6 Operating EBITDAR/Debt Service Coverage ⎯ (0.8) 0.2 0.6 FFO Fixed Charge Coverage ⎯ 2.4 (25.4) 0.7 FCF Debt Service Coverage ⎯ ⎯ (1.6) (1.1) (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage ⎯ ⎯ (1.3) (0.9) Cash Flow from Operations/Capital Expenditures ⎯ ⎯ (15.9) (0.1)

Capital Structure and Leverage (x) FFO Adjusted Leverage ⎯ ⎯ (1.1) 17.7 Total Debt with Equity Credit/Operating EBITDA (6.1) (2.7) 9.6 3.8 Total Net Debt with Equity Credit/Operating EBITDA (6.0) (2.6) 8.1 3.5 Total Adjusted Debt/Operating EBITDAR (6.1) (2.7) 9.6 3.8 Total Adjusted Net Debt/Operating EBITDAR (6.0) (2.6) 8.1 3.5 Implied Cost of Funds ⎯ 7.7 5.2 9.9 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.2 0.3 0.5 0.3

Balance Sheet Total Assets 1,523,300 1,557,871 2,946,493 2,088,699 Cash and Marketable Securities 5,426 11,996 493,520 81,813 Short-Term Debt 335,761 482,452 1,539,773 336,107 Long-Term Debt 1,518,811 987,634 1,518,253 684,607 Total Debt 1,854,572 1,470,086 3,058,026 1,020,714 Equity Credit ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 1,854,572 1,470,086 3,058,026 1,020,714 Off-Balance Sheet Debt 0 0 0 0 Total Adjusted Debt with Equity Credit 1,854,572 1,470,086 3,058,026 1,020,714 Total Equity (920,771) (652,603) (796,297) 572,753 Total Adjusted Capital 933,801 817,483 2,261,729 1,593,467

Cash Flow Funds from Operations ⎯ ⎯ (2,823,222) (26,811) Change in Operating Working Capital ⎯ ⎯ 216,694 (25,108) Cash Flow from Operations ⎯ ⎯ (2,606,528) (51,919) Total Nonoperating/Nonrecurring Cash Flow ⎯ ⎯ 0 0 Capital Expenditures ⎯ ⎯ (163,938) (501,257) Dividends ⎯ ⎯ 0 0 Free Cash Flow ⎯ ⎯ (2,770,466) (553,176) Net Acquisitions and Divestitures ⎯ ⎯ (80,586) (105,889) Other Investments, Net ⎯ ⎯ (43,452) (4,056) Net Debt Proceeds ⎯ ⎯ 3,048,559 475,737 Net Equity Proceeds ⎯ ⎯ 257,652 31,842 Other Financing, Net ⎯ ⎯ 0 142,725 Total Change in Cash ⎯ ⎯ 411,707 (12,817)

Income Statement Net Revenues 346,148 616,115 1,936,941 1,427,079 Revenue Growth (%) ⎯ (68) 36 63 Operating EBIT (434,515) (688,809) 155,515 168,454 Gross Interest Expense ⎯ 174,578 106,977 84,473 Rental Expense 0 0 0 0 Net Income 391,155 112,424 (739,910) (27,055) aAuditors of the company’s financial statements have expressed many concerns and qualifications. The 2009 figures are based upon pro forma balance sheets and income statements. The company did not publish a pro forma cash flow statement. Source: Independência S.A.

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Capital Goods Industrias Metalurgicas Argentina Full Rating Report Pescarmona S.A.I.C. y F.

Ratings Rating Rationale Current Security Class Rating • Industrias Metalurgicas Pescarmona S.A.I.C. y F.’s (IMPSA) ratings reflect the Foreign Currency IDR B+ Local Currency IDR B+ positive trend in the company’s long-term business fundamentals due to the Senior Unsecured Notes B+/RR4 development of its operations in Brazil and the sustained global demand for hydro

IDR − Issuer default rating. and wind power generating equipment. The ratings also incorporate IMPSA’s sizeable backlog, which provides certainty to the company’s cash generation over Rating Outlook the medium term. Balanced against these strengths are the company’s high leverage, aggressive capital expenditure program, and its dependence on a few Stable large projects in developing countries. A sudden downturn in the key markets would negatively affect IMPSA’s ability to develop new projects. Financial Data Industrias Metalurgicas Pescarmona • Fitch Ratings expects revenues and EBITDA from Brazil to represent more than 65% S.A.I.C. y F. of IMPSA’s consolidated figures from fiscal 2011 onwards. The growth of the LTM company’s business in Brazil has reduced IMPSA’s exposure to more volatile markets (ARS Mil.) 4/30/10 1/31/10 Total Revenues 2,481,241 2,342,436 such as Argentina and has increased the company’s access to multiple funding EBITDAR 420,533 391,377 sources. This has reduced concerns about IMPSA’s need to finance its working Cash from Operations 401,077 (46,660) capital needs in Argentina ⎯ should that market deteriorate ⎯ and has resulted in Cash and the company’s foreign currency ratings exceeding the ‘B’ country ceiling of Marketable Argentina. Securities 323,273 239,306 Total Adjusted Debt 1,995,489 2,210,030 • Fitch expects IMPSA’s EBITDA to grow to above USD160 million during the fiscal year Total Adjusted ended Jan. 31, 2011. The company’s FCF is anticipated to remain negative during Debt with 2010 due to growth and cash deficits, which are expected to be mostly financed Recourse/ EBITDAR (x) 4.1 4.3 with nonrecourse project financing. For the fiscal year ended in January 2011, Fitch FFO Adjusted expects IMPSA’s total debt with recourse to increase to approximately Leverage (x) 9.7 442.0 USD450 million from USD438 million. Nevertheless, the rapid growth of EBITDA Analysts should lower the company’s leverage ratio, measured by total debt/EBITDA, to approximately 3.0x from 4.3x as of January 2010. Gabriela Catri +54 11 5235-8129 • IMPSA has recently engaged in a liability management program through which an [email protected] indirect subsidiary, WPE International Cooperatief (WPEI), will issue notes for up to USD300 million that are irrevocably and unconditionally guaranteed by IMPSA and Fernando Torres +54 11 5235-8124 WPE (its Brazilian subsidiary) on a senior unsecured basis. This program aims to [email protected] extend the average life of the company’s debt, which includes the buyback of its 2014 notes through a tender offer announced on September 8 and the issuance of

new bullet notes. Both transactions are contingent upon one another. Therefore, the issuance of the proposed notes will depend on the success of the tender offer. Use of proceeds includes the refinancing of IMPSA’s 2014 notes, the prepayment of short-term loans, and funds for additional capex. Through this transaction, the average life of IMPSA’s consolidated debt is expected to grow to above four years from approximately two years as of today. • IMPSA’s shareholder has announced several changes in its corporate structure. Venti (Luxemburg), a recently created holding company of the Pescarmona family, has filed to issue Brazilian depositary receipts (BDRs) at the Comissao de Valores Mobiliarios (CVM) in Brazil. If the IPO succeeds, IMPSA’s and Corporacion IMPSA S.A.’s (current shareholder) shares will be transferred to Venti. Fitch’s ratings do not take into consideration the impact of the IPO as its timing and results are

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uncertain. Should proceeds from the IPO be used to materially reduce IMPSA’s leverage, the ratings could be positively affected. Key Rating Drivers • The company’s ratings could come under pressure if nonrecourse financing increases above levels anticipated by Fitch, any material performance problems that threaten future projects and cash flow, or a failure to comply with the terms for the operation of the wind farms (for which long-term PPAs have been signed with Eletrobras and the CCEE). Rating Issues Please refer to Fitch’s full company report, “Industrias Metalurgicas Pescarmona S.A.I.C. y F. (IMPSA),” dated Sept. 15, 2010, for more information regarding:

• Recent events. • Management strategy. • Company overview. Liquidity and Debt Structure IMPSA had USD514 million of total debt and USD83 million of cash and marketable securities as of April 30, 2010. Of the company’s total debt, USD68 million was structured without legal recourse to the company as project finance debt for a wind farm in Brazil (Ceara). This debt was funded through a 12-year loan from Brazil’s development bank, Caixa Economica Federal. IMPSA’s FFO were negative for the fiscal year ended April 30, 2010 due to large working capital needs to fund the development of wind farms. In the medium term, Fitch expects FCF to remain negative as the Santa Catarina and the Ceara II projects develop. For this purpose, it is expected that IMPSA will replicate the “project finance” structure applied in Ceara, with financing having no recourse to the company. Recovery Rating The recovery ratings for IMPSA’s capital markets debt instruments reflect Fitch’s expectation that the company’s creditors would have an average recovery constrained by the soft cap of ‘RR4’ for bonds issued by Argentine corporates. In deriving a distressed enterprise valuation to determine the recovery under this scenario, Fitch discounts the company’s LTM EBITDA to a level that would cover operating leases, interest expenses, and maintenance capital expenditures. Fitch has applied a 4.0x distressed EBITDA multiple, which is slightly below the average ratio observed for heavy industrial companies.

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Recovery Analysis ⎯ Industrias Metalúrgicas Pescarmona S.A.I.C. y F. (USD Mil., As of June 30, 2010)

Enterprise Value EBITDA 145 EBITDA Discount (%) 40 Post-Restructuring EBITDA Estimation 87 Multiple (x) 4.0 Going Concern Enterprise Value 348.0 Post-Restructuring EBITDA Estimation Guidelines Interest Expense 65 Rent Expense ⎯ Estimated Maintenance Capital Expenditures 20 Total 85

Advance Available to Liquidation Value Balance Rate (%) Creditors Cash 83.1 0 ⎯ A/R 116.6 80 93.3 Inventory 280.8 50 140.4 Net PP&E 123.5 20 24.7 Total 604.0 ⎯ 258.4

Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value 348 Less Administrative Claims (10%) 35 Adjusted Enterprise Value for Claims 313

Distribution of Value Secured Priority Lien Value Recovered Recovery Recovery Rating Notching Rating Senior Secured 0.0 ⎯ 0 ⎯ ⎯ ⎯

Concession Payment Availability Table Adjusted Enterprise Value for Claims 313 Less Secured Debt Recovery ⎯ Remaining Recovery for Unsecured Claims 313 Concession Allocation (5%) 16 Value to be Distributed to Senior Unsecured Claims 297

Value Concession Unsecured Priority Lien Recovered Recovery Allocation ‘RR’ Rating Notching Credit Ratings Senior Unsecured 445.8 313.2 70 100 RR4 ⎯ B+ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Argentine corporates are capped at ‘RR4’. Source: Fitch.

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Organizational Structure — Industrias Metalúrgicas Pescarmona S.A.I.C. y F. (As of April 30, 2010)

LTM April 30, 2010 Summary Statistics Industrias Metalúrgicas ARS421 Million of EBITDA Pescarmona S.A.I.C. y F. ARS323 Million of Cash and Marketable Securities ARS1,995 Million of Total Debt USD225 Million Senior Guaranteed ARS1,732 Million of Total Debt with Recourse Notes Due 2014

98% 100.0% IMPSA Internacional Inc. INVERALL S.A.

30.7% 99.9% CEMPPSA Inverall Constr. S.A.

100.0% 99.9% IMPSA Caribe S.A. Wind Power Energy 65.2% 50.0% 34.8% SOLURBAN Energimp S.A.

69.9% Limpieza Metropol S.A.

60.0% IMPSA – MyM S.A. U.T.E.

31.1% Mercantil Andina S.A.

Source: Fitch and Industrias Metalúrgicas Pescarmona S.A.I.C. y F. financial statements.

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Debt and Covenant Synopsis ⎯ Industrias Metalúrgicas Pescarmona S.A.I.C. y F.

Overview Issuer Industrias Metalúrgicas Pescarmona S.A.I.C. y F. Guarantors N.A. Document Date Sept. 7, 2007 Maturity Date 2014 Description of Debt Senior Guaranteed Notes Financial Covenants Consolidated Leverage (Maximum) N.A. Interest Coverage (Minimum) N.A. Acquisitions/Divestitures Change of Control Provision Change of control clause at 101% of principal. Sale of Assets Restriction The company will not and will not permit any restricted subsidiary to make any asset disposition unless: 1) the consideration received at the time of the sell is equal to the fair value of the shares or assets sold; 2) at least 75% of that consideration is received in the form of cash or temporay cash investments; 3) the company or the restricted subsidiary applies 100% of the net cash proceeds within 360 days to: repay senior debt, reinvest, or purchase additional assets. Limitation on Sale of Restricted Subsidiaries The company will not and will not permit any restricted to subsidiary transfer, convey, lease, sell or dispose of any voting stock of any restricted subsidiary, except: to the company or to other restricted subsidiary; in compliance with covenants “Limitation on Sales of Assets”, “Limitation on Restricted Payments.” Debt Restrictions Additional Debt Restriction The company will not and will not permit any restricted subsidiary to incurr in any indebtedness. Exceptions are: 1) on the date of such incurrance, the interest coverage ratio would be no less than 2.0x and total debt to EBITDA no greater than 4.0x; 2) no default or event of default shall have occurred. This covenant does not prohibit the incurrance of the following debt: 1) intercompany indebtedness within certain restrictions; 2) indebtedness represented by the notes, or outstanding on the issue date, or consisting on refinancing indebtedness; 3) hedging obligations; 4) subordinated indebtedness; 5) debt in an aggregate principal amount not exceeding USD30 million; 6) short-term debt for the ordinary course of business not exceeding USD 40 million during the first year after the issuance, USD20 million prior to the second anniversary, and USD10 million thereafter; 7) debt in addition to that referred on 1 not exceeding USD25 million. Restricted Payments The company will not and will not permit any of its restricted subsidiaries to: 1) declare or pay any dividend other than: a) dividends payed in shares of its common stock, b) dividends payed on a pro rata basis of the holders of such common stock; 2) purchase, redeem or acquire any capital stock of the company or subsidiaries; 3) purchase, redeem or retire for value, prior to scheduled maturity, any debt which is subordinated to the Notes; 4) make any investments other than permitted investments. Other Limitation on Liens The company will not and will not permit any of the restricted subsidiaries to assume any lien (except for permitted ones) upon its property, unless at the same time the obligations under the notes are segured equally. Transactions with Affiliates The company will not and will not allow its restricted subsidiaries to enter into a transaction with affiliates, unless: 1) the transaction is on terms that are no less favorable than those that would have been obtained in a comparable transaction with a person that is not an affiliate; 2) the company delivers to the trustee: a) for transactions in excess of USD 5 million, a resolution from its board of directors, b) for transactions in excess of USD10 million an opinion as to the fairness of that transaction from a financial point of view, issued by an international investment bank. Sale and Leaseback Transactions The company or its restricted subsidiaries will not enter into any sale and lease back transactions unless persuant to the provisions of the covenant described under “limitation on indebtedness”. Mergers, Consolidations, Sales, Leases Not allowed unless: 1) immmediately after giving effect to that transaction no event of default shall have occurred; 2) any corporation formed by such merger is a sociedad anonima organized and validly existing, and expressly assumes the debt service of the notes; 3) immideately after that merger the company could inccur in USD1 of additional debt, in line with the “limitation on indebtedness” covenant; 4) the successor agrees to indemnify any holder against e.g. tax issues; 5) within 180 days the credit ratings of the notes shall not be lower as a result of the merger. N.A. − Not applicable. Source: Offering memo of the notes, company, and Fitch Ratings.

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Financial Summary ⎯ Industrias Metalúrgicas Pescarmona S.A.I.C. y F. (ARS 000, As of Jan. 31)

Period-End Exchange Rate (ARS/USD) 3.89 3.83 3.49 3.09 3.11 3.07

Profitability 4/30/10 2010 2009 2008 2007 2006 Operating EBITDA 420,533 391,337 341,809 213,801 174,461 129,841 Operating EBITDAR 420,533 391,337 341,809 213,801 174,461 129,841 Operating EBITDA Margin (%) 16.9 16.7 22.4 23.7 21.5 18.3 Operating EBITDAR Margin (%) 16.9 16.7 22.4 23.7 21.5 18.3 FFO Return on Adjusted Capital (%) 7.7 0.2 7.8 4.8 6.0 0.8 Free Cash Flow Margin (%) 12.8 (4.8) (51.3) (4.8) (14.7) (7.6) Return on Average Equity (%) 40.2 4.2 7.3 14.8 13.0 18.1 Coverage (x) FFO Interest Coverage 0.8 0.0 1.2 0.8 0.9 0.1 Operating EBITDA/Gross Interest Expense 1.6 1.6 2.3 2.1 2.3 1.7 Operating EBITDAR/(Interest Expense + Rental Expenses) 1.6 1.6 2.3 2.1 2.3 1.7 Operating EBITDA/Debt Service Coverage 0.5 0.6 0.6 1.4 0.4 0.4 Operating EBITDAR/Debt Service Coverage 0.5 0.6 0.6 1.4 0.4 0.4 FFO Fixed Charge Coverage 0.8 0.0 1.2 0.8 0.9 0.1 FCF Debt Service Coverage 0.7 0.2 (1.2) 0.4 (0.1) 0.1 (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage 1.2 0.5 (0.6) 3.4 0.1 0.3 Cash Flow from Operations/Capital Expenditures 4.7 (0.7) (6.3) (1.0) (9.3) (1.6) Capital Structure and Leverage (x) FFO Adjusted Leverage 9.7 442.0 10.9 16.4 12.6 100.4 Total Debt with Equity Credit/Operating EBITDA 4.7 5.6 5.9 6.1 5.0 5.7 Total Net Debt with Equity Credit/Operating EBITDA 4.0 5.0 4.9 4.0 4.5 5.2 Total Adjusted Debt/Operating EBITDAR 4.7 5.6 5.9 6.1 5.0 5.7 Total Adjusted Net Debt/Operating EBITDAR 4.0 5.0 4.9 4.0 4.5 5.2 Implied Cost of Funds 12.5 11.3 9.0 9.4 9.5 8.9 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ 0.2 0.2 Short-Term Debt/Total Debt 0.3 0.2 0.2 0.0 0.4 0.3 Debt with Recourse/EBITDA 4.1 4.3 4.2 5.2 ⎯ ⎯ Net Debt with Recourse/EBITDA 3.4 3.7 3.3 3.0 ⎯ ⎯ Balance Sheet Total Assets 4,147,477 3,852,570 3,168,977 2,331,831 1,651,034 1,406,862 Cash and Marketable Securities 323,273 239,306 324,043 459,520 86,374 60,215 Short-Term Debt 511,449 441,677 386,103 50,798 384,216 218,943 Long-Term Debt 1,484,040 1,768,353 1,619,978 1,259,608 494,087 518,634 Total Debt 1,995,489 2,210,030 2,006,081 1,310,406 878,303 737,577 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 1,995,489 2,210,030 2,006,081 1,310,406 878,303 737,577 Total Adjusted Debt with Equity Credit 1,995,489 2,210,030 2,006,081 1,310,406 878,303 737,577 Total Debt with Recourse 1,732,410 1,682,369 1,434,996 1,108,319 ⎯ ⎯ Total Equity 659,023 424,423 357,745 337,944 278,098 226,408 Total Adjusted Capital 2,654,512 2,634,453 2,363,826 1,648,350 1,156,401 963,985 Cash Flow Funds from Operations (58,477) (232,915) 34,283 (23,120) (6,846) (68,248) Change in Working Capital 459,554 186,255 (709,806) 1,150 (100,375) 35,163 Cash Flow from Operations 401,077 (46,660) (675,523) (21,970) (107,221) (33,085) Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 0 Capital Expenditures (84,714) (65,375) (107,349) (21,224) (11,526) (20,500) Free Cash Flow 316,363 (112,035) (782,872) (43,194) (118,747) (53,585) Net Acquisitions and Divestures (111,828) (76,554) (25,592) (110,605) (35,089) 310,673 Other Investments, Net 77,101 59,930 (36,852) 6,524 83 0 Net Debt Proceeds (109,638) 78,770 675,275 524,815 161,151 (232,823) Other, Financing Activities (74,827) 0 0 1,996 6,732 3,810 Total Change in Cash 97,171 (49,889) (170,041) 379,536 14,130 28,075 Income Statement Net Revenue 2,481,241 2,342,436 1,526,327 901,527 810,326 709,422 Revenue Growth (%) ⎯ 53.5 69.3 11.3 14.2 99.9 Operating EBIT 356,048 333,935 302,925 169,943 134,889 93,272 Gross Interest Expense 263,750 237,915 149,798 102,928 76,492 75,596 Rental Expense 0 0 0 0 0 0 Net Income 209,030 16,435 25,252 45,691 32,873 32,734 Source: Fitch Ratings.

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Financial Summary ⎯ Industrias Metalúrgicas Pescarmona S.A.I.C. y F. (USD 000, As of Jan. 31)

Period-End Exchange Rate (ARS/USD) 3.89 3.83 3.49 3.09 3.11 3.07 Average Exchange Rate 3.8759 ⎯ 3.1900 3.0857 3.0752 2.9327

4/30/10 2010 2009 2008 2007 2006 Profitability Operating EBITDA 108,499 102,070 107,150 69,288 56,732 44,274 Operating EBITDAR 108,499 102,070 107,150 69,288 56,732 44,274 Operating EBITDA Margin (%) 16.9 16.7 22.4 23.7 21.5 18.3 Operating EBITDAR Margin (%) 16.9 16.7 22.4 23.7 21.5 18.3 FFO Return on Adjusted Capital (%) 7.7 0.2 7.8 4.8 6.0 0.8 Free Cash Flow Margin (%) 12.8 (4.8) (51.3) (4.8) (14.7) (7.6) Return on Average Equity (%) 39.6 4.0 7.5 14.9 13.1 18.5 Coverage (x) FFO Interest Coverage 0.8 0.0 1.2 0.8 0.9 0.1 Operating EBITDA/Gross Interest Expense 1.6 1.6 2.3 2.1 2.3 1.7 Operating EBITDAR/(Interest Expense + Rental Expenses) 1.6 1.6 2.3 2.1 2.3 1.7 Operating EBITDA/Debt Service Coverage 0.5 0.6 0.7 1.4 0.4 0.5 Operating EBITDAR/Debt Service Coverage 0.5 0.6 0.7 1.4 0.4 0.5 FFO Fixed Charge Coverage 0.8 0.0 1.2 0.8 0.9 0.1 FCF Debt Service Coverage 0.7 0.2 (1.3) 0.4 (0.1) 0.1 (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage 1.2 0.5 (0.7) 3.4 0.1 0.3 Cash Flow from Operations/Capital Expenditures 4.7 (0.7) (6.3) (1.0) (9.3) (1.6) Capital Structure and Leverage (x) FFO Adjusted Leverage 9.7 442.0 10.0 16.4 12.5 96.0 Total Debt with Equity Credit/Operating EBITDA 4.7 5.6 5.4 6.1 5.0 5.4 Total Net Debt with Equity Credit/Operating EBITDA 4.0 5.0 4.5 4.0 4.5 5.0 Total Adjusted Debt/Operating EBITDAR 4.7 5.6 5.4 6.1 5.0 5.4 Total Adjusted Net Debt/Operating EBITDAR 4.0 5.0 4.5 4.0 4.5 5.0 Implied Cost of Funds 12.3 10.8 9.4 9.4 9.5 9.1 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ 0.2 0.2 Short-Term Debt/Total Debt 0.3 0.2 0.2 0.0 0.4 0.3 Debt with Recourse/EBITDA 4.1 4.3 4.2 5.2 ⎯ ⎯ Net Debt with Recourse/EBITDA 3.3 3.7 3.0 3.0 ⎯ ⎯ Balance Sheet Total Assets 1,067,369 1,004,844 909,189 754,516 531,221 458,709 Cash and Marketable Securities 83,196 62,417 92,969 148,688 27,791 19,633 Short-Term Debt 131,623 115,200 110,774 16,437 123,622 71,387 Long-Term Debt 381,923 461,229 464,776 407,574 158,973 169,101 Total Debt 513,546 576,429 575,550 424,011 282,595 240,488 Total Debt with Equity Credit 513,546 576,429 575,550 424,011 282,595 240,488 Total Adjusted Debt with Equity Credit 513,546 576,429 575,550 424,011 282,595 240,488 Total Debt with Recourse 445,842 438,803 411,704 358,621 ⎯ ⎯ Total Equity 169,602 110,700 102,638 109,349 89,478 73,821 Total Adjusted Capital 683,148 687,129 678,188 533,360 372,073 314,309 Cash Flow Funds from Operations (15,087) (60,750) 10,747 (7,493) (2,226) (23,271) Change in Working Capital 118,567 48,580 (222,510) 373 (32,640) 11,990 Cash Flow from Operations 103,480 (12,170) (211,763) (7,120) (34,866) (11,281) Capital Expenditures (21,857) (17,051) (33,652) (6,878) (3,748) (6,990) Free Cash Flow 81,623 (29,221) (245,414) (13,998) (38,614) (18,272) Net Acquisitions and Divestures (28,852) (19,967) (8,023) (35,844) (11,410) 105,934 Other Investments, Net 19,892 15,631 (11,552) 2,114 27 0 Net Debt Proceeds (28,287) 20,545 211,685 170,080 52,403 (79,389) Other, Financing Activities (19,306) 0 0 647 2,189 1,299 Total Change in Cash 25,071 (13,012) (53,304) 122,998 4,595 9,573 Income Statement Net Revenue 640,172 610,964 478,472 292,163 263,504 241,901 Revenue Growth (%) (72.7) 27.7 63.8 10.9 8.9 100.5 Operating EBIT 91,862 87,098 94,961 55,074 43,863 31,804 Gross Interest Expense 68,049 62,054 46,959 33,356 24,874 25,777 Rental Expense 0 0 0 0 0 0 Net Income 53,931 4,287 7,916 14,807 10,690 11,162 Source: Fitch Ratings.

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Real Estate Inversiones y Representaciones Argentina Full Rating Report S.A. (IRSA)

Ratings Rating Rationale Current Security Class Rating • Inversiones y Representaciones S.A.’s (IRSA) ‘B+’ local currency issuer default rating Foreign Currency IDR B (IDR) reflects the company’s strong market position and diversified portfolio of real Local Currency IDR B+ Senior Unsecured Notes B/RR4 estate assets in Argentina. The ‘B+’ rating also factors in its positive operating trends, the positive improvement in the company’s corporate structure, and IDR − Issuer default rating. relatively low leverage levels. The ‘B+’ local currency IDR rating is constrained by the company’s exposure to market cyclicality due to the heavy concentration of its Rating Outlook assets in Argentina. The rating also reflects the company’s exposure to a Stable devaluation of the Argentine peso due to its peso revenues and U.S. dollar- denominated debt. IRSA’s foreign currency IDR continues to be constrained at the Financial Data ‘B’ level due to the ‘B’ country ceiling assigned to Argentina by Fitch. Inversiones y Representaciones S.A. (ARS Mil.) • Through its subsidiary, Alto Palermo S.A. (APSA), IRSA has a leading market share in LTM the shopping center segment of the market within the city of Buenos Aires and the 3/31/10 6/30/09 greater Buenos Aires area. The shopping center segment accounted for about 49% of Total Revenues 1,340,676 1,220,584 EBITDAR 749,106 431,507 IRSA’s consolidated EBITDA during 2009. IRSA’s second most important business Cash from division is its office building segment, which accounts for about 23% of the Operations 464,360 299,293 Cash and company’s EBITDA. IRSA is the clear leader in the development and management of Marketable office buildings in Buenos Aires, with a market share of approximately 20% in the Securities 164,802 258,475 premium segment. The balance of IRSA’s EBITDA is derived from three premium Total Adjusted Debt 1,533,725 1,334,474 hotels as well as its residential property development division. Importantly, both Total Adjusted IRSA and APSA own key parcels of land in strategic areas of Buenos Aires, which Debt/EBITDAR (x) 2.0 3.1 FFO Adjusted could be sold to improve the company’s liquidity or used in new developments. The Leverage (x) 2.4 2.6 book value of this undeveloped land exceeds USD100 million.

Analysts • For the LTM ended March 2010, IRSA recorded sales and EBITDA of USD353 million and USD197 million, respectively. These figures compare to USD358 million and Gabriela Catri USD127 million for the fiscal year ended in June 2009. IRSA’s cash flow generation +54 11 5235-8129 during the LTM allowed it to finance capital expenditures of USD51 million and [email protected] distribute USD14 million of dividends. FCF totaled USD56 million. The improvement José Vertiz in IRSA’s cash flow generation was due to the positive performance of IRSA’s office +1 212 908-0641 rental and residential real estate development business units. The company also [email protected] benefited from the strong performance of APSA’s shopping malls and the stabilization of its consumer financing subsidiary, Tarshop S.A. (Tarshop). • The Stable Outlook reflects Fitch’s expectations that IRSA will manage its balance sheet to a targeted ratio of debt to EBITDA around 3.0x. The company’s cash flow from operations is expected to become more stable and predictable as a result of recent actions taken by the company. These actions include the sale of 80% of Alto Palermo’s (APSA) consumer financing subsidiary, Tarshop, and the increase in its stake in APSA to 93% from 63%. Key Rating Drivers • Any significant increase in IRSA’s leverage beyond expectations could pressure ratings. A downturn in the Argentine economy would hurt the company’s results and could also lead to a negative rating action. IRSA’s foreign currency IDR is constrained by the ‘B’ country ceiling of Argentina. An upgrade or downgrade of the

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Argentine country ceiling would affect IRSA’s foreign currency IDR. Rating Issues Please refer to Fitch’s full company report, “Inversiones y Representaciones S.A. (IRSA),” dated Sept. 15, 2010, for more information regarding:

• Management strategy. • The acquisition of Pargue Arauco’s stake in APSA. • The sale of its consumer credit subsidiary. Liquidity and Debt Structure IRSA had USD396 million of debt as of March 31, 2010. It is comprised primarily of IRSA’s USD150 million notes maturing during 2017, APSA’s USD120 million notes due in 2017, and USD50 million peso-linked notes maturing during 2012. IRSA’s leverage, as measured by net debt to EBITDA, was 1.8x, a reduction from the average net-debt ratio of 2.2x maintained by the company between 2007 and 2009. During July 2010, IRSA issued USD150 million of notes due in 2020. The proceeds will be used to fund capital expenditures and investments, replace short-term debt and increase the capital of subsidiaries. IRSA’s ratings incorporate the expectation that the company’s leverage would increase to between 3.3x and 3.5x by the end of fiscal-year 2010. Nevertheless, the leverage ratio remains comfortable within the rating category. For the real estate industry, the emphasis of Fitch’s methodology is on portfolio quality and diversity, and the size of the asset base. IRSA’s portfolio of assets is strong with USD1.03 billion of undepreciated book capital as of March 31, 2010. These assets are mostly unencumbered as secured debt accounted for less than 5% of the company’s total debt. Leverage, as measured by total debt as a percentage of undepreciated book capital, was 38% at the end of March. On a market value basis, these ratios would be even lower. IRSA’s cash position has been trending negative during the last two years, as cash has decreased to USD43 million as of March 31, 2010 from USD135 million as of June 30, 2008. The company’s liquidity position, measured by the ratio of cash to short- term debt, was below average at 0.35x. The declining trend in the company’s liquidity over the past year is attributable to the resources used to support APSA’s financial consumer business (Tarshop). The company maintains a large pool of unencumbered assets that could provide alternative sources of financing if required. During 2009, the company sold nonstrategic properties for USD52 million. Recovery Rating The recovery ratings for IRSA’s capital markets debt instruments reflect Fitch’s expectation that the company’s creditors would have an average recovery, constrained by the soft cap of ‘RR4’ for bonds issued by Argentine corporates. In deriving a distressed enterprise valuation to determine the recovery under this scenario, Fitch discounts the company’s LTM EBITDA to a level that would cover operating leases, interest expenses, and maintenance capital expenditures. Fitch has applied a 5.0x distressed EBITDA multiple, which is consistent with the value observed in the Buenos Aires stock exchange during the last year.

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Recovery Analysis ⎯ Inversiones y Representaciones S.A. (IRSA) (USD Mil.)

Enterprise Value EBITDA 130.0 EBITDA Discount (%) 25 Post-Restructuring EBITDA Estimation 97.5 Multiple (x) 5.0 Going Concern Enterprise Value 487.5 Post-Restructuring EBITDA Estimation Guidelines Interest Expense 48.0 Rent Expense ⎯ Estimated Maintenance Capital Expenditures 20.0 Total 68.0

Advance Available to Liquidation Value Balance Rate (%) Creditors Cash 42.5 0 ⎯ A/R 84.7 80 67.8 Inventory 49.9 50 25.0 Net PP&E 678.1 20 135.6 Total 855.2 ⎯ 228.3

Enterprise Value for Claims Distribution

Greater of Going Concern Enterprise or Liquidation Value 487.5 Less Administrative Claims (10%) 48.8 Adjusted Enterprise Value for Claims 438.8

Distribution of Value Secured Priority Lien Value Recovered Recovery Recovery Rating Notching Rating Senior Secured 0.0 ⎯ 0 ⎯ ⎯ ⎯

Concession Payment Availability Table Adjusted Enterprise Value for Claims 438.8 Less Secured Debt Recovery ⎯ Remaining Recovery for Unsecured Claims 438.8 Concession Allocation (5%) 21.9 Value to be Distributed to Senior Unsecured Claims 416.8

Value Concession Unsecured Priority Lien Recovered Recovery Allocation ‘RR’ Rating Notching Credit Ratings Senior Unsecured 520.0 438.8 84 100 RR4 ⎯ B Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Argentine corporates are capped at ‘RR4’. Source: Fitch.

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Organizational Structure — Inversiones y Representaciones S.A. (As of March 31, 2010)

LTM April 30, 2010 Summary Statistics (ARS Mil.) Inversiones y Representaciones S.A. EBITDA 749 USD150 Mil. Notes Due 2017 Cash and Marketable Securities 165 USD150 Mil. Notes Due 2020 Total Debt 1,595

63.35% 100.00% 1.42% 100.00% 100.00% 5.10% 100.00% 100.00% 50.00% Alto Palermo S.A. E-Commerce Palermo Tyrus S.A. RITELCO Office Buildings CYRSA (APSA) Latina S.A. Invest 100.00% 64.01% 50.00% 1.86% 5.19% 5.00% 5.00% Baicom Inversora Office Buildings Shopping Centers REIG Horizons Bolivar Alto Palermo Intercontinental Paseo Alcorta 9.88% 26.86% (76.34%) Alto Avellaneda 5.00% Sheraton Libertador Abasto HERSHA Banco (80%) Patio Bullrich Hipotecario Llao Llao 100.00% Alto NOA (50%) 70.00% Banco de Credito Alto Rosario IRSA International y Securitizacion 100.00% Cordoba Shopping LLC Residential Villa Cabrera 30.00% Mendoza Shopping Apartments 98.00% Metropolitan 885 Third Avenue LLC Shopping Centers Land Reserves 50.00% Neuquen Solares Santa Maria Liveck del Plata (90%) 80.00% Terrenos de Cabillito Shopping Centers 90.00% (50%) Puerto Retiro (50%) Dot Baires Shopping Zetol & Vista al Pereiraola (50%) 54.00% Muelle Canteras Natal 5.00% Crespo (50%) Shopping Centers Buenos Aires Design 98.59% Tarshop 50.00% 100.00% Metroshop Apartments

Source: Fitch and Inversiones y Representaciones S.A. financial statements.

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Debt and Covenant Synopsis ⎯ Inversiones y Representaciones S.A.

Overview Issuer Inversiones y Representaciones S.A. Guarantors N.A. Document Date Jan. 11, 2007; Program modified on May 7, 2010 Maturity Date 2017, 2020; Notes issued under USD400 million program Description of Debt Senior Unsecured Notes Financial Covenants Consolidated Leverage (Maximum) N.A. Interest Coverage (Minimum) N.A. Acquisitions/Divestitures Change of Control Provision Change of control clause at 101% of principal. Sale of Assets Restriction Neither the issuer nor its restricted subsidiaries can sell assets unless: 1) the consideration at the time of such asset sale at least equals the fair market value of those assets or shares sold; 2) at least 75% of the consideration is received in cash or equivalents, or in assets to be used for permitted business. The company or its restricted subsidiaries should apply 85% of the net cash proceeds within 24 months to repay debt or invest in a permitted business. Debt Restrictions Additional Debt Restriction Neither the issuer nor restricted subsidiaries are allowed to incur additional debt except permitted debt unless the consolidated interest coverage exceeds 1.75x and for guaranteed debt, total guaranteed debt at the company and its restricted subsidiaries is below 30% of consolidated tangible assests. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations; guarantees as long as permitted by the “Limitation on Guarantees”; derivatives as long as used for hedging purposes; debt to finance the acquisition of assets related to the core business of the company, as long as it is below 5% of total consolidated tangible assets; debt related to labor claims; short-term bank debt related to the normal course of business. Restricted Payments With several exceptions, the issuer and restricted subsidiaries are prohibited from making certain investments, including the acquisitions of stocks, bonds, and notes under certain conditions. Limitation on Liens The issuer shall not assume any lien upon its assets (with the expection of “permitted liens”) unless at the same time the obligations of the company under the notes are secured equally.

Other Nonrestricted Subsidiaries The issuer can designate a subsidiary as “nonrestricted” only when: 1) there is no event of default at the time of designating that subsidiary; 2) at that time, the company can take additional leverage as determined in the “additional debt restriction” of at least USD1,00; 3) at that time the company is allowed to make a permited investment as defined in the “Restricted Payments” that equals the investment of the company in the designated subsidiary. Dividends and Payments Affecting Restricted With several exceptions, the company will not create or allow the existance of any privilege or restriction Subsidiaries to the ability of any restricted subsidiary to: 1) paying dividends or debt to the company or any other restricted subsidiary; 2) granting loans to the company or any other restricted subsidiary; 3) transfering any of its assets to the company or any other restricted subsidiary. Limits on Consolidations or Mergers Restrictions on merger or consolidation of issuer. Exceptions include: 1) the merger of other entities with the issuer provided that the surving entity will be the issuer; 2) if any entity formed by such merger is organized and validly under existing laws, and the surviving entity assumes responsibility towards the debt service of the existing notes. Limits on Guarantees The company will not allow any of its restricted subsidiaries to guarantee IRSA’s debt, unless at the same time they provide the same guarantee to the notes. Transactions with Affiliates Transactions with affiliates are permitted as long as: 1) the terms of the transaction are not substantially less favorable than those that could be achieved with a nonrelated party; 2) when total payments involving an affiliate exceed the USD5 million, the terms of that transaction should be approved by the majority of the company’s board of directors; 3) when total payments involving an affiliate exceed the USD20 million, an independent financial advisor will have to analyze the rational of such transaction and present his opinion to the trustee. N.A. − Not applicable. Source: Company, Offering memo of the notes, and Fitch Ratings.

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Financial Summary ⎯ Inversiones y Representaciones S.A. (USD 000, As of June 30)

Period-End Exchange Rate (ARS/USD) 3.88 3.79 3.02 3.09 3.09 Average Exchange Rate 3.8030 3.4096 3.1247 3.0861 3.0003

LTM 3/31/10 2009 2008 2007 2006 Profitability Operating EBITDA 196,978 126,914 119,748 94,297 89,111 Operating EBITDAR 196,978 126,914 119,748 94,297 89,111 Operating EBITDA Margin (%) 55.9 35.4 34.5 39.4 46.3 Operating EBITDAR Margin (%) 55.9 35.4 34.5 39.4 46.3 FFO Return on Adjusted Capital (%) 14.7 13.4 12.0 6.3 10.9 Free Cash Flow Margin (%) 16.0 (5.6) (44.3) (37.8) 11.4 Return on Average Equity (%) 21.8 6.4 2.4 5.3 5.3 Coverage (x) FFO Interest Coverage 4.4 3.9 4.4 3.2 4.9 Operating EBITDA/Gross Interest Expense 5.1 3.2 3.7 4.4 5.3 Operating EBITDAR/(Interest Expense + Rental Expenses) 5.1 3.2 3.7 4.4 5.3 Operating EBITDA/Debt Service Coverage 1.2 1.0 1.3 1.0 1.4 Operating EBITDAR/Debt Service Coverage 1.2 1.0 1.3 1.0 1.4 FFO Fixed Charge Coverage 4.4 3.9 4.4 3.2 4.9 FCF Debt Service Coverage 0.6 0.1 (1.3) (0.8) 0.6 (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage 0.9 0.7 0.1 1.8 1.5 Cash Flow from Operations/Capital Expenditures 2.4 0.9 0.4 0.4 1.7 Capital Structure and Leverage (x) FFO Adjusted Leverage 2.3 2.3 3.0 6.2 1.2 Total Debt with Equity Credit/Operating EBITDA 2.0 2.8 3.5 4.6 1.1 Total Net Debt with Equity Credit/Operating EBITDA 1.8 2.2 2.4 2.1 0.5 Total Adjusted Debt/Operating EBITDAR 2.0 2.8 3.5 4.6 1.1 Total Adjusted Net Debt/Operating EBITDAR 1.8 2.2 2.4 2.1 0.5 Implied Cost of Funds 9.6 9.9 7.1 7.1 10.2 Secured Debt/Total Debt ⎯ ⎯ 0.0 0.1 0.3 Short-Term Debt/Total Debt 0.3 0.3 0.1 0.1 0.3 Balance Sheet Total Assets 1,409,554 1,298,944 1,479,071 1,341,174 888,064 Cash and Marketable Securities 42,513 68,020 134,745 229,258 53,132 Short-Term Debt 121,006 92,414 62,892 69,307 46,067 Long-Term Debt 290,442 274,928 370,850 395,542 95,700 Total Debt 411,448 367,342 433,742 464,849 141,767 Equity Credit 15,801 16,164 15,497 34,422 43,407 Total Debt with Equity Credit 395,647 351,178 418,245 430,427 98,360 Total Adjusted Debt with Equity Credit 395,647 351,178 418,245 430,427 98,360 Total Equity 746,498 673,696 787,463 678,571 627,372 Total Adjusted Capital 1,142,145 1,024,874 1,205,708 1,108,998 725,732 Cash Flow Funds from Operations 132,540 113,401 108,190 48,189 64,652 Change in Working Capital (10,436) (25,374) (13,448) 4,661 237 Cash Flow from Operations 122,104 88,027 94,742 52,850 64,889 Capital Expenditures (51,227) (101,356) (240,843) (135,892) (38,730) Dividends (14,428) (6,924) (7,787) (7,509) (4,238) Free Cash Flow 56,448 (20,253) (153,888) (90,552) 21,921 Net Acquisitions and Divestures 19,416 0 (5,164) (28,321) (6,891) Other Investments, Net (108,431) (29,072) 1,278 (1,295) 103 Net Debt Proceeds 7,306 (24,528) (7,192) 288,220 (22,959) Net Equity Proceeds (2,723) 0 52,298 8,411 14,546 Other, Financing Activities 23,952 14,129 10,412 0 397 Total Change in Cash (4,032) (59,724) (102,256) 176,463 7,116 Income Statement Net Revenue 352,531 358,995 346,991 239,382 192,541 Revenue Growth (%) ⎯ 4 45.0 24.3 53.2 Operating EBIT 156,330 86,975 81,557 62,445 62,120 Gross Interest Expense 38,666 39,764 32,036 21,594 16,720 Rental Expense 0 0 0 0 0 Net Income 148,447 46,657 17,562 34,703 32,188 Source: Fitch Ratings.

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Financial Summary ⎯ Inversiones y Representaciones S.A. (ARS 000, As of June 30)

Period-End Exchange Rate (ARS/USD) 3.88 3.79 3.02 3.09 3.09

LTM 3/31/10 2009 2008 2007 2006 Profitability Operating EBITDA 749,106 431,507 374,177 291,009 267,359 Operating EBITDAR 749,106 431,507 374,177 291,009 267,359 Operating EBITDA Margin (%) 55.9 35.4 34.5 39.4 46.3 Operating EBITDAR Margin (%) 55.9 35.4 34.5 39.4 46.3 FFO Return on Adjusted Capital (%) 14.7 13.4 12.0 6.3 10.9 Free Cash Flow Margin (%) 16.0 (5.6) (44.3) (37.8) 11.4 Return on Average Equity (%) 21.8 6.4 2.5 5.3 5.3 Coverage (x) FFO Interest Coverage 4.4 3.9 4.4 3.2 4.9 Operating EBITDA/Gross Interest Expense 5.1 3.2 3.7 4.4 5.3 Operating EBITDAR/(Interest Expense + Rental Expenses) 5.1 3.2 3.7 4.4 5.3 Operating EBITDA/Debt Service Coverage 1.2 0.9 1.3 1.0 1.4 Operating EBITDAR/Debt Service Coverage 1.2 0.9 1.3 1.0 1.4 FFO Fixed Charge Coverage 4.4 3.9 4.4 3.2 4.9 FCF Debt Service Coverage 0.6 0.1 (1.3) (0.8) 0.6 (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage 0.9 0.7 0.1 1.8 1.5 Cash Flow from Operations/Capital Expenditures 2.4 0.9 0.4 0.4 1.7 Capital Structure and Leverage (x) FFO Adjusted Leverage 2.4 2.6 2.9 6.2 1.2 Total Debt with Equity Credit/Operating EBITDA 2.0 3.1 3.4 4.6 1.1 Total Net Debt with Equity Credit/Operating EBITDA 1.8 2.5 2.3 2.1 0.5 Total Adjusted Debt/Operating EBITDAR 2.0 3.1 3.4 4.6 1.1 Total Adjusted Net Debt/Operating EBITDAR 1.8 2.5 2.3 2.1 0.5 Implied Cost of Funds 9.6 10.0 7.3 7.1 10.3 Secured Debt/Total Debt ⎯ ⎯ 0 0.1 0.3 Short-Term Debt/Total Debt 0.3 0.3 0.1 0.1 0.3 Balance Sheet (x) Total Assets 5,464,135 4,935,987 4,471,972 4,144,899 2,740,121 Cash and Marketable Securities 164,802 258,475 407,403 708,523 163,940 Short-Term Debt 469,079 351,173 190,153 214,193 142,140 Long-Term Debt 1,125,900 1,044,725 1,121,264 1,222,423 295,282 Total Debt 1,594,979 1,395,898 1,311,417 1,436,616 437,422 Equity Credit 61,254 61,424 46,856 106,382 133,932 Total Debt with Equity Credit 1,533,725 1,334,474 1,264,561 1,330,234 303,490 Total Adjusted Debt with Equity Credit 1,533,725 1,334,474 1,264,561 1,330,234 303,490 Total Equity 2,893,798 2,560,043 2,380,893 2,097,124 1,935,755 Total Adjusted Capital 4,427,523 3,894,517 3,645,454 3,427,358 2,239,245 Cash Flow Funds from Operations 504,048 385,563 338,062 148,716 193,974 Change in Working Capital (39,688) (86,270) (42,021) 14,383 711 Cash Flow from Operations 464,360 299,293 296,041 163,099 194,685 Capital Expenditures (194,817) (344,611) (752,562) (419,377) (116,201) Dividends (54,871) (23,541) (24,332) (23,175) (12,715) Free Cash Flow 214,672 (68,859) (480,853) (279,453) 65,769 Net Acquisitions and Divestures 73,839 0 (16,137) (87,402) (20,675) Other Investments, Net (412,362) (98,846) 3,994 (3,995) 309 Net Debt Proceeds 27,785 (83,395) (22,473) 889,475 (68,884) Net Equity Proceeds (10,357) 0 163,416 25,958 43,642 Other, Financing Activities 91,091 48,038 32,534 0 1,190 Total Change in Cash (15,332) (203,062) (319,519) 544,583 21,351 Income Statement Net Revenue 1,340,676 1,220,584 1,084,242 738,756 577,680 Revenue Growth (%) ⎯ 12.6 46.8 27.9 56.2 Operating EBIT 594,523 295,716 254,842 192,710 186,380 Gross Interest Expense 147,048 135,196 100,104 66,642 50,165 Net Income 564,545 158,635 54,875 107,097 96,573 Source: Fitch Ratings.

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Food Marfrig Alimentos S.A. Brazil Full Rating Report

Ratings Rating Rationale Current Security Class Rating • Marfrig Alimentos S.A.’s (Marfrig) ratings are supported by the company’s business Foreign Currency IDR B+ position as one of Brazil’s largest producers and exporters of beef, poultry, and Local Currency IDR B+ Unsecured Notes B+/R4 pork. The company’s activities are evenly distributed between the domestic market National Scale BBB+(bra) and export sales with a more diversified business profile than most of its peers. The IDR − Issuer default rating. ratings are also supported by the company’s diversified production base and the low cost of producing proteins in Brazil. Rating Outlook • The ratings take into consideration the volatility of protein prices and profit Stable margins due to factors beyond the company’s control. These factors include domestic and international supply and demand imbalances resulting from such Financial Data factors as disease and weather conditions, global economic growth, changes in Marfrig Alimentos S.A. consumption habits, and government-imposed sanitary and trade restrictions. (BRL Mil.) Competitive pressures from other Brazilian or international producers and exporters LTM also affect the company’s margins. 6/30/10 12/31/09 Net • Marfrig’s strong business profile partially mitigates industry risks. The recent Revenue 11,742 9,615 EBITDA 1,165 819.5 acquisition of Keystone Foods LLC (Keystone) strengthens Marfrig’s competitive Funds from position in the value-added protein products market. Keystone produces and Operations 260 181 distributes poultry, beef, fish, and pork products to food service companies with Total Debt 6,924 5,343 Cash and operations in 13 countries. The transaction will increase Marfrig’s customer Marketable concentration with McDonald’s, Keystone’s key client, as it represents 90% of Securities 2,028 3,033 Total Debt/ Keystone’s USD6.4 billion sales. EBITDA 5.9 6.5 Net Debt/ • Marfrig’s ‘B+’ ratings continue to reflect the company’s aggressive growth strategy EBITDA 4.2 2.8 based on acquisitions. This strategy, which has been financed with a mix of debt FFO Adjusted and equity, has led to increasing working capital requirements and resulted in Leverage 7.0 6.6 negative free cash flow generation over the past few years. During the LTM ended

June 30, 2010, Marfrig’s capital expenditures totaled USD360 million, resulting in a Analysts negative FCF of USD160 million. Daniel Kastholm, CFA • Marfrig’s leverage is high. As of June 30, 2010, Marfrig had USD3.8 billion of total +1 312 368-2070 [email protected] debt and USD1.1 billion of cash and marketable securities. For the LTM ended June 30, 2010, the company generated USD645 million of EBITDA, resulting in a Gisele Paolino +55 21 4503-2600 gross leverage ratio of 5.9x and a net leverage ratio of 4.2x. Considering Keystone’s [email protected] acquisition, the pro forma gross and net leverage ratios of Marfrig are

approximately 5.4x and 3.0x, respectively. Interest coverage, including the interest cash payment on the convertible securities, should be in the range of 1.7x to 2.0x. • Fitch projects an improvement in Marfrig’s leverage ratios within the next 18 months due to higher capacity utilization, a more favorable moment in the beef cycle, increases in market share in Brazil, plus synergies from prior acquisitions. Nevertheless, FCF is expected to continue to remain negative or be only mildly positive. This will make the company dependant upon banks, the capital market, or its shareholders for working capital financing and to meet short-term debt obligations.

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Key Rating Drivers • Marfrig’s rating could be positively affected by some combination of the following: a significant decrease in leverage, generation of positive FCF, reduction of the company’s reliance on short-term debt, further revenue diversification, and the lifting of Brazilian beef sanitary restrictions by more countries. • A rating downgrade could be triggered by a rise in the company’s total debt credit ratios, a low level of cash liquidity, an inability to roll over short-term credit lines, a continuation of negative FCF generation and/or a significant deterioration of operations due to trade restrictions or sanitary outbreaks. Rating Issues Please refer to Fitch’s full company report, “Marfrig Alimentos S.A. (Marfrig),” dated Oct. 8, 2010, for more information regarding:

• Management strategy. • Recent financial performance. Liquidity and Debt Structure Marfrig had BRL2.0 billion of cash and marketable securities as of June 30, 2010. This compares with BRL2.3 billion of short-term debt and BRL6.9 billion of total debt. The company’s debt consists primarily of pre-export payment credit lines (35%), trade lines (29%), and capital market issuances (22%). Trade lines issuances are supported by Marfrig’s sizeable level of exports. The company faces long-term debt maturities of BRL550 million in 2011, BRL736 million in 2012, and BRL749 million in 2013. Around 78% of the company’s total debt is denominated in currencies other than the Brazilian real. Marfrig’s aggressive growth strategy, which has been financed with a mix of debt and equity, has led to increasing working capital requirements and resulted in negative free cash flow generation over the past few years. During the LTM ended June 30, 2010, Marfrig’s capital expenditures totaled USD360 million, resulting in a negative FCF of USD160 million. For the LTM ended June 30, 2010, the company generated USD645 million of EBITDA, resulting in a gross leverage ratio of 5.9x and a net leverage ratio of 4.2x. The Keystone acquisition will add about USD150 million of annual EBITDA and USD250 million of net debt to Marfrig. As a result, the pro forma gross and net leverage ratios of Marfrig are approximately 5.4x and 3.0x, respectively. Interest coverage, including the interest cash payment on the convertible securities, should be in the range of 1.7x to 2.0x.

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Recovery Analysis ⎯ Marfrig Alimentos S.A. (BRL Mil.)

Going Concern Enterprise Value June 30, 2010 LTM EBITDA 1.166 Discount (%) 15 Post-Restructuring EBITDA Estimation 991 Multiple (x) 4 Going Concern Enterprise Value 3,964

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 731 Rent Expense ⎯ Estimated Maintenance Capital Expenditures 100 Total 831

Available to Enterprise Value for Claims Distribution Creditors Greater of Going Concern Enterprise or Liquidation Value 3,964 Less Adminstrative Claims (10%) 396 Concession Allocation 3,568 Adjusted Enterprise Value for Claims ⎯

Distribution of Value Secured Priority Lien Value Recovered Recovery (%) Recovery Rating Notching Rating Secured 150 150 100 RR4 ⎯ B+

Concession Payment Availability Table Adjusted Enterprise Value for claims 3,568 Less Secured Debt Recovery 150 Remaining Recovery for Unsecured Claims 3,418 Concession Allocation (5%) 171 Value to be Distributed to Senior Unsecured Claims 3,247

Value Concession Recovery Unsecured Priority Lien Recovered Recovery (%) Allocation (%) Rating Notching Rating Unsecured 6,775 3,247 48.0 0 RR4 0 B+ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Brazilian corporates are capped at ‘RR4’. Source: Fitch.

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Organizational Structure — Marfrig Alimentos S.A. Marfrig Alimentos S.A.b (As of June 30, 2010) (Brazil)

MFB Marfrig Seara Holdingsa Frigorifico MARFRIG HOLDINGS Frigorificos Brazil Secculuma Unifreda (Europe) BV Tacuarembo S.A.b (EUROPE) BV S.A.b (Brazil) 99% (Brazil) 99.9% (Netherlands) 100% (Uruguay) 93.45% (Netherlands) 100% (Brazil) 100%

Barioora LTDA.a a MOY PARK HOLDING EUROPE Masplen Limited Inaler S.A.b (Brazil) 100% Mabella LTDA.b LTD. (KILNWAY) (Jersey) 100% (Uruguay) 100% (Brazil) 100% (England) 100%

Seara Alimentosb Pampeano Almentos Prescott International b a S/A S.A. S.A Parc Castell Braslo Prod. De Carnes Kitchen Range Foods Brusand LTD.a Moy Park LTDb (Brazil) 100% (Brazil) 100% (Uruguay) 100% Limiteda LTDA.b LTD.b (Bermuda) 100% (Northern Ireland) 100% (Jersey) 100% (Brazil) 100% (England) 100%

Seara Intl. LTDA a AB&P S.A.b Cledinor S.A.b Mas Do Brasil Penasul UK LTD.b (Cayman) 100% (Argentina) 100% (Uruguay) 100% Valores Catalenes Participacoes (England) 100% MPP Holdings LTD.a Bakewell Foods LTD.b S.A.a LTDA.a (England) 100% (England) 100% (Panama) 100% Seara Food Europe Estancias Del Sur (Brazil) 100% a EST. Colonia S.A.b Penasul Holding BV S.A.b b (Uruguay) 100% (Southeasth) LTD. (Netherlands) 100% (Argentina) 100% Protinal Part. Pensaul Alimentos (England) 100% Dungannon Protein Albert Van Zoonenb LTDA.a LTDA.b LTD.b Marfrig Chile (Netherlands) 100% b (Brazil) 100% (Brazil) 100% (Northern Ireland) 100% Seara Meats BV Best Beef S.A.b Inversiones Penasul Trading LTD.b (Netherlands) 100% (Argentina) 100% LTDA.a (England) 100% (Chile) 99,47% Mas Frangos Da Granja Agroind. Weston Importers Participacoes Ferne Foods LTD.b LTDb Ipumirim LTD.b LTD.b Quinto Cuarto LTDA.a (Northern Ireland) 100% 42 Tradings BVb MIRAB S.A.b (Brazil) 94% (England) 100% (England) 100% S.A.b (Brazil) 100% (Netherlands) 100% (Argentina) 100% (Chile) 100% Roca Sales LTD.b Agrofrando Ind. E (England) 100% Ibirapuera Avicola Trace Assured LTD.b Com. De Alimentos CDB Meats LTD.b b a b LTDA.b (Northern Ireland) Seara Japao LTD EDUBIR S.A. PBP S.A. LTDA.b (England) 100% (Brazil) 100% Caxias Do Sul LTD.b 23.06% (Japan) 100% (Uruguay) 100% (Chile) 100% (Brazil) 100% (England) 100%

b b Houtingdon Rose Energy LTD. b Seara Singapura b Frigorifico Patagonia Ham Packers LTD. Quickfood S.A. MBL Alimentos S.A. b LTD S.A.b Poultry LTD. (Northern Ireland) (Argentina) 81.48% (Brazil) 100% (England) 100% (Singapore) 100% (Chile) 100% (England) 100% 33.33% Penasul East Anglia b Binala Servicios Y a Columbus Netherlands LTD. b Quickfood S.A. a Moy Park France Gestiones S.L. BV (England) 100% Gateplus LTD.a (Chile) 100% Holdings SASa (France) (Spain) 100% (Netherlands) 100% (England) 100% Garibalde 100% Poultry LTD.b b Gideny S.A.a Marfood USA Inc. (England) 100% (USA) 100% (Uruguay) 51% Moy Park France Huntingdon Frozen SASb b (France) 100% Marfrig Zendaleather S.A.b Food LTD. Overseas LTDa (Uruguay, Argentina, Chile, Hong Kong, USA, (England) 100% (Cayman) 100% Germany, South Africa, China, Mexico) Penasul Europe LTD.b aOperational. bHoldings or Non-Operating. (England) 100% Source: Fitch and Marfrig Alimentos S.A.’s financial statements.

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Debt and Covenant Synopsis ⎯ Marfrig Alimentos S.A. (Foreign Currency Notes)

Overview Issuer Marfrig Overseas Limited Marfrig Overseas Limited Guarantors Marfrig Frigoríficos e Comércio de Alimentos Ltda. Marfrig Alimentos S.A Document Date Nov. 16, 2006 April 29, 2010 Maturity Date Nov. 16, 2016 April 29, 2020 Description of Debt Senior Guaranteed Notes Senior Guaranteed Notes Amount USD375 Million USD500 Million Ranking The issuance is unconditionally and irrevocably guaranteed by The issuance is unconditionally and irrevocably guaranteed Marfrig and ranks equally with Marfrig’s senior unsecured by Marfrig and ranks equally with Marfrig’s senior indebtedness. unsecured indebtedness.

Financial Covenants Net Adjusted Debt/Pro Forma EBITDA Less than 4.75x Less than 4.75x Limitations on Restricted Payments The company will not: declare or pay any dividend, purchase The company will not: declare or pay any dividend, purchase or redeem any subordinated obligation prior to the or redeem any subordinated obligation prior to the scheduled maturity or make any investment if 1) an event scheduled maturity or make any investment if 1) an event of default has occurred; 2) and the net debt to EBITDA of default has occurred; 2) and the net debt to EBITDA ratio is greater than 4.75x. ratio is greater than 4.75x. Acquisitions/Divestitures Change of Control Provision If a change of control occurs, each holder of notes will have If a change of control occurs, each holder of notes will have the right to require Marfrig Overseas and the company to the right to require Marfrig Overseas and the company to repurchase all or any part of that holder’s notes pursuant to repurchase all or any part of that holder’s notes pursuant a change of control offer. In the change of control offer, to a change of control cffer. In the change of control offer, Marfrig Overseas and the company will offer a “change of Marfrig Overseas and the company will offer a “change of control payment” in U.S. dollars equal to 101% of the control payment” in U.S. dollars equal to 101% of the aggregate principal amount of notes repurchased plus aggregate principal amount of notes repurchased plus accrued and unpaid interest and additional amounts, if any, accrued and unpaid interest and additional amounts, if on the notes repurchased, to the date of purchase. any, on the notes repurchased, to the date of purchase.

Others Limitations on Sales of Assets The company will not make any asset disposition unless the The company will not make any asset disposition unless the following conditions are met: the asset disposition is for fair following conditions are met: the asset disposition is for market value; at least 75% of the consideration consists of fair market value; at least 75% of the consideration cash and temporary cash investments or additional assets; consists of cash and temporary cash investments or within 360 days after the receipt of any net available cash additional assets; within 360 days after the receipt of any from the sale, the net availabe cash may be used: to net available cash from the sale, the net availabe cash may permanently repay indebtedeness, to acquire all or be used: to permanently repay indebtedeness, to acquire substantially all of the assets of a related business or to all or substantially all of the assets of a related business or acquire additional assets for the company. The net available to acquire additional assets for the company. The net cash of an asset disposition not applied to the available cash of an asset disposition not applied to the aforementioned within 360 days shall constitue “excess aforementioned within 360 days shall constitue “excess proceeds”. excess proceeds of less than USD20 million shall proceeds”. excess proceeds of less than USD20 million shall be carried forward and accumulated. When accumulated be carried forward and accumulated. When accumulated excess proceeds equal or exceed USD20 million, the Excess Proceeds equal or exceed USD20 million, the company must, within 30 days, make an offer to purchase company must, within 30 days, make an offer to purchase notes, at purchase price and in U.S dollars, of 100% of their notes, at purchase price, in U.S dollars, of 100% of their principal amount plus accrued and unpaid interest thereon, principal amount plus accrued and unpaid interest thereon, to the date of purchase. to the date of purchase. Optional Redemtion The notes may be redeemed at Marfrig Overseas’s election, as Prior to May 4, 2013, Marfrig Overseas may, at its option on a whole, but not in part, by the giving of notice as one or more occasions, redeem notes in an aggregate provided in the Indenture, at a price in U.S. dollars equal principal amount not to exceed 35% of the aggregate to the outstanding principal amount thereof, together with principal amount of the notes originally issued prior to the any additional amounts and accrued and unpaid interest to redemption date at a redemption price of 109.50%, plus the redemption date. accrued and unpaid interest to the redemption date. Prior to May 4, 2015, Marfrig Overseas will also be entitled at its option to redeem some or all of the notes at a redemption price equal to 100% of the principal amount of the notes plus the applicable premium as of, and accrued and unpaid interest to, the redemption date. On and after May 4, 2015, Marfrig Overseas will be entitled at its option to redeem all or a portion of the notes upon not less than 30 nor more than 60 days’ notice, at the redemption price (plus accrued interest to the redemption date, if redeemed during the 12-month period commencing on May 4 of the years: 2015 ⎯ 104.750%; 2016 ⎯ 103.167%; 2017 ⎯ 101.583%; and 2018 and thereafter ⎯ 100%. Source: Marfrig Alimentos S.A. offering memo and Fitch Ratings.

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Financial Summary ⎯ Marfrig Alimentos S.A. (BRL Mil.)

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 1,165,723 819,536 753,254 380,232 247,652 Operating EBITDAR 1,165,723 819,536 762,158 380,232 247,652 Operating EBITDA Margin (%) 9.9 8.5 12.1 11.4 11.6 Operating EBITDAR Margin (%) 9.9 8.5 12.3 11.4 11.6 FFO Return on Adjusted Capital (%) 8.7 8.4 6.0 15.2 19.4 Free Cash Flow Margin (%) (2.5) (4.3) (19.6) (24.2) (17.5) Return on Average Equity (%) 21.8 19.6 (1.8) 5.9 23.1 Coverage (x) FFO Interest Coverage 1.4 1.3 1.0 2.1 1.5 Operating EBITDA/Gross Interest Expense 1.6 1.3 1.7 1.5 1.5 Operating EBITDAR/(Interest Expense + Rental Expenses) 1.6 1.3 1.7 1.5 1.5 Operating EBITDA/Debt Service Coverage 0.4 0.4 0.4 0.4 0.9 Operating EBITDAR/Debt Service Coverage 0.4 0.4 0.4 0.4 0.9 FFO Fixed Charge Coverage 1.4 1.3 1.0 2.1 1.5 FCF Debt Service Coverage 0.1 0.1 (0.4) (0.6) (0.7) (FCF + Cash and Marketable Securities)/Debt Service Coverage 0.8 1.5 0.2 0.5 0.3 Cash Flow from Operations/Capital Expenditures 0.5 0.2 (1.5) (0.4) (2.4) Capital Structure and Leverage (x) FFO Adjusted Leverage 7.0 6.6 10.9 4.2 4.2 Total Debt with Equity Credit/Operating EBITDA 5.9 6.5 6.0 6.2 4.2 Total Net Debt with Equity Credit/Operating EBITDA 4.2 2.8 4.6 3.4 3.1 Total Adjusted Debt/Operating EBITDAR 5.9 6.5 6.7 6.2 4.2 Total Adjusted Net Debt/Operating EBITDAR 4.2 2.8 5.3 3.4 3.1 Implied Cost of Funds 12.6 12.6 13.1 15.4 25.2 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.3 0.3 0.3 0.3 0.1 Balance Sheet Total Assets 14,080,712 11,451,641 9,155,171 4,330,666 1,717,805 Cash and Marketable Securities 2,028,812 3,033,438 1,071,664 1,049,806 291,740 Short-Term Debt 2,292,259 1,566,329 1,306,339 697,858 118,126 Long-Term Debt 4,632,251 3,776,928 3,223,491 1,645,856 928,987 Total Debt 6,924,510 5,343,257 4,529,830 2,343,714 1,047,113 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 6,924,510 5,343,257 4,529,830 2,343,714 1,047,113 Off-Balance Sheet Debt 0 0 553,710 0 0 Total Adjusted Debt with Equity Credit 6,924,510 5,343,257 5,083,540 2,343,714 1,047,113 Total Equity 4,409,938 4,197,808 2,747,768 1,305,697 245,610 Total Adjusted Capital 11,334,448 9,541,065 7,831,308 3,649,411 1,292,723 Cash Flow Funds from Operations 259,937 181,343 6,446 293,029 86,804 Change in Working Capital 101,052 (60,334) (734,903) (497,871) (339,870) Cash Flow from Operations 360,989 121,009 (728,457) (204,842) (253,066) Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (657,697) (535,483) (485,091) (553,923) (105,217) Dividends 0 0 0 (49,025) (14,340) Free Cash Flow (296,708) (414,474) (1,213,548) (807,790) (372,623) Net Acquisitions and Divestures (615,494) (190,346) (1,477,692) (563,423) (146,115) Other Investments, Net (760,604) (5,319) (43,831) (12,475) (21,348) Net Debt Proceeds 495,426 1,173,271 1,341,916 1,097,928 787,551 Net Equity Proceeds 1,468,314 1,466,549 1,359,120 1,043,826 0 Other, Financing Activities 3.344 (67.907) 55.893 0 0 Total Change in Cash 294,278 1,961,774 21,858 758,066 247,465 Income Statement Net Revenue 11,742,043 9,615,740 6,203,797 3,339,949 2,130,509 Revenue Growth (%) ⎯ ⎯ 86 57 57 Operating EBIT 808,140 545,080 724,586 333,186 229,280 Gross Interest Expense 730,939 622,427 451,542 260,598 164,536 Rental Expense 0 0 8,904 0 0 Net Income 481,281 679,079 (35,500) 46,129 48,641 Source: Marfrig Alimentos S.A.

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Food Minerva S.A. Brazil Full Rating Report

Ratings Rating Rationale Current Security Class Rating • Minerva S.A.’s (Minerva) ‘B’ ratings are supported by the company’s business Local Currency IDR B position as the third largest Brazilian exporter of fresh and frozen beef, its low cost Foreign Currency IDR B Unsecured Notes B/RR4 structure, its increasing grade of product customization, and its diversified and National Scale BBB−(bra) flexible export revenue base. The successful execution of its strategic plan, 1st Debentures Issuance BBB−(bra) including an equity issuance during the challenging operating environment of the IDR − Issuer default rating. last 24 months, further supports Minerva’s ratings.

• The ratings are constrained by Minerva’s high leverage, negative free cash flow Rating Outlook generation, and commodity price volatility. In addition, the ratings reflect the risks Stable associated with the appreciation of the Brazilian real and potential disease Financial Data outbreaks. Minerva is more exposed to these risks than top competitors given that exports represent about 70% of revenues and approximately 40% of capacity is Minerva S.A. (BRL Mil.) concentrated in Brazilian states that face more sanitary restrictions. 3/31/10 12/31/09 Total Revenues 1,479 1,302 • Minerva’s leverage is expected to gradually decline as the company increases its EBITDA 110 92 cash flow generation. As of March 2010, net leverage declined to 4.5x from 5.0x in Cash Flow from 2009 and from 6.2x in 2008. Fitch expects the leverage to decline to 4.0x by year Operations 6 14 Cash and Marketable end and to remain, on average, below that level over the medium term. This credit Securities 261 243 metric improvement was driven by an increase in LTM EBITDA due to, among other Total Debt 757 701 Net Debt/EBITDA (x) 4.5 5.0 things, higher demand in the export market, increased penetration in the domestic FFO Adjusted retail chain, and relatively high capacity utilization. Further cash flow generation Leverage 13.2 42.6 improvements are expected from market share gains, higher margins as a result of an improving cattle cycle in Brazil, higher production from greenfield investments Analysts and acquisitions, and the addition of cash generation from Minerva Dawn Farms, a Daniel R. Kastholm, CFA 50%-owned joint venture that should become operational by 2011. +1 312 368-2070 [email protected] • Minerva’s liquidity is adequate and supported by USD261 million of cash and marketable securities as of March 2010. This level of cash compares to Gisele Paolino USD77 million in short-term debt and USD177 million of debt maturities during 2011 +55 21 4503-2600 [email protected] and 2012. Increased credit availability in Brazil has reduced refinancing concerns of the past and further mitigates this risk. Minerva also has in-the-money two-year American call options outstanding, which could represent an incremental USD90 million equity infusion by September 2011 and approximately USD57 million long-term credit lines with Banco Nacional de Desenvolvimento Econômico e Social (BNDES) to be disbursed in 2010, which will be secured by investments made in 2008. • Minerva has historically had tight cash flow due to growing working capital requirements and capital expenditures. During 2009, for the first time in recent history of the company, it generated positive cash flow for a year. For the LTM ended March 31, 2010, the company’s free cash flow (FCF) was negative USD68 million despite positive cash from operations of USD6 million. In 2010, Minerva should reduce the cash drain from better operating trends, continued improvements in working capital management, reduced volumes of further capex and the monetization of tax credits due to a new fiscal regulation that went into effect at the end of 2009.

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Key Rating Drivers • A negative rating action could occur if net leverage remains at or above 4.0x on a consistent basis, the liquidity/debt maturity profile deteriorates from the current manageable levels, significant secured debt is added to the capital structure, and/or the company continues to generate negative free cash flow. • A positive rating action could be triggered by a significant leverage decrease from current levels and positive free cash flow generation. Rating Issues Please refer to Fitch’s full company report, “Minerva S.A.’s (Minerva),” dated Aug. 31, 2010, for more information regarding:

• Recent financial performance. • Management strategy. • Production capacity. Liquidity and Debt Structure The company’s liquidity relies primarily on cash on hand, which amounted to USD261 million as of the end of March. Most of this cash was raised during January through the issuance of USD250 million of senior notes due in 2019. Minerva has USD757 billion of total debt, of which USD77 million is short-term debt. Debt maturities of approximately USD250 million during the next two years will drain most of the company’s cash position. The operations of the company have been a significant drain in cash, primarily due to high working capital needs and more than USD250 million in investments in the last two years. FCF continues to be negative. For the LTM ended March 31, 2010, the company generated negative USD68 million of FCF, including negative USD28 million during the first quarter of 2010. Fitch expects that Minerva will improve cash flow generations as it gains market share in both the Brazilian and international markets and reduces capital expenditures. The company’s working capital management should improve, as cattle suppliers are not requesting cash payments in the spot market anymore. Nevertheless, positive FCF generation in 2010 may prove to be challenging as the company increases production in its two new slaughter plants and ramps up production at Minerva Dawn Farms. Secured debt represents approximately 16% of the total including BNDES, FINEP, and PEP loans. Seventy-five percent of total debt is denominated in USD with the remaining 25% in BRL.

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Organizational Structure — Minerva S.A.

Vilela de Queiroz Family

100.00%

VDQ Holdings S.A.

68.00%

5.71% 26.29% Banco Fator Minerva Outros (Free Float)

99.99% 50.00% 70.00% 100.00%50.00% 100.00%

Minerva Dawn Brascasing Minerva Log Minerva Farms Indústria e Minerva Comercial e Friasa S.A. S.A. Overseas Ltd. Comercio de Overseas II Ltd. Industrial Ltda. Proteinas S.A.

Source: Minerva S.A.’s financial statements and Fitch.

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Recovery Analysis ⎯ Minerva S.A. (BRL. Mil.)

Going Concern Enterprise Value March 31, 2010 LTM EBITDA 206 Discount (%) 15 Post-Restructuring EBITDA Estimation 175 Multiple (x) 4 Going Concern Enterprise Value 700

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 155 Rent Expense ⎯ Estimated Maintenance Capital Expenditures 20 Total 175

Advance Available to Enterprise Value for Claims Distribution Rate (%) Creditors Greater of Going Concern Enterprise or Liquidation Value ⎯ 700 Less Administrative Claims 10 70 Adjusted Enterprise Value for Claims ⎯ 630

Distribution of Value Secured Priority Lien Value Recovered Recovery (%) Recovery Rating Notching Rating Secured 210 210 100 RR4 ⎯ B

Concession Payment Availability Table Adjusted Enterprise Value for Claims 630 Less Secured Debt Recovery 210 Remaining Recovery for Unsecured Claims 420 Concession Allocation (5%) 21 Value to be Distributed to Senior Unsecured Claims 399

Concession Recovery Unsecured Priority Lien Value Recovered Recovery (%) Allocation (%) Ratinga Notching Rating Senior Unsecured 75.8 75.8 100 0 RR4 ⎯ B Unsecured 1,060.7 344.1 32 100 RR4 0 B Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Brazilian corporates are capped at ‘RR4’. Source: Fitch.

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Debt and Covenant Synopsis ⎯ Minerva S.A. (Foreign Currency Notes)

Overview Issuer Minerva Overseas Ltd. Minerva Overseas Ltd. II Guarantors Minerva S.A. Minerva S.A. Document Date Jan. 26, 2007 Jan. 22, 2010 Maturity Date Feb. 1, 2017 Nov. 15, 2019 Description of Debt Unsecured and Unsubordinated Debt Unsecured and Unsubordinated Debt Amount USD200 Million USD250 Million

Financial Covenants Consolidated Net Debt/ Less than 3.5x. Less than 3.5x. EBITDA (Maximum) (The maximum amount of debt that Minerva and its subsidiaries may incur pursuant to this covenant shall not be deemed to be exceeded, with respect to any outstanding debt, solely as a result of fluctuations in the exchange rate of currencies.) Acquisitions/Divestitures Change of Control Provision Not later than 30 days following a change of Control, Minerva Not later than 30 days following a change of control that results in Overseas will make an offer to purchase all outstanding notes at a rating decline, Minerva Overseas will make an offer to a purchase price equal to 101% of the principal amount plus purchase all outstanding notes at a purchase price equal to accrued interest to the date of purchase. 101% of the principal amount plus accrued interest to the date of purchase. Sale of Assets Restriction Minerva will not, and will not permit any subsidiary to, make any Minerva will not, and will not permit any subsidiary to, make any asset sale unless the following conditions are met: (i) the asset asset sale unless the following conditions are met: (i) the asset sale is for fair market value, as determined in good faith; (ii) at sale is for fair market value, as determined in good faith; (ii) at least 75% of the consideration consists of cash or cash equivalents least 75% of the consideration consists of cash or cash received at closing. equivalents received at closing.

Debt Restriction Additional Debt Restriction Neither Minerva nor any guarantor may incur any debt that is No debt will be deemed to be subordinated in right of payment to subordinate in right of payment to other debt of Minerva or any any other debt solely by virtue of being unsecured or secured Guarantor unless such debt is also subordinate in right of on a first or junior lien basis. payment to the notes or the guaranty on substantially identical terms. Limitation on Liens Minerva will not, and will not permit any subsidiary to, directly or Minerva will not, and will not permit any subsidiary to, directly or indirectly incur or permit to exist any lien of any nature indirectly incur or permit to exist any lien of any nature whatsoever on any of its properties or assets without effectively whatsoever on any of its properties or assets without providing that the notes are secured equally and ratably with the effectively providing that the notes are secured equally and obligations so secured for so long as such obligations are so ratably with the obligations so secured for so long as such secured. obligations are so secured. Limitation on Sale and Minerva will not, and will not permit any subsidiary to, enter into Minerva will not, and will not permit any subsidiary to, enter into Leaseback Transactions any sale and leaseback transaction with respect to any property any sale and leaseback transaction with respect to any property unless Minerva or such Subsidiary would be entitled to: (i) incur unless Minerva or such Subsidiary would be entitled to: (i) incur debt in an amount equal to the attributable debt with respect to debt in an amount equal to the attributable debt with respect such sale and leaseback transaction; and (ii) create a lien on such to such sale and leaseback transaction; and (ii) create a lien on property or asset securing such attributable debt without equally such property or asset securing such attributable debt without and ratably securing the notes. equally and ratably securing the notes. Limitation on Restricted Minerva will not, and will not permit any subsidiary to, directly or Minerva will not, and will not permit any subsidiary to, directly or Payments indirectly: (i) declare or pay any dividend or make any indirectly: (i) declare or pay any dividend or make any distribution on its equity interests held by persons other than distribution on its equity interests held by persons other than Minerva or any of its substantially wholly owned subsidiaries; (ii) Minerva or any of its subsidiaries; (ii) purchase, redeem or purchase, redeem or otherwise acquire or retire for value any otherwise acquire or retire for value any equity interests of equity interests of Minerva held by persons other than Minerva or Minerva held by persons other than Minerva or any of its any of its substantially wholly owned subsidiaries; or (iii) repay, subsidiaries; or (iii) repay, redeem, repurchase, defease or redeem, repurchase, defease or otherwise acquire or retire for otherwise acquire or retire for value, or make any payment on value, or make any payment on or with respect to any or with respect to any subordinated debt except a payment of subordinated debt except a payment of interest or principal at interest or principal at stated maturity. stated maturity. Continued on the next page. Source: Company and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ Minerva S.A. (Continued)

Dividends Restriction Limitation on Dividend Minerva will not, and will not permit any subsidiary to, create Minerva will not, and will not permit any Subsidiary to, create or or otherwise cause or permit to exist or become effective otherwise cause or permit to exist or become effective any any encumbrance or restriction of any kind on the ability of encumbrance or restriction of any kind on the ability of any any subsidiary to (i) pay dividends or make any other subsidiary to (i) pay dividends or make any other distributions on distributions on any equity interests of the subsidiary owned any equity interests of the subsidiary owned by Minerva or any other by Minerva or any other subsidiary; (ii) pay any debt or subsidiary; (ii) pay any debt or other obligation owed to Minerva or other obligation owed to Minerva or any other subsidiary; any other subsidiary; (iii) make loans or advances to Minerva or any (iii) make loans or advances to Minerva or any other other subsidiary; or (iv) transfer any of its property or assets to subsidiary; or (iv) transfer any of its property or assets to Minerva or any other subsidiary. Minerva or any other subsidiary.

Local Currency Debentures Overview Issuer Minerva S.A. Guarantors VDQ Holdings S.A. Document Date July 10, 2010 Maturity Date July 10, 2015 Description of Debt Simple, unsecured, and non-convertible in shares. Amount BRL200 Million

Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Less than 3.5 x Source: Company and Fitch Ratings.

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Financial Summary ⎯ Minerva S.A. (USD Mil., Brazilian GAAP, Years Ended Dec. 31)

Period-End Exchange Rate 1,778.5 1,744.5 2,314.5 1,779.0 2,135.5 Average Exchange Rate 1,871.3 1,998.4 1,837.7 1,946.0 2,175.6

LTM 3/31/10 2009 2008 2007 2006 Profitability Operating EBITDA 110 92 83 62 56 Operating EBITDA Margin (%) 7 7 7 8 10 FFO Return on Adjusted Capital (%) 6 2 6 (3) 11 Free Cash Flow Margin (%) (5) (4) (22) (19) (6) Return on Average Equity (%) ⎯ 19 (54) 9 44 Coverage (x) FFO Interest Coverage 0.7 0.3 1.0 (0.5) 1.3 Operating EBITDA/Interest Expense 1.4 1.8 1.5 1.7 2.2 Operating EBITDA/Debt Service Coverage 0.7 0.4 0.4 0.9 0.3 FFO Fixed Charge Coverage 0.7 0.3 1.0 (0.5) 1.3 FCF Debt Service Coverage 0.1 ⎯ (0.9) (1.5) ⎯ (FCF + Cash and Marketable Securities)/Debt Service Coverage 1.7 1.1 ⎯ 1.5 0.2 Cash Flow from Operations/Capital Expenditures 0.1 0.2 (0.3) (1.7) (4.5)

Capital Structure and Leverage (x) FFO Adjusted Leverage 13.2 42.6 10.8 (16.1) 7.0 Total Debt with Equity Credit/Operating EBITDA 6.9 7.6 7.3 4.9 4.2 Total Net Debt with Equity Credit/Operating EBITDA 4.5 5.0 4.9 1.4 3.4 Total Adjusted Debt/Operating EBITDA 6.9 7.6 7.3 4.9 4.2 Total Adjusted Net Debt/Operating EBITDA 4.5 5.0 4.9 1.4 3.4 Implied Cost of Funds (%) ⎯ 7.9 12.3 13.8 13.1 Short-Term Debt/Total Debt 0.1 0.2 0.3 0.1 0.6

Balance Sheet Total Assets 1,219 1,188 872 768 447 Cash and Marketable Securities 261 243 202 212 44 Short-Term Debt 77 167 155 35 144 Long-Term Debt 680 534 455 266 91 Total Debt 757 701 610 301 235 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 757 701 610 301 235 Off-Balance Sheet Debt ⎯ ⎯ ⎯ ⎯ ⎯ Total Adjusted Debt with Equity Credit 757 701 610 301 235 Total Equity 283 302 136 298 88 Total Adjusted Capital 1,040 1,003 746 599 323

Cash Flow Funds from Operations (23) (36) 1 (56) 8 Change in Operating Working Capital 29 50 (64) (34) (35) Cash Flow from Operations 6 14 (63) (90) (27) Total Non-Operating/Non-Recurring Cash Flow ⎯ ⎯ ⎯ ⎯ ⎯ Capital Expenditures (74) (69) (191) (53) (6) Dividends ⎯ ⎯ ⎯ ⎯ ⎯ Free Cash Flow (68) (55) (253) (142) (33) Net Acquisitions and Divestures ⎯ ⎯ ⎯ ⎯ ⎯ Other Investments, Net ⎯ ⎯ ⎯ ⎯ ⎯ Net Debt Proceeds 2 (33) 310 98 62 Net Equity Proceeds 85 80 ⎯ 190 ⎯ Other Financing, Net (14) (13) (8) ⎯ ⎯ Total Change in Cash 5 (21) 49 146 29

Income Statement Net Revenues 1,479 1,302 1,154 752 548 Revenue Growth (%) 30 13 54 37 42 Operating EBIT 84 71 69 33 50 Gross Interest Expense 80 52 56 37 25 Net Income 31 41 (117) 18 25 Source: Minerva.

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Energy (Oil & Gas) Petróleos de Venezuela, S.A. Venezuela Full Rating Report (PDVSA)

Ratings Rating Rationale Current Security Class Rating • Petróleos de Venezuela, S.A.’s (PDVSA) credit quality is inextricably linked to that of Foreign Currency IDR B+ the government of Venezuela. It is a state-owned entity whose royalties and tax Local Currency IDR B+ Senior Unsecured Notes B+/RR4 payments represent more than 50% of the government’s revenues, and it is of National Scale AAA(ven) strategic importance to the economic and social policies of the country. In the past IDR − Issuer default rating. three years, the government has used PDVSA’s balance sheet to nationalize electricity companies and acquire industrial companies. During 2008 the government also took Rating Outlook the additional step of changing PDVSA’s charter and mission statement to allow it to participate in any industry that could contribute to the social development of the Stable country, including health care, education, and agriculture. Financial Data • PDVSA continues to be an important player in the global energy sector. A strong Petróleos de Venezuela, S.A. (PDVSA) balance sheet in line with worldwide competitors, sizeable proven hydrocarbon (USD Mil.) 12/31/09 12/31/08 reserves, strategic interests in international downstream assets, private Total Assets 149,601 131,832 participation in upstream operations, and geographic proximity to the North Total Equity 74,389 71,513 American market provide important competitive advantages that are difficult to Total Debt 21,419 15,095 Short-Term Debt 2,930 1,677 undermine. PDVSA’s position as a state-owned entity, combined with increased Cash and government control over business strategies and internal resources, underscores the Equivalents 6,981 4,483 Revenues 74,996 126,364 close link between the company’s credit profile and that of the sovereign. EBITDA 26,135 34,967 Capex (15,333) 18,413 • PDVSA’s cash generation declined during 2009 due to lower hydrocarbon prices. As Debt/EBITDA (x) 0.8 0.4 of year-end 2009, the company reported an EBITDA and FFO of approximately Adjusted Debt/ EBITDAR (x) 1.6 1.1 USD26.1 billion and USD11.3 billion, respectively, down from USD34.9 billion and USD15.9 billion during 2008. Total financial debt as of Dec. 31, 2009 increased to Analysts USD21.4 billion from USD15.0 billion as of 2008 as a result of debt issuance during 2009. The leverage level remains strong for the rating category with a total-debt- Lucas Aristizabal to-EBITDA ratio of 0.8x and a total-adjusted-debt-to-EBITDAR ratio of 1.6x. Despite +1 312 368-3260 [email protected] lower cash flow generation, capital expenditures remain high at USD15.3 billion during 2009; however, PDVSA’s total contributions to the government significantly Ana P. Ares declined to USD27.8 billion from USD53.1 billion in 2008. +54 11 5235-8121 [email protected] • Hydrocarbon reserves in the country continue to increase with proved hydrocarbon

Julio Ugueto reserves of 211 billion barrels of oil equivalent (boe) (approximately 85% oil and 15% +58 212 286-3232 natural gas) and proved developed hydrocarbon reserves of 21 billion boe as of [email protected] December 2009. Since the strike at the end of 2002, reporting disclosures and

corporate communications have improved significantly and are now more consistent with pre-strike levels. However, independent market research agency reports indicate production numbers may be overstated, which indicates a high level of reporting risk. Venezuela’s reported oil production has remained relatively stable during the past four years at approximately 3.0 million barrels per day (bpd) despite USD57.7 billion of upstream investments during the past five years, which has helped offset high decline rates.

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Debt Structure Key Rating Drivers (As of December 2009) • Catalysts for an upgrade include an upgrade of Venezuela’s sovereign rating, real independence from the government, and/or a sharp and extended commodity price % of Amount Total upturn. (USD Mil.) Debt PDVSA S.A. • Catalysts for a downgrade include a downgrade of Venezuela’s ratings, a substantial Bonds 13.8 64 increase in leverage to finance capex or government spending, and/or a sharp and Loans 3.0 14 Investment Certificates 1.9 9 extended commodity price downturn. Capital Leases 0.0 0 Total PDVSA S.A. 18.6 87 Rating Issues

CITGO Bonds 0.6 3 Please refer to Fitch’s full company report, “Petróleos de Venezuela, S.A. (PDVSA),” Loans 1.7 8 dated Sept. 9, 2010, for more information regarding PDVSA. Capital Leases 0.0 0 Total CITGO 2.4 11 Debt Structure Project Finance Petrocedeño 0.2 1 PDSVA had USD21.4 billion of debt at the end of 2009. It was composed primarily of Refineria Isla Curazao 0.2 1 USD18.6 billion of debt at the holding company level (PDVSA S.A.), USD2.4 billion of Petrozuata 0.0 0 Other 0.0 0 debt at CITGO, and USD370 million of project finance debt. The holding company debt Total Project Finance 0.4 2 includes USD13.8 billion in bonds, USD3 billion in bank loans, and USD1.9 billion in capital leases. Only USD1.15 billion (7%) of total debt is denominated in a currency Total Debt 21.4 100 other than U.S. dollars. As of Dec. 31, 2009, PDVSA’s off-balance sheet obligations Source: PDVSA. totaled approximately USD22.3 billion and were composed of operating lease debt, unfunded pension liabilities, and other environmental and legal contingent liabilities. The company’s liquidity position is bolstered primarily by USD6.9 billion of cash on hand, adequate cash flow generation, and a manageable amortization schedule. Short-term debt was approximately USD2.9 million as of year-end 2009, and the company had about USD3.3 billion of upcoming maturities during 2011. The company’s liquidity position could be compromised going forward by high capital investment as well as transfers to the central government, which will likely increase from 2009 levels. Despite PDVSA’s strong asset base and relatively low debt levels, the recovery rating of its notes have been capped at ‘RR4’ due to the uncertainty of the legal process in Venezuela. A recovery rating of ‘RR4’ is consistent with an average recovery of between 30% and 50% in case of default.

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Organization Chart — Petróleos de Venezuela, S.A. (PDVSA) (As of Dec. 31, 2009)

Petróleos de Venezuela, S.A.

PDVSA Petróleo Corporación PDVSA Deltaven, S.A. & Propernyn B.V. PDV Holding Inc. PDVSA Trading (Holland) S.A. Venezolana de Gas, S.A. PDV Marina S.A. Company Petróleo, S.A.(CVP)

Refineries Propernyn N.V. Empresas Mixtas (Curaçao) Refineries (Conventional Oil) (CITGO Petroleum Corporation)

Orinoco Belt Joint PDV Europa B.V. Ventures (Holland)

Refineries

Assets in North European and Other Assets Latin Crude and Gas Assets Distribution Entities America Caribbean Assets America Caribbean

Venezuela International Source: PDVSA.

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Debt and Covenant Synopsis ⎯ Petróleos de Venezuela, S.A. (PDVSA) (Foreign Currency Notes)

Overview Issuer Petróleos de Venezuela, S.A. (PDVSA) Guarantors PDVSA Petróleo, S.A. Document Date April 4, 2007 Maturity Date April 12, 2017; April 12, 2027; April 12, 2037 Description of Debt Senior Unsecured Notes

Financial Covenants Consolidated Net Leverage (Maximum) No material provision noted. Interest Coverage (Minimum) No material provision noted. Acquisitions/Divestitures Change of Control Provision Not included in the indenture's covenants.

Debt Restriction Additional Debt Restriction No material provision noted. Limitation on Secured Debt PDVSA is not permitted to issue senior secured debt or to create any lien on any asset, property, or income without providing the same security to the existing notes. Restricted Payments No material provision noted.

Other Cross Default If the issuer or any of its significant subsidiaries defaults on any indebtedness of at least USD100 million. Acceleration If any event of default occurs and is continuing, the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Events of default include, but are not limited to failure to pay principal, interest of any aditional amount on the notes; a default in the observance or performance on any covent and which default continues for a period of 60 days; defaults in any indebtedness of at least USD100 million. Restriction on Purchase of Notes The issuer is allowed to redeem the notes in whole or in part at a preset redemption price. N.A. − Not applicable. Source: Company and Fitch Ratings.

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Financial Summary ⎯ Petróleos de Venezuela S.A. (PDVSA) (IFRS, USD Mil., Years Ended Dec. 31)

2009 2008 2007 2006 2005 Profitability Operating EBITDA 26,135 34,967 28,310 25,043 22,097 Operating EBITDA Margin (%) 34.8 27.7 29.4 25.2 26.1 FFO Return on Adjusted Capital (%) 10.3 15.7 11.0 11.8 17.7 Free Cash Flow Margin (%) (13.8) (3.6) (12.2) (4.5) 3.2 Return on Average Equity (%) 6.0 14.7 11.5 10.9 14.6

Coverage (x) FFO Interest Coverage 25.0 21.7 15.8 27.8 62.0 Operating EBITDA/Gross Interest Expense 55.5 45.4 48.5 93.8 135.6 Operating EBITDA/Debt Service Coverage 7.7 14.3 8.2 27.3 24.8 FFO Fixed Charge Coverage 13.8 13.6 8.7 11.6 17.8 FCF Debt Service Coverage (2.9) (1.6) (3.2) (4.5) 3.2 (FCF + Cash and Marketable Securities)/Debt Service Coverage (0.9) 0.3 (1.8) (1.6) 7.4 Cash Flow from Operations/Capital Expenditures 0.5 0.9 0.3 0.6 1.7

Capital Structure and Leverage (x) FFO Adjusted Leverage 3.6 2.2 3.3 1.7 1.2 Total Debt with Equity Credit/Operating EBITDA 0.8 0.4 0.6 0.1 0.2 Total Net Debt with Equity Credit/Operating EBITDA 0.6 0.3 0.4 0.0 0.0 Total Adjusted Debt/Operating EBITDAR 1.6 1.1 1.1 0.5 0.2 Total Adjusted Net Debt/Operating EBITDAR 1.4 0.9 1.0 0.4 0.0 Short-Term Debt/Total Debt 0.1 0.1 0.2 0.2 0.2

Balance Sheet Total Assets 149,601 131,832 107,672 80,529 70,365 Cash and Marketable Securities 6,981 4,483 4,880 2,723 3,725 Short-Term Debt 2,930 1,677 2,877 652 729 Long-Term Debt 18,489 13,418 13,129 2,476 2,704 Total Debt 21,419 15,095 16,006 3,128 3,433 Off-Balance Sheet Debt 22,313 22,600 16,722 10,348 9,056 Total Adjusted Debt 43,732 37,695 32,728 13,476 12,489 Total Equity 74,389 71,513 56,062 53,103 47,095 Total Adjusted Capital 118,121 109,208 88,790 66,579 59,584

Cash Flow Funds from Operations 11,323 15,908 8,656 7,153 9,947 Change in Working Capital (3,428) 544 (4,482) (3,049) (3,253) Cash Flow from Operations 7,895 16,452 4,174 4,104 6,694 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 1,255 Capital Expenditures (15,333) (18,413) (12,852) (7,205) (3,938) Dividends (2,948) (2,609) (3,037) (1,317) (1,317) Free Cash Flow (10,386) (4,570) (11,715) (4,418) 2,694 Net Acquisitions and Divestitures (14) 1,242 756 1,774 0 Other Investments, Net 34 1,344 (1,091) 3,216 (1,100) Net Debt Proceeds 10,361 (1,539) 13,093 (497) (287) Net Equity Proceeds 2,503 5,025 0 0 0 Other, Financing Activities 0 (344) 0 0 0 Total Change in Cash 2,498 1,158 1,043 75 52

Income Statement Net Revenue 74,996 126,364 96,242 99,267 84,553 Revenue Growth (%) (41) 31 (3) 17 33 Operating EBIT 20,341 29,747 24,292 21,391 18,763 Gross Interest Expense 471 770 584 267 163 Net Income 4,394 9,356 6,273 5,452 6,483 Source: Fitch Ratings and Petróleos de Venezuela, S.A.

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Electric-Corporate Rede Energia S.A. Brazil Full Rating Report And Subsidiaries Centrais Elétricas do Pará S.A. (Celpa) and Centrais Elétricas Matogrossenses S.A. (Cemat)

Ratings Rating Rationale Current Security Class Rating • Rede Energia S.A.’s (Rede) ratings reflect the relatively high leverage of the group Rede Energia S.A. when compared to other electricity companies in the Brazilian market, which is not Foreign Currency IDR B− Local Currency IDR expected to change materially in the coming years. Long-Term National Rating B(bra) Perpetual Notes USD575 Mil. B−/RR4 • As of June 30, 2010, Rede’s liquidity position was tight despite the successful Debentures due 2014 B/RR4 closing of new transactions, including two debenture issuances. Short-term debt

Celpa and Cemat maturities amounted to approximately BRL2.0 billion compared to BRL760 million in Foreign/Local Currency IDR B cash and a negative cash flow from operations of −BRL120 million. The agency also Long-Term National Rating BBB(bra) Notes due 2012 B/RR4 considers that the group’s refinancing needs are still challenging, especially IDR − Issuer default rating. considering its limited cash generating growth capacity versus high capital expenditure requirements, which has historically affected its free cash flow. Rating Outlook • Rede will benefit from a BRL600 million capital injection to be made by the Stable infrastructure fund FI-FGTS within the next 30 or 60 days. Although the resources will not be directly used to reduce debt, Fitch Ratings sees it as a positive move Financial Data since resources will be destined for two operational subsidiaries ⎯ mostly for Celpa Rede Energia S.A. (BRL Mil., Consolidated) ⎯ to finance capex and allow this subsidiary to improve its operational LTM performance and achieve the parameters established by the regulatory agency, 6/30/10 12/31/09 ANEEL. As of June 30, 2010, Celpa’s energy losses amounted to 30.5 % compared to Total Revenues 5,290 5,045 EBITDAR 1,152 1,160 the 24.4% standard set by ANEEL, which was mostly affected by its expansion in Cash from rural areas. Operations (120) 202 Cash and • The ratings are supported by the group’s market position as an important player in Marketable Securities 760 414 the electric distribution segment in Brazil. Rede’s credit profile is underpinned by Total Adjusted its portfolio of nine distribution companies covering about 34% of the national Debt 7,526 6,831 Total Adjusted territory, the natural monopoly and the regulated nature of the distribution Debt/EBITDAR (x) 6.5 5.9 segment, as well as its growing customer base. Many of the group’s concession FFO Adjusted areas show an average consumption growth that has exceeded the national average Leverage 7.9 5.9 over the past five years. Analysts • The difference between the issuer default ratings (IDRs) of Rede and its subsidiaries Ricardo Carvalho reflects the holding company’s tighter liquidity position and dependency on +55 21 4503-2600 [email protected] dividends from its subsidiaries to meet its debt service. Around 29% of consolidated debt was allocated at the holding company level, which also has a significant Mauro Storino proportion of foreign currency debt. +55 11 4503-2600 [email protected] Key Rating Drivers • A negative rating action could take place if one or more of the following were to occur: worsening in the group’s refinancing risk, a capex plan with inadequate funding, or potential difficulties in managing its financial covenants. • A positive rating action could take place if one or more of the following were to occur: a substantial increase in cash flows from operations and/or debt reductions leading to lower leverage ratios.

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Rating Issues Please refer to Fitch’s full company report, “Rede Energia S.A.’s (Rede),” dated Oct. 15, 2010, for more information regarding:

• Sale of 35% of the total capital of Rede’s holding company, EEVP to an infrastructure fund managed by the state-owned bank Caixa Econômica Federal. • Recent financial performance. • Company overview. Liquidity and Debt Structure Rede still presents a leveraged financial position on a consolidated basis, despite some successful initiatives of stretching its debt repayment schedule, including two new debenture issuances (BRL370 million in December 2009 with a five-year tenor and BRL250 million in the first half of 2010 with a four-year tenor). As of June 30, 2010, Rede Group posted a BRL7.5 billion total adjusted debt, which includes rescheduled taxes, intercompany loans, labor settlement, and derivatives, among others. From the total debt, approximately BRL2.0 billion is due in the short term compared to BRL760 million in cash and a negative cash flow from operations of −BRL120 million for the LTM June 30, 2010, characterizing Rede’s challenging refinancing needs. As of June 2010, around 29% of consolidated debt was concentrated in the holding company, which also carried a large portion of USD-denominated debt, including the perpetual bonds. Approximately 23% of total debt was exposed to foreign currency movements, excluding the National Treasury debt. Currency protection is partial since the group has used currency swaps to protect only principal payments on some foreign currency obligations. Interest payments on the perpetual notes are not hedged. Adjusted net debt/EBITDA was 5.9x as of June 30, 2010. Rede has some financial covenants, including maximum consolidated net debt/EBITDA of 4.0x. As per the covenant definition, this calculation does not consider taxes, liabilities, or new loans from Eletrobrás for the governmental program Programa Luz para Todos (PLPT) and also excludes regulatory credits from the calculation. Net debt/EBITDA as reported by Rede was 3.27x as of June 2010 and was in compliance with the maximum level established.

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Organizational Structure — Rede Energia (As of March 31, 2010)

BNDESPAR DENERGE EEVP OUTROS 23.88% 15.62% 56.43% 4.07%

REDE ENERGIAa,b

100.00% 99.98% 100.00% 99.60% EDEVPc QMRAb REDE POWERb REDECOMe

10.11% 51.26% 99.50% CELPAa,c REDESERVe 43.74% 60.48% 56.18% 39.92% VALE DO VACARIAf ENERSULc 70.78% CEMATa,c TANGARAd

100.00% 100.00% CAIUÁc JURUENAd

50.86% CELTINSc

91.45% EEBc

98.69% CNEEc

97.70% CFLOc

aPublic companies. bHolding. cDistribution. dGeneration. eCommercialization and Services. fCogeneration. Source: Fitch and Rede Energia financial statements.

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Recovery Analysis ⎯ Rede Energia S.A. (BRL Mil., As of June 30, 2010)

Going Concern Enterprise Value EBITDA 1,151.8 EBITDA Discount (%) 10 Post-Restructuring EBITDA Estimation 1,036.6 Market Multiple (x) 5.0 Going Concern Enterprise Value 5,183.1

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 807 Rent Expense ⎯ Estimation Maintenance Capital Expenditures 400 Total 1,207

Advance Available to Liquidation Value Balance Rate (%) Creditors Cash 760 0 ⎯ A/R 1,412 80 1,129.6 Inventory 41 50 50.5 Net PP&E ⎯ 20 ⎯ Total 2,213 ⎯ 1,150.1

Enterprise Value for Claims Distribution

Greater of Going Concern Enterprise or Liquidation Value 5,183.1 Less Administrative Claims (10%) 518.3 Adjusted Enterprise Value for Claims 4,664.8

Distribution of Value Secured Priority Lien Value Recovered Recovery Rate (%) Recovery Rating Notching Rating Senior Secured 0.0 ⎯ 0 ⎯ ⎯ ⎯ Secured 1,908 1,908 100 RR4 ⎯ B

Concession Payment Availability Table Adjusted Enterprise Value for Claims 4,664.8 Less Secured Debt Recovery 1,908.0 Remaining Recovery for Unsecured Claims 2,756.8 Concession Allocation (5%) 137.8 Value to be Distributed to Senior Unsecured Claims 2,619.0

Value Recovery Rate Concession Unsecured Priority Lien Recovered (%) Allocation ‘RR’ Rating Notching Credit Ratings Senior Unsecured 5,618.0 2,756.8 49 100 RR4 0 B− Unsecured 0.0 ⎯ 0 0 ⎯ ⎯ ⎯ Subordinated 0.0 ⎯ 0 0 ⎯ ⎯ ⎯ Junior Subordinated 0.0 ⎯ 0 0 ⎯ ⎯ ⎯ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Dominican Republic corporates are capped at ‘RR4’. Source: Fitch.

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Debt and Covenant Synopsis ⎯ Rede Energia S.A. (Foreign Currency Notes)

Overview Issuer Rede Energia S.A. CEMAT and CELPA Guarantors N.A. N.A. Document Date April 2, 2007 Feb. 14, 2006 Maturity Date N.A. Feb. 14, 2012 Description of Debt Perpetual bonds Notes Units Amount USD575 million (USD400 million + USD175 million) USD100 million Financial Covenants Net Debt/EBITDA (Maximum) Less than 4.0 x. N.A. (The maximum amount of debt that the issuer and its subsidiaries may incur pursuant to this covenant shall not be deemed to be exceeded, with respect to any outstanding debt, solely as a result of fluctuations in the exchange rate of currencies.) Total Debt/EBITDA (Max.) N.A. Less than 3.5x both for CEMAT and CELPA. Interest Coverage Ration (Min.) N.A. Higher than 2.25x both for CEMAT and CELPA. Acquisitions/Divestitures Change of Control Provision No later than 30 days following a change of control that No later than 30 days following a change of control, the results in a rating decline, the issuer will make an offer to issuer will make an offer to purchase all outstanding purchase all outstanding notes at a purchase price equal notes at a purchase price equal to 101% of the principal to 101% of the principal amount plus accrued interest to amount plus accrued interest to the date of purchase. the date of purchase. Limitations on Sales of Assets or The issuer shall not sell, lease, transfer, or otherwise dispose Neither the issuer nor its subsidiaries shall make any asset Shares of any direct or indirect interest in the CELPA shares and disposition unless the following conditions are met: (1) CELTINS shares unless the following conditions are met: (I) it receives consideration at least equal to the fair value it receives consideration at least equal to the fair market of the assets and (2) at least 75% of the consideration value of the shares, (2) at least 75% of the consideration is consists of cash or cash equivalents. in the form of cash or cash equivalents. Debt Restriction Limitation on Liens N.A. With certain exceptions, the issuer will not, and will not permit any of its restricted subsidiaries to issue, assume, or guarantee any debt secured by a lien upon any property or assets without effectively providing that the notes are secured equally and ratably with such debt so long as such debt is so secured. Limitation on Sale and Leaseback N.A. The issuer and its subsidiaries will not enter into any sale Transactions and leaseback transaction unless it will be entitled to incur debt in an amount equal or exceeding the value of such sale and leaseback transition and to incur a lien to secure such debt. Dividends and other Payment Restrictions Limitation on Dividend and Other Rede Energia will not and will not permit any subsidiary to The Issuer will not and will not permit any subsidiary to Payments create or permit to exist or become effective any create or permit to exist or become effective any consensual encumbrance or restriction on the ability of consensual encumbrance or restriction on the ability of any significant subsidiary to (1) pay dividends or make any any restricted subsidiary to (1) pay dividends or make other distributions on its capital stock to the Issuer or any any other distributions on its capital stock to the Issuer Subsidiary; (2) pay any indebtedness owed to the Issuer or or any Subsidiary; (2) pay any indebtedness owed to the any Subsidiary; (3) make loans or advances to the Issuer or Issuer or any Subsidiary; (3) make loans or advances to any significant subsidiary; or (4) transfer any of its the Issuer or any significant subsidiary; or (4) transfer properties or assets to the Issuer or any significant any of its properties or assets to the issuer or any subsidiary. significant subsidiary. Others Limitation on Transactions with With certain exceptions, the issuer shall not make any With certain exceptions, the issuer or its subsidiaries shall Affiliates payment; sell, lease, transfer or dispose of any of its not make any payment; sell, lease, transfer, or dispose properties or assets; or enter into any transaction or of any of its properties or assets; or enter into any contract for the benefit of any affiliate. This covenant transaction or contract for the benefit of any affiliate. does not apply for cash management or other financial management functions. Limitation on Consolidation, With certain exceptions, the issuer will not consolidate with; With certain exceptions, the issuer will not consolidate Merger, Conveyance, Sale, or merge with; or convey, transfer, or lease all or with; merge with; or convey, transfer, or lease all or Lease substantially all of its assets to any person. substantially all of its assets to any person. Cross Acceleration Cross acceleration of other debt with a USD40 million Cross acceleration of other debt with a USD10 million threshold. threshold for both CEMAT and CELPA. N.A. − Not applicable. Source: Company and Fitch Ratings.

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Financial Summary ⎯ Rede Energia S.A. (BRL 000, As of Dec. 31)

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 1,151,841 1,160,017 1,068,963 1,107,423 905,418 Operating EBITDAR 1,151,841 1,160,017 1,068,963 1,107,423 905,418 Operating EBITDA Margin (%) 21.8 23.0 26.8 33.6 31.2 Operating EBITDAR Margin (%) 21.8 23.0 26.8 33.6 31.2 FFO Return on Adjusted Capital 9.7 12.2 5.4 10.3 11.7 Free Cash Flow Margin (%) (12.6) (10.3) (28.2) (20.9) (18.1) Return on Average Equity (%) (7.3) 0.8 8.1 2.0 4 Coverage (x) FFO Interest Coverage 1.2 1.4 1.3 2.0 3.1 Operating EBITDA/Gross Interest Expense 1.4 1.4 2.6 2.6 3.3 Operating EBITDAR/Interest Expense + Rents 1.4 1.4 2.6 2.6 3.3 Operating EBITDA/Debt-Service Coverage 0.4 0.5 0.6 1.0 0.7 Operating EBITDAR/Debt Service Coverage 0.4 0.5 0.6 1.0 0.7 FFO Fixed Charge Coverage 1.2 1.4 1.3 2.0 3.1 FCF Debt Service Coverage 0.1 0.1 (0.4) (0.3) (0.2) (FCF + Cash and Marketable Securities)/Debt Service Coverage 0.3 0.3 (0.2) 0.3 0.2 Cash Flow from Operations/Capital Expenditures (0.2) 0.3 (0.1) 0.3 0.4 Capital Structure and Leverage (x) FFO Adjusted Leverage 7.9 5.9 13.7 6.6 5.6 Total Debt with Equity Credit/Operating EBITDA 6.6 5.7 5.8 4.9 5.2 Total Net Debt with Equity Credit/Operating EBITDA 5.9 5.4 5.4 4.4 4.6 Total Adjusted Debt/Operating EBITDAR 6.5 5.9 6.6 4.9 5.2 Total Adjusted Net Debt/Operating EBITDAR 5.9 5.5 6.2 4.4 4.6 Implied Cost of Funds (%) 11.8 12.5 7.0 8.3 6.9 Short-Term Debt/Total Debt 0.2 0.2 0.2 0.1 0.2 Balance Sheet Total Assets 12,165,299 11,673,806 11,334,177 9,920,373 8,958,465 Cash and Marketable Securities 760,267 413,953 395,951 612,309 500,484 Short-Term Debt 1,863,115 1,425,455 1,288,695 647,117 1,044,466 Long-Term Debt 5,743,862 5,202,665 4,913,818 4,803,859 3,653,821 Total Debt 7,606,977 6,628,120 6,202,513 5,450,976 4,698,287 Total Debt with Equity Credit 7,606,977 6,628,120 6,202,513 5,450,976 4,698,287 Off-Balance Sheet Debt (80,516) 203,198 802,906 0 0 Total Adjusted Debt with Equity Credit 7,526,461 6,831,318 7,005,419 5,450,976 4,698,287 Total Equity 2,312,274 2,630,542 2,523,006 2,552,846 2,497,517 Total Adjusted Capital 9,838,735 9,461,860 9,528,425 8,003,822 7,195,804 Cash Flow Funds from Operations 142,972 351,591 104,482 402,801 569,811 Change in Working Capital (262,786) (149,355) (172,704) (44,586) (233,562) Cash Flow from Operations (119,814) 202,236 (68,222) 358,215 336,249 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (499,399) (699,779) (1,059,006) (1,048,077) (862,012) Common Dividends (48,164) (24,131) 0 0 0 Free Cash Flow (667,377) (521,674) (1,127,228) (689,862) (525,763) Net Acquisitions and Divestitures 0 0 (30,596) 12,230 502,741 Other Investments, Net 648 1,711 118,555 330,252 (85,012) Net Debt Proceeds 1,190,015 537,964 707,736 397,881 408,622 Net Equity Proceeds 0 0 115,176 61,324 0 Other (Investments and Financing) 0 0 0 0 (60,870) Total Change in Cash 523,286 18,001 (216,357) 111,825 239,718 Income Statement Revenue 5,290,010 5,044,554 3,995,756 3,300,191 2,900,879 Revenue Growth (%) 12 26 21 14 4 Operating EBIT 735,063 759,115 727,728 783,580 617,783 Gross Interest Expense 807,203 802,746 408,189 419,897 274,111 Rental Expense 0 0 0 0 0 Net Income (174,073) 20,338 205,338 51,454 88,518 Source: Company and Fitch Ratings.

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Homebuilding Servicios Corporativos Javer, Mexico Full Rating Report S.A.P.I. de C.V.

Ratings • Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer) is one of the most important Current Security Class Rating developers of affordable and middle-income housing in Mexico, selling 16,026 units Local Currency IDR B+ during 2009. The company’s credit ratings reflect its strong market presence in the Foreign Currency IDR B+ Mexican state of Nuevo León, its significant land reserve, and its relatively healthy USD210 Mil. Senior Notes Due 2014 BB−/RR3 liquidity position. Factors that constrain the company’s credit ratings are its uneven cash flow from operations (CFFO), moderate leverage, and limited geographic and IDR − Issuer default rating. product diversification. Like other Mexican homebuilders, Javer’s credit ratings incorporate a challenging operating environment, growing working capital Rating Outlook requirements, and a high dependence upon government-related mortgage funding for Stable low-income homes. Financial Data • Javer’s CFFO is uneven due to the company’s strategy of launching large Servicios Corporativos Javer, S.A.P.I. developments, which requires large working capital investments, during the first half of de C.V. the year. As a result, for the LTM ended June 30, 2010, Javer generated negative (MXN Mil.) 6/30/10 12/31/09 Total Assets 5,479 5,206 MXN13.0 million of CFFO. This figure compares with MXN94.8 million during the LTM Cash and ended June 30, 2009. Fitch’s ratings of Javer incorporate an expectation that the Marketable Securities 525 806 company’s cash flow from operations will improve during the third quarter and fourth Net Revenues 4,069 4,932 quarters of 2010 as the company sells the units it is developing. During 2009, strong EBITDA 905 1,090 sales during the second half of the year led to a CFFO of MXN938.1 million for the year. Debt 2,743 2,625 EBITDA/Interest Expenses (x) 2.3 3.3 • Like the other main Mexican homebuilders, Javer primarily participates in the Debt/EBITDA (x) 3.0 2.4 affordable entry-level and middle-income housing segments. During the first half of 2010, 37.7% of the company’s revenues were generated from units with selling Analysts prices below MXN260,000, while 35.5% were made within the range of MXN260,000 to MXN560,000. Javer’s geographic diversification has improved during the last Jose Vertiz +1 212 908-0641 several years as the company now operates in the Mexican states of Nuevo León, [email protected] Aguascalientes, Jalisco, and Tamaulipas. Nevertheless, the company’s operations remain highly concentrated as the company generates about 70% of its revenues in the state of Nuevo León. • Javer maintains an important land bank, representing around eight years of operations as of June 30, 2010. This level of land is high in relation to the company’s current volume of homes sold and is positively factored into the company’s credit ratings. Javer manages two acquisition schemes, direct land purchase and joint agreements. Each one has historically represented around 50% of the company’s land bank. As of June 30, 2010, the company had a land bank of approximately 55,877 units in its owned land reserves, which is equivalent to 3.5 years based upon the units sold during 2009. The company also had 71,361 units of land reserves through land trust agreements. These joint agreements broaden Javer’s financial flexibility by reducing its working capital needs. They also reduce risks related to property ownership. • Javer is highly dependent upon mortgages that are created by Infonavit, a government-related agency. Changes in Infonavit’s lending policies or payment period could affect Javer’s operational performance. During the first half of 2010, Infonavit was Javer’s main mortgage provider, accounting for mortgages for about 86% of the total units sold.

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• The ratings consider the strong, long-term fundamentals for the Mexican homebuilding sector, a result of positive demographic trends and the housing deficit. The affordable-entry or low-income segment remains the primary growth driver in the sector. The strength in the low-income sector remains supported by government efforts to make lenders shift their focus towards it. Government agency, Infonavit maintains a target of 475,000 mortgages for 2010, while Fovissste, Infonavit’s equivalent for public sector employees, maintains a target of 100,000 mortgages for 2010. At the end of the first semester of 2010, Infonavit and Fovissste had reached 46% and 33%, respectively, of their targets for 2010. What Could Trigger a Rating Action? • Positive rating actions could result from debt reduction due to strong free cash flow generation and/or an equity issuance. • Continued negative cash flows from operations could result in a negative rating action. Low sales could also lead to a Rating Watch of Negative or a ratings downgrade. Rating Issues Please refer to Fitch’s full company report, “Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer),” dated Oct. 5, 2010, for more information regarding:

• Recent financial performance. • Market position • Management strategy. Liquidity and Debt Structure At the end of June, Javer had MXN2.748 billion of total debt. The company’s debt consists primarily of MXN2.7 billion of senior notes (USD210 million) due in 2014. Javer also has MXN46 million in capital leases and MXN1.6 million in notes payable with financial institutions. During 2009 and the LTM ended June 30, 2010, Javer generated MXN1,090 million and MXN905 million of EBITDA, respectively. These figures result in a total debt-to-EBITDA ratio of 3.0x for the LTM, which is above the company’s average leverage of 2.5x for the 2007–2009 period. The ratings incorporate the expectation that Javer’s leverage will return to its historical levels of below 2.5x as the company improves its cash flow generation during the second half of 2010. Positively incorporated into the ratings is Javer’s moderately strong cash position and its manageable near-term debt maturity schedule. At the end of June, Javer had MXN525 million of cash and marketable securities. Only MXN1.6 million of its long-term debt falls due during the next 12 months. Recovery Rating Javer’s recovery ratings reflect Fitch’s belief that under a bankruptcy scenario the company’s enterprise value, and hence recovery rates for its creditors, will be maximized in a liquidation scenario rather than a restructuring scenario (as a going concern). This assumption reflects the view that in a bankruptcy scenario the company’s going concern value would be significantly lower than its projected liquidation value. Under this scenario, Fitch applies the industry’s standard discount rates on the company’s cash, accounts receivable, inventory, and net PP&E of 0%, 80%, 65%, and 20%, respectively. The ‘BB–/RR3’ rating assigned to the senior notes reflects good

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recovery prospects in the range of 50%–70% given default. Although Javer’s recovery analysis results in higher recovery prospects, Mexico’s recovery rating cap is ‘RR3’, or one notch above the issuer default rating for both investment- and speculative-grade debt issuances.

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Recovery Analysis ⎯ Servicios Corporativos Javer, S.A.P.I. de C.V. (MXN Mil.)

Enterprise Value Liquidation Value 6/30/10 Balance as of Recovery Available to EBITDA 905 6/30/10 Rates (%) Creditor EBITDA Discount (%) 40 Cash 524.5 0 ⎯ Distressed EBITDA 543 Accounts Receivable 770.5 80 616.4 Market Multiple 3.5 Inventory 3,359.4 65 2,183.6 Enterprise Value 1,901 PP&E, Net 274.0 20 54.8 Total 4,928.4 ⎯ 2,854.8

Interest Expense ⎯ Rent Expense ⎯ Maintenance Capital Expenditures ⎯ Principal Amortization (Next 12 Months) ⎯ Distribution of Value by Priority Greater of Enterprise or Liquidation Value 2,855 Less Administrative Claims 286 Less Concession Payments 0.0 Adjusted Value 2,569

Amount Outstanding and Available R/C Value Recovered Recovery Rate (%) 'RR' Rating Notching Credit Ratings Issuer Default Rating ⎯ ⎯ ⎯ ⎯ ⎯ B+ Senior Unsecured 2,660.0 2,569 97 RR3 (Capped) 1 BB− Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, Mexico has a soft cap at ‘RR3’, which results in a maximum one-notch benefit over the issuer default rating. Source: Javer’s financial statements and Fitch Ratings.

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Organizational Structure — Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer) (As of June 30, 2010)

Proyectos del Noreste, Promotora de Proyectos Southern Cross Designees S.A. de C.V. Inmobiliarios Turin, (40.7%), Evercore S.A. de C.V. Designee(10.7%), and Arzentia (8.5%)

38.0% 2.0% 60.0%

Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer) USD210 Mil. Senior Notes Due 2014a

99.9% 99.9% 99.9% 99.9%

Impulsora de Viviendas Construccion de Viviendas Servicios Administrativos Urbanizaciones Javer S.A. Javer S.A. de C.V., SOFOM, Javer S.A. de C.V. Javer, S.A. de C.V. de C.V. E.N.R.

99.9% 99.9% 99.9%

Casas Javer S.A. de C.V. Casas Consentidas Javer, Hogares Javer, S.A. de C.V., S.A. de C.V. SOFOM E.N.R.

LTM June 2010 Summary Statistics

MXN905.2 Million of EBITDA MXN524.5 Million of Cash and Marketable Securities MXN18.2 Million of Short-Term Debt MXN2,724.3 Million of Long-Term Debt

aEach of Javer’s subsidiaries guarantees the notes jointly and severally on a senior unsecured basis. Source: Javer.

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Debt and Covenant Synopsis ⎯ Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer) (Foreign Currency Notes)

Overview Issuer Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer) Guarantors Payment of principal of, premium, if any, and interest on the notes is guaranteed jointly and severally on a senior unsecured basis by each of the following Javer subsidiaries (Guarantors): Servicios Administrativos Javer, S.A. de C.V.; Casas Javer, S.A. de C.V.; Hogares Javer, S.A. de C.V.; Viviendas Javer, S.A. de C.V.: Construcción de Viviendas Javer, S.A. de C.V.: Urbanizaciones Javer, S.A. de C.V., Impulsora de Viviendas del Noreste, S.A. de C.V.: Impulsora de Viviendas Javer, S.A. de C.V.: SOFOM, E.N.R., Desarrollos Integrales Javer S.A de C.V.: and Casas Consentidas Javer, S.A. de C.V., SOFOM, E.N.R. Document Date 8/4/09 Maturity Date 8/4/14 Description of Debt Senior Notes Amount USD210 Million Ranking The notes and the guarantees rank equally in right of payment with all of the company and the subsidiary guarantors’ existing and future senior indebtedness; and senior in right of payment to all of the company and the subsidiary guarantors’ existing and future subordinated indebtedness. The notes and the guarantees will effectively rank junior in right of payment to all of the company and the subsidiary guarantors’ existing and future secured indebtedness with respect and up to the value of the assets securing such indebtedness. The notes and the guarantees will be structurally subordinated to all indebtedness (including trade payables) of the company’s nonguarantor subsidiaries. Furthermore, the notes and the guarantees will rank junior in right of payment to all obligations preferred by statute (such as tax or labor obligations). Financial Covenants Limitation on Incurrence of The company will not, and will not cause or permit any of its restricted subsidiaries to, directly or indirectly, incur any indebtedness, Additional Indebtedness including acquired indebtedness if, at the time of and immediately after giving pro forma effect to the incurrence thereof and the application of the proceeds therefrom, the consolidated fixed charge coverage ratio of the company is greater than the ratio set forth below in the row opposite the time period (in each case after the issue date 8/4/2009): Until 1 year...... 2.0 to 1.0 From 1 year until 2 years...... 2.25 to 1.0 From 2 years until 3 years...... 2.5 to 1.0 From 3 years and thereafter...... 2.75 to 1.0 These restrictions are subject to important exceptions and qualifications. Acquisitions/Divestitures Change of Control Provision Upon the occurrence of a change of control, the holders of the notes will have the right ⎯ subject to certain exceptions ⎯ to require the issuer to repurchase some or all of the notes at 101% of their principal amount, plus accrued and unpaid interest, if any, on the repurchase date. In connection with the company’s change of control occurred during 2009, the company completed a consent solicitation pursuant to a consent solicitation statement dated Oct. 28, 2009, requesting that holders of the outstanding notes as of a record date waive the change of control provisions of and consent to an amendment to the indenture governing the outstanding notes (together, the “Waiver and Amendment”). After receiving valid consents from holders of a majority in aggregate principal amount of the outstanding notes, the Waiver and Amendment was affected through the execution of a supplemental indenture, dated as of Nov. 9, 2009, to the indenture.

Certain Covenants The indenture contains certain covenants that, among other things, limit the company’s ability and the ability of its subsidiaries to: (1) incur additional indebtedness; (2) pay dividends on the company’s capital stock or redeem, repurchase, or retire the company’s capital stock or subordinated indebtedness; (3) make investments; (4) create liens; (5) create any consensual limitation on the ability of the company’s restricted subsidiaries to pay dividends, make loans, or transfer property to the company; (6) engage in transactions with affiliates; (7) sell assets, including capital stock of the company’s subsidiaries; and (8) consolidate, merge, or transfer assets. If the notes obtain investment grade ratings from the rating agencies and no default has occurred and is continuing, the foregoing covenants will cease to be in effect with the exception of covenants that contain limitations on liens and on, among other things, certain consolidations, mergers, and transfer of assets for so long as each of the foregoing rating agencies maintains its investment grade rating. These covenants are subject to important exceptions and qualifications.

Others Limitation on The company will not, and will not permit any of its restricted subsidiaries to, directly or indirectly, enter into any transaction or series of Transactions with related transactions (including, without limitation, the purchase, sale, lease, or exchange of any property or the rendering of any Affiliates service) with, or for the benefit of, any of its affiliates (each an “affiliate transaction”), unless: (1) the terms of such affiliate transaction are no less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arm’s- length basis from a person that is not an affiliate of the company; (2) in the event that such affiliate transaction involves aggregate payments or transfers of property or services with a fair market value, in excess of USD5.0 million, the terms of such affiliate transaction will be approved by a majority of the members of the board of directors of the company; and (3) in the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD15.0 million, the company will, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such affiliate transaction to the company and the relevant restricted subsidiary (if any) from a financial point of view from an independent financial advisor and file the same with the trustee. This restriction is subject to important exceptions and qualifications. Limitation on Javer will not, in a single transaction or series of related transactions, consolidate or merge with or into any person (whether or not the Consolidations or Mergers company is the surviving or continuing person), or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any restricted subsidiary to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the company’s properties and assets (determined on a consolidated basis for the company and its restricted subsidiaries), to any person. This restriction is subject to several exceptions. Continued on next page. Source: Servicios Corporativos Javer, S.A.P.I. de C.V. and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer) (Continued) (Foreign Currency Notes)

Other Events of Default The main events of default are: (1) default in the payment when due of the principal of or premium, if any, on any notes, including the failure to make a required payment to purchase notes tendered pursuant to an optional redemption, change of control offer or an asset sale offer; (2) default for 30 days or more in the payment when due of interest, additional amounts or liquidated damages, if any, on any notes; (3) the failure to perform or comply with any of the provisions described under “—Certain Covenants—Merger, Consolidation, and Sale of Assets”; and (4) the failure by the company or any restricted subsidiary to comply with any other covenant or agreement contained in the indenture or in the notes for 45 days or more after written notice to the company from the trustee or the holders of at least 25% in aggregate principal amount of the outstanding notes. Cross Default Cross default when an uncured event of default occurs for debt of more than USD15 Mil. Acceleration If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. Governing Law The indenture, the guarantees, and the notes will be governed by the laws of the state of New York. Optional Redemption Optional redemption. The company may not redeem the notes prior to Aug. 4, 2014. The company will have the right, at its option, to redeem any of the notes, in whole or in part, at any time or from time to time prior to their maturity, on at least 30 days’ but not more than 60 days’ notice, at a redemption price equal to the greater of (1) 100.0% of the principal amount of such notes and (2) the sum of the present value of each remaining scheduled payment of principal and interest thereon (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the treasury rate plus 50 basis points (the make-whole amount), plus in each case accrued interest on the principal amount of the notes to the date of redemption. Optional redemption upon equity offerings. At any time, or from time to time, on or prior to Aug. 4, 2012 the company may, at its option, use the net cash proceeds of one or more equity offerings to redeem in the aggregate up to 35.0% of the aggregate principal amount of the notes issued under the Indenture at a redemption price equal to 113.0% of the principal amount thereof; provided that: (1) after giving effect to any such redemption at least 65.0% of the aggregate principal amount of the notes issued under the indenture remains outstanding; and (2) the company shall make such redemption not more than 90 days after the consummation of such equity offering. Source: Servicios Corporativos Javer, S.A.P.I. de C.V. and Fitch Ratings.

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Financial Summary ⎯ Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer) (MXN 000, Years Ended Dec. 31)

LTM 6/30/10 6/30/09 2009 2008 2007 Profitability Operating EBITDA 905,273 1,065,126 1,090,334 1,100,650 723,563 Operating EBITDAR 905,273 1,065,126 1,090,334 1,100,650 723,563 Operating EBITDA Margin (%) 22.2 21.8 22.1 24.6 23.4 Operating EBITDAR Margin (%) 22.2 21.8 22.1 24.6 23.4 FFO Return on Adjusted Capital (%) 18.3 15.6 22.2 21.3 33.8 Free Cash Flow Margin (%) (4.1) (0.6) 13.6 (2.6) 8.9 Coverage (x) FFO Interest Coverage 1.8 1.6 2.6 2.3 6.7 Operating EBITDA/Gross Interest Expense 2.3 3.0 3.3 3.2 4.5 Operating EBITDAR/Interest Expense + Rents 2.3 3.0 3.3 3.2 4.5 Operating EBITDA/Debt Service Coverage 2.2 1.0 1.8 0.9 0.3 Operating EBITDAR/Debt Service Coverage 2.2 1.0 1.8 0.9 0.3 FFO Fixed Charge Coverage 1.8 1.6 2.6 2.3 6.7 FCF Debt Service Coverage 0.6 0.3 1.7 0.2 0.2 (FCF + Cash and Marketable Securities)/Debt Service Coverage 1.8 0.7 3.0 0.5 0.2 Cash Flow from Operations/Capital Expenditures (0.1) (13.2) 6.9 (1.2) 4.2 Capital Structure and Leverage (x) FFO Adjusted Leverage 3.8 3.8 3.1 3.1 2.2 Total Debt with Equity Credit/Operating EBITDA 3.0 1.9 2.4 2.2 3.3 Total Net Debt with Equity Credit/Operating EBITDA 2.5 1.5 1.7 1.9 3.2 Total Adjusted Debt/Operating EBITDAR 3.0 1.9 2.4 2.2 3.3 Total Adjusted Net Debt/Operating EBITDAR 2.5 1.5 1.7 1.9 3.2 Implied Cost of Funds (%) 16.5 18.3 13.0 14.5 13.7 Short-Term Debt/Total Debt 0.0 0.4 0.1 0.3 1.0 Balance Sheet Total Assets 5,478,914 4,816,042 5,205,461 5,138,574 4,509,953 Cash and Marketable Securities 524,462 466,191 805,927 350,041 54,567 Short-Term Debt 18,224 735,591 267,918 845,512 2,330,686 Long-Term Debt 2,724,327 1,333,151 2,357,190 1,578,316 32,269 Total Debt 2,742,551 2,068,742 2,625,108 2,423,828 2,362,955 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 2,742,551 2,068,742 2,625,108 2,423,828 2,362,955 Off-Balance Sheet Debt 0 0 0 0 0 Total Adjusted Debt with Equity Credit 2,742,551 2,068,742 2,625,108 2,423,828 2,362,955 Total Equity 1,174,643 1,450,035 1,164,193 1,299,826 848,746 Total Adjusted Capital 3,917,194 3,518,777 3,789,301 3,723,654 3,211,701 Cash Flow Funds from Operations 321,195 200,598 513,387 446,310 923,086 Change in Working Capital (334,221) (105,789) 424,774 (509,746) (563,668) Cash Flow from Operations (13,026) 94,809 938,161 (63,436) 359,418 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (155,679) 7,172 (135,960) (53,846) (85,156) Common Dividends 0 (130,000) (130,000) 0 0 Free Cash Flow (168,705) (28,019) 672,201 (117,282) 274,262 Net Acquisitions and Divestitures 0 0 0 0 0 Other Investments, Net (14,207) (173) 0 (173) 862,884 Net Debt Proceeds 874,685 238,422 410,538 422,371 (40,594) Net Equity Proceeds (584,835) 0 (586,000) 0 1,263,906 Other (Investments and Financing) (48,667) (10,634) (40,853) (9,442) (2,338,241) Total Change in Cash 58,271 199,596 455,886 295,474 22,217 Income Statement Net Revenues 4,069,241 4,883,438 4,931,677 4,472,945 3,089,797 Revenue Growth (%) (16.7) 10.3 44.8 Operating EBIT 858,675 1,024,205 1,050,215 1,059,915 695,148 Gross Interest Expense 397,347 349,914 327,671 347,724 161,854 Rental Expense 0 0 0 0 0 Net Income 353,884 441,680 498,634 510,425 269,678 Source: Fitch Ratings.

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Metals and Mining Siderúrgica del Turbio, S.A. — Venezuela Full Rating Report Sidetur

Ratings Rating Rationale Current • Siderurgica del Turbio, S.A.’s (Sidetur) ratings and Negative Outlook reflect the Security Class Rating Foreign Currency IDR B+ challenging political and macroeconomic conditions in Venezuela. As a result of Local Currency IDR B+ electricity rationing and a new exchange regime, cash flows are expected to come Unsecured Notes B+/RR4 under pressure during 2010. Supporting the company’s ratings are its conservative National Scale A+(ven) National Short Term Rating F1(ven) debt management policy, comfortable liquidity, and leading market position as a domestic producer of rebar with 44.2% market share in 2009. For fiscal 2009, IDR − Issuer default rating. Sidetur had a total-debt-to-EBITDA ratio of 0.9 times (x), an FFO adjusted leverage Rating Outlook ratio of 1.3x, and an FFO fixed charge coverage of 4.4x. As of March 31, 2010 these ratios were 1.6x, 1.2x, and 7.9x, respectively, which are all comfortable for its Negative rating category. Financial Data • Sidetur’s revenues and EBITDA are expected to fall as a result of lower sales Siderúrgica del Turbio, S.A. volumes to around USD500 million and USD85 million in fiscal 2010 from (USD Mil.) USD647 million and USD119 million in fiscal 2009, respectively. The primary driver LTM of lower volumes is the compulsory energy rationing in Venezuela. In spite of this 3/31/10 9/30/09 decline, the company’s leverage should remain low, with a total-debt-to-EBITDA Net Revenue 525 647 Operating ratio of around 1.2x and under 1.0x on a net basis for the year. Sidetur does not EBITDA 68 119 have integrated power generation capability other than a diesel generator for Free Cash Flow (9) (100) Capital emergency use that can only generate enough power to maintain the heat in the Expenditures (7) (7) furnace and keep core computer systems and crane magnets operating. Total Debt 110 106 Total Debt/ • Sidetur’s liquidity profile was comfortable for the year end with cash-to-short-term- EBITDA (x) 1.6 0.9 Cash and debt coverage of 3.0x and a manageable debt maturity schedule of Marketable USD5 million per year until 2016. As of March 31, 2010, the company held Securities 54 58 USD54.4 million of cash and marketable securities, a significant reduction on the USD149 million held in fiscal 2008. USD7.6 million of the latest cash position was Analysts restricted cash, which guarantees a quote of capital and interest of the bonds Jay Djemal issued by Sidetur. The company’s second-quarter 2010 short-term-debt-to-total- +1 312 368-3134 debt ratio remains low at 0.2x, and it also has access to additional undrawn credit [email protected] lines for the next year with banks totaling USD50 million. Julio Ugueto +58 212 286-3232 • Sidetur is faced with pressure on profit margins from higher raw material prices [email protected] following the Bolivar devaluation in January 2010. Under Venezuela’s dual official

exchange rate system, the USD exchange rate for priority imports such as food, medicine, and other essential goods was set at VEF2.60/USD1.00, while the rate for other foreign exchange transactions was set at VEF4.30/USD1.00. The VEF4.30 rate affects Sidetur’s raw material input of hot briquetted iron and the VEF2.60 rate affects Sidetur’s electrodes and spare parts. • Sidetur has a challenge to maintain its profit margins. Historical EBITDA margins have averaged around 24% for the past five years but have been showing year-on- year decline. The main reasons for this are that the rebar price is regulated along with rising operating costs each year due to high inflation averaging 31%, which Sidetur reflects in semi-annual salary increases.

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What Could Trigger a Downgrade? • Sovereign-related risks associated with rebar price controls and the dual foreign currency exchange regime, as well as the risks of operating in a small market driven by construction spending will remain key drivers for Sidetur’s ratings. There is also an ever-present nationalization event risk. • Sidetur has an aggressive dividend policy that has resulted in negative free cash flow since 2008, as calculated by Fitch. If this aggressive dividend policy continues, it could damage the company’s current liquidity cushion and lead to a ratings downgrade. Rating Issues Please refer to Fitch’s full company report, “Siderurgica del Turbio, S.A. (Sidetur),” dated Sep. 8, 2010, for more information regarding:

• Effect of energy rationing. • Labor strike. • Business overview. Liquidity and Debt Structure Sidetur’s liquidity profile was comfortable for the year end with cash-to-short-term- debt coverage of 3.0x and a manageable debt maturity schedule of USD5 million per year until 2016 (excluding the promissory note repayment of USD10 million due in April 2010). As of March 31, 2010, the company held USD55 million of cash and marketable securities, of which USD8 million was restricted cash. The restricted cash guarantees a quote of capital and interest of the bonds issued by Sidetur. The company also has access to additional undrawn credit lines for the next year with banks totaling USD50 million. Fiscal 2009’s long-term debt was USD86.25 million compared to USD91.25 million in fiscal 2008, representing a decrease of USD5 million. The long-term debt decreased during fiscal 2009 purely as a result of the annual debt amortization of USD5 million, with no prepayments being made. Fiscal 2009’s short-term debt was USD19.4 million, which consisted of short-term bank loans and the current portion of long-term obligations under capital leases. The company’s total debt position increased by around USD4 million in the second quarter of 2010 due to Sidetur obtaining promissory notes in bolivars to finance working capital. The promissory notes have a 17% annual interest rate and mature between April 2010 and June 2010. Sidetur uses the cash obtained from promissory notes to finance its working capital needs. Sidetur has an international issuance of USD100 million unsecured notes due in 2016 (a balance of USD86.3 million as of fiscal 2009), which generates annual debt service requirements of approximately USD14 million and a principal bullet payment of USD60 million due in 2016. Second-quarter 2010 cash and marketable securities were USD55 million compared to USD58 million for fiscal 2009. Sidetur’s cash management policy is to invest available cash in deposits and short-term instruments issued by Venezuelan and, to the extent permitted by law, U.S. banks. The company has financial covenants with various creditors, and all covenants were in compliance as of March 31, 2010.

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Recovery Analysis Despite Sidetur’s bespoke recovery analysis indicating a recovery rating of ‘RR1’ for Sidetur’s USD100 million senior unsecured notes, the rating approach used in this credit analysis follows Fitch’s “Country Specific Treatment of Recovery Ratings” criteria published Aug. 21, 2006. This criteria report categorizes Venezuela as a Group D jurisdiction, which has a soft cap for recovery ratings at ‘RR4’.

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Recovery Analysis ⎯ Siderúrgica del Turbio, S.A. (USD Mil.)

Going Concern Enterprise Value March 31, 2010 LTM EBITDA 68 Discount (%) 50 Post-Restructuring EBITDA Estimation 32 Multiple (x) 4.7 Going Concern Enterprise Value 149.7

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 7 Rent Expense ⎯ Estimated Maintenance Capital Expenditures 4 Principal Amortization (Net, 12 months) 21 Total 32

Advance Available to Enterprise Value for Claims Distribution Rate (%) Creditors Greater of Going Concern Enterprise or Liquidation Value ⎯ 149.7 Less Adminstrative Claims 10 15 Concession Allocation 5 7.5 Adjusted Enterprise Value for Claims ⎯ 127.3

Distribution of Value Unsecured Priority Lien Value Recovered Recovery (%) Recovery Rating Notching Rating Senior Unsecured 110.1 110.1 100 RR4 ⎯ B+ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Venezuelan corporates are capped at ‘RR4’. Source: Fitch.

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Organizational Structure — Siderúrgica del Turbio, S.A. — Sidetur

SIDERÚRGICA VENEZOLANA “SIVENSA” S.A.

CENTRO DE CONOCIMIENTO APLICADO FUNDAMETAL

100.00% 68.69% SIDERÚRGICA DEL TURBIO, S.A. “SIDETUR” IBH

100.00% 99.41% 100.00% 100.00% 100.00% 100.00%

SIDERÚRGICA DEL TURBIO DE C.A. SERVICIOS SANCHÓN RUTEDIS FINANCE B.V. INVERMETAL INC. SIVEMETAL LTD. SIDETUR FINANCE B.V. COLOMBIA LTD “SIDECOL” UNICO (SANCHON)

Source: Fitch and Siderurgica del Turbio, S.A.’s financial statements.

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Debt and Covenant Synopsis ⎯ Siderúrgica del Turbio, S.A. (Foreign Currency Notes)

Overview Issuer Sidetur Finance B.V. Guarantors Sidetur S.A. Document Date April 26, 2006 Maturity Date April 20, 2016 Description of Debt Senior Unsecured Notes Amount USD100 million

Financial Covenants Consolidated Net Debt/EBITDA (Maximum) Less than 3.0x Consolidated Interest Coverage/EBITDA (Maximum) Less than 2.5x Acquisitions/Divestitures Change of Control Provision Not later than 30 days following a change of control, Sidetur Finance will make an offer to purchase all outstanding notes at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest to the date of purchase. Sale of Assets Restriction Sidetur will not, and will not permit any subsidiary to, make any asset sale unless the following conditions are met: (1) the asset sale is for fair market value, as determined in good faith; (2) at least 75% of the consideration consists of cash or cash equivalents received at closing; (3) an amount equal to 100% of the net available cash from an asset sale is applied by Sidetur for reinvestment within 270 days; (4) an offer is made to puchase the notes at 100% principal amount plus accrued and unpaid interest. Consolidation, Merger, Conveyance, Sale, or Lease Sidetur is not restricted from consolidating with or merging into another corporation or conveying, transferring or leasing Sidetur’s properties and assets substantially as an entirety to any person, provided that: (1) the corporation formed by such consolidation is organized and exists under the laws of Venezuela and the United States; (2) no default or event of default shall have occurred or be continuing following such a transaction; (3) such a transaction complies with the indenture; and (4) such a transaction would not have a change in U.S. Federal Tax impact on the noteholders.

Debt Restriction Additional Debt Restriction Neither Sidetur nor its subsidiaries may incur any debt unless the net financial result is within financial covenant ratio limits or the debt is intercompany debt that is subordinate in right of payment to other debt of Sidetur unless such debt is also subordinate in right of payment to the notes or the guarantee on substantially identical terms. Limitation on Liens Sidetur will not, and will not permit any subsidiary to, directly or indirectly, issue, assume or guarantee to exist any lien of any nature whatsoever on any of its properties or assets, without effectively providing that the notes are secured equally and ratably with the obligations so secured for so long as such obligations are so secured. Limitation on Sale and Leaseback Transactions Sidetur will not, and will not permit any subsidiary to, enter into any sale and leaseback transaction with respect to any property unless Sidetur or such subsidiary would be entitled to: (1) incur debt in an amount equal to the attributable debt with respect to such sale and leaseback transaction; and (2) create a lien on such property or asset securing such attributable debt without equally and ratably securing the notes. Limitation on Restricted Payments Sidetur will not, and will not permit any subsidiary to, directly or indirectly: (1) declare or pay any dividend or make any distribution on its equity Interests held by persons other than Sidetur or any of its substantially wholly owned subsidiaries; (2) purchase, redeem or otherwise acquire or retire for value any equity interests of Sidetur held by persons other than Sidetur or any of its substantially wholly owned subsidiaries; or (3) repay, redeem, repurchase, defease or otherwise acquire or retire for value, or make any payment on or with respect to any subordinated debt except a payment of interest or principal at stated maturity. Dividends Restriction Limitation on Dividend Sidetur will not, and will not permit any subsidiary to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any restricted subsidiary to: (1) declare or pay any dividend or make any distribution on its equity interests held by persons other than Sidetur or any of its substantially wholly owned subsidiaries; (2) pay any indebtedness owed to Sidetur or any subsidiary; (3) make loans or advances to Sidetur or any subsidiary; or (4) transfer porpoerties or assets to Sidetur or any subsidiary. Exceptions are permitted by reason of applicable law or governmental rule, regulation, or order. Other Covenants The indenture also contains covenants regarding permitted lines of business, the performance of the issuer and Sidetur’s obligations under the notes, the maintenance of the issuer and Sidetur’s corporate existence, the maintenance of Sidetur’s properties, the compliance with applicable laws, maintenance of the issuer and Sidetur’s governmental appovals, the issuer and Sidetur’s payment of taxes and other claims, the appointment of the trustee, the maintenance of insurance, the maintenance of the issuer and Sidetur’s books and records, the maintenance of an office or agency in the state of New York, the ranking of the notes, notices of certain events, further actions and the use of the proceeds. Source: Sidetur Finance B.V. offering memo and Fitch Ratings.

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Financial Summary ⎯ Siderúrgica del Turbio, S.A. (USD 000, Years Ended Sept. 30)

LTMa 3/31/10 2009 2008 2007 2006 Profitability Operating EBITDA 67,950 119,468 141,532 126,357 117,223 Operating EBITDAR 67,950 119,468 141,532 126,357 117,223 Operating EBITDA Margin (%) 12.9 18.5 23.4 26.9 28.5 Operating EBITDAR Margin (%) 12.9 18.5 23.4 26.9 28.5 FFO Return on Adjusted Capital (%) 34.5 34.2 25.1 72.4 49.9 Free Cash Flow Margin (%) (1.8) (15.4) (7.7) 15.3 25.5 Return on Average Equity (%) 8.8 9.6 68.1 96.3 205.1 Coverage (x) FFO Interest Coverage 7.9 4.4 3.8 12.2 10.8 Operating EBITDA/Gross Interest Expense 6.0 6.6 8.4 9.9 9.0 Operating EBITDAR/(Interest Expense + Rental Expenses) 6.0 6.6 8.4 9.9 9.0 Operating EBITDA/Debt Service Coverage 1.8 3.2 3.3 3.7 3.1 Operating EBITDAR/Debt Service Coverage 1.8 3.2 3.3 3.7 3.1 FFO Fixed Charge Coverage 7.9 4.4 3.8 12.2 10.8 FCF Debt Service Coverage 0.1 (2.2) (0.7) 2.5 3.1 (FCF + Cash and Marketable Securities)/Debt Service Coverage 1.5 (0.6) 2.8 8.0 5.4 Cash Flow from Operations/Capital Expenditures 8.1 1.1 1.7 5.2 32.0 Capital Structure and Leverage (x) FFO Adjusted Leverage 1.2 1.3 1.8 0.8 1.1 Total Debt with Equity Credit/Operating EBITDA 1.6 0.9 0.8 0.9 1.3 Total Net Debt with Equity Credit/Operating EBITDA 0.8 0.4 (0.2) (0.5) 0.6 Total Adjusted Debt/Operating EBITDAR 1.6 0.9 0.8 0.9 1.3 Total Adjusted Net Debt/Operating EBITDAR 0.8 0.4 (0.2) (0.5) 0.6 Implied Cost of Funds 9.6 16.2 14.3 9.4 7.9 Secured Debt/Total Debt 0.0 0.0 0.0 0.0 0.0 Short-Term Debt/Total Debt 0.2 0.2 0.2 0.2 0.2 Balance Sheet Total Assets 336,080 343,083 405,644 416,284 395,860 Cash and Marketable Securities 54,445 57,754 149,356 188,039 86,257 Short-Term Debt 26,335 19,364 25,675 21,500 24,818 Long-Term Debt 83,750 86,250 91,250 97,500 128,715 Total Debt 110,085 105,614 116,925 119,000 153,533 Equity Credit 0.0 0.0 0.0 0.0 0.0 Total Debt with Equity Credit 110,085 105,614 116,925 119,000 153,533 Off-Balance Sheet Debt 0.0 0.0 0.0 0.0 0.0 Total Adjusted Debt with Equity Credit 110,085 105,614 116,925 119,000 153,533 Total Equity 148,720 126,519 139,078 96,555 127,275 Total Adjusted Capital 285,805 232,133 256,003 215,555 280,808 Cash Flow Funds from Operations 77,898 61,372 47,352 143,211 127,122 Change in Working Capital (25,255) (53,608) 6,554 (53,330) (5,759) Cash Flow from Operations 52,643 7,764 53,906 89,881 121,363 Total Non-Operating/Non-Recurring Cash Flow 0.0 0.0 0.0 0.0 0.0 Capital Expenditures (6,504) (6,971) (31,210) (17,452) (3,797) Dividends (55,364) (100,364) (69,618) (349) (13,000) Free Cash Flow (9,225) (99,571) (46,922) 72,080 104,566 Net Acquisitions and Divestures 0.0 0.0 0.0 0.0 0.0 Other Investments, Net 0.0 0.0 55,350 24,195 (13,106) Net Debt Proceeds (55,466) (14,689) 14,442 (16,559) (37,570) Net Equity Proceeds 0.0 0.0 0.0 0.0 0.0 Other, Financing Activities 27,627 22,658 (14,273) (37,238) (27,624) Total Change in Cash (37,064) (91,602) 8,597 42,478 26,266 Income Statement Net Revenue 525,214 647,112 605,961 470,067 410,849 Revenue Growth (%) N.A. 6.8 28.9 14.4 20.5 Operating EBIT 53,288 104,439 128,024 113,051 100,774 Gross Interest Expense 11,332 18,035 16,870 12,772 12,963 Rental Expense 0.0 0.0 0.0 0.0 0.0 Net Income 13,766 12,706 80,211 107,792 130,986 aUnaudited. N.A. − Not applicable. Note: Audited, consolidated financial statements (U.S. GAAP). Source: Sidetur.

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Transportation TAM S.A. (TAM) Brazil Full Rating Report

Ratings Rating Rationale Current Security Class Rating • The ratings reflect the company’s significant market share position in the Brazilian Local Currency IDR B+ airline sector, solid liquidity, high leverage, and limited improvement in cash flow Foreign Currency IDR B+ generation during the last few quarters. The ratings also factor in expectations that National Scale BBB+(bra) Senior Notes USD B+/RR4 during 2010 TAM S.A. (TAM) will slightly improve its leverage while maintaining solid Debentures ⎯ 1st Issuance BBB+(bra) liquidity. Industry-related risks such as fuel cost volatility, high operating leverage, IDR − Issuer default rating. and cyclicality are factored into the ratings, as is the company’s high degree of sensitivity to changes in the macroeconomic scenario. Rating Watch • TAM’s ratings continue to reflect the company’s strong market presence in the Positive domestic air passenger transportation sector, with a market share of approximately Financial Data 42%. It also factors in the company’s position as the sole Brazilian airline operator in long-haul routes to Europe and the U.S., which is strengthened by several code TAM S.A. (BRL. Mil., Consolidated) share agreements and its recent membership to Star Alliance. Further factored into LTM TAM’s ratings is the high percentage of business passengers in its ticket sales mix 6/30/10 12/31/09 and its revenue diversification. Revenue 10,178 9,900 EBITDAR 1,318 1,411 • The ratings take into consideration the negative affect that increasing competition Total Adjusted Debt 10,860 11,212 has had on TAM’s operating results. The company’s RASK–CASK spread has maintained Cash and a negative trend during the last 18 months, reaching levels of BRL2.15 cents, Marketable Securities 2,244 2,086 −BRL0.97 cents, BRL0.70 cents, and BRL0.20 cents in the 4Q08, 2Q09, 4Q09, and Adjusted Total 2Q10, respectively. The deterioration in profitability was mainly driven by the Debt/EBITDAR (x) 8.6 7.9 Adjusted Net deterioration in yields during the first half of 2009 with a limited recovery during the Debt/EBITDAR (x) 6.9 6.5 LTM period ended in June 2010, and by the inability of the company to take full

advantage of lower fuel costs due to the company’s fuel hedge position. Analysts • As a result of the decline in spread due to increased competition, TAM’s cash José Vertiz generation, as measured by EBITDAR, has been trending negative during the last +1 212 908-0641 [email protected] few years ⎯ it was BRL1.5 billion, BRL 1.4 billion, and BRL1.3 billion during fiscal 2008, fiscal 2009 and the LTM period ended June 2010, respectively. TAM’s EBITDAR Debora Jalles margin has declined from 13.9% to 12.9% from fiscal 2008 to LTM June 2010. +55 21 4503-6229 [email protected] • The company had approximately BRL11.3 billion in total debt at the end of June 2010, which includes BRL425 million in refinanced taxes payables. The company’s leverage, as measured by net debt/EBITDAR, deteriorated over the last few years to 6.9x at the end of June 2010 from 5.7x at the end of fiscal 2008. Excluding the refinanced taxes payables (BRL425 million), the company’s net leverage is estimated at 6.5x by the end of June 2010. Fitch Ratings expects the company’s net leverage to be in the 6.0x to 6.5x range by the end of fiscal 2010. Further deleveraging could benefit credit quality. • On Aug. 16, 2010, Fitch placed TAM’s ratings on Rating Watch Positive and LAN Airlines S.A.’s (LAN) ‘BBB’ issuer default rating on Rating Watch Negative. These rating actions followed the announcement by TAM and LAN that they had reached an agreement to combine their holdings under a single parent entity. The Rating Watch Positive on TAM’s ratings reflects the view that the combined credit profile of the two companies would be stronger than TAM’s current credit profile. The transaction is subject to regulatory and shareholder approval.

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• For 2010, Fitch expects the company’s EBITDAR margin to remain around 12%–14%. The company’s EBITDAR margin decreased to 14.3% in 2009 and to 12.9% in the LTM period ended in June 2010, respectively. These margins negatively compare with the 15.2% margin reached in 2008 and the company’s average EBITDAR margin of 17.7% during 2006–2008. What Could Trigger a Rating Action? • A positive rating action could result if TAM and LAN’s efforts to combine operations under a single parent entity receive regulatory and shareholder approval. Fitch views the combination of TAM and LAN to be positive from a strategic perspective as it should allow the companies to grow and take advantage of commercial, financial, and operational synergies. From the revenue side, the synergies would come from new cargo service, improved access to joint hubs, and combined network support. From the cost side, the synergies would come from the consolidation of airport functions in overlapping stations and leveraging economies of scales and efficiencies to reduce operating costs. • On a pro forma basis, ending in June 2010, the combined company’s EBITDAR would be around USD1.7 billion, with an estimated EBITDAR margin of 17.4%; net leverage would be around 4.8x; and liquidity, measured by cash and marketable securities/revenue, would be approximately 19%. TAM’s net leverage was 6.9x (including refinanced taxes payable) at the LTM ended June 2010, while LAN’s leverage was 3.2x for the same period. Key factors in the process of stabilizing the credit profile of the combined company will be management’s capacity to speed up expected synergies and integrate both companies in the near term and the commitment that both economic groups, the Cueto Group and the Amaro Group, would provide equity increases if needed, to maintain a solid credit profile. Rating Issues Please refer to Fitch’s full company report, “TAM S.A. (TAM),” dated Oct. 6, 2010, for more information regarding:

• Recent developments. • Company overview. • Operating performance. Debt Structure TAM’s liquidity remains solid. TAM had BRL2.2 billion of cash and marketable securities and BRL1.4 billion of on-balance sheet short-term debt as of June 30, 2010. The company’s cash position covers its short-term debt obligations by 1.5x and equals about 22% of its LTM net revenue, or nearly three months of revenues. Derivative hedge contracts should not have a major impact on cash flow. The company’s total adjusted debt was BRL11.3 billion, which includes off-balance sheet operating leases of BRL3.2 billion. About 83% of TAM’s total adjusted debt was denominated in U.S. dollars or linked to the dollar. With about 40% of its revenues tied to the dollar. Recovery Rating TAM’s recovery ratings (RRs) reflect Fitch’s belief that the company would be reorganized rather than liquidated in a bankruptcy scenario, given Fitch’s estimates that the company’s going concern value is significantly higher than its projected liquidation value due mostly to the significant value associated with TAM’s unique

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market position in the Brazilian airline industry. In estimating the company’s going concern value, Fitch applies a valuation multiple of 6.0x to the company’s discounted EBITDA. Fitch discounts TAM’s normalized operating EBITDAR by approximately 5%, which reflects the view that the company should maintain current levels of EBITDAR and that if the company faces a distress scenario it should come from increases in its debt levels instead of deterioration in the company’s cash flow generation, measured by EBITDAR. After reductions for administrative and cooperative claims, Fitch arrives at an adjusted reorganization value of approximately BRL6.7 billion. Based upon these assumptions, the total senior secured debt of BRL5.9 billion ⎯ including finance leases (BRL4.9 billion), bank loans (BRL540 million), and refinanced taxes payable (BRL426 million) ⎯ recovers 100% resulting in ‘RR1’ ratings for this type of debt. The unsecured debt, which includes the senior notes (BRL1.1 billion) and the local debentures (BRL1.1 million) recovers approximately 38% resulting in a recovery rating of ‘RR4’, reflecting the subordination of the public unsecured debt (senior notes and local debentures) to the secured debt (financial leases and bank loans).

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Recovery Analysis ⎯ TAM S.A. (BRL Mil., LTM as of June 30, 2010)

Going Concern Enterprise Value EBITDA 1,318 Discount (%) 5 Post-Restructuring EBITDA Estimation 1,252 Multiple (x) 6.0 Going Concern Enterprise Value 7,512

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 389 Rent Expense 457 Estimated Maintenance Capital Expenditures 250 Total 1,096

Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value 7,512 Less Adminstrative Claims (10%) 751 Adjusted Enterprise Value for Claims 6,761

Distribution of Value Secured Priority Lien Value Recovered Recovery (%) Recovery Rating Notching Rating Secured 5,918.0 5,918.0 100 RR4 ⎯ B+

Concession Payment Availability Table Adjusted Enterprise Value for Claims 6,761 Less Secured Debt Recovery 5,918 Remaining Recovery for Unsecured Claims 843 Concession Allocation (5%) 42 Value to be Distributed to Senior Unsecured Claims 801

Value Unsecured Priority Lien Recovered Recovery (%) Concession Allocation (%) Recovery Rating Notching Rating Issuer Default Rating ⎯ ⎯ ⎯ ⎯ ⎯ ⎯ B+ Senior Unsecured 2,203.0 843 38 100.0 RR4 0 B+ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Brazilian corporates are capped at ‘RR4’. Source: Fitch Ratings.

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Organizational Structure — TAM S.A. (As of June 30, 2010) TEP and Nova Fronteira Other Common Shares: 89.420% Common Shares: 10.580% Preferred Shares: 24.670% Preferred Shares: 75.330% Total: 46.250% Total: 53.750%

TAM S.A.

TAM Linhas Aéreas MRO TP Franchising TAM Mercosur Multiplus Pantanal TAM Cargo (99.990%) (94.980%) (73.170%) (100.000%) (100.000%)

TAM Viagens TAM Capital TAM Capital 2 TAM Financial TAM Financial 2 TP Franchising (99.990%) (100.000%) (100.000%) (100.000%) (100.000%) (0.001%)

SPC – Special purpose companies. Source: Fitch and TAM S.A. financial statements.

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Debt and Covenant Synopsis ⎯ TAM S.A. (Foreign Currency Notes)

Overview Issuer TAM Capital Inc. TAM Capital 2 Inc. Guarantors TAM S.A. and TAM Linhas Aéreas S.A. TAM S.A. and TAM Linhas Aéreas S.A. Document Date 4/20/07 10/22/09 Maturity Date 4/25/17 1/29/10 Description of Debt Senior Guaranteed Notes Senior Guaranteed Notes Amount USD300 Mil. USD300 Mil. Ranking The notes are unsecured and rank equally with the other unsecured The notes are unsecured and rank equally with the other unsecured indebtedness the issuer may incur. The notes are guaranteed, indebtedness the issuer may incur. The notes are guaranteed, jointly and severally, on an unsecured, unsubordinated basis by the jointly and severally, on an unsecured, unsubordinated basis by the guarantors. The guarantees rank equally in right of payment with guarantors. The guarantees rank equally in right of payment with the other unsecured indebtedness and guarantees of the guarantors. the other unsecured indebtedness and guarantees of the guarantors. The notes are effectively junior to the issuer’s and the guarantors’ The notes are effectively junior to the issuer’s and the guarantors’ secured indebtedness. Under Brazilian law, holders of the notes do secured indebtedness. Under Brazilian law, holders of the notes do not have any claim whatsoever against the guarantors’ not have any claim whatsoever against the guarantors’ nonguarantor subsidiaries. nonguarantor subsidiaries. Financial Covenants The terms of the notes do not contain any restrictive covenants or The terms of the notes do not contain any restrictive covenants or other provisions designed to protect holders of the notes in the other provisions designed to protect holders of the notes in the event that the issuer, the guarantors, or any other of the event that the issuer, the guarantors, or any other of the guarantors’ present or future subsidiaries participate in a highly guarantors’ present or future subsidiaries participate in a highly leveraged transaction. The terms of the notes do not permit the leveraged transaction. The terms of the notes do not permit the issuer and the guarantors to consolidate or merge with, transfer iIssuer and the guarantors to consolidate or merge with, transfer all or substantially all of their respective assets to another all or substantially all of their respective assets to another person, or enter into transactions with affiliates, unless the issuer person, or enter into transactions with affiliates, unless the issuer or the guarantors, as the case may be, comply with certain or the guarantors, as the case may be, comply with certain requirements. requirements. Acquisitions/Divestitures Change of Control Provision Upon the occurrence of a change of control that results in a ratings Upon the occurrence of a change of control that results in a ratings decline, the holders of the notes will have the right ⎯ subject to decline, the holders of the notes will have the right ⎯ subject to certain exceptions ⎯ to require the issuer to repurchase some or certain exceptions ⎯ to require the issuer to repurchase some or all of the notes at 101% of their principal amount, plus accrued all of the notes at 101% of their principal amount, plus accrued and unpaid interest, if any, on the repurchase date. and unpaid interest, if any, on the repurchase date.

Debt Restriction Additional Debt Restriction The indenture does not limit the amount of debt or other obligations The indenture does not limit the amount of debt or other obligations that may be incurred by the issuer or the guarantors or any of that may be incurred by the issuer or the guarantors or any of their present or future subsidiaries. their present or future subsidiaries.

Others Limitation on Neither the issuer nor any guarantor will, or permit any of their Neither the issuer nor any guarantor will, or permit any of their Transactions with respective subsidiaries to, enter into or permit to exist any respective subsidiaries to, enter into or permit to exist any Affiliates transaction (including the purchase, sale, lease, or exchange of transaction (including the purchase, sale, lease or exchange of any property, employee compensation arrangements, or the any property, employee compensation arrangements, or the rendering of any service) with, or for the benefit of, any affiliate rendering of any service) with, or for the benefit of, any affiliate of the issuer or such guarantor, other than themselves or any of of the issuer or such guarantor, other than themselves or any of their respective subsidiaries, unless the terms of the affiliate their respective subsidiaries, unless the terms of the affiliate transaction are no less favorable to the issuer, such guarantor, or transaction are no less favorable to the issuer, such guarantor, or such subsidiary than those that could be obtained at the time of such subsidiary than those that could be obtained at the time of the affiliate transaction in arm’s length dealings with a person the affiliate transaction in arm’s length dealings with a person who is not an affiliate. who is not an affiliate. Limitation on Restrictions on merger or consolidation of issuer and guarantors. Restrictions on merger or consolidation of issuer and guarantors. Consolidations or Mergers Exceptions include: 1) the resulting, surviving, or transferee Exceptions include: 1) the resulting, surviving or transferee person will be a person organized and existing under the laws of person will be a person organized and existing under the laws of the Cayman Islands, Brazil, the United States of America ( or any the Cayman Islands, Brazil, the United States of America (or any state thereof or the District of Columbia), or any other country state thereof or the District of Columbia) or any other country (or (or political subdivision thereof) that is a member country of the political subdivision thereof) that is a member country of the European Union. This person expressly assumes all the obligations European Union. This person expressly assumes all the obligations of the issuer or such guarantor under the notes and the indenture of the issuer or such guarantor under the notes and the indenture executed and delivered to the trustee, all the obligations of the executed and delivered to the trustee, all the obligations of the issuer or such guarantor under the notes, and the indenture; and issuer or such guarantor under the notes, and the indenture; and 2) no event of default occurs or is continuing. 2) no event of default occurs or is continuing. Continued on next page. Source: TAM and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ TAM S.A. (Continued) (Foreign Currency Notes)

Other Events of Default The notes contain certain events of default consisting of the The notes contain certain events of default, consisting of the following: (1) failure to pay the principal when due or failure to following: (1) failure to pay the principal when due or failure to pay interest in respect to the notes within 30 days of the due date pay interest in respect to the notes within 30 days of the due date for an interest payment; (2) failure to comply with the issuer’s for an interest payment; (2) failure to comply with the issuer’s and the guarantors’ covenants with such failure continuing for and the guarantors’ covenants with such failure continuing for either 30 or 60 days after written notice has been delivered to either 30 or 60 days after written notice has been delivered to the issuer and the guarantors; (3) indebtedness of the issuer, the the issuer and the guarantors; (3) indebtedness of the issuer, the guarantors or any of the significant subsidiaries of TAM S.A. guarantors, or any of the significant subsidiaries of TAM S.A. exceeding USD50 million is not paid when due or is accelerated; exceeding USD50 million is not paid when due or is accelerated; and (4) specified events of bankruptcy, liquidation, or insolvency and (4) specified events of bankruptcy, liquidation, or insolvency of TAM S.A. or any of its subsidiaries. of TAM S.A. or any of its subsidiaries. Cross-Default Cross default when an uncured event of default occurs for debt of Cross default when an uncured event of default occurs for debt of more than USD50 million. more than USD50 million. Acceleration If any event of default occurs and is continuing, the trustee or the If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. and payable upon certain events of insolvency or bankruptcy. Governing Law The indenture, the guarantees, and the notes will be governed by The indenture, the guarantees, and the notes will be governed by the laws of the state of New York. the laws of the state of New York. Optional Redemption The notes will be redeemable, at the option of the issuer, in whole On or prior to Jan. 29, 2015, the notes will be redeemable, at the or in part, on any interest payment date, at a redemption price option of the issuer, in whole or in part, on any interest payment equal to the greater of (1) 100% of the principal amount of the date, at a redemption price equal to the greater of (1) 100% of notes to be redeemed or (2) the sum of the present values of the the principal amount of the notes to be redeemed or (2) the sum remaining scheduled payments of principal and interest on such of the present values of the remaining scheduled payments of notes. principal and interest on such notes. After Jan. 29, 2015, the notes will be redeemable, at the option of the issuer, in whole or in part, on any redemption date, at the redemption prices (expressed as percentages of their principal amount at maturity: 104.75% in 2015, 103.17% in 2016, 101.58% in 2017, and 100% in 2018 and thereafter. Source: TAM and Fitch Ratings.

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Financial Summary ⎯ TAM S.A. (TAM) (BRL Mil., Fiscal Years Ended Dec. 31)

6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 861 886 1,189 333 973 Operating EBITDAR 1,318 1,411 1,614 1,214 1,692 Operating EBITDA Margin (%) 8.5 8.9 11.2 4.1 13.2 Operating EBITDAR Margin (%) 13.0 14.3 15.2 14.9 23.0 FFO Return on Adjusted Capital 13.2 9.2 18.3 13.2 19.7 Free Cash Flow Margin (%) (1.3) (0.8) 3.6 (4.8) 7.6 Return on Average Equity (%) 60.4 118.3 (127.4) 8.7 49.9

Coverage (x) FFO Interest Coverage 3.0 1.6 4.5 1.9 7.1 Operating EBITDA/Gross Interest Expense 2.2 2.2 3.1 1.4 8.5 Operating EBITDAR/Interest Expense + Rents 1.6 1.5 2.0 1.1 2.0 Operating EBITDA/Debt Service Coverage 0.5 0.5 0.9 0.3 2.0 Operating EBITDAR/Debt Service Coverage 0.6 0.6 0.9 0.6 1.4 FFO Fixed Charge Coverage 1.9 1.3 2.7 1.2 1.8 FCF Debt Service Coverage 0.1 0.2 0.6 (0.1) 1.4 (FCF + Cash and Marketable Securities)/Debt Service Coverage 1.3 1.4 2.0 2.0 6.5 Cash Flow from Operations/Capital Expenditures 1.5 0.7 1.7 0 5.3

Leverage (x) FFO Adjusted Leverage 7.0 9.5 5.2 6.5 4.1 Total Debt with Equity Credit/Operating EBITDA 9.4 8.5 6.8 7.1 1.3 Total Net Debt with Equity Credit/Operating EBITDA 6.8 6.2 5.2 (0.8) (1.2) Total Adjusted Debt/Operating EBITDAR 8.6 7.9 6.9 7.0 3.7 Total Adjusted Net Debt/Operating EBITDAR 6.9 6.5 5.7 4.9 2.3 Implied Cost of Funds (%) 9.6 5.1 7.4 12.7 12.1 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.2 0.2 0.1 0.4 0.3

Balance Sheet Total Assets 13,261 13,136 13,224 6,542 5,169 Cash and Marketable Securities 2,244 2,086 1,914 2,607 2,453 Short-Term Debt 1,511 1,284 929 1,005 364 Long-Term Debt 6,610 6,253 7,212 1,345 895 Total Debt 8,120 7,537 8,141 2,350 1,259 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 7,662 7,537 8,141 2,350 1,259 Off-Balance Sheet Debt 3,197 3,675 2,975 6,167 5,033 Total Adjusted Debt with Equity Credit 11,318 11,212 11,116 8,517 6,292 Total Equity 977 1,637 631 1,505 1,457 Total Adjusted Capital 12,295 12,849 11,747 10,022 7,749

Cash Flow Funds from Operations 778 252 1,341 207 696 Change in Working Capital (456) (27) (255) (195) 27 Cash Flow from Operations 322 225 1,086 12 723 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (218) (302) (634) (265) (136) Common Dividends (233) 0 (72) (138) (29) Free Cash Flow (130) (77) 380 (391) 558 Net Acquisitions and Divestitures 0 0 0 0 0 Other Investments, Net (215) (215) (133) 84 0 Net Debt Proceeds 630 693 (608) 460 901 Net Equity Proceeds 657 0 (14) 0 0 Other (Investment and Financing) 3 0 0 0 0 Total Change in Cash 946 401 (375) 153 1,459

Income Statement Revenue 10,178 9,900 10,592 8,151 7,345 Revenue Growth (%) ⎯ (6.5) 29.9 11.0 30.0 Operating EBIT 316 336 725 217 871 Gross Interest Expense 389 401 386 230 115 Rental Expense 457 525 425 881 719 Net Income 295 1,341 (1,361) 129 556 Source: TAM S.A. and Fitch Ratings.

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Telecommunications Telecom Argentina S.A. Argentina Full Rating Report and Telecom Personal S.A.

Ratings Rating Rationale Current Security Class Rating • Telecom Argentina S.A. (TEO) and Telecom Personal S.A.’s (Personal) ratings reflect Telecom Argentina S.A. a robust credit profile, strong operating performance, and a comfortable debt Local Currency IDR B+ Foreign Currency IDR B maturity profile. The ratings are tempered by increased competition, regulatory National Scale AA−(arg) risk in the fixed-line business, and currency mismatch between the company’s foreign currency-denominated debt and its peso-denominated cash flow. The Telecom Personal S.A. Local Currency IDR B+ foreign currency issuer default ratings (IDRs) of both companies are constrained by Foreign Currency IDR B Argentina’s country ceiling of ‘B’. National Scale (Arg) AA−(arg) ONs B/RR4 • TEO benefits from a diversified business mix with operations consisting of fixed and ONs AA−(arg) mobile services. The mobile business unit, Telecom Personal S.A. (Personal), is now IDR − Issuer default rating. ONs − Obligaciones the main driver of the company’s operating performance, accounting for 67% of negociables. revenues and 73% of EBITDA during the six months ended June 30, 2010. TEO’s incumbent position in northern Argentina in fixed-line services and mobile services Rating Outlook mitigates potential fixed-line traffic loss due to mobile substitution. Fitch Ratings Stable believes fixed-mobile convergence can help integrated operators, such as TEO, Financial Data improve customer loyalty, reduce operating costs, and avoid cannibalization between business segments. Telecom Argentina S.A. (ARS Mil.) LTM • TEO’s financial profile has improved considerably during the past two years, driven 6/30/10 12/31/09 primarily by better operating results and the use of free cash flow for debt Revenues 13,189 12,226 reduction. Better operating performance is driven by its mobile business. The fixed- EBITDA 4,223 3,900 Margin (%) 32.0 31.9 line business faced some increases in operating costs, while fixed-line rates Debt 868 821 remained frozen. Debt/EBITDA (x) 0.2 0.2 EBITDA/ • In 2010 TEO is expected to post modest revenue and EBITDA growth compared to Interest (x) 34.9 26.7 Lines in Service previous years, driven by the mobile segment, which is also expected to slow given (000) 4,066 4,364 the current economic situation in Argentina. The company should also grow pre- Broadband Accesses (000) 1,274 1,223 dividend free cash flow, as capital expenditures should stabilize at around Mobile Subscribers ARS2.1 billion. For the 12 months ended June 30, 2010, pre-dividend free cash flow (000) 17,169 16,281 was ARS1.9 billion. In addition, the company should start generating positive

retained earnings during 2009, which should enable it to pay dividends in the Analysts future.

Sergio Rodríguez, CFA Key Rating Drivers +1 52 81 8399-9100 [email protected] • Factors that could lead to positive rating actions include an upgrade in Argentina’s sovereign ratings in conjunction with sustained or improved credit metrics, a Cecilia Miguillón solution to shareholders’ issues, and lower currency mismatch between debt and +1 54 11 5235-8123 [email protected] cash flow generation.

• A negative rating action could be triggered by a sovereign rating downgrade of Argentina, which could affect the foreign currency IDR; an increase in leverage associated with change in control of TEO; or a lack of strategy related to shareholders’ issues that could affect the company’s long-term competitive position and financial profile.

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Rating Issues Please refer to Fitch’s full company report, “Telecom Argentina S.A. (TEO),” dated Sept. 20, 2010, for more information regarding:

• Update of litigation between Italia and the Werthein Group. • Company overview. Liquidity and Debt Structure Liquidity risk for TEO is low, and Fitch expects TEO to continue paying debt as it matures until it has no indebtedness. As of June 30, 2010, cash balances totaled approximately ARS1.2 billion. Free cash flow for the 12 months ended in that same period was ARS1.2 billion, and total debt was ARS868 million. TEO’s debt remains exposed to foreign currency fluctuation, primarily to the U.S. dollar. The company’s cash balances partially compensate for the currency mismatch, as part of its cash and marketable securities balance is invested in foreign currency. Recovery Rating Given TEO’s low leverage, recovery prospects are 100%, which should imply a ‘RR1’. However, the recovery ratings are capped by Argentina’s soft cap at ‘RR4’.

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Recovery Analysis ⎯ Telecom Argentina S.A. (ARS Mil., As of June 30, 2010)

Enterprise Value EBITDA 4,223 Discount (%) 50 Post-Restructuring EBITDA Estimation 2,112 Market Multiple (x) 4.0 Going Concern Enterprise Value 8,446 Interest Expense ⎯ Rent Expense ⎯ Maintenance Capital Expenditures ⎯ Total ⎯

Recovery Available to Liquidation Value Balance Rate (%) Creditors Cash 1,193 0 ⎯ A/R 1,193 75 854.3 Inventory ⎯ 50 ⎯ PP&E, Net 6,919 50 3,459.5 Total 9,251 ⎯ 4,313.8

Distribution of Value by Priority Greater of Going Concern Enterprise or Liquidation Value 8,446 Less Administrative Claims (10%) 844.6 Adjusted Enterprise Value for Claims 7,601.4

Amount Outstanding and Available R/C Value Recovered Recovery Rate ‘RR’ Rating Notching Credit Ratings Issuer Default Rating ⎯ ⎯ ⎯ ⎯ ⎯ B+ First Priority Secured 0 0 0 ⎯ ⎯ ⎯ Second Priority Secured 0 0 0 ⎯ ⎯ ⎯ Senior Unsecured 868 868 100 RR4 0 B+ Senior Subordinated 0 0 0 ⎯ ⎯ ⎯ Preferred Stock 0 0 0 ⎯ ⎯ ⎯ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Argentine corporates are capped at ‘RR4’. Source: Fitch.

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Organizational Structure — Telecom Argentina S.A. (As of June 30, 2010)

Summary Statistics Telecom Italia W de (LTM June 30, 2010) Argentina S.L.

ARS4,223 Million of EBITDA 58.00% 42.00% ARS1,193 Million of Cash and Marketable Securities ARS868 Million of Total Debt Sofora Telecomunicaciones

67.78%

Nortel Inversora 54.70%

Telecom Argentina (No Unconsolidated Debt)

99.99% 100.00% 99.99%

Micro Sistemas Cubecorp Telecom Personal Argentina ARS685 Million Obligacones Negociable Due December 2010 ARS29 Million Other Debt

87.50% 100.00% Nucleo Springville

(Total Debt ARS154 Mil.)

Source: Fitch and Telecom Argentina S.A. financial statements.

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Debt and Covenant Synopsis ⎯ Telecom Personal S.A. (Foreign Currency Notes)

Overview Issuer Telecom Personal S.A. Document Date Nov. 15, 2005 Maturity Date Dec. 22, 2010 Description of Debt Senior Unsecured Negotiable Notes (Obligaciones Negociables)

Financial Covenants Consolidated Net Leverage (Maximum) 3.25 to 1 prior to 2006 and 3 to 1 thereafter Interest Coverage (Minimum) N.A. Acquisitions/Divestitures Change of Control Provision No later than 60 days following a change of control at 101% of principal. Sale of Assets Restriction The issuer and its subsidiaries are not permitted to to make any assest sale unless: 1) the sale is at market value and is determined in good faith by the board of directors; 2) at least 75% of the value is paid in cash; and 3) immediately after selling the asset no default or event of default shall occur. Proceeds from asset sales should be applied within 365 days of receipt to: 1) repay unsubordianted secured debt by such assets; 2) acquire all assets or majority voting stock of permitted buisness; 3) make capital expenditures used in a permitted business; 4) acquire long-term assets used by a permitted business; and 5) repay any other senior indebtedness of Telecom Personal.

Certain Covenants Limitation on Liens Neither the issuer nor subsidiaries are permitted to assume or incur any lien to its property, assets, or revenues whether owned at the time of the issuance or later acquired, securing any indebtedness unless the notes are equally and ratably secured by such liens. Limitation in Indebtedness Telecom Personal will not, and will not permit any of its subsidiaries to, incur any indebtedness unless on the date of the incurrence of such indebtedness, after giving effect to such incurrence and the receipt and application of the proceeds therefrom, the leverage ratio does not exceed 1) 3.25 to 1, if such indebtedness is incurred prior to, 2006; or 2) 3.00 to 1, if such indebtedness is incurred thereafter.

Notwithstanding the foregoing, Telecom Personal and any of its subsidiaries may, to the extent provided below, incur the following indebtedness (permitted indebtedness ): 1) indebtedness outstanding on the issuance date, including the notes; 2) indebtedness of Telecom Personal or any of its subsidiaries constituting permitted refinancing indebtedness; 3) indebtedness with respect to letters of credit and bankers’ acceptances issued in the ordinary course of business and not supporting indebtedness, including letters of credit supporting performance bonds; 4) indebtedness of Telecom Personal or any of its subsidiaries to Telecom Personal or any of its subsidiaries so long as such indebtedness continues to be owed to Telecom Personal or a subsidiary and which, if the obligor is Telecom Personal, is subordinated in right of payment to the notes; 5) hedging contracts of Telecom Personal relating to indebtedness permitted under the indenture; and 6) indebtedness of Telecom Personal or any of its subsidiaries incurred on or after the issuance date not otherwise permitted in an aggregate principal amount at any time outstanding not to exceed USD50,000,000 (or its equivalent in other currencies).

For the purposes of determining compliance with this covenant, in the event that an item of indebtedness meets the criteria of more than one of the types of indebtedness permitted by the preceding paragraph or is entitled to be incurred pursuant to the first paragraph of this covenant, Telecom Personal in its sole discretion shall classify such item of indebtedness into one or more available categories as of the date of incurrence. Limitation on Sale and Leaseback Telecom Personal will not, and will not permit any of its subsidiaries to, enter into any sale and leaseback transaction, provided that Telecom Personal or any of its subsidiaries may enter into a sale and leaseback transaction if: 1) Telecom Personal or such subsidiary, as applicable, could have incurred indebtedness in an amount equal to the attributable debt relating to such sale and leaseback transaction under the leverage ratio test in the first paragraph of the covenant described above under the caption limitations on indebtedness; 2) the gross cash proceeds of that sale and leaseback transaction are at least equal to the fair market value, as determined in good faith by the board of directors of Telecom Personal or such subsidiary and set forth in an officers’ certificate delivered to the trustee of the property that is the subject of that sale and leaseback transaction; and 3) Telecom Personal or such subsidiary applies the proceeds of such sale and leaseback. N.A. − Not applicable. Continued on next page. Source: Company and Fitch Ratings.

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Debt and Covenant Synopsis ⎯ Telecom Personal S.A. (Continued) (Foreign Currency Notes)

Limitation on Transactions with Telecom Personal will not, and will not permit any of its subsidiaries to, directly or indirectly, enter into, renew, or Shareholders and Affiliates extend any transaction or arrangement including the purchase, sale, lease, or exchange of property or assets, or the rendering of any service, with any holder of 10% or more of the capital stock of Telecom Personal, except upon terms not less favorable to Telecom Personal or such subsidiary than those that could be obtained in a comparable arms- length transaction with a person that is not an affiliate of Telecom Personal (an arms-length transaction).

In addition, Telecom Personal will not, and will not permit any of its subsidiaries to, directly or indirectly, enter into, renew, or extend any transaction or arrangement including the purchase, sale, lease, or exchange of property or assets, or the rendering of any service, with any Affiliate of Telecom Personal, except for arms-length transactions. If any such transaction or series of related transactions has an aggregate value in excess of 1% of Telecom Personal's net worth as set forth in Telecom Personal's latest publicly available financial statements, Telecom Personal will, prior to such transaction, 1) obtain a favorable written opinion from either a) the statutory audit committee (Comité de Auditoría) of the board of directors of Telecom Personal, if in existence at the time,or b) at least one independent consultant that the terms of the transaction are consistent with those obtained in an arms-length transaction; and 2) obtain the approval of a majority of the board of directors of Telecom Personal who are disinterested in the subject matter of the transaction pursuant to a resolution of the board of directors of Telecom Personal. Provided that if Telecom Personal is not a party to such transaction, such opinion, or approval described in 1) and 2) above, it will be provided by the comité de auditoría or board of directors, as applicable, of the relevant subsidiary or the independent consultants of such relevant subsidiary, as applicable. Limits on Consolidations or Telecom Personal will not merge into or consolidate with any person or sell, assign, transfer, or otherwise convey or Mergers dispose of all or substantially all of its assets, whether by one transaction or a series of transactions, to any person unless: 1) the holders of the notes had the opportunity to exercise opposition rights, if any, they may have under Argentine Law No. 11,867, as amended, Argentine Law No. 19,550, as amended, or any other applicable Argentine law and Telecom Personal shall have complied with any such opposition rights with respect to such transaction or series of transactions; 2) the resulting surviving or transferee person, which we refer to as the surviving entity is a) Telecom Personal or an Argentine affiliate or b) a sociedad anónima organized under the laws of Argentina; 3) the surviving entity (if not Telecom Personal) shall have expressly assumed, by a document executed and delivered to the trustee in form and substance reasonably satisfactory to the trustee all of the obligations of Telecom Personal under the notes; 4) immediately after giving effect to such transaction or series of transactions on a pro forma basis, no default or event of default shall have occurred and be continuing; 5) immediately after giving effect to such transaction or series of transactions on a pro forma basis, including any indebtedness incurred or anticipated to be incurred in connection with or in respect of the transaction or series of transactions a) the surviving entity shall have a consolidated net worth equal to or greater than Telecom Personal's consolidated net worth immediately prior to such transaction or series of transactions, and (b) either the surviving entity could incur at least USD1.00 of indebtedness under limitations on indebtedness or the surviving entity will have a leverage ratio (calculated by substituting such surviving entity for Telecom Personal) equal to or less than the Telecom Personal's leverage ratio immediately prior to such transaction or series of transactions; and 6) the surviving entity shall have delivered to the trustee an officers' certificate and an opinion of counsel each stating that such merger, consolidation, sale, assignment, transfer, or other conveyance or disposition complies with this covenant and the indenture and that all conditions precedent herein provided for relating to such transaction have been complied with.

Upon the occurrence of any of the transactions permitted by the preceding paragraph, the surviving entity (if not Telecom Personal) will succeed to and become substituted for Telecom Personal, and may exercise every right and power of Telecom Personal, with the same effect as if it had been named in the notes and the indenture. Following such transaction, Telecom Personal will be released from its liability as obligor on the notes and under the indenture. N.A. − Not applicable. Source: Company and Fitch Ratings.

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Financial Summary ⎯ Telecom Argentina S.A. (ARS Mil., As of June 30, 2010)

LTM 6/30/10 2009 2008 2007 2006

Profitability Operating EBITDA 4,223 3,900 3,330 3,052 2,285 Operating EBITDAR 4,223 3,900 3,330 3,052 2,285 Operating EBITDA Margin (%) 32.0 31.9 31.4 33.6 31.0 Operating EBITDAR Margin (%) 32.0 31.9 31.4 33.6 31.0 FFO Return on Adjusted Capital (%) 62.0 57.0 58.6 52.4 38.1 Free Cash Flow Margin (%) 9.3 14.7 14.8 15.5 15.2 Return on Average Equity (%) 31.0 29.2 26.7 33.3 11.9 Coverage (x) FFO Interest Coverage 31.8 24.8 15.3 9.3 5.0 Operating EBITDA/Interest Expense 34.9 26.7 14.1 8.6 4.7 Operating EBITDAR/Interest Expense + Rents 34.9 26.7 14.1 8.6 4.7 Operating EBITDA/Debt Service Coverage 4.6 4.3 2.1 1.7 1.2 Operating EBITDAR/Debt Service Coverage 4.6 4.3 2.1 1.7 1.2 FFO Fixed Charge Coverage 31.8 24.8 15.3 9.3 5.0 FCF Debt Service Coverage 1.5 2.1 1.1 1.0 0.9 (FCF + Cash and Marketable Securities)/Debt Service Coverage 2.8 3.6 1.8 1.5 1.2 Cash Flow from Operations/Capital Expenditures 2.2 2.2 2.0 2.2 2.4 Capital Structure and Leverage (x) FFO Adjusted Leverage 0.2 0.2 0.6 1.0 1.7 Total Debt with Equity Credit/Operating EBITDA 0.2 0.2 0.6 1.0 1.8 Total Net Debt with Equity Credit/Operating EBITDA (0.1) (0.1) 0.3 0.7 1.5 Total Adjusted Debt/Operating EBITDAR 0.2 0.2 0.6 1.0 1.8 Total Adjusted Net Debt/Operating EBITDAR (0.1) (0.1) 0.3 0.7 1.5 Implied Cost of Funds (%) 7.6 10.2 9.0 9.7 10.7 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.9 0.9 0.7 0.5 0.3 Balance Sheet Total Assets 10,721 10,633 9,649 9,171 8,720 Cash and Marketable Securities 1,193 1,289 1,125 992 661 Short-Term Debt 794 763 1,355 1,474 1,395 Long-Term Debta 74 58 688 1,724 2,703 Total Debt 868 821 2,043 3,198 4,098 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 868 821 2,043 3,198 4,098 Off-Balance Sheet Debtb ⎯ ⎯ ⎯ ⎯ ⎯ Total Adjusted Debt with Equity Credit 868 821 2,043 3,198 4,098 Total Equity 5,342 5,528 4,101 3,109 2,201 Total Adjusted Capital 6,210 6,349 6,144 6,307 6,299 Cash Flow Funds from Operations 3,729 3,476 3,364 2,947 1,916 Change in Operating Working Capital (145) (188) (230) (294) 30 Cash Flow from Operations 3,584 3,288 3,134 2,653 1,946 Total Non-Operating/Non-Recurring Cash Flow ⎯ ⎯ ⎯ ⎯ ⎯ Capital Expenditures (1,658) (1,474) (1,546) (1,208) (825) Dividends (694) (19) (20) (38) ⎯ Free Cash Flow 1,232 1,795 1,568 1,407 1,121 Net Acquisitions and Divestures (22) (17) (112) 147 (41) Other Investments, Net 289 260 341 (512) 62 Net Debt Proceeds (1,565) (1,491) (1,353) (1,245) (1,077) Net Equity Proceeds ⎯ ⎯ ⎯ ⎯ ⎯ Other Financing, Net (214) (176) ⎯ ⎯ (4) Total Change in Cash (280) 371 444 (203) 61 Income Statement Net Revenues 13,189 12,226 10,608 9,074 7,372 Revenue Growth (%) 17 15 17 23 30 Operating EBIT 2,990 2,762 2,041 1,636 894 Gross Interest Expense 121 146 236 355 482 Rental Expense ⎯ ⎯ ⎯ ⎯ ⎯ Net Income 1,567 1,405 961 884 244 aLong-term debt includes perpetual bonds. bOff-balance sheet debt = 7.0x operating leases. Source: Fitch Ratings.

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Telecom Telefonica de Argentina S.A. Argentina Full Rating Report (TASA)

Ratings Rating Rationale Current Security Class Rating • Telefonica de Argentina S.A.’s (TASA) ratings are supported by its solid business Local Currency IDR BB− Foreign Currency IDR B+ position, strong cash flow generation, and sound financial profile. The ratings are National Scale AA+(arg) tempered by increased competition, mobile substitution, regulatory risk, and a Senior Unsecured Debt BB–/RR3 currency mismatch between its cash flow generation and indebtedness. The foreign IDR − Issuer default rating. currency issuer default rating (IDR), rated one notch higher than Argentina’s country ceiling, incorporates a level of implicit support from its controlling Rating Outlook shareholder, Telefonica S.A. (TESA) of Spain. Stable • The company’s incumbent position in the southern region of Argentina results in Financial Data strong cash flow generation. Revenue growth is driven primarily from broadband services, which are offered through bundled services, as local service rates remain Telefonica de Argentina S.A. LTM frozen. This growth partially offsets operating margin pressures related to cost (ARS Mil.) 6/30/10 12/31/09 increases associated with wages. Revenues 5,954 9,664 FFO 1,747 1,930 • TASA’s liquidity position and free cash flow generation is sufficient to meet its FFO Margin (%) 29.3 34.7 Debt 1,197 1,126 upcoming debt obligations. The largest maturities faced by the company are during FFO Adjusted November 2010 when ARS455 million matures and during August 2011 when Leverage (x) 0.6 0.5 ARS594 million in negotiable notes mature. These two maturities account for 88% of FFO Interest Coverage (x) 9.4 10.9 total debt. Cash 843 1,030 Cash/Short- • Concerns that temper TASA’s ratings include exposure to currency mismatch as Term Debt (x) 1.3 1.6 most of its revenues are peso denominated and all of its debt is foreign currency denominated; however, low leverage partially mitigates this risk. In addition, the Analysts company faces regulatory risk and increased competition from wireless substitution. Sergio Rodríguez, CFA • Regulatory risk persists in the form of frozen tariffs that, along with cost hikes +52 81 8335-7179 [email protected] related primarily to salaries and wages, have pressured operating margins. Fitch Ratings believes TASA will continue generating strong cash flow despite the fact Cecilia Minguillón that operating margins will continue to decline slightly over the next few years. +54 11 5235-8123 [email protected] • TASA’s financial profile should continue to improve in the near-to-medium term as the company continues to use cash balances and free cash flow to pay debt. Key Rating Drivers • A positive rating action could occur if Argentina’s sovereign rating and country ceiling were upgraded or if the company receives explicit support from its parent, TESA. • Factors that could lead to a negative rating action include a downgrade of Argentina’s sovereign rating and the introduction of adverse regulatory or government measures that materially affect the company’s financial position. Rating Issues Please refer to Fitch’s full company report, “Telefonica de Argentina S.A. (TASA),” dated Sept. 17, 2010, for more information regarding:

• Revenue mix and an agreement with DirecTV.

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Liquidity and Debt Structure TASA has a manageable maturity profile. Its debt consists primarily of U.S. dollar- denominated market debt. The company is expected to pay short-term maturities with cash when it faces a debt maturity of ARS455 million in November 2010. EBITDA and FFO growth is expected to be stable or slightly positive for the next few years despite slight EBITDA margin reductions and higher capital expenditures than the previous year.

Free cash flow before dividend payments should remain in the 15%−20% range, and credit protection measures should continue strengthening as the company pays debt as it matures. Fitch notes that in the medium-to-long term, TASA may increase leverage to have a more efficient capital structure that is more in line with its Latin American peers. During the first half of 2010, TASA made a dividend payment of ARS342 million. It was the first payment by the company in years. Recovery Ratings TASA’s foreign currency IDR and recovery rating of ‘RR3’ are rated one notch higher than the country ceiling of Argentina at ‘B’ and its soft cap of ‘RR4’ as a result of Fitch’s incorporation of implicit support from its controlling shareholder, TESA. In the past, TESA has provided financial flexibility to TASA in the form of intercompany loans. TASA’s recovery prospects following either the going concern or liquidation approach results in a 100% recovery, which should imply a ‘RR1’. However, as mentioned above, the recovery rating has been partially constrained by Argentina’s soft cap at ‘RR4’. The rating uplift to ‘RR3’ incorporates implicit support from TESA. Securities rated ‘RR3’ have characteristics consistent with securities historically recovering between 51%−70% of current principal and related interest.

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Recovery Analysis ⎯ Telefonica de Argentina S.A. (ARS Mil., As of June 30, 2010)

Enterprise Value EBITDA 1,937 Discount (%) 50 Post-Restructuring EBITDA Estimation 969 Market Multiple (x) 4.0 Going Concern Enterprise Value 3,874

Post-Restructuring EBITDA Estimation Guidelines Interest Expense ⎯ Rent Expense ⎯ Maintenance Capital Expenditures ⎯ Total ⎯

Recovery Available to Liquidation Value Balance Rate (%) Creditors Cash 843 0 ⎯ A/R 910 75 682.5 Inventory ⎯ 50 ⎯ PP&E, Net 4,611 50 2,305.5 Total 6,364 ⎯ 2,988.0

Distribution of Value by Priority Greater of Going Concern Enterprise or Liquidation Value 3,874 Less Administrative Claims (10%) 387.4 Adjusted Enterprise Value for Claims 3,486.6

Amount Outstanding and Available R/C Value Recovered Recovery Rate ‘RR’ Rating Notching Credit Ratings Issuer Default Rating ⎯ ⎯ ⎯ ⎯ ⎯ B+ First Priority Secured 0 0 0 ⎯ ⎯ ⎯ Second Priority Secured 0 0 0 ⎯ ⎯ ⎯ Senior Unsecured 1,197 1,197 100 RR3 +1 BB− Senior Subordinated 0 0 0 ⎯ ⎯ ⎯ Preferred Stock 0 0 0 ⎯ ⎯ ⎯ Note: According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Argentine corporates are capped at ‘RR4’. Source: Fitch.

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Organizational Structure — Telefonica de Argentina S.A. (As of June 30, 2010)

Summary Statistics Telefonica de Argentina S.A. (LTM June 30, 2010) ARS1,937 Million of EBITDA ARS594 Million ON’s Due November 2011 ARS843 Million of Cash and Market Sector ARS573 Million ON’s Due August 2011 ARS1,197 Million of Total Debt

100%

Telefonica Data Argentina S.A.

Source: Fitch and Telefonica de Argentina S.A. financial statements.

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Debt and Covenant Synopsis ⎯ Telefonica de Argentina S.A. (Foreign Currency Notes)

Overview Issuer Telefonica de Argentina S.A. Document Date August 2003 Maturity Date Oct. 7, 2010 and Aug. 1, 2011 Description of Debt Senior Unsecured Negotiable Notes (Obligaciones Negociables)

Financial Covenants Consolidated Net Leverage (Maximum) N.A. Interest Coverage (Minimum) N.A. Acquisitions/Divestitures Sale of Assets Restriction The negotiable notes prohibit the sale of all of the assets unless certain circumstances are met.

Certain Covenants Limitation on Liens Limitation on lien to TASA and any material subsidiary subject to certain exemptions for all assets. Limitation on Sale and Leaseback Limitation on sale and leaseback on assets of TASA and any material subsidiary subject to certain exemptions. Limits on Consolidations or Mergers The negotiable notes prohibit the merger or transfer of all or substantially all of the assets unless certain circumstances are met. N.A. − Not applicable. Source: TASA and Fitch Ratings.

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Financial Summary ⎯ Telefonica de Argentina S.A. (TASA) (ARS Mil., As of June 30, 2010)

Period-End Exchange Rate (ARS/USD) 3.206 3.206 3.425 3.282 3.472

LTM 6/30/10 2009 2008 2007 2006 Profitability Operating EBITDA 1,937 1,892 1,765 1,481 1,704 Operating EBITDAR 1,937 1,892 1,765 1,481 1,704 Operating EBITDA Margin (%) 32.5 33.4 37.1 35.4 44.3 Operating EBITDAR Margin (%) 32.5 33.4 37.1 35.4 44.3 FFO Return on Adjusted Capital (%) 50.5 52.6 55.7 43.6 45.2 Free Cash Flow Margin (%) 8.8 18.6 22.2 15.8 31.6 Return on Average Equity (%) 16.7 13.9 14.2 3.3 8.7 Coverage (x) FFO Interest Coverage 9.4 10.9 11.2 5.1 5.8 Operating EBITDA/Interest Expense 9.3 9.7 9.2 4.4 4.9 Operating EBITDAR/Interest Expense + Rents 9.3 9.7 9.2 4.4 4.9 Operating EBITDA/Debt Service Coverage 2.2 2.3 6.6 1.8 1.5 Operating EBITDAR/Debt Service Coverage 2.2 2.3 6.6 1.8 1.5 FFO Fixed Charge Coverage 9.4 10.9 11.2 5.1 5.8 FCF Debt Service Coverage 0.8 1.5 4.6 1.2 1.4 (FCF + Cash and Marketable Securities)/Debt Service Coverage 1.8 2.8 6.1 1.7 1.6 Cash Flow from Operations/Capital Expenditures 2.5 2.7 2.5 2.2 3.9 Capital Structure and Leverage (x) FFO Adjusted Leverage 0.6 0.5 0.6 1.0 1.2 Total Debt with Equity Credit/Operating EBITDA 0.6 0.6 0.7 1.2 1.4 Total Net Debt with Equity Credit/Operating EBITDA 0.2 0.1 0.5 0.9 1.2 Total Adjusted Debt/Operating EBITDAR 0.6 0.6 0.7 1.2 1.4 Total Adjusted Net Debt/Operating EBITDAR 0.2 0.1 0.5 0.9 1.2 Implied Cost of Funds (%) 15.9 15.9 12.6 16.4 13.6 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.5 0.6 0.1 0.3 0.3 Balance Sheet Total Assets 6,780 6,993 6,283 6,290 6,429 Cash and Marketable Securities 843 1,030 382 425 294 Short-Term Debt 657 627 77 509 792 Long-Term Debta 540 499 1,243 1,212 1,595 Total Debt 1,197 1,126 1,320 1,721 2,387 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 1,197 1,126 1,320 1,721 2,387 Off-Balance Sheet Debtb 0 0 0 0 0 Total Adjusted Debt with Equity Credit 1,197 1,126 1,320 1,721 2,387 Total Equity 2,671 2,916 2,538 2,201 2,129 Total Adjusted Capital 3,868 4,042 3,858 3,922 4,516 Cash Flow Funds from Operations 1,747 1,930 1,956 1,372 1,689 Change in Operating Working Capital (291) (271) (202) (181) (61) Cash Flow from Operations 1,456 1,659 1,754 1,191 1,628 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (589) (607) (699) (530) (414) Dividends (342) 0 0 0 0 Free Cash Flow 525 1,052 1,055 661 1,214 Net Acquisitions and Divestures (94) (87) (259) (63) 130 Other Investments, Net (9) (1) 0 0 0 Net Debt Proceeds (316) (317) (532) (723) (395) Net Equity Proceeds 0 0 0 (6) (1,038) Other Financing, Net (72) 0 0 0 0 Total Change in Cash 34 647 264 (131) (89) Income Statement Net Revenues 5,954 5,664 4,761 4,186 3,846 Revenue Growth (%) 13.7 19 13.7 8.8 14.2 Operating EBIT 911 858 766 413 640 Gross Interest Expense 208 195 191 337 350 Rental Expense 0 0 0 0 0 Net Income 449 378 337 72 222 aLong-term debt includes perpetual bonds. bOff-balance sheet debt = 7.0x operating leases. Source: Fitch Ratings.

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Natural Gas & Propane Transportadora de Gas del Norte Argentina Full Rating Report S.A. (TGN)

Ratings Rating Rationale Current Security Class Rating • Transportadora de Gas del Norte S.A.’s (TGN) foreign and local currency issuer Foreign Currency IDR D Local Currency IDR D default ratings (IDRs) of ‘D’ reflect the suspension of principal and interest Senior Notes due 2012 CC/RR5 payments on USD345 million of debt by the company on Dec. 23, 2008. Although Senior Notes USD247.3 Mil. CCC/RR4 TGN has reached the consent to restructure its debt with 88% of the bondholders IDR − Issuer default rating. through a court procedure (Acuerdo Preventivo Extrajudicial [APE]), the process has not been finalized. Rating Outlook • The ‘CC’ rating of the 2012 notes reflect the expectation of below-average recovery N.A. prospects given default; the ‘RR5’ indicates a probability of recovery of 11%−30% of current principal and related interest. Financial Data Transportadora de Gas del Norte S.A. • The ‘CCC/RR4’ expected ratings of the USD247.3 million seven-year notes (new (ARP Mil.) notes) offered in the restructuring process to reflect a moderate improvement in 3/31/10 12/31/09 TGN’s debt profile following such restructuring. During years one through four, cash Total Revenues 520 530 EBITDAR 254 264 interest payment will be low at 3.5%. When principal amortizations begin in year Cash from five, absent any tariff increase or any other factor that favors TGN’s cash flow, Operations 193 260 Cash and cash generation will most likely be negative, adding pressure to the company’s Marketable credit quality. Securities 313 304 Total Adjusted • During the LTM period ended March 31, 2010, TGN generated USD29 million of free Debt 1,499 1,439 Total Adjusted cash flow. This represents a decrease from USD49 million during 2009. Fitch Ratings Debt/EBITDAR expects next year’s cash generation to deteriorate as a result of inflationary (x) 5.9 5.4 pressures and the suspension of certain export contracts. For the LTM ended FFO Adjusted Leverage (x) 3.4 3.2 March 31, 2010, capital expenditures remained unchanged at USD22 million. Given the suspension of principal and interest payments, the company has been building Analysts cash, which would most likely be used to restructure the debt or finance working capital needs. Ana Paula Ares +54 11 5235-8121 [email protected] Rating Issues

Federico Sandler Please refer to Fitch’s full company report, “Transportadora de Gas del Norte S.A. +54 11 5235-8122 (TGN),” dated Oct. 27, 2010, for more information regarding: [email protected] • National Appeal Court ruling on injunction by the national pension fund (ANSES),

one of the dissenters to the agreement reached by TGN and 88% of its creditors. • Status of Decree Nª458 the agreement that was reached by TGN and the government during October 2008 that allowed a 20% natural gas transportation tariff increase. • Regulatory environment.

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Liquidity and Debt Structure As of March 31, 2010, TGN had USD386.7 million of financial debt, which includes past due interests and penalties. The debt is primarily comprised of series A and B notes and USD2.4 millions of debt with suppliers. This debt is subject to the restructuring process launched by the company in 2009. TGN’s cash position at the end of March was USD80.8 million. Debt Restructuring On Oct. 14, 2009, TGN filed its restructuring agreement with an APE Court for its approval pursuant to the Argentine Bankruptcy Law. Consent for this agreement was achieved with the support of about 88% of outstanding principal. The state-owned institutional investor, ANSES, is amongst the nonconsenting creditors. Consenting creditors have the option to withdraw their consent to the agreement, subject to a minimum number of creditors. The first three-month period to withdraw the consent begun in July 14, 2010 and requires the consent of two-thirds of the bondholders. The second three-month period will begin in Oct.14, 2010 and will be subject to the agreement of 50% of the bondholders. From Jan. 14, 2011 and beyond, the consent could be withdrawn with the agreement of 25% of the bondholders. The debt subject to the restructuring for USD347.3 million currently includes outstanding notes for USD344.9 million and commercial debt of USD2.4 million. Existing creditors have been offered two exchange options: 1) up to USD40 million in cash for the equivalent of USD100 million of par value of the existing notes or 2) new notes for up to USD247.3 million in exchange for USD247.3 million of existing notes. Oversubscription of either of these two options will be prorated to the other option. The new notes will carry a coupon rate that steps up over the life of the notes. For years one to three the coupon is 6.5%, for years four and five it increases to 7.5%, and during years six and seven it is 8.5%. The notes have a minimum cash interest payment of 3.5% per annum with the option for TGN to capitalize the remainder. Principal will be amortized in bi-annual installments beginning in year five with payment levels equal to 7.5% of principal for each payment in year five, 10% for each payment in year six, and 65% in year seven. Following the debt restructuring, TGN’s total debt will be reduced by USD100 million to USD247.3 million, and net debt will be reduced by USD60 million, somewhat reducing leverage. Positively, the restructuring significantly lowers short-term debt service requirements for the first four years following completion by lowering cash interest expense to 3.5% and eliminating principal payments until year five. However, as principal amortizations begin in year five, cash flow will likely become negative absent tariff adjustments and could result in pressure on credit quality, thus adding to financial distress. The timing of the restructuring remains uncertain. First, the APE court will need to issue the initial endorsement approving the restructuring agreement. After this endorsement is issued, TGN will restructure the debt held by consenting creditors. On a later date, following the final endorsement, TGN will restructure the remaining debt with similar terms and conditions. Recovery Rating The recovery ratings for TGN’s capital markets debt instruments reflect Fitch’s expectation that the company’s creditors would have a below average recovery consistent with a recovery rating of ‘RR5’. In 2009, TGN filed its debt restructuring proposal to an APE court with the consent of 88% of the bondholders, but no material advances have been made.

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Fitch has performed a liquidation analysis in the event of a bankruptcy, as this scenario seems more likely as long as the debt restructuring is not closed. For such purposes, Fitch has significantly adjusted the discount rate for accounts receivables, as a significant portion that are related to export sales might not be paid over the medium term. Fitch has also estimated the enterprise valuation in the event of financial distressed. In deriving a distressed enterprise valuation, Fitch discounts the company’s LTM EBITDA to a level that reflects TGN’s expected cash generation, as EBITDA reported in the financial statements includes a portion of export revenues which are accrued but are not collected by the company. The recovery analysis has incorporated a low EBITDA multiple which reflects uncertainty about TGN’s cash flow absent any tariff increases and its lack of access to financing alternatives. The recovery rating of ‘RR5’ that has been assigned to the company’s capital markets debt reflects a below average recovery for the creditors. The ‘RR5’ rating indicates a probability of recovery of 11%−30% of current principal and related interest.

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Recovery Analysis ⎯ Transportadora de Gas del Norte S.A. (TGN) (USD Mil., As of June 30, 2010)

Enterprise Value EBITDA 57.5 Discount (%) 52 Post-Restructuring EBITDA Estimation 27.6 Market Multiple (x) 3.5 Going Concern Enterprise Value 96.6

Post-Restructuring EBITDA Estimation Guidelines Interest Expense ⎯ Rent Expense ⎯ Maintenance Capital Expenditures ⎯ Total ⎯

Advance Available to Liquidation Value Balance Rate (%) Creditors Cash 78.0 0 ⎯ A/R 14.8 50 7.4 Inventory 3.8 50 1.9 PP&E, Net 529.7 20 105.9 Total 626.4 ⎯ 115.3

Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value 115.3 Less Administrative Claims (10%) 11.5 Adjusted Enterprise Value for Claims 103.7

Distribution of Value Secured Priority Lien Value Recovered Recovery ‘RR’ Rating Notching Credit Ratings Senior Secured 0.0 ⎯ 0 ⎯ ⎯ ⎯ Secured 0.0 ⎯ 0 ⎯ ⎯ ⎯

Concession Payment Availability Table Adjusted Enterprise Value for Claims 103.7 Less Secured Debt Recovery ⎯ Remaining Recovery for Unsecured Claims 103.7 Concession Allocation (5%) 5.2 Value to be Distributed to Senior Unsecured Claims 98.6

Value Recovery Rate Concession Unsecured Priority Lien Recovered (%) Allocation ‘RR’ Rating Notching Credit Ratings Senior Unsecured 369.0 103.7 28 100 RR5 −1 N.A. N.A. − Not applicable. Note: (1) According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Argentine corporates are capped at ‘RR4’. (2) Numbers may not add due to rounding. Source: Fitch.

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Organizational Structure — Transportadora de Gas del Norte S.A. (As of March 31, 2010)

2009 Summary Statistics Transportadora de Gas del Norte S.A. ARS265 Million of EBITDA ARS304 Million of Cash and Marketable USD250 Million Senior Unsecured Notes Securities due 2012 MXN1,439 million of Total Debt (Currently in Default)

Note: TGN does not have any material subsidiary. Source: Fitch and Transportadora de Gas del Norte S.A. financial statements.

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Debt and Covenant Synopsis ⎯ Transportadora Gas Del Norte S.A. (TGN) (Foreign Currency Notes)

Overview Issuer Transportadora Gas Del Norte S.A. (TGN) Guarantors None Document Date Sept. 14, 2006 Maturity Date Dec. 31, 2012 (defaulted in January 2009) Description of Debt Senior Unsecured Notes

Financial Covenants Consolidated Net Leverage (Maximum) N.A. Interest Coverage (Minimum) N.A. Acquisitions/Divestitures Change of Control Provision Change of control clause at 101% of principal. Sale of Assets Restriction The issuer and its affiliates cannot sell assets unless: 1) at least 75% is paid in cash, 2) the issuer remains in compliance with the terms and conditions of the notes, and 3) net proceeds are used to repurchase outstanding notes.

Debt Restriction Additional Debt Restriction Neither the issuer nor its affiliates are allowed to incur additional debt except permitted debt. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations. TGN is allowed to incur or maintain up to USD15,000,000 of additional indebtedness and up to USD35,000,000 of additional subordinated debt. Should the issuer or its affiliates incur any additional indebtedness, TGN is required to maintain a consolidated debt to EBITDA (as defined in the indenture) equal or below 3.5x. Limitation on Secured Debt Subject to certain conditions, TGN or its subsidiaries may incur liens on assets, trade receivables, or future flows when: 1) the lien is permitted by the concession agreement and 2) if the guaranteed debt is subordinated and the notes are also secured by such lien. Restricted Payments The issuer and its affiliates are prohibited from paying dividends, technical assistance services above USD1,000,000 in the event of default, and payments on subordinated indebtedness. The issuer and its affiliates are allowed to make restricted payments if 1) no event of default occurs or is continuing and 2) there is sufficient liquidity as defined in the indenture- to make such payment.

Other Cross Default Cross default when an uncured event of default occurs for debt of more than USD15,000,000. Acceleration If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. PIK Interest Rate N.A. Intercompany Loans Intercompany loans are subordinated. Restriction on Purchase of Notes The issuer may purchase series A notes at par. After the full amortization of series A, the issuer may purchase series B notes at 101% in 2010, 105.5% in 2011, and at par in 2012. Transactions with Affiliates Transactions between issuer and affiliates should follow good business practices.

Limitation on Asset Sales Limits on Consolidations or Mergers Restrictions on the merger or consolidation of issuer and subsidiaries. Exceptions require that: 1) bondholders have the opportunity to oppose such transaction; 2) the surviving entity will be the issuer or another corporation existing under the laws of Argentina; 3) the surviving entity assumes the existing debt; 4) no event of default occurs or is continuing; 5) the company’s pro forma net worth is similar or higher than the existing one prior to such transaction and the resulting consolidated debt-to-EBITDA ratio is equal or below the one prior to such transaction. Mandatory Redemption The note will be redeemed on a pro rata basis if the issuer or affiliates sell assets. N.A. − Not applicable. Source: Company and Fitch Ratings.

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Financial Summary ⎯ Transportadora de Gas del Norte S.A. (TGN) (ARS 000, As of Dec. 31)

Period-End Exchange Rate (ARS/USD) 3.88 3.80 3.47 3.15 3.06

LTM 3/31/10 2009 2008 2007 2006

Profitability Operating EBITDA 254,126 264,964 284,530 322,015 300,033 Operating EBITDA Margin (%) 48.8 49.9 56.4 62.1 59.2 FFO Return on Adjusted Capital (%) 16.1 16.8 13.5 14.6 12.1 Free Cash Flow Margin (%) 21.0 34.4 28.3 27.7 (2.8) Return on Average Equity (%) (2.30) (4.10) (2.60) 4.6 20.2

Coverage (x) FFO Interest Coverage 3.7 4.1 4.4 3.6 1.5 Operating EBITDA/Gross Interest Expense 2.2 2.4 3.8 3.2 1.5 Operating EBITDA/Debt Service Coverage 0.2 0.2 0.2 1.6 1.0 FFO Fixed Charge Coverage 3.7 4.1 4.4 3.6 1.5 FCF Debt Service Coverage 0.1 0.2 0.2 1.2 0.6 (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage 0.3 0.4 0.3 1.5 0.8 Cash Flow from Operations/Capital Expenditures 2.3 3.3 4.1 3.8 0.8

Capital Structure and Leverage (x) FFO Adjusted Leverage 3.4 3.2 3.6 3.2 4.1 Total Debt with Equity Credit/Operating EBITDA 5.9 5.4 4.3 3.6 4.1 Total Net Debt with Equity Credit/Operating EBITDA 4.7 4.3 3.7 3.4 4.0 Implied Cost of Funds 8.2 8.2 6.4 8.4 12.4 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 1.0 1.0 1.0 0.1 0.1

Balance Sheet Total Assets 2,905,111 2,888,100 2,639,251 2,613,555 2,648,398 Cash and Marketable Securities 313,343 304,292 153,980 67,028 41,572 Short-Term Debt 1,499,442 1,439,317 1,212,965 104,931 93,154 Long-Term Debta ⎯ ⎯ 0 1,049,404 1,138,606 Total Debt 1,499,442 1,439,317 1,212,965 1,154,335 1,231,760 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 1,499,442 1,439,317 1,212,965 1,154,335 1,231,760 Off-Balance Sheet Debtb 0 0 0 0 0 Total Adjusted Debt with Equity Credit 1,499,442 1,439,317 1,212,965 1,154,335 1,231,760 Total Equity 1,209,184 1,226,682 1,278,228 1,311,762 1,277,794 Total Adjusted Capital 2,708,626 2,665,999 2,491,193 2,466,097 2,509,554

Cash Flow Funds from Operations 319,728 338,193 259,518 258,944 98,112 Change in Working Capital (126,458) (77,729) (71,043) (30,208) (52,492) Cash Flow from Operations 193,270 260,464 188,475 228,736 45,620 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (84,213) (77,777) (45,550) (59,672) (59,976) Dividends 0 0 0 (25,683) 0 Free Cash Flow 109,057 182,688 142,925 143,381 (14,356) Net Acquisitions and Divestures 0 0 0 0 0 Other Investments, Net (2,901) (11,476) 0 0 0 Net Debt Proceeds 0 0 (54,598) (118,292) (418,273) Net Equity Proceeds 0 0 0 0 0 Other, Financing Activities (34,360) (32,424) 503 (149) (1,169) Total Change in Cash 71,796 138,788 88,830 24,940 (433,798)

Income Statement Net Revenue 520,345 530,966 504,485 518,544 506,820 Revenue Growth (%) 2 5 (3) 2 13 Operating EBIT 127,440 138,891 160,823 203,637 186,482 Gross Interest Expense 116,356 108,992 75,649 99,977 205,850 Rental Expense 0 0 0 0 0 Net Income (27,985) (51,546) (33,534) 59,651 215,246 abLong-term debt includes perpetual bonds. bOff-balance sheet debt = 7.0x operating leases. Source: Fitch Ratings.

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Natural Gas & Propane Transportadora de Gas del Sur S.A. Argentina Full Rating Report

Ratings Rating Rationale Current • Transportadora de Gas del Sur S.A.’s (TGS) ratings reflect its solid financial position Security Class Rating Foreign Currency IDR B and credit metrics compared with its peer group, adequate operating performance, Local Currency IDR B+ the sector’s weak regulatory framework, and TGS’ asset concentration in Argentina. Senior Notes due 2017 B/RR4

IDR − Issuer default rating. • Leverage, as measured by total debt to EBITDA, has steadily declined, allowing TGS’ credit protection measures to remain strong for its rating category. For the 12 Rating Outlook months ended March 31, 2010, TGS posted a low leverage level with a net-debt-to- EBITDA ratio of 0.6x and FFO interest coverage of 5.5x. Fitch Ratings expects TGS to Stable maintain sound credit metrics in the near-to-medium term, although a modest Financial Data deterioration is anticipated absent any tariff increases for the natural gas Transportadora de Gas del Sur S.A. transportation business. (USD Mil.) LTM • Despite frozen tariffs for its pipeline business and rising inflation, TGS continued to 3/31/10 12/31/09 build cash during 2009. As a result, TGS’ liquidity is strong with USD284 million in Total Revenues 417 391 cash and equivalents as of March 31, 2010 and no debt maturities until May 2014. EBITDA 187 172 Cash from Annual interest payments of approximately USD30 million is easily manageable. Operations 123 135 Near-term capital expenditure (capex) plans are expected to remain at a minimum Cash and Marketable level, allowing TGS to continue generating positive free cash flow and be able to Securities 285 271 maintain considerable financial flexibility. Total Adjusted Debt 398 401 • Credit concerns include the effects of volatile commodity prices and natural gas Total Adjusted Debt/EBITDA (x) 2.1 2.3 availability for the natural gas processing business unit (representing 57% of sales FFO Adjusted and 47% of EBITDA), the prevalence of flat tariffs for its transportation business unit Leverage 1.9 1.9 (representing 34% of sales and 45% of EBITDA), and a broad domestic economic downturn. Analysts • Tariff adjustments remain a critical factor in the regulated gas transportation Federico Sandler +54 11 5235-8122 business’ profitability and margins, particularly within a context of rising inflation [email protected] and cost increases. During December 2009, a presidential decree approved a 20% tariff increase retroactive through September 2008. However, at present, the new Ana Paula Ares tariff scheme has not yet been applied. Fitch estimates that this tariff increase +54 11 5235-8121 [email protected] would result in an additional USD20 million to USD25 million increase in EBITDA (subject to the exchange rate). Fitch’s ratings of TGS do not incorporate tariff increases. Key Rating Drivers • Positive rating actions could result from: o Implementation of a full tariff review combined with an improvement in the regulatory framework. o An upgrade of Argentina’s country ceiling. • Negative rating actions could result from: o Prolonged unavailability of natural gas. o The continuance of flat tariffs for TGS’ transportation business unit. o Increased leverage that would result in a deterioration of credit metrics.

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Rating Issues Please refer to Fitch’s full company report, “Transportadora de Gas del Sur S.A. (TGS),” dated Sept. 14, 2010, for more information regarding:

• Company overview. • Natural gas pipeline unit update. • Natural gas processing unit update. Liquidity and Debt Structure TGS’ liquidity is strong and is provided mainly by internally generated cash flows. As of March 2010, the company’s liquidity consisted of USD284 million in money market and short-term deposits. Eighty-nine percent of the company’s liquidity is placed abroad. The company’s strategy is to maintain a minimum cash of USD30 million to USD50 million in liquid investments. As of March 31, 2010, TGS’ debt was composed of USD385 million of senior unsecured notes that amortize in four equal annual installments beginning May 2014 with a fixed coupon of 7.875%. Between the fourth quarter of 2008 and the first quarter of 2010, TGS bought back USD105 million of the initial USD490 million debt issuance, reducing its outstanding amount of debt by 21%. The notes were issued in 2007 to refinance debt that was restructured back in 2004. Since its debt restructuring in 2004, TGS’ leverage has steadily declined while cash balances have built up. TGS has a positive free cash flow, and an incurrence of external financing is not anticipated. Recovery Rating TGS’ recovery rating of ‘RR4’ indicates that the company’s creditors would have an average recovery prospect in the range of 31%−50% of current principal and related interest in the event of default. This rating reflects a recovery rating cap for Argentine issuers of ‘RR4’, whereas TGS’ bespoke recovery analysis suggests a higher recovery level consistent with ‘RR1’. Fitch has performed a liquidation analysis in the event of a bankruptcy, although this scenario seems very unlikely and has also estimated the enterprise valuation in the event of financial distress. In deriving a distressed enterprise valuation, Fitch discounts the company’s LTM EBITDA to a level that incorporates the prevalence of frozen tariffs for TGS’ regulated business, cost increases ranging from 15%−20%, and conservative price assumptions for the LNG’s business unit. TGS has minimum capital expenditures estimated at USD40 million per year and an interest expense of USD31 million per annum, which could be comfortably covered with the anticipated distressed EBITDA. Fitch has applied a 6.0x distressed EBITDA multiple, which is higher than the multiple of which AEI acquired a portion of TGS in 2009. This multiple reflects an adequate cash generation in an event of distress when compared to its interest payments and capital expenditures. The recovery rating analysis indicates a recovery ‘RR1’ with a recovery prospect of 91%−100% of principal outstanding, but TGS’ capital markets debt has been assigned an ‘RR4’ rating, which reflects the soft cap on Argentine issuers.

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Recovery Analysis ⎯ Transportadora de Gas del Sur S.A. (USD Mil., As of March 31, 2010)

Enterprise Value EBITDA 187.0 Discount (%) 33 Post-Restructuring EBITDA Estimation 125.3 Market Multiple (x) 6.0 Going Concern Enterprise Value 751.7

Post-Restructuring EBITDA Estimation Guidelines Interest Expense 31.0 Rent Expense ⎯ Maintenance Capital Expenditures 40.0 Total 71.0

Advance Available to Liquidation Value Balance Rate (%) Creditors Cash 285 0 ⎯ A/R 121 65 78.7 Inventory 4 55 2.2 Net PP&E 1,055 40 42.2 Total 1,465 ⎯ 502.9

Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value 751.7 Less Administrative Claims (10%) 75.2 Adjusted Enterprise Value for Claims 676.6

Distribution of Value Secured Priority Lien Value Recovered Recovery ‘RR’ Rating Notching Credit Ratings Senior Secured 0.0 ⎯ 0 ⎯ ⎯ ⎯ Secured 0.0 ⎯ 0 ⎯ ⎯ ⎯

Concession Payment Availability Table Adjusted Enterprise Value for Claims 676.6 Less Secured Debt Recovery ⎯ Remaining Recovery for Unsecured Claims 676.6 Concession Allocation (5%) 33.8 Value to be Distributed to Senior Unsecured Claims 642.7

Value Recovery Rate Concession Unsecured Priority Lien Recovered (%) Allocation ‘RR’ Rating Notching Credit Ratings Senior Unsecured 401.0 401.0 100 100 RR4 ⎯ B Note: (1) According to Fitch Ratings’ country-specific treatment of recovery ratings, the recovery ratings of Argentine corporates are capped at ‘RR4’. (2) Numbers may not add due to rounding. Source: Company information and Fitch estimates.

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Organizational Structure — Transportadora de Gas del Sur S.A.

2010 Summary Statistics Transportadora de Gas del Sur S.A.

USD187 Million of EBITDA USD500 Million 7.875% USD285 Million of Cash and Marketable Senior Unsecured Notes Due 2017 Securities (ARS1,965 Billion) USD398 Million of Total Debt

100%

Telcosur S.A.

Source: Fitch and Transportadora de Gas del Sur S.A. financial statements.

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Debt and Covenant Synopsis ⎯ Transportadora de Gas del Sur S.A. (Foreign Currency Notes)

Overview Issuer Transportadora de Gas del Sur S.A. Guarantors N.A.; Debt is Senior Unsecured Document Date Jan. 18, 2007 Maturity Date May 14, 2017 Description of Debt Senior Unsecured Notes

Financial Covenants Consolidated Net Leverage (Maximum) N.A. Interest Coverage (Minimum) N.A. Acquisitions/Divestitures Change of Control Provision In the event the Argentine government controls over 50% of the voting rights, bondholders will have the right to demand the repurchase of bonds at 101% of nominal value. Sale of Assets Restriction N.A.

Debt Restriction Additional Debt Restriction The issuer is allowed to incur additional debt either to refinance its existing debt or as customer advances. Dividends may only be distributed if the issuer is not in breach of its financial commitments with its debt holders. Limitation on Secured Debt N.A. Restricted Payments The issuer is prohibited from making dividend payments, except if immediately after such debt payment the issuer is able to incur in new debt in accordance with restrictions in Additional Debt Restrictions stated above.

Other Cross Default Cross default when an uncured event of default occurs for debt of more than USD15 million. Acceleration If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. Limits on Liens Restrictions on liens on issuer’s assets. PIK Interest Rate N.A. Intercompany Loans N.A. Restriction on Purchase of Notes The issuer may fully purchase the notes (no partial repurchases are allowed) at its full discretion, including any changes in current tax laws. Transactions with Affiliates N.A.

Limitation on Asset Sales Limits on Consolidations or Mergers Restrictions on merger of issuer. N.A. − Not applicable. Source: Company and Fitch Ratings.

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Financial Summary ⎯ Transportadora de Gas del Sur S.A. (TGS) (ARS 000)

Period-End Exchange Rate (ARS/USD) 3.88 3.80 3.47 3.15 3.06

3/31/10 2009 2008 2007 2006 Profitability Operating EBITDA 720,690 649,061 636,200 688,942 763,017 Operating EBITDA Margin (%) 44.8 43.9 44.8 54.8 58.3 FFO Return on Adjusted Capital 17.1 17.0 16.0 14.9 15.6 Free Cash Flow Margin (%) 19.7 22.5 23.2 25.0 36.6 Return on Average Equity (%) 8.4 5.7 5.8 5.2 13.8 Coverage (x) FFO Interest Coverage 5.5 5.3 5.1 4.3 3.9 Operating EBITDA/Gross Interest Expense 4.8 4.3 4.5 4.4 3.9 Operating EBITDA/Debt Service Coverage 3.7 3.9 4.1 4.0 2.6 FFO Fixed Charge Coverage 5.5 5.3 5.1 4.3 3.9 FCF Debt Service Coverage 2.4 2.9 3.0 2.7 2.3 (FCF + Cash and Marketable Securities)/Debt Service Coverage 8.0 9.1 6.9 5.2 3.9 Cash Flow from Operations/Capital Expenditures 3.8 3.4 2.6 2.5 4.8 Capital Structure and Leverage (x) FFO Adjusted Leverage 1.9 1.9 2.0 2.4 2.7 Total Debt with Equity Credit/Operating EBITDA 2.1 2.3 2.2 2.3 2.6 Total Net Debt with Equity Credit/Operating EBITDA 0.6 0.8 1.3 1.7 2.0 Total Adjusted Debt/Operating EBITDAR 2.1 2.3 2.2 2.3 2.6 Total Adjusted Net Debt/Operating EBITDAR 0.6 0.8 1.3 1.7 2.0 Implied Cost of Funds (%) 9.8 10.3 9.4 8.7 8.5 Secured Debt/Total Debt ⎯ ⎯ ⎯ ⎯ ⎯ Short-Term Debt/Total Debt 0.0 0.0 0.0 0.0 0.0 Balance Sheet Total Assets 5,724,837 5,619,190 5,033,324 5,001,684 5,139,242 Cash and Marketable Securities 1,100,861 1,025,142 604,690 423,918 478,256 Short-Term Debt 44,272 14,983 13,932 16,459 99,063 Long-Term Debta 1,492,347 1,502,330 1,398,465 1,574,500 1,918,524 Total Debt 1,536,619 1,517,313 1,412,397 1,590,959 2,017,587 Equity Credit ⎯ ⎯ ⎯ ⎯ ⎯ Total Debt with Equity Credit 1,536,619 1,517,313 1,412,397 1,590,959 2,017,587 Off-Balance Sheet Debtb 0 0 0 0 0 Total Adjusted Debt with Equity Credit 1,536,619 1,517,313 1,412,397 1,590,959 2,017,587 Total Equity 3,296,498 3,221,109 3,072,729 2,929,548 2,782,131 Total Adjusted Capital 4,833,117 4,738,422 4,485,126 4,520,507 4,799,718 Cash Flow Funds from Operations 673,705 654,453 577,127 517,937 556,698 Change in Working Capital (200,804) (142,716) 4,954 466 49,548 Cash Flow from Operations 472,901 511,737 582,081 518,403 606,246 Total Non-Operating/Non-Recurring Cash Flow 0 0 0 0 0 Capital Expenditures (125,519) (149,147) (220,792) (203,565) (127,383) Common Dividends (30,000) (30,000) (32,000) 0 0 Free Cash Flow 317,382 332,590 329,289 314,838 478,863 Net Acquisitions and Divestures 0 0 0 0 0 Other Investments, Net 0 0 28,386 (28,386) 0 Net Debt Proceeds (59,968) (25,497) (191,486) (463,606) (562,309) Net Equity Proceeds 0 0 0 0 0 Other (Investments and Financing) 75,266 113,459 47,183 90,216 48,758 Total Change in Cash 332,680 420,552 213,372 (86,938) (34,688) Income Statement Revenue 1,607,319 1,478,748 1,419,202 1,257,273 1,309,502 Revenue Growth (%) 25.4 4.2 12.9 (4.0) 23.0 Operating EBIT 509,168 439,617 431,432 490,019 570,130 Gross Interest Expense 150,983 151,416 140,944 156,661 193,674 Rental Expense 0 0 0 0 0 Net Income 265,576 178,480 175,091 147,508 358,022 aLong-term debt includes perpetual bonds. bOff-balance sheet debt = 7.0x operating leases. Source: Fitch Ratings.

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Latin America Corporate Finance Team Directory

United States ⎯ Fitch Ratings Daniel R. Kastholm Group Head, Latin America Corporates [email protected] +1 312 368-2070 Joe Bormann Basic Industries, Beverage [email protected] +1 312 368-3349 Jose Vertiz Property/Real Estate, Homebuilding [email protected] +1 212 908-0641 Lucas Aristizabal Utilities, Energy (Oil & Gas) [email protected] +1 312 368-3260 Jay Djemal Metals & Mining [email protected] +1 312 368-3134 Argentina ⎯ Fitch Argentina Calificadora de Riesgos S.A. Cecilia Minguillón Sr. Director of Energy (Oil & Gas), Utilities [email protected] +54 11 5235-8123 Ana Paula Ares Energy (Oil & Gas), Utilities [email protected] +54 11 5235-8121 Gabriela Catri Infrastructure, Building Material, Construction [email protected] +54 11 5235 8129 Fernando Torres Metal & Mining, Building Material & Construction [email protected] +54 11 5235-8124 Federico Sandler Electric-Corporate [email protected] +54 11 5235-8122

Bolivia ⎯ Fitch Bolivia Josseline Jenssen Energy (Oil & Gas), Utilities [email protected] +59 12 277-4470 Brazil ⎯ Fitch Ratings Brazil Ltda. Ricardo Carvalho Sr. Director of Brazilian Corporates, Utilities [email protected] +55 21 4503-2627 Jose Romero Homebuilding, Building Products [email protected] +55 11 4504-2603 Mauro Storino Telecom & Media, Utilities [email protected] +55 21 4503-2625 Fernanda Rezende Homebuilding, Retail, Pulp & Paper [email protected] +55 11 4504 2618 Renata Maria Pinho Electric-Corporate [email protected] +55 11 4504 2600 Gisele Paolino Transportation, Retail [email protected] +55 21 4503-2624 Débora Jalles Basic Materials, Airlines [email protected] +55 21 4503-2629 Gustavo Mueller Associate Director [email protected] +55 21 4503-2601 Central America ⎯ Fitch Costa Rica Calificadora de Riesgos, S.A. Sr. Director of Central America Corporates, Erick Campos Utilities [email protected] +506 2 296-9182 x13 Vanessa Villalobos Utilities, Retail, Building Materials [email protected] +506 2 296-9182 x29 Chile ⎯ Fitch Chile Clasificadora de Riesgos Limitada Rina Jarufe Sr. Director of Chilean Corporates [email protected] +56 2 499-3310 Giovanny Grosso Metals & Mining, Utilities [email protected] +56 2 499-3327 Paula Garcia-Uriburu Natural Resources [email protected] +56 2 499-3316 Monica Coeymans Forestry Products, Food & Beverage [email protected] +56 2 499-3312 Maria Beatriz Moreno Utilities [email protected] +56 2 499-3315 Andrea Jimenez Property/Real Estate, Retailing [email protected] +56 2 499-3322 Andrea Rojas Research Assistant [email protected] +56 2 499-3337 Colombia ⎯ Fitch Ratings Colombia Glaucia Calp Sr. Director of Colombia Corporates, Utilities [email protected] +57 1 326-9999 x1110 Telecommunications,Retail, Water/Waste Natalia O’Byrne Utilities [email protected] +57 1 326-9999 x1100 Milena Carrizosa Electric-Corporate, Water/Waste Utilities milena.carrizosa@ fitchratings.com +57 1 326-9999 x1090 Maria Pia Medrano Electric-Corporate, Health Care [email protected] +57 1 326-9999 Diego Mauricio Barreto Food, Health Care, Energy (Oil & Gas) [email protected] +57 1 326-9999 x1170 Felipe Vargas Gomez Transportation, Building Materials [email protected] +57 1 326-9999 x1120 Water/Waste Utility, Diversified Services, Maria Mercedes Cedeno Health Care [email protected] +57 1 326-9999 x1140 Mario Irreno Cardenas Water/Waste Utility, Health Care [email protected] +57 1 326-9999 x1002

Mexico ⎯ Fitch Mexico S.A. de C.V. Victor Villarreal Sr. Director of Mexican Corporates [email protected] +52 81 8399-9100 x101 Alberto Moreno Diversified Manufacturing, Media [email protected] +52 81 8399-9100 x133 Sergio Rodríguez Telecom [email protected] +52 81 8399-9100 x135 Rogelio Gonzalez Food & Beverage, Auto & Related [email protected] +52 81 8399-9100 x134 Alberto de los Santos Food, Beverage, & Tobacco, Auto & Related [email protected] +52 81 8399-9100 x110 Venezuela ⎯ Fitch Venezuela, Sociedad Calificadora de Riesgos, S.A. Carlos Fiorillo Office Head [email protected] +58 212 286-3356 Hilario Ramirez Utilities [email protected] +58 212 286-3356 Julio Ugueto Food, Beverage, & Tobacco, Homebuilding [email protected] +58 212 286-3356 Jose Luis Rivas Associated Director [email protected] +58 212 286-3356

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