September 28, 2007 ARTICLE IN BUSINESS STANDARD ON FORD ROMANIAN NEGOTIATIONS The following article is the English translation of a story which ran in the September 20 edition of the Business Standard, a Romanian business publication. McGuireWoods Romania played key role in the negotiations between the Romanian government and Ford of Europe for the transaction. A Spaniard will run the Ford plant in Craiova Business Standard, September 20, 2007 The first person Ford will bring to Romania is a Spaniard, and his role will be to coordinate the entire transition process at the plant from the Daewoo to Ford era, according to the interview Lyle Watters, Ford’s chief-negotiator for the acquisition of the Craiova plant gave exclusively to the Business Standard. The mandate of the Spanish manager could go on even after the first Ford model will be produced in Craiova in 2009. Even so, the American company plans to keep the current management team for an undetermined period of time. “The person that will lead the transition period is Spanish, but we’ll have others that will come from the UK or Germany, The Spanish expert will lead the transition to make sure we get through a successful launch of the vehicles. The plan is he will be here for a substantial period of time”, said Lyle Watters, without giving too many details for now. The first team of experts may live in the building that Daewoo has owned in the central part of Craiova, which will soon be taken over by the American company. “It was really important for Ford to retain the block of apartments in Craiova. Pretty soon we’ll have to bring some of our people to Craiova; there is a shortage of accommodation there, so this was a key element to retain. We retained ownership of one of the blocks, the second block we will retain on a long term lease basis”, added Watters. Concerning the price that the U.S. Company offered for the 72.4% package of shares, Watters said it was only part of the total package offered to the Government – the value of the Automobile Craiova land that remained in the possession of the Romanian Government could be multiples of the purchase price. “We retained two pieces: the block of apartments at Craiova and land at the port of Constanta—very important for logistical reasons”, Watters also said. Ford had a back-up for Craiova The name of the company in Romania hasn’t been settled yet, but it will surely consist of elements like "Ford" and "Craiova". The discussions between the American company and the Romanian Government started more than two years ago. “The major issue was the Korean’s interest of 51% in DWAR; nothing could happen until the Koreans left”, Watters explains. He also said that Ford was not interested in buying a company with debts of over one billion Euros. “The negotiations started on July 6th 2007. Until that point, we were preparing plans and waiting for the path to be cleared so that negotiations on the privatization could begin. The privatization could only happen when the Koreans left the scene, and the problem of the debts was solved”, added Watters. Ford’s representatives stated that they had alternatives in the event the transaction with the Romanian plant did not work out. “We looked at a number of different countries in Eastern Europe, and had preliminary discussions. It was important we had that backup plan, because as Ford of Europe's volume continues to grow, we couldn’t be totally exposed to this one transaction”, declares Ford’s chief negotiator. Ford’s negotiation team consisted of Lyle Watters, Director of Business Strategy – Ford of Europe, and other two experts of the company. “I’ve always had, apart for myself, either Mrs. Manuela Nestor (partner at Nestor Nestor Diculescu Kingston Petersen law firm) or Ms. Nadia Crisan, our strategic consultant, present at the negotiations”, explained Watters. The discussions on the technical and financial offers submitted by the U.S. Company on July 5th started the next day. “In total, there were hundreds of hours of negotiations. Initially we met once, twice a week with the Commission, but then towards the end of July, we started meeting almost every day, to ensure we stayed on plan to complete negotiations by early September. Some of those meetings run until 2 am in the morning”, added the Ford official. The privatization contract of Automobile Craiova was signed a week ago in Frankfurt. Ford took over 72.4% of the Romanian company for EUR 57 mil, and committed to EUR 675 mil investments and to reach a level of integration of 60% for the cars produced in Craiova. The U.S. Company will produce 300.000 cars per year starting on 2011, of which 90% will be exported. The exports will reach EUR 2 billions, with a strong effect on the commercial balance, as Sebastian Vladescu – president of the privatization committee, recently stated. Plans The U.S. Company will produce 300.000 cars per year starting on 2011, from which 90% will be exported. The Ford moves The transition process will be coordinated by a Spaniard Ford took over two parcels of land and Daewoo block of flats in Craiova The U.S. Company always had alternatives in Eastern Europe The name of the company which will run the plant will include “Ford” and “Craiova” elements. Consulting News and Press Releases 804.775.1900 info@mwcllc.com