B2-HV-17-D f the gear units Notes Flender GmbH Flender MD Bevel-helical gear Reduction Boxes B2

Flender/Flender Gear Units/Bevel-helical gear Reduction Boxes B2

n IVJ' current financial position. sale of assets may be difficult and time consuming compared to contracting out management and may result in lower sales price than if the assets are sold after operations are improved via management contract. Option 2: Infusion of New Private Capital (Joint Venture) Under Option 2 new company would be formed with the assets of IVJ and new capital invested by private investor group. The new company would be jointly owned by the private investor group and the Government with the private group holding majority control. As in Option 1, the sale of specific assets would be negotiated with employees and all liabilities would remain with the government. The principal advantage of Option 2 over Option 1 is that private investors may be more interested in participating if their funds are infused into the company to improve performance rather than paid to the Government as under Option 1. The private owners could buy out the Government' share at later date if the mill becomes successful. The sale of the Government' remaining shares after period of private sector management would likely result in higher value than could be received today. In this case, the government may receive higher price the in Option 1. The principal disadvantages of Option 2 compared to Option 1 are that the Government continues to bear partial responsibility for financial losses and the Government receives less or no cash as result of privatization. Option 3: Management/Employee Buvout Option 3 is similar to Option 1 except that the private investors that purchase the assets of IVJ would be IVJ management and/or employees. The purchase would likely have to be financed with Government support. The principal advantages of Option 3 are as follows: As owners of the mill, management and/or employees would have an extremely strong incentive to improve management, operations, and worker productivity. * Management/employee ownership ma