B3-KH-6-A o Article No LP Type Size d l G l kg Sol Bevel-helical speed reduction gearboxes B3

Flender/Flender Gear Units/Bevel-helical speed reduction gearboxes B3

rn to an investor group with experience in the industry. The liabilities of IVJ would remain with the Government. The responsibility for severance benefits would also remain with the government, but would partially offset employees' payment for their option to buy 2% of the State' holding in IVJ. The investors would form new company, which would be set up at the time of the sale, with IVJ' assets and continue to operate the mill. OPTION 2: INFUSION OF NEW PRIVATE CAPITAL (JOINT VENTURE) 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 pv'ivate 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. * OPTION 3: MANAGEMENT/EMPLOYEE BUYOUT CORNAP would sell the assets of IVJ as going concern to IVJ management and/or employees. The purchase would likely have to be financed with Government support. * OPTION 4: MANAGEMENT CONTRACT OR LEASE CORNAP would lease or contract out management of IVJ to private firm with expertise in sugar mill operations. Ownership of IVJ would remain with CORNAP and the mill would continue as going concern. Ownership of the mill could be transferred to the private sector several years later after operations, management, and financial performance had been improved. 3. Recommended Strategy Given the uncertainty concerning the attractiveness of IVJ to private parties, we recommend that CORNAP pursue flexible strategy which maximizes the chances of achieving successful privatization. Based on the Government objectives outlined above we recommend the following approach: 1. Solicit the participation of private investors in IVJ through sale of assets or joint venture (Options 1 or . The advantages of this approach are as follows: 0 Ownership of IVJ is transf