Exhibit (c) - (2)
Minneapolis New York Chicago San Francisco Palo Alto London Hong Kong PROJECT GLORIA Confidential Discussion Materials June 1, 2012 Since 1895. Member SIPC and NYSE. GUIDES FOR THE JOURNEY.® PiperJaffray® |
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TABLE OF CONTENTS CONFIDENTIAL INFORMATION Section I Transaction Overview Section II GLORIA Overview Section III Valuation Summary Appendix A GLORIA Financial Summary This presentation has been delivered pursuant to, and is subject to the terms and conditions of, the engagement letter between Piper Jaffray & Co. (“Piper Jaffray”) and GLORIA dated March 6, 2012. GUIDES FOR THE JOURNEY.® PiperJaffray® 2 |
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SECTION I Transaction Overview GUIDES FOR THE JOURNEY.® PiperJaffray® |
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TRANSACTION OVERVIEW CONFIDENTIAL INFORMATION BIDDING PARTIES OFFER PRICE AND FINANCING STRUCTURE CONDITIONS TO CLOSING Summary of the Go-Private Offer to GLORIA The Chairman of GLORIA, (the “Buyer”) has entered into an agreement to pursue the acquisition of share and ADS of GLORIA not owned by the Buyer, subject to Rule 13e-3 under the U.S. Securities Exchange Act of 1934 (the “Transaction”) Buyer currently owns c.38.7% of the outstanding ordinary shares on a fully diluted basis Offer price of $0.162 per share and $1.62 per ADS in cash for each outstanding ADS (each ADS represents ten ordinary shares of GLORIA), other than(i) any share or ADS owned by any subsidiaries of Gloria, (ii) any share and ADS beneficially owned (as determined pursuant to Rule 13d-3 under the Exchange Act) by the Buyer prior to at the time when the Transaction has been registered by the Registrar of Companies of the Cayman Islands or at such other subsequent date or time as Merger Sub and the Company may agree and specify in the Transaction in accordance with the Cayman Companies Law, (iii) any share held by the depositary of GLORIA which is not represented by ADS and (iv) share owned by holders of share who have validly exercised and not effectively withdrawn or lost their appraisal rights pursuant to Section 238 of the Cayman Companies Law Transaction consideration to be financed by the Buyer’s own funds Our analysis assumes among other matters that the above sources of cash will be available and the conditions in the merger agreement will be satisfied in accordance with their terms Buyer (Trillion Energy Holdings Limited (BVI)) has formed a merger sub (Trillion Energy Investments Holding Limited (Cayman)), for the purpose of pursuing the Transaction Shareholder vote of at least two-thirds of shares present and voting Majority of the minority shareholders’ vote, i.e. a majority of the total issued and outstanding shares other than those (a) held by the Buyer or an entity controlled by the Buyer and (b) subject to the earn-out obligations There shall have been no event that could be expected to have an MAE GUIDES FOR THE JOURNEY.® PiperJaffray® 4 |
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TRANSACTION SUMMARY CONFIDENTIAL INFORMATION $ in millions, except per share data Each ADS represents 10 shares Summary Financial Terms Pre-offer (1) Current (2) At Offer Price per ADS $1.23 $0.99 $1.62 Offer Price Premium 31.7% 63.6% - ADS Outstanding: Basic ADS Outstanding 17.2 17.2 17.2 ADS Outstanding 17.2 17.2 17.2 Implied Equity Value of GLORIA $21.1 $17.0 $27.8 Plus: Debt (3) $17.5 $17.5 $17.5 Less: Cash (3) ($8.2) ($8.2) ($8.2) Plus: Minority Interest (3) $4.2 $4.2 $4.2 Implied Enterprise Value of GLORIA $34.6 $30.5 $41.3 Valuation Summary GLORIA Statistics Earnings per ADS (4)(5) Metric EBITDA (4)(5) LTM 2012 $5.2 ($0.39) Multiples based on Pre-offer(1) Price Multiples based on Current(2) Price Multiples based on Offer Price EV/EBITDA (4)(5) P/E (4)(5) EV/EBITDA (4)(5) P/E (4)(5) EV/EBITDA (4)(5) P/E (4)(5) LTM 2012 6.7x NM 5.9x NM 8.0x NM 1. Pre-offer closing price as at Feb 23, 2012 2. Current closing price as at May 30, 2012 3. As of March 31, 2012 4. For the 12-month period ended March 31, 2012 5. Calculation of EBITDA and EPS calculation excluded one time impairment loss on assets, inventory write-downs and changes in fair value of contingent liabilities GUIDES FOR THE JOURNEY.® PiperJaffray® 5 |
SECTION II
GLORIA Overview
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RECENT FINANCIAL TRENDS — GLORIA
CONFIDENTIAL INFORMATION
$ in millions
LTM Rolling Sales by Quarter
$250 $235.0 $219.2 $230.3 $212.1 $210.0 $201.1 $200 $182.2 $176.7 $158.4 $150 $127.5 $131.4
$100 $92.0 $89.0
$62.6 $62.0
$46.7
$50 $36.8
$-
Q1 ‘08 Q2 ‘08 Q3 ‘08 Q4‘ 08 Q1 ‘09 Q2 ‘09 Q3 ‘09 Q4‘ 09 Q1 ‘10 Q2 ‘10 Q3 ‘10 Q4‘ 10 Q1 ‘11 Q2 ‘11 Q3 ‘11 Q4‘11 Q1‘12
LTM Rolling EBITDA by Quarter
$100
$83.2
$80 $73.2 $73.3
$66.4
$56.8
$60
$40
$22.4
$20
$10.1
$5.9 $5.2
$1.8 $2.9
$(0.9)
$-
Q1 ‘08 Q2 ‘08 Q3 ‘08 Q4‘ 08 Q1 ‘09 Q2 ‘09 Q3 ‘09 Q4‘ 09 Q1 ‘10 Q2 ‘10 Q3 ‘10 Q4‘ 10 Q1 ‘11 Q2 ‘11 Q3 ‘11 Q4‘11 Q1‘12
$(9.5)
$(20)
$(20.7) $(21.0) $(19.7)
$(28.8)
$(40)
Source: GLORIA’s SEC filings
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RECENT AND PROJECTED FINANCIAL TRENDS — GLORIA
CONFIDENTIAL INFORMATION
$ in millions
Sales by Year
$700
$606.8
$600 $566.7 $566.7 $595.5 $584.1
$501.7
$500 $466.9
$428.7
$400 $352.0
$300
$219.2 $230.3
$200
$92.0
$100 $62.0
$-
2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F
EBITDA by Year
$80 $73.3
$60
$40
$20.9 $19.7 $19.0
$20 $13.0 $15.7 $15.0
$11.3 $11.3
$6.7
$(0.9) $2.9
$-
2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F
$(20)
$(20.7)
$(40)
Source: GLORIA’s SEC filings and GLORIA and GLORIA management projections.
Note: 2011 EBITDA excluded impairment losses in relation to GLORIA’s loss-making bio-diesel operations; forecast EBITDA excluded one-off gains from disposal
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GLORIA STOCK TRADING METRICS — 1 YEAR
CONFIDENTIAL INFORMATION
GLORIA Stock Trading Metrics — 1 Year
Price per ADS US$
5.50 5.00 4.50 4.00
Price 3.50 3.00 2.50 2.00 1.50 1.00 0.50
05-31-2011 08-31-2011 11-30-2011 02-29-2012 05-30-2012
Offer Price: US$1.62
07/01/11 to 09/30/11 shareholding change Renaissance Technology Corp. down 26,249 shares ; Mr. Chen Zihong (Former Chief Logistics Officer) down 644,409 shares
07/28/11
Announced the acquisition of Hunan Xiangbei, GLORIA’s copper recycling business
10/01/11 to 12/31/11 shareholding change Renaissance Technology Corp. down 15,900 shares; Mr. Yu Jianqiu up 244,636 shares
08/23/11
Announcement of 2011 2Q results
12/21/11 Announcement of 2011 3Q results
01/01/12 to 03/31/12 shareholding change Renaissance Technology Corp. up 11,900 shares; Jane Street Capital, LLC up 42,481 shares 2/24/12
Announcement of receipt of go-private offer 4/27/12
Announcement of 2011 4Q results
5/09/12 Receives suspension and delisting warning from the NYSE
No of ADS
‘000 1,000 900 800 700 600 500 Volume 400 300 200 100 0
Price Metrics
(Closing Prices)
$16.0 $15.25 $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $3.00 $1.68 $2.0 $1.33 $0.99 $0.84
$0.0
Current 180-Day 1-Year Average2-Year Average 3-Year High 3-Year Low
(May-30-2012) Average
Volume Metrics
(Daily Average ADS 1,000s)
100.0 93.2 90.0 79.4 80.0 70.0 60.0 50.9 50.0 40.0 32.8 30.0 20.0 10.0 0.0
180-Day Average 1-Year Average 2-Year Average 3-Year Average
Percent of Volume Traded in Stock Price Range — 1 Year
40% 34.8% 35% 33.7% 30% 24.9% 25% 20% 15% 10% 6.6% 5% 0%
< $1.62 $1.62-$2.11 $2.12-$2.61 $2.62-$3.11
Source: Capital IQ. Represents the period from May 31, 2011 to May 30, 2012.
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GLORIA STOCK TRADING METRICS — 1-YEAR AND 3-YEAR
CONFIDENTIAL INFORMATION
Relative Price Chart — 1 Year (1)
120
100 80
60
40
20 05-31-2011
07-31-2011 09-30-2011 11-30-2011 01-31-2012 3-31-2012 05-30-2012
GLORIA
NYSE Composite Index
S&P500
Selected public companies (3) average
Relative Price Chart — 3 Year (2)
260 240 220 200 180 160 140 120 100 80 60 40 20 0 06-01-2009
09-01-2009 12-01-2009 03-01-2010 06-01-2010 09-01-2010 12-01-2010 03-01-2011 06-01-2011 09-01-2011 12-01-2011 03-01-2012 05-30-2012
GLORIA
NYSE Composite Index
S&P500
Selected public companies (3) average
Source: Capital IQ.
1. Represents the period from May 31, 2011 to May 30, 2012.
2. Represents the period from June 1, 2009 to May 30, 2012.
3. Represents public companies selected for the trading analysis of public companies, for details please refer to Section III B — Selected Public Company Analysis
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GLORIA OWNERSHIP SUMMARY
CONFIDENTIAL INFORMATION
‰ Each ADS represents 10 shares
Institutional Holders (1) Executive Officers, Directors and Others (2)
Primary Percent of Primary Percent of Options & Total
Holder Shares Primary Holder Shares Primary Rtd. Stock Shares
Renaissance Technologies Corp. 7,003,800 4.1% Jianqiu Yu 66,442,578 38.7%—66,442,578
Others 510,210 0.2% Vendor of Jinxin 12,000,000 7.0%—12,000,000
Vendor of Xiangbei 3,080,916 1.8%—3,080,916
Total 81,523,494 47.5%—81,523,494
Summary of Share Ownership
Primary Percent of
Total 7,514,010 4.3% Holder Shares Primary
Institutional Holders 7,514,010 4.3%
Executive Officers, Directors and Others 81,523,494 47.5%
Public 82,730,155 48.2%
Total Institutions 7,514,010 4.3% Total Shares Outstanding (3) 171,767,659 100.0%
(1) Based on ownership as of 5/30/12 as reported by Capital IQ. (3) Equivalent to 17,176,765 ADSs i.e. 17.2 million ADSs.
(2) Based on ownership as of 5/30/12 as reported by Capital IQ and the Company’s SG13 G/A filing.
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SECTION III - A
Valuation Summary
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CONFIDENTIAL INFORMATION
OVERVIEW OF PROPOSED TRANSACTION
$ in millions, except per share data
• Each ADS represents 10 shares
Summary Financial Terms
Pre-offer (1) Current(2) At Offer
Price per ADS $1.23 $0.99 $1.62
Offer Price Premium 31.7% 63.6% -
ADS Outstanding:
Basic ADS Outstanding 17.2 17.2 17.2
ADS Outstanding 17.2 17.2 17.2
Implied Equity Value of GLORIA $21.1 $17.0 $27.8
Plus: Debt (3) $17.5 $17.5 $17.5
Less: Cash (3) ($8.2) ($8.2) ($8.2)
Plus: Minority Interest (3) $4.2 $4.2 $4.2
Implied Enterprise Value of GLORIA $34.6 $30.5 $41.3
Valuation Summary
GLORIA Statistics
Metric EBITDA (4)(5) Earnings per ADS (4)(5)
LTM 2012 $5.2 ($0.39)
Multiples based on Pre-offer(1) Price Multiples based on Current(2) Price Multiples based on Offer Price
EV/EBITDA (4)(5) P/E (4)(5) EV/EBITDA (4)(5) P/E (4)(5) EV/EBITDA (4)(5) P/E (4)(5)
LTM 2012 6.7x NM 5.9x NM 8.0x NM
1. Pre-offer closing price as at Feb 23, 2012
2. Current closing price as at May 30, 2012
3. As of March 31, 2012
4. For the 12-month period ended March 31, 2012
5. Calculation of EBITDA and EPS calculation excluded one time impairment loss on assets, inventory write-downs and changes in fair value of contingent liabilities
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CONFIDENTIAL INFORMATION
OVERVIEW OF PROPOSED TRANSACTION (CONT’D)
Transaction Premiums Analysis
Offer date 2/24/2012
Offer price $ 1.62
Premium to $1.62 Offer Price
Spot Prior Price Date Premium / (Discount)
1 Day $1.23 02/23/12 31.7%
7 Day $1.22 02/17/12 32.8%
30 Day $1.35 01/25/12 20.0%
90 Day $1.74 11/25/11 (6.7%)
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CONFIDENTIAL INFORMATION
SUMMARY OF ANALYSES
Analysis based on the following selection criteria
Trading Analysis of Selected Public Companies
• Selected U.S.-listed PRC-based industrial companies with a market capitalization below US$200 million and above US$10 million
Analysis of M&A Transactions of Selected Companies
• Go-private transactions involving selected U.S.-listed PRC-based industrial companies announced between January 1, 2010 and May 30, 2012
Discounted Cash Flow Analysis
• The Discounted Cash Flow Analysis is used to calculate a range of theoretical values for GLORIA based on the net present value of (a) GLORIA’s implied free cash flows for the second half of FY2012 through FY2020 and (b) a terminal value for GLORIA at financial year end 2020 calculated based on an exit multiple of EBITDA(1)
Premiums Paid Analysis
• Go-private transactions involving selected U.S.-listed PRC-based industrial companies announced between January 1, 2010 and May 30, 2012
Note 1: In conducting its analyses, Piper Jaffray did not perform any appraisals or valuations of any specific assets or liabilities (fixed, contingent or other) of GLORIA, and was not furnished or provided with any such appraisals or valuations. The analyses performed by Piper Jaffray in connection with its valuation analysis were going concern analyses. Piper Jaffray expresses no view regarding the liquidation value of GLORIA or any other entity.
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CONFIDENTIAL INFORMATION
VALUATION SUMMARY
$ in millions, except per share data
Selected Public Companies Selected M&A Transaction DCF Premiums Paid
Spot Price
1-Day 7-Day 30-Day 90-Day
$5.41 $5.00 $3.93
$4.00 $3.52 $3.82
Price Per ADS
$3.00
$2.05 $2.12
$2.00 $1.94
$1.69
Offer Price = $1.46
$1.62
$1.44
$1.28
$1.00 $1.18
$0.88
$0.53 $0.50
$0.00 $0.21
NEG NEG
LTM LTM Premium / LTM LTM Premium / LTM Stock Price
P/E EBITDA (Discount) to NAV P/E EBITDA (Discount) to NAV EBITDA 1-Day 7-Day 30-Day 90-Day
Metric: ($0.39) $5.2 $36.0 ($0.39) $5.2 $36.0 $5.2 $1.23 $1.22 $1.35 $1.74
Gloria - at offer price: NM 8.0x -22.8% NM 8.0x -22.8% 8.0x 31.7% 32.8% 20.0% -6.7%
Maximum 9.9x 14.3x -30.2% 26.9x 15.7x 81.9% 8.2x 67.0% 59.3% 57.1% 211.9%
3rd Quartile 3.6x 5.7x -54.0% 11.9x 10.0x 14.4% -- 46.9% 47.1% 48.8% 44.3%
Mean 3.1x 4.4x -68.4% 10.9x 8.4x -15.1% -- 32.3% 35.5% 37.8% 35.3%
Median 2.4x 3.0x -75.0% 9.3x 8.0x -27.1% -- 28.2% 36.4% 44.6% 32.7%
1st Quartile 1.5x 1.2x -82.7% 7.0x 6.3x -57.0% -- 20.4% 28.5% 27.6% 11.1%
Minimum 0.6x 0.8x -89.9% 0.7x 1.1x -74.6% 5.5x 4.4%(3.1%) 6.7%(71.4%)
Implied Price Per ADS:
Maximum NM $3.52 $1.46 NM $3.93 $3.82 $1.69 $2.05 $1.94 $2.12 $5.41
3rd Quartile NM $0.94 $0.96 NM $2.23 $2.40 $ -- $1.81 $1.80 $2.01 $2.51
Mean NM $0.55 $0.66 NM $1.75 $1.78 $ -- $1.63 $1.65 $1.86 $2.35
Median NM $0.10 $0.53 NM $1.61 $1.53 $ -- $1.58 $1.66 $1.95 $2.30
1st Quartile NM NEG $0.36 NM $1.10 $0.90 $ -- $1.48 $1.57 $1.72 $1.93
Minimum NM NEG $0.21 NM NEG $0.53 $0.88 $1.28 $1.18 $1.44 $0.50
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SUMMARY OF ANALYSES – PUBLIC COMPARABLES
CONFIDENTIAL INFORMATION
Selected Public Company Analysis
Gloria Selected Companies (1)
Pre-offer (2) $1.23 Current (3) $0.99 At Offer $1.62 Min 1st Quartile Mean Median 3rd Quartile Max
Price / LTM Earnings (4) NM NM NM 0.6x 1.5x 3.1x 2.4x 3.6x 9.9x
Enterprise Value / LTM EBITDA (4) 6.7x 5.9x 8.0x 0.8x 1.2x 4.4x 3.0x 5.7x 14.3x
Premium / (Discount) to NAV (5) -41.4% -52.8% -22.8% -89.9% -82.7% -68.4% -75.0% -54.0% -30.2%
(1) Selected companies consist of U.S.-listed PRC-based industrial companies with a market capitalization below US$200 million and above US$10 million
(2) Pre-offer closing price as at Feb 23, 2012
(3) Current closing price as at May 30, 2012
(4) LTM represents the 12-month period ended March 31, 2012 for GLORIA and latest filed last twelve months for selected public companies
(5) Based on latest NAV available before completion or latest filings
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SUMMARY OF ANALYSES – TRANSACTION COMPARABLES
CONFIDENTIAL INFORMATION
Selected M&A Transaction Analysis
Gloria Selected Transactions (1)
Pre-offer (2) $1.23 Current (3) $0.99 At Offer $1.62 Min 1st Quartile Mean Median 3rd Quartile Max
Price / LTM Earnings (4) NM NM NM 0.7x 7.0x 10.9x 9.3x 11.9x 26.9x
Enterprise Value / LTM EBITDA (4) 6.7x 5.9x 8.0x 1.1x 6.3x 8.4x 8.0x 10.0x 15.7x
Premium / (Discount) to NAV (5) -41.4% -52.8% -22.8% -74.6% -57.0% -15.1% -27.1% 14.4% 81.9%
(1) Selected transactions include go-private transactions involving U.S.-listed PRC-based industrial companies announced between January 1, 2010 and May 30, 2012
(2) Pre-offer closing price as at Feb 23, 2012
(3) Current closing price as at May 30, 2012
(4) LTM represents the 12-month period ended March 31, 2012 for GLORIA and latest filed last twelve months for selected public companies
(5) Based on latest NAV available before completion or latest filings
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SUMMARY OF ANALYSES – DISCOUNTED CASH FLOW
CONFIDENTIAL INFORMATION
Discounted Cash Flow Analysis
Implied Equity Value Per ADS - Gloria
Discount Rate
EBITDA Exit Multiple 21.2% 23.5% 25.9%
6.0x $1.47 $1.15 $0.88
6.5x $1.58 $1.24 $0.96
7.0x $1.69 $1.33 $1.03
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SUMMARY OF ANALYSES – PREMIUMS PAID
CONFIDENTIAL INFORMATION
Premiums Paid Analysis
Selected Companies (5)
Gloria @ $1.62 Min 1st Quartile Mean Median 3rd Quartile Max
1-Day Spot Premium (1) $1.23 31.7% 4.4% 20.4% 32.3% 28.2% 46.9% 67.0%
7-Day Spot Premium (2) $1.22 32.8% (3.1%) 28.5% 35.5% 36.4% 47.1% 59.3%
30-Day Spot Premium (3) $1.35 20.0% 6.7% 27.6% 37.8% 44.6% 48.8% 57.1%
90-Day Spot Premium (4) $1.74 (6.7%) (71.4%) 11.1% 35.3% 32.7% 44.3% 211.9%
(1) Premium based on GLORIA closing stock price of $1.23 on 2/23/2012
(2) Premium based on GLORIA closing stock price of $1.22 on 2/17/2012
(3) Premium based on GLORIA closing stock price of $1.35 on 1/25/2012
(4) Premium based on GLORIA closing stock price of $1.74 on 11/25/2011
(5) Go-private transactions involving selected U.S. listed PRC-based industrial companies announced between January 1, 2010 and May 30, 2012
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SECTION III - B
Selected Public Company Analysis
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SELECTED PUBLIC COMPANY ANALYSIS
CONFIDENTIAL INFORMATION
Overview
Piper Jaffray has reviewed and compared publicly available financial, operating and stock market information for GLORIA and selected publicly traded companies
Selection Criteria
Comparable public company selection criteria:
• U.S.-listed PRC-based industrial companies with market capitalization below US$200 million and above US$10 million
Selected Companies
U.S.-listed PRC-based industrial companies with market capitalization below US$200 million and above US$10 million
Lihua International, Inc. Yongye International, Inc.
China Gerui Advanced Materials Group Ltd. Jinpan International Ltd.
Gulf Resources, Inc. China New Borun Corporation
China Ceramics Co., Ltd. China Valves Technology, Inc.
Orient Paper, Inc. Tri-Tech Holding, Inc.
Sutor Technology Group Limited China Shengda Packaging Group Inc.
THT Heat Transfer Technology, Inc. China Precision Steel, Inc.
Ossen Innovation Co., Ltd. SmartHeat Inc.
Shengkai Innovations, Inc. SinoHub, Inc.
China Auto Logistic Inc.
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CONFIDENTIAL INFORMATION
SELECTED PUBLIC COMPANIES
$ in millions, except per share data
Market Cap.
Price Market Enterprise P / E EV / LTM Premium / (Discount)
Comparable Company Stock Symbol 05/30/12 Cap. Value LTM EBITDA to NAV
Lihua International, Inc. LIWA $5.35 $161.0 $53.0 3.1x 0.8x -30.5%
Yongye International, Inc. YONG $2.98 $150.6 $118.2 1.5x 0.9x -55.2%
China Gerui Advanced Materials Group Ltd. CHOP $2.53 $147.4 $149.1 2.2x 1.5x -52.8%
Jinpan International Ltd. JST $7.34 $120.3 $139.4 4.8x 4.2x -34.5%
Gulf Resources, Inc. GURE $1.54 $53.2 -$25.4 2.7x NM -78.4%
China New Borun Corporation BORN $2.42 $62.3 $100.4 1.3x 1.2x -71.8%
China Ceramics Co., Ltd. CCCL $3.01 $54.9 $65.9 1.1x 0.9x -72.7%
China Valves Technology, Inc. CVVT $1.46 $52.7 $52.9 NM 1.0x -78.5%
Orient Paper, Inc. ONP $2.06 $38.0 $43.2 1.8x 1.2x -71.5%
Tri-Tech Holding, Inc. TRIT $4.56 $37.4 $55.3 4.8x 5.3x -51.0%
Sutor Technology Group Limited SUTR $0.92 $37.1 $177.1 2.9x 5.3x -82.2%
China Shengda Packaging Group Inc. CPGI $0.65 $25.3 $21.9 3.3x 1.7x -75.0%
THT Heat Transfer Technology, Inc. THTI $1.93 $39.5 $58.1 6.8x 7.1x -30.2%
China Precision Steel, Inc. CPSL $0.28 $13.0 $54.5 NM 11.5x -89.9%
Ossen Innovation Co., Ltd. OSN $0.92 $18.3 $104.2 1.6x 5.2x -77.0%
SmartHeat Inc. HEAT $4.04 $16.0 $21.7 NM NM -87.7%
Shengkai Innovations, Inc. VALV $0.91 $15.6 -$53.9 0.6x NM -88.8%
SinoHub, Inc. SIHI $0.27 $9.0 $112.5 9.9x 14.3x -89.4%
China Auto Logistic Inc. CALI $0.44 $9.8 $110.8 1.3x 9.0x -83.1%
Maximum 9.9x 14.3x -30.2%
3rd Quartile 3.6x 5.7x -54.0%
Mean 3.1x 4.4x -68.4%
Median 2.4x 3.0x -75.0%
1st Quartile 1.5x 1.2x -82.7%
Minimum 0.6x 0.8x -89.9%
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SECTION III - C
Selected Precedent Transaction Analysis
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CONFIDENTIAL INFORMATION
SELECTED M&A TRANSACTIONS ANALYSIS
Overview
Piper Jaffray has reviewed go-private transaction involving of U.S. listed PRC industrial companies
Selection Criteria
Comparable M&A transaction selection criteria:
Go-private transactions involving selected U.S.-listed PRC-based industrial companies announced between January 1, 2010 and May 30, 2012
Selected Companies
Go-private transactions involving selected U.S. listed PRC-based industrial companies announced between January 1, 2010 and May 30, 2012
Shengtai Pharmaceutical Inc. WSP Holdings Ltd.
Andatee China Marine Fuel Services Corporation Fushi Copperweld, Inc.
China Advanced Construction Materials Group, Inc. China GrenTech Corp. Ltd.
Tiens Biotech Group USA Inc. China Security & Surveillance Technology, Inc.
China Fire & Security Group, Inc. Chemspec International Limited
Harbin Electric, Inc.
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SELECTED M&A TRANSACTIONS
CONFIDENTIAL INFORMATION
Premium /
Enterprise Enterprise Value/
Announcement LTM P/E Multiple (Discount) to
Value ($ million) LTM EBITDA
Date Status Target Acquirer NAV
4/17/2012 Announced Shengtai Pharmaceutical Inc. Qingtai Liu $83.1 5.8x 6.5x -74.6%
12/13/2011 Announced WSP Holdings Ltd. H.D.S. Investments LLC $849.4 N/A N/A -73.8%
11/23/2011 Announced Andatee China Marine Fuel Services Corporation An Fengbin (CEO and affliates) $86.4 10.4x 10.2x -27.1%
11/14/2011 Completed China GrenTech Corp. Ltd. Yingjie Gao (major shareholder) $243.5 7.7x 0.7x -69.8%
7/26/2011 Announced China Advanced Construction Materials Group, Inc. Xianfu Han, Weili He (major shareholders) $48.2 6.6x 4.6x -44.1%
6/27/2011 Completed Tiens Biotech Group USA Inc. Jinyuan Li (major shareholder) $148.5 15.7x 26.9x -35.4%
3/8/2011 Completed China Security & Surveillance Technology, Inc. Rightmarks Holdings Ltd $955.8 8.8x 9.0x -16.6%
3/7/2011 Completed China Fire & Security Group, Inc. Bain Capital Private Equity $227.1 13.7x 20.2x 81.9%
11/11/2010 Completed Chemspec International Limited Halogen mergersub Ltd $294.3 6.2x 9.6x 38.1%
11/3/2010 Announced Fushi Copperweld, Inc. Abax Global Capital Limited $64.7 1.1x 8.7x -9.4%
10/11/2010 Completed Harbin Electric, Inc. Investor Group $772.0 8.3x 12.5x 64.9%
Maximum 15.7x 26.9x 81.9%
3rd Quartile 10.0x 11.9x 14.4%
Mean 8.4x 10.9x -15.1%
Median 8.0x 9.3x -27.1%
1st Quartile 6.3x 7.0x -57.0%
Minimum 1.1x 0.7x -74.6%
Source: Public filings, Capital IQ, and Thomson SDC.
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26
SECTION III - D
Discounted Cash Flow Analysis
GUIDES FOR THE JOURNEY.®
PiperJaffray®
DISCOUNTED CASH FLOW ANALYSIS
CONFIDENTIAL INFORMATION
Overview
The Discounted Cash Flow Analysis is used to calculate a range of theoretical values for GLORIA based on the net present value of:
GLORIA’s implied free cash flows for the second half of FY2012 through FY2020
A terminal value of GLORIA at FY2020 based upon a market multiple of EBITDA
Key Assumptions
For the purposes of this analysis, Piper applied the following assumptions:
Cash flows discounted back to 30 June, 2012
Discount range from 21.2% - 25.9% based on the WACC calculation
Utilized a range of market EBITDA multiples
Assumed tax rates per Company management
All projected financial data for GLORIA for the period from the beginning of 2H FY2012E to the end of FY2020E used in Piper Jaffray’s Discounted Cash Flow analysis was prepared by management
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CONFIDENTIAL INFORMATION
DISCOUNTED CASH FLOW ANALYSIS – GLORIA
Projected Results (2)
Fiscal Year Ending December 2012 2H (1) 2013 2014 2015 2016 2017 2018 2019 2020
Revenue $202.7 $428.7 $466.9 $501.7 $566.7 $566.7 $606.8 $595.5 $584.1
Adjusted EBITDA $4.7 $11.3 $11.3 $13.0 $15.7 $15.0 $20.9 $19.7 $19.0
Adjusted Operating Income / (Loss) 3.9 9.4 9.5 11.2 13.8 13.2 19.1 17.8 17.1
Income Taxes (1.5) (3.3) (3.9) (4.6) (5.5) (5.6) (6.5) (6.6) (6.7)
After Tax Operating Income 2.4 6.1 5.5 6.6 8.3 7.6 12.6 11.3 10.5
Depreciation and Amortization / Other Non-Cash Items (3) 1.2 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9
(Increase) / Decrease in Net Working Capital (1.5) (6.7) (5.7) (5.0) (9.0) 0.0 (6.3) 1.2 0.9
Capital Expenditures (11.2) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash proceeds from asset sale 0.0 4.8 0.0 0.4 0.0 0.0 4.2 5.0 4.4
Free Cash Flow (9.0) 6.0 1.7 3.8 1.1 9.5 12.3 19.2 17.6
Terminal Value of Future Cash Flows (@6.5x 2020 EBITDA) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 123.5
Net Present Value Calculation Sensitivity Analysis - Enterprise Value
Discount Rate NPV of Free Cash Flow $14.4
NPV of Terminal Value $20.5 21.2% 23.5% 25.9%
Enterprise Value $34.8 EBITDA 6.0x $38.8 $33.2 $28.5
Exit 6.5x $40.6 $34.8 $29.9
Minority Interest (4) 4.2 Multiple 7.0x $42.5 $36.4 $31.2
Net Debt (4) 9.3
Equity Value $21.3 Sensitivity Analysis - Equity Value
Basic ADS Outstanding 17.2 Discount Rate
21.2% 23.5% 25.9%
EBITDA 6.0x $25.3 $19.8 $15.1
Exit 6.5x $27.2 $21.3 $16.4
Multiple 7.0x $29.0 $22.9 $17.7
Sensitivity Analysis - Equity Value Per ADS
ADS Outstanding 17.2 Discount Rate
Implied Equity Value Per Share $1.24 21.2% 23.5% 25.9%
EBITDA 6.0x $1.47 $1.15 $0.88
Assumptions Exit 6.5x $1.58 $1.24 $0.96
EBITDA in 2020: $19.0 Multiple 7.0x $1.69 $1.33 $1.03
EBITDA Multiple: 6.5x
Discount Rate / Return Rate: 23.5%
Tax Rate: 25.0%
Notes:
1. 2012 2H represents the period from July 1, 2012 to 31 December 2012.
2. Based on financial projections provided by Company’s management
3. Non-cash items include share-based compensation and impairment loss
4. As of March 31, 2012
29 GUIDES FOR THE JOURNEY.® PiperJaffray®
SECTION III - E
Premium Paid Analysis
GUIDES FOR THE JOURNEY.® PiperJaffray®
CONFIDENTIAL INFORMATION
PREMIUMS PAID ANALYSIS
Overview The Premiums Paid Analysis involves a review of purchase prices in public transactions relative to pre-announcement prices
Comparable M&A transaction selection criteria:
Selection Criteria Go-private transactions involving selected U.S.-listed PRC-based industrial companies announced between January 1, 2010 and May 30, 2012
Go-private transactions involving selected U.S. listed PRC-based industrial companies announced between January 1, 2010 and May 30, 2012
Selected Companies
Shengtai Pharmaceutical Inc. WSP Holdings Ltd.
Andatee China Marine Fuel Services Corporation Fushi Copperweld, Inc.
China Advanced Construction Materials Group, Inc. China GrenTech Corp. Ltd.
Tiens Biotech Group USA Inc. China Security & Surveillance Technology, Inc.
China Fire & Security Group, Inc. Chemspec International Limited
Harbin Electric, Inc.
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CONFIDENTIAL INFORMATION
PREMIUMS PAID ANALYSIS
Offer Price Premium
Announcement Date Status Target Acquirer Enterprise Value ($ million) 1 Day Prior 1 Week Prior 1 Month Prior 3 Month Prior
4/17/2012 Announced Shengtai Pharmaceutical Inc. Qingtai Liu $83.1 50.0% 50.0% 26.9% 37.5%
12/13/2011 Announced WSP Holdings Ltd. H.D.S. Investments LLC $849.4 50.0% 36.4% 44.6% -71.4%
11/23/2011 Announced Andatee China Marine Fuel Services CorporationAn Fengbin (CEO and affiliates) $86.4 20.6% 38.0% 50.4% 211.9%
11/14/2011 Completed China GrenTech Corp. Ltd. Yingjie Gao (major shareholder) $243.5 23.0% 15.9% 56.7% 50.0%
7/26/2011 Announced China Advanced Construction Materials Group, Inc. Xianfu Han, Weili He (major shareholders) $48.2 15.2% 44.3% 47.2% -11.4%
6/27/2011 Completed Tiens Biotech Group USA Inc. Jinyuan Li (major shareholder) $148.5 67.0% 59.3% 29.4% 18.7%
3/8/2011 Completed China Security & Surveillance Technology, Inc. Rightmarks Holdings Ltd $955.8 33.2% 34.9% 23.1% 32.7%
3/7/2011 Completed China Fire & Security Group, Inc. Bain Capital Private Equity $227.1 43.8% 56.5% 57.1% 25.7%
11/11/2010 Completed Chemspec International Limited Halogen mergersub Ltd $294.3 28.2% 22.2% 28.4% 3.4%
11/3/2010 Announced Fushi Copperweld, Inc. Abax Global Capital Limited $64.7 4.4% -3.1% 6.7% 52.7%
10/11/2010 Completed Harbin Electric, Inc. Investor Group $772.0 20.2% 36.2% 45.5% 38.6%
Maximum 67.0% 59.3% 57.1% 211.9%
3rd Quartile 46.9% 47.1% 48.8% 44.3%
Mean 32.3% 35.5% 37.8% 35.3%
Median 28.2% 36.4% 44.6% 32.7%
1st Quartile 20.4% 28.5% 27.6% 11.1%
Minimum 4.4% -3.1% 6.7% -71.4%
Source: Public filings, Capital IQ, and Thomson SDC.
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Appendix A
GLORIA Financial Summary
GUIDES FOR THE JOURNEY.® PiperJaffray®
CONFIDENTIAL INFORMATION
GLORIA FINANCIAL SUMMARY
FY2010 FY2011 FY2012E FY2013E FY2014E FY2015E FY2016E FY2017E FY2018E FY2019E FY2020E
Revenue $62.0 $230.3 $352.0 $428.7 $466.9 $501.7 $566.7 $566.7 $606.8 $595.5 $584.1
-Copper products $33.0 $221.8 $299.1 $375.8 $414.0 $452.0 $517.0 $517.0 $567.9 $567.4 $566.8
-Biodiesel products $29.0 $8.6 $52.9 $52.9 $52.9 $49.7 $49.7 $49.7 $38.9 $28.1 $17.3
Gross Profit -$11.1 $7.1 $17.9 $21.8 $24.0 $26.0 $29.8 $29.8 $32.1 $31.5 $30.8
Gross Profit Margin(%) NM 3.1% 5.1% 5.1% 5.1% 5.2% 5.3% 5.3% 5.3% 5.3% 5.3%
EBITDA -$0.9 $2.9 $6.7 $11.3 $11.3 $13.0 $15.7 $15.0 $20.9 $19.7 $19.0
EBITDA Margin (%) NM 1.3% 1.9% 2.6% 2.4% 2.6% 2.8% 2.7% 3.5% 3.3% 3.3%
EBIT -$18.6 -$6.5 $3.2 $9.4 $9.5 $11.2 $13.8 $13.2 $19.1 $17.8 $17.1
EBIT Margin (%) NM NM 0.9% 2.2% 2.0% 2.2% 2.4% 2.3% 3.1% 3.0% 2.9%
Net Income -$15.3 -$10.6 $1.2 $3.3 $2.5 $3.2 $3.7 $3.3 $8.2 $7.2 $6.9
Net Income Margin (%) NM NM 0.3% 0.8% 0.5% 0.6% 0.7% 0.6% 1.3% 1.2% 1.2%
Note: GLORIA’s operating results in the forecast period primarily attribute to the operating performance of its copper recycling business, which was acquired for an aggregate consideration of approximately US$22.2 million.
Source: GLORIA’s management projections.
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