LIMITING FACTORS AND OTHER ASSUMPTIONS
The accompanying report (the “Report”) was provided solely for the use of Ampal-American Israel Corporation (the “Recipient”) by Houlihan Lokey Financial Advisors, Inc. (“Houlihan Lokey”) for general corporate planning purposes and is not intended to be relied upon by any other person or entity or used for any other purpose. Use of the Report by any third party is at the sole risk of that party, and access to the Report by any third party does not create privity between Houlihan Lokey and any such party. This statement of Limiting Factors and Other Assumptions is in addition to any other assumptions, qualifications, limitations, conditions or restrictions set forth in the Report. Any undefined terms used in this statement of Limiting Factors and Other Assumptions shall have the meanings set forth in the Report.
The Report was based on financial, economic, market and other conditions, the condition of the “Project,” and the purchasing power of the currency stated in the Report, as they could be reasonably evaluated, as of December 31, 2011 (the “Valuation Date”). Any conclusions contained in the Report were effective only as of the Valuation Date. Unanticipated events and circumstances may occur and actual results may vary from those assumed. The variations may be material and Houlihan Lokey assumed no responsibility for any such variations. Subsequent events that could affect the conclusions set forth in the Report include, without limitation, changes in industry performance or market conditions and changes to the business, financial condition and results of operations of the Project. In addition, Houlihan Lokey relied upon and assumed, without independent verification, that there had been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Project since the respective dates of the most recent information, financial or otherwise, provided to it that would be material to its analyses.
Houlihan Lokey has not undertaken, and is under no obligation, to update, revise, reaffirm or withdraw the Report. Any events occurring after the Valuation Date have not been considered, and Houlihan Lokey has no obligation to update the Report for such events or otherwise comment on or consider such events. In particular, the Report has not been updated to reflect any changes in:
- The likelihood, timing and terms of requisite financing for the Project;
- The potential impact of the Recipient’s current financial situation on the Project, including any liquidation, receivership, bankruptcy and/or similar proceedings in which the Recipient is or may be involved, as well as any arrangements currently contemplated between the Recipient and any of its creditors and/or debenture holders;
- The timing of commencement of construction of the Project;
- Estimated exchange rates;
- Estimated energy prices; or
- Estimated changes, if any, in the cash flow projections for the Project, or any other assumptions underlying such cash flow projections.
The projections contained in the Report may or may not be achieved and differences between projected results and those actually achieved may be material. Houlihan Lokey was advised, and assumed, that such projections were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of the future financial results and condition of the Project, as of the Valuation Date, and Houlihan Lokey expressed no views with respect to such projections or the assumptions on which they were based.
The analyses performed by Houlihan Lokey set forth in the Report are not necessarily indicative of actual values or actual future results, which may vary significantly. Houlihan Lokey assumed no responsibility for any such variations. Any valuation is only an approximation, subject to uncertainties and contingencies, all of which are difficult to predict and beyond the control of the firm preparing such valuation and, thus, a valuation is not intended to be, and should not be construed in any respect as, a guarantee of value. The analyses relating to the Project do not purport to reflect the prices at which any equity of the Project may actually be sold. They relate to a theoretical intrinsic value of the Project; they do not relate to, or purport to be, estimates of fair market value or fair value. For various reasons, the price at which any equity of the Project might be sold in a specific transaction between specific parties on a specific date might be significantly different than those set forth in the Report. The issuance of the Report by Houlihan Lokey did not represent an assurance, guarantee or warranty that the Recipient or any of its affiliates would not default on any obligations or enter into any liquidation, receivership, bankruptcy or similar proceedings, nor did Houlihan Lokey make any assurance, guarantee or warranty that any covenants, financial or otherwise, associated with any financing will not be breached or violated in the future.
The scope of the financial analysis contained in the Report was based on discussions with the Recipient (including, without limitation, regarding the methodologies to be utilized), and Houlihan Lokey did not make any representation, express or implied, as to the sufficiency or adequacy of such financial analysis or the scope thereof for any particular purpose. In light of the unique nature of the Project, only a discount cash flow analysis was used in connection with estimating the equity net present value of the Project. Houlihan Lokey was not requested to make, and did not make, any physical inspection or independent appraisal or evaluation of any of the specific assets, properties or liabilities (fixed, contingent, derivative, off-balance-sheet or otherwise) of the Project. Houlihan Lokey relied on the representations made concerning the anticipated cash flows to be generated by the Project, together with the estimated value of certain real property not expected to be used for production purposes, net of payments to be made to creditors, whether in respect of contingent liabilities or otherwise.
Houlihan Lokey (a) relied upon and assumed, without independent verification, the accuracy and completeness of all data, material and other information furnished, or otherwise made available, to Houlihan Lokey, discussed with or reviewed by Houlihan Lokey, or publicly available, and did not assume any responsibility with respect to such data, material and other information (including, without limitation, conformity or non-conformity with generally accepted accounting principles and/or other guidelines established by regulatory or other governing bodies), (b) made no representation or warranty (express or implied) in respect of the accuracy or completeness of such information and (c) relied upon the assurances received by it that there were no facts or circumstances that would make such information inaccurate or misleading.
The information presented in the Report was included solely to assist the Recipient for general corporate planning purposes. The information may contain departures from generally accepted accounting principles and/or other guidelines established by regulatory or other governing bodies. Houlihan Lokey made no representation as to whether the Report complies with any standards, guidelines, rules or procedures prescribed by any valuation association or any other group or organization.
Houlihan Lokey’s work with respect to any information did not constitute an audit, review, compilation, attestation, examination or agreed upon procedures engagement with respect to such information in accordance with standards established by the American Institute of Certified Public Accountants or any other organization, and, accordingly, Houlihan Lokey did not express any audit opinion or any other form of assurance on such information.
Houlihan Lokey is not an expert on, and nothing contained in the Report should be construed as advice with regard to, legal, accounting, regulatory, insurance, environmental, engineering, tax or other specialist matters. Houlihan Lokey assumed that the Project, the Recipient and applicable affiliates of the Recipient have complied with all applicable regulations, codes, ordinances, statutes and laws (including, without limitation, usage, environmental, zoning and similar laws and/or regulations), and that all required licenses, certificates of occupancy, consents or other legislative or administrative authority from any government or private entity or organization have been or can be obtained or renewed for any use on which any conclusions contained in the Report are based and no effort has been made to determine the possible effect, if any, on the Project due to future regulations, codes, ordinances, statutes, laws or other requirements.
Any conclusions set forth in the Report were not intended by Houlihan Lokey, and should not be construed, to be investment advice in any manner whatsoever, or a recommendation to buy or sell any assets or securities of relating to the Project.
The Report did not constitute a commitment by Houlihan Lokey or any of its affiliates to underwrite, subscribe for or place any securities, to extend or arrange credit, or to provide any other services. Houlihan Lokey and its affiliates (collectively, the “Houlihan Lokey Group”), engage in providing investment banking, securities trading, financing, and financial advisory services and other commercial and investment banking products and services to a wide range of institutions and individuals. In the ordinary course of business, the Houlihan Lokey Group and certain of its employees, as well as investment funds in which they may have financial interests or with which they may co-invest, may acquire, hold or sell, long or short positions, or trade or otherwise effect transactions, in debt, equity, and other securities and financial instruments (including bank loans and other obligations) of, or investments in, one or more parties or entities relevant to the matters set forth in the Report and their respective affiliates or have other relationships with such parties or entities. With respect to any such securities, financial instruments and/or investments, all rights in respect of such securities, financial instruments and investments, including any voting rights, will be exercised by the holder of the rights, in its sole discretion. In addition, the Houlihan Lokey Group may in the past have had, and may currently or in the future have, financial advisory or other investment banking relationships with various parties or entities, including parties or entities that may have interests with respect to one or more parties or entities relevant to the matters set forth in the Report, from which conflicting interests or duties may arise. Although the Houlihan Lokey Group in the course of such other activities and relationships may acquire information about such parties or entities, or that otherwise may be of interest to a reader of the Report, the Houlihan Lokey Group has no obligation to, and may not be contractually permitted to, disclose such information, or the fact that the Houlihan Lokey Group is in possession of such information, to a reader of the Report.
