2. Agenda
Deal rationale
Deal structure
O g a OU co e s o o u a
Orginal MOU conversion formula
2008 pro forma results
Appendix
*
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3. Early option exercise - Deal Rationale
Total consolidation of Goldfarb as an operational branch for PDG Realty;
PDG Realty will increase its exposure in the low income segment;
Reduction in the “Minority Interest” line of our Income Statement;
The terms from the MOU (as of 22/Nov/07) will be preserved. The future payments will continue to be calculated by the
original formula (presented later in this document);
Goldfarb´s management team continues in a long term commitment and subject to exclusivity and non-compete clauses;
Accretive valuation.
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4. Early option exercise - Deal Structure
Early exercise of the call option to acquire up to 20% of the common shares of Goldfarb Incorporações e Construções S.A.
through the issuance of PDG Realty shares and Subscription Warrants;
Company structure:
Structure before early option exercise Structure after early option exercise
Founding partners Founding partners
80% 20% 100.0% 0.0%
+ call option
20% Goldfarb
Deal structure:
Both sides had 4 options (PDG Realty calls and PDG Realty early exercised its 4 calls.
Founding partners puts). Each option had an specific Founding partners received 829,644 PDG shares and 4
exercise date (2009 up to 2012) related to 5% of subscription bonuses class 1
Goldfarb, totaling the remaining 20%. More details in appendix 1.
More details in the MOU dated as of 22/Nov/07.
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5. Early option exercise – Original MOU
conversion formula
Originally the option could be exercised annually by any of the partners in 4 tranches (the first of which in 2009, and the last
in 2012). Formula from original Memorandum of Understanding, to be implemented in current transaction:
PDGR3 nº = (GIC NP/ PDG NP) * 65% * PDG Shares * % of GIC Shares
Where:
Wh
PDGR3 no.: means the number of PDG’s shares to be issued as a result of the merger;
PDG NP: means the PDG's net profit as shown in the corporate balance sheet of December 31 of the year immediately prior to the exercise of the respective Option’s tranche;
GIC NP: means GOLDFARB’s net profit as shown in the corporate balance sheet dated December 31 of the year immediately prior to the exercise of the respective Option’s
tranche;
PDG Shares: means the number of shares representing PDG’s capital stock on December 31 of the year immediately prior to the exercise of the respective Option;
% of GIC Shares: means the percentage of GOLDFARB’s shares being sold in the tranche in question (5%).
Therefore,
Therefore the early exercise of the Option shall not result in any change in the Option exercise payment terms as (i) the
terms,
payment shall continue to be made with PDG Realty’s shares; (ii) the number of shares to be transferred shall continue to be
determined by the formula above; and (iii) the term for the subscription of PDG Realty’s shares by the partners of MP Holding
3 Ltda. shall remain unchanged, that is, it shall only take place in the following 3 fiscal years.
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6. Early option exercise – 2008 Results pro
forma
Just as an exercise, below we present the consolidated pro forma results (considering 100% stake in Goldfarb) for
operational figures in 2008 and adjusted net income in 9M08:
Operational results:
2008
80% Goldfarb 100% Goldfarb
Launched pro rata PSV 2,611.5 2,807.0
Contracted sales pro rata 1,811.9 1,943.6
Adjusted Net Income:
9M08
80% Goldfarb 100% Goldfarb
Adjusted Net Income 183.8 195.0
Adjusted Net Margin 21.3% 22.6%
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7. Appendix 1
Issued shares rational: Earnings Goldfarb 9M08 (R$) 56,089,336
Earnings PDG Realty 9M08 (R$) 180,449,881
(a) Goldfarb / PDG Realty 31.08%
(b) Multiple discount 35.00%
(a) * [ 1 ‐ (b) ] = (c) 20.20%
(d) Total PDG Realty shares 146,003,148
(c) * (d) = (e) 29,498,455
2008 shares to be bought 5.00%
(f) 9M08 pro rata shares to be bought 3.75%
Shares to be issued before adjustment (e) * (f) = 1,106,192
Threshold (1) 25%
Shares issued 9M08 829,644
,
Subscription bonuses rational (each Series represents 10 bonuses):
Nº OF SHARES TO BE ISSUED EXERCISE PERIOD
To be determined according to the Company’s and Goldfarb’s net profit in 2008, Beginning End
Series A
with a 35% discount in relation to the Company’s net profit multiple, minus the On the date of disclosure to the market of the Ninety (90) days as of the date when the
py p p
number of shares already delivered as a result of the Merger. Company’s financial statements referring to warrants of this series may be exercised.
the fiscal year ended on December 31, 2008.
To be determined according to the Company’s and Goldfarb’s net profit in 2009, Beginning End
Series B
with a 35% discount in relation to the Company’s net profit multiple. On the date of disclosure to the market of the Ninety (90) days as of the date when the
Company’s financial statements referring to warrants of this series may be exercised.
the fiscal year ended on December 31, 2009.
To be determined according to the Company’s and Goldfarb’s net profit in 2010, Beginning End
Series C
with a 35% discount in relation to the Company’s net profit multiple. On the date of disclosure to the market of the Ninety (90) days as of the date when the
Company’s financial statements referring to warrants of this series may be exercised.
the fiscal year ended on December 31, 2010.
To be determined according to the Company’s and Goldfarb’s net profit in 2011,
g py p , Beginning
g g End
Series D
with a 35% discount in relation to the Company’s net profit multiple. On the date of disclosure to the market of the Ninety (90) days as of the date when the
Company’s financial statements referring to warrants of this series may be exercised.
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the fiscal year ended on December 31, 2011.
