ROLE OF PRIVATE EQUITY IN AUTO SUPPLY BASE RESTRUCTURING

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ROLE OF PRIVATE EQUITY IN AUTO SUPPLY BASE
RESTRUCTURING

Thomas T. Stallkamp Industrial Partner Ripplewood
Holdings, LLC Automotive News World
Congress January 17, 2006
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Factors Affecting Supplier Restructuring

• Limited traditional financing
• Frequent reliance on single customer
• Lack of OEM assistance or loyalty
• Liquidity issues created by uncertain schedules
• Arbitrary OEM pricing requests

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Restructured Supplier Profile (Youll know
things are better when)

• Pricing based on technology/cost advantage
• Balanced customer base
• Operations in major geographic markets (NA,
  Europe, Far East)
• Streamlined overhead and wage structure
• Cost reductions greater than price downs

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Role of Private Equity

• Accelerate restructuring of supply base
• Increased size and mass through add-on
  acquisitions or mergers
• Provide capital for refinancing
• Promote critical review of Business Plan
• Increased emphasis on profitability over revenue
• Increased management involvement through
  ownership

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Opportunities in Auto Supply

• Industry will always need parts
• Take advantage of restructuring events
• Combination of similar operations/suppliers
• Acquisition of OEM non-core businesses
• Coordinating with OEM outsourcing plans as
  preferred supplier
• Leverage of global assets (accelerate moves to
  lower cost locations)

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Light Metal Strategy

• Public Japan Private Belgium
• Locations Japan Europe
• Thailand Brazil
• China JV Canada
• Multiple customers
• Broad geographic base
• Strong technology and developments