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ROLE OF PRIVATE EQUITY ROLE OF PRIVATE EQUITY IN IN

AUTO SUPPLY BASE RESTRUCTURINGAUTO SUPPLY BASE RESTRUCTURING

Thomas T. StallkampThomas T. Stallkamp

Industrial PartnerIndustrial PartnerRipplewood Holdings, LLCRipplewood Holdings, LLC

Automotive NewsAutomotive NewsWorld CongressWorld CongressJanuary 17, 2006January 17, 2006

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Factors Affecting Supplier Factors Affecting Supplier RestructuringRestructuring

Limited traditional financingLimited traditional financing Frequent reliance on single customerFrequent reliance on single customer Lack of OEM assistance or loyaltyLack of OEM assistance or loyalty Liquidity issues created by uncertain Liquidity issues created by uncertain

schedules schedules Arbitrary OEM pricing requestsArbitrary OEM pricing requests

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““Restructured” Supplier Profile Restructured” Supplier Profile (You’ll know things are better (You’ll know things are better

when…)when…) Pricing based on technology/cost Pricing based on technology/cost

advantageadvantage Balanced customer baseBalanced customer base Operations in major geographic markets Operations in major geographic markets

(NA, Europe, Far East)(NA, Europe, Far East) Streamlined overhead and wage Streamlined overhead and wage

structurestructure Cost reductions greater than price downsCost reductions greater than price downs

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Role of Private EquityRole of Private Equity

Accelerate restructuring of supply baseAccelerate restructuring of supply base Increased size and mass through add-Increased size and mass through add-

on acquisitions or mergerson acquisitions or mergers Provide capital for refinancingProvide capital for refinancing Promote critical review of Business Promote critical review of Business

PlanPlan Increased emphasis on profitability Increased emphasis on profitability

over revenueover revenue Increased management involvement Increased management involvement

through ownershipthrough ownership

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Opportunities in Opportunities in Auto SupplyAuto Supply

““Industry will always need parts”Industry will always need parts” Take advantage of restructuring eventsTake advantage of restructuring events

Combination of similar Combination of similar operations/suppliersoperations/suppliers

Acquisition of OEM non-core businessesAcquisition of OEM non-core businesses Coordinating with OEM outsourcing plans Coordinating with OEM outsourcing plans

as preferred supplieras preferred supplier Leverage of global assets (accelerate Leverage of global assets (accelerate

moves to lower cost locations)moves to lower cost locations)

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Light Metal StrategyLight Metal Strategy

Public – Public – JapanJapan Private – Private – BelgiumBelgium

Locations – Locations – JapanJapan EuropeEurope

ThailandThailand BrazilBrazil

China – JVChina – JV CanadaCanada

Multiple customersMultiple customers Broad geographic baseBroad geographic base Strong technology and Strong technology and

developmentsdevelopments