2011-01-17 special committee valuation - fairness opinion

8/17/2019 2011-01-17 Special Committee Valuation - Fairness Opinion

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http://www.sec.gov/Archives/edgar/data/1326973/000095012311053708/f59292exv99wcw2.htm 1

EX-99.C.2 3 f59292exv99wcw2.htm EX-99.C.2Exhibit C(2)

TheSpecialCommitteeofShakespeareValuationUpdateJanuary17th,2011ConfidentialPresentation


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TableofContentsAgendaSummaryObservationsandAssessmentofShakespeareValuationAnalysis________________________________________________________________________________________AppendicesLeveragedFinanceMarketOverviewWACCAnalysisComparableCompanies


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SummaryObservationsandAssessmentofShakespeare


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UpdateSinceourLastMeetingSincewelastmetonOctober26,Shakespeare'sstockhastradeddown21%from$7.56to$5.96(1)OnDecember16,approximatelytwomonthsafterourmeeting,ShakespearereportingmixedQ1'11resultsandsignificantlyreducedguidanceforQ2'11Reportedrevenueof$216million,missingconsensusestimatesof$222mm,andguideddownQ2'11revenueto$165-185mmvs.consensusof$197mmReportednon-GAAPEPS of$0.27,beatingconsensusestimatesof $0.25 bymanagingexpenses,andguideddown Q2'11EPS to $0.09-0.11vs.consensusof$0.21The recentunderperformance andloweredguidance are primarilydrivenbyachallengingDRAM pricingenvironmentwithdirectimpactto the BrazilbusinessDRAM priceshave dropped20 - 40%(2)overthe pastquartersince we lastmetin Octoberto todayCompoundedbyslowerthanexpectedmomentuminBrazilFlashandStorage Enterprise businessesBrokerestimatesforQ2'11andFY'11have beensignificantlyreducedvs.priorOctoberestimates, withrevenue down13% and11% respectively, andEPS down52% and28% However,currentmanagementcase stillanticipatesmissingguidance forbothQ2'11andFY'11Q2revenue higherthanstreetestimatesby5% andEPS lowerby20% Fullyearrevenue andEPS are lowerthanstreetestimatesby3% and46% respectivelyWhile the establishedleadingdefense SSDandspecialtymodule marketpositionsprovide support, there isa potentialforfurtherdownside tostockprice performance asmanagement'srevisedviewsarefullycommunicatedtoinvestors___________________________Note:AllincomestatementfiguresperWallStreetconsensus.AsofmarketcloseonJanuary14,2011.BasedonBarclaysCapitalestimatesofa21%dropinDDR2ASPsanda43% dropinDDR3ASPsfromOctober26,2010toJanuary14,2011.Analysisispreliminarygiventherevisedmanagementforecastsareaworkinprogress1


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Shakespeareremainswelldiversifiedwithfocusedinvestmentstrategy,howeverinvestorstakingwait-and-seeapproachSummaryObservationsontheBusinessGrowthInitiativesSpecializedDRAMfocusesonstable,attractivemarketsLeadingedge,specialtyproductsdrivingsolidmarginsFocusongrowingnetworking,telecomandindustrialmarketsSuccessfullogisticsbusinessleveragingShakespeare'sextensiveDRAMknowledgeandexpertiseUnique moduletestofferingsprovidekeydifferentiatorTargetingnon-PCcustomers-notafocusfor semicompaniesBroad base of tierone customersRelatively insulatedfromshort-termfluctuationsinDRAM pricingProjectedto be aGDPgrowerAdecliningaddressable end-marketSpecialty DRAMEnterprise SSDBrazilian MarketStrong historicalpresence in largedefense and industrialSSDmarketsAchieved$100mm volumerun rate Broad IPplatform&expertisejumpstartingpushintohighly attractive enterprise marketDoubling R&Deffortsprovidingcompetitive advantage StrongTier1OEMmomentum and ability toleverage Tier 1OEMrelationshipsGrowth ishingedonenterprise SSDadoptionUnproventractionand exposure tosignificantcompetitionContinuedsignificantR&Dinvestmentwillbe requiredLarge marketopportunityOne ofthe fastestgrowing globaleconomiesandPCmarketsGovernmentmandatednationwideBroadband/PCdeploymentplan(Currentpenetration


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StrongRecentFinancialPerformanceFacingHeadwindsQuarterlyRevenueandQ/QGrowthSinceIPO___________________________Source:CompanyfilingsandFactSet.Note:FiscalyearendsinAugust.ComparablesIndexincludesBenchmarkElectronics,Micron,OCZ,Plexus,SanDisk,Sanmina-SCI,SpansionandSTEC.IndexedStockPricePerformance-LTMIndexedStockPricePerformance-SinceIPOQuarterlyEBITDAandMarginSinceIPO21.8% -22.9%-30.2%19.3% 21.9% -20.2%FY06 FY07 FY09 FY10 FY08 FY11FY06 FY07 FY09 FY10 FY08 FY11ManagementforecastsManagementforecasts3


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MixedHistoricalPerformancevs.ExpectationsQuarterlyRevenueSurprisesSinceIPOQuarterlyEarningsSurprisesSinceIPO___________________________Source:CompanyfilingsandFactSet.Note:EPSisnon-GAAP,excludingstock-basedcompensation,restructuringchargesandotherunusualitems.ConsensusEPSprojectionof($0.01)andreportedEPSof$0.02.ConsensusEPSprojectionof($0.01)andreportedEPSof$0.03.ConsensusEPSprojectionof($0.01) andreported EPS of$0.01.$188.5 $197.0 $237.2 $239.1 $186.5 $165.6 $175.0 $164.5 $167.6 $160.7 $140.8 $109.1 $91.6 $99.8 $123.1 $160.1 $201.2 $218.7 $216.4 $183.4 $172.9 $182.7 $0.19 $0.23 $0.22 $0.22 $0.22 $0.21 $0.18 $0.17 $0.05 $0.02 $0.02 $0.03 ($0.01)$0.00 $0.08 $0.23 $0.26 $0.29 $0.27 $0.08 $0.02 $0.02 EPS:Rev($mm):NM(1) NM(3) NM(2) (20.7%) ManagementforecastversusStreetestimatesManagementforecastversusStreetestimates(90.5%) (85.7%) 4


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n=8EPSConsensusSummaryOutlookRevenueConsensusAnalystProjections($inmillions,exceptpersharevalues)___________________________Source:IBESConsensus.FactSetandBloomberg.Note:Summaryoutlookandanalystprojectionsonlyincludereportsfromcurrentperiod.ShakespearefiscalyearendsinAugust.WallStreetExpectationsHaveBeenTemperedChallengingASPenvironmentandlackofunderstandinginthecomplexandvarieddriversof Shakespeare'sbusinessescontinuetoweighoninvestor sentimentOptimism aroundfocusongrowthinitiative leveraging dominance in defense/industrialto buildaposition in high margin enterpriseSSDEncouraged by plans tofund promisingFlashinvestmentinhigh growth Brazilian marketExpectationthatBrazilwillcontinue itssolideconomicgrowthcoupledwith strongPCgrowthfrompent-up consumerdemandEncouragedthatoutsideof Brazil,memorybusinessnotlikelyto be significantlyimpactedbyDRAMASPdeclinesStrength ofbalance sheetConcernsaroundweaker DRAMASPsaffectingShakespeareintoCY2Q 2011andbeyondCustomerconcentrationrisk withseverallarge OEMcustomersrepresenting the majority ofsalesMarketconcentrationriskgivenrelatively highcontributiontorevenue fromBrazilIncreasingcompetitioninSSDmarketcouldslowgrowthinenterprise SSDRecentsoftnessinPCandserverdemandcouldputpressureondemand for Shakespeare'sproductsKey ThemesPositivesNegativesAnalystRecommendationsCurrentOctober 2010October2010October2010MedianPriceTarget:$7.00MedianPriceTarget:$10.255


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Jan-116.4xContinuestoTradeatSignificantDiscounttoPeersHistoricalEV/FTMRevenueMultiplesHistoricalPrice/FTMEarningsMultiples___________________________Source:FactSetandWallStreetresearch.Note:CompsincludeBenchmarkElectronics,Micron,Plexus,SanDisk,Sanmina-SCI,SpansionandSTEC.ShakespeareFTMEBITDAcalculatedbyaddingactualFYD&AforappropriateperiodstoprojectedFTMEBIT.Current1YrAvg SinceIPOShakespeare7.7x9.5x12.4x Comps13.0x 12.2x 15.2x 0.43x 1.14x 7.7x13.0x HistoricalEV/FTM EBITDAMultiples(1) 3.8xCurrent1Yr Avg SinceIPOShakespeare3.8x3.8x4.9xComps6.4x7.3x6.4xCurrent1Yr Avg SinceIPOShakespeare0.43x 0.46x 0.48x Comps1.14x 0.93x 0.92x Jan-11Jan-116


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StreetFinancials-Nowvs.Then($inmillions,exceptpersharedata)SignificantlyreducedestimatesReflectsloweredguidanceduetoincreasingASPpressureandslowerthanplannedtractioninSSDandFlashImpliesahigherlong-termgrowththanbeforetoachievelowerendofmgmt.CAGRguidanceGrossmarginsexpectedtobenegativelyimpactednear-termandrecoveringinoutyears___________________________Source:Companyfilings,WallStreetequityresearch andBarclaysCapitalInvestmentBanking estimates.Note:FYendsAugust.Impliesa lowerlong-termgrowthtoachieve lowerendofmgmt.CAGRguidancevs. currentSignificantreduction inbroker consensusestimates...Significantreduction in revenue expectationsthrough 2012 Netprofitabilityimpacted by top-line reduction/ongoing margin pressure October 2010CurrentChange7


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SegmentReviewofManagementFinancialsShakespeareSummaryFinancialModel-ManagementCase___________________________Source:Shakespearefilings,WallStreetequityresearch,IBESconsensusestimates,andBarclaysCapitalInvestmentBankingestimates.Note:Adj.EBITexcludesstock-basedcompensationexpensesandothernon-cashexpenses.2011to2013basedonmanagementprojections;2014and2015segmentgrowthpermanagementguidance;SpecialtyModule2-3%,BrazilDRAM18-20%,BrazilFlash ~15%, SSDEnterprise >20%,EmbeddedStorage2-3%,SSDDefense3-5%. Commentary 2014and 2015heldflataslimited leverage in COGS Slightmarginupliftin2014 and 2015 due to operating leverage from G&A and R&DLeading positionbutprojectedto beaGDP grower withinaslowingdecliningaddressablemarketMinimalexposure to fluctuationsin DRAM pricing DRAMexposureisstabilizingbutother challengesremainin BrazilDRAMandenterprise SSD,which are projected askeydriversofgrowth MostimpactedbydecliningDRAMpricesbutexpected tostabilizeovernextcouple of quartersLongerterm exposure to localcompetition inBrazilGrowthistiedto Flash,whichisalready 2quartersbehindschedule StillremainsleastunderstoodbusinessGrowth ishinged on successinenterprise SSD Unproven traction,andexposure to significantcompetitionLimitedvisibilityintoSSD segment;needfor furtherdiligencewith managementonoperatingmargins9


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ValuationAnalysis


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SummaryValuationShakespeareSharePriceNotesCurrentPrice(1/14/11):$5.9652-WeekLow(8/12/10)andHigh(4/14/10)AnalystPriceTargetsdiscountedat13.0%costofequity4.5x-5.5xCY2011EEBITDATargeting20%to30%IRR5.0x5yearFTMEBITDAexitmultiple0.40x-0.80xLTMRevenue25%-52%premiumto1-day24%-52% premiumto30-daytradingaverage___________________________Source:FactSet,Bloomberg,Company filings,WallStreetresearch, IBES consensusestimatesand BarclaysCapitalInvestmentBankingestimates. Note:Marketdata asof1/14/11. Cashadjustedto $110mm and debtof$55.1mmper11/26/10 filingsand managementguidance.Inventory isadjusted to $125mmper managementguidance.DCFandLBOassumebalancesheetfrom2/27/11 transactionclose.Based on analystrange of$6.50to $11.00,discountedto1/17/11. 10.0x -13.0xCY2011EP/EMultiple 5.0% - 6.0% PerpetuityGrowth Rate and12.0% - 14.0%WACC5.0x-7.5x LTMEBITDA(1)10


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TransactionPricingMatrixPurchasePriceRatio($inmillions,exceptpershareamounts)___________________________Source:CompanyfilingsandWallStreetresearch.Cashadjustedto$110mmanddebtof$55.1mmper11/26/10filingsandmanagementguidance.11


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79.7%CurrentComparableTradingandOperatingMetrics___________________________Source:FactSet,Companyfilings,WallStreetresearch.Marketdataasof1/14/11.RevenueGrowthCY11/10ComparableOperatingMetricsCY11GrossMarginCY11EBITDAMargin40.7%EV/CY11RevenueComparableTradingMetricsEV/CY11EBITDAPrice/CY11EarningsEV/CY11EBITDA-CapExCY11EBITDA-CapExMarginShakespeare(Street)Shakespeare(Street)Shakespeare(Street)Shakespeare(Street)Shakespeare(Street)Shakespeare(Street)Shakespeare(Street)Shakespeare(Street)12


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DiscountedCashFlowAnalysis-ManagementValuation___________________________Source:ManagementprojectionsandBarclaysCapitalestimates.Note:Assumesmidpointconventionforannualcashflowswhicharediscountedto2/27/11forillustrativepurposes.Assumesnetcashof$54.9mmat2/27/11,basedonWallStreetconsensusandmanagementguidance.1.EBITandEBITDAadjustedtoexcludestock-basedcompensationandothernon-cashexpensesand isimpacted by IncrementalBrazilR&D.SummaryDCF Commentary 2011 to2013 basedonmgmt.projections2014and2015 aggregate based on DRAM, storageandBrazilsegmentgrowth permgmt.guidance2011 to2013 basedonmgmt.projectionsSlightmargin upliftin 2014and 2015 due to operatingleverageinG&Aand R&DNon-GAAPtaxrateprovidedbymgmt., projectionsconvergeon 25%permgmt.guidance Assumesa favorableperpetuity growth rate 13


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DiscountedCashFlowSensitivityAnalysis___________________________Source:ManagementprojectionsandBarclaysCapitalestimates.Note:Assumesmidpointconventionforannualcashflowswhicharediscountedto2/27/11forillustrativepurposes.Assumesnetcashof$54.9mmat2/27/11,basedonWallStreetconsensusandmanagementguidance.BrazilGrowthvs.EnterpriseStorageGrowthReductionSensitizesreductioninmanagementrevenueforecastforBrazilFlash andEnterprise SSDGrowth Analyzeseffecton pricepershareby taking % of managementgrowthforecastinarangefrom0%-100%0% impliesno growth in BrazilFlashand EnterpriseStorage segments;100% assumesgrowth atmanagementguidance AssumesmidpointofDCF analysis:5.5%perpetuity growth rate and 13.0%discountrate 5.5% perpetuitygrowthrateanoptimisticassumptionNeedtofurther diligence marginprofileofSSD s egmentManagement14


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PrecedentTransactions___________________________Source:CompanyfilingsandFactSet.Therearenodirectlycomparableprecedenttransactionsand,thus,theanalysisisofmorelimitedutilitythantypical15


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PremiumsPaidDomesticTechnologyM&ATransactions2006-2010YTDbetween$300Mand$1Binvalue(1)DomesticTechnologyM&ATransactions2009-2010YTDbetween$300Mand$1Binvalue(2)___________________________Source:SDC.Note:30Daydenotespremiumto30daytradingaverage.Analysisincludes148transactions.Analysisincludes36transactions.Analysisincludes82transactions.FirstQuartileMeanMedianThirdQuartileGlobalTechnologyTakePrivate Transactions2009 -2010 YTD (3)16


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IllustrativeLBOTransaction-OverviewAssumespurchaseat$8.00pershare(~34%premium)tocurrentstockprice,implyinganentrymultipleofEV/LTMAdj.EBITDAof~4.7x(~8.5xFTM)withnewdebtof$230mmofseniorHYnotesProFormaCapitalizationTable___________________________Source:BarclaysCapitalresearchandInvestmentBankingestimates.Note:Assumesinterestrateof9.50%onSeniorNotes.IRRcalculatedbasedoncompletionoftransaction on 2/27/2011.2/27/11 cashbalance based on WallStreetconsensusand managementguidance.Assumes$50mmminimum cash.Transaction expensesandfeesinclude M&A fees,amortization of senior notesandprepaymentof existing s enior rate notesat101. Sourcesand UsesAssumptionsAssumesa2/27/11 transactionat$8.00/shareOperatingmodelbased on Shakespeare managementcase through 2013, and managementguidancethrough balanceofprojectionperiodUltimatelywillbe financed with$230mmofSeniorSecuredNotes, expectedto price with a 7.5% coupon,however, tobe conservative,we have modeled a 9.5% coupon whichreflectshighendofpotentialmarketpriceflexAssumes$50mm of minimumcash which resultsin$60mm ofcashused towardfinancingthe transactionImpliesa 53% sponsorequitycheckFinancingsourcesusedto retire existingfloatingrate notes,payexpensesandpurchase equityProformaforthe transaction, Shakespeare willbe leveredat4.0xwitha2.6xcoverage ratio,basedon2/27/11FTMEBITDA17


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IllustrativeLBOTransaction-FinancingConsiderationsThedebtmarketsareattractive,andabletoprovideacquisitionfinancingOver$320billionofnewhighyieldand$230billionofleveragedloansissuedin2010,surpassingthatforallof 2009,arecordbreakingyearforthehighyieldmarket~10%ofvolumein2010havebeenforLBOfinancing,withanaggregatevolumeofover$50billionMiddlemarketLBOfinancingactivityhasbeenactivewitha number of technology-relatedissuesin 2010 Rateshavedroppedtoall-time levels,with the highyieldindexyielding7.5% Semiconductoryieldsin particularhave improveddramaticallywithrecoveryin the semiscycle BarclaysCapitalbelievesthatthe LBOdebtmarketwouldbe receptive to anofferingbyShakespeare Criticalto achievingbestexecutionismediatingconcernsoverASP downwardpricingpressuresanddemonstratingthe sustainabilityofcontinuedimprovementsinShakespeare'soperatingmodel,andabilityto weatherthe nextdownturnBasedonour preliminaryanalysis, we believe Shakespeare cansupportleverage levelsof~4.0xtroughEBITDA(FTM)atthe time of a transactionSophisticatedinvestorsbothonthe private equityanddebtmarketside recognize thatsemisisa cyclicalbusinessandleverage needstobe manageable,especiallyinLBOsituationsCriticalindemonstratingthe thesisbehinda Shakespeare LBOisthe amountofequitybeingputintoa transactionAcquisitionmultiple reaffirmvaluations, providingsupportforincreasedleverage Debtinvestorswouldwantahealthyequitycushionbehindthem,atleastinthe40%-50%areaSponsorshaveavailabletothemanumberoffinancingstructuresandmarketsinordertosupportanLBOEachalternativehasitsmeritsandconsiderations,suchascostofcapitalversusbeingsubjecttofinancialmaintenancecovenantsForillustration,wehaveassumedastructureof$230millionofSeniorSecuredHighYieldBondsCouldalsofinancethrougha1stLienTermLoanwithpotentially a 2ndLienTermLoan/Mezzanine componentTheacquisition finance marketsarerobustand wouldbe receptive to anoffering by Shakespearebutsizeandvolatilityofthe businesscould createissues18


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IllustrativeLBOTransaction-ReturnsAnalysisExitIRRAnalysisAssumespurchaseat$8.00pershare(~34%premium)tocurrentstockprice,implyinganentrymultipleofEV/LTMAdj.EBITDAof~4.7x(~8.5xFTM)withnewdebtof$230mmofseniorHYnotes___________________________Source:BarclaysCapitalresearchandInvestmentBankingestimates.Note:Assumesinterestrateof9.50%onSeniorNotes.IRRcalculatedbasedoncompletionoftransaction on 2/27/2011.2/27/11 cashbalance based on WallStreetconsensusand managementguidance.Assumes$50mmminimum cash.Transaction expensesandfeesinclude M&A fees,amortization of senior notesandprepaymentof existing senior rate notesat101. LBOSummary 19


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Appendices


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LeveragedFinanceMarketOverview


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Withyieldsathistoricallows,therehasbeenasurgeofprimaryissueinthemarketsLeveragedFinanceMarketSnapshot...drivingHighYieldratestohistoriclows...Today:7.3%2002-1H07HYIndexYTWAvg.:7.8%VolatileequitymarketsandyieldsintreasuriesandIGatall-timelows......hasinvestorsseekingyieldintheleveragedfinancemarkets......providingoptimalconditionsforissuerstotaptheprimarymarkets2009HYVolume:$182.0billion2010 HYVolume:$320.3 billion2010HYMutualFund Flows:+10.7billion 2010 Lev.Loans:+12.3 billion 20


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TheLBOfinancingmarketshavebeenreceptivetoarangeoftechnology-relatedbusinessesMid-SizedTechnology-RelatedLBOActivityRecentMid-SizedTechnology-RelatedLBOTransactions22


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ShakespeareWACCAnalysisWACCAnalysisVersusComparableCompanies___________________________Riskfreerateof2.55%basedon10YearTreasury.MarketRiskPremiumperIbbotson.Note:Betareleveredatthemeanofthecapitalstructureofcomparablecompanies.ComparableCompaniesincludeBenchmarkElectronics,Micron,OCZ,Plexus,SanDisk,Sanmina-SCI,SpansionandSTEC.23


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ComparableCompanies


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DisclaimerThisdocumenthasbeenpreparedbyBarclaysCapital,theinvestmentbankingdivisionofBarclaysBankPLC("Barclays"),forinformationpurposesonly.Thisdocumentisanindicativesummaryofthetermsandconditionsofthesecurities/transactiondescribedhereinandmaybeamended,supersededorreplacedbysubsequentsummaries.Thefinaltermsandconditionsofthesecurities/transactionwillbesetoutinfullintheapplicableofferingdocument(s)orbindingtransactiondocument(s).Thisdocumentshallnotconstitute anunderwritingcommitment,anofferoffinancing,anofferto sell,orthe solicitationofanofferto buyanysecuritiesdescribedherein,whichshallbe subjectto Barclays'internalapprovals.No transactionorservicesrelatedtheretoiscontemplatedwithoutBarclays'subsequentformalagreement.Barclaysisnotactingasafiduciary.Accordingly you mustindependently determine,withyour ownadvisors, theappropriatenessforyouofthe securities/transactionbeforeinvesting ortransacting. Barclaysacceptsnoliabilitywhatsoeverforanyconsequentiallossesarisingfrom theuse of thisdocumentorreliance ontheinformationcontainedherein. Barclaysdoesnotguarantee the accuracy or completenessof information whichiscontainedinthisdocumentandwhichisstatedtohave been obtained fromor is basedupontrade andstatisticalservicesorotherthirdpartysources.Anydata onpastperformance,modellingorback-testingcontainedhereinisnoindicationastofuture performance.No representationismade astothereasonablenessoftheassumptionsmadewithinortheaccuracyorcompletenessofanymodellingorback-testingoranyotherinformationcontainedherein.AllopinionsandestimatesaregivenasofthedatehereofandaresubjecttochangeandBarclaysassumesnoobligationtoupdatethisdocumenttoreflectanysuchchanges.Thevalueofanyinvestmentmayfluctuateasaresultofmarketchanges.Theinformationhereinisnotintendedtopredictactualresultsandnoassurancesare givenwithrespectthereto.Nothinghereinshallbe deemedto constitute investment,legal,tax,financial,accountingorotheradvice.Barclays,itsaffiliatesandthe individualsassociatedtherewith may(in variouscapacities)have positionsordealin transactionsorsecurities(orrelatedderivatives)identicalorsimilarto those describedherein.IRS Circular230Disclosure:BarclaysCapitalanditsaffiliatesdonotprovide taxadvice.Please note that(i)anydiscussionofU.S. tax matterscontainedinthiscommunication(includinganyattachments)cannotbe usedbyyoufor the purpose ofavoidingtaxpenalties;(ii)thiscommunicationwaswrittentosupportthe promotionormarketingofthe mattersaddressedherein;and(iii)youshouldseekadvice basedonyourparticularcircumstancesfromanindependenttaxadvisor.BARCLAYS CAPITALINC., THEUNITEDSTATES AFFILIATEOF BARCLAYS CAPITAL, THEINVESTMENTBANKINGDIVISIONOF BARCLAYS BANKPLC, ACCEPTS RESPONSIBILITYFORTHEDISTRIBUTIONOF THIS DOCUMENTINTHEUNITEDSTATES.ANYTRANSACTIONSBYU.S.PERSONSINANYSECURITYDISCUSSEDHEREINMUSTONLYBECARRIEDOUTTHROUGHBARCLAYSCAPITALINC.,200PARKAVENUE,NEWYORK,NY10166.NOACTIONHASBEENMADEORWILLBETAKENTHATWOULDPERMITAPUBLICOFFERINGOFTHESECURITIESDESCRIBEDHEREININANYJURISDICTIONINWHICHACTIONFORTHATPURPOSE ISREQUIRED.NOOFFERS,SALES,RESALESORDELIVERYOFTHESECURITIESDESCRIBEDHEREINORDISTRIBUTIONOF ANYOFFERINGMATERIALRELATINGTOSUCHSECURITIESMAYBEMADEINORFROM ANYJURISDICTIONEXCEPTINCIRCUMSTANCESWHICHWILLRESULTINCOMPLIANCEWITHANYAPPLICABLELAWS ANDREGULATIONS ANDWHICHWILLNOTIMPOSEANYOBLIGATIONONBARCLAYS ORANYOF ITS AFFILIATES.THIS DOCUMENTDOES NOTDISCLOSE ALLTHERISKS ANDOTHERSIGNIFICANTISSUES RELATEDTO ANINVESTMENTINTHESECURITIES/TRANSACTION. PRIORTO TRANSACTING, POTENTIALINVESTORS SHOULDENSURETHAT THEYFULLYUNDERSTANDTHETERMS OF THESECURITIES/TRANSACTIONANDANYAPPLICABLERISKS.BarclaysBankPLCisregisteredinEnglandNo.1026167.RegisteredOffice:1ChurchillPlace,LondonE145HP. CopyrightBarclaysBankPLC, 2010(allrightsreserved). Thisdocumentisconfidential,andnopartofitmaybereproduced,distributedortransmittedwithoutthepriorwrittenpermissionofBarclays.25

2011-01-17 special committee valuation - fairness opinion

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