AA Investments Company Limited Asia Aluminum Holdings ... · 3 The information contained in this report including any statement of fact or opinion, relating to any of AA Investments

AA Investments Company LimitedAsia Aluminum Holdings Limited(Provisional Liquidators Appointed)And Their Subsidiaries

Request for Indicative Support from Stakeholders

12 June 2009

Strictly Private and Confidential

2

Letter from the Provisional Liquidators

Dear Stakeholders,

We, Roderick John Sutton and Fok Hei Yu, as provisional liquidators of Asia Aluminum Holdings Limited, AA Investments Company Limited, China Steel Development Company Limited, Asia Aluminum Manufacturing Company Limited and Asia

Aluminum Management Limited (“PL Companies”), hereby request the urgent action of all stakeholders to show their indicative support to accept the following:

1. Accept a proposed sale of certain Group assets.

2. Petition for AAI & AAH to remain in provisional liquidation.

The equity interest proposed to be sold are 100% of the equity interests of Asia Aluminum (China) Co. Ltd, Zhaoqing Asia

Aluminum Factory Co., Ltd and Zhaoqing Asia Aluminum Industrial City Management Company Limited (“PRC assets”) and a release of intercompany loan accounts between these companies and the Group.

We have, to the date of this letter and report, been negotiating with various interested parties but have received only one offer for the PRC assets from Golden Concord Pacific Limited (“Golden Concord”) (effective gross purchase price USD475.3m). As

this offer is to expire on 30 June 2009 with no possibility of an extension, we hereby present the latest update to stakeholdersand request for your urgent action to consider the information in this report and to provide your indication in regards to your acceptance of the above motions by Friday 19 June 2009, 11:30pm HK time (4:30pm London time, 11:30am

New York time), by returning the voting form attached at Annexure 1*.

We would like to take this opportunity to reiterate that any delay in finalising the Golden Concord offer before its expiration

date of 30 June 2009 or any other alternative superior offer, may place at risk the extraction of value from these PRC assets tooffshore stakeholders, as in our view, the PRC stakeholders are likely to immediately pursue or commence legal proceedings

against the PRC assets.

As such, please consider the proposal set forward in this report and if supportive of the sale, please sign the attached voting

form attached at Annexure 1 and return it to us.

Should you have any questions in regards to the above or the content of this report, please call +852 2820 5600 or email

[email protected].

Yours faithfully,

Roderick John SUTTON and FOK Hei YuJoint and Several Provisional Liquidators*For PIK noteholders and Senior noteholders, your forms will be distributed by your respective trustees.

3

� The information contained in this report including any statement of fact or opinion, relating to any of AA Investments

Company Limited, Asia Aluminum Holdings Limited, their subsidiaries, associates or affiliates, has been prepared from the records and documents obtained by the Provisional Liquidators. The information has not been audited by us and an independent verification of the information has not been conducted by us (including any member company or partnership

of the Ferrier Hodgson Group, together “Ferrier Hodgson”), its directors, staff or advisors except where otherwise stated.

� The production of this report to anyone other than the bank or its professional advisors, or without the written consent of Ferrier Hodgson may cause various parties loss and damage. Any person who produces this report to anyone other than the bank or its professional advisors without the written consent of Ferrier Hodgson may be liable to account for any

loss or damage suffered by the relevant party.

� This report is prepared solely for the information of the stakeholders of the Group. This report may not be reproduced,

used, or given to any other person, in whole or in part, for any purpose, other than that for which it is intended, except to the Lenders’ own advisors, unless the written consent from Ferrier Hodgson is obtained beforehand.

� In accepting delivery of this document, each recipient acknowledges that the information presented in this document has been prepared in a very limited period of time based on limited information provided to Ferrier Hodgson. We are heavily

reliant upon management representations and the accuracy and validity of the financial and other information that has been provided to us. Where information has been provided to us, we have assumed that it is accurate and current.

Where information has been obtained from other sources, appropriate indication has been provided.

� Each recipient of this Report acknowledges that the Group operates in an industry that has been and is likely to continue

to be subject to fluctuations, changes in regulatory, cyclical movements and uncertainty. The information contained in this report contains certain assumptions considered by the authors as correct at the time of writing that may prove to be

incorrect. The information contained in this document or the sources from which it has been obtained have not been audited or independently verified by Ferrier Hodgson. The information contained in this report is subject to change at any time.

� No representation of warranty, express or implied, is made with respect to, and no reliance should be placed on, the accuracy, completeness or fairness of the information or opinions set out in this document. Neither Ferrier Hodgson, its

Executive Directors or its staff, not its instructing parties (including, without limitation, any legal advisors) shall have anyliability whatsoever for any loss arising from any actions taken or otherwise in connection with this report.

Disclaimer and Confidentiality

4

Glossary

Group Companies

Financial Terms

Other

Zhaoqing Asia Aluminum Factory Co., LtdZAAF

Asia Aluminum Management LtdAAM

AAI and AAH and their subsidiariesGroup

Zhaoqing Asia Aluminum Industrial City Management Company Limited ZAAM

China Steel Development Co. LtdCSD

Asia Aluminum Group LtdAAG

Asia Aluminum (China) Co. LtdAAC

Asia Aluminum Manufacturing Co. LtdAAMCL

AA Investments Limited AAI

Asia Aluminum Holdings LimitedAAH

Full NameAbbreviation

US dollarsUSD

Hong Kong dollarsHKD


AAC, ZAAF & ZAAMPRC assets

AAMCL, AAM and CSDVendor companies

ApproximatelyApprox.

Hong KongHK

Receivers appointed over the shares of AAH and AAIKPMG

Peoples’ Republic of ChinaPRC

Golden Concord Pacific Limited, the proposed purchaserGolden Concord

Allen & Overy, legal advisers to the PIK noteholdersA&O

Provisional Liquidators, Rod Sutton and Vincent Fok of Ferrier Hodgson LimitedPLs

Companies in Provisional Liquidation – AAH, AAI, AAM, AAMCL & CSDPL Companies


5

Table of Contents

207 Consideration of Financial Terms of Offer

196 Urgent Stakeholder Action Required

Annexure 5 – Public Sale Process Examples

Annexure 4 – Simplified Group Chart

Annexure 3 – Details of Contact with Other Potential Purchaser

Annexure 2 – Support Letters from Zhaoqing Government and PRC Banks

165 Request For Stakeholder Support

Annexure 1 – Voting Form

258 Frequently Asked Questions

144 Action Taken by a Group of PIK Noteholders

113 Sale of PRC Assets

102 Summary of Key Events

61 Executive Summary

6

Executive Summary1

Stakeholder Action Required

� The PLs request the urgent attention of all stakeholders to consider the information in this report (and previous

reports) and to request your indication in regards to your acceptance of:

1. the Golden Concord or any other better offers to purchase the PRC assets; and

2. Petition for AAI & AAH to remain in provisional liquidation.

� Please indicate your acceptance on the above motions by returning the voting form attached at Annexure 1 by Friday 19 June 2009, 11:30pm HK time (4:30pm London time, 11:30am New York time). PIK noteholders and Senior

noteholders note: your forms will be distributed by your respective trustees.

Why Action Is Required

Provisional liquidators have no power of sale

� The powers of the PLs provided by the Court Order under which they are appointed do not include the power of sale.

Therefore, in order to effect the sale of the PRC assets, the PLs will need to apply to Court to obtain an order authorising the sale.*

� Creditors’ support for the sale is a factor to be considered by the Court.

Risk of dissipation of PRC assets

� It is the PLs’ opinion that any delay in finalising a sale may place at risk the extraction of value from these PRC assets to offshore stakeholders given the size of the PRC creditor claims (USD489m). If onshore legal proceedings are to be

commenced, the likelihood of any return to offshore creditors is minimal, at best. PRC lenders not only have a direct claim to the PRC assets, they also have guarantees provided by other Group companies.

Provisional liquidation status of AAH and AAI

� A group of PIK noteholders has commenced legal action in an attempt to remove AAH and AAI from independent court supervised control by striking out the original winding up petition under which the PLs were appointed.

� It is the PLs’ view that, for the benefit of all stakeholders in general, AAH and AAI should continue to be subject to independent court supervised control since they are and continue to be massively insolvent.

*In light of the expiration of the Golden Concord offer, the PLs propose requesting for Court sanctioning for the proposed sale on or about 22 June 2009.

7

Executive Summary1

Summary of Existing Deal

� To the date of this report, the PLs have only received one offer for the PRC assets, from Golden Concord. However, the PLs are continuing to deal with interested parties.

� The current offer from Golden Concord is for the acquisition of 100% of the equity of three group companies with a release of intercompany loan accounts.

� AAC, wholly owned by CSD;

� ZAAF, wholly owned by AAMCL; and

� ZAAM, wholly owned by AAM.

� The net purchase price is summarised as follows1:

Value At Risk

� The estimated returns to various stakeholders groups from the Golden Concord proposal are summarised below. Iethese are the values at risk if the proposed offer is not completed.

* Return for most but not all of these lenders, includes guarantee claims, excludes secured lender.

Notes:

1. Refer to section 3 of our report to stakeholders dated 6 May 2009 for detailed explanation of the purchase price mechanism, noting that the mechanism does not place any stakeholders in a better or worse off position.

3.5AAG Minority Shareholder

0.725.1PIK Noteholders

19.0385.0Senior Noteholders

50.87*83.8Unsecured HK Lenders

As % of Total ClaimUSDmStakeholder Group

Value at RiskEstimated Returns







101.8794Net Purchase Price

(83.8)(654)Less HK Lenders Estimated Theoretical Dividend

185.61,448Sub Total (Equity Values)

(289.6)(2,259)Less PRC Net Debt

475.33,706Effective Gross Purchase Price

USDmHKDm

8

Executive Summary1

Likely Outcome If Court Sanction Is Not Granted

� The PLs expect that if the transaction with Golden Concord does not progress or an alternative investor does not meet or

exceed the terms of the proposed Golden Concord transaction, the most likely scenario is that:

� There will be a flood of claims, demands, legal actions and freezing orders commenced against the Industrial City

site.

� It is then likely that a PRC Court directed auction would take place with the proceeds to be used firstly to pay local

PRC creditors. If this is not the case, the alternative is a PRC bankruptcy.

� Estimated returns to stakeholders of the magnitude shown above may be lost.

� Further, the PLs envisage that the Court auction would result in the PRC assets being sold at a significantly discounted

price.

� Many of the PRC lenders have guarantees from Group entities in addition to being direct lenders to the PRC assets

(detailed on pages 33 and 34 of our report to stakeholders dated 6 May 2009). Given the magnitude of their claims (USD 289.6 million) it may be unlikely that surplus funds from the proceeds of the Court auction would be available to

provide a return to offshore Stakeholders.

� The local Zhaoqing government is at present working with suppliers, banks and Stakeholders to maintain stability. They

have advised that this can only be done until 30 June at the latest. In this regard the local Zhaoqing government and PRC banks have expressed written support for the Golden Concord offer which are attached as Annexure 2 (English

and Chinese).

9

Executive Summary1

Likely Outcome If AAH and AAI Are Taken Out Of Provisional Liquidation

� If AAH and AAI, which are undoubtedly massively insolvent, are to be taken out of provisional liquidation, their affairs will no longer be subject to the scrutiny of the HK High Court process.

� Stakeholders’ interests and the Group assets will no longer be in control of an independent party (the PLs) and as such, risk being in jeopardy.

Key Dates

� Key milestones in the process to finalise the sale of the PRC assets is illustrated below:

Request for indicative support from Stakeholders for:

i. sale of PRC assets

ii. AAH & AAI to remain under control of PLs

12 June 09

Voting forms to be returned*

19 June 09

PLs to request

Court sanction for the proposed sale or a superior offer

22 June 09

Execute various completion documents

Jul 09

Scheme of Arrangement to distribute sale

proceeds

Approx. Oct 09

PRC creditors

likely to commence legal

action/obtain freezing orders

22 June 09

PRC Court

directed auction to take place with

proceeds likely firstly be used to

pay PRC

creditors

Court Sanction?

Yes

No

Likely Outcome If AAH and AAI Are Taken Out Of Provisional Liquidation

� If AAH and AAI, which are undoubtedly massively insolvent, are to be taken out of provisional liquidation, their affairs will no longer be subject to the scrutiny of the HK High Court process.

� Stakeholders’ interests and the Group assets will no longer be in control of an independent party (the PLs) and as such, risk being in jeopardy.

Key Dates

� Key milestones in the process to finalise the sale of the PRC assets is illustrated below:

*For PIK noteholders and Senior noteholders, your forms will be distributed by your respective trustees.

10

Summary of Key Events2

Appointment by PIK noteholders of Edward Middleton and Paul Mitchell of KPMG as Receivers over the shares in AAH and

AAI.

30 Apr 09

Vincent Fok and Rod Sutton of Ferrier Hodgson Limited were appointed as PLs to AAI, AAH and CSD by the High Court of HK.

The PLs have had no previous involvement with the Group or its management prior to being approached to provide a Consent

to Act about four days before the appointment occurred.

16 Mar 09

A winding up petition was filed against AAMCL by one of its lenders. As a result, the PLs applied for AAMCL to also be placed

into Provisional Liquidation given its financial position and so it could be properly controlled.

27 Mar 09

The PLs were appointed to AAMCL.1 Apr 09

The PLs successfully applied for the appointment of Provisional Liquidators to AAM given a Notice of Default and Intention to

Accelerate issued by the Trustee of the Senior Notes.

27 Apr 09

The PLs negotiated a contract to sell wholly owned equity interests in certain Group companies (AAC, ZAAF and ZAAM) and

a non-exclusive agreement was signed with the purchaser, Golden Concord. The proposed transaction is subject to Court

approval, requiring consultation with creditors. Other assets of the Group are to remain under the control of the PLs.

30 Apr 09

The Tender Offer was not accepted by the requisite percentage of the respective holders of the PIK Notes and the Senior

Notes. As such, funding to be provided by certain PRC lenders if the Tender Offer was successful has not been provided

given the failure of the Tender Offer.

10 Mar 09

The PLs attended High Court proceedings in regard to two Notices of Motion filed by Messrs Allen & Overy acting for a group

of PIK noteholders, attempting to remove AAI and AAH from provisional liquidation and replace the directors of these two

companies with their own nominees. The hearings were adjourned and the motions before the Court will be heard on 22 July

2009.

8 Jun 09

Supplementary Report to Stakeholders issued by the PLs, providing a revision of PL’s estimated return to Stakeholders from

the proposed proceeds of the Golden Concord offer following greater clarity of intercompany claims.

3 Jun 09

AAI and AAH announced a proposal (“the Tender Offer”) to its noteholders to acquire the PIK Notes and the Senior Notes at a

discount which, if successful, would have enabled the Group to obtain further financing to continue its operations.

13 Feb 09

The PLs issued a detailed report to stakeholders, advising the general status of the Group, the proposed Golden Concord

transaction, the estimated indicative returns to Stakeholders and inviting Stakeholders’ comments in regards to the proposal.

6 May 09

EventDate

11

Sale of PRC Assets3

3.1 Offers Received

Golden Concord Offer

� To the date of this report, the PLs have only received one offer for the PRC assets.

� The current offer was received from Golden Concord on 30 April 2009 for the acquisition of 100% of the equity of the three group companies:

� AAC, wholly owned by CSD;

� ZAAF, wholly owned by AAMCL; and

� ZAAM, wholly owned by AAM.

� The gross purchase price offered by Golden Concord is USD475.3 million, however due to the significant level of onshore PRC debt which Golden Concord have undertaken to assume and the possible assumption of HK based debt,

the effective net purchase price is in the order of USD101.8 million.

� The derivation of the net purchase is summarised in the following table:

� Refer to section 3 of our report to stakeholders dated 6 May 2009 for detailed explanation of the purchase price mechanism, noting that the mechanism does not place any stakeholders in a better or worse off position.

� Note: the Golden Concord offer will expire on 30 June 2009 if Court sanction for the sale is not achieved. Golden Concord have advised that they will not extend the deadline given concern as to the action that may be

taken by PRC stakeholders if the matter is delayed any further.

101.8794Net Purchase Price

(83.8)(654)Less HK Lenders Estimated Theoretical Dividend

185.61,448Sub Total (Equity Values)

(289.6)(2,259)Less PRC Net Debt

475.33,706Effective Gross Purchase Price

USDmHKDm

12

Sale of PRC Assets3

Other Potential Purchasers

� The PLs were contacted by three interested parties one day after their appointment. Ten other parties have come forward to the PLs since their appointment. Each of these parties demonstrated varying levels of mild interest in the

PRC assets, and the PLs have worked to progress discussions with all of these parties.

� The PIK noteholders and KPMG (the Receivers appointed over the shares of AAH and AAI) have themselves been in

discussions with various other interested parties and have been contacting their own networks to establish further potential interest in the assets.

� The PLs have also been working in conjunction with KPMG to further all discussions and also explore any possibility of a partnership between some interested parties, particularly where one may have the financial resources and the other the

experience in running the plants.

� A data room has been set up and a number of interested parties have access. We note however no party accessed the

data room in the week since access was first granted. At the date of this report aside from KPMG, only one interested party had accessed the data room.

� From our discussions with other relevant parties (including the Zhaoqing government and PRC lenders), the key issues that potential purchasers would need to address are the ability to work with the local Zhaoqing government, local banks,

and suppliers. To date, none of the interested parties we have spoken with have indicated an ability to address these key issues. We understand that only one interested party has approached them with respect to the purchase of the

assets; this party was advised that the local government would prefer to do a deal with Golden Concord.

� In addition to the above key issues, the PLs have been seeking to obtain an offer superior to that of Golden Concord, ie

an increased purchase price and reduced conditions attached to the sale. To date, the PLs have not received a better (or indeed ANY other) offer for the PRC assets.

� The PLs remain open to interested investors submitting a superior offer for the PRC assets and will continue to work with any interested parties.

� However the PLs do consider (as discussed further in section 7.3) that given the reasonably high profile nature of this matter, the time that has elapsed since the appointment of the PLs, provision of further information and the terms of the

Golden Concord deal, if there was a serious alternative bidder in existence they would have provided a bid by now or at least made genuine efforts to demonstrate that they are able to present a deal and bring it to completion.

� See Annexure 3 for details on the PLs’ discussions with other potential purchasers.

13

Sale of PRC Assets3

3.2 Estimated Returns From Current Offer For PRC Assets

* Return for most but not all of these lenders, includes guarantee claims, excludes secured lender.

� Please note that we cannot rule out needing to make further adjustments to the intercompany loan accounts or other parts of the model used to determine the estimated returns, to give a better reflection of the true position

of the intercompany loan accounts. We consider the adjustments are necessary to be fair to all stakeholders.

� We also note that before there is any distribution of funds to stakeholders, a Scheme of Arrangement will likely need to

be agreed amongst relevant stakeholders to effect that distribution. If the sale is completed, we will contact stakeholders further in this regard.

3.3 Action Required from Stakeholders

� The actions required from Stakeholders in regard to the proposed sale of the PRC assets are set out in section 6 below.






Estimated Returns

14

Action Taken by a Group of PIK Noteholders4

4.1 Summary of Events

� On 3 June 2009, the PLs received from Messrs Allen & Overy (“A&O”) acting for a group of the PIK noteholders, two

Notices of Motion, which are attempts to remove AAI and AAH from provisional liquidation.

� Hearings on the above motions were adjourned on 8 June 2009 and the motions before the Court will be held on 22 July

2009.

4.2 Position of the PLs

� We do not think it can be disputed that AAH and AAI are and continue to be massively insolvent and should therefore be

subject to independent court supervised control.

� If the group of PIK noteholders are successful in their actions to remove AAH and AAI from the control of the PLs, who

we note are officers of the Court, it is the PLs view that the Group assets and therefore, the interests of all stakeholders will ultimately be in jeopardy.

4.3 Assets Proposed for Sale and the Ranking of Stakeholder’s Claims to those Assets

� As noted in our report dated 6 May 2009, the Vendor companies of the three PRC companies subject to sale are:

� AAMCL;

� AAM; and

� CSD.

ie It is the creditors of these companies who have the most relevant say in any sale of the PRC assets.

15

Action Taken by a Group of PIK Noteholders4

� The direct claims of the relevant Stakeholder groups to the PRC assets and Vendor companies are illustrated in the

following table:

� A simplified group chart illustrating the claims of stakeholders to the PRC assets is attached at Annexure 4.

4.4 Action Required from Stakeholders

� It is the PLs’ opinion that the above motions may be an attempt by some Stakeholders to disrupt the sale process and take AAH and AAI out of provisional liquidation and transfer the control of these companies to their nominated directors,

ie outside of the scrutiny of the High Court process. So far as practicable, we will work with PIK noteholders and KPMG to ensure that, in the circumstances, the Golden Concord offer is the best and we are not able to locate a more superior

deal.

� As such, we are contacting all Stakeholders to ask your views on securing a creditors’ petition against AAH and

AAI, so that if the PIK noteholders are successful in their actions to dismiss the Petition that the winding up of AAH was based on, your views will be heard and you may be the substituting petitioner to allow AAH and AAI to

remain in provisional liquidation.

� Refer to section 6 below for the action required from Stakeholders in regards to the substitution petition.

100

0.6

12

28

11

14

34

%

AAMCL7.4PIK noteholders

1,231Total

ZAAF149PRC trade creditors

ZAAF & AAC340PRC based lenders

AAMCL141HK based lenders

AAMCL173AAG

AAMCL and CSD – via charged loan accounts421Senior noteholders

Debtor companyUSDmStakeholder Group

16

Request For Stakeholder Support5

5.1 Provisional Liquidators have No Power of Sale

� The powers of the PLs provided by the Court Order under which they are appointed do not include the power of sale.

Therefore, in order to effect the sale of the PRC assets, the PLs will need to apply to Court to obtain an order authorising the sale.

� In light of the expiration of the Golden Concord offer, the PLs propose requesting for Court sanctioning for the proposed sale on or about 22 June 2009.

� As advised in our 6 May 2009 report, the Court will be interested in the level of creditor support for the proposed sale.

� A voting form is attached at Annexure 1 of this report for Stakeholders to indicate their support for the proposal.*

*For PIK noteholders and Senior noteholders, your forms will be distributed by the appropriate trustees.

17


5.2 Consequence of Inaction/Absence of a Sale

� We expect that if the transaction with Golden Concord does not progress or an alternative investor does not provide a

superior offer than the terms of the proposed Golden Concord transaction, the most likely scenario is that:

� There will be a flood of claims, demands, legal actions and freezing orders commenced against the Industrial City

site.

� It is then likely that a PRC Court directed auction would take place with the proceeds to be used firstly to pay local

PRC creditors.

� As such, it is the PLs’ view that any delay in finalising a sale may place at risk the extraction of value from these PRC assets to offshore stakeholders given the significant size of the PRC creditor claims (USD340m Bank debt + USD149m unsecured debt = USD489m). If onshore legal proceedings (or an onshore bankruptcy) are to be commenced, the

likelihood of any return to offshore creditors is minimal, at best. PRC lenders not only have a direct claim to the PRC assets, they also have guarantees provided by other Group companies.

� Further, the PLs envisage that the Court auction would result in the PRC assets being sold at a significantly discounted price.

� The estimated value at risk to stakeholders in the event that the proposed sale is not completed is as follows:





As % of ClaimUSDmStakeholder Group






As % of ClaimUSDmStakeholder Group


18


5.3 Stakeholders’ Interest For AAH and AAI to Remain in Provisional Liquidation

� AAH and AAI are undoubtedly massively insolvent.

� As such, it is in the interest of all stakeholders that the affairs of these insolvent companies be placed under the control

of an independent party.

� We, the PLs, act as independent Officers of the Court and are subject to the scrutiny of the Hong Kong High Court process. We have no financial interest in the proposed transactions of the Group other than to represent the creditors’

best interest. Our remuneration is subject to the approval of the Court.

5.4 Consequence of AAH and AAI Not Under Court Supervised Control

� Stakeholders’ interests and Group assets will be compromised as the affairs of the Group will no longer be under the

control of an independent party (the PLs) and will not be subject to the scrutiny of the Hong Kong High Court process.

� There is a risk of Group assets (thereby stakeholders’ interests) being in jeopardy.

19

Urgent Stakeholder Action Required 6

6.1 Sale of PRC Assets

� As noted in section 3 above,

� the Golden Concord offer is due to expire on 30 June 2009; and

� no other superior offers have come forward to the PLs to date of this report.

� Further, when we consult with Stakeholders on a sale of the three companies, it is the creditors of the Vendor companies (ieAAMCL, AAM and CSD) who have the most relevant say.

� As such, the PLs request all stakeholders to provide their indication of their support for the Golden Concord or any other better offers by returning the voting slip attached at Annexure 1 and returning to us by Friday 19 June 2009,

11:30pm HK time (4:30pm London time, 11:30am New York time). PIK noteholders and Senior noteholders note: your forms will be distributed by your respective trustees.

� A proposed timetable for the process to finalise the Golden Concord offer (or any other superior offer) is illustrated below:

6.2 AAH and AAI to Remain in Provisional Liquidation

� As noted in section 3 above, AAH and AAI should remain in provisional liquidation given that they are insolvent.

� As such, the PLs request all stakeholders to provide their indication of their support to petition AAH and AAI to remain in provisional liquidation by completing the voting slip attached at Annexure 1 and returning to us by Friday 19 June 2009, 11:30pm HK time (4:30pm London time, 11:30am New York time). PIK noteholders and Senior

noteholders note: your forms will be distributed by your respective trustees.

Request for indicative support from Stakeholders for:

i. sale of PRC assets

ii. AAH & AAI to remain under control of PLs

12 June 09

Voting forms to be returned*

19 June 09

PLs to request

Court sanction for the proposed sale or a superior offer

22 June 09

Execute various completion documents

Jul 09

Scheme of Arrangement to distribute sale

proceeds

Approx. Oct 09

PRC creditors

likely to commence legal

action/obtain freezing orders

22 June 09

PRC Court

directed auction to take place with

proceeds likely firstly be used to

pay PRC

creditors

Court Sanction?

Yes

No*For PIK noteholders and Senior noteholders, your forms will be distributed by your respective trustees.

20

Consideration of Financial Terms of Offer 7

In considering the financial terms of the Golden Concord offer (or any other bid that may come forth), stakeholders should also

consider the following salient items as detailed in the subsequent sections of this report:

� The current depressed state of the aluminium industry and difficulties faced by its major players

� Current lack of alternative offers and the likelihood of a late bid

� Alternative methods of extracting value from the PRC assets and the potential returns from these methods

� Other salient issues

21

Consideration of Financial Terms of Offer

7.1 Current Position of the Aluminium Industry

� World aluminum output began to contract in the second half of 2008 and this accelerated in 2009 with world aluminum

production declining for the first time in fifteen years and by as much as 5%. The severe market conditions have resulted in a historical drop in aluminium prices (see Table 1 above).

� Annual world aluminium consumption is forecasted to fall by 5% in 2009 due to the global economic crisis, and is forecasted to remain flat in 2010, with no signs of recovery until 2011.

� In China, the Government’s RMB4 trillion fiscal stimulus package has eased difficulties within the domestic market, however, exports have been affected by the global financial crisis. Further, China’s aluminium market faces an over-

capacity problem, as state-owned producers are reluctant to cut output, which would result in primary aluminium prices being likely to remain low for the rest of the year.

Table 1: Historical Aluminium Price Trend

Source: PR Hub, 21 May 09; Forbes.com, 20 Apr 09; Midas Holdings Limited 2008 Annual Report.

Table 2: Industry Competitors

Source: LME

Curtailed operations at one of its facilities

USKaiser Aluminum Corp

Implemented production and cost-cutting measures and

sold four non-core

downstream businesses

USAlcoa Inc

Implemented production and

cost-cutting measures

NorwayNorsk Hydro ASA

Chapter 11USAleris International, Inc.

Chapter 11USIndalex

StatusCountryKey Players

Source: Company websites

7

22

Consideration of Financial Terms of Offer7

7.2 Other Current Offers and the Likelihood of a Late Bid

� As at the date of this report, the PLs had not received any alternative offer for the PRC assets.

� Despite the lack of a global public sale process, the situation of the Group and the potential for a sale of Group assets or

a restructuring has been widely publicised:

� The failure of the Asia Aluminum tender offer, its subsequent placement into provisional liquidation and

subsequent developments have been well reported in the world wide media.

� Many Stakeholders are large, well respected, world wide financial institutions. Institutions such as these are often

key players in M&A activity, therefore this opportunity has been known to this source of potential investors for some time.

� The aluminium products manufacturing industry is a relatively small, well connected and networked group. Therefore a strategic player would have been aware of the provisional liquidation of the Group entities and known what assets the Group holds that may be of interest to a strategic purchaser. Indeed, the PLs were contacted

within two days of the announcement of the provisional liquidations by two industry players seeking to make their potential interest in a purchase of Group assets known.

� The non-exclusive nature and limited conditions of the current offer removes a lot of the hurdles for another interested

party to make a competing bid whilst protecting the interests of all Creditors and Stakeholders.

� Additionally, the terms of the Golden Concord offer (which effectively sets a floor for other bidders), the availability of the report to stakeholders, the ability for potential interested parties to access further information, and importantly, the need

for urgency have been in the public arena for in excess of 5 weeks.

� We also note from Ferrier Hodgson’s extensive practical experience, that a public sale process is not necessarily value adding. Examples of situations with and without a public sale process are provided for your reference in Annexure 5.

� In light of the above situation, we therefore consider that if there was a serious alternative bidder in existence, they would have provided a bid by now or at least made genuine efforts to demonstrate that they are able to

present a deal and bring it to completion.

� The PLs remain open to interested investors submitting a superior offer for the PRC assets and will continue to work in

conjunction with the PIK noteholders and KPMG.

23


7.3 Estimated Returns From Other Methods of Extracting Value from the PRC Assets

� In the absence of the Golden Concord offer or another superior offer, the PRC assets are likely to enter into PRC

bankruptcy proceedings given the number of demands and legal proceedings that have been commenced against the PRC assets.

� If legal proceedings are pursued by PRC stakeholders, it is likely that a PRC Court directed auction would take place.

� Proceeds from this auction process will most likely firstly be used to pay local PRC creditors who have claims against the

PRC assets in the order of USD489 million.

� We note the PRC lenders not only have a direct claim to the PRC assets, they also have guarantees from a number of Group entities (refer to page 33 to 34 of our report to Stakeholders dated 6 May 2006).

� As such, the likelihood of any return to offshore creditors from the PRC assets will be significantly reduced if a return is achievable at all.

24


7.4 Other Salient Issues

Onshore claims

� There are significant levels of onshore debt and creditor claims (in the order of USD489 million, ie USD340 Bank debt and USD149 unsecured debt) which will be assumed by Golden Concord under the terms of their offer.

� We have been advised by some of the interested parties with whom we have had discussions that this level of onshore debt is a key deterrent for them in making an offer.

Possibility of a restructuring

� Prior to the application to Court for the Group companies to be placed in provisional liquidation, the Group attempted to restructure the debt of the Group by making an offer to buy back the PIK Notes and Senior Notes at a discount. This attempt at a restructure failed.

� From discussions we have had with existing management, they have made it very clear that they would not work with

the existing capital structure. As such, whilst existing management are incumbent, there is little likelihood of a restructuring.

Current status of FRP plant

� The flat-rolled product plant owned by AAC, is not complete. An independent industry expert estimated that a capexspend in excess of USD300 million is required to bring the plant to a level of commercial operation that was originally intended. Providing funds were made available in Q3 2009, a limited product range could be produced by Q1 2010.

� As such, there is significant construction/completion risk associated with this plant.

� Some parties have argued that no value could be attributed to this plant aside from scrap value.

� We understand AAC has not yet received any expressions of interest from potential customers due to the delay in completion and the current uncertainty surrounding the Group.

Possibility of a sale of the PRC assets individually

� Some interested parties the PLs have been in discussions with have expressed an interest solely in purchasing the extrusion operations. We have considered and explored this option, however it is considered not feasible given:

� The land the three companies are located on is the one site;

� Whilst AAC and ZAAF have independent land use rights, this land is located in the middle of the site, with all

access roads and common facilities on land for which the land use rights are held by ZAAM; and

� It is unlikely that PRC creditors would see the distinction between the three companies in trying to recover their claims. Ie a creditor of AAC, for example, may pursue legal claims against ZAAF assets.

25

Frequently Asked Questions

Q1. If AAI or AAH are taken out of Provisional Liquidation, can the sale of the PRC assets still occur?

Yes, the sale can still occur. We have received no objection to the Provisional Liquidation of the Vendor companies. However court sanction of the sale is still required.

Q2. Given the PIK noteholders have a large claim against the AA Group (USD535 million excluding capitalised interest), why is their say in the sale of PRC assets relatively small?

AAI’s only direct loan account to a Vendor company is with AAMCL for the amount of USD7.4 million. This is a relatively small amount in comparison to the total funds provided by the PIK noteholders to AAI of USD 535 million (excluding

capitalised interest) as the majority of funds provided by the PIK holders were used to finance the privatisation of the Group in 2006, ie the funding provided to AAI came into AAI and was then used to buy the shares held by the

shareholders existing prior to the privatisation, rather than being used or advanced to other companies below AAI. We refer you to the Provisional Liquidators’ letter dated 8 June 2009 for further details.

Q3. How long will you wait for an alternate interested party to give you a formal offer and obtain the local government’s blessing to purchase the assets? Given that there will be a court process that will take place,

how long can we wait for an acceptable alternate bid to come through?

Until the court approves the sale, we are still able receive offers. We remain open to interested investors submitting a

superior offer and do what we can to assist interested parties in this process. However we note there is an urgency in this regard. The Golden Concord offer will expire on 30 June 2009, therefore in the absence of a superior offer we will

seek Court sanction of this sale. Note the local government advised that only one interested party has approached them with respect to the purchase of the assets; this party was advised that the local government would prefer to do a deal with Golden Concord.

Q4. How would other offers be compared against the existing Golden Concord offer?

As officers of the court, it is the PLs’ duty to review any alternate offers that we receive. If a party is able to increase the purchase price or offer better conditions to sale, and we are comfortable that this party is able to work with the local

government and local banks, we would then review the party’s execution risk.

8

Commonly asked questions regarding the court sanctions process and possible outcomes are documented below for your

reference. Should you have any further questions please do not hesitate to contact us.

26


Q5. When does the Golden Concord offer expire? Can the offer be extended?

The sale and purchase agreement signed with Golden Concord requires court sanction by 30 June 2009. Golden Concord is unable to extend their offer past this date as they are unable to hold back on local creditors’ demands. The

local government has formed a committee to work with local suppliers and banks. The committee asked local banks to maintain the moratorium. Local government advised that they are able to deal with local creditors until potentially the

22nd or 23rd of June 2009, however after this time it would be increasingly difficult to do so.

Q6. When do we expect to obtain a court decision on the sale?

Once voting slips are returned from stakeholders, the PLs are aiming to attend a court hearing for the sanction of the sale by 22 June 2009. Once a hearing occurs, the Hong Kong courts generally make their decisions fairly quickly. Note

we would only proceed with a court hearing if no compelling alternate bidders come forward and if sufficient stakeholder support is obtained.

Q7. Are there any other assets in the Group? Does the sale concern them?

We are seeking to sell the three subsidiaries only. Under the terms of the sale, we have also agreed to forgive loan

accounts due to and from these subsidiaries to ensure there is no claim by PRC assets against other companies and vice versa which is part of providing clean title to the purchaser. Therefore, except for the sale of the three subsidiaries

and the forgiveness of loan accounts, we are not seeking to sell or deal with any other assets at this stage. We discuss the other assets from pages 68 to 78 of our report to stakeholders dated 6 May 2009.

Q8. What % of Senior noteholder approval is required? What happens if this level of approval is not achieved?

There is no firm percentage. The HK Courts require that a ‘clear and significant’ indication of support is demonstrated.

Views of other direct creditors including the HK lenders will also be considered. If significant support is not received, then the PLs will notify the Court that the sale will not proceed.

Q9. What is the deadline for submission of the voting slips?

Voting slips should be submitted to the PLs no later than Friday, 19th June 2009 at 11:30pm (Hong Kong time) / 11:30am (New York time) / 4:30pm (London time).

8

27


Q10. What are the next steps if the court approves the sale?

Should the court sanction the sale, Completion is to occur 30 business days after the satisfaction of the Conditions Precedent to the sale, as agreed in the sale and purchase agreement (and detailed in page 42 of the report to

stakeholders dated 6 May 2009). During this time we expect to receive the balance of the purchase price, taking account adjustments if necessary.

After this 30 day period, we would begin drafting a Scheme of Arrangement by which sale proceeds would be distributed to Stakeholders. We expect the Scheme of Arrangement to be completed (ie funds distributed to Stakeholders) within

three to four months from Completion of the transaction.

Q11. What happens if the court does not approve the sale?

If the court does not approve the sale, based on recent discussions with the local government and existing management, we envisage that the local banks would move swiftly to place the assets into a PRC liquidation. As previously advised,

we are of the opinion that the return to Stakeholders would likely be minimal, at best.

Q12. Has a Senior noteholder steering committee been formed?

Yes. If you would like to join this committee, please contact Fabrice Pellous of Legal & General Investment

Management at [email protected] or +44 203 124 3513.

Q13. Can I contact the PIK noteholders?

Yes, please contact Ms Galaxy Chan of KPMG at [email protected] or +852 3121 9839.

8

Annexure 1:

Voting Forms

ASIA ALUMINUM HOLDINGS LIMITED 亞洲鋁業控股有限公司

(In Provisional Liquidation) (“the Company”)(Incorporated in Bermuda with limited liability)

Voting Form for use by creditors and stakeholders of the Company

To: Mr. Fok Hei Yu and Mr. Roderick John Sutton, both of Ferrier Hodgson Limited, 14/F, TheHong Kong Club Building, 3A Chater Road, Hong Kong, the Joint and Several ProvisionalLiquidators of the Company

I/We*(Note 1)________________________ of ____________________________________ am/are* acreditor of the Company/holder of 8.00% Senior Notes due 2011 issued by the Company pursuantto an Indenture dated 23 December 2004 as amended the First Supplemental Indenture dated 10May 2007 and the Second Supplemental Indenture dated 29 September 2008*. As at _________2009, the amount of indebtedness owed and due by the Company to me/us* is in the sum ofHK$/US$*___________________________. I/We* have read the Report to Stakeholders dated6th May 2009 (“the Report”) and understand the contents therein. After our due consideration,I/We* vote in respect of the resolutions set out below.*Delete as appropriate

RESOLUTIONS FOR(Note 2)

AGAINST(Note 2)

1. To support sale by China Steel Development Co. Ltd. 中鋼發

展有限公司, Asia Aluminum Manufacturing Co. Ltd. 亞洲鋁

業集團有限公司 and Asia Aluminum Management Limited

亞洲鋁業管理有限公司(all in Provisional Liquidation) of

their 100% of the entire equity interest in, and 100% of thetotal paid up or contributed registered capital of Asia

Aluminum (China) Co. Ltd. 亞洲鋁業(中國)有限公司,

Zhaoqing Asia Aluminum Factory Co. Ltd. 肇慶亞洲鋁廠有

限公司 and Zhaoqing Asia Aluminum Industrial City

Management Company Limited 肇慶亞鋁工業城管理有限公

司 to Golden Concord Pacific Limited in terms of the Sale and

Purchase Agreement dated 30 April 2009 (“the Agreement”)or to other purchaser with the same terms and conditions of theAgreement but with a higher consideration.

2. To support the continuation of Provisional Liquidation of theCompany and the appointment of Mr. Fok Hei Yu and Mr.Roderick John Sutton, both of Ferrier Hodgson Limited as theProvisional Liquidators of the Company

Dated this __________ day of _________________ 2009

Signature(s) (Notes 3 & 4): _____________________________________________

Notes:1. Full name(s) and address(es) to be inserted in BLOCK CAPITALS. The names of all joint creditors should be stated.2. IMPORTANT: IF YOU WISH TO VOTE FOR ANY RESOLUTION, PLEASE TICK THE BOX MARKED “FOR”. IF YOU

WISH TO VOTE AGAINST ANY RESOLUTION, PLEASE TICK THE BOX MARKED “AGAINST”.3. This voting form must be signed by you or your attorney duly authorized in writing or, in the case of a corporation, must be executed

under its seal or under the hand of any officer or attorney or other person duly authorized to sign the name. ANY ALTERATIONMADE TO THIS VOTING FORM MUST BE INITIALLED BY THE PERSON WHO SIGNS IT.

4. By signing the voting form, the Provisional Liquidators are authorized to submit this voting form to the Court in their application to theCourt for sanction for the relevant sale.

5. To be valid, this voting form must be sent to Mr. Fok Hei Yu and Mr. Roderick John Sutton, care of Ferrier Hodgson Limited, 14/F, TheHong Kong Club Building, 3A Chater Road, Hong Kong, the Joint and Several Provisional Liquidators of the Company ON ORBEFORE 19TH JUNE 2009 (FRIDAY), 11:30PM HK, 4:30PM LONDON, 11:30AM NEW YORK.

ASIA ALUMINUM MANUFACTURING COMPANY LIMITED 亞洲鋁業集團有限公司

(In Provisional Liquidation) (“the Company”)(Incorporated in Hong Kong with limited liability)



I/We*(Note 1)________________________ of ____________________________________ am/are* acreditor of the Company. As at _________ 2009, the amount of indebtedness owed and due by theCompany to me/us* is in the sum of HK$/US$*___________________________. I/We* haveread the Report to Stakeholders dated 6th May 2009 (“the Report”) and understand the contentstherein. After our due consideration, I/We* vote in respect of the resolutions set out below.*Delete as appropriate


AGAINST(Note 2)

1. To support the Company’s sale of its 100% of the entire equityinterest in, and 100% of the total paid up or contributedregistered capital of Zhaoqing Asia Aluminum Factory Co.

Ltd. 肇慶亞洲鋁廠有限公司 to Golden Concord Pacific

Limited in terms of the Sale and Purchase Agreement dated 30April 2009 (“the Agreement”) or to other purchaser with thesame terms and conditions of the Agreement but with a higherconsideration.


Dated this __________ day of _________________ 2009







ASIA ALUMINUM MANAGEMENT LIMITED 亞洲鋁業管理有限公司

(In Provisional Liquidation) (“the Company”)(Incorporated in Hong Kong with limited liability)





AGAINST(Note 2)

1. To support the Company’s sale of its 100% of the entire equityinterest in, and 100% of the total paid up or contributedregistered capital of Zhaoqing Asia Aluminum Industrial City

Management Company Limited 肇慶亞鋁工業城管理有限公

司 to Golden Concord Pacific Limited in terms of the Sale and

Purchase Agreement dated 30 April 2009 (“the Agreement”)or to other purchaser with the same terms and conditions of theAgreement but with a higher consideration.


Dated this __________ day of _________________ 2009







CHINA STEEL DEVELOPMENT COMPANY LIMITED 中鋼發展有限公司

(In Provisional Liquidation) (“the Company”)(Incorporated in Samoa with limited liability)





AGAINST(Note 2)

1. To support the Company’s sale of its 100% of the entire equityinterest in, and 100% of the total paid up or contributed

registered capital of Asia Aluminum (China) Co. Ltd. 亞洲鋁

業(中國)有限公司 to Golden Concord Pacific Limited in

terms of the Sale and Purchase Agreement dated 30 April 2009(“the Agreement”) or to other purchaser with the same termsand conditions of the Agreement but with a higherconsideration.


Dated this __________ day of _________________ 2009







Annexure 2:

Support Letters from Zhaoqing Governmentand PRC Banks

2

Support Letters from Zhaoqing Government and PRC Banks

3


4


5


Annexure 3:

Details of Contacts with Other Potential Purchasers

2

Details of Contact with Other Potential Purchasers

� Through the course of their appointment, the PLs have held numerous discussions with and provided information to

these and other potential purchasers.

� The PLs have offered and given relevant parties access to discussions with the PIK noteholders and KPMG.

� We observe that requests for information from potential purchasers and the volume of data room access have been limited. To date, no superior offers have been made, and no parties have indicated an ability to deal with the issues in

the PRC.

� First contact with the PLs on 17 March 2009. Regular follow up calls made thereafter to progress initial contact.

� Provided access to the Asia Aluminum data room. At the time of writing of this report, Party 2 was the only interested

party that has accessed the data room.

� Assets are in line with Party 2’s key focus areas.

� May have government contacts but requires financial assistance to conclude a purchase. PLs offered access to PIK

noteholders to explore financing opportunities; Party 2 has already been in contact with the PIK noteholders.

� Has serious concerns regarding the ability of a party other than Golden Concord to do the following, should an alternate

party conclude the transaction:

� Physically secure the assets (local stakeholders may remove the assets)

� Replace legal representation and the Board of Directors of the Target Companies (third parties may be prevented

from taking control)

� Discussions ongoing. No offer nor indication of ability to make an offer received to date, despite initial contact on 17

March 2009.

Party 2

� First contact with the PLs on 17 March 2009. Regular follow up calls made thereafter to progress initial contact.

� Assets are in line with Party 1’s key focus areas.

� Considers China issues to be an obstacle, but open to discussions with other interested parties who are able to overcome

these issues.

� Notwithstanding, Party 1 emphasized that they are not keen on taking part in a competitive bidding process for purposes

of driving the transaction price. They have indicated that they will only consider submitting an offer if the current Golden

Concord offer is not concluded.

� PLs offered to facilitate meetings with PIK noteholders to match Party 1 with potential partners with ties in China; no

response received.

Party 1

RemarksParty

3

� First contact with the PLs on 3 June 2009.

� Has aluminum interests and may be open to cooperating with Golden Concord or other parties. Meetings with PIK

noteholders offered to this end; no response received.

� Offered access to data room on 4 June 2009; no response received.

Party 7

� First contact with the PLs made on 17 March 2009. Regular follow up calls made thereafter to progress initial contact.

� Are monitoring developments with respect to Asia Aluminum to determine the possibility for and the extent of their

participation.

� Would require formal due diligence prior to submitting an offer.

Party 3

� First contact with the PLs on 27 May 2009.

� Given access to data room and offered meetings with PLs and PIK noteholders. Has not accessed data room nor met

with the PLs at the time of writing of this report.

� No conclusion on the level of their interest at this stage due to limited response from Party 5; ongoing follow up.

Party 5

� First contact with the PLs on 5 May 2009. Regular follow up calls made thereafter to progress initial contact.

� Keen on the assets and in participating either as a financial investor or as a lender.

� Cautious as to timing of their participation given recent media coverage of Asia Aluminum.

� Offered access to data room; no response. Are reviewing Report to Stakeholders internally.

� Awaiting response to invitation for further discussion.

Party 4

� First contact with the PLs on 29 May 2009.

� Given access to data room and offered meetings with PIK noteholders. Has not accessed data room nor accepted an

offer to meet with the PLs at the time of writing of this report.

� Are giving the PRC Assets consideration, but timing constraints may pose an issue. PLs have offered assistance to this

end.

� No concluded interest at this stage due to limited dialogue with Party 6; ongoing follow up.

Party 6

RemarksParty


4

� Contacted PLs through KPMG for possible joint bid with another party.

� Showed interest in the assets two years ago.

� Potential interest; ongoing follow up from PLs and KPMG.

Party 12

� First contact with the PLs on 22 May 2009 through KPMG and attended a meeting to discuss the Report to Stakeholders

with PLs and KPMG on 2 June 2009.

� Has not responded to invitations to view data room and to schedule further meetings.

� Limited response since time of first contact; however PLs continue to follow up.

Party 11

� PLs attempted contact with Party 9 for sometime and eventually received a response on 9 June 2009.

� Report to Stakeholders provided on 10 June 2009.

� Awaiting response to invitation for further discussion.

Party 9

� First contact with the PLs on 14 April 2009 through KPMG. Regular follow up calls made thereafter to progress initial

contact.

� Unable to disclose identity of potential investor to date. KPMG advised that a signed Confidentiality Agreement is going to

be provided, however, no response to date.

� Ongoing follow up from PLs and KPMG.

Party 10

� PLs attempted contact with Party 8 for some time and eventually received a response on 9 June 2009.

� Party is an industry player in China.

� Indicated in conversations with PL that they are not interested, as:

� The assets do not fit strategically with Party 8’s primarily upstream operations

� Issues regarding completion and operations of FRP plant

� Issues in running the factories in the absence of the current AA management team

� Large amount of onshore debt would need to be dealt with

� PLs provided KPMG with Party 8’s contact details to facilitate further exploratory discussions.

Party 8

RemarksParty


5

� First contact with PLs on 10 June 2009 through PIK noteholders. Meeting held with Party 13 and KPMG immediately

thereafter.

� Would participate as an equity investor. Indicated significance of working with existing management on operations due

to sensitivities of the PRC.

� Items of concern:

� Requires further information, including discussions with existing management, before an offer can be formalized

� Ability of a party other than existing management to operate the factories due to relationships in place

� Potential interest albeit with strong reservations; ongoing follow up from PLs and KPMG.

Party 13

RemarksParty


Annexure 4:

Simplified Group Structure Chart

Asia Aluminum Holdings Limited

(Provisional Liquidators Appointed)

Simplified Group Chart &

Debt Chart

PIK Note holders of US$535m

Notes:(1) Other investors include LCF II Holdings Limited and Keywise Greater China Opportunities Master Fund

Kwong Wui Chun andfamily

(Chairman)Other investors (1)

97.41%

AA InvestmentsCompany Limited

[Bermuda]HCCW 141/2009

Asia AluminumHoldings Limited


Sino AdvanceInvestments Ltd.

[BVI]

Asia Aluminum GroupLtd.[BVI]

Asia AluminumManagement Ltd.

[HK]HCCW 237/2009

China SteelDevelopment Co. Ltd.

[Samoa]HCCW 142/2009

Asia Aluminum (China)Co. Ltd.

亞洲鋁業(中國)有限公司[China]

Asia AluminumManufacturing Co., Ltd.

[HK]HCCW 165/2009

Zhaoqing AsiaAluminum Factory Co.,

Ltd.(肇慶亞洲鋁廠有限公司)

[China]

Zhaoqing AsiaAluminum IndustrialCity ManagementCompany Limited

(肇慶亞鋁工業城管理有限公司)[China]

SPP

SPS

SPS

100%

Conducts Extrusion Business

Shares pledged to PIKNote holders

Operated by Minority Shareholders

Security held by PRC Bank

2.59%

G

G

G

▲ ♣

♦

Senior Note Holders (“SNH”) of US$450m

Hong Konglenders

US$155m(direct lend)

PRC lendersUS$333m (direct

lend)

Trade Creditors US$154m

SPP

G

FH Representatives Appointed asDirectors

Conducts Flat RollsBusiness▲

♣

Shares pledged to Senior Noteholders

Holds Land Use Title

Provisional Liquidators Appointed

HK Lenders

Guarantee provided to Senior Note holders

♦

74.99%

100%

100%100%

US$343m

100%

US$78m

US$15m

US$56m100%

Provided US$100msecurity to SNH

100%

US$7m

Vendor Company

ProvidedUS$300msecurity to

SNH


SNH

SPS

100%

SPS

SPP

US$173m

“most” Relevant Claims In Sale SanctionApplication

Senior Note Holders(“SNH”) Interest via

guaranteeUS$450m


guaranteeUS$450m

97.41%

AA InvestmentsCompany Limited


Asia AluminumHoldings Limited


Sino AdvanceInvestments Ltd.

[BVI]

Asia Aluminum GroupLtd.[BVI]

Asia AluminumManagement Ltd.

[HK]HCCW 237/2009

China SteelDevelopment Co. Ltd.

[Samoa]HCCW 142/2009

Asia Aluminum (China)Co. Ltd.

亞洲鋁業(中國)有限公司[China]

Asia AluminumManufacturing Co., Ltd.

[HK]HCCW 165/2009

Zhaoqing AsiaAluminum Factory Co.,

Ltd.(肇慶亞洲鋁廠有限公司)

[China]

Zhaoqing AsiaAluminum IndustrialCity ManagementCompany Limited

(肇慶亞鋁工業城管理有限公司)[China]

SPP

SPS

SPS

100%

Conducts Extrusion Business

Shares pledged to PIKNote holders

Operated by Minority Shareholders

Security held by PRC Bank

2.59%

G

G

G

▲ ♣

♦

Senior Note Holders (“SNH”) of US$450m

Hong Konglenders

US$155m(direct lend)

PRC lendersUS$333m (direct

lend)

Trade Creditors US$154m

SPP

G

FH Representatives Appointed asDirectors

Conducts Flat RollsBusiness▲

♣

Shares pledged to Senior Noteholders

Holds Land Use Title

Provisional Liquidators Appointed

HK Lenders

Guarantee provided to Senior Note holders

♦

74.99%

100%

100%100%

US$343m

100%

US$78m

US$15m

US$56m100%

Provided US$100msecurity to SNH

100%

US$7m

Vendor Company


SNH


SNH

SPS

100%

SPS

SPP

US$173m

“most” Relevant Claims In Sale SanctionApplication


guaranteeUS$450m


guaranteeUS$450m

Annexure 4

Annexure 5:

Public Sale Process Examples

2

Public Sale Process Examples

Example 1

In one reasonably high profile matter whereby Ferrier Hodgson was the PL, before a public sale process had beenstarted, approximately 80 interested parties contacted the PL.

Once the public sale process was started, only 5 additional parties came forward, none of whom showed any genuineinterest.

For reasonably high profile matters, for which Asia Aluminum falls into this category, likely interestedparties will be aware of the potential for asset sales.

Example 2

In another matter whereby Ferrier Hodgson was appointed Provisional Liquidator, a public sale process was conducted,however only two interested parties came forward.

Once the structure of the group of companies and the security were disclosed to these parties, they advised that theassets were no longer of interest.

The eventual purchaser of the assets was an investor holding a share pledge as consideration for the provision offunding provided, which gave them effective control of the group.

A public sale process in this case did not add value as there was only one party that had the ability tobring a deal to completion due to the security they held within the group.

Example 3

In the case of the Lehman sale to Nomura, there was no public sale process due to the urgency required in effecting asale or a restructuring.

There are particular circumstances whereby a public sale process can not be conducted

Documents

AA Investments Company Limited Asia Aluminum Holdings ... · 3 The information contained in this report including any statement of fact or opinion, relating to any of AA Investments