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# PROJECT KENNEDY

Private and Confidential

# PROJECT KENNEDY (cont.)

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# PROJECT KENNEDY (cont.)

## Performance Update

■ Market conditions for the luxury sports car sector continue to remain extremely challenging for all manufacturers

■  Kennedy continues to perform below budget, on both a wholesale and retail basis

- Wholesales to date total 1,215 units versus a budget of 1,825 units, prompting Management to reduce 2010 wholesale budget from 6,000 sales to 5,053. Management are preparing the business for a potential further reduction to 4,800 units

Kennedy continues to underperform not only against budget but also the market

<table><tr><th>Units</th><th>Kennedy</th><th>Bentley</th><th>Ferrari</th><th>Lamborghini</th><th>Maserati</th></tr><tr><td>May-10</td><td>202</td><td>165</td><td>223</td><td>43</td><td>172</td></tr><tr><td>May-09</td><td>228</td><td>179</td><td>200</td><td>37</td><td>137</td></tr><tr><td>Variance</td><td>-11.4%</td><td>-7.8%</td><td>11.5%</td><td>16.2%</td><td>25.5%</td></tr></table>

■  Poor preparation for the launch of the Rapide has significantly impacted sales

<table><tr><th>nits</th><th>Rapide</th><th>Flying Spur</th><th>Panamera</th><th>Quattroporte</th></tr><tr><td>May-10</td><td>21</td><td>57</td><td>907</td><td>73</td></tr></table>

# PROJECT KENNEDY (cont.)

## Performance Update (cont.)

# PROJECT KENNEDY (cont.)

## Financial Pressure

• As the deterioration of Kennedy's performance continues,additional pressure continues to build on the financial position of the Company

	- The risk remains that Kennedy fails to comply with its financial covenants or struggles to refinance its debt upon maturity

| Month   | Wholesale Volume (LHS) |
|---------|------------------------:|
| Dec-09  | 6,000                   |
| Jan-10  | 6,000                   |
| Feb-10  | 6,000                   |
| Mar-10  | 5,825 (Mar 10 – forecast revised to 5,825) |
| Apr-10  | 5,385 (Apr 10 – forecast revised to 5,385) |
| May-10  | 5,385 (May 10 – forecast revised to 5,385) |
| Jun-10  | ~4,900 (solid-line observed decline) |
| Jul-10  | ? (dotted projected scenarios: up / down) |
| Aug-10–Dec-10 | ? (no solid data; projections shown) |

Chart text / legend (directly on chart)
- Legend: Volume (LHS) — solid line; EBITDA (RHS) — dotted line
- Left axis: Wholesale Volumes (4,000 to 6,500)
- Right axis: £m (50 to 90)
- Right-side labels: Accounting EBITDA; Financial Engineering £23m; Operating EBITDA
- Annotation: "Dec 09 – Mgmt forecast volumes of 6,000 for 2010"

£m

# PROJECT KENNEDY (cont.)

## Financial Pressure (cont.)

Г

# PROJECT KENNEDY (cont.)

## What Kennedy needs:

1. Stable and secure shareholders

2. Revamp of Management team to take advantage of the strengths within the existing team.

	- Critically needs a strong, experienced CEO and to upgrade the sales and marketing

3. Empowering the Management team to make the necessary changes to develop new markets

4. Rationalisationof product ranges, through theeliminationof the"low" priced entry

	- models, to once againposition the Company as aspirational and more up-market

5. Agree a coherent and dynamic fuel economy programme built around the core stable of products

# PROJECT KENNEDY (cont.)

## What Kennedy needs: (cont.)

# PROJECT KENNEDY (cont.)

## Capital Requirement

■ Total committed capital of up to £500 million, over 3 years, could be required to fully implement the strategy. This would include:

		— £200 million to acquire the Company's debt

		— £300 million to develop the business through capital expenditure

- The new capital would allow Kennedy to:

	— Design and develop new models, re-positioning the Company as the most exclusive sports car provider

	— Repatriation of production of the new Rapide model from Graz in Austria, to the Kennedy production facility in Gaydon

	— Bring the Lagonda model into production, allowing the Company to access new markets, both sectorally and geographically

	— Focus on developing environmental options, especially hybrid

	— Expand the dealership network into new, faster growth, emerging markets

# PROJECT KENNEDY (cont.)

## Capital Requirement (cont.)

Г

# PROJECT KENNEDY (cont.)

## Scenario Analysis

Post-acquisition of the debt, the following scenarios could play out...

Scenario Analysis

| Step | Timing | PASS outcome | FAIL outcome |
|---|---:|---|---|
| Leverage Covenant | (difficulty envisaged Q3/Q4 2010) | PASS | FAIL → Company enters Administration |
| Liquidity Covenant | (difficulty envisaged Q2/Q3 2011) | PASS | FAIL → Pre-pack sale to Consortium |
| Refinance of Debt | (May 2012) | Refinance → Debt holders repaid in full plus coupon | Unable to fully Refinance |

• Should Kennedy pass all covenants and be able to refinance the Debt facility, then Debt holders will be repaid in full plus the annual coupon (375bps above LIBOR)

• If not the Company will enter Administration and a pre-pack sale will allow the Consortium the opportunity to take full ownership

# PROJECT KENNEDY (cont.)

## Scenario Analysis (cont.)

# PROJECT KENNEDY (cont.)

## Next Steps

The key steps to execution are:

1. Agree Consortium and the capital commitment

2. Mandate Jon Moulton to represent Consortium, to buy Kennedy's debt from banking syndicate, seeking to achieve the purchase of 66.7% of the facility

3. The possible breach of Kennedy's covenants could be in Q4 2010 for leverage covenants and Q2 2011 for cash flow covenants

4. Upon breach of covenants, accelerate repayment of the debt facility under terms of the loan agreement

5. Appoint Administrator upon inability of Company to re-pay debt facility to Consortium

6. Administrator to conduct pre-pack sale of Kennedy to the Consortium