General Steel Holdings Inc · OTC:GSIH
General Steel — Investor Presentation (April 2009)
29 slides from General Steel's investor presentation, Apr 29, 2009
Slide 1: General Steel Consolidation Growth Strategy
General Steel Consolidation Growth Strategy April 2009
Slide 2: Forward-looking statements disclaimer
Confidential Ordinance) S The forward-looking statements (including Company projections) made in this presentation and any subsequent Q&A are subject to risks, uncertainties and certain assumptions. The Company's actual results may differ materially from those currently anticipated due to a number o
Slide 3: Table of Contents
Table of Contents © Company Overview © Industry Overview ® Growth Strategy (Slide 18 — Slide 20) ® Proposed Transaction Structure and Rationale (Slide 21 — Slide 28)
Slide 4: Company Overview
Company Overview
Slide 5: General Steel Overview
General Stee! Ove} + Formed in 1989, General Steel is a China-based, U.S-listed producer of steel and steel-based products — Only fully-integrated Chinese stee! company listed on a USS. stock exchange + 6,250 employees + 2008 revenues of US$1.4 billion + 6.3 million metric tons of total production c
Slide 6: General Steel Overview - Operations
General Steel Overview = Oper + Operations are located in Shaanxi and Guangdong Provinces, Inner Mongolia autonomous region and Tianjin municipality Da Hot-rolled sheet Longmen JV Rebar, high-speed Baotou JV Spiral- weld pipe Maoming High-speed wire
Slide 7: General Steel Overview - Longmen JV
General Steel Overview — LonginenmNs@peter S} Key Statistics Jownership | * Acquired 1 June 2007 ‘+ 60% GSI; 40% Longmen Group Production . 440 milion metric tons annualized producton capacity * Rebar Broducts: * High-speed wire © Fully-integrated operation with access to a 300m metric ton iron ore
Slide 8: General Steel Overview - Subsidiary Key Statistics
General Steel Overvie Key Statistics '* Acquired 70% on 24 June 2004 '* 100% owned Prodi 7 —_ ¢ Current capacity at 400,000 metric tons eonn ea ‘+ Leading share of the market for hot-rolled sheet used for producing light agricultural vehicles * Strong sales and distribution network: three regional s
Slide 9: General Steel Overview - Baotou JV
Key Statistics Production Capa Comments General Steel Overvie » Acquired on 25 May 2007 '* 80% GSI, 20% Baotou Iron & Stee! Group ‘+ Current annual capacity at 100,000 metric tons ‘+ Spiral-weld pipe for use in the energy sector + JV with the 13® largest steel company in China, Baotou Iron & Steel +
Slide 10: General Steel Overview - Maoming
General Steel| Ove Key Statistics + Acquired on 25 June 2008 Capacity + Current annual capacity at 1.8 million metric tons. EE a * Close to deepwater port creating export opportunities to ‘South-East Asia Comments * State-of-the-art production lines ‘+ Underutilized (previously operating at 10% capa
Slide 11: General Steel Overview - Strong Management
General Steel Overview = Strong Manag eineriasiecta| &} ‘Over 20 years of experience within the steel industry Has key relationships with industry experts and members of government H ae ‘+ Member of China's APEC! Development Council (April 2003) and the Senior Economist etn EE) of Tianjin City (1994
Slide 12: Financial Overview - Sales
General Steel|— Financial Overview — Sales + The acquisition of Maoming Hengda Steel Co in 2008 is expected to drive an increase in revenues through its Guangdong location 1400 + Contracts to build railways, provide rebar for 4499 earthquake damage repair, and strong demand in Sichuan should also be
Slide 13: Financial Overview - Net Income and EBITDA
General Stee! — Financial Oven Financial Overview — Net Income EBITDA + Completed construction of two, 1,280m? blast furnaces at Longmen JV ussmm catth — Expected to lower production costs due to i} 2908 0 efficiency gains and less manpower, coke and poe" energy requirements a a + Despite high raw m
Slide 14: Industry Overview
Industry Overview =5 + 13
Slide 15: China steel production and consumption by region
@ + China is the largest producer, consumer and exporter 2008 Production by Region of steel globally 495 191% + Despite this, per capita consumption/production is low Ae relative to developed markets 38% — significant opportunity for growth 26%! + Domestic and international steel demand has declined
Slide 16: China Steel Production and Consumption
China Steel Production() China Stee! Consumption") (mt) (mt) 600 600 400 200 200 2005 2006 2007 2008 2009E 2010E 2005 ©2006 2007 2008 2009E 2010E Note: (1) HS8C estimates ‘Sources: Analyst Research, company acoounts, FactSet ISI, Word Steel ‘Aszooision 18
Slide 17: Industry Consolidation in China
Industry Consolidation in@ The next few years Will play algenninaya) fry trenisforsncitions ZS + In order to encourage new, scalable, less pollutant and Steel Capacity Consolidation Timeline dns ined technologically enhanced production, the central (m tons)2 government is working to shift production
Slide 18: Challenges in Consolidating Steel Industry
Challenges in Consolidating) Steel siaii Types of Consolidation in | Current Chinese Steel Market Consolidate between state- ‘owned companies Baogang (Shanghai) and Baogang (Inner Mongolia ) Consolidate between state- owned and private-owned companies Shandong Iron & Steel Group (Stated-owned) and R
Slide 19: Growth Strategy
Growth Strategy >it 3 18
Slide 20: General Steel - Growth Strategy
General Steel — Growth Strategy: &} Over the next few years General Steel aims to become a top producer in China with consolidated annual capacity of 16-20 million metric tons + Capacity growth, geographical expansion and sourcing diversity will be led by an aggressive acquisition and joint venture
Slide 21: Capacity growth over time
a0 tons wai June 04 May 07 June 07 June 08 Dec-08 Next few year i Daquizhou Baotou JV Longmen JV HAddition Longmen JV Maoming Bi New Acquisition
Slide 22: Proposed Transaction Structure and Rationale
Proposed Transaction Structure and Rationale GSI Model of Consolidation The overall strategy and approaches, including expected documents provided herein are provided in general for illustration purposes. Actual transactions may vary from case to case in terms of mechanisms deployed and documents us
Slide 23: Proposed Roll-Up Strategy
Proposed Roll-Up Strategy Key Concepts + General Steel lease from Target, through GSI's wholly-owned PRC-Incorporated subsidiary DQ, all operations of the business in exchange for a fee — Modest commitment fee pay to Target upfront in GSI stock + General Steel will also be granted an irrevocable exc
Slide 24: Relationship between General Steel and Target Companies
Relationship between Genefalls: Companies: Palrticlozitiric) Employees Operations Inventory Supply and Sales Channels
Slide 25: Transaction Benefits
Transaction Benefits Our strategy takes advantage of the government’s push for market consolidation, realizing benefits for both General Steel and participating companies Member Companies v v v v v Retain members of original operating team Opportunity to remain operational Scale benefits and other s
Slide 26: General Steel's proposed structure versus alternatives
General Steel’s proposed) Since) Consolidate with private Consolidate with SOE company é H Consolidate with GSI H Hl 1 1 1 zi WR! v Publicly traded GSI shares Sdhsgbieipsal| ~ Valued based on net asset and valuation H q q q q H ¥ Continued with increased 1x Capacity will be incorporated into. « Capa
Slide 27: Target screening criteria
Target companies are initially identified through a broader screening process: + State- or privately-owned initial + No geographic limitation. Areas of interest: steel making, iron smeiting, steel product Screening processing, steel product logistics, or iron-ore or coal mining Criteria + Long-term
Slide 28: Case Study: Shaanxi Longmen Joint Venture
Case Study: Shaanxi longi + On June 15, 2007, General Steel and Shaanxi Longmen Iron and Steel Group signed an agreement to form ‘Shaanxi Longmen Iron and Steel Co, Ltd (‘Longmen Joint Venture’) — General Steel contributed RMB300 million (US$39 million) to attain 60% interest — Longmen Group contrib
Slide 29: Closing slide
In the rapidly consolidating) stes| inaUsri Neri tclmsi= Giisss eres comeciniss =! Uniciuis lifeline gade With reall and! tangible wsencitcnam
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