What rationales did you use for your valuation of Celanese?

1. Varying the operating assumptions and the DCF to derive the current
implied share value. We used a weighted average of the estimates
provided by the independent consultant and our own consultant estimates
to project the key operating assumptions.
2. Considering the rate of inflation and the current cash rate (2003) we
decided to slightly adjust the Terminal Value Growth rate to 2.00% to
reflect the market.
3. The default Exit multiples were only based on comparable EU firms. As our
firm had 60% of our assets in the US, we decided to use a weighted
average of US and EU firms.
4. After the LBO, our firm will be highly leveraged. However, it would be
inappropriate to use the EV/EBITDA multiple as it is capital structure
neutral.
5. We also considered the point in the chemical pricing cycle. We know that
the acetyls market had hit a low point in the chemical cycle in 2001, and
had already recovered to a mid-cycle position by 2003. Looking at the
2001 figures, it indeed hit a low point with a sales growth of -11%.
However, it has been forecasted by both our and independent consultants
to rise to 6% by 2003. This is a strong indication we are heading to a high
point in the cycle, therefore we can imply a higher exit multiple.