Sulamericana Química—Transaction Summary

Company: Sulamericana Química, LTDA

Address: Via De Penetrecao II s/n, Lote 5, Centro Indutrial de Aratu
Simoes Filho Bahia, Brazil CEP.43.700-000
Website: http://www.saquimica.com.br/
Email: contato@sulamericanaquimica.com.br
Year Est.: 2007
Business: Engaged in the wholesale trade and transportation of fuel, minerals, steel and
chemical products, as well as wholesalers of mineral extraction products
including cut precious and semi-precious stones (Attachment 1).
Principals: Jose Helio Sanches—Director & Shareholder
Agenor De Oliveira Santos Filho—Director & Shareholder
Proposed Deal • The entire transaction will be managed by a Trustee, i.e., Citibank or BNY
Structure: Mellon.
• A new, Delaware-based SPV will issue an anticipated $300 million in bonds
to institutional buyers.
• The bond issue will be based solely on the insurer’s guarantee and Trust
Estate—the Project Fund, Funded Interest Account and Loan Reserve
Account—not the project or the Issuer.
• The Issuer will loan $150 million from the bond proceeds to Brazilian-based
Sulamericana Química (Attachment 1), repayable in three years, for project
development and business expansion.
• The remainder will be held to cover all three years of prepaid interest and
premiums, loan loss reserve, and all transaction-related expenses.
• The insurer will provide a guarantee based on their evaluation of the
transaction and secured by precious gems, either Alexandrite (Attachment 2)
or rubies (Attachment 3), as well as an interest in the Trust Estate.
• The Alexandrite, which has not yet been appraised, is estimated to be worth
$400 million and is held in a secure facility in Brazil, but can be moved to a
vault of the insurer’s choosing and appraised by an approved appraiser.
• The rubies are being held in a vault in Dubai and have been professionally
appraised at $540 million and insured to a current value of $225 million
(Attachment 4), which can be increased if required.

Advantages of • For All Parties—the entire transaction will be managed by a Trustee who
Deal Structure: administer the handling of documents, disbursements of monies, escrow of
collateral, etc., and management of the Trust Estate.
• For Bondholders—the transaction is based on the credit rating of the
Insurer, the Trust Estate, and the bond rating assigned to the transaction by
the Rating Agency.
 • For Sulamericana—the ability to quickly obtain financing from trusted,
accredited parties without undergoing a long and expensive underwriting
process.
• For the Insurer—Given that all interest and premiums will be prepaid and
held by the Trustee, the only risk of default is failure to repay the loan at
maturity. To offset that risk, the Insurer will be given security in the form of
gemstones that could be sold to recover any potential losses. Moreover, in
an event of default, all remaining Trust Estate monies after repayment of the
bonds will be paid to the Insurer, further reducing the Insurer’s risk profile.

Other • Deal Schematic (Attachment 5)

Attachments: • Typical Gideon Group Funding Process (Attachment 6)
Attachment 1—Company Registration
Attachment 2—Ruby Summary Appraisal
Attachment 3—Proof of Insurance
Attachment 4—Alexandrite Overview
 Rating Agency
Gideon Group
(S&P, Moody's, Fitch)
-Develop and coordinate financing structure -Provide transaction bond rating based
-Engage transaction professionals, i.e., Placement Agent, Note solely on insurance guarantee, not project
Counsel, Trustee, Rating Agency, Insurers, etc. -Bond rating determines interest rate on
-Oversee transaction until closing and loan maturity bonds, i.e., higher rating = lower interest

Bond Rating

Borrower TRUSTEE
Placement Agent/Bond Counsel
(Sulamericana Quimica) (Citibank, BNY Mellon)
Attachment 5—Deal Schematic

-Sign loan agreements with SPV
-Convey gemstone title to Trustee/Insurer Issuer instructions
-Repay loan at maturity via refinancing or
loan repayment
Title to gemstones
Insurer
-Provide insurance guarantee utilizing
gemstones and interest in Trust Estate as
collateral
Loan disburse. per -All transaction documents/monies held in escrow until closing -Prepare bond transaction documents
-Upon closing, deposit proceeds into Trust accounts, i.e., Project, -Secure bondbuying commitments
Funded Interest, Loan Reserve and Cost of Issuance Accounts -Submit transaction docs to Rating Agency
-Make loan disbursement to Borrower per Issuer's instructions -Ticket institutional investors for Notes
Loan repayment -Make interest payments/premium payments & bond repayment
-Make payments to all transaction professionals Interest payments
& bond repayment Transaction documents, i.e., offering
memorandum, bond indenture, etc.
Sign Loan Docs
All financing/transactions documents Bond Proceeds
$0
Issuer Institutional Bondholders
(New Delaware-Based SPV) (Morgan Stanley, Stern Brothers, etc)
-Issue bonds to insitutional buyers backed by insurance -Purchase bonds from SPV Issuer
Insurance guarantee guarantee only, not the project or the Issuer Issue Bonds -Receive interest payments per indenture
-Provide 3-yr, interest-only loan to Borrower agreement
-Receive bond repayment at maturity
Attachment 6—Typical Gideon Group Funding Process

1. Formal Engagement
2. Confirmation of acceptability/form of collateral and preliminary valuation
3. KYC and AML Finalization and Sign-Off
4. Engagement of Professionals
• Investment Banks, i.e., Goldman Sachs, Morgan Stanley, Stern Brothers, etc.
• Trustee, i.e., Citibank, BNY Mellon
• Rating Agencies, i.e., Moody’s, Standard and Poor’s, Fitch
• Placement Agents
• Attorneys

5. Term Sheet issued

6. Term Sheet acceptance

7. Drafting of Documents
• Trust Indenture
• Loan Documents
• Securities Documents
• Misc.

8. Receipt and final valuation of collateral

*Any and all items on the deliverables list should be provided as soon as possible and not
subject to completion of the above listed processes.

9. Submission of transaction and documents to rating agencies

10. Receipt of indicative ratings from rating agencies
11. Confirmation/acceptance of final terms and conditions
12. Receipt of fully executed documents and outstanding deliverables/receivables
13. Closing
14. Disbursement of funds
a. Closing fees
b. Reserve amounts
c. Loan amounts