PARK ELEKTRİK MADENCİLİK & SİLOPİ ELEKTRİK MERGER

Brief NoteNovember 24, 2014

Contents

Merger ProcessSilopi Elektrik

Public DisclaimerRegarding the merger process, all the information and financial data therein is to be approved by the governmental agencies such as CMB, EMRA and Borsa Istanbul. Without their consent the merger process shall not be completed.

Merger Process

Park & Silopi MergerOn September 1st, 2014, Park Elektrik announced a plan by the BOD to merge with Silopi Elektrik, the sister company which is engaged in electricity production in Silopi, in its 135 MW thermal power plant. 95% of Silopi Elektrik’s investments to triple its capacity to 405 MW has been completed already.

The merger has rationale of product diversification, managerial and financial scales of economies and the Group’s perspective to have a bigger entity in the capital markets.

Main Incentives

Increasing Market Cap

Product Diversification

Managerial and

Financial Scale of Economi

cs

Main Incentives

Scale of Economics

Product Diversification

Creating Value

Neighbouring locations shall help to optimize scale of economics.

To be a player in the developing energy sector as well as

commodity markets.

The value created by the merger shall be projected in the market

value of the company.

Stages1 Sep 2014

12 Sep 2014

15 Sep 2014

16 Sep 2014

1 Oct 2014

13 Oct 2014

12 Nov 2014

21 Nov 2014

Board of directors decisions declared of both companies. They included exit price of TL 4.20.

Expert report was declared. Merger ratio was determined as 0,186914.

Merger agreement and merger report of the Board of Directors was signed.

CMB and EMRA applica- tions accomp-lished.

Silopi Elektrik applied to the BIST to be listed.

Board decision was announced by Silopi Elektrik on dividend distribution policy and it included in the merger agreement.

Borsa Istanbul approved listing of Silopi Elektrik shares subsequent to forthco-ming merger.

Capital Market Board approved merger of Park and Silopi with an exit right of TL4.20.

Completed Stages

Stages

Approval from Energy Market Regulatory Agency.

Approvals of the merger in the general meetings of the both companies.

Exit rights will be executed maximumsix days after the general meeting. It will be lasted min. 10 and max 20 days.

Stockholders who did not prefer to use exit right will change their shares with new company’s shares.

Central Registry Agency registrationwill take place.

Commencing transactions in Borsa Istanbul.

Remaining Stages

Estimated Timing

It is planned to have general meetings of both companies through the end of the 2014 to finalize the merger process.

EvaluationsExpert Analysis* (Thousand TL)

Silopi Elektrik(Transferee)

Park Elektrik(Transferor)

Total Value

SH’s Equity

DCF Comparable Transaction Value

Base Value

SH’s Equity DCF Market Value

Base Value

73,205 3,518,885 2,451,746 2,402,893 469,102 1,402,196 674,487 924,494 3,327,387

20% 40% 40% %100 20% 40% 40% %100

* Expert institution is Eren Bağımsız Denetim YMM A.Ş., a member of Grant Thornton International Limited.

Change RatioExpert AnalysisSilopi Elektrik Paid Capital: 80.000.000 TLPark Elektrik Paid Capital: 148.867.243 TL

Merger Ratio = 2,402,8933,327,387

= %72.22

Post Merger Capital = 80,0000.7222

= 110,779

Amount of Capital Increase

= 110,779 -80,000 = 30,779

Exchange Ratio = 30,779148,867,243

= 0.206757

Silopi Elektrik

Silopi Elektrik in Brief - 1

It is located in Şırnak/Silopi, southeast of Turkey.

Electricity production license, dated 23.03.2004 was issued by EMRA. The license duration is 20 years.

Electricity production started in 2009 with one unit.

Established capacity is 135 MW currently.

It will triple its capacity in the beginning of 2015 by adding two more units that each has 135MW capacity. Total capacity of the company will be 405MW starting from 2015.

Silopi Elektrik in Brief - 295% of the investment of two new units has been completed already.

Total investment value of the three units is estimated as US$500mn in today’s prices.

After completion of the two generation units at the end of 2014, the company’s established capacity will reach 405 MW. With this capacity the Company aims to produce 1% of total electricity production of the country.

Currently the company sells %50 of the production to the group companies. Remaining is to be sold in the free market.

Silop Elektrik in Brief - 3Consumes asphaltite, a kind of hydrocarbon as fuel.

The technology is called fluidised bed.

Owns the operational rights in the asphaltite mine until 2033.

Calorific value of the asphaltite is between 5.500-5.800 kcal/kg.

Silopi Electrik benefits guaranteed supply and low cost for the fuel.

The electricity is sold via bilateral agreements or PMUM.

Silopi Elektrik – Production

Gross Production

2011 2012 2013 2014/06

Capacity(annual) (KWh)

1,182,600,000 1,182,600,000 1,182,600,000 586,305,000

Production(annual) (KWh)

816,911,424 849,468,384 731,715,744 516,539,520

CUR(annual)

70% 71.8% 61.87% 88.10%

Silopi Elektrik – Sales

Sales 2012 2013 2013/06 2014/06

Sales Amount(mn, kw/h)

735 634 333* 470

Sales Revenues(mn TL)

112 96 51* 73

* In 2013, maintenance works caused the production to be realized at low levels which was deteriorated the revenues. With the completion of the new plants, we do not expect to suffer from substantial production losses.

Breakdown of Sales (KWh)

2012 2013 2014*0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

Bilateral Contracts(KWh)MFSC(KWh)

Energy Choice

Breakdown of Sales (TL)

2012 2013 2014*0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

Bilateral Contracts(TL)MFSC(TL)Energy Choice(TL)

Breakdown of Cost Of Production

Fuel&Energy53%

Labour26%

System Costs12%

Main-tainance

3%

Other6%

Summary Income Statement

TL 2011 2012 2013 1H13 1H014

Sales 97.377.269 111.789.785 96.386.866 50.668.615 73.136.601

COGS -73.490.313 -94.119.783 -88.171.970 47.225.848 56.804.865

Gross Profit 23.886.956 17.670.002 8.214.896 3.442.767 16.331.736

Margin 25% 16% 9% 7% 22%

GM Expenses -2.838.152 -3.039.365 -2.066.680 1.025.907 1.218.537

Other Income 233.732 406.053 164.672 93.829 4.772.706

Other Expenses -444.830 -243.600 -44.991 68.400 1.337.730

Operating Income 20.837.706 14.793.090 6.267.897 2.442.289 18.548.175

Margin 21% 13% 7% 5% 25%Income From Invesment 0 5.518 -31.748 6.529 0

Financial Income 0 13.010.610 0 9.595.653

Financial Expenses -47.859.425 -6.445.417 -66.157.320 25.476.352 0

Income Before Tax -27.021.719 21.363.801 -59.921.171 -23.027.534 28.143.828

Tax Income/(Loss) 5.125.557 -4.569.393 11.813.745 -4.555.255 5.414.209

Net Income/Loss -21.896.162 16.794.408 -48.107.426 -18.472.279 22.729.619

Margin - 15% - - 31%

Annual Margin Comparison

TL 2011 2012 2013 1H13 1H14

Sales 97.377.269 111.789.785 96.386.866 50.668.615 73.136.601

Gross Profit 23.886.956 17.670.002 8.214.896 3.442.767 16.331.736

Gross Margin 25% 16% 9% 7% 22%

EBITDA 32.523.528 26.574.413 18.168.218 8.353.451 30.580.387

EBITDA Margin 33% 24% 19% 16% 42%

Net Earnings -21.896.162 16.794.408 -48.107.426 -18.472.279 22.729.619

Net Margin - 15% - - 31%