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Amax Holdings Limited

Non-performing Assets Treatment: Junket Business in Macau. Amax Holdings Limited. Aug, 2010. Amax – AMA Contractual Agreement. Amax Holdings Limited. 100%. Ace High Group Limited. Amax Group. $1.9 billion Loan. 80% Profit Sharing. AMA.

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Amax Holdings Limited

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  1. Non-performing Assets Treatment: Junket Business in Macau Amax Holdings Limited Aug, 2010

  2. Amax – AMA Contractual Agreement Amax Holdings Limited 100% Ace High Group Limited Amax Group $1.9 billion Loan 80% Profit Sharing AMA In December 2007, Amax Group granted a loan of HK$1.9 billion in exchange for 80% profits made by AMA, our Macau business partner. The loan was used as liquidity and working capital in AMA’s operations.

  3. AMA Original Business Structure Cash AMA Altira Macau Non-cash Chips Non-cash Chips Collaborator 3 Collaborator 1 Collaborator 2 And other collaborators VIP Client F Sub-collaborator C Sub-collaborator A VIP Client H Sub-collaborator G VIP Client D VIP Client B Sub-collaborator E AMA is a junket aggregator, which works with different collaborators to generate revenue. AMA allows collaborators to utilize its capital for their operation, providing liquidity to clients.

  4. New Amax – AMA Relationship Chart • Structural change of relationship due to: • Negative impact of 1.25% commission cap imposed by Macau Government • Breach of contract by AMA’s collaborators • Pending legal proceedings on the matter • AMA turned to a loss for the 2009 financial year Amax Holdings Altira Macau AMA Collaborator 3 Collaborator 1 A share of commissions income And other collaborators Collaborator 2 Sub-collaborator A Sub-collaborator C VIP Client F VIP Client H VIP Client B VIP Client D Sub-collaborator E Sub-collaborator G

  5. On-going concern basis Profit & Loss on Investment (AFS) HK$ 5 billion Sep 2008 Mar 2009 Sep 2009 Mar 2010 - HK$ 483 million Dec 2007 Mar 2008 - HK$ 1.5 billion - HK$ 1.51 billion - HK$ 1.49 billion 2009 loss on investment – HK$1.9 billion* HK$ 2.1 billion HK$122 million HK$ 5.1 billion AFS Value: *For details of uncertainties, please refer to page 6

  6. Amax Collection Uncertainties • Uncertainty 1 • The risk of AMA becoming insolvent due to litigation, bad debt, collection issues, and other externalities • A creditor of AMA has taken legal action against the company for the recovery debts due by AMA • Uncertainty 2 • Includes all collaborators with repayment schedules • Currently assuming all repayment schedules will be fulfilled • Amount total: HK$173.2M • Risk of collection issues on the total amount • Uncertainty 3 • Includes all collaborators without repayment schedules • Amax assumes zero recoverability due to limited supporting information and evidence from AMA and its collaborators • Upside potential in the case of successful collection: HK$ 2.14 billion Amax Holdings Uncertainty 1 AMA Uncertainty 3 Uncertainty 2 Collaborators without Repayment Schedule Non-performing assets / collaborators Collaborators with Repayment Schedules

  7. Amax Management Action • Action taken as of now • Called loan on AMA • Contract not terminated for the benefit of the Amax Group, where Amax will share potential upside but will not share further loss • Appointed Horwath Corporate Advisory Services Limited, a corporate governance and advisory specialist firm to advise on the costs and benefits of different alternatives in recovering the loan and the profit owed by AMA.

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