Galapagos / Mangrove update and litigation

All,

Please find our updated analysis on Galapagos / Mangrove here.

We remain long the new Mangrove SSNs and will only tactically review the position between now and December, when we believe the court process begins. The idea would be to pick it back up cheaper, but It’s unlikely to result in a trade.

The threat of the litigation from the S.A. is certainly palpable. But from where we are standing, the outcome - if it were successful - would neither be practicable, nor deprive the new SSNs - or the Super Sr. Liabilities of their claims against the group. The episode is more likely to end in a settlement somewhere not far above the figure the SUNs would have received if they had agreed to plan A in the first place.

Ever since their carve-out from DEA, the Galapagos entities have had significant troubles and of varying kind. So why should this time be different? We believe that the inclusion of the shut-down costs of the dry-cooling business represents adequate downside protection. We also believe that the cost estimate reflects closure costs today and that closing the business 12 months from now will likely save 10s of millions that will remain as cash on the balance sheet.

Wolfgang