Latin American Equity Research

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1 Latin American Equity Research New York, July 13, 2009 Sector Report Latam Mining MIND THE GAP Worst Case Has Limited Downside Potential GMEXICO VS. PCU Luis Miranda*, CFA Victoria Santaella Alonso Aramburu Mexico: Banco Santander S.A. NY - Santander Investment Securities, Inc. NY - Santander Investment Securities, Inc. (5255) (212) (212) lmiranda@santander.com.mx vsantaella@santander.us aaramburu@santander.us In this report we present an intrinsic value update analysis of Grupo Mexico and its main underlying assets: Southern Copper Corp.; Asarco; and ITM, with the objective of determining if the discount at which Grupo Mexico is currently trading is fair when compared to the net asset value of its subsidiaries and to the historical discounts at which this stock has traded. In addition, we evaluate the potential impact on the company s NAV if it loses Asarco and its 30% stake in PCU due to the various legal trials in which it is currently involved, and we provide an update of the status on the legal front. Grupo Mexico (GMEXICOB MM; US$1.05; Hold; Target Price: US$0.75) is currently trading at a 38.6% discount to its net asset value (NAV). This discount is in line with its two-year average of 37.1% and has narrowed significantly versus its peak of 60% during 1Q09. We believe that this volatility is largely related to expectations of the positive or negative outcome of the legal trials that the company is currently facing. If Grupo Mexico loses Asarco and the 30% stake in Southern Copper (NYSE: PCU; US$19.04; Buy; Target Price: US$26.50), we estimate the stock has 14.3% downside potential, from current levels of US$1.05 per share, to US$0.90. This assumes that Grupo Mexico would still trade at a 20% discount to its NAV, which is in line with the historical 18-month average pre-crisis discount (January 2007-July 2008) of 20.8%, and accounts for: (1) lack of consistent dividend policy and growth plan; (2) profits taxes, if any of the assets are sold; and (3) limited visibility for the spin-off of railroad assets. Losing Asarco would also mean that the legal issues related to the potential illegal transfer of assets, and the asbestos and environmental liabilities would be eliminated, thus, in our opinion, reducing the volatility and the deep discounts that the market has assigned to this company. However, in our opinion, a legal appeal from Grupo Mexico is highly likely under this scenario. If Grupo Mexico regains control of Asarco and maintains its 80% stake in PCU, the stock has 30.3% upside potential from current levels to US$1.37 per share. This appreciation implies no changes to the company s current NAV of US$13.2 billion, but instead would reflect an expected decrease in the NAV discount from the current 38.6% to 20.0%. Important dates. Toward the end of August 2009, we expect a final resolution on the restructuring plans (sale of Asarco); and toward the end of the year, we expect a resolution on the potential illegal transfer of assets issue. What happens if no agreements are reached and things remain as they are now status quo? In this case, we believe Grupo Mexico s stock will follow PCU s performance, as it is already trading at a discount level very similar to its two-year average of 37.1%. Having said that, we are currently positive on PCU s outlook and recently upgraded the stock to Buy with a YE2010 target price of US$26.50 per share. Please refer to our June 30 report, Pricing the Recovery; Upgrading to Buy, for more details. We believe this is the most likely scenario, as whoever loses in this legal process will very likely appeal the decision of the court. Relative Discount Price Market 3-Mth Main Current Jul 7 Two-Year Jul 7 Cap Avg. Vol. Underlying NAV NAV Discount NAV Discount Holding Ticker US$ US$ Mn US$ Mn Asset Discount US$ Mn Max Min Grupo Mexico GMEXICOB , PCU, Asarco & ITM 38.6% 5, % 18.3% Sources: Economatic, Bloomberg, company reports, and Santander estimates. Important disclosures/certifications are in the Important Disclosures section of this report. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) / (212)

2 Mind the Gap PCU versus Grupo Mexico NET ASSET VALUE THREE SCENARIOS Scenario 1: Status quo. We estimate the value of GMexico s main underlying assets amounts to US$15.9 billion, minus total net debt of US$286 million and US$2.4 billion related to the legal liabilities, assuming the company will have to pay, for a net asset value of US$13.2 billion. GMexico s market cap is currently US$8.1 billion, which represents a discount of 38.6% compared with its NAV, and 150 basis points below its 24-month (July 2007 July 2009) average discount of 37.1%. Figure 1. GMexico NAV Calculation (US$ in Millions) Equity Value of Valuation Assets Valuation Ownership Investment Methodology Southern Copper 16, % 12,947.2 Market Cap (7/6) Asarco 2, % 2, X LTM EBITDA Ferromex 1, % x LTM EBITDA Ferrosur % x LTM EBITDA Total Gross Assets 15,907.3 Net Debt 1Q09 - Grupo Mexico (Holding) Asarco Expected Liability -2,440.0 NAV 13,181.3 Gmexico Market Cap (7/6) 8,091.5 Difference vs. NAV - US$ 5,089.8 Difference vs NAV - % -38.6% Historical Difference (Last 24 Months) -37.1% Sources: Santander, Asarco Web site, Grupo Mexico, and Southern Copper reports. GMexico stock is approaching its two-year average level of 37.1% after a period of high volatility and deeper discounts. Figure 2. GMexico NAV Historical Discount 2-Year Average of 37.1% 0.0% -10.0% -20.0% -30.0% -40.0% -50.0% -60.0% -70.0% 7/9/2007 9/9/ /9/2007 1/9/2008 3/9/2008 5/9/2008 7/9/2008 9/9/ /9/2008 1/9/2009 3/9/2009 5/9/2009 Sources: Economatic, Bloomberg, Company reports, and Santander estimates. 2 Important disclosures/certifications are in the Important Disclosures section of this report. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212)

3 Scenario 2: Grupo Mexico regains control of Asarco. If the legal problems that the company is currently facing are resolved in Grupo Mexico s favor (i.e., it regains control of Asarco and keeps its 80% stake in PCU), we expect the discount to decline from 38.6% to 20.0%, providing 30.3% upside potential to the stock from current levels. Scenario 3: Grupo Mexico loses Asarco and its 30% stake in PCU. Assuming that the U.S. courts rule against Grupo Mexico, which in practical terms would mean losses of Asarco and a 30% stake in PCU, Grupo Mexico s NAV would be, by our estimate, US$8.6 billion, which represents a 6.5% discount from its current market cap. If we assume that the stock deserves a 20% discount versus its NAV, the downside potential on the stock price from current levels is 14.3%. Figure 3. GMexico NAV Calculation Losing Asarco and 30% of PCU (US$ in Millions) Equity Value of Valuation Assets Valuation Ownership Investment Methodology Southern Copper Corp. 16, % 8,092.0 Market Cap (7/6) Asarco % X LTM EBITDA Ferromex 1, % x LTM EBITDA Ferrosur % x LTM EBITDA Total Gross Assets 8,941.6 Net Debt 1Q09 - Grupo Mexico (Holding) Asarco Expected Liability 0.0 NAV 8,655.6 Gmexico Market Cap (7/6) 8,091.5 Difference vs. NAV - US$ Difference vs. NAV - % -6.5% Historical Difference (Last 24 Months) -37.1% Sources: Santander, Asarco Web site, Grupo Mexico, and Southern Copper reports. POSSIBLE OUTCOMES SUMMARY TABLE The following table shows the upside and downside potential for Grupo Mexico stock depending on the outcome of the legal issues faced by the company, assuming in both cases that the shares sell at a 20% discount to the company s NAV. Figure 4. GMexico NAV Calculation Losing Asarco and 30% of PCU (US$ in Millions) NAV Discount NAV Implied Market Cap Implied Stock Price Upside/ Downside Status Quo 37.1% 13, ,545.1 US$1.05 0% Winning Asarco 20.0% 13, ,545.1 US$ % Losing Asarco & 30% PCU 20.0% 8, ,924.5 US$ % Sources: Santander, Asarco Web site, Grupo Mexico and Southern Copper reports. Multiples assignation. To determine the equity valuation of Asarco and the railroad business, we applied a 15% discount to the average multiples of copper mining companies and the railroad industry represented by leading international companies such as KSU, CNR, and NSC. Important disclosures/certifications are in the Important Disclosures section of this report. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) / (212)

4 Mind the Gap PCU versus Grupo Mexico UPDATE ON LEGAL PROCESSES The company is involved in two legal cases that could have a material impact on the value of the company. The first is related to various asbestos and environmental claims, which pushed Asarco into Chapter 11 Bankruptcy back in Asarco is currently owned 100% by AMC (Americas Mining Corporation), which, in turn, is 100% owned by Grupo Mexico. The second legal case relates to the potentially fraudulent conveyance of assets of Southern Copper Corp. (PCU) from Asarco to Grupo Mexico in 2005, in which Asarco is directly suing Grupo Mexico. In the Chapter 11 process, a U.S. court is offering Asarco for sale with the condition that the bidders present a reorganization plan to pull Asarco out of Chapter 11 while ensuring that the proceeds from the sale will go to secure payment of the asbestos and environmental creditors, among others. The processes have been long and we concentrate on the most updated information. Any outcome is difficult to predict with certainty at this point in time. THE CLAIMS AND RELATED LIABILITIES Environmental claims (EPA). We understand that this is the largest claim, with an estimated value of US$1.65 billion. It seems that the size of this claim was determined through legal hearings on June 5, 2009, but given the legal nature of the process, we cannot be certain that this figure will be final. We also understand that the US$1.65 billion figure represents the worst-case scenario, with some room to be downwardly adjusted. Nevertheless, given the legal nature of these figures, we believe they could change in the future. Asbestos claims. The second largest claim is related to asbestos. We understand that the size of the claims is US$1.0 billion, and both Grupo Mexico and Vedanta are offering to pay 78% of the claims (US$780 million). Both companies have the support of the asbestos committees that are negotiating the claims. Bondholders. Asarco has bonds outstanding of US$440 million (nominal value). These bonds have maturities from 2013 to The estimated value of a full payment for these bonds would be close to US$700 million, considering interest and prepayment fees. According to news services, it is estimated that Harbinger Capital Partners, one of the companies presenting a reorganization plan for Asarco, holds close to 66% of these bonds, or some US$290 million. Administrative liabilities. Finally, Asarco also has administrative claims that represent close to US$400 million. Most of these claims are related to legal fees. Total claims. We estimate that the total value of claims is approximately US$3,750 million, considering the total amount for the asbestos claims and the full amount for the bondholders (interest and prepayment). However, if we consider the agreement with asbestos claimants (only US$780 million out of the US$1.0 billion) and the nominal value of the bonds (US$440 million), total claims would be US$3,270 million. THE REORGANIZATION PLANS AND SALE OF ASARCO Three companies have submitted reorganization plans and offers, in an attempt to gain control of Asarco, while pulling it out of Chapter 11: Grupo Mexico (via AMC); Vedanta; and Harbinger Capital Partners. We understand that on June 30, hearings to evaluate the three reorganizations plans began and could last several weeks. It is important to understand that the key points that the authorities will evaluate from the plans are the payments to creditors and legal claims that Asarco has. We do not intend to determine which one of the three is best and most probable to win, given that several legal issues will be analyzed by the judge. However, we provide the main monetary characteristics of each plan, which follows. 4 Important disclosures/certifications are in the Important Disclosures section of this report. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212)

5 Grupo Mexico. Through AMC, the company would pay cash in the amount of US$1,462.5 million to Asarco plus a US$280 million note for one year at 6%. The company would also use the estimated cash of Asarco of US$1.4 billion and tax reimbursements estimated in US$60 million. We must consider that these two items would be the same (i.e., access to Asarco s cash and tax reimbursements) for any proposal. AMC already has support from the Asbestos Committee and would place in an escrow account US$1.3 billion as collateral. The company recently increased the cash allocated to the asbestos claims to US$780 million, from US$750 million, in response to the increase in Vedanta s offering. Vedanta. The company offered to pay US$1.1 billion in cash to Asarco plus a US$770 million note. We understand that this is a nine-year bullet, but we do not have the specific characteristics of the note. The plan includes US$770 million for asbestos claims, for which it also has the Asbestos Committee s approval. The plan includes a US$100 million letter of credit as collateral. We understand that the plan also includes potential benefits form other legal processes, mainly the potential illegal transfer of assets, which would lead to Asarco owning almost 30% of PCU. Harbinger. Harbinger Capital Partners offered a plan that includes US$500 million cash and benefits from other legal processes. We do not have full details on this plan, but remember that this group holds US$290 million, or some to two-thirds of bonds outstanding, which would likely be capitalized. Figure 5. Asarco Offers (U.S. Dollars in Millions) AMC Vedanta Harbinger Cash Note * - Total Cash 1,743 1, Asarco Cash 1,400 1,400 1,400 Tax Recovery Total 3,203 3,330 1,960 *This is the nominal amount of the note, but we do not have the information to estimate the NPV. Source: Company information, Bloomberg, and news services. THE ILLEGAL TRANSFER OF ASSETS CASE On April 1, Judge Hanen in the Brownsville Court (Texas) issued a Memorandum Opinion and Order relating to the transfer of Southern Copper Corp. In this document, the judge s decision was that the transfer of assets was illegal, fraudulent, and breached fiduciary duties. This is a radical change and completely opposite his initial opinion in August In this document, the judge sets the guideline for evaluating the damage, which could be close to US$6.0 billion-us$6.3 billion, according to Asarco s lawyers, as reported by Bloomberg. This would include close to US$4.7 billion related to a 29.5% stake in PCU, plus several years ( ) of dividends paid (amounting to US$1,851 million, minus the US$747 million paid by Grupo Mexico for Asarco at the time of the spin-off). Originally, Asarco s stake in PCU was 54.2% but after Asarco was acquired by Grupo Mexico, the assets of Minera Mexico were merged into PCU. The judge also ruled that the company would have to put 30.6% of PCU in an escrow account to secure the payment if the company lost the legal process. That escrow was already created and the shares secured since May On April 3, GMexico issued a press release stating that it would appeal Judge Hanen s decision. The final ruling on this matter could be made at the end of If Grupo Mexico s restructuring plan for Asarco allows it to regain control of Asarco, this lawsuit would be immediately canceled. If, on the other hand, either Vedanta or Harbinger win, we believe they will continue pursuing this lawsuit against Grupo Mexico, and Grupo Mexico runs the risk of losing the stocks (or its equivalent) deposited in the escrow account. Important disclosures/certifications are in the Important Disclosures section of this report. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) / (212)

6 Mind the Gap PCU versus Grupo Mexico UNDERLYING ASSETS BUSINESS DESCRIPTION PCU is one of the largest copper companies in the world. SOUTHERN COPPER CORPORATION (NYSE: PCU) Southern Copper Corporation ( SCC ) is the second largest copper mining company in the world in terms of its mineral reserves, with an asset base that includes mines, metallurgical plants, and exploration projects in Peru, Mexico, and Chile. In 2008, copper represented 70% of the company s total revenue, followed by molybdenum (17%), zinc (7.0%), and silver (3%), with other metals accounting for the remaining 3%. The U.S. market represented 27% of the company s total revenue in 2008, Europe 24%, Mexico 23%, and others the remaining 26%. The company s main copper mines include Cuajone and Toquepala in Peru, and La Caridad and Cananea in Mexico. SCC is listed on the New York and Peru stock exchanges, and Grupo Mexico is the controlling shareholder, with an 80% stake in the company. ASARCO LLC (NOT LISTED) The company is a fully integrated miner, smelter, and refiner of copper in the United States, with annual production of approximately million pounds of copper. Its main copper mines include the Mission, Silver Bell, and Ray open-pit mines, all three in Arizona. Asarco s Amarillo Copper Refinery in Texas and the SX/EW plants at the Ray and Silver Bell mines produce about 375 million pounds of refined copper per year. In September 2005, the company filed a voluntary petition for Chapter 11 reorganization in the United States Bankruptcy Court in Corpus Christi, as a result of historical asbestos and environmental liabilities, as well as the high cost of pension and health benefits plans. As of June 2009, we estimate these claims to be for US$2.65 million plus US$400 million in legal fees. Figure 5. Asarco Selected Financial Information (US$ in Millions) Q09 Revenues 1, , , EBITDA EBTIDA Margin 38% 32% 66% 21% Net Earnings Dec 06 Dec 07 Dec 08 1Q09 Total Assets 1, , , ,335.1 Cash , ,317.8 Total Liabilities 1, , , ,193.6 Debt Equity , ,858.6 Net Debt , ,124.5 Source: Company filings in the U.S. Bankruptcy Court. INFRAESTRUCTURA Y TRANSPORTES MEXICO (NOT LISTED) Grupo México s transport division is represented by the subsidiary company Infraestructura y Transportes México, S.A. de C.V. ( ITM ), its principal subsidiaries being Grupo Ferroviario Mexicano, S.A. de C.V. ( GFM ), Ferrocarril Mexicano, S.A. de C.V. ( Ferromex ), and Ferrosur, S.A. de C.V. ( Ferrosur ). Ferromex is the largest railroad company in Mexico and has the widest coverage. Ferromex has a track network of 8,500 kilometers, covering approximately 71% of Mexico. Ferromex lines connected to five border points with the United States, as well as four ports on the Pacific coast and two on the Gulf of Mexico. Ferromex is controlled by Grupo 6 Important disclosures/certifications are in the Important Disclosures section of this report. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212)

7 México (holding a stake of 55.5%), Union Pacific (26.0%), and Grupo Carso-Sinca Inbursa (18.5%). On November 24, 2005, ITM acquired Ferrosur through Infraestructura y Transportes Ferroviarios, S.A. de C.V. ( ITF ). Ferrosur is the railroad company that covers the south of Mexico. Ferrosur has a track network of 2,029 kilometers covering the central and southeastern regions of Mexico, principally operating in the states of Tlaxcala, Puebla, Veracruz, and Oaxaca, and has access to the ports of Veracruz and Coatzacoalcos on the Gulf of Mexico. Ferrosur is controlled by Grupo México (holding 74.99%), and Grupo Carso-Sinca Inbursa (holding 25.01%). Grupo México also owns Intermodal México, S.A. de C.V. Southern Copper Valuation and Risks: Our YE2010 target price is based on a DCF analysis and implies a forward P/E multiple of 8.0 times. Main risks include the high correlation to copper prices, ongoing strikes, mainly in Mexico, and a prolonged slowdown in economic activity, mainly in China. Grupo Mexico Valuation and Risks: Our YE2009 target price for GMexico is based on a sum-of-the parts analysis, and incorporates a discount that reflects the company s legal processes. Risks include: the fact that the company s results have a high correlation to copper prices and are also vulnerable to strikes; the outcome of Asarco s legal issues; and the company s potential entry into the infrastructure business; overall economic weakness; and the ongoing strike in the Cananea mine, which used to represent 25% of copper production and has been on strike since August Important disclosures/certifications are in the Important Disclosures section of this report. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) / (212)

8 Mind the Gap PCU versus Grupo Mexico IMPORTANT DISCLOSURES Grupo Mexico 12-Month Relative Performance (U.S. Dollars) IPC GMEXICO J-08 A-08 S-08 O-08 N-08 D-08 J-09 F-09 M-09 A-09 M-09 J-09 J-09 Sources: Bloomberg and Santander. Grupo Mexico Three-Year Stock Performance (U.S. Dollars) *Initiation of Coverage B$ /13/07* UP $ /1/08 3,300 2,800 2,300 1,800 1, Analyst Recommendations and Price Objectives SB: Strong Buy B: Buy H: Hold UP: Underperform S: Sell UR: Under Review 0 J-06 S-06 D-06 M-07 J-07 S-07 D-07 M-08 J-08 S-08 D-08 M-09 J-09 Grupo Mexico (L Axis) MEXBOL (R Axis) 300 Source: Santander. 8 Important disclosures/certifications are in the Important Disclosures section of this report. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212)

9 Southern Copper 12-Month Relative Performance (U.S. Dollars) 10% 0% -10% -20% -30% -40% -50% -60% -70% -80% IGBVL PCU Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Sources: Bloomberg and Santander. Southern Copper Three-Year Stock Performance (U.S. Dollars) *Initiation of Coverage B$ /13/07* UP $ /1/08 3,300 2,800 2,300 1,800 1, Analyst Recommendations and Price Objectives SB: Strong Buy B: Buy H: Hold UP: Underperform S: Sell UR: Under Review 0 J-06 S-06 D-06 M-07 J-07 S-07 D-07 M-08 J-08 S-08 D-08 M-09 J-09 Grupo Mexico (L Axis) MEXBOL (R Axis) 300 Source: Santander. Important disclosures/certifications are in the Important Disclosures section of this report. U.S. investors inquiries should be directed to Santander Investment Securities Inc. at (212) / (212)

10 Key to Investment Codes IMPORTANT DISCLOSURES Rating Definition % of Companies Covered with This Rating % of Companies Provided Investment Banking Services in the Past 12 Months Buy Expected to outperform the local market benchmark by more than 10% % 46.15% Hold Expected to perform within a range of 0% to 10% above the local market benchmark % 42.31% Underperform/Sell Expected to underperform the local market benchmark % 11.54% Under review 1.06% The numbers above reflect our Latin American universe as of Monday, July 6, For a discussion, if applicable, of the valuation methods used to determine the price targets included in this report and the risks to achieving these targets, please refer to the latest published research on these stocks. Research is available through your sales representative and other electronic systems. Target prices are 2009 year-end unless otherwise specified. Recommendations are based on a total return basis (expected share price appreciation + prospective dividend yield) unless otherwise specified. Stock price charts and rating histories for companies discussed in this report are also available by written request to Santander Investment Securities Inc., 45 East 53 rd Street, 17 th Floor (Attn: Research Disclosures), New York, NY USA. Ratings are established when the firm sets a target price and/or when maintaining or reiterating the rating. Ratings may not coincide with the above methodology due to price volatility. Management reserves the right to maintain or to modify ratings on any specific stock and will disclose this in the report when it occurs. Valuation methodologies vary from stock to stock, analyst to analyst, and country to country. Any investment in Latin American equities is, by its nature, risky. A full discussion of valuation methodology and risks related to achieving the target price of the subject security is included in the body of this report. The benchmark used for local market performance is the country risk of each country plus the 1-year U.S. Treasury yield plus 6.5% of equity risk premium, unless otherwise specified. The benchmark plus the 10.0% differential used to determine the rating is time adjusted to make it comparable with the total return of the stock over the same period. For additional information about our rating methodology, please call (212) This research report ( report ) has been prepared by Santander Investment Securities Inc. ("SIS"; SIS is a subsidiary of Santander Investment I, S.A. which is wholly owned by Banco Santander, S.A. ["Santander"]) on behalf of itself and its affiliates (collectively, Grupo Santander) and is provided for information purposes only. This report must not be considered as an offer to sell or a solicitation of an offer to buy any relevant securities (i.e., securities mentioned herein or of the same issuer and/or options, warrants, or rights with respect to or interests in any such securities). Any decision by the recipient to buy or to sell should be based on publicly available information on the related security and, where appropriate, should take into account the content of the related prospectus filed with and available from the entity governing the related market and the company issuing the security. This report is issued in Spain by Santander Investment Bolsa, Sociedad de Valores, S.A. ( Santander Investment Bolsa ) and in the United Kingdom by Banco Santander, S.A., London Branch. Santander London is authorized by the Bank of Spain. This report is not being issued to private customers. SIS, Santander London and Santander Investment Bolsa are members of Grupo Santander. The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed, that their recommendations reflect solely and exclusively their personal opinions, and that such opinions were prepared in an independent and autonomous manner, including as regards the institution to which they are linked, and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report, since their compensation and the compensation system applying to Grupo Santander and any of its affiliates is not pegged to the pricing of any of the securities issued by the companies evaluated in the report, or to the income arising from the businesses and financial transactions carried out by Grupo Santander and any of its affiliates: Luis Miranda*, Victoria Santaella, and Alonso Aramburu. *Employed by a non-us affiliate of Santander Investment Securities Inc. and not registered/qualified as a research analyst under FINRA rules, and is not an associated person of the member firm, and, therefore, may not be subject to the FINRA Rule 2711 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. The information contained within this report has been compiled from sources believed to be reliable. Although all reasonable care has been taken to ensure the information contained within these reports is not untrue or misleading, we make no representation that such information is accurate or complete and it should not be relied upon as such. All opinions and estimates included within this report constitute our judgment as of the date of the report and are subject to change without notice. From time to time, Grupo Santander and/or any of its officers or directors may have a long or short position in, or otherwise be directly or indirectly interested in, the securities, options, rights or warrants of companies mentioned herein. Any U.S. recipient of this report (other than a registered broker-dealer or a bank acting in a broker-dealer capacity) that would like to effect any transaction in any security discussed herein should contact and place orders in the United States with SIS, which, without in any way limiting the foregoing, accepts responsibility (solely for purposes of and within the meaning of Rule 15a-6 under the U.S. Securities Exchange Act of 1934) for this report and its dissemination in the United States by Santander Investment Securities Inc. All Rights Reserved. 2009