Conversion to Single Class Of Shares (ON - Voting Shares) And Change to Bovespas Novo Mercado

1. STOCKHOLDING RESTRUCTURING OF IOCHPE-MAXION
December, 2007

2. Simplified Corporate Structure
Iochpe-Maxion is the largest Brazilian manufacturer of wheels and chassis for commercial vehicles, railway freight cars
and railway castings
Iochpe-Maxion S.A.
50.0% 100.0%
Amsted-Maxion Fundição e
Maxion Sistemas Automotivos Ltda.
Equipamentos Ferroviários S.A.
R$ 199.7 million1 (21%) R$ 675.2 million1 (70%)
Railway Equipment
Wheels and Chassis Division Automotive Components Division
Railway Freight Cars: R$ 67.8 million1 (7%)
Wheels: R$ 285.5 million1 (30%) Automotive Components: R$ 85.9 million1 (9%)
Casting Products: R$ 103.6 million1 (11%) and
Railway Wheels: R$ 28.3 million1 (3%) Chassis: R$ 389.7 million1 (41%)
1) Consolidated Net Operational Revenues as of 9M07
2

3. Financial Summary
NET SALES (R$ Million) EBITDA (R$ Million) AND EBITDA MARGIN (%)
1,494 17%
1,248 14% 14% 14% 14%
13% 13%
1,099
982 961 205
156 163
676 139 130
411 89
69
2002 2003 2004 2005 2006 9M06 9M07 2002 2003 2004 2005 2006 9M06 9M07
EBITDA EBITDA Margin
NET DEBT (R$ Million) AND NET DEBT / EBITDA NET INCOME (R$ Million)
1.5x
1.3x 72
1.0x 1.1x
0.8x 58 56 55
0.6x 0.6x 51
184
174
125 132
106 115
102
-5
2002 2003 2004 2005 2006 9M06 9M07 -24
2002 2003 2004 2005 2006 9M06 9M07
Net Debt Net Debt / EBITDA
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4. Market Information and Perception
MARKET CAPITALIZATION ANALYSTS’ COVERAGE
Number of Common Shares (Thousand) 18,429 “We reiterate our Buy rating on Iochpe, as we continue to believe the stock
offers investors exposure to attractive growth themes: (1) infrastructure
Common Share Price on Nov/30th (R$/share) 33.00 play, driven by exposure to 86% of Brazil’s transportation matrix; (2)
Number of Preferred Shares (Thousand) 34,808 leverage to interest rate reductions and growth in mining and agriculture and
(3) a dominant position in the domestic markets of wheels and chassis and
Preferred Share Price on Nov/30th (R$/share) 35.30 railway equipment.”
Market Capitalization (R$ Million) 1,836.9
Alexandre Falcão – Merrill Lynch (Nov 05, 2007)
Total Debt1 (R$ Million) 219.3 “Iochpe is now entering a prosperous cycle... Next year, not only will
Brazilian truck production remain strong, but the company’s railcar sales
(-) Cash and Equivalents1 (R$ Million) 45.7 should also grow from 1,125 units in 2007 to over 3,200 units.”
(=) Net Debt (R$ Million7) 173.6 Renata Faber – Itaú Corretora (Nov 27, 2007)
Firm Value (R$ Million) 2,010.5 “We are reiterating our Buy rating on Iochpe-Maxion...”
“We believe that Iochpe-Maxion’s two main business segments offer
Total Debt / Market Capitalization 0.12 attractive momentum going forward. We expect truck production to remain
strong and note that orders for railcars have increased.”
PERFORMANCE: MYPK4 vs. IBOV Daniel Gewehr – Santander Investment (Sep 24, 2007)
240
220
COMPARATIVE ANALISYS
200
SHARE PRICE APPRECIATION
180
COMPARABLES 360 DAYS 180 DAYS 90 DAYS 30 DAYS
160
140 IOCHPE-MAXION 119% 45% 26% -1%
120
MARCOPOLO 53% 22% -2,5% -12%
100
80 RANDON 120% 25% 19% -5,7%
Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07
MYPK4 IBOV IBOVESPA 50% 20% 19% -2,1%
1) Total Debt and Cash and Equivalents according to Company’s audited Financial Statements for September, 2007
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5. Transaction Summary
Unification of Iochpe-Maxions’ different share classes through conversion of Preferred shares (PNs) into common shares (ONs)
PROPOSED TRANSACTION Reform of the Company’s Bylaws
Listing in Bovespa Novo Mercado
OFFERED SHARE
1.0 ON : 1.2 PN or 0.83 ON : 1 PN
CONVERSION RATIO
Adoption of improved Corporate Governance practices
Extension of voting rights to all shareholders
ATTRACTIVENESS FOR THE Tag Along rights to all shareholders
COMPANY At least 20% independent members in the Board of Directors
Potential to increase liquidity in the Capital Markets through listing in Novo Mercado
Alignment of all shareholders’ interests
Capital Structure composed by common shares only
Board of Directors composed by 13 members, of which at least 20% are independent
Dividends distribution maintained at 37% of net income in each fiscal year
NEW IOCHPE-MAXION Ending of the additional 10% dividends for preferred shareholders
100% Tag Along in case of transfer of control
Poison Pill: A tender offer “OPA” must be performed whenever a shareholder reaches a total stake equal or superior to 15% of the
total shares issued by the Company¹. Share price defined for the tender offer: Share Price2 + 50% of Share Price
PROPOSED TIMETABLE Shareholders Extraordinary Shareholders Meeting “AGE” to be held on Jan 17, 2008
1) Current controlling shareholders are not subject to the obligation of performing the tender offer in certain cases
2) Higher value among: (i) higher unitary market price reached by the shares issued by the Company in any stock exchange where these shares were traded, in a period of 36 (thirty six) months prior to the tender offer; (ii) higher price of a share or lot of
shares issued by the Company paid by the Acquiring Shareholder in a period of 36 (thirty six) months prior to the tender offer; (iii) the value equivalent to 9 (nine) times the Company’s Average Consolidated EBITDA subtracted by the Company’s
Consolidated Net Debt, subject to possible Pro Forma Adjustments, divided by the total number of shares issued by the Company and (iv) 1.5 times the Company’s average net sales considering the 2 (two) most recent fiscal years, divided by the total
number of shares issued by the Company
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6. Results of analysis made by Unibanco
Implicit premium for the ON shares and resulting implicit conversion ratio for PN shares
Conversion of Shares in Brasil1
Direct Control -9% 11%
(1.10x) (0.90x)
0% 9%
Shared Control (1.00x) (0.92x)
Global M&A Operations2
26% 32%
1 Week (whole sample) (0.79x) (0.76x)
25% 35%
1 Month (whole sample) (0.80x) (0.74x)
24% 28%
1 Week (Sample > US$ 100Mil) (0.81x) (0.78x)
27% 34%
1 Month (Sample > US$ 100Mil) (0.79x) (0.75x)
Discounted Cash Flow3
30% R$ 43.74 R$ 53.2 4 58%
1 MYPK4 @ 33.7 (0.77x) R$ 33.7 R$ 33.7 (0.63x)
30% R$ 43.74 R$ 53.2 4 58%
1 Week (0.77x) R$ 33.6 R$ 33.6 (0.63x)
24% R$ 43.74 R$ 53.2 4 51%
1 Month (0.81x) R$ 35.2 R$ 35.2 (0.66x)
Brazilian Corporate Law 5 25%
(0,80x)
-20% 0% 20% 40% 60% 80%
1) Based on the interval (from minimum to maximum) of the implied premium for selected share conversion transactions
2) Conversion ratio and implicit premium calculated by comparison between acquisition value and historic value one week and one month prior to transaction, for the shares referred to
3) DCF valuation interval assuming WACC in the range 10.6% to 11.1% and perpetuity growth in the range 3.0% to 4.0%. Conversion ratio and premium calculated by comparison with the following market prices for Iochpe-Maxion shares (MYPK4): (i) close
of November 16, 2007 (R$ 33.7/share), (ii) average (R$ 33.6/share over the week November 10-16, 2007); and (iii) average (R$ 35.2/share) over the month October 16 to November 16, 2007
4) Minimum (R$ 43.7) and maximum (R$ 53.2) of the interval for fair value estimated by the DCF methodology for the share price of Iochpe-Maxion
5) Art.254-A. Obligation of conducting a tender offer priced at least at 80% of the amount paid per common share to the controlling shareholders
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7. Market Perception
ANALYSTS’ COMMENTS ABOUT IOCHPE-MAXION MIGRATION TO “NOVO MERCADO”
“ …we believe merging into Novo Mercado should provide upside to investors as it has (1) only one class of
shares; (2) 100% tag along rights; and (3) higher corporate governance standards. Looking at past Novo
Mercado migrations in Brazil, market seems to have reacted positively to such transactions – an average
28.8% share appreciation.”
Alexandre Falcão
Merrill Lynch
(Feb 07, 2007)
“...If we were to make a guess of the share swap ratio, we would suggest 10 PN shares for 8 ON shares...
Joining the Novo Mercado, even after giving a discount to preferred shares would definitely add value for
shareholders... We thus reinforce our positive view about Iochpe and reiterate our BUY recommendation...”
Renata Faber
Itaú Corretora
(Feb 16, 2007)
“...The indication of best corporate governance practices is positive news for the company … however, the
company has not published any information on (i) the timetable for the process of conversion; or (ii) the
exchange ratio between the PN and ON shares. We maintain our recommendation of attractive for the
company’s shares...”
Eduardo Pirani Puzziello
Fator Corretora
(Feb 22, 2007)
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8. Transaction Overview
IOCHPE-MAXION – CURRENT SHAREHOLDING STRUCTURE 1
Common Preferred Total
Shareholders Amount (%) (% of Total) Amount (%) (% of Total) Amount (%)
Total Ioschpe Family 13,744,267 74.58% 25.82% 143,942 0.41% 0.27% 13,888,209 26.09%
BNDESPAR 4,012,050 21.77% 7.54% 9,612,777 27.62% 18.06% 13,624,827 25.60%
Controlling Shareholders 17,756,317 96.35% 33.36% 9,756,719 28.03% 18.33% 27,513,036 51.68%
Other 672,280 3.65% 1.26% 25,046,988 71.97% 47.05% 25,719,268 48.32%
Total 18,428,597 100.00% 34.62% 34,803,707 100.00% 65.38% 53,232,304 100.00%
Share Exchange Ratio: 0.83333 Preferred Share Conversion with a
20% Premium to Common Shares
IOCHPE-MAXION – EXPECTED SHAREHOLDING STRUCTURE AFTER THE SHARE CONVERSION IS PERFORMED
Common Preferred Total
Shareholders Amount (%) (% of Total) Amount (%) (% of Total) Amount (%)
Total Ioschpe Family 13,864,219 29.23% 29.23% - - - 13,864,219 29.23%
BNDESPAR 12,022,698 25.35% 25.35% - - - 12,022,698 25.35%
Controlling Shareholders 25,886,916 54.58% 54.58% - - - 25,886,916 54.58%
Other 21,544,770 45.42% 45.42% - - - 21,544,770 45.42%
Total 47,431,686 100.00% 100.00% - - - 47,431,686 100.00%
1) Shareholders’ positions as of Sep 30, 2007
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9. Proposed Timetable – Conversion of PNs into ONs
The Board of Directors approved:
− Proposal to adhere to Novo Mercado, including:
– Conversion of Preferred Shares (PNs) into Common Shares (ONs), at a ratio of 1.2 PN: 1.0 ON
– Reform of the Company’s Bylaws
BOARD OF DIRECTORS
Dec 04, 2007 – Election of new members for the Board of Directors
MEETING
– Calling of a Special Shareholders Meeting of Preferred Shareholders to approve the conversion
and of an Extraordinary General Shareholders Meeting to deliberate on the Novo Mercado
listing proposal
Statement of Material Fact explaining the transaction
SPECIAL1 AND
Special Shareholders Meeting of Preferred Shareholders to approve the proposed conversion
EXTRAORDINARY
Jan 17, 2008 Extraordinary Shareholders Meeting to approve the proposed transaction (conversion of PNs into ONs, reform of
SHAREHOLDERS the Company’s Bylaws, election of new Board of Directors and listing in Novo Mercado)
MEETINGS
PUBLICATION OF Publication of the minutes of the shareholders meetings and beginning of the term to exercise the right to
Jan 18, 2007 withdraw from the company
THE MINUTES
DEADLINE
Feb 18, 2008 End of the term for the holders of preferred shares to exercise the right to withdraw from the company
TO WITHDRAW
PN SHARES
Feb 25, 2008 PNs are converted into ONs
CONVERSION
ADRs BACKED
Feb 28, 2008 Issuance of new ADRs backed by the ONs
BY ONs
1) In the case the necessary quorum to approve the conversion of PNs into ONs in the Special Shareholders Meeting is not reached, the proposed timetable will be affected
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