TELEIOS-CAPITAL

Dear Fellow Shareholder:

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We, Makuria Investment Management (UK) LLP, Teleios Capital Partners LLC, and Constructive Capital AS, advise entities that hold long-term investments on behalf of institutions, foundations, endowments and families. These entities collectively own more than 10% of the common shares of Kongsberg Automotive (“KA” or “the Company”) that are entitled to be voted at the special meeting of shareholders to be held on December 21, 2015 (the “Meeting”).

We believe that for several years, KA has failed to achieve its potential. As a result, employees and shareholders have suffered from a lack of product focus, misjudged capital allocation decisions, weak governance, and poor market communications.

We are therefore exercising our right to give our fellow shareholders a direct voice in determining the Company’s future by proposing to replace five members of the Board with highly qualified and independent directors (“the Nominees”). In our view, these candidates combine a depth of international automotive industry expertise and functional knowledge, and their appointment would better reflect KA’s status as a globally engaged and recognised supplier. KA’s shareholders face a choice of whether to preserve the status quo, or seek to give the Company the direction and momentum it needs to thrive.

THE PROPOSED SLATE

We have proposed to bring comprehensive change to the current board by replacing five of its eight members. The Nominees are:

Robert J. Remenar (US citizen): Formerly CEO of Nexteer Automotive, a $3 billion US/Chinese automotive supplier. Formerly held various senior executive positions at General Motors as well as Delphi, the $17 billion global automotive supplier. Currently Vice Chairman at Nasdaq Helsinki listed auto/truck supplier PKC Group, as well as board member of NYSE-listed Cooper-Standard Automotive.

Beatriz Malo de Molina (Spanish citizen residing in Norway): Possesses more than 20 years’ experience in corporate finance and Mergers and Acquisitions (M&A). Currently head of M&A for Scandinavian conglomerate Orkla. Spent 10 years at Goldman Sachs M&A – investment banking in New York, Frankfurt, London. Subsequently with McKinsey & Co. in Oslo.

Mimi Berdal (Norwegian citizen): Highly experienced professional board member. Former partner at law firm Arntzen de Besche. Numerous current and former board positions including Gassco, Itera, STX Europe and Chairman of the board of REC.

Glenn Mercer (US citizen): Former Partner and a senior expert for the auto industry at McKinsey & Co. Automotive industry consultant and advisor to various investment firms, including KKR and KleinerPerkins.

Bruce Taylor (US citizen): Former head of $2 billion Automotive Group at Eaton Corp. and General Manager of their European Automotive Controls division. Former Operating Partner at private equity firm Cortec Group. Former CEO of AMACS and Global Thermoelectric.

MISSED OPPORTUNITIES TO CREATE VALUE

Since the beginning of 2010, the average share price of European auto parts companies appreciated by 138% until the end of the third quarter of 2015,¹ while the share price of KA declined by 22% during the same period.² KA’s peers have grown revenues by 25% since 2011 whereas the Company’s sales remained largely flat over the same period. Return on equity at KA has averaged 1.5% over the past five years, compared to 15.3% for its peers.³

While auto parts companies across the world have resolutely taken an array of operational and strategic measures in order to build scale, sharpen their financial performance, and create shareholder value, KA has for years failed to take determined action on any of those fronts.

Given the Company’s outstanding industry reputation, we believe that this enduring lack of focus and strategic direction has prevented KA from achieving its potential as a world class automotive supplier.

A CHANCE FOR CHANGE

We believe that the proposed highly experienced board nominees are uniquely qualified to support management in delivering on an ambitious plan to grow the Company and create shareholder value. This includes reprioritizing capital spend toward high-return areas, establishing a strong position in China, optimizing the Company’s product portfolio, rethinking dividend strategy, and improving its access to capital markets by professionalizing investor relations. We are convinced that KA can grow faster than its peers, and stand ready to invest more in the Company’s future.

We have followed a rigorous selection process to identify distinguished candidates to serve on KA’s board. They are all fully independent individuals, without any pre-existing or current ties to our respective firms or the Company, selected on the basis of their objectively superior qualifications to serve the interest of the Company and all its stakeholders. We believe that the proposed slate collectively commands world-class expertise in the automotive industry, an appropriate mix of Nordic and international backgrounds, and valuable corporate governance expertise. The candidates have been vetted both for their individual strengths and their ability to function as an effective and complementary group.

We urge our fellow shareholders to independently review and verify the proposed slate’s qualifications and their strong track record of creating value at some of the world’s leading automotive component manufacturers. We are confident that you will conclude that voting “FOR” our five independent director nominees is in the best interests of KA and its shareholders.

Yours sincerely,

Lorenz Manthey, Partner, Makuria Investment Management (UK) LLP

Firas Abi-Nassif, Partner, Teleios Capital Partners LLC

Lars Odin Mellemseter, Managing Partner, Constructive Capital AS

1			Measured by the Bloomberg EMEA Auto Parts & Equipment index.
2			Share price performances exclude dividends or equivalent forms of capital returns to shareholders.
3			Peers included in this analysis comprise: CONTINENTAL AG, VALEO SA, GKN PLC, ELRINGKLINGER AG, JOHNSON CONTROLS INC, FAURECIA, TOKAI RIKA CO LTD, AMERICAN AXLE & MFG HOLDINGS, GRAMMER AG, AISIN SEIKI CO LTD, BORGWARNER INC, FEDERAL-MOGUL HOLDINGS CORP, MARTINREA INTERNATIONAL INC, WABCO HOLDINGS INC, STANDARD MOTOR PRODS. Source: Bloomberg.

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Contact:

GEIR BJØRLO, +47 915 40 000
geir.bjorlo@corpcom.no