Boart Longyear — Investor Presentation (October 2014)
30 slides from Boart Longyear's investor presentation, Oct 23, 2014
Slide 1: Recapitalisation Transaction: Centerbridge - 23 October 2014
LS600 - Poland Recapitalisation Transaction: Centerbridge - 23 October 2014
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer • This presentation has been prepared by Boart Longyear Limited, ABN 49 123 052 728 (Boart Longyear or the Company) and may contain forward-looking statements with respect to the financial condition, results of operations and business of Boart Longyear and certain pla
Slide 3: Important Notice and Disclaimer (cont.)
Important Notice and Disclaimer (cont.) • No representation or warranty, express or implied is or will be made by any legal or natural person in relation to the accuracy, reliability or completeness of all or part of this presentation, or any constituent or associated presentation, information or ma
Slide 4: Transaction Background
@ Transaction Background BOART g LONGYEAR
Slide 5: Binding agreement between Boart Longyear and Centerbridge to recapitalise the Company
Binding agreement between Boart Longyear and Centerbridge to recapitalise the Company • Global market leader in providing drilling • Private equity firm established in 2005 services and drilling products • US$20bn under management • Unique vertically integrated business model • Dedicated to partneri
Slide 6: Successful Completion of Strategic Review
Successful Completion of Strategic Review Comprehensive recapitalisation Fully committed equity injection of US$119 million to US$127 million New term loans of up to US$225 million Total liquidity increased to approximately US$240 million1 Transaction Highlights Net debt reduced by approximately US$
Slide 7: Centerbridge Recapitalisation Overview
Centerbridge Recapitalisation Overview • New funded term loan provided by • US$119m – US$127m equity injection Centerbridge refinances former revolving credit facility and provides capacity for • US$6m initial unconditional placement has increased Centerbridge ownership to 19.9% US$105m tender offer
Slide 8: How the Recapitalisation Impacts Stakeholders
How the Recapitalisation Impacts Stakeholders Shareholder Impact assuming 100% take-up of rights 1 Shareholding (23 October) Shareholding (post transaction) New Equity Options for shareholders1,2 Centerbridge • US$76 to US$84m pro-rata renounceable rights 19.9% issue Centerbridge • Do nothing • US$3
Slide 9: New Term Loan with accretive interest
New Term Loan with accretive interest Up to US$225 million in new ‘covenant lite’ term loans • Interest: Accretive interest on Tranche A and B of 12% reducing to 11% for each quarter that trailing 12 month adjusted EBITDA is greater than US$200m – Improves liquidity (US$13m p.a.), with interest on e
Slide 10: New Equity Capital
New Equity Capital US$119 million to US$127 million in new equity1 with shareholders able to participate in rights offer • Pricing: Rights Offer to be priced at the Australian Dollar equivalent of the VWAP Price based on the prevailing Australian Dollar to US Dollar exchange rate on the business day
Slide 11: Equity Funded Share Buy-back and Preference Shares
Equity Funded Share Buy-back and Preference Shares • Concurrent with rights offer there will be an equal access US$20m1 off-market buy-back of the ordinary2 shares at the Australian Dollar Rights Price – Shareholders can sell some or all of their shares into the buy-back at the Australian dollar equ
Slide 12: Sources & Uses | Pro Forma Capitalisation
Sources & Uses | Pro Forma Capitalisation Recapitalisation decreases net debt by ~US$120m and increases pro-forma cash liquidity to ~US$240m Sources 1 US$m Uses 1 US$m New Term Loan-Tranche A 120 Bank Revolver 38 New Term Loan-Tranche B 105 Sr. Secured Notes Tender Offer-par 105 Initial Equity Place
Slide 13: New Partnership and Governance Framework
New Partnership and Governance Framework • Partnership with Centerbridge and not a change of control • Centerbridge has significant experience working with boards and management teams on optimising Centerbridge businesses for through the cycle profitability committed to • The Recapitalisation and Ce
Slide 14: Why the Independent Directors recommend this transaction to shareholders
Why the Independent Directors recommend this transaction to shareholders Status quo is likely unsustainable • Company requires financial flexibility to withstand current operating conditions until the drilling Status Quo market returns • Doing nothing is not an option, as the timing of any market re
Slide 15: Indicative Recapitalisation Timeline
Indicative Recapitalisation Timeline Step 1 – October/November Step 2 – December/January (Follow-on Placement, Rights Issue, (New Term Loan, Initial Equity Placement) Buy-Back, Preferred Shares, Bond Equitisation) Announcements Close Rights Company Recapitalisation Offer Announce announcement
Slide 16: Recapitalisation repositions Boart Longyear for the longer term
Recapitalisation repositions Boart Longyear for the longer term Provides a comprehensive capital structure solution Provides liquidity that better positions the Company through the cycle More flexible and longer-dated debt structure consistent with business needs Meaningful reduction in net debt Sha
Slide 17: Quarterly Update
Quarterly Update BOART g LONGYEAR
Slide 18: Safety & Environment
Safety & Environment Our goal is adding value with zero harm – leading our industry with our employees returning home safely each day and performing our work with minimal impact to our neighbors or the environment. Total Case Incident Rate 1 Lost Time Incident Rate 1 4.00 0.40 3.26 0.34 3.00 0.30 2.
Slide 19: Third Quarter Comparative Information
Third Quarter Comparative Information Second Positives Third Quarter Ended All amounts in US$ Quarter Ended • Drilling services for underground and large rotary (Mi l l i ons ) 1 2014 2013 2012 2014 have remained stable, albeit at a low level, over Total Company the last year Revenue 239.3 279.5 513
Slide 20: Conclusion
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Slide 21: We are committed to a sustainable business model based on financial discipline and customer focus
We are committed to a sustainable business model based on financial discipline and customer focus 1 Valuable Franchise • Safety leaders in the industry • Drilling Services provider of choice for major mines • Innovation leaders driving safety and productivity on site 2 Right Path Forward • Focused o
Slide 22: One Source: Drilling Services | Drilling Equipment | Performance Tooling
& | ONE SOURCE DRILLING SERVICES | DRILLING EQUIPMENT | PERFORMANCE TOOLING for Mining and Drilling Companies Globally
Slide 23: Appendix
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Slide 24: YTD September 2014 Operations Global Products
YTD September 2014 Operations Global Products – Markets appear to be stabilising with order backlog and other leading indicators improving Change Change YTD YTD Fav/(Unfav) YTD YTD Fav/(Unfav) (US$M) Key Performance Indicators Sep ‘14 Sep ‘13 Sep ‘14 Sep ‘13 $ % Quantum % Revenue 176.5 244.4 (67.9)
Slide 25: YTD September 2014 Operations Drilling Services
YTD September 2014 Operations Drilling Services – Operating rigs stabilising, pricing pressure continues Change Change YTD YTD Fav/(Unfav) YTD YTD Fav/(Unfav) (US$M) Key Performance Indicators Sep ‘14 Sep ‘13 Sep ‘14 Sep ‘13 $ % Quantum % Revenue 484.3 754.0 (269.7) (35.8%) Average Operating Rigs (w
Slide 26: Indicative timeline: Company announcement / Shareholder decisions
Shareholder decisions1 Indicative timeline Company announcement / Announce Notice of Meeting (including Close rights offer Announce Recapitalization Explanatory Statement and Shareholder Close Buy-Back Rights Issue / Proposal Independent Expert's Report) meeting Announce results of buy
Slide 27: Revised debt maturity profile
Revised debt maturity profile 350 300 US$16m 105 Equitisation 250 Term Loan Tranche B 7% Sr. 200 US $m Former Unsecured 284 Credit Facility 195 Notes 150 100 140 10% Sr. Secured 120 Notes Term Loan 50 Tranche A 0 2014 2015 2016 2017 2018 2019 2020 2021 Note: Company may replace up to US$50m of Tranc
Slide 28: New Term Loan
New Term Loan Covenants and Events of Default1 Key Covenants Key Events of Default • Restrictions on incurrence of • Failure to comply with covenants indebtedness/guarantees • Cross-default provisions to other • Restrictions on capital expenditure permitted indebtedness • Restrictions on permitted d
Slide 29: Convertible Preference Shares
Convertible Preference Shares If required, Centerbridge will receive any equity it would otherwise receive above 49.9% voting power, in the form of preference shares Issuer • Boart Longyear Ltd • The number of Convertible Preference Shares issued will depend on the extent to which implementation of
Slide 30: Convertible Preference Shares (cont'd)
Convertible Preference Shares (cont’d) If required, Centerbridge will receive any equity it would otherwise receive above 49.9% voting power, in the form of preference shares • Winding up, cash in priority to any other class of shares, equal to the aggregate of the per share price and any accrued Ri
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