42 slides from Martin Midstream Partners L.p's proxy contest presentation, Dec 9, 2024
Slide 1: The Case for Voting AGAINST the MMLP-MRMC Merger
The Case for Voting AGAINST the MMLP-MRMC Merger December 2024
Slide 2: Legal Disclaimer
Legal Disclaimer The materials contained herein (the “Materials”) represent the opinions of Nut Tree Capital Management L.P. and Caspian Capital L.P. and the other participants named in their proxy solicitation (collectively, the “Investors,” or “we”) and are based on publicly available information
Slide 3: Table of Contents
Table of Contents Section I: Executive Summary Page: 4 Section II: The Proposed Merger Materially Undervalues MMLP Page: 14 Section III: Merger Review was Deeply Flawed and Rife with Conflicts Page: 26 Section IV: There is No Financial Need for the Merger and MMLP Remaining Page: 36 Public Provides
Slide 4: Section I: Executive Summary
Section I: Executive Summary VOTE AGAINST ON THE GOLD PROXY TODAY! 4
Slide 5: Executive Summary
Executive Summary MMLP-MRMC Merger materially undervalues MMLP and is not driven by any financial or business need. Unitholders are likely to see significantly more value if MMLP remains public A. Proposed Merger at $4.02 per Common Unit Materially Undervalues MMLP • Purchase price undervalues the C
Slide 6: Nut Tree / Caspian's Long-Tenured History with the Company
Nut Tree / Caspian’s Long-Tenured History with the Company Nut Tree and Caspian have combined economic exposure in the Company of approximately 13.6% of the outstanding Common Units and are seeking to maximize the value of the Common Units for the benefit of all independent MMLP unitholders Nut
Slide 7: MMLP-MRMC Proposed Transaction Summary
MMLP-MRMC Proposed Transaction Summary MRMC Merger Sub LLC, a direct wholly owned subsidiary of MRMC, has proposed acquiring all of the publicly-owned Common Units of MMLP, other than Common Units held by MRMC and its affiliates for $4.02 per Common Unit in cash The proposed Merger is a “going-pri
Slide 8: Transaction Background
Transaction Background On May 24, 2024, MRMC submitted a proposal to acquire the remaining outstanding Common Units of MMLP it does not already own for $3.05 per share, a mere 1.7% premium to the unit price prior to deal announcement On June 21, 2024, Conflicts Committee received a non-binding p
Slide 9: Conflicts Committee Curiously Withdrew Demand for a Majority of Minority Condition for a Lesser Price
Conflicts Committee Curiously Withdrew Demand for a Majority of Minority Condition for a Lesser Price On May 24, 2024, MRMC submitted a non-binding offer of $3.05 per Common Unit On July 2, 2024, Conflicts Committee countered with $4.75 per Common Unit, conditioned on a “Majority of the Minority
Slide 10: MRMC Proposed Deal Immediately After MMLP Finally Met Leverage Covenant in their Bond Indenture
MRMC Proposed Deal Immediately After MMLP Finally Met Leverage Covenant in their Bond Indenture In early 2024, MMLP reported that it had finally met the 3.75x leverage covenant in its bond indenture, an important requirement for being able to increase distributions to common unitholders The mark
Slide 11: MRMC and MMLP Relationship Creates Inherent Conflicts of Interest
MRMC and MMLP Relationship Creates Inherent Conflicts of Interest MMLP was formed in 2002 by MRMC, which indirectly holds 100% of the membership interests in the General Partner of MMLP MRMC directs the operations and activities of MMLP through its control of the General Partner MRMC’s employe
Slide 12: MMLP Operates in Highly Attractive Segments with High Barriers to Entry
MMLP Operates in Highly Attractive Segments with High Barriers to Entry MMLP is a midstream Master Limited Partnership focused on serving refined products markets along the Gulf Coast with a particular focus on hard to handle materials MMLP provides specialty services to major and independent oi
Slide 13: MMLP's Operations are Strategically Located
MMLP’s Operations are Strategically Located Source: Martin Midstream Investor Presentation, data as of May 17, 2024. VOTE AGAINST ON THE GOLD PROXY TODAY! 13
Slide 14: Section II: The Proposed Merger Materially Undervalues MMLP
Section II: The Proposed Merger Materially Undervalues MMLP VOTE AGAINST ON THE GOLD PROXY TODAY! 14
Slide 15: Proposed Merger Materially Undervalues MMLP
Proposed Merger Materially Undervalues MMLP Purchase price of $4.02 per Common Unit undervalues the Company based on industry-standard valuation methodologies: Multiple of 2024 expected EBITDA analysis indicates MMLP could be worth over $15.40 per Common Unit, more than 280% over the purchase pric
Slide 16: MMLP's Own Public Investor Materials Argue The Stock is Unreasonably Cheap
MMLP’s Own Public Investor Materials Argue The Stock is Unreasonably Cheap • The below slide from MMLP’s own investor presentation, published seven days before MRMC announced its bid for the Company, points to significant valuation upside. • Following MRMC’s bid, the presentation containing the belo
Slide 17: Proposed Merger Materially Undervalues MMLP
Proposed Merger Materially Undervalues MMLP Multiple of Expected 2024 EBITDA: MRMC’s purchase price of $4.02 per Common Unit implies a valuation of the Company of 5.2x MMLP management’s expected 2024 EBITDA, significantly below the 9.4x average and 9.7x median multiple of the constituents of the A
Slide 18: Proposed Merger Materially Undervalues MMLP
Proposed Merger Materially Undervalues MMLP Multiple of Expected 2024 EBITDA (Continued): The Alerian MLP Index is the leading Company's Prior index of energy MLP’s and is the 2024 Expected EBITDA Multiple Alerian MLP Index* comparables Company appropriate comparable company set ENERGY TRANSFER LP
Slide 19: Proposed Merger Materially Undervalues MMLP
Proposed Merger Materially Undervalues MMLP Multiple of Expected 2024 EBITDA (Continued): Constituents of the Alerian MLP Index trade at an EBITDA multiple range of 6.2x-11.7x, with a mean of 9.4x and median of 9.7x Using the low and high multiples for the Alerian MLP Index constituents and appl
Slide 20: Proposed Merger Materially Undervalues MMLP
Proposed Merger Materially Undervalues MMLP Unit Distribution Yield / Distributable Cash Flow: We believe Unit Distribution Yield and Distributable Cash Flow are important valuation analyses for MLPs The Company agrees: ⎯ “Distributable Cash Flow is also a quantitative standard used throughout t
Slide 21: Proposed Merger Materially Undervalues MMLP
Proposed Merger Materially Undervalues MMLP Unit Distribution Yield / Distributable Cash Flow: Due to the pass-through structure of MLPs, investors generally place importance on an MLP’s ability to pay current and future distributions Nut Tree and Caspian believe MMLP’s EBITDA multiple has decli
Slide 22: Proposed Merger Materially Undervalues MMLP
Proposed Merger Materially Undervalues MMLP Unit Distribution Yield / Distributable Cash Flow (Continued): MMLP currently pays a de minimis distribution ($0.02 per Common Unit per year) and is restricted from growing its distribution under the terms of its bond indenture, we believe this is likely
Slide 23: Proposed Merger Materially Undervalues MMLP
Proposed Merger Materially Undervalues MMLP Unit Distribution Yield / Distributable Cash Flow (Continued): We believe a range of 60% to 100% payout ratio is possible for MMLP implying a range of $0.52 to $0.87 per Common Unit in 2025 and more in subsequent years At a Unit Distribution Yield in-l
Slide 24: Proposed Merger Materially Undervalues MMLP
Proposed Merger Materially Undervalues MMLP Other Assets: MMLP also has certain other assets not currently contributing to earnings that may have significant value that do not appear to have been reflected in Houlihan Lokey’s analysis Management has discussed with investors the potential “hidden
Slide 25: Proposed Merger Materially Undervalues MMLP
Proposed Merger Materially Undervalues MMLP The Company has a near-dated opportunity to materially reduce interest expense, boosting Distributable Cash Flow, while also eliminating current restrictions on distributions Since 2020, the Company has incurred debt with interest rates over 10.5% The
Slide 26: Section III: Merger Review was Deeply Flawed and Rife with Conflicts
Section III: Merger Review was Deeply Flawed and Rife with Conflicts VOTE AGAINST ON THE GOLD PROXY TODAY! 26
Slide 27: Financial Advisor Houlihan Lokey Provided a Deeply Flawed Analysis
Financial Advisor Houlihan Lokey Provided a Deeply Flawed Analysis Houlihan Lokey selected a grossly inappropriate set of comparables with conveniently low EBITDA multiple valuations for use in its Selected Companies EBITDA Multiple analysis: Houlihan chose an odd list of comparable companies that
Slide 28: Houlihan Lokey's list of comparable companies are not comparable
Financial Advisor Houlihan Lokey Provided a Deeply Flawed Analysis Houlihan Lokey’s list of comparable companies are not comparable Houlihan’s list includes only four MLPs, which have pass through structures like MMLP and tend to trade at higher multiples as a result of their tax-advantaged struct
Slide 29: Financial Advisor Houlihan Lokey Provided a Deeply Flawed Analysis
Financial Advisor Houlihan Lokey Provided a Deeply Flawed Analysis Conflicts Committee relied on flawed and biased analysis to justify the transaction with MRMC Houlihan Lokey selected a grossly inappropriate set of comparables, which tainted both of the core valuation analyses the Conflicts Commi
Slide 30: Financial Advisor Houlihan Lokey Provided a Deeply Flawed Analysis
Financial Advisor Houlihan Lokey Provided a Deeply Flawed Analysis Houlihan Lokey’s inappropriate comp set also tainted their Discounted Cashflow Analysis: Wells Fargo, financial advisor to MRMC, also conducted a Discounted Cash Flow Analysis utilizing the same projections, but different weighted
Slide 31: Merger Review was Deeply Flawed and Rife with Conflicts
Merger Review was Deeply Flawed and Rife with Conflicts The Merger presents major conflicts of interest for MMLP, MRMC, and its ultimate controlling person, Ruben Martin, III, and requires the highest level of scrutiny to protect the interest of unaffiliated MMLP unitholders The Conflicts Commit
Slide 32: Merger Review was Deeply Flawed and Rife with Conflicts
Merger Review was Deeply Flawed and Rife with Conflicts The Merger presents major conflicts of interest for MMLP, MRMC, and its ultimate controlling person, Ruben Martin, III Due to the significant conflicts of interest, the transaction requires the highest level of scrutiny to protect the interest
Slide 33: Merger Review was Deeply Flawed and Rife with Conflicts
Merger Review was Deeply Flawed and Rife with Conflicts The members of the Conflicts Committee have longstanding relationships with Ruben Martin, III and his affiliates that undermine their purported “independence” The Conflicts Committee consists of three directors whom the GP Board has deemed to
Slide 34: Merger Review was Deeply Flawed and Rife with Conflicts
Merger Review was Deeply Flawed and Rife with Conflicts The GP Board and the Conflicts Committee ran a deficient process that did not adequately protect the interests of unaffiliated MMLP unitholders The Conflicts Committee was handcuffed from the very beginning of the process of evaluating MRMC’s
Slide 35: Merger Review was Deeply Flawed and Rife with Conflicts
Merger Review was Deeply Flawed and Rife with Conflicts The GP Board and the Conflicts Committee ran a deficient process that did not adequately protect the interests of unaffiliated MMLP unitholders (Continued) After Nut Tree and Caspian made a competing offer to buy MMLP, and despite their repea
Slide 36: Section IV: There is No Financial Need for the Merger
Section IV: There is No Financial Need for the Merger and MMLP Remaining Public Provides a Superior Alternative to Unitholders VOTE AGAINST ON THE GOLD PROXY TODAY! 36
Slide 37: MMLP Remaining Public Provides Superior Alternative for Unitholders
MMLP Remaining Public Provides Superior Alternative for Unitholders There is no financial need for the Company to complete the Merger at the current purchase price, and remaining outstanding as a publicly traded MLP is a path to superior value creation for MMLP unitholders The Company’s significan
Slide 38: Section V: Conclusion
Section V: Conclusion VOTE AGAINST ON THE GOLD PROXY TODAY! 38
Slide 39: This Merger is a Bad Deal for MMLP Unitholders
This Merger is a Bad Deal for MMLP Unitholders The Proposed Merger at $4.02 per Common Unit Materially Undervalues MMLP Multiple of 2024 EBITDA analysis suggests a value range of $7.00 to $23.55 per Common Unit, or 74%-486% higher than MRMC’s offer price Distributable Cash Flow and Unit Distribu
Slide 40: Section VI: Appendix
Section VI: Appendix VOTE AGAINST ON THE GOLD PROXY TODAY! 40
Slide 41: MRMC Description
MRMC Description Martin Resource Management Corporation is engaged in the following principal business activities: Distributing asphalt, marine fuel and other liquids Providing marine bunkering and other shore-based marine services in Texas, Louisiana, Mississippi, Alabama, and Florida Operati
Slide 42: Ruben Martin, III Has a History of Attempting Unfair Processes
Ruben Martin, III Has a History of Attempting Unfair Processes Court Opinion of Judge Jack Carter in the case of Martin v. Martin on 03-20-2012 Historically, MRMC was jointly managed for over twenty years by Ruben S. Martin, III, and Scott D. Martin, sons of the founders (who owned or controlled a