Bluescope Steel Limited · ASX:BSL
Bluescope Steel — Investor Presentation (November 2011)
45 slides from Bluescope Steel's investor presentation, Nov 22, 2011
Slide 1: Capital Raising Presentation
For personal use only Capital Raising Presentation Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 22 November 2011 ASX Code: BSL NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Important information
For personal use only Important information Important information This presentation has been prepared by BlueScope Steel Limited ABN 16 000 011 058 (BlueScope Steel). It contains general information about BlueScope Steel's activities as at the date of this presentation. It is information given in su
Slide 3: Important information (cont’d)
For personal use only Important information (cont’d) Financial data All dollar values are in Australian dollars ($ or A$) unless stated otherwise and financial data is presented as at the date stated. The pro forma financial information and past performance information in this presentation is given
Slide 4: Important information (cont’d)
For personal use only Important information (cont’d) Disclaimer No party other than BlueScope Steel has authorised or caused the issue, lodgement, submission, dispatch or provision of this presentation, or takes any responsibility for, or makes or purports to make any statements, representations or
Slide 5: Agenda
For personal use only Agenda Equity raising Rationale and use of proceeds Details of the offer and timetable Business update Recap on 1H FY2012 trading update and outlook Overview of BlueScope’s business segments and key initiatives Risk factors Important notices regarding foreign jurisd
Slide 6: Executive summary
For personal use only Executive summary BlueScope Steel is undertaking a fully underwritten 4 for 5 accelerated renounceable entitlement offer with rights trading to raise approximately $600 million Purpose is to strengthen BlueScope Steel’s balance sheet and financial flexibility Results in a
Slide 7: Equity raising
For personal use only Equity raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 8: Overview
For personal use only Overview BlueScope is raising $600 million to strengthen its balance sheet Fully underwritten 4 for 5 accelerated renounceable Entitlement Offer with rights trading to raise approximately $600 million(1) Entitlement Offer Approximately 1,500 million new ordinary shares to b
Slide 9: Rationale
For personal use only Rationale The proceeds of the Entitlement Offer will be applied to debt reduction Results in a more appropriate capital structure − Reduction in 30 June 2011 pro-forma net debt from $1,068 million to $491 million(1) More appropriate − Reduction in 30 June 2011 pro-forma Net D
Slide 10: Additional reasons to support the offer
For personal use only Additional reasons to support the offer BlueScope has undertaken a significant restructuring of its operations to reduce operating costs and better position the Company to benefit from future recovery in the steel cycle − Restructuring of Australian steelmaking operations ann
Slide 11: Increased balance sheet strength
For personal use only Increased balance sheet strength Net debt has increased to $1,555 million at 31 October from $1,068 million at 30 June 2011 primarily due to Pro-forma $ millions 30 June 2011 post raising(1) CIPA restructuring costs spent of ~$110 million Working capital increase of ~$230 m
Slide 12: BlueScope Steel is a leading international steel solutions company
For personal use only BlueScope Steel is a leading international steel solutions company A leading international steel solutions company with a geographically diverse manufacturing and marketing footprint across Australia, New Zealand, the US and Asia Producer of higher margin downstream product
Slide 13: Entitlement Offer timetable
For personal use only Entitlement Offer timetable Key dates Institutional Entitlement Offer period Tuesday 22 November – Wednesday 23 November 2011 Institutional Bookbuild 8:00am, Thursday 24 November 2011 Ordinary Shares re-commence trading 12:00pm, Thursday 24 November 2011 Retail Entitlements beg
Slide 14: Business update
For personal use only Business update NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 15: Trading update and 1H FY2012 outlook
For personal use only Trading update and 1H FY2012 outlook Trading Update – Summary Capacity utilisation internationally remains below 80%, a sign that steel-making margins will be low As a result, in recent months major steel companies have followed BlueScope’s lead and either shut or mothballe
Slide 16: Trading update – Coated & Industrial Products Australia (CIPA)
For personal use only Trading update – Coated & Industrial Products Australia (“CIPA”) Restructure and closure of major plant and equipment well advanced All major plant closures completed successfully in the first two weeks of October Total cash costs of the restructuring expected of $430 mil
Slide 17: Coated & Industrial Products Australia
For personal use only Coated & Industrial Products Australia Business overview Key initiatives Leading supplier of flat steel products in Australia Reduced raw steelmaking capacity from 5.3mtpa to 2.6mtpa to Largest supplier of metal coated and painted steel in Australia reduce exposure to los
Slide 18: Production capacity from one blast furnace is now better aligned with Australian steel demand
Production capacity from one blast furnace is now better aligned with Australian steel demand For personal use only Port Kembla Raw Steel Production Capacity and Domestic Steel Despatches 6,000 BlueScope’s historical raw steel production with 5,000 two blast furnaces Excess production 4,000 from two
Slide 19: Australian Distribution & Solutions
For personal use only Australian Distribution & Solutions Business overview Key initiatives Leading supplier of flat steel solutions in Australia Initiating operating model review to drive profitability Key operations include Steel Distribution, Lysaght − Cost structure rollforming, Service Ce
Slide 20: New Zealand & Pacific Steel Products
For personal use only New Zealand & Pacific Steel Products Business overview Key initiatives Only fully integrated flat steel maker in New Zealand – Expansion of Taharoa iron sands export capacity by captive source of iron units 400ktpa to 1.2Mtpa Leading domestic market share of flat products
Slide 21: Coated & Building Products Asia
For personal use only Coated & Building Products Asia Business overview Key initiatives Pre-eminent seller of branded steel in Asia – coating, Restructured the business in 2009 painting, rollforming and PEB facilities throughout the region − now continuing to deliver strong returns Operations
Slide 22: Hot Rolled Products North America
For personal use only Hot Rolled Products North America Business overview Key initiatives 2.1 Mtpa North Star steel mini-mill in Delta, Ohio Potential upgrade in production capacity from ~2.1 million to 50/50 joint venture with Cargill Inc. ~2.5 million tons per annum Voted #1 in customer sa
Slide 23: Coated & Building Products North America
For personal use only Coated & Building Products North America Business overview Key initiatives Pre-eminent global designer / supplier of Pre-Engineered Buildings business has been restructured over 2009 to 2011 Buildings: no 1 position in North America period – cost reductions and supply chain
Slide 24: Risk factors and important notices regarding foreign jurisdictions
For personal use only Risk factors and important notices regarding foreign jurisdictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 25: Risk factors
For personal use only Risk factors Key risks A number of risks and uncertainties, some of which are specific to the Company and others of a more general nature, may affect the business, financial position and results of operations of the Company, the value of its Shares and its funding requirements.
Slide 26: Risk factors (cont’d)
For personal use only Risk factors (cont’d) Exit from the Coated & Industrial Products Australia (“CIPA”) export business On 22 August 2011, the Company announced its decision to exit the export business of the CIPA division. This involves the closure of the Port Kembla No. 6 Blast Furnace, one coke
Slide 27: Risk factors (cont’d)
For personal use only Risk factors (cont’d) Exit from the Coated & Industrial Products Australia (“CIPA”) export business (cont’d) f) Competitive position Under normal business conditions, the Company operates its facilities at production levels at or near capacity. Generally, high levels of produ
Slide 28: Risk factors (cont’d)
For personal use only Risk factors (cont’d) Growth objectives and project development The Company’s growth strategy includes a number of potential greenfield and brownfield projects that are inherently subject to completion and financing risks. The Company cannot guarantee that it will be able to ex
Slide 29: Risk factors (cont’d)
For personal use only Risk factors (cont’d) Proposed Australian Carbon Pricing Mechanism The production of greenhouse gases is inherent in the iron and steelmaking processes and there is currently no technology capable of substantially reducing or mitigating emissions of these greenhouse gases. The
Slide 30: Risk factors (cont’d)
For personal use only Risk factors (cont’d) Carbon / Emissions Schemes in other Jurisdictions In addition to Australia and New Zealand, it is possible that other countries in which the Company operates may introduce regulations which impose a cost on greenhouse gas emissions and energy intensive ass
Slide 31: Risk factors (cont’d)
For personal use only Risk factors (cont’d) Insurance risk Not all of the Company’s risks are insured or insurable (and may have significant deductibles on policies). The Company’s insurance policies do not provide coverage for all losses related to the Company’s business, and the occurrence of loss
Slide 32: Risk factors (cont’d)
For personal use only Risk factors (cont’d) Joint venture arrangements Some of the Company's activities in Asia, the U.S., New Zealand and the Pacific Islands are conducted through joint ventures. A number of these joint ventures are not controlled by the Company and, while the Company is represente
Slide 33: Risk factors (cont’d)
For personal use only Risk factors (cont’d) International trade restrictions The Company has significant exposure to the effects of trade actions and barriers. Various countries have in the past instituted, or are currently contemplating the institution of, trade actions and barriers. The Company ca
Slide 34: Risk factors (cont’d)
For personal use only Risk factors (cont’d) Asset impairment At each reporting date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that the carrying amount of those assets may not be recoverable through continuing use (exc
Slide 35: Important notices regarding foreign jurisdictions
For personal use only Important notices regarding foreign jurisdictions International Offer Restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. New Shares may not be offered or sold in any cou
Slide 36: Important notices regarding foreign jurisdictions (cont’d)
For personal use only Important notices regarding foreign jurisdictions (cont’d) purchases the New Shares during the period of distribution shall be deemed to have relied on the misrepresentation if it was a misrepresentation at the time of purchase and has a right of action for damages or, alternat
Slide 37: Important notices regarding foreign jurisdictions (cont’d)
For personal use only Important notices regarding foreign jurisdictions (cont’d) France This document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in France within the meaning of Article L.411-1 of the French Monetary and
Slide 38: Important notices regarding foreign jurisdictions (cont’d)
For personal use only Important notices regarding foreign jurisdictions (cont’d) Italy The offering of the New Shares in the Republic of Italy has not been authorized by the Italian Securities and Exchange Commission (Commissione Nazionale per le Società e la Borsa, "CONSOB") pursuant to the Italian
Slide 39: Important notices regarding foreign jurisdictions (cont’d)
For personal use only Important notices regarding foreign jurisdictions (cont’d) Norway This document has not been approved by, or registered with, any Norwegian securities regulator pursuant to the Norwegian Securities Trading Act of 29 June 2007. Accordingly, this document shall not be deemed to c
Slide 40: Important notices regarding foreign jurisdictions (cont’d)
For personal use only Important notices regarding foreign jurisdictions (cont’d) Switzerland The New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility in Switzerland. This document h
Slide 41: Appendix – supporting business and financial information
For personal use only Appendix – supporting business and financial information NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 42: Balance sheet impact of equity raising
For personal use only Balance sheet impact of equity raising The table below presents the pro forma impact of the equity raising as if it had occurred on 30 June 2011 Pro-forma BlueScope Steel Balance Sheet $ millions 30 June 2011 Adjustments (1) Pro-forma post raising Cash 172 — 172 Receivables 1,0
Slide 43: Debt facilities as at October 2011
For personal use only Debt facilities as at 31 October 2011 Committed facility size Amount drawn Amount undrawn Currency Maturity USDm/THBm/MYRm $m $m $m Syndicated Facility Agreement Tranche 1 Multi Dec-13 675 664 11 Tranche 2 Multi Dec-15 675 176 499 2004 USPP Notes Series B USD Jul-14 200 187 187
Slide 44: Segment business drivers
For personal use only Segment business drivers Corporate / Group Australia New Zealand Asia North America Coated & Australia New Zealand & Coated & Hot Coated & Industrial Distribution Pacific Steel Building Rolled Building Products & Solutions Products Products Products Products Australia Asia Nort
Slide 45: Capital Raising Presentation
For personal use only Capital Raising Presentation Paul O’Malley, Managing Director and Chief Executive Officer Charlie Elias, Chief Financial Officer 22 November 2011 ASX Code: BSL NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
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