Tronox Holdings Plc · NYSE:TROX
Tronox — Merger or Acquisition (January 2012)
51 slides from Tronox's merger presentation, Jan 26, 2012
Slide 1: Lender Presentation – Public Lenders
Filed by Tronox Incorporated Pursuant to Rule 425 of the Securities Act of 1933, as amended Subject Company: Tronox Incorporated (File No: 001-32669) Lender Presentation Public Lenders January 26, 2012
Slide 2: Forward-Looking Statements
Forward-Looking Statements This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward- looking statements are typically identified by words or phrases such as “may,” “will,” “anticipate,” “estimate,” “expect,” “project,” “int
Slide 3: Additional Information & Non-GAAP Financial Measures
Additional Information & Non-GAAP Financial Measures Additional Information and Where to Find it. This document does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any juri
Slide 4: Today's Presenters
Today’s Presenters Tom Casey Chairman and Chief Executive Officer, Tronox Dan Greenwell Senior Vice President and Chief Financial Officer, Tronox John Romano Executive Vice President, Tronox Robert Gibney VP Administration and Materials Procurement, Tronox Michael Smith Director, Corporate Developme
Slide 5: Table of Contents
Table of Contents I. Introduction and Transaction Overview II. Tronox Overview III. Exxaro Mineral Sands Overview IV. Perspective on the TiO2 Market V. Key Credit Highlights VI. Historical Financial Performance VII. Summary Terms and Timeline Appendix: Additional Materials 5
Slide 6: I. Introduction and Transaction Overview
I. Introduction and Transaction Overview 6
Slide 7: Tronox Overview
Tronox Overview Tronox Inc. (“Tronox” or the “Company”) is one of the largest global titanium dioxide (TiO 2) producers with operations in the U.S., Europe and Australia Globally, Tronox has 465,000 tonnes of annual rated chloride pigment production capacity One of only two chloride-only producers i
Slide 8: Transaction Overview
Transaction Overview On September 26, 2011, Tronox announced the execution of a definitive agreement to acquire Exxaro Resources’ (“Exxaro”) mineral sands operations, which will create the world’s largest vertically-integrated TiO2 pigment company (“New Tronox”) Exxaro will receive approximately 38.
Slide 9: Sources and Uses
Sources and Uses Financing Closing ($ in millions) Sources $mm Uses $mm New Senior Secured Term Loan $ 425.0 Refinance Existing Senior Secured Term Loan $ 421.7 Balance Sheet Cash 9.5 Estimated Transaction Fees, OID, and Expenses 12.8 Total Funded Sources $ 434.5 Total Funded Uses $ 434.5 New Senior
Slide 10: Pro Forma Capitalization
Pro Forma Capitalization Standalone Tronox New Tronox x LTM x LTM ($ in millions) Refinancing PF for 9/30/2011 Stand Alone M&A Related PF for M&A 9/30/2011 9/30/2011 Adjustments Refinancing Adj. EBITDA April '12 Adjustments Closing Adj. EBITDA Cash $ 130.6 $(9.5) $ 121.1 NA NA NA 1 $125mm Asset Base
Slide 11: II. Tronox Overview
TRONOX | Il. Tronox Overview
Slide 12: Tronox Overview
Tronox Overview ($US in millions) Company Overview Financial Summary LTM Global pure play TiO2 producer 2008A 2009A 2010A 9/30/2011 Pigment Revenue $ 1,116 $ 938 $ 1,068 $ 1,450 One of the largest global TiO2 Electrolytics 121 127 128 135 producers and marketers with 8% share Other 8 5 21 9 of globa
Slide 13: Tronox Overall Position Summary
Tronox Overall Position Summary Tronox’s sales effort is leveraged towards the higher growth and higher value segments 2010A Tronox Geographic Positioning by Sales 2010A Tronox Positioning in TiO 2 Market Volumes 12% Coatings 78% 10% 8% Plastics 19% 6% 4% Paper & Specialties 2% 3% 0% -1% 0% 2% 3% 4%
Slide 14: Proprietary Process and Highly Efficient Flexible Operations
Proprietary Process and Highly Efficient Flexible Operations Tronox is one of only five major TiO2 producers in the world utilizing proprietary chloride technology 100% of Tronox capacity is produced via the chloride process Chloride technology yields consistently whiter, brighter pigment grades pre
Slide 15: III. Exxaro Mineral Sands Overview
III. Exxaro Mineral Sands Overview 15
Slide 16: Exxaro Mineral Sands Combination Rationale
Exxaro Mineral Sands Combination Rationale The Tronox / Exxaro Mineral Sands combination creates the leading global, vertically-integrated TiO2 pigment producer with access to diverse and growing global markets Tronox and Exxaro have worked together for more than 20 years, having jointly operated th
Slide 17: Exxaro Mineral Sands Overview
Exxaro Mineral Sands Overview Company Overview Financial Summary ($USD mm) Exxaro Mineral Sands is comprised of KZN Sands, LTM Namakwa Sands and a 50% interest in the Tiwest JV rd 2008A 2009A 2010A 9/30/2011 3 largest titanium ore feedstock producer globally in Revenue $ 334 $ 419 $ 636 $ 864 2010 (
Slide 18: New Tronox EBITDA Profile
New Tronox EBITDA Profile New Tronox will benefit from a more diversified earnings stream Standalone Tronox Adj. EBITDA Contribution New Tronox Adj. EBITDA Contribution Zircon, Pig Iron & Other 22% 18
Slide 19: IV. Perspective on the TiO2 Market
IV. Perspective on the TiO 2 Market 19
Slide 20: Factors that Influence the TiO2 Cycle
Factors that Influence the TiO 2 Cycle Demand Pricing Long-term global demand for TiO2 is expected to Significant TiO2 capacity reductions in 2009 (7-8% grow by approximately 3-4%, which is consistent of global capacity) with very limited new capacity with long-term GDP trends expected due to high c
Slide 21: Significant Capacity Reductions
Significant Capacity Reductions During the last cycle, over 380,000 MT of capacity was taken out of market, which management estimates to be a 7 – 8% reduction Bringing new capacity online requires significant capex, long lead time and requires difficult to achieve permitting (in particular environm
Slide 22: Rising Demand from Emerging Markets…
Rising Demand from Emerging Markets… Significant long-term TiO 2 consumption growth expected from emerging markets TiO2 usage per capita in the major emerging markets, particularly in China and India, is significantly below that seen in most Western countries TiO2 Consumption per Capita and Growth R
Slide 23: ...As Global Economies Grow
...As Global Economies Grow Population and Urbanization to Drive Demand Growth in Emerging Markets Despite sluggish housing starts in the U.S. and Europe, supply / demand dynamics remain strong The combination of U.S. / European improvements and an ever increasing population / urbanization in emergi
Slide 24: Constrained Feedstock Environment is Expected to Persist
Constrained Feedstock Environment is Expected to Persist Ore supply is tight, creating a favorable pricing environment for the foreseeable future 1 Fundamentals for titanium feedstocks remain strong, Global Supply / Demand for Titanium Feedstock despite recent softening in China Developing countries
Slide 25: Structural Shift in the Industry Expected to Continue to Drive TiO2 Prices Higher
Structural Shift in the Industry Expected to Continue to Drive TiO 2 Prices Higher As a result of strong underlying demand, a lack of capacity and overall structural shift in the industry, TiO prices have increased significantly and are expected to remain high 2 TiO2 pigment producers are limited in
Slide 26: Tronox Has Experienced an Enduring Step Change in Profitability
Tronox Has Experienced an Enduring Step Change in Profitability The fundamental structure of the TiO2 value chain has changed 8% reduction of pigment supply in 2008/2009 No new chloride plants have been built since 1994 No new major feedstock supply since 2008/2009 Demand has increased by 14% during
Slide 27: V. Key Credit Highlights
TRONOX | V. Key Credit Highlights
Slide 28: Key Credit Strengths
Key Credit Strengths Leading Global Pigment Platform Long-Standing Blue Chip TiO2 Customer Relationships Low Cost and Efficient Production Network Vertical Integration Provides Significant Competitive Advantage Well Positioned Against its Peers Compelling Operational Rationale Strong Financial Momen
Slide 29: Leading Global Pigment Platform
Leading Global Pigment Platform Tronox Pigment Facilities Location Capacity (MT) Hamilton 225,000 Botlek 90,000 Tronox Electrolytic Facilities Location Capacity (MT) Hamilton (Sodium Chlorate) 150,000 Henderson (EMD) 27,000 Botlek, The Netherlands Henderson (Boron Products) 525 Oklahoma City, OK Tiw
Slide 30: Long-Standing Blue Chip TiO2 Customer Relationships
Long-Standing Blue Chip TiO 2 Customer Relationships Tronox’s Blue Chip Customer Relationships Tronox has supplied its top ten TiO2 customers for over ten years Diversified customer base of approximately 1,000 customers in over 90 countries Customers include market leaders in each of the major end-u
Slide 31: Low Cost and Efficient Production Network
Low Cost and Efficient Production Network The Company’s TiO2 operations are among the lowest cost producers of TiO2 globally Combined with the Exxaro Mineral Sands’ titanium feedstock assets in South Africa and Australia, this Vertically network of TiO2 and titanium feedstock facilities will give Ne
Slide 32: Vertical Integration Provides Significant Competitive Advantage
Vertical Integration Provides Significant Competitive Advantage New Tronox will be long of titanium feedstock, giving the Company significant advantages compared to its peers, especially in a today’s rising ore pricing environment Tronox Today (000’s tonnes of ore) New Tronox (000’s tonnes of ore) T
Slide 33: Well Positioned Against Its Peers
Well Positioned Against Its Peers Pure Play TiO2 Diversified Pro Forma Business Model Pigments value chain TiO pigments Primarily TiO pigments Diversified chemicals Diversified chemicals ² ² TiO pigment exposure TiO pigment exposure ² ² LTM Revenue $2,205 mm ¹ NA $1,879 mm Total: $11,000 mm Total: $
Slide 34: Compelling Operational Rationale
Compelling Operational Rationale New Tronox’s network of TiO 2 and titanium feedstock facilities will have the flexibility to optimize asset and feedstock utilization, and a secured ore supply creates a solid platform for future growth and enhanced earnings potential Near Term Synergies Medium Term
Slide 35: Strong Financial Momentum
Strong Financial Momentum Since 2008, Tronox has increased Adjusted EBITDA by 390% Standalone Tronox Net Sales ($MM) Standalone Tronox Adj. EBITDA ($MM) New Tronox Net Sales ($MM) New Tronox Adj. EBITDA ($MM) 35
Slide 36: Strong and Experienced Management Team
Strong and Experienced Management Team Chairman since February 2011 Tom Casey Chief Executive Officer since October 2011 Chairman and Previously served in various senior managerial and directorial roles, including: CEO of Current Group, Chief Executive Chairman & CEO of One Communications Corp, and
Slide 37: VI. Historical Financial Performance
VI. Historical Financial Performance 37
Slide 38: Standalone Tronox Historical Financials
Standalone Tronox Historical Financials Pigment Sales Volumes¹ (Kt) Revenue Adjusted EBITDA Adjusted EBITDA – Capex 1. Includes 100% of the TiO produced by the Tiwest Joint Venture; Tronox Incorporated currently markets 50% of the production on behalf of Exxaro. ² 38
Slide 39: New Tronox Pro Forma Historical Financials
New Tronox Pro Forma Historical Financials New Tronox Pigment Sales Volumes¹ (Kt) New Tronox Revenue New Tronox Adjusted EBITDA² New Tronox Adjusted EBITDA – Capex 39
Slide 40: VII. Summary Terms and Timeline
VII.Summary Terms and Timeline 40
Slide 41: Indicative Summary of Terms
Indicative Summary of Terms Senior Secured Term Loan Borrower Tronox Pigments (Netherlands) BV Each of (i) the Borrower’s existing and subsequently acquired or organized subsidiaries, (ii) Tronox’s direct and indirect existing and subsequently acquired or organized subsidiaries and (iii) following t
Slide 42: Summary Timetable
Summary Timetable January 2012 February 2012 S M T W T F S S M T W T F S 1 2 3 4 5 6 7 1 2 3 4 8 9 10 11 12 13 14 5 6 7 8 9 10 11 15 16 17 18 19 20 21 12 13 14 15 16 17 18 22 23 24 25 26 27 28 19 20 21 22 23 24 25 29 30 31 26 27 28 Key Date Date: Event rd January 23 Announce Transaction th January 2
Slide 43: Appendix
TRONOX | Appendix
Slide 44: Standalone Tronox Pro Forma Corporate Structure
Standalone Tronox Pro Forma Corporate Structure Note: Dotted line delineates boundary of guarantors under the credit facility. 44
Slide 45: New Tronox Pro Forma Corporate Structure
New Tronox Pro Forma Corporate Structure Note: Dotted line delineates boundary of guarantors under the credit facility. Non-U.S. entities will provide a 45-day post-closing period to provide the guarantees. 45
Slide 46: Exxaro Transaction Detail
Exxaro Transaction Detail Transaction Structure Detail Current Tronox shareholders to exchange existing common stock for new Class A shares in Australian-domiciled company (“New Tronox”) and $12.50 of cash per share Option to receive exchangeable shares in Tronox Inc. with right to exchange later in
Slide 47: Exxaro Transaction Detail (cont'd)
Exxaro Transaction Detail (cont’d) Pro Forma Shares Outstanding 25.2 million shares outstanding (excluding Exxaro’s put/call shares) Intention to list on a major exchange, such as the NYSE, after closing Board of Directors 9 member board comprising: 6 Class A Directors (including the CEO of Tronox)
Slide 48: Additional Tax Asset Information
Additional Tax Asset Information Tronox should retain many of the tax attributes it presently has available to it, including historical NOLs (subject to annual limitation) Tax attributes appear to be worth at least $300 million on a Net Present Value basis These tax attributes (which are subject to
Slide 49: Financial Reconciliation
Financial Reconciliation ($US in millions) LTM 9 mos ended 9 mos ended 2008A 2009A 2010A 9/30/2011 9/30/2010 9/30/2011 Tronox Revenue $ 1,246 $ 1,070 $ 1,218 $ 1,594 $ 892 $ 1,268 Exxaro Revenue 334 419 634 864 458 688 1 Less Pro Forma Intercompany Eliminations (125) (141) (172) (254) (129) (211) Co
Slide 50: Tronox EBITDA Reconciliation
Tronox EBITDA Reconciliation ($US in millions) LTM 9 Mos Ended 9 Mos Ended 2008 2009 2010 9/30/2011 9/30/2011 9/30/2010 Net income (loss) ($335) ($39) $5 $766 $807 $45 Interest and debt expense $54 $36 $50 $35 $24 $40 Income tax provision (benefit) ($2) ($2) $2 $3 $4 $3 Depreciation and amortization
Slide 51: TRONOX |
TRONOX |