Tronox Holdings Plc · NYSE:TROX
Tronox — Merger or Acquisition (April 2012)
41 slides from Tronox's merger presentation, Apr 27, 2012
Slide 1: Filed by Tronox Incorporated Pursuant to Rule 425
Filed by Tronox Incorporated Pursuant to Rule 425 of the Securities Act of 1933, as amended Subject Company: Tronox Incorporated (File No: 001-32669) 1
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,” “inte
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: Management Team
Management Team Chairman of the Board 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 various se
Slide 5: Board of Directors
Board of Directors (all directors since bankruptcy emergence, Feb. 2011) Member of the Human Resources/Compensation and Corporate Governance committees Currently Managing Member and President of Epilogue, LLC, a consulting and advisory firm Robert M. Gervis Previously served in various senior manage
Slide 6: Table of Contents
Table of Contents I. Tronox Overview II. Exxaro Mineral Sands Acquisition III. Exxaro Mineral Sands Overview IV. Key New Tronox Company Strengths Appendix: Additional Materials 6
Slide 7: I. Tronox Overview
TRONOX | |. Tronox Overview
Slide 8: 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 in
Slide 9: Tronox Overview
Tronox Overview ($US in millions) Company Overview Financial Summary 2008A 2009A 2010A 2011A Global pure play TiO2 producer Pigment 1,116 938 1,068 1,514 Electrolytics 121 127 128 129 One of the largest global TiO2 Other 8 5 21 8 producers and marketers with 8% share Revenue 1,246 1,070 1,218 1,651
Slide 10: Tronox Overall Position Summary
Tronox Overall Position Summary Tronox’s sales effort is leveraged towards the higher growth and higher value segments 2011A Tronox Positioning in TiO2 Market Tronox Geographic Positioning by 2011A Production Note: Size of bubble represents Tronox sales in its end markets. Projected growth rates are
Slide 11: 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 12: II. Exxaro Mineral Sands Acquisition
II. Exxaro Mineral Sands Acquisition 12
Slide 13: Transaction Overview
Transaction Overview On September 26, 2011, Tronox entered into a definitive agreement to acquire Exxaro Resources’ (“Exxaro”) mineral sands operations, which will create the world’s largest vertically-integratedTiO2 pigment company (“New Tronox”) Exxaro will receive approximately 38.5% of the commo
Slide 14: Corporate Structure
Corporate Structure Tronox Existing Corporate Structure New Tronox Pro Forma Corporate Structure Current Current 100.0% of Exxaro Exxaro Tronox Tronox Class B Shares Incorporated Incorporated (~38.5% of Stockholders Stockholders voting rights) 50.0% 100.0% 100.0% 100.0% of Class A Shares 100.0% (~61
Slide 15: Exxaro Transaction Detail
Exxaro Transaction Detail Transaction Structure Detail Current Tronox shareholders to exchange existing common stock for new Class A common stock in New Tronox, a Australian-domiciled corporation and $12.50 per share Option to receive exchangeable shares with right to exchange later into Class A sha
Slide 16: Key Governance Terms
Key Governance Terms 9 member board comprising: 6 Class A directors (nominated by Tronox) Management and Pro 3 Class B directors (nominated by Exxaro) Forma Board of Directors Tom Casey to remain Chairman & CEO of combined company Key members of Exxaro's senior management expected to join Tronox to
Slide 17: Key Governance Terms (cont'd)
Key Governance Terms (cont’d) Limited significant matters require supermajority (6 of 9) approval at board level, including: Election of the Chairman of Limited Board the Board Supermajority Appointment or termination of the Chief Executive Officer Matters Material acquisitions / dispositions Sale o
Slide 18: III. Exxaro Mineral Sands Overview
III. Exxaro Mineral Sands Overview 18
Slide 19: Exxaro Mineral Sands Combination Rationale
Exxaro Mineral Sands Combination Rationale The Tronox / Exxaro Mineral Sands combination creates the leading global, vertically-integrated TiO2 pigment producer with access to diverse and growing global markets Tronox and Exxaro have worked together for more than 20 years, having jointly operated th
Slide 20: Exxaro Mineral Sands Overview
Exxaro Mineral Sands Overview Company Overview Financial Summary ($USD mm) Exxaro Mineral Sands is comprised of KZN Sands, 2008A 2009A 2010A 2011A Namakwa Sands and a 50% interest in the Tiwest JV Revenue 334 419 634 910 rd 3 largest titanium ore feedstock producer globally in 2011 (10% market share
Slide 21: 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 21
Slide 22: IV. Perspective on the TiO2 Market
IV. Perspective on the TiO2 Market 22
Slide 23: 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 according to TZMI expe
Slide 24: 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 25: Rising Demand from Emerging Markets
Rising Demand from Emerging Markets… Significant long-term TiO2 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 Ra
Slide 26: ...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 27: 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 28: 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, TiO2 prices have increased significantly and are expected to remain high TiO2 pigment producers are limited in
Slide 29: 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 30: IV. Key New Tronox Company Strengths
IV. Key New Tronox Company Strengths 30
Slide 31: Key Company Strengths
Key Company Strengths Leading Global Pigment Platform Long-Standing Blue Chip TiO2Customer Relationships Low Cost and Efficient Production Network Well Positioned Against its Peers Significant Operational Synergies Strong Financial Momentum 31
Slide 32: 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 33: 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 34: 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, Vertically this network of TiO2 and titanium feedstock facilities will give Ne
Slide 35: 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 36: 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 1 LTM Revenue $2,306 mm $5,238 mm $1,943 mm Total: $11,221 mm T
Slide 37: Compelling Operational Rationale
Compelling Operational Rationale New Tronox’s network of TiO2 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 S
Slide 38: Appendix
TRONOX | Appendix
Slide 39: Additional Tax Asset Information
Additional Tax Asset Information Tronox should retain much of the deductions for tax purposes it presently has available to it, including historical NOLs Tax attributes appear to be worth at least $300 million on a Net Present Value basis These tax attributes (which are subject to audit by IRS) cons
Slide 40: Restructuring Summary
Restructuring Summary Tronox emerged from bankruptcy in February 2011 with a significantly improved balancing sheet and shedding of its legacy liabilities Legacy Liabilities: Resolved Environmental Legacy Liabilities (Claimants will not have any recourse to Reorganized Tronox) Resolved Tort Legacy L
Slide 41: TRONOX
TRONOX | TRONOX