Borgestad Asa · OSL:BOR
Borgestad Asa — Debt Investor Presentation (February 2018)
53 slides from Borgestad Asa's debt investor presentation, February 2018
Slide 1: Investor presentation: NOK [300-350]m senior secured bond issue
Investor presentation NOK [300-350]m senior secured bond issue February 2018
Slide 2: Disclaimer
Disclaimer THIS PRESENTATION HAS BEEN PREPARED BY BORGESTAD ASA (“BORGESTAD”, THE “COMPANY” OR THE “ISSUER”, AND TOGETHER WITH ITS SUBSIDIARIES, “THE GROUP”) EXCLUSIVELY FOR INFORMATION PURPOSES IN CONNECTION WITH THE CONTEMPLATED OFFERINGS OF SENIOR SECURED BONDS (THE “BONDS”) BY THE ISSUER. THIS P
Slide 3: Disclaimer (cont.)
Disclaimer (cont.) IN THE EVENT THAT THIS PRESENTATION IS HELD OR DISTRIBUTED IN THE UNITED KINGDOM, IT SHALL BE DIRECTED ONLY AT PERSONS WHO ARE EITHER (I) “INVESTMENT PROFESSIONALS” FOR THE PURPOSES OF ARTICLE 19(5) OF THE UK FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005
Slide 4: Oslo Børs' oldest company: diversified cash flows and robust underlying values
Oslo Børs’ oldest company: Diversified cash flows and robust underlying values 1 Diversified conglomerate with >100 years’ history 2 3 Properties Industrial provide operations with significant asset solid operational backing performance
Slide 5: Table of contents
Table of contents Transaction summary Introduction to Borgestad Borgestad Properties Borgestad Industries Financials Risk factors Appendix 5
Slide 6: Summary of terms
Summary of terms Issuer: Borgestad ASA Status: Senior secured Issue volume: NOK [300-350] million Tenor: 3 years Coupon: 3 months NIBOR + [•]% p.a., quarterly interest payments Issue price: 100% of par Use of proceeds: Refinance the existing bond, fund the debt service retention account and towards
Slide 7: Transaction overview
Transaction overview Summary Simplified transaction structure • Borgestad is contemplating issuing a NOK [300-350]m bond Mortgage and to refinance its existing NOK 300m bond maturing in October share pledge NOK [300-350]m 2018 senior secured Share pledge bond issue - The remainder of the proceeds wi
Slide 8: Credit highlights
Credit highlights 1 Diversified and • The oldest company on Oslo Børs; founded in 1904 and listed in 1917 sustainable • Diversification through investments in real estate and refractory industry conglomerate • Growth in profitability and cash flow with >100 years’ • Large underlying values / break-u
Slide 9: Table of contents
Table of contents Transaction summary Introduction to Borgestad Borgestad Properties Borgestad Industries Financials Risk factors Appendix 9
Slide 10: Key events: BOR is streamlining its business, focusing on core assets
Key events: BOR is streamlining its business, focusing on core assets 1 2 Focus on core business Borgestad Properties Borgestad Industries • Borgestad is focusing on companies • Successful five year renewal of the main • New management in place since Q3 where it can have a controlling position part
Slide 11: Strong 2017 results
Strong 2017 results Revenue (NOKm) EBITDA (NOKm) Growth 2% 5% 2% Margin 8% 7% 6% 8% 781.1 792.9 747.3 733.6 61.7 58.5 53.2 43.5 2014 2015 2016 2017 2014 2015 2016 2017 11
Slide 12: Borgestad in brief
Borgestad in brief History Share price development last 12 months • Aktieselskabet Borgestad, founded by Prime Minister 1904 Gunnar Knudsen 90 First day following release of Q3 2017 1917 • Listed on Oslo Børs 80 70 1923 • Renewal of the fleet into motorships 60 1940 • 6 out of 8 vessels sunk during
Slide 13: The oldest company on Oslo Børs
The oldest company on Oslo Børs “Through fire, water and shore for more than 100 years” 250 NOK/share 200 150 100 50 0 1990 2018 Borgestad ASA was founded in 1904 by Prime In 2006 the company sold the shares in Borgestad Minister Gunnar Knudsen with a share capital of Shipping AS, and in 2007 the sh
Slide 14: The bond has traded around par since issuance in 2014
The bond has traded around par since issuance in 2014 Key terms bond issue 2014/2018 Bond trading Issuer: Borgestad ASA Price indications VWAP Oslo Børs Status: Senior secured 105 104 Issue volume: NOK 300 million 103 Tenor: 3 years (extended one year, amendment fee 0.5%), 102 maturing October 2018
Slide 15: Management team strongly aligned with overall business
Management team strongly aligned with overall business Management team Board of Directors Christen Knudsen Bertel O. Steen CEO Chairman • Fourth generation after the founder of Borgestad • Board member 1997-2004 • Master in Economics and Business Administration from NHH • Elected Chairman in 2004 •
Slide 16: Table of contents
Table of contents Transaction summary Introduction to Borgestad Borgestad Properties Borgestad Industries Financials Risk factors Appendix 16
Slide 17: Borgestad Properties
Borgestad Properties 1 Source: Company 17
Slide 18: Agora Bytom: Sizable shopping centre with premium location
Agora Bytom: Sizable shopping centre with premium location Agora Bytom Asset located in the middle of Bytom city centre • Borgestad’s largest investment (equity stake) • Shopping centre with over 100 stores (30,658 m2 rental area) located in the heart of Schlesien (Poland’s largest region by populat
Slide 19: Diversified tenant base and limited vacancies
Diversified tenant base and limited vacancies Lettable area by tenants Vacancies as of YE 2017 Tenants by gross lettable area SQM 32,000 Selected tenants: 10.5% Tenant 1 8.2% 24,000 Tenant 2 7.6% Tenant 3 6.4% 16,000 100.0% 89.5% Tenant 4 6.0% 8,000 Tenant 5 5.0% 0 Leased area Vacant Total Tenant 6
Slide 20: Solid and steady EBITDA contribution
Solid and steady EBITDA contribution Revenue (NOKm) EBITDA (NOKm) Growth 6% -12 % 6% Margin 45 % 41 % 48 % 50 % 73.7 69.7 68.3 64.6 34.2 31.7 31.1 29.9 2014 2015 2016 2017 2014 2015 2016 2017 20
Slide 21: The Polish economy is thriving
The Polish economy is thriving Unemployment dropping Consumer confidence increasing Registered unemployment Consumer confidence index 16 10 14 0 12 -10 10 (%) 8 -20 6 -30 4 -40 2 0 -50 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Registered unempl
Slide 22: Displaying solid KPIs compared to key countries
Displaying solid KPIs compared to key countries Unemployment approaching High GDP growth expected Western levels Purchasing power increasing Poland Poland Poland Australia Australia Australia Sweden Sweden Sweden United United United States States States Finland Finland Finland Advanced Advanced Eco
Slide 23: Agora Bytom's micro fundamentals strong
Agora Bytom’s micro fundamentals strong Monthly footfall Agora Bytom until Nov 2017 Monthly turnover at Agora Bytom 2011 - 2017 PLNm y-o-y growth 800,000 24 2012 17% 2013 5% 700,000 22 2014 4% 2015 2% 20 2016 7% 600,000 2017 10% 18 500,000 16 14 400,000 12 10 300,000 8 200,000 6 4 100,000 2 0 0 Jan
Slide 24: Healthy transactions market – yield compression since '09
Healthy transactions market – yield compression since ‘09 (Agora opened ’10) Historical Polish prime yields Historical development of transaction volumes Yield €m 13% Office 6,000 12% Retail Industrial 5,000 11% 10% 4,000 9% 8% 3,000 7% 6% 2,000 5% 1,000 4% 3% 0 2002 2003 2004 2005 2006 2007 2008 20
Slide 25: Selection of Polish retail asset transactions since 2015
Selection of Polish retail asset transactions since 2015; supportive of Agora valuation Agora Bytom Q1 2015 Q1 2017 Q2 2017 2017 Q3 2017 Solaris, Opole IKEA, several locations Warsaw Inowroclaw Radom 18,000 sqm 538,000 sqm >50,000 sqm 24,000 sqm 40,900 sqm €52m @ 7.7% yld € 900m € 200m € 54m € 164m
Slide 26: Agora value estimated to EUR 99m (mid), book value of EUR 96m
Agora value estimated to EUR 99m (mid), book value of EUR 96m Agora valuation range • Book value of Agora Bytom of approx. EUR 96 million Low case High case • Valuation supportive of book value; estimates above EUR Leases signed EURm 5.6 5.6 Vacancies EURm 0.6 0.6 100m Rental income EURm 6.2 6.2 Ave
Slide 27: Other main real estate assets valued to NOK 113m
Other main real estate assets valued to NOK 113m Borgestad Næringspark (100%) Bridge Eiendom (50%) Asset introduction Details Asset introduction Details • Industrial park, established March 2003, Type Industrial park • Bridge Eiendom AS owns offices in Brevik, Type Industrial park when the productio
Slide 28: Table of contents
Table of contents Transaction summary Introduction to Borgestad Borgestad Properties Borgestad Industries Financials Risk factors Appendix 28
Slide 29: Borgestad Industries
Borgestad Industries 2 Source: Company 29
Slide 30: Borgestad Industries at a glance
Borgestad Industries at a glance Business introduction Business unit overview • Borgestad Industries develops, manufactures and delivers Share of sales (2017A) refractory products, installations and turnkey solutions that Sales: NOK 727m1) enhance the productivity and competitiveness of industrial E
Slide 31: Strong financial development
Strong financial development Revenue (NOKm) EBITDA (NOKm) Growth -3.6 % 37.2 % -7.5 % 28.7 % 1.4 % 2.5 % 6.1 % 1.3 % Margin 5.3 % 4.8 % 5.1 % 3.0 % 5.8 % 4.4 % 4.6 % 2.8 % 5.1 % 717 727 38 37 676 650 659 31 29 546 28 505 413 22 398 20 19 15 2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011
Slide 32: Global refractory market of ~USD 29bn expected to grow ~4% CAGR until 2022
Global refractory market of ~USD 29bn expected to grow with ~4% CAGR until 2022 Market size Geographical split South America 8.0% Western Europe +3.9% +3.5% 33.0% Middle-East & Africa USD 36bn 57m tons 25.0% USD 29bn 46m tons 17.0% 17.0% 2016 2022e 2016 2022e AsiaPac North America Product overview P
Slide 33: Segment overview: Cement
Segment overview: Cement Segment introduction Key financials (NOKm)1) • Provider of refractory turnkey solutions for Sales Gross profit the cement industry Margin 15.6 % 20.1 % 15.5 % 10.2 % • Mission to contribute to cost-efficient cement production by optimising the use 203 32 30 of refractory pro
Slide 34: Segment overview: Steel
Segment overview: Steel Segment introduction Key financials (NOKm)1) • Refractory materials used for steel Sales Gross profit industry producing brick-lined furnaces, ladles and torpedoes for liquid steel and Margin 23.3 % 26.3 % 24.8 % 23.9 % casting systems 121 116 32 107 28 • Diversified industry
Slide 35: Segment overview: Brilliant
Segment overview: Brilliant Segment introduction Key financials (NOKm)1) • Offers knowledge and quality refractory Sales Gross profit solutions to a wide range of industrial customers applying complex high Margin 26.7 % 22.5 % 22.1 % 23.1 % temperature processes in their 166 169 44 manufacturing 38
Slide 36: Segment overview: Installation
Segment overview: Installation Segment introduction Key financials (NOKm)1) • Professional refractory installation Sales Gross profit services, mainly to the Norwegian and Swedish markets Margin 21.6 % 22.3 % 22.1 % 21.5 % • Experienced supervisors are working with 392 84 338 75 carefully selected t
Slide 37: Production facility in Bjuv
Production facility in Bjuv Location Location Facility overview • Scandinavia´s largest refractory producer • Production unit and R&D still based in Bjuv, Sweden • Serves the cement, steel, Ferro-Alloy and aluminum industries • Product range consists of about 40 different qualities with molds for ap
Slide 38: Borgestad controls its refractory value chain
Borgestad controls its refractory value chain Brick production flow Raw material Batch Packing & Pressing Setting Firing Unloading supply preparation shipping • Mostly consisting of • Materials formed into • Mixed materials • Bricks are placed on • Carts are sent through • The bricks are • Finished
Slide 39: Table of contents
Table of contents Transaction summary Introduction to Borgestad Borgestad Properties Borgestad Industries Financials Risk factors Appendix 39
Slide 40: Key financials
Key financials P&L Comments NOK '000 2014 2015 2016 2017 • Strong and steady financials Revenues 733,641 747,262 781,052 792,865 • Strategic focus paying off; high 2017 profitability COGS (303,262) (296,661) (294,874) (326,301) Personnel (203,385) (220,112) (258,033) (261,624) • Sale of Grenland Are
Slide 41: Quarterly sales and EBITDA development
Quarterly sales and EBITDA development Financials NOKm EBITDA% 260 245 40% 240 230 228 222 220 203 200 189 30% 181 185 186 187 180 172 175 163 167 165 160 146 20% 140 120 11% 11% 100 10% 9% 8% 9% 8% 10% 7% 7% 7% 7% 80 5% 6% 60 2% 2% 40 -1% 0% 20 22 28 20 18 25 12 14 11 9 14 12 15 16 0 3 -2 3 -20 -10
Slide 42: Balance sheet
Balance sheet Balance sheet Comments NOK '000 2016 2017 NOK '000 2016 2017 • Equity ratio of 28.3%, increase from 25.5% 31 Intangible assets 114,167 112,266 Equity 397,523 465,812 PP&E 140,171 139,668 December 2016 Investment properties 878,990 939,003 Provisions 1,000 766 • Book equity of NOK 466m
Slide 43: Segment overview
Segment overview Financials NOK '000 Properties Industries Other/elim Total 2016 2017 2016 2017 2016 2017 2016 2017 Sales 64,584 68,296 717,159 726,753 (692) (2,184) 781,052 792,865 EBITDA 31,089 34,160 20,144 36,901 (7,765) (9,408) 43,469 61,653 EBIT 16,047 19,111 10,223 25,851 (7,826) (9,469) 18,4
Slide 44: Table of contents
Table of contents Transaction summary Introduction to Borgestad Borgestad Properties Borgestad Industries Financials Risk factors Appendix 44
Slide 45: Risk factors
Risk factors Investing in the Bonds involves a high degree of risk. These slides contain some of the key risks pertaining to the Issuer’s business and the Bonds. Prospective investors should carefully consider, among other things, the risk factors set out below before making an investment decision a
Slide 46: Risk factors
Risk factors RISKS RELATED TO THE GROUP’S FINANCIAL POSITION AND LIQUIDITY • Liquidity risk: Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group require a significant amount of cash to service their debt and the Groups ability to g
Slide 47: Risk factors
Risk factors RISKS RELATED TO THE BONDS • The Bonds may not be a suitable investment for all investors: Each potential investor in the Bonds must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: (i) have sufficient knowled
Slide 48: Risk factors
Risk factors RISKS RELATED TO THE BONDS (cont.) • The value of the collateral securing the Bonds may not be sufficient to satisfy the Issuer's obligations under the Bonds: Although the Bonds are secured obligations of the Issuer, there can be no assurance that the value of the assets securing the Bo
Slide 49: Table of contents
Table of contents Transaction summary Introduction to Borgestad Borgestad Properties Borgestad Industries Financials Risk factors Appendix 49
Slide 50: BIND locations – A global company
BIND locations – A global company Customer countries Angola Cyprus Ireland Nicaragua Sweden Albania Czech Republic Italy Nigeria Switzerland Australia Denmark Jordan Norway Taiwan Austria Ecuador Kazakhstan Oman Taiwan Bahrain Egypt Kosovo Pakistan Thailand Belarus Estonia Latvia Philippines Tunisia
Slide 51: Other assets
Other assets Company % share Book value Description 3.1% 27.6 Develop, construction and sales of wind energy projects in northern China Buskerud Telemark 3.05% 2.7 Investments in Buskerud, Vestfold and Telemark Investeringsfond AS Borgestad ASA’s headquarter 3.1 Located in Gunnar Knudsens Veg 144, S
Slide 52: Key personnel Borgestad Properties
Key personnel Borgestad Properties Pål Feen Larsen Miroslav Cechowski Hanna Petters CFO/COO, Borgestad Asset manager, Director, ASA Agora Bytom Agora Bytom Responsible for Borgestad Properties AS Marcin Pal Marta Radomska Technical manager, Leasing manager, Agora Bytom Agora Bytom 52
Slide 53: Gunnar Knudsensveg 144 3712 Skien Norway
Gunnar Knudsensveg 144 +47 35 54 24 00 3712 Skien post@borgestad.no Norway borgestad.no
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