Bri-chem Corp. · TSX:BRY
Bri-chem — Investor Presentation (December 2006)
24 slides from Bri-chem's investor presentation, December 2006
Slide 1: Common Share Offering Investor Presentation
December 2006 Gwelan Supply Ltd. Common Share Offering Investor Presentation
Slide 2: Safe Harbor
Gwelan Supply Ltd. Safe Harbor Safe Harbor Certain of the statements set forth in this presentation are forward looking statements. Although mBase and Gwelan management believe their expectations are based on reasonable assumptions, they can give no assurance that expected results will be achieved.
Slide 3: Transaction Summary
Gwelan Supply Ltd. Transaction Summary Transaction Summary ► Reverse Takeover transaction of mBase Commerce Inc. (''mBase'') a publicly traded company listed on the TSX Venture Exchange ("MBM"), by Gwelan Supply Ltd. (''Gwelan''): ► mBase shareholder special meeting - November 30, 2006. ► Comprehens
Slide 4: Post-Amalgamation Corporate Structure
Gwelan Supply Ltd. Post-Amalgamation Corporate Structure Corporate Structure Overview Bri-Chem Corp. Bri-Chem Supply Ltd. Sodium Solutions Inc. (100% owned) (100% owned)(1)(2) ► Founded in 1985 by Brian ► Founded in 1996 by Doug Campbell. Riopelle. ► Distributor of over 100 domestic ► Fully integrat
Slide 5: Experienced Board of Directors & Management
Gwelan Supply Ltd. Experienced Board of Directors & Management Board of Directors & Management ► President of Western America Capital Inc. - Private Equity Firm. ► Director, President and Chief Financial Officer of mBase Commerce Inc. Don Caron ► Director and Corporate Secretary of Commercial Soluti
Slide 6: Uses Of Drilling Mud or Drilling Fluids
Gwelan Supply Ltd. Uses Of Drilling Mud or Drilling Fluids Industry Overview Lubricates The ► Drilling fluids are essential to all drilling processes Drill Bit ► Lubricates and cools the drill bit which extends its life and performance. Stabilizes The Well Bore ► Remove cutting debris from the botto
Slide 7: Business Operations
Gwelan Supply Ltd. Business Operations Business Operations Bri-Chem Supply Ltd. ► Sources and distributes over 100 products in a wide variety of weights and clays, lost circulation materials, chemicals, and oil mud products. ► Established highly regarded industry reputation. ► Approximately 40% mark
Slide 8: Strategic Network of Stock Points
Gwelan Supply Ltd. Strategic Network of Stock Points Stock Points Stock Points ► Gwelan's primary headquarters and warehouses are located in Alberta. 1 - High Level, Alberta 2 - Peace River, Alberta ► Customers are served through a network of 13 strategically located stock points 3 - Grande Prairie,
Slide 9: Customers
Gwelan Supply Ltd. Customers Major Customers ► Alliance Drilling Fluids is Canada’s only independent drilling fluids company capable of complete fluids management. Alliance handles the engineering of drilling fluids from conception to completion. Their focus is primarily in the deep gas zones. ► Pro
Slide 10: Drivers of Demand for Drilling Fluids
Gwelan Supply Ltd. Drivers of Demand for Drilling Fluids Demand Factors Cash Flow and Capital Expenditure (C$mm)(2) ► Demand for drilling fluids is positively correlated with the active rig count. ► Proxies for drilling activity in The Western Canadian Sedimentary Basin (WCSB) include: ► the number
Slide 11: Primary Drivers of Demand For Drilling Fluid
Gwelan Supply Ltd. Primary Drivers of Demand For Drilling Fluid Demand Analysis 39% Average Average Annual Rig Count Compared to Gwelan Supply Ltd. Revenue (1)(2) Organic Growth Year 2002 2003 2004 2005 2006 WCSB Average Active Annual Rig Count, Year Ending July 31 Average versus 16% Rig Count 325 3
Slide 12: Historical Financial Performance
Gwelan Supply Ltd. Historical Financial Performance Financial Performance Gwelan Supply Ltd. 5 Year Performance Solid 4 Year Revenue Growth 90.0 20% ► Gwelan's growth is 80.0 18% attributed to: CAGR: 37% 16% ► robust oil and gas 70.0 Average: 39% 14% industry; 60.0 ► new products; (C$mm) 12% 50.0 ►
Slide 13: Recent Industry & Company Performance
Gwelan Supply Ltd. Recent Industry & Company Performance H2 Company Performance Canadian Gas Prices ($/GJ)(1) Gwelan Supply Ltd. Recent Results ► H2-2006 Drilling activity in the WCSB declined from H2-2005 levels. ► As a result Gwelan's revenues Q1 declined from $20.8 million to $14.7 million. ► EBI
Slide 14: Outlook and Growth Strategy
Gwelan Supply Ltd. Outlook and Growth Strategy Growth Strategy Oil and Gas Industry Outlook Public Listing ► PSAC Forecasts increases in Gas drilling activity in Alberta Foothills. Will Facilitate Segment 2006(1) 2007(2) % Change Growth Canadian Total Wells Drilled 23,900 21,500 -10.0% Opportunities
Slide 15: Summary of Transaction Consideration
Gwelan Supply Ltd. Summary of Transaction Consideration Transaction Overview Acquisition ► mBase to purchase Gwelan for $25,000,000 (including repayment of related party financed with loans). cash, shares ► $10,800,000 in Amalco Shares (5,400,000 shares, post closing) and vendor ► $11,000,000 in cas
Slide 16: RTO Financing Considerations: Management Commitment
RTO Financing Considerations Management Commitment Management Commitment "Private ► Key employees will enter into a minimum three year employment contract. Company" remuneration to ► Annual base salaries for the top 4 executives will total $564,000. be replaced with ► Executive and employee bonuses
Slide 17: Summary Pro Forma Balance Sheet
Gwelan Supply Ltd. Summary Pro Forma Balance Sheet Balance Sheet Total bank lines Bri-Chem Corp. (Amalco) Pro Forma Combined Balance Sheet (Post Issue) of credit amount July 31, 2006 (C$, unless otherwise noted) to $23 million, leaving unused Assets Liabilities Current assets Current liabilities cap
Slide 18: Valuation Summary
Gwelan Supply Ltd. Valuation Summary Valuation Summary Valuation Summary Attractive (C$, unless otherwise noted) Minimum Offering Maximum Offering Valuation Total Shares Outstanding (Basic) 11,162,852 12,412,852 Approximately Total Shares Outstanding (Fully Diluted) 12,662,852 14,012,852 5.2x Traili
Slide 19: Investment Highlights
Gwelan Supply Ltd. Investment Highlights Investment Highlights Proven ► Premier wholesale distributor of drilling fluids and additives. Business ► Sell to mud companies who sell directly to drilling firms. Strategy ► Proven management team with over 100 years collective experience. Highly Scalable ►
Slide 20: Term Sheet
Gwelan Supply Ltd. Term Sheet Income Statement Issuer: Gwelan Supply Ltd. (“Gwelan” or “The Company”). Offering: Gwelan Common Shares (the “Shares”). Issue Price: $2.00 per Share. In connection with the Amalgamation, the Shares will be exchanged for Amalco Shares on a one for one basis. Size of The
Slide 21: Appendix A: Gwelan Consolidated Historical Normalized EBITDA
Gwelan Supply Ltd. Appendix A Appendix A Gwelan Consolidated Historical Normalized EBITDA (All figures in C$ unless otherwise noted) For the Years Ended July 31 2001 2002 2003 2004 2005 2006 Sales $ 24,884,571 $ 21,559,077 $ 29,988,019 $ 33,973,731 $ 44,421,183 $ 76,192,274 Pre-tax earnings $ (12,67
Slide 22: Appendix B: FY2006 Normalized EBITDA
Gwelan Supply Ltd. Appendix B Appendix B Bri-Chem Corp. (Amalco) FY2006 Normalized EBITDA Year Ended July 31, 2006 2006 2006 1. Actual management wages and bonuses Minimum Maximum for 2006 are credited as they do not (all figures in C$ unless otherwise noted) Financing Financing reflect the compensa
Slide 23: Appendix C: LTM Normalized EBITDA
Gwelan Supply Ltd. Appendix C Appendix C Bri-Chem Corp. (Amalco) LTM Normalized EBITDA(1)(2) 12 Months Ending October 31, 2006 All figures in C$ unless otherwise noted LTM LTM Minimum Maximum Financing Financing LTM EBITDA Adjustments FY 2006 Normalized EBITDA 8,829,308 8,829,308 Q1 2007 Normalized
Slide 24: Appendix D: Select Company Comparables
Gwelan Supply Ltd. Appendix D Appendix E 0 Select Company Comparables(1) Market EBITDA (C$mm) EPS (C$/Share) EV/EBITDA (x) P/E (x) EV/ Revenue Industrial Distributors Cap (C$mm) 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 Applied Industrial Tech 1,220.86 154.03 169.81 1.87 2.04 7.76 7.04 15.06