Tpc Co., Ltd · KRX:130740
Tpc — Debt Investor Presentation (March 2010)
39 slides from Tpc's debt investor presentation, Mar 18, 2010
Slide 1: Public Lenders' Presentation – March 2010
Exhibit 99.2 TPC Group LLC $150 million Asset Based Sr. Secured Revolving Credit Facility $280 million Amended Sr. Secured Term Loan Facility Public Lenders’ Presentation March 2010
Slide 2: Forward Looking Statement & Non-GAAP Financial Measures
Forward Looking Statement & Non-GAAP Financial Measures This presentation may contain forward-looking statements, including, in particular, statements about the plans, strategies and prospects of TPC Group LLC (“the Company” or “TPC”). These forward-looking statements are based on the Company’s curr
Slide 3: Participants
Participants Charles W. Shaver President and Chief Executive Officer Ruth I. Dreessen Executive Vice President and Chief Financial Officer Robert R. Whitlow Vice President, Finance and Treasury Lenders Presentation – March 2010 3
Slide 4: Agenda
Agenda Executive Summary Deutsche Bank Investment Highlights Charles W. Shaver President and CEO, TPC Group Company Overview Ruth I. Dreessen Executive Vice President and CFO, TPC Group The Transaction Deutsche Bank Q&A Appendix Lenders Presentation – March 2010 4
Slide 5: Executive Summary
Executive Summary TPC Group LLC ("TPC" or the "Company") is a leading North American chemicals processor and service provider, whose primary products are butadiene, butene-1, isobutylene, polyisobutylene, and fuel products TPC is seeking to arrange a new asset based revolving credit facility up to $
Slide 6: Investment Highlights
Investment Highlights Charles W. Shaver President and CEO, TPC Group Lenders Presentation – March 2010 6
Slide 7: Key Investment Highlights
Key Investment Highlights » Market Leader in Consolidated Industry • #1 position in Butadiene, Butene-1, HR-PIB, and Diisobutylene in North America • Contractually aligned with cost-advantaged "light" ethylene producers » Differentiated Business Model • Service-based intermediary with strong infrast
Slide 8: Market Leader in Consolidated Industry
Market Leader in Consolidated Industry » Through its Crude C4 processing operations, TPC is the largest producer by production capacity of finished butadiene and butene-1 in North America » TPC is one of only two North American Crude C4 processors that can separate and purify butene-1 from Crude C4
Slide 9: Differentiated Business Model
Differentiated Business Model Positioned as a Crude C4 Processor, Logistics Provider & Marketer » Independent merchant processor status makes TPC a critical component in the supply chain A Critical » Provides beneficial relationship for both suppliers and customers Component of » Leads to long-stand
Slide 10: Strong Free Cash Flow
Strong Free Cash Flow » Majority of TPC’s revenues are derived from index-based contracts which mitigate TPC’s exposure to chemical market and energy price fluctuations Fiscal year ended June 30, LTM ended ($ in millions) 2007 2008 2009 03/31/10E Adjusted Bank EBITDA (a) $88.8 $97.3 $72.6 $96.3 Main
Slide 11: Positioned for Margin Expansion and Growth
Positioned for Margin Expansion and Growth » Beneficiary of cyclical recovery in key markets: multiple company specific upsides • Beneficiary of macro tailwinds – upswing in Butadiene, Butene-1 and Crude C4 prices » Service based fee contracts • Allow TPC to charge a fee for the value associated wit
Slide 12: Substantial and Strategic Asset Value
Substantial and Strategic Asset Value Corporate Offices Lake Charles Terminal Houston Operations Baytown Operations Port Neches Operations 2.4 B lbs/yr Raw C4 Mix Processing 85 M lbs/yr Nonene 1.8 B lbs/yr Raw C4 Mix Processing 240 M lbs/yr PIB 50 M lbs/yr Tetramer 257 acres 165 acres 154 acres Exte
Slide 13: Unique, Long-standing Relationships with Customers and Suppliers
Unique, Long-standing Relationships with Customers and Suppliers » Customers and suppliers put their trust in TPC » Customers rely on TPC for securing raw materials, which they cannot make or significantly import » Suppliers rely on TPC for taking their Crude C4s, which they cannot purify and cannot
Slide 14: Experienced Management Team
Experienced Management Team Charles W. Shaver Ruth I. Dreessen » Chief Executive Officer and President and board director of » Executive Vice President and Chief Financial Officer since TPC Group Inc. (TPC) since 2004 2005 » Joined TPC Group from Gentek, where he was a Vice » Joined TPC Group in 200
Slide 15: Company Overview
Company Overview Ruth I. Dreessen Executive Vice President and CFO, TPC Group Lenders Presentation – March 2010 15
Slide 16: TPC Snapshot
TPC Snapshot ($ in millions) FY 2008 FY 2009 LTM 3/31/10E Total revenue $2,016 $1,377 $1,404 Adjusted Bank EBITDA(a) $97 $73 $96 Crude C4 Processing (b) Performance Products FY 2008 FY 2009 FY 2008 FY 2009 Total volume 3,004 2,295 788 602 Volume % total 79% 79% 21% 21% Revenue ($ mm) 1,550 1,062 466
Slide 17: Products Overview
Products Overview Performance Products Crude C4 Processing Polyisobutylene Isobutylene Propylene Raffinates “PIB” Butadiene Butene-1 & MTBE Products Derivatives HR-PIB Isobutylene Nonene Butylenes Conventional Diisobutylene Tetramer Butane PIB Gasoline & Phenolic Plasticizers Synthetic Polyethylene
Slide 18: End Markets
End Markets Total Processing by Volume Crude C4 Processing by Volume Raff & MTBE Other Fuels Nylon Plasticizers Fuels Synthetic 100% Polyethylene Rubber Performance Products by Volume Isobutylenes Prop. Deriv. Lube & Fuel Other Fuels Additives Rubber Chemicals Other Lube & Fuel Lube & Fuel Additives
Slide 19: Manufacturing Overview
Manufacturing Overview Source: Company data Lenders Presentation – March 2010 19
Slide 20: Gaining Share via Proprietary Technology
Gaining Share via Proprietary Technology PIB polymers are a meaningful part of TPC TPC’s patented, Highly Reactive grade, “HR-PIB”, provides important processing & performance benefits HR-PIB demand growing faster than conventional PIB TPC is North America’s sole merchant producer of HR-PIB HR-PIB h
Slide 21: Where TPC has been
Where TPC has been – highlights of last 15 months Unprecedented reduction in demand & pricing • Oil from $125/Bbl to $35/Bbl, now back to $80/Bbl • 50% reduction in volume Recovery in demand & pricing • Incremental month over month improvement through calendar year 2009 Cost control through all aspe
Slide 22: Where TPC is today
Where TPC is today Product margins improving • Stable hydrocarbon pricing with forward curves sloping upward • Customer demand remaining strong Suppliers & customers recovering • North American demand stable • Global markets improving Well positioned to capitalize on economic recovery • Rationalized
Slide 23: Where TPC will go
Where TPC will go – focus for next 12 months Execute growth of Performance Products • Margin recovery • Polyisobutylene ramp up • Nonene / tetramer growth Pursue growth initiatives to increase profitability • Trend toward service based fees • EBITDA margin increase Continue to improve on Operating E
Slide 24: Selected Financial Data – Historical
Selected Financial Data – Historical Revenues ($ in millions) Adjusted Bank EBITDA (a) ($ in millions) (a) Not indicative of actual results; for Adjusted Bank EBITDA reconciliation to Adjusted reported EBITDA and for additional disclosure, refer to slides 35-37. Source: Company filings and Company d
Slide 25: The Transaction
The Transaction Deutsche Bank Lenders Presentation – March 2010 25
Slide 26: Sources and Uses / Capitalization
Sources and Uses / Capitalization ($ in millions) Sources of Funds Uses of Funds ABL Facility (a) $11.5 Term Loan B Facility $267.4 Existing Term Loan Tranche (b) 92.4 Repay Existing Revolver Draw 5.8 Extended Term Loan Tranche (b) 175.0 Upstream distribution to Parent 40.0 Cash from Balance Sheet 4
Slide 27: Estimated Core Credit Statistics
Estimated Core Credit Statistics ($ in millions) Credit Statistics LTM 3/31/10E Total Debt $282.3 Adjusted Bank EBITDA $96.3 Capital Expenditures(a) $10.5 Interest Expense(b) $11.5 Total debt / LTM Adjusted Bank EBITDA (c) 2.9x LTM Adjusted Bank EBITDA (c) / Interest Expense 8.4x (LTM Adjusted Bank
Slide 28: Summary of Terms – ABL Revolver
Summary of Terms – ABL Revolver Facility: Up to $150.0 million senior secured asset based revolver First priority security interest in accounts, inventory, payments and receivables in respect thereof, Security: general intangibles related thereto and the proceeds thereof Second lien on assets of the
Slide 29: Summary of Terms – Term Loan B
Summary of Terms – Term Loan B Term loan B – indicative terms Borrower: TPC Group LLC (the “Borrower”) Extension quantum: $175 million Extended maturity: January 2, 2016 – 2.5 year extension Extended tranche pricing: Coupon: L+350 (100 bps increase) LIBOR floor: 1.50% Non-extended tranche pricing: C
Slide 30: Summary of Terms – Term Loan B (cont.)
Summary of Terms – Term Loan B (cont.) Term loan B - proposed covenant amendments Provision Restricted Payments Permit one-time $40mm distribution to shareholders from cash on hand and Investments: Builder: 50% of Excess Cash Flow (“ECF”) which can be accessed if leverage-post transaction below 3.0x
Slide 31: Transaction timeline
Transaction timeline March April S M T W T F S S M T W T F S Denotes holiday 1 2 3 4 5 6 1 2 3 7 8 9 10 11 12 13 4 5 6 7 8 9 10 Key dates 14 15 16 17 18 19 20 11 12 13 14 15 16 17 21 22 23 24 25 26 27 18 19 20 21 22 23 24 28 29 30 31 25 26 27 28 29 30 Description of key dates Date Term Loan ABL » La
Slide 32: Q&A
Q&A Lenders Presentation – March 2010 32
Slide 33: Appendix
Appendix Lenders Presentation – March 2010 33
Slide 34: Corporate Structure
Corporate Structure TPC Group Inc. Delaware Corporation 100% Texas Petrochemicals B.V. Netherlands B.V. $150 million ABL Facility TPC Group LLC $280 million Term Loan B Texas Limited Liability Company Facility 100% Texas Olefins Domestic Texas Butylene TP Capital Corp. / International Sales Port Nec
Slide 35: Adjusted Bank EBITDA reconciliation
Adjusted Bank EBITDA reconciliation Fiscal year ended June 30, Projected LTM ($ in millions) ended 2007 2008 2009 March 31, 2010 (1) Net revenues $1,781.5 $2,016.2 $1,376.9 $1,404.3 % growth - 13.2% (31.7%) - Gross profit $241.4 $264.0 $182.7 $235.8 % margin 13.6% 13.1% 13.3% 16.8% Adjusted Reported
Slide 36: Notes to Adjusted Bank EBITDA reconciliation
Notes to Adjusted Bank EBITDA reconciliation Adjusted Bank EBITDA is included in this presentation to provide lenders with a view of the Company’s financial performance as adjusted to exclude certain items that might affect the comparability of results, and to hypothetically reflect recent financial
Slide 37: Notes to Adjusted Bank EBITDA reconciliation (cont.)
Notes to Adjusted Bank EBITDA reconciliation (cont.) 3. Based on total net business insurance claim of $47.0 million, comprised of (a) $19.5 million deductible, (b) $10.0 million cash recovery received in June 2009 and (c) $17.5 million cash recovery received in December 2010. Adjustment of $37.0 mi
Slide 38: Adjusted Bank EBITDA to Net Income reconciliation
Adjusted Bank EBITDA to Net Income reconciliation ($ in millions) Fiscal year ended June 30, LTM ended (1) 2007 2008 2009 March 31, 2010E (a) Adjusted Bank EBITDA $88.8 $97.3 $72.6 $96.3 Reconciliation to Adjusted EBITDA as reported (2) Non-Core MTBE ($2.7) $6.2 - - (3) BI Insurance / Hurricane, net
Slide 39: Free Cash Flow to Operating Cash Flow reconciliation
Free Cash Flow to Operating Cash Flow reconciliation ($ in millions) Fiscal year ended June 30, LTM ended 2007 2008 2009 March 31, 2010E (1) Free cash flow $60.9 $70.2 $51.3 $74.3 Reconciliation to Adjusted Bank EBITDA Maintenance capex 16.4 15.6 9.8 10.5 Interest expense 11.5 11.5 11.5 11.5 Adjuste