Olin Corporation · NYSE:OLN
Olin — Merger or Acquisition (April 2015)
26 slides from Olin's merger presentation, Apr 9, 2015
Slide 1: SunTrust Client Visits, April 9, 2015
SunTrust Client VisitsApril 9, 2015
Slide 2: Forward-Looking Statements
Forward-Looking Statements This communication includes forward-looking statements. These statements relate to analyses and other information that are based on management’s beliefs, certain assumptions made by management, forecasts of future results, and current expectations, estimates and projection
Slide 3: SEC Disclosure Rules Important Notices and Additional Information
SEC Disclosure Rules Important Notices and Additional Information In connection with the proposed transaction, Blue Cube Spinco Inc. (“Spinco”) will file a registration statement on Form S-4/S-1 containing a prospectus and Olin Corporation will file a proxy statement on Schedule 14A and a registrati
Slide 4: Olin to Acquire Dow Chemical's Chlorine Products Transaction Overview
Olin to Acquire Dow Chemical’s Chlorine Products Transaction OverviewReverse Morris Trust structureTotal value of $5B, consisting of approximately 1) $2.2B in common stock, 2) $2B in cash and cash equivalents, and 3) $.8B in assumed debt and pension liabilitiesSeparate agreement on ethylene is addit
Slide 5: Reverse Morris Trust Structure
Reverse Morris Trust Structure Non-electingS/Hs Electing Dow S/Hs Dow DCP DCP stock OlinS/Hs Olin DCP ~49.5% Dow ~50.5% OlinS/Hs Olin Merger sub DCP stock Dow DCP Olinstock Merge Non-electingS/Hs Dowstock Electing Dow S/Hs Non-electingS/Hs Electing Dow S/Hs Step 2: Merger Step 1: Split-off1 Step 3:
Slide 6: Strategic Benefits
Strategic Benefits Creates Leading Producer of Chlorine Derivatives and Caustic SodaLeading global chlor alkali producer with 5.6 million tons of low cost chlorine capacity#1 global seller of membrane caustic soda and chlorinated organics#1 global supplier of epoxy materials#1 North American seller
Slide 7: Creates Chlorine-Based Products Leader
Creates Chlorine-Based Products Leader 7 Chlorine global capacity: ~90,000 kMT Source: CMAI 2014 average capacities in kMT1 Includes 50% of Dow Mitsui Chlor Alkali joint venture chlorine capacity2 Capacity in Brazil, Germany and Australia not in scope of transaction Post-separation2 DCP1 +DCP1 Top c
Slide 8: Diversified Geographic Footprint
Diversified Geographic Footprint Chlor–Alkali & Vinyl Epoxy Global Chlorinated Organics Supporting assets Zhangjiagang, ChinaCER Gumi, South KoreaCER Guaruja, Sao Paulo, BrazilLER, CER Pisticci, ItalyCER Roberta, GACER Rheinmünster, GermanyCER Terneuzen,NetherlandsCumene Baltringen, GermanyCER Stade
Slide 9: Will Diversify Olin's Business Mix
Will Diversify Olin’s Business Mix ~$0.64bn $0.34bn ~$1.0bn + = Dow Chlorine Products Olin Pro forma New Olin 2014 pro forma EBITDA by business ($bn) Source: Olin and Dow management
Slide 10: Top Tier Low Cost Structure
Top Tier Low Cost Structure Stable and Low Cost Raw MaterialsElectricity – 85% of the New Olin system’s energy to generate electricity will come from natural gas and hydroelectric sourcesSalt Brine – 80% of brine requirements will be supplied from owned and operated mines that are connected to manuf
Slide 11: Significant Synergies
Increased procurement efficienciesElimination of duplicate terminals and optimization of freight to terminalsReduction of net acquisition cost for purchased causticSavings from trucking and rail fleet optimizationCOGS reduction opportunities Logistics & procurement SG&ACost optimizationEnergy utiliz
Slide 12: Olin Stand Alone Performance
Olin Stand AlonePerformance
Slide 13: Company Overview
Company Overview All financial data are for the 12 months ended December 31, 2014 and December 31, 2013. Data are presented in millions of U.S. dollars except for earnings per share. Winchester Chlor Alkali A Leading North American Producer of Chlorine and Caustic Soda FY 2014 FY 2013Revenue: $ 1,20
Slide 14: Chlor Alkali Process
Chlor Alkali Process ECU = Electrochemical Unit; a unit of measure reflecting the chlor alkali process outputs of 1 ton of chlorine, 1.13 tons of 100% caustic soda and .03 tons of hydrogen. North American Position Percent of 2014 Revenue #2 #1 Industrial #1 Merchant #1Burner Grade 51% 13% 4% 11% 20%
Slide 15: Growing EBITDA
Growing EBITDA Strategic AcquisitionsPioneer, 2007SunBelt JV, 2011KA Steel, 2012Investments in Less Cyclical Chlor Alkali Co-productsSodium Hypochlorite (Bleach)Hydrochloric Acid (HCl)Potassium Hydroxide (KOH)Improved Winchester ProfitabilityRelocation of Centerfire operations to MSVolume growth rea
Slide 16: Diverse Customer Base
Diverse Customer Base Chlorine Caustic Soda North American Industry Olin Corporation Source: IHS and Olin 2014 demand.Chlorine: “Inorganics” includes: Titanium dioxide and bromine. Caustic Soda: “Organics” includes: MDI, TDI, polycarbonates, synthetic glycerin, sodium formate, monosodium glutamate.
Slide 17: Bleach Growth is a Key Objective
22% CAGR Bleach Growth is a Key Objective Bleach sells at a premium to the ECU and, while seasonal, is not cyclicalOlin bleach volumes have delivered steady growth since 2006We expect additional growth to continue as bleach railcars extend our delivery rangeIn 2014, Olin converted 10% of its ECUs in
Slide 18: Growing HCl Volumes
Growing HCl Volumes Olin is the leading producer of burner-grade HCl with 5 production locations in North AmericaOlin HCl volumes have grown steadily since 2006Distribution strategy is expected to increase volumes and raise netbacksWe forecast that HCl volumes will continue to growHCl continues to s
Slide 19: EBITDA Improvement
EBITDA Improvement Olin Bleach, HCl and KOH initiatives have reduced the cyclicality of the business, and at the same time, increased profit margins2014 sales of co-products represented 32% of total Chlor Alkali salesTrough EBITDA levels have improved approximately $200 million during the 2009-2010
Slide 20: Chemical Distribution
Chemical Distribution KA Steel, purchased in August 2012, established Olin as the largest caustic distributor in the U.S. with an infrastructure that provides a strong fit with Olin’s chlor alkali assets:Mature supply relationships90,000 tons of caustic storage in a network of 26 terminalsExpanded g
Slide 21: Winchester Brands
Winchester Brands Winchester StrategyCenterfire relocation:$24 million of cost savings in 2014Expect $30 million of cost savings in 2015Expect $35-$40 million lower annual operating costs beginning in 2016New product development:Continue to develop new product offeringsMaintain reputation as a new p
Slide 22: U.S. Commercial Ammunition Manufacturer Shipments
U.S. Commercial AmmunitionManufacturer Shipments1 Increased Gun Control Concerns (Assault Weapons Ban/Brady Bill Enacted /Ammunition Shortage Rumors) Concerns of Y2K-related issues Increased participation & consumer stockpiling driven by:Price increasesCaliber-specific shortagesPolitical uncertainty
Slide 23: Growing Shooting Sports Participation Has Increased Installed Base
Growing Shooting Sports Participation Has Increased Installed Base
Slide 24: Winchester Is Growing
Winchester Is Growing We expect Winchester’s 2015 earnings to exceed 2014 earnings as a result of:Cost savings from the centerfire relocation to Oxford, MSA significant increase in the number of sport shootersPistol and rimfire ammunition demand remains robustCommercial backlog at Q4 2014 was 7 time
Slide 25: Strong Balance Sheet
Strong Balance Sheet Year end 2014 cash balance of $257 million$72 million of CAPEX in 2014 vs. D&A expense of $139 millionDuring 2014, $128 million distributed to shareholders in the form of common stock dividends and 2.5 million common share repurchases2015 CAPEX is expected to be in the $120 to $
Slide 26: Profit Outlook
2014 EBITDA was $344 millionEarnings improvements are expected in all three business segments in 2015 over 2014 resultsChlor Alkali Products full year 2015 segment income is expected to improve compared to 2014 primarily due to higher cyclical ECU pricing and higher bleach, HCl and KOH volumesChemic