Sherritt International Corporation · TSX:S
Sherritt International — Debt Investor Presentation (November 2005)
20 slides from Sherritt International's debt investor presentation, Nov 8, 2005
Slide 1: Investor Presentation
Investor Presentation November 8, 2005
Slide 2: Intentionally Left Blank
Intentionally Left Blank 1
Slide 3: Summary of New Debt Issue
Corporate Overview Summary of New Debt Issue ISSUER Sherritt International Corporation ( the “Company”) ISSUE Senior unsecured debentures (the “Debentures”) AMOUNT Up to $225,000,000 TERM 7 or 10 Years USE OF PROCEEDS Replace outstanding debt and general corporate purposes RANKING AND New debt issue
Slide 4: Corporate Overview: Philosophy
Corporate Overview Philosophy • Senior executives have grown Sherritt from $677 million in assets in 1995 EXPERIENCED to approximately $2.8 billion today BOARD AND • Management supported by strong decentralized teams with significant MANAGEMENT operating experience TEAM • Track record of implementin
Slide 5: Corporate Structure and Revenue by Business Segment
Corporate Overview Corporate Structure and Revenue by Business Segment • Sherritt is a diversified company with a growing revenue base that has become more balanced across its business sectors over the last 7 years SHERRITT INTERNATIONAL CORPORATION Ownership 50% 50% 100% 100% Various % Other Coal M
Slide 6: Successful Execution of Recapitalization
Corporate Overview Successful Execution of 3 Year Recapitalization • Sherritt’s efforts to recapitalize the Company have been paying off, resulting in significantly improved leverage ratios – Exchange Offer for $300 million convertible debt in December of 2003 to 7% convertible debentures expiring 2
Slide 7: Rating Spectrum
Corporate Overview Rating Spectrum • Sherritt’s credit stats place it securely in the A-, BBB+ range, despite a BB (High) rating by DBRS – “Despite a financial profile that is deserving of a higher rating, DBRS continues to feel that Sherritt’s high exposure to Cuba and the resultant country and pol
Slide 8: Business Overview: Coal
Business Overview Coal • Canada's largest thermal coal producer • 2004 sales of 39 million tonnes (100%) • Long term contracts supplying coal to base-load power plants at contracted inflation indexed prices (91% of shipments) DOMINANT – No competing coal suppliers MARKET – Supplies 78% of Alberta’s
Slide 9: Business Overview: Metals
Business Overview Metals • Fully integrated producer of quality finished nickel and cobalt products CANADIAN BASED • Approximately 50 years of operating without a labour disputes stoppage REFINING, RECORD • All refining occurs in Canada at Fort Saskatchewan using Sherritt technology PRODUCTION • Acc
Slide 10: Business Overview: Oil & Gas
Business Overview Oil & Gas • Cuba's largest producer of oil and its most strategic energy partner • 90 wells in Cuba generated gross production of approx. 38,700 bopd (35% of Cuban consumption including associated natural gas production and over 78% of oil fired electricity generation requirements)
Slide 11: Business Overview: Power
Business Overview Power • 226 MW of natural-gas fired electrical generating capacity – Currently producing approximately 13% of Cuba’s electricity from three facilities – 100% off-take NO FUEL COSTS, – Utilizes associated gas from oil fields provided at no cost 100% OFF-TAKE, – Long-term fixed price
Slide 12: Initiatives
Business Overview Initiatives COAL METALS • Coal Valley expansion (2 million tonnes per • Brownfield expansion to 50,000 tonnes annum) – Q4/05 – US$450 million cost, 50% funded by • Evaluating prudent funding strategies for Cuban government including refining growth operations in Canada • Convert re
Slide 13: Financial Performance Summary
Financial Performance Summary SELECTED FINANCIAL RESULTS FYE FYE LTM ($ millions except per share data) 2003 2004 SEPT 05 Revenue $902.7 $1 086.0 $1 090.7 EBITDA 344.0 490.7 466.7 Net Earnings 83.2 160.0 139.0 EPS - Basic 0.75 1.20 0.99 EPS - Diluted 0.63 0.92 0.79 Cash from operations 205.0 373.4 3
Slide 14: Strong EBITDA and Revenue Growth
Financial Performance Strong EBITDA and Revenue Growth • Strong EBITDA growth through diversified revenue streams EBITDA BY BUSINESS SEGMENT(1)(2) REVENUE BY BUSINESS SEGMENT(2) $600 $1 200 Metals Oil & Gas Coal Power & Other Metals Oil & Gas Coal Power & Other $500 $1 000 % % 21 24 = Revenue by Seg
Slide 15: Superior Credit Statistics
Financial Performance Superior Credit Statistics EBITDA / INTEREST EXPENSE(1) CASH FLOW / DEBT(1)(2) 8.0x 7.4x 0.70x 7.0x 0.58x 6.2x 0.60x 6.0x 0.50x 0.44x 5.0x 4.1x 4.2x 3.6x 3.4x 0.40x 4.0x 3.0x 0.30x 3.0x 0.20x 0.18x 0.21x 0.21x 0.20x 0.15x 2.0x 1.0x 0.10x 0.0x (3) 0.00x (3) 1999 2000 2001 2002 2
Slide 16: Management Team
Management Team • Sherritt management team has a strong track record of implementing strategies that add long-term value to all stakeholders SHERRITT POSITION EXPERIENCE Ian W. Delaney Executive Chairman of the Board 15 years Jowdat Waheed President and CEO 15 years Guy Bentinck Senior Vice Presiden
Slide 17: Share Price Performance
Share Price Performance • Sherritt’s strong operating performance and recapitalization efforts have led to a 41% increase in its share price since January 2004, or a 21% CAGR – Since its equity financing in March 2003, Sherritt’s share price has increased 107% SHERRITT – RELATIVE CAPITAL MARKET PERF
Slide 18: Summary of New Debt Issue
Summary of New Debt Issue ISSUER Sherritt International Corporation ( the “Company”) ISSUE Senior unsecured debentures (the “Debentures”) AMOUNT Up to $225,000,000 TERM 7 or 10 Years USE OF PROCEEDS Replace outstanding debt and general corporate purposes RANKING AND New debt issued under the prospec
Slide 19: Timing
Summary of New Debt Issue Timing INVESTOR PRESENTATION: November 14 – 16, 2005 BOOK OPENS: November 16, 2005 PRICING: November 17, 2005 CLOSING: November 22, 2003 18
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