| Filed by Globe Specialty Metals, Inc. pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: Globe Specialty Metals, Inc. Filer’s SEC File No.: 001-34420 Date: September 2, 2015 |
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Globe Specialty Metals & Grupo FerroAtlántica
GSM Today and Our Transformational Next Step
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Disclaimer and Forward Looking Statements
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this communication regarding the proposed transaction, the expected timetable for completing the transaction, benefits and synergies of the transaction, future opportunities for the combined company and products and any other statements regarding Globe’s, Grupo Villar Mir’s, FerroAtlántica’s and VeloNewco’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts are “forward-looking” statements made within the meaning of Section 21E of the Securities Exchange Act of 1934. These statements are often, but not always, made through the use of words or phrases such as “believe,” “anticipate,” “could,” “may,” “would,” “should,” “intend,” “plan,” “potential,” “predict(s),” “will,” “expect(s),”
“estimate(s),” “project(s),” “positioned,” “strategy,” “outlook” and similar expressions. All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are the following: Globe, Grupo Villar Mir, FerroAtlántica and VeloNewco’s ability to consummate the transaction; the conditions to the completion of the transaction, including the receipt of shareholder approval; regulatory approvals required for the proposed transaction may not be obtained on the terms expected or on the anticipated schedule; Globe, Grupo Villar Mir, FerroAtlántica and VeloNewco’s ability to meet expectations regarding the timing, completion and other aspects of the transaction; the possibility that the parties may be unable to successfully integrate Globe’s and
FerroAtlántica’s operations and that such integration may be more difficult, time-consuming or costly than expected; operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the transaction; the retention of certain key employees may be difficult; the intense competition and expected increased competition in the future; the ability to adapt services to changes in technology or the marketplace; the ability to maintain and grow relationships with customers and clients; the historic cyclicality of the metals industry and the attendant swings in market price and demand; increases in energy costs and the effect on costs of production; disruptions in the supply of power; availability of raw materials or transportation; cost of raw material inputs and the ability to pass along those costs to customers; costs associated with labor disputes and stoppages; the ability to generate sufficient cash to service indebtedness; integration and development of prior and future acquisitions; VeloNewco’s ability to effectively implement strategic initiatives and actions taken to increase sales growth; VeloNewco’s ability to compete successfully; availability and cost of maintaining adequate levels of insurance; the ability to protect trade secrets or maintain their trademarks and other intellectual property; equipment failures, delays in deliveries or catastrophic loss at any of Globe’s, FerroAtlántica’s or VeloNewco’s manufacturing facilities; changes in laws protecting U.S. and Canadian companies from unfair foreign competition or the measures currently in place or expected to be imposed under those laws; compliance with, potential liability under, and risks related to environmental, health and safety laws and regulations (and changes in such laws and regulations, including their enforcement or interpretation); risks from international operations, such as foreign exchange, tariff, tax, inflation, increased costs, political risks and their ability to expand in certain international markets; ability to manage foreign operations; risks associated with the metals manufacturing and smelting activity; ability to manage price and operational risks including industrial accidents and natural disasters; ability to acquire or renew permits and approvals; potential loss due to immediate cancellations of service contracts; risks associated with potential unionization of employees or work stoppages that could adversely affect the parties’ operations; changes in general economic, business and political conditions, including changes in the financial markets; and exchange rate fluctuation. Additional information concerning these and other factors can be found in Globe’s filings with the Securities and Exchange Commission (“SEC”), including Globe’s most recent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and in the registration statement on Form F-4 filed by VeloNewco. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof and the parties undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the proposed transaction among Globe, Grupo Villar Mir, FerroAtlántica and VeloNewco. In connection with the proposed transaction, VeloNewco has filed with the SEC a registration statement on Form F-4, which includes a proxy statement of Globe that also constitutes a prospectus of VeloNewco. Investors and security holders are urged to read the definitive proxy statement/prospectus, which was filed with the SEC by Globe on August 12, 2015, together with all other relevant documents filed with the SEC, because they will contain important information about the proposed transaction. Investors and security holders are able to obtain the documents free of charge at the SEC’s website, http://www.sec.gov, or for free from Globe by contacting the Corporate Secretary, Globe Specialty Metals, 600 Brickell Avenue, Suite 3100, Miami, FL 33131, telephone: 786-509-6900 (for documents filed with the SEC by Globe) or from Grupo Villar Mir by contacting Investor Relations, Torre Espacio, Paseo de la Castellana, 259 D 49a, 28046 Madrid, Spain, +34 91 556 7347 (for documents filed with the SEC by Grupo Villar Mir, FerroAtlantica or VeloNewco).
Participants in Solicitation
Globe, Grupo Villar Mir, FerroAtlántica and VeloNewco and their directors and executive officers and certain employees may be deemed to be participants in the solicitation of proxies from the holders of Globe common stock with respect to the proposed transaction. Information about Globe’s directors and executive officers is set forth in the definitive proxy statement filed in connection with Globe’s 2014 annual meeting of shareholders, which was filed with the SEC on October 27, 2014. Investors may obtain additional information regarding the interest of such participants by reading the definitive proxy statement/prospectus regarding the proposed transaction, which was filed with the SEC on August 12, 2015. These documents may be obtained free of charge from the SEC’s website http://www.sec.gov, or from Globe and Grupo Villar Mir using the contact information above.
Non-Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
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GSM: Today (Pre-Combination)
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GSM’s Core Business Principles
Grow through value enhancing acquisitions with well-defined investment criteria
Maintain our industry leading cost structure to ensure profitability through cycles
Ensure a well-defined business model and strategic purpose that is easily communicated to investors
Focus on profitability through asset concentration in products with attractive, fast growing end markets
Maintain a strong, flexible balance sheet — designed for growth
Focus on maximizing shareholder returns through revenue and earnings growth, dividend growth and timely share repurchases
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GSM Today: A Leading North American Producer of Silicon Metal and
Silicon Alloys
A world leader in silicon metal and silicon alloys production
Serving key customers in the specialty chemical, aluminum, solar, steel and ductile iron foundry industries
Diversified production base with 11 facilities and three mines in six countries – U.S., Canada, Argentina, Poland, China and South Africa
22 furnaces with installed power of 518 MW and capabilities to produce more than 350,0001 tons/year of silicon metal and silicon alloys
Mining locations in U.S. and Canada
Key Financials:
LTM 6/30/2015 Revenue of $801mm and LTM 6/30/2015 EBITDA of $143mm
Current Headquarters:
Miami, Florida, United States
Revenue by Product2
Other
11 %
Silicon-based
Alloys Silicon Metal
33 % 56 %
Revenue by Geography2
Europe Asia
Latin 4 % 1 %
America
3 %
North
America
91 %
Source: GSM management.
1 Includes tonnage from joint venture with Dow Corning
2 For the fiscal year ended June 30, 2015.
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A Strong History of Growth through Acquisition and Optimization of the Portfolio
Announced
2004 Business
2006 2010
Alan Kestenbaum 2012 2014 Combination
Acquisiton of Mendoza and Acquisiton of
acquired GMI in 2004, Acquisiton of Acquisiton of
San Luis, Argentina Core Metals, AL with
including Selma, AL, Becancour, Siltech,
Niagara, NY, and 2009 and MPM, IN Canada South Africa Ferro-Atlántica
Beverly, OH facilities 2007 Listing of $ 2.8
Acquisiton of Globe
Specialty 2011
Camargo, Brazil
Metals on Acquisiton
2008 NASDAQ of Alden, KY
2005
Acquisiton of Alloy, Acquisiton of 2009
WV, Alabama Sand Yonvey, China Divestiture of
Camargo and
& Gravel, AL, and 49% of Alloy $ 1.4 $ 1.0 1
Alloy Power
2005 $ 1.0
Divestiture of Alloy $ 0.7
Power
2004 2009 2011 2013 2015
Market Capitalization (US$bn)
GSM Today2 Pro Forma
Combined3
CY Revenue (US$mm) $ 372 $ 674 $ 755 $ 801 $ 2,403
CY Adjusted EBITDA (US$mm) $ 48 $ 135 $ 105 $ 143 $ 325
Multiple of Net
Acquisition Price $404 Total Replacement Cost Investment
Estimated Total Divestiture Price(295) less Divestitures $2,000 18.3x
Replacement Cost $2,300 Total Net Investment: 109 Total Enterprise Value Today (GSM) $1,075 9.9x
1 As of August 31, 2015.
Note: Management estimates using replacement value of $90M for a
2 LTM as of June 30, 2015.
standard sized furnace, including related infrastructure costs
3 Pro forma combined revenue and Adjusted EBITDA; LTM 3/31/15 stats for FerroAtlantica
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GSM Maintains a Key Advantage in the Global Silicon Metals Landscape: Vertical Integration
Mining Operations
Alabama Quartz
Quebec
Alden (Kentucky,
Specialty
Tennessee) Coal
Woodchip
Multiple facilities
6+ Tons of 1 Ton of
Power Silicon
Raw Materials
(45% of Costs)
(25% of Costs)
Raw materials an important differentiator — GSM is vertically integrated Maintain our industry leading cost structure to ensure profitability through cycles Just-in-time delivery of raw materials keeps working capital low; close proximity to plants
U.S. Energy revolution to reduce energy costs
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II. Combination with FerroAtlantica — The Transformational Next Step
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Grupo Villar Mir
Overview
Grupo Villar Mir, SAU is one of the largest privately-owned European industrial groups
Founded in 1987 by Juan Miguel Villar Mir
100% owned through direct and indirect participations by the Villar Mir Family
Group Businesses
JUAN MIGUEL Villar Mir
“Grupo Villar Mir has a successful track record of supporting great businesses and we look forward to our role as a long-term, value-driven shareholder in the combined company [GFAT + GSM].”
- Juan Miguel Villar Mir GFAT & GSM Merger Announcement 23-Feb-2015
Acquired in 1992, FerroAtlántica
100% owned by Grupo Villar Mir
Leading global producer of silicon metal and ferroalloys
Operates two divisions: (i) electrometallurgy and (ii) energy, which includes the hydroelectric plants; has mining locations in Spain, Venezuela and South Africa
15 plants in 5 countries (5 in Spain, 6 in France, 2 in South Africa, 1 in Venezuela and 1 in China) and 210MW of hydropower plants in Spain and France
The OHL Group is a concession and construction international group with presence in 30 countries across five continents
OHL gets the name after the merger of three different companies; Obrascon, Huarte and Lain
The Group is currently composed of five divisions: infrastructure concessions, construction, industrial construction, services and development
Although most of the revenues still come from construction, most of the EBITDA of OHL Group comes from the infrastructure concession business
abertis
World leader in Toll Roads with 28 concessions 7,500 km under management
18.9% owned by Grupo Villar Mir
The World’s most diversified operator with presence in 12 countries and 60% of EBITDA generated outside of Spain
European leader in Telecom Infrastructure, broadcast and Cell Phone Towers, and controlling Shareholder in Hispasat
Acquired in 1995, Fertiberia is the leading fertilizer producer in the European Union and the Mediterranean basin, and one of the main operators in the ammonia and derivatives market
99.8% owned by Grupo Villar Mir
10 plants in three countries (5 in Spain, 2 in Algeria and 3 in Portugal)
VM Energia is electricity and gas trading company that supplies 4,600 Million KWh to 26,827 sites and represents 1,953 MW of renewable energy Manages the production of GFAT
Leader managing the Interconnection between Spain and France
Acquired in 2014, is the leading property company of the Euro zone prime office rental sector 24.4% owned by Grupo Villar Mir 51 operative rental assets located in Spain(32 assets) and Paris (through its 53.1% stake in SFL 19 assets) with total surface above ground: 725,341 sqm
Old War Office (London, UK) to accommodate a five-star hotel and exclusive annexed apartments at the former headquarters of Sir Winston Churchill Canalejas Project (Madrid, Spain) is a high-quality mixed-use development,
covering seven historic buildings in Madrid’s city center
Torre Espacio (Madrid, Spain) 235 m building, where the headquarters of the Group and main companies are located.
Leading high quality Real Estate developers in Spain
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FerroAtlántica Today: A Leading International Producer of Silicon Metal,
Silicon-based Alloys and Manganese Alloys
A leading global producer of silicon metal, silicon-based alloys and manganese alloys
A leading independent Spanish producer of hydroelectric energy
Two major business lines:
15 production centers: Spain (5), France (6), Venezuela (1), South Africa (2), China (1)
46 furnaces with installed power of 1,024 MW; produces more than 1mm tons/year of ferroalloys
Mining locations in Spain, France, Venezuela and South Africa
Additional solar silicon metal production capabilities
14 total hydroelectric plants: Spain (12) and France (2)
Total installed capacity of 210 MW; average annual production of 650mm KWh
Key Financials: LTM 3/30/15 €mm $mm1
Revenue 1,141 1,602
EBITDA 149 182
Ownership:
Currently 100% owned by Grupo Villar Mir, one of Spain’s largest private companies
Current Headquarters:
Madrid, Spain
Revenue by Product
CaSi
1%
Microsilica
2% Other
8%
Energy
5% Silicon Metal
35%
Foundry
6% Ferrosilicon
20%
Manganese
Alloys
23%
Revenue by Geography
Spain—Electrometallurgy
18%
RoW
19% Spain -
Energy
South Korea 5%
1% Rest of EU Germany
Italy 17% 14%
3%
US
South Africa 10%
4%
France UK
4% 5%
Source: FerroAtlántica management information and financial reports.
1 Converted at 1Q2015 average USD / EUR exchange rate of 1.1283; 4Q2014 average of 1.2155;
3Q2014 average of 1.2685; and 2Q2014 average of 1.3645 9
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Combination Creates a New International Leader in Silicon and Specialty
Metals
A compelling value proposition for GSM shareholders
6 Significant Growth Potential
Entrepreneurial culture with strong M&A and operational track record
1 Global Producer
A leader in silicon metal and ferroalloys
Enhanced Platform
Diversified low-cost international platform with increased scale
Optimization potential through vertically integrated business model, bolstered by new energy platform
5 Strong Financial Position
Strong balance sheet and cash flow to support continued growth and innovation, driving future shareholder returns
4 Growing Demand
Auto, solar, consumer products (silicones), construction and energy
3 Significant Value Creation
Substantial operating and financial synergies
Transaction expected to be accretive to
GSM EPS in year one
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1,2 A Combination of Industry Leaders
Highly Complementary Business Profile, Management Style and Growth Strategy
Built and run by entrepreneurs Focus on vertical integration
Long history of disciplined acquisitions Advantaged cost structure
and successful integrations
Emphasis on balance sheet strength
Low-cost producer
Pro-forma combined revenues of ~$2.4 billion and pro-forma EBITDA of ~$325 million
NewCo
Production
15 11 26
Facilities
Mining
6 3 9
Operations
Countries 5 6 9
Pro Forma Revenue Pro Forma Silicon Revenue
by Geography1 by End Market1
Asia Electronics 2%
2% Solar/ Other 1%
RoW Semiconductor
9% 11%
North
America Aluminum
42% 45%
Europe Chemical
41 For the year ended December 31, 2014.
7% 42%
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Geographies Align to Create Global Leader in Silicon Metal & Alloys —
1,2
Internationalization of Cost Structure
2 écancour, Canada
Silicon JV 45,000 mt
GSM 51% or 23,000 mt
Dow Corning 49% 22,000 mt
3 a Malbaie, Quebec
Quartz Mine
4 Niagara Falls, NY
con 27,000 mt
5 everly, OH
rosilicon and
Foundry Alloys 52,000 mt
Silicon 25,000 mt
or Ferrosilicon 40,000 mt
6 Alloy, WV
Silicon JV 72,000 mt
GSM 51% or 36,700 mt
Dow Corning 49% 35,300 mt
7 orbin, KY (Alden Resources)
Specialty Coal &
Preparation Plant 2.5 mil tons
8 Aurora, IN
uorspar 65,000 mt
9 illingsley, AL
Quartz Mine
10 ridgeport, AL
rosilicon 35,000 mt
11 elma, AL
on 24,000 mt
12 Mendoza, Argentina
Calcium Silicon,
Foundry Alloys 21,000 mt
Cored Wire 24 mil meters
13 rgentina
droelectric Power 12 MW
24 ydro Plants, France
2 plants with 20MW combined
capacity
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London, UK 1 7
2
5 24
4
8 5 21
6
10
11 230 dro Plants, Spain
12 plants with 192MW combined
capacity
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13
19 errabal, Spain
Quartz Mine
14 New Castle, South Africa 20 onia, Spain
osilicon 45,000 mt
Quartz Mine
15 olice, Poland 21 pain
Cored Wire 8 mil meters Mina Conchitina
16 hizuishan, Ningxia Hui, 22 enezuela
na (“Yonvey”)
Quartz Mine
Carbon Electrodes 12,000 mt
2 Boo, Spain
ro Manganese 57,000 mt
Silicomanganese 115,000 tons
3 Cee, Spain
Ferrosilicon 18,000 mt
Ferro Manganese 55,000 mt
16 Silicomanganese 37,000 mt
4 Dumbria, Spain
Ferrosilicon 61,000 mt
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5 Sabon, Spain
12 audun, France
Silicon 40,000 mt
Silicon 23,000 mt
Ferrosilicon 35,000 mt
6 Monzon, Spain
13 olokwane, South Africa Ferro Manganese 80,000 mt
Silicon / Quartz Mine 55,000 mt Silicomanganese 80,000 mt
14 and Carbide, South Africa 7 Pierrefitte, France
Silicon 12,000 mt culants 14,000 mt
Ferrosilicon 40,000 mt
Inoculants 10,000 mt 8 Anglefort, France
15 enezuela Silicon 35,000 mt
osilicon 96,000 mt
Ferro Manganese 21,000 mt 9 Les Clavaux, France
Silicomanganese 22,000 mt on 35,000 mt
16 angshi, China 10 Montricher, France
Silicon 36,000 mt
Silicon 33,000 mt
17 amQuarz, South Africa
SamQuarz mine 11 hateau Feuillet, France
Silicon 23,000 mt
18 smeralda, Spain Inoculants 20,000 mt
Mina Esmeralda Calcium Silicide 15,000 mt
Globe Operations FerroAtlántica Operations
Combined Company Headquarters Overlapping Countries 12
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1,2 Strategic Benefits for Combined Group
Key Strategic Benefits
SiM FeSi SiMn FeMn MgFeSi CaSi Innoculants Fume Energy Coal
Products
Customers
Cost Position & Raw Materials
Operational Expertise
Optimization of product flows enables faster delivery times and improved customer service Enhanced ability to serve international customers with combined global platform Diversified customers across various end markets
Combination of two low-cost producers drives profitability through cycle Scale enhances access to, and procurement of, key raw materials Broader currency exposure flattens cost volatility
Combination of best-in-class engineering and operational expertise will drive synergies
Sharing of technological and operational “know-how” and best practices
Increased efficiencies and lower cost of production across combined assets Research and development; solar applications for silicon products
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3 Value Creation #1:
Creating Significant Value for GSM Shareholders — Operational & Financial Synergy Potential
SG&A / Overhead
Platform A Optimization
Best Practices Efficiencies1
+B Financial Synergies
Working
+C Capital Release
Consolidation of management functions
Elimination of regional offices and redundancies Reduction in R&D
Improved furnace operations resulting in higher output Optimized production to better service customers Cross-selling opportunities
Furnace maintenance and improvements to maximize yield Procurement/raw material integration Electrode technology and procurement savings
By-product recovery process
Tax savings
Refinancing of existing debt
Pay-down of debt from release of working capital
Improved inventory and raw materials management
$10mm
$30mm
$25mm
$30mm
Aggregate 3-
Year Benefit:
$100mm
Cost Synergies Generating Incremental
EBITDA
(TEV/EBITDA Multiple)
Financial Synergies Generating Incremental
Net Income
(P/E Multiple)
Incremental
Cash Flow
Source: GSM and FerroAtlántica management estimates.
1 Includes raw material integration, electrode technology, by-products recovery process, research and development and laboratory technology.
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Value Creation #2:
3
Significant Operating Leverage to Price and Costs
Overview of Currency Exposure
Prices $ $ / €
Costs $ €
Historical USD / EUR Foreign Exchange Rate
1.50
1.40
1.30
1.20
1.10 1.14
1.00
0.90
0.80
Aug-2013 Dec-2013 Apr-2014 Aug-2014 Dec-2014 Apr-2015 Aug-2015
Source: Bloomberg. Market data as of 21-Aug-2015
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3 Value Creation #3:
Well Positioned for Continued Growth
Global platform and strong balance sheet provides significant dry powder to pursue bolt-on acquisitions to our existing business and build-up the platform
Continued distress in the broader markets provide opportunities to acquire strategic mining and processing assets — track record of positioning ourselves for follow-on accretive acquisition opportunities during market downturns
Positions the combined company to opportunistically grow the downstream platform further
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4 Silicon Metal And Silicon-Based Alloy Prices have Proven More
Resilient than Other Industrial Commodities…
110%
100%
90%
(13.9)%
Value 80%
(25.0)%
Indexed 70%
(36.1)%
60%(40.5)%
(45.6)%
50%
(56.8)%
40%
Aug-2014 Oct-2014 Jan-2015 Mar-2015 Jun-2015 Aug-2015
Silicon Oil Iron Ore Aluminum Steel (HRC) Nickel
Source: Bloomberg. Market data as of 21-Aug-2015
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4 supported by Favorable Trends and Stable Growth in Key End Markets
North American Light Vehicle Aluminum
Content as a Percent of Curb Weight1 Consumer Goods
14.0% 13.0% Global GDP Growth Silicone End Uses
3.3 % 3.2 % 12.0% 10.4%
2.7 % 10.0% 8.8%
~500
7.8% Pounds
8.0% 7.1% 6.9%
6.4%
77
6.0% Pounds 343
4.5%
.9% Pounds
4.0%
2.0% 2.1%
2.0% Approx. 10kg of silicon metal per car
0.0% 2015E 2016E 2017E
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015E 2020E
Global Solar Demand Global Stainless Steel Consumption (Mt)
GW on (Kt) 120 500 1,2 2,000 110 200 1,100
100 ,000 43.0 41.1
90 900 39.4 37.7
80 800 35.1 36.2 34.3
70 Growth driven by 700
60 600 megatrends
50 500
40? Availability of energy 400 30 related financing 300
20? Battery + storage 200
10? YieldCo conversions 100
—
2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2014 2015E 2016E 2017E 2018E 2019E 2020E PV Demand Silicon
Source: Ducker Worldwide, Wall Street Research, CRU, Photon Consulting, GTM Research, EPIA, HIS, GSM Analysis, WSJ, and the World Bank 1Based on 3,6000 lbs of curb weight
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4 and Globe’s Production of Specialty Metals and Alloys
Automotive Consumer Goods
Specialty Metals and Alloys
Specialty Steel Military / Defense
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5 Leading to Higher Margins Relative to Peers and…
LTM Gross Margin %
28.6 %
20.2 %
18.7 % 18.6 % 18.3 %
14.3 %
9.5 %
Dynamic Materials Globe Materion Haynes Kaiser Carpenter Allegheny
LTM EBITDA Margin %
17.9 %
13.3 %
11.8 % 11.7 % 9.8 %
7.4 %
7.3 %
Globe Haynes Carpenter Kaiser Dynamic Materials Allegheny Materion
Source: Bloomberg. Market data as of 21-Aug-2015
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5 And Stronger Financial Performance Relative to Peers
GSM vs. Specialty Metals Peers
LTM LTM ROIC Net Debt / YoY Sales LTM Adj. LTM Gross Capacity
Inventory Total Assets Growth EBITDA Margin % Utilization
Turnover Margin
GSM vs. Other Metals Peers
LTM LTM ROIC Net Debt / YoY Sales LTM Adj. LTM Gross Capacity
Inventory Total Assets Growth EBITDA Margin % Utilization
Turnover Margin
Source: Bloomberg
Note: Specialty Metals Peers include GrafTech, Haynes International, Allegheny Technologies, Carpenter Technology, Dynamic Materials and RTI International
Other Metals Peers include Century Aluminum, Cliffs Natural Resources, Kaiser Aluminum, Worthington Industries, Steel Dynamics, Alcoa, AK Steel, Commercial Metals, and Materion.
ROIC defined as Adj. EBIT x (1-Tax) / (Net debt + Shareholders’ equity); blue bar represents Globe’s relative performance to its peer group.
LTM as of June 30, 2015.
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5 Strong Balance Sheet to Fund Opportunities
Combined —
Pro Forma for the
Transaction
($mm)
Net Debt $474mm1 $(20)mm $373mm4
Net Working Capital $ 580mm2 $111mm $691mm
LTM EBITDA $ 191mm3 $143mm $389mm5
Net Leverage Metric
Net Debt / LTM EBITDA 2.6x NM < 1.0x6
Notes: Balances shown for Globe are as of June 30, 2015 from the 10K Annual Report
1 Net debt balance shown for FerroAtlántica as of December 31, 2014 per the F-4 filing in USD
2 Net working capital calculated as inventory plus accounts receivables less accounts payables; balances shown for FerroAtlántica are as of December 31, 2014 per the F-4 filing in USD
3 Based on financials for the Electrometallurgy and Energy Divisions (incl. trading and hydroelectric facilities) from the quarterly Grupo Villar Mir Group Performance updates (1Q15, 4Q14, 3Q14, 2Q14)
4 Based on maximum FerroAtlántica closing net debt balance of €351mm per Business Combination Agreement, converted at F/X rate of 1.1184
5 Combined LTM EBITDA Includes $55mm in first year synergies
6 Based on combined LTM EBITDA including $55mm of first year synergies
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5 Benefits from Working Capital Velocity —
Significant Opportunity to Release Cash
($mm)
Accounts Receivable $297mm $55mm
Inventory $439mm $120mm
Accounts Payable $156mm $64mm
Selected Working Capital Ratios
Days Sales Outstanding 74 25
Inventory Turns 2.0 5.4
Days Payable Outstanding 64 36
Note: Balances shown for FerroAtlántica are as of December 31, 2014 per the F-4 filing in USD, except where noted. Balances shown for Globe are as of June 30, 2015 from the 10K Annual Report.
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5 FerroAtlántica’s Energy Division Provides a Key Advantage and
Additional Profit Center/Opportunity to Unlock Value
Key Characteristics
Largest independent hydroelectric power producer in Spain and France, with an installed capacity totaling c.210MW
– Average annual output of 600 GWh
19MW of new hydro power currently under construction in Spain
– Production will commence during 1Q 2016 Energy Division provides a power hedge and profit center
Key Statistics1
Revenue $46mm
Key Financials
EBITDA $25mm
Power Plants
FerroAtlántica (148 MW installed) Hidro Nitro (44 MW installed) FerroPem (20 MW installed)
FerroAtlántica Plant Location Capacity Plant Location Capacity Plant Location Capacity
1 4 A Coruña
6 Castrelo 28.7 Huesca 13 St.Béron St.Béron 13.7
1 Barasona 22.1
2 7 (Castrelo) 8
3 (Graus)
5 Hidro Nitro FerroPem
Puente A Coruña
8 10 2 2.7 14 Villalongue Pierrefite 6.0 Olveira (Castrelo)
14 13 Huesca
9 12 11 9 El Ciego 2.7 A Coruña (Estada)
3 Carantoña 5.0 (Pasarela)
Huesca
Santa A Coruña 10 Arias I (Somontano 6.4
4 49.1 de Barbastro) Eugenia I (Ezaro)
Huesca A Coruña
5 Fervenza 3.6 11 Arias II (Somontano 6.4
(A Reboira) de Barbastro) Santa A Coruña
6 49.1 Huesca Eugenia II (Ezaro)
12 Ariéstolas (Somontano 6.1 de Barbastro) A Coruña
7 Novo Pindo 9.8 (Ezaro)
Note: Energy division includes the hydro power assets and the gas and electricity trading arm of Grupo Villar Mir.
1 Assumes historical average 1.2690 USD / EUR FX rate for revenue and EBITDA conversions, and 1.07 USD / EUR FX rate for balance sheet conversions. Key Financials are based on last twelve months as of March 31, 2015. Balance Sheet figures are as of March 31, 2015.
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5 FerroAtlantica’s Energy Division Provides a Key Advantage and
Additional Profit Center / Unlocking of Value
Hydroelectric Facilities plants sell purchase power into power from grid grid
Owned hydroelectric plants Ability to manage the difference Proprietary technology allows provide flexibility between buying off the grid and for interruption at facilities All hydroelectric plants can then selling power at rates Can immediately shut down regulate flows — build up water better than what facilities could production during peak hours levels in reservoirs during purchase and restart during cheaper period of low power prices Internal power trading platform power periods Release water for power manages flows generation during higher power pricing periods and sell to the grid
Energy Division provides a power hedge and profit center (EBITDA of $25 million1)
Source: FerroAtlántica management information and financial reports.
1 EBITDA of €20mm for LTM 3/31/15 converted at Converted at 1Q2015 average USD / EUR exchange rate of 1.1283; 4Q2014 average of 1.2155; 3Q2014 average of 1.2685; and 2Q2014 average of 1.3645
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6 Strong Track Record of Growth During Market Downturns —
Uniquely Positioned to Capitalize on Growth Opportunities
Previous Previous Current
1,710 Investment Period Investment Period Investment Period
Acquired GMI, Acquisition of Acquisitions of Acquisition of
1,520 including Selma, AL, Mendoza and San Yonvey, China; Core Siltech, South Africa
Niagara, NY, and Luis, Argentina; and Metals, AL; MPM, IN;
Beverly, OH facilities Camargo, Brazil Alden, KY1;
Becancour, Canada2
1,330 Subsequent
Combination
acquisitions of Alloy, Agreement with
WV, Alabama Sand & FerroAtlántica
1,140 Gravel, AL, and Alloy
Power
950
760
570 Acquired FerroVen,
Rocas Arcillas y
Minerales, Pechiney
Électrométallurgie
380 (FerroPem and Silicon
Smelters)
190 Acquired SamQuartz, South
Acquired Rand
Africa
Carbide , South Africa
0 and Mangshi, China
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
S&P / TSX Composite Index Metals & Mining
Source: Bloomberg. Market data as of 21-Aug-2015
1 Initial discussions commenced in 3Q10; acquisition announced 2Q11
2 Initial discussions commended 4Q11; DIP financing in Jan. 2012; acquisition announced Apr. 2012
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Compelling Value Proposition for GSM Shareholders
Global Producer
Enhanced Platform
Significant Value Creation
Growth Potential
Strong Financials
Positions combined company as a leading international producer of silicon metal with c.$2.4bn in revenues and pro forma leverage of <1.0x1
Enhanced product offering and diversified production base with broader geographic reach
Optimized vertical integration with high quality raw materials to generate substantial operating and financial synergies Transaction expected to be accretive to GSM earnings per share from year one post completion
Strategically positioned to benefit from fast-growing end markets, and financial structure to deliver further growth
Improved cash generation — supports shareholder friendly policies
1 Based on LTM EBITDA, and year 1 synergies.
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Transaction Update – On Track for Q4 Close
Recent Developments:
F-4 effective as of August 12th
Initial integration planning:
Site visits to FerroAtlántica plants
Site visits to GSM plants
Financial reporting integration planning meetings
DoJ review pending, other regulatory approvals received
Shareholder Meeting currently scheduled for September 10th
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Appendix
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FerroAtlántica: Key Facts
Electrometallurgy
A global leader in silicon metal production
Financials: Revenue €1,103mm ($1,556mm), EBITDA
€129mm ($157mm)1
15 production centers: Spain (5), France (6), Venezuela (1),
South Africa (2), China (1)
46 furnaces: total installed power of 1,024 MW
Production capacity exceeds 1 million tons/year
– SiM (290,000 tons/year)
– SiMn (250,000 tons/year)
– FeMn (210,000 tons/year)
– FeSi (250,000 tons/year)
– MgFeSi / Inoculants (44,000 tons/year)
– CaSi (15,000 tons/year)
Annually, produces 171,000 tons of Microsilica
and 42,000 tons of Söderberg Paste
Research and development production of
photovoltaic-grade Silicon Metal
Energy
A leading independent hydroelectric energy producer in Spain
Financials: Revenue €46mm ($38mm), EBITDA €25mm
($20mm)1
Also maintains presence in France
Operates 14 hydroelectric plants in Spain and France
— 7 in Galicia, on Rivers Xallas and Grande
— 5 in Aragón, on Rivers Cinca and Esera
— 2 in French locations of Saint-Béron and Villelongue
Total installed capacity: 210 MW
Annual average production: 650 million KWh
Two reservoirs with combined capacity of 120 million m3
1 Converted at 1Q2015 average USD / EUR exchange rate of 1.1283; 4Q2014 average of 1.2155; 3Q2014 average of 1.2685; and 2Q2014 average of 1.3645 .
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Global Silicon Consumption to Grow by ~6% Per Annum
2005-2014 CAGR:5%
2015e-2019e cagr:6%
kMT
3,000 2,500 2,000 1,500 1,000 500
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E
Source: CRU
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Silicon End Uses
Silicones (50% Of Silicon Metal Consumption)
750,000 tons consumed by silicones industry
GDP + 4% growth – NA silicones facilities running at full capacity
Weather Stripping Dashboard
Cables
Tires Coatings
Grout Sealants
Caulking Shampoo Cosmetics
Paint
Note: % of sales figures represent industry estimates of western world consumption, For additional detail on silicones end markets, visit www.silicones.eu
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Silicon End Uses
Aluminum (40% of Silicon Metal Consumption)
Silicon metal required in aluminum as a strengthener and alloying agent to improve castability and minimize shrinking and cracking Significant growth expected in silicon-intensive aluminum wheels to meet EPA regulations for the trucking industry (aluminum wheels average 7.5% silicon content by weight) Aluminum provides a lighter weight alternative to steel Aluminum demand has increased at a 5%+ CAGR for the past 20 years
Global Primary Aluminum Demand
(000s tons)
55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E2015E
North American Light Vehicle Aluminum Content as a Percent of Curb Weight
14.0%
13.0%
12.0%
10.4%
10.0%
8.8% ~500
7.8% Pounds
8.0% 7.1%
6.9%
6.4% 343
Pounds
6.0%
77 4.5%
Pounds
3.9% 4.0% 2.1% 2.0%
Approx. 10kg of silicon metal per car
2.0%
0.0%
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015E 2020E
Source: Bloomberg and Street research Source: Ducker Worldwide
Note: Based on 3,600 lbs of curb weight
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Silicon End Uses
Solar (10% of Silicon Metal Consumption)
Continued decreases in solar wafer and module prices stimulating demand and taking market share away from thin film makers (e.g. Solyndra) Global solar related silicon demand to double, exceeding 700,000 tons by 2016 Projections have been consistently beaten by actual growth
Global Solar Demand 2008 Projections vs. 2012 Projections
MW Silicon Tons
70,000 800,000
700,000 60,000
50,000 600,000 500,000 40,000 400,000 30,000 300,000
20,000 200,000 10,000 100,000
0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2008 Estimates (Photon) Actual MW Actual Silicon (tons) 2012 Estimates MW 2012 Estimates Silicon (Tons)
Source: Credit Suisse, CRU, Photon Consulting, GTM Research, EPIA, HIS, GSM Analysis, and WSJ
Solar Installation
Solar Panel
Solar Cell Wafer Polysilicon Silicon
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Silicon End Uses
Semiconductors
Silane gas is an essential material used in the production of semi-conductors and LCD display panels
The three strongest demand areas for semiconductors will be NAND flash, logic application specific integrated circuits, and microprocessors
NAND and ASIC demand will be driven by media tablets and smartphones
Microprocessor growth will be driven by demand for computers, tablets, and smart phone devices
Semiconductor Revenue ($ in Bn) $400
$350 $300 $250
$200
2011 2012 2013 2014 2015 2016
Source: IHS
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Silicon End Uses
New Applications & Products
Example: Silicon Anode Lithium-ion Battery
Greater energy storage capabilities
Allows for smaller sizes batteries for electronic devices and electric cars Energy storage for renewable energy sources
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Silicon Alloys End Uses
Steel (Electrical Steel)
Technical expertise Just-in-time delivery
Steel
Ferrosilicon Calcium Silicon
(FeSi)(CaSi)
Used in the manufacture of high grade steel Produces lump, powder and cored wire forms
Commodity Specialty
Used in production of carbon steels, stainless steels and other steel alloys
High grade specifications Requires technical know-how Product/Market: electrical steel and motor laminates (auto)
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Silicon Alloys End Uses
Foundry Products
Foundry
Magnesium Ferrosilicon (MgFeSi)
Ductile Iron Castings
Used in applications where strength and formability are required
Automotive components
Ductile Iron Pipe
Water transmission
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Manganese Alloys and FeSi at a Glance
Ferroalloys are an essential input for the steel industry
Ferroalloys are alloys of iron that contain a significant amount of one or more other non ferrous elements, such as manganese, silicon and chromium Manganese ferroalloys are used to increase the strength and elasticity of steel The evolution of the steel demand is the primary driver of manganese ferroalloy demand ? c.10 kg of Mn alloys are required to enhance a ton of steel
Over 90% of the world’s manganese ferroalloy production is used for steel production
Manganese
Ore
>90% <10%
Feedstock for
Ferroalloys Other
Ferroalloys
>90% <10%
Steel Other
HC FeMn
MC FeMn
SiMn
Total Ferroalloys Demand
Surface critical flat steel Stainless steel, carbon
products steel, and various other
Some long products steel alloys
Examples Examples
Consumer appliances
Standard Steel Pipes
API(a) tube and pipe; rails
Specialty Steel Ductile iron
Automotive body sheet
FeMn 24% FeSi 31%
Ferroalloys
Total demand 2013: 25.7 mt
SiMn 45%
Long steel products Non-surface critical flat products
Examples
Construction steels Unexposed car parts
Note: FeMn includes HC FeMn and refined FeMn; FeSi on contained Si basis (a) American Petroleum Institute Source: CRU, CPM, K.Fowkes, Hatch, Macquarie Research
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