| 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 4, 2015 |
EXPLANATORY NOTE: This filing pursuant to Rule 425 under the Securities Act of 1933 contains an updated slide show presentation, which supersedes the original slide show presentation that was filed with the Securities and Exchange Commission on 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” andsimilar expressions. Allsuch forward ?looking statements involve estimates and assumptions that are subject torisks, 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 arethe following: Globe,GrupoVillarMir, FerroAtlántica and VeloNewco’s abilityto consummate the transaction; the conditions tothe completion ofthe transaction, including the receiptof shareholder approval; regulatory approvals required forthe proposed transaction maynotbe obtained ontheterms expected oronthe anticipated schedule; Globe,GrupoVillarMir, 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 inthefuture;the abilitytoadapt services to changes in technology orthe marketplace; theabilityto 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 fromunfairforeign competition orthe measures currently inplaceor expected tobe imposed underthoselaws; compliance with, potential liabilityunder,andrisksrelatedto 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 inthe financial markets; and exchange rate fluctuation. Additional information concerning theseandotherfactorscanbefoundin Globe’s filingswiththe Securities and Exchange Commission (“SEC”), including Globe’s most recentAnnual Reports on Form10?K, Quarterly Reports on Form10?Q and Current Reports on Form8?K, and in the registration statement on FormF?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 asaresultofnew information, futureeventsor otherwise.
Additional Information andWheretoFindIt
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 theSECa registration statement onFormF?4,which includes a proxy statement ofGlobe thatalso constitutes a prospectus of VeloNewco. Investors and security holders are urgedtoreadthe definitive proxy statement/prospectus, which was filed with theSECbyGlobe onAugust12,2015,as supplemented onAugust26,2015,and as itmaybe further supplemented, 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 filedwiththeSECbyGrupoVillarMir, 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 gov ,or may be obtained free of charge from the SEC’s website http://www. sec. fromGlobeandGrupoVillarMirusingthe 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 ofSection10ofthe Securities Actof1933,as amended.
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I. 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
Focuson 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 SiliconAlloys
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 basewith11 facilities andthreeminesinsix countries –U.S., Canada, Argentina, Poland, China and South Africa
22 furnaces with installed power of 518 MW and capabilities to produce more than 350,000 1 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 Product 2
Other
11 %
Silicon?based
Alloys Silicon Metal
33 % 56 %
Revenue by Geography 2
Europe Asia Latin 4 % 1 % America 3 %
North America
91 %
Source: GSM management.
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Includes tonnage from joint venture with Dow Corning |
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For the fiscal year ended June 30, 2015. |
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A Strong History of Growth through Acquisition and Optimization of the Portfolio
2004
2006
Alan Kestenbaum
Acquisiton of Mendoza and acquired GMI in 2004, San Luis, Argentina including Selma, AL, Niagara, NY, and 2009 Beverly, OH facilities Listing of
2007
Globe Acquisiton of Specialty Camargo, Brazil
2008 NASDAQ
2005
Acquisiton of 2009 Acquisiton of Alloy,
Yonvey, China Divestiture of WV, Alabama Sand Camargo and & Gravel, AL, and 49% of Alloy Alloy Power
2005
Divestiture of Alloy $ 0.7 Power
2004 2009
CY Revenue (US$mm) $ 372
CY Adjusted EBITDA (US$mm) $ 48
Acquisition Price Estimated Total Divestiture Price Replacement Cost $2,300 Total Net Investment:
Announced Business
2010
2012 2014 Combination
Acquisiton of
Acquisiton of Acquisiton of
Core Metals, AL with Becancour, Siltech, and MPM, IN Ferro?Atlántica
Canada South Africa
$ 2.8
2011
Acquisiton of Alden, KY
2011 2013
2015
Market Capitalization (US$bn) GSMToday2 ProForma Combined 3 $ 674 $ 755 $ 801 $ 2,247
$ 135 $ 105 $ 143 $ 349
Multiple of Net Total Replacement Cost Investment $404 $2,000 18.3x (295) less Divestitures 109 Total Enterprise Value Today (GSM) $1,075 9.9x
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As of August 31, 2015. |
Note: Management estimates using replacement value of $90M for a
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LTM as of June 30, 2015. standard sized furnace, including related infrastructure costs |
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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 6+ Tons of 1 Ton of
(Kentucky, Power
Specialty
Tennessee) Coal Raw Materials Silicon
Woodchip (45% of Costs)
Multiple
(25% of Costs)
facilities
Raw materials an important differentiator — GSMis 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 toreduceenergycosts
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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
Acquired in1992, FerroAtlántica
100%ownedbyGrupoVillarMir
Leading global producer ofsiliconmetaland ferroalloys
Operates two divisions: (i) electrometallurgy and(ii) energy, which includes the hydroelectric plants;hasmining locations inSpain, Venezuela andSouthAfrica 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 in30 countries acrossfive continents OHL gets the name after the merger of three different companies; Obrascon, HuarteandLain 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 EBITDAofOHLGroupcomesfromthe infrastructure concession business
WorldleaderinTollRoadswith28 concessions 7,500kmundermanagement 18.9% ownedbyGrupoVillarMir The World’s most diversified operator with presence in 12 countries and 60% ofEBITDA generated outside ofSpain European leader in Telecom Infrastructure, broadcast and Cell Phone Towers, and controlling Shareholder in Hispasat
“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 MIGUE L ? Juan Miguel Villar Mir Villar Mir GFAT & GSM Merger Announcement
23?Feb?2015
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% ownedbyGrupoVillarMir
? 10plantsinthree countries (5inSpain,2inAlgeriaand3in Portugal)
VM Energia is electricity and gas trading company that supplies 4,600 Million KWhto26,827sitesand represents 1,953MWof renewable energy Manages the production ofGFAT
Leader managing the Interconnection between SpainandFrance
Acquired in 2014, is the leading property company of the Euro zone prime officerentalsector 24.4% ownedbyGrupoVillarMir 51 operative rental assets located in Spain(32 assets) and Paris (through its 53.1% stakeinSFL19assets) withtotalsurfaceabove ground: 725,341 sqm
Old War Office (London, UK) to accommodate a five?star hotel and exclusive annexed apartments attheformer headquarters ofSir Winston Churchill Canalejas Project (Madrid, Spain) is a high?quality mixed?use development, covering sevenhistoric buildings in Madrid’s citycenter Torre Espacio (Madrid, Spain) 235 m building, where the headquarters of the Groupandmain companies are located.
Leading highqualityRealEstate developers inSpain
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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) rgy
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 Electrometallu Additional solar silicon metal production capabilities Energy 14 total hydroelectric plants: Spain (12) and France (2) Total installed capacity of 210 MW; average annual production of 650mm KWh
Key Financials: LTM 3/31/15 €mm $mm1
Revenue 1,144 1,447
EBITDA 163 206
Ownership:
Currently 100%ownedbyGrupoVillarMir,oneofSpain’slargestprivate 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 17% 14% Italy 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 1.2489;
3Q2014 average of 1.3266; and 2Q2014 average of 1.3715
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Combination Creates a New International Leader in Silicon and Specialty Metals
A compelling value proposition for GSM shareholders
vertically integrated business model, bolstered by new energy platform
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Strong Financial Position 3 Significant Value Creation |
Strong balance sheet and cash flow to • Substantial operating and financial support continued growth and synergies innovation, driving future shareholder 4 Growing Demand
Transaction expected to be accretive to returns GSM EPS in year one Auto, solar, consumer products (silicones), construction and energy
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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 ~$2.2 billion and pro?forma EBITDA of ~$350 million
Pro Forma Revenue Pro Forma Silicon Revenue NewCo by Geography 1 by End Market1
Asia Electronics 2%
Solar/ Other 1%
Production 2%
15 11 26 Semiconductor
Facilities RoW
11% 9%
Mining North
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3 9 |
Operations America
Aluminum
42%
45%
Europe Chemical
Countries 5 6 9 47% 42%
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Fortheyearended December 31,2014. |
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Geographies Align to Create Global Leader in Silicon Metal & Alloys —
1,2
Internationalization of Cost Structure
24 Hydro Plants, France
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Bécan |
Silicon 2 plants with 20MW combined GSM , capacity Dow Corning 49% 22,000 mt
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La Malbaie, Quebec 15 |
London, UK 1
Quartz Mine 7
1110
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Niagara Falls, 24 12 9 8 |
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5 2 3 |
Silicon
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Beverly, OH 10 |
Ferrosilicon and 11 9 230Hydro Plants, Spain
Foundry Alloys 52,000 mt 12 plants with 192MW combined Silicon 25,000 mt capacity or Ferrosilicon 40,000 mt
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Alloy, WV |
Silicon JV 72,000 mt GSM51%or 36,700mt Dow Corning 49% 35,300 mt
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Corbin, KY (Alden Resources) |
Specialty Coal &
Preparation Plant 2.5 mil tons
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Aurora, IN |
Fluorspar 65,000 mt 13
9 Billingsley, AL 14
Quartz Mine
10 12 13
Bridgeport, AL
Ferrosilicon 35,000 mt 19 Serrabal, Spain
11 Quartz Mine
Selma, AL
14 New Castle, South Africa
Silicon 24,000mt Sonia,Spain Ferrosilicon 45,000 mt
12 Mendoza, Argentina Quartz Mine
15 Police, Poland
Calcium Silicon, 21 Spain Foundry Alloys 21,000 mt Cored Wire 8 mil meters Mina Conchitina Cored Wire 24 mil meters
16 Shizuishan, Ningxia Hui, 22
Venezuela
13 Argentina China (“Yonvey”) Quartz Mine Hydroelectric Power 12 MW Carbon Electrodes 12,000 mt
Globe Operations
Combined Company Headquarters
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16
12 Laudun, France
Silicon 23,000 mt Ferrosilicon 35,000 mt
13 Polokwane, South Africa
Silicon / Quartz Mine 55,000 mt
14 Rand Carbide, South Africa
Silicon 12,000 mt Ferrosilicon 40,000 mt Inoculants 10,000 mt
15 Venezuela
Ferrosilicon 96,000 mt
Ferro Manganese 21,000 mt Silicomanganese 22,000 mt
16 Mangshi, China
Silicon 36,000 mt
17 SamQuarz, South Africa
SamQuarz mine
18 Esmeralda, Spain
Mina Esmeralda
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Boo, Spain |
Ferro Manganese 57,000 mt Silicomanganese 115,000 tons
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Cee, Spain |
Ferrosilicon 18,000 mt Ferro Manganese 55,000 mt Silicomanganese 37,000 mt
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Dumbria, Spain |
Ferrosilicon 61,000 mt
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Sabon, Spain |
Silicon 40,000 mt
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Monzon, Spain |
Ferro Manganese 80,000 mt Silicomanganese 80,000 mt
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Pierrefitte, France |
Inoculants 14,000 mt
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Anglefort, France |
Silicon 35,000 mt
9 Les Clavaux, France
Silicon 35,000 mt
Montricher, France
Silicon 33,000 mt
11 Chateau Feuillet, France
Silicon 23,000 mt Inoculants 20,000 mt Calcium Silicide 15,000 mt
FerroAtlántica Operations
Overlapping Countries
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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
Optimization of product flows enables faster delivery times and improved customer service
Customers
Enhanced ability to serve international customers with combined global platform Diversified customers acrossvariousend markets
Combination of two low?cost producers drives profitability through cycle
Cost Position &
Scale enhances access to, and procurement of, key raw materials Raw Materials Broader currency exposure flattens cost volatility
Combination of best?in?class engineering and operational expertise will drive synergies
Operational
Sharing of technological and operational “know?how” and best practices
Expertise
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
Consolidation of management functions
SG&A /
Overhead • Elimination of regional offices and redundancies $10mm
Reduction in R&D
Platform • Improved furnace operations resulting in higher output $30mm A • Optimized production to better service customers
Optimization
Cross?selling opportunities
Furnace maintenance and improvements to maximize yield Best Practices Procurement/raw material integration
1 • Electrode technology and procurement savings $25mm
Efficiencies
By?product recovery process
Financial • Tax savings
+B • Refinancing of existing debt $30mm
Synergies
Pay?down of debt from release of working capital
Working Aggregate 3?
+C • Improved inventory and raw materials management
Capital Year Benefit:
Release $100mm
Source: GSM and FerroAtlántica management estimates.
1 Includes raw material integration, electrode technology, ? by products recovery process, research and development and laboratory technology.
Cost Synergies Generating Incremental
EBITDA
(TEV/EBITDA Multiple)
Financial Synergies Generating Incremental
Net Income
(P/E Multiple)
Incremental
Cash Flow
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Value Creation #2:
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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 1.14 1.10 1.00 090. 90 0.80 Aug-2013 Dec-2013 Apr-2014 Aug-2014 Dec-2014 Apr-2015 Aug-2015
Source: Bloomberg. Marketdataasof21 ?Aug?2015
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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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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. Marketdataasof21 ?Aug?2015
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…supported by Favorable Trends and Stable Growth in Key End Markets |
North American Light Vehicle Aluminum
Content as a Percent of Curb Weight 1 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
3.9% 4.5% 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 Silicon (Kt) 120 500 1,200 2,000 110 200 1,100
100 1,000 43.0
90 900
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
1Basedon3,6000lbsofcurbweight
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…and Globe’s Production of Specialty Metals and Alloys |
Automotive Consumer Goods
Specialty Metals and Alloys
Specialty Steel Military / Defense
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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 %
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3 % 11.8 % 11.7 % |
9.8 %
7.4 %
7.3 %
Globe Haynes Carpenter Kaiser Dynamic Materials Allegheny Materion
Source: Bloomberg. Marketdataasof21 ?Aug?2015
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…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 itspeer group.
LTMasofJune30,2015.
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Strong Balance Sheet to Fund Opportunities
Combined —Pro Forma for the Transaction ($mm)
Net Debt $474mm 1 $(20)mm $380mm 4 Net Working Capital $580mm 2 $111mm $691mm LTM EBITDA $206mm 3 $143mm $404mm 5
Net Leverage Metric
Net Debt / LTM EBITDA
2.3x
NM
0.9x 6
Notes: Balances shown for Globe are as of June 30, 2015 from the 10K Annual Report
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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 Converted at 1Q2015 average USD / EUR exchange rate of 1.1283; 4Q2014 average of 1.2489; 3Q2014 average of 1.3266; and 2Q2014 average of 1.3715
4 Based on maximum FerroAtlántica closing net debt balance of €351mm per Business Combination Agreement, converted at F/X rate of 1.14
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Combined LTM EBITDA Includes $55mm in first year synergies |
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Basedon combined LTMEBITDA including $55mmoffirstyear synergies |
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Benefits from Working Capital Velocity —Significant Opportunity to Release Cash |
($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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FerroAtlántica’s Energy Division Provides a Key Advantage and Additional Profit Center/Opportunity to Unlock Value |
Key Characteristics Key Statistics 1
Largest independent hydroelectric power producer in Spain and France, with
Revenue $47mm an installed capacity totaling c.210MW Key Financials EBITDA $25mm
– 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
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
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4 A Coruña |
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Castrelo 28.7 Huesca 13 St.Béron St.Béron 13.7 |
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Barasona 22.1 |
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7 (Castrelo) 8 |
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(Graus) |
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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 Converted at 1Q2015 average USD / EUR exchange rate of 1.1283; 4Q2014 average of 1.2489; 3Q2014 average of 1.3266; and 2Q2014 average of 1.3715
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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.
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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 including Selma, AL, Mendoza and San Yonvey, China; Core Siltech, South Africa
1,520
Niagara, NY, and Luis, Argentina; and Metals, AL; MPM, IN; Beverly, OH facilities Camargo, Brazil Alden, KY1; Becancour, Canada 2 1,330 Subsequent
Combination Mining acquisitions of Alloy, Agreement with & WV, Alabama Sand& FerroAtlántica
1,140 Gravel, AL, and Alloy
Metals Power Index 950 ite Compos 760
TSX 570 Acquired FerroVen, / Rocas Arcillas y
Minerales, Pechiney S&P 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
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 inJan.2012; acquisition announced Apr.2012 |
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Compelling Value Proposition for GSM Shareholders
Positions combined company as a leading international producer of silicon metal with
Global Producer
c.$2.2bn in revenues and pro forma leverage of 0.9x 1
Enhanced Platform 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 11th
? 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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Favorable Recommendations to Vote ‘FOR’ the Deal
ISS Proxy Advisory Services
Egan?Jones
Glass, Lewis & Co.
Adoption of
Combination FOR FOR FOR Agreement
Adjournment FOR FOR FOR
Advisory Vote FOR FOR AGAINST
Source: ISS Proxy Advisory Services Report, August 27, 2015; Egan?Jones Proxy Report, August 27, 2015; Glass, Lewis & Co, August28, 2015
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Appendix
|
|
FerroAtlántica: Key Facts
Electrometallurgy Energy
A global leader in silicon metal production A leading independent hydroelectric energy producer in Spain Financials: Revenue €1,107mm ($1,399mm), EBITDA
€143mm ($181mm) 1 Financials: Revenue €38mm ($47mm), EBITDA €20mm ($25mm)1 15 production centers: Spain (5), France (6), Venezuela (1), South Africa (2), China (1) Also maintains presence in France 46 furnaces: total installed power of 1,024 MW Operates 14 hydroelectric plants in Spain and France Production capacity exceeds 1 million tons/year — 7 in Galicia, on Rivers Xallas and Grande
– SiM (290,000 tons/year) —
| 5 |
|
in Aragón, on Rivers Cinca and Esera |
– SiMn (250,000 tons/year)
— 2 in French locations of Saint?Béron and Villelongue
– FeMn (210,000 tons/year)
Total installed capacity: 210 MW
– FeSi (250,000 tons/year)
Annual average production: 650 million KWh
– MgFeSi/ Inoculants (44,000 tons/year)
(15,000 Two reservoirs with combined capacity of 120 million m3
– CaSi 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
1 Converted at 1Q2015 average USD / EUR exchange rate of 1.1283; 4Q2014 average of 1.2489; 3Q2014 average of 1.3266; and 2Q2014 average of 1.3715 .
.
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Global Silicon Consumption to Grow by ~6% Per Annum
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
Paint
Weather Stripping Dashboard
Cables
Grout Sealants
Tires Coatings
Caulking Shampoo Cosmetics
Note: %ofsalesfigures represent industry estimates of western world consumption, For additional detailon 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 asa Percent ofCurbWeight
14.0%
13.0%
12.0%
10.4%
10.0%
8.8% ~500
7.8% Pounds
8.0% 7.1%
6.9% 6.4%
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: Basedon3,600 lbsofcurbweight
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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, exceedin g 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 Solar 60,000
Installation
50,000 600,000
500,000 Solar 40,000 Panel 400,000 30,000 300,000 Solar Cell
20,000 200,000
10,000 Wafer 100,000
0 0
20002001200220032004200520062007200820092010201120122013201420152016
Polysilicon
2008 Estimates (Photon) Actual MW
Actual Silicon (tons) 2012 Estimates MW 2012 Estimates Silicon (Tons)
Silicon
Source: Credit Suisse, CRU, Photon Consulting, GTM Research, EPIA,HIS,GSM Analysis, and WSJ
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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
37
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Silicon Alloys End Uses
Steel (Electrical Steel)
Technical expertise
Steel
Just?in?time delivery
Used in the manufacture of high grade steel Produces lump, powder and cored wire forms
Commodity Specialty
Used in production High grade of carbon steels, specifications stainless steels and Requires technical other steel alloys 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 Ductile Iron Pipe
Used in applications Water transmission where strength and formability are required
? Automotive components
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Manganese Alloys and FeSi at a Glance
Ferroalloys arean essential inputforthesteel 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
Total Ferroalloys Demand
Manganese
Surfacecriticalflatsteel Stainless steel,carbon
Ore
products steel,and variousother >90% <10% Some long products steelalloys
Examples Examples
Feedstock for Consumer appliances
Other Standard SteelPipes Ferroalloys API(a) tubeand pipe;rails Specialty SteelDuctileiron Automotive bodysheet
Ferroalloys
FeMn 24% FeSi31%
>90% <10%
Ferroalloys
Steel Other Total demand 2013: 25.7 mt
HCFeMn
MCFeMn
SiMn 45%
SiMn Long steel products Non?surfacecriticalflat products
Examples
Note: FeMn includes HC FeMn and refined FeMn; FeSi on contained Si basis Construction steels (a) American Petroleum Institute Unexposed car parts Source:CRU,CPM,K. Fowkes, Hatch, Macquarie Research
40