Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Sooner Holdings, Inc. | d646782d8k.htm |
| EX-2.1 - EX-2.1 - Sooner Holdings, Inc. | d646782dex21.htm |
| EX-2.2 - EX-2.2 - Sooner Holdings, Inc. | d646782dex22.htm |
| EX-99.1 - EX-99.1 - Sooner Holdings, Inc. | d646782dex991.htm |
 Agreement to Sell Substantially All
Assets to Renewable Energy Group,
Inc. in Exchange for Shares
December 17, 2013
Exhibit 99.2 |
 2
Forward Looking Statements
This document contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, as amended, including
statements regarding the benefits of the transactions for investors in
Syntroleum Corporation (“Syntroleum”) and Renewable Energy Group, Inc.
(“REG”), the benefits of the transactions to the business of the
combined company, the estimated amounts available for distribution to
Syntroleum stockholders in connection with the dissolution and the timing of the
closing of the asset sale. Forward-looking statements may also include
statements relating to the Fischer-Tropsch ("FT") process,
Syntroleum ®
Process, Synfining ®
Process, and related technologies including, gas-to-liquids
("GTL"), coal-to- liquids ("CTL") and
biomass-to-liquids ("BTL"), and Syntroleum’s renewable fuels Bio-Synfining ®
technology.
These forward-looking statements are based on current expectations,
estimates, assumptions and projections
that are subject to change, and actual results may differ materially from the
forward-looking statements. Factors that could cause actual results to
differ materially include, but are not limited to, risks associated with obtaining
Syntroleum’s stockholder approval and the failure to satisfy other closing
conditions to the asset sale; REG’s ability to integrate
Syntroleum’s business with its own, changes or events affecting the business, financial
condition or results of operations of either Syntroleum or REG prior to the closing
of the asset sale; the risk that Syntroleum will discover or incur
unanticipated liabilities or expenses in connection with the dissolution that would
limit or eliminate distributions to Syntroleum stockholders; and
other risks and uncertainties described from time
to time in REG's annual report on Form 10-K, quarterly reports on Forms
10-Q and other periodic filings with the SEC and Syntroleum’s
annual report on Form 10-K, quarterly reports on Forms 10-Q and other periodic filings
with
the
SEC.
The
forward-looking
statements
are
made
as
of
the
date
of
this
press
release
and
neither
REG
nor
Syntroleum undertakes to update any forward-looking statements based on new
developments or changes in expectations. |
 Additional Information
3
Additional Information about the Proposed Transactions and Where
to Find It
REG plans to file with the SEC a registration statement on Form S-4 in
connection with the transactions discussed in this presentation, which will
include Syntroleum’s preliminary proxy statement and REG’s preliminary
prospectus for such transactions. REG and Syntroleum will also file other documents
with the SEC related to the proposed transactions. Syntroleum will mail a
definitive proxy statement/prospectus to its stockholders as of a record
date to be established for voting on the proposed transactions. THE REGISTRATION STATEMENT AND
THE
DEFINITIVE
PROXY
STATEMENT/PROSPECTUS
WILL
CONTAIN
IMPORTANT
INFORMATION
ABOUT
REG, SYNTROLEUM, THE PROPOSED TRANSACTIONS AND RELATED MATTERS. BEFORE MAKING ANY
VOTING
AND
INVESTMENT
DECISION
WITH
RESPECT
TO
THE
TRANSACTIONS,
INVESTORS
AND
STOCKHOLDERS OF SYNTROLEUM ARE URGED TO READ THE REGISTRATION STATEMENT AND
DEFINITIVE PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN THEY ARE AVAILABLE. The
registration
statement,
the
proxy
statement/prospectus
and
other
documents,
when
filed
with
the
SEC
by
REG
and Syntroleum,
can
be
obtained
free
of
charge
through
the
website
maintained
by
the
SEC
at
www.seg.gov,
at
REG’s
website
at
www.regi.com
under
the
tab
“Investor
Relations”
and
then
“Financial
Information”
and
“SEC
Filings,”
at
Syntroleum’s
website
at
www.syntroleum.com
under
the
tab
“Investor
Relations”
and
then
“SEC
Filings,”
from Renewable Energy Group Investor Relations, 416 S. Bell Avenue, Ames, Iowa
50010, telephone: 515-239-8091, or from Syntroleum Investor
Relations, 5416 S. Yale Ave., Suite 400, Tulsa, Oklahoma 74135, telephone:
281-224-9862. |
 Disclaimer; Proxy Solicitations
4
Disclaimer
This communication shall not constitute 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 the offer, solicitation or sale would be unlawful
prior to the registration or qualification under the securities laws of any such
jurisdiction. No offering 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. Participants in the Solicitation
Syntroleum and REG and their respective directors and executive officers may be
deemed participants in the solicitation of proxies from Syntroleum
stockholders in connection with the transactions discussed in this
presentation. Information regarding the special interests of these directors
and executive officers in the proposed transactions will be included in the definitive proxy
statement/prospectus referred to above. Additional information regarding
Syntroleum’s directors and executive officers is also included in
Syntroleum’s proxy statement for its 2013 Annual Meeting of
Stockholders, which was filed with the SEC on November 1, 2013. Additional
information regarding REG’s directors and executive officers is also
included in REG’s proxy statement for its 2013 Annual Meeting of
Stockholders, which was filed with the SEC on April 4, 2013. These proxy statements are
available
free
of
charge
at
the
SEC’s
website
at
www.sec.gov
and
from
Syntroleum
and
REG
by
contacting them as described above. Other information about the participants in the
proxy solicitation will be contained in the proxy
statement/prospectus. |
 Transaction Overview
•
Syntroleum’s Board unanimously approved on December 17th an agreement
to sell to Renewable Energy Group (REG) substantially all of Syntroleum’s
assets including:
–
50% interest in Dynamic Fuels
–
Global renewable fuels intellectual property
–
Gas to liquids intellectual property
•
Syntroleum would retain certain liabilities
•
Purchase consideration: 3,796,000 shares of REG
–
$40.3 mm value as of 12/16 ($4.04 per share), capped at $49 million, and subject
to adjustment based on cash to be delivered to REG at closing (1)
–
37% premium to SYNM 10 day average price (1)
–
Approximately 9.2% of combined company (2)
–
Syntroleum currently intends to issue REG shares as a liquidating dividend to
stockholders, subject to satisfaction by Syntroleum of its retained
liabilities 5
(1)
Based on share prices as of 12/16/13.
(2)
Calculated based on the number of REG shares outstanding post-transaction on a
fully-diluted basis, assuming 3,796,000 shares issued to
Syntroleum. |
 Transaction Rationale
•
Consolidates SYNM renewable diesel IP and assets into a leading
renewable fuel producer
–
Provides asset diversification to stockholders
•
Platform and resources to invest in next generation synthetic fuel and
chemicals growth opportunities
–
Natural gas to liquids (GTL), biomass to liquids (BTL)
–
Phase change material (“PCM”)
–
Specialty renewable products (drilling and frac fluids)
•
Syntroleum IP and technologies a key driver for REG
6
REG:
A Leading U.S.
Biodiesel
Producer
SYNM:
Next Gen
Technologies –
Renewable
Diesel, GTL,
PCM
Strong Platform
for Growth |
 Proposed RFS2 Changes By EPA =
Potentially Reduced Mandates
•
EPA published proposed reduced 2014 mandates versus guidelines
established in Energy Policy Act of 2009
–
Total renewable fuel of 15.21 vs. expected of 18.15 billion gallons
–
Reduced advanced biofuel to 2.2 vs. expected of 3.75 billion gallons
–
1.28 billion gallons biomass based diesel, which is the same as 2013
•
Significant excess biomass based diesel capacity likely
•
Flexible feedstock capability, economies of scale and flexible fuels
will be important
•
Proposal now under public comment period until January 28, 2014
7
Best positioned players have flexible feedstock assets,
flexible fuel capabilities + economies of scale |
 REG/SYNM = Largest Portfolio of
Flexible Feedstock Capable Assets
8
Plant
Location
Nameplate
Capacity MMGY
High FFA
Capable
Dynamic Fuels (50% interest) (a)
Louisiana
37.5
X
REG Albert Lea
Minnesota
30.0
X
REG Danville
Illinois
45.0
X
REG Houston
Texas
35.0
REG Mason City (b)
Iowa
30.0
X
REG New Boston
Texas
15.0
X
REG Newton
Iowa
30.0
X
REG Ralston
Iowa
12.0
REG Seneca
Illinois
60.0
X
Total
294.5
247.5
REG Plants Partially Completed
GA, KS, LA, NM
150.0
X
Total
444.5
397.5
a) Operations suspended in Q4 2012
b) Currently being upgraded for multiple feedstock |
 Result
of Comprehensive Review of Strategic Alternatives
•
Board conducted comprehensive review of strategic
alternatives
–
Assisted by outside financial and legal advisors
•
Piper Jaffray provided a fairness opinion to the Board
stating the aggregate purchase price to be received by
Syntroleum in consideration for the asset sale was fair,
from a financial point of view, to Syntroleum
•
Board firmly believes that this transaction is in the best
interest of all Syntroleum stockholders
9
Board unanimously recommends Syntroleum
stockholders vote in favor of transaction |
 Roadmap to Completion
•
Transaction is subject to customary closing
conditions and regulatory approvals
•
Syntroleum stockholder approval required
–
Stockholders expected to receive proxy materials in
February, subject to SEC review
–
Stockholder meeting expected to take place in March
2014, subject to SEC review
10 |
 Renewable Energy Group Overview
•
Headquarters
–
Ames,
Iowa
•
Share
Listing
–
NASDAQ
/
REGI
•
Shares
Outstanding
–
36.5
million
•
Current
Market
Capitalization
–
$387
million
as
of
12/16/13
11
Sources: Shares outstanding from REG 9/30/13 10Q, market capitalization from
Yahoo Finance. |
 REG =
Fully Integrated Biodiesel Platform
12
Ability to process a wide
variety of lower cost
feedstocks
into biodiesel
12
biodiesel
plants,
8
in
production and 4 partially
completed, with existing
capacity of 257 MMGPY
Leading producer of
biodiesel in the United
States
marketing both REG
biodiesel and biodiesel
produced by others
Source: REG 2012 annual results presentation, updated for new REG plants.
|
 REG
is a Leading Biodiesel Producer 13
1)
1Q-3Q
actual
plus
midpoint
of
REG
guidance
for
4Q
of
65
-
75
million.
2)
Source: Compiled from data presented in REG quarterly results
presentations. 150
188
256
0
50
100
150
200
250
300
2011
2012
2013E (1)
GALLONS SOLD |
 REG
Generates Significant EBITDA 14
1)
1Q-3Q
actual
plus
midpoint
of
REG
guidance
for
4Q
of
$25
-
$40
million.
Source: Compiled from data presented in REG quarterly results
presentations. $107
$97
$145
$0
$20
$40
$60
$80
$100
$120
$140
$160
2011
2012
2013E (1)
ADJUSTED
EBITDA |
 REG
Has a Strong Balance Sheet ($ in millions)
09/30/13
12/31/12
12/31/11
12/31/10
Cash
$135.9
$66.8
$33.6
$6.9
Term Debt
$35.5
$37.0
$85.6
$86.6
Term Debt / Total
Assets
5.1%
7.5%
17.7%
23.4%
Net Book Value
$552.4
$324.8
$120.6
$35.1
15
Source: REG 3Q 2013 Presentation |
 Transaction Overview and Rationale
•
Board thoroughly evaluated strategic alternatives with a goal of
maximizing stockholder value
•
Enables combined company to pursue revenue growth from PCM and
GTL businesses
•
Board unanimously recommends Syntroleum stockholders vote in favor
of the transaction with REG
16
Compelling transaction is a win-win for all
Syntroleum stakeholders
–
Combination with REG provides strong platform for stockholders
–
Confident transaction is in the best interest of all Syntroleum
stockholders |
 Syntroleum Progress Report |
 Gas-to-Liquids Opportunity
•
Natural gas abundant due to shale gas development
–
Low gas prices/high oil price support strong GTL economics
•
Syntroleum has a leading GTL technology
•
Significant market opportunity (licensing and participation)
–
4,000 to 5,000 BPD GTL plants
–
Feedstock flexible (methane, ethane, propane, butane)
–
Manageable natural gas volumes –
40 to 50 million cubic ft/day
–
Developed at the field, product sold locally
•
Right technology timeline, right commercial environment
18
GTL a long term strategy with significant potential payoff
|
 Execution of GTL Strategy
19
Steam Methane Reformer or
Autothermal Reformer
•
Demonstrated
technology
•
Many exist in the world
today
•
Capital cost well defined
•
Process guarantees
available
•
50% of project cost
Step 1: Synthesis Gas
Step 2: Fischer Tropsch
Step 3: Refining
Syntroleum’s Catoosa Demo Plant
Dynamic Fuels Geismar Plant
•
Operated 80 bpd Catoosa
Demo Facility 2004-2006
–
Produced military grade
fuels
–
Sinopec validation
•
Efficacy insurance may
mitigate technology risk
•
Similar technology as
Geismar Plant
•
Demonstrated technology at
commercial scale
Nat
Gas
Fuels
–
Reactor design
–
Hydroprocessing
catalyst |
 Build
Plants Integrated to the Gas Field –
Field GTL
•
Why 4,000 to 5,000 BPD?
–
Manageable gas volumes (40 –
50 million cubic ft/day)
–
Manageable construction project (pre-fabricated sections)
–
Sized to local, dedicated gas reserves (20 years = 300-400 bn cubic ft)
–
Fuel products target local diesel markets
–
Manageable capital, risk profile
•
Why near the gas field?
–
Field proximity lowers gathering and transmission cost
•
Why an integrated project?
–
Physically hedges the integrated project
–
Higher margins better support debt financing
20 |
 GTL
Project Under Development •
4,000 -
5,000 bpd GTL project with upstream oil
and gas company integrated to gas reserves
–
Signed MOU in July 2013 to develop engineering
feasibility study and business plan
–
Engineering design well under way
–
Site
selection
proceeding
–
multiple
sites
under
consideration
21 |
 What
is Phase Change Material (PCM)? •
A PCM is a substance capable of
storing and releasing energy via
melting and solidification
–
Ice cubes in water regulates the
temperature to 32
o
F
•
Building energy efficiency PCM
regulates
temperature
from
70
o
–
73
o
F
–
Ideal for building materials & textiles
–
Multiple military applications
–
10 –
15% energy reduction targets
•
Many possible delivery formats
–
Sheets
–
Pellets
•
Composition of matter patent for
renewable PCM
22 |
 PCM
Applications •
Building materials
–
Insulation
–
PCM sheets
•
HVAC
–
Peak load reduction, resulting sized A/C units
–
Reduction in size of military portable units
•
Textiles, Outerwear
–
Clothing
–
Hat inserts
–
Vests
–
Specialized applications
23 |
 PCM:
Potential Market Opportunity •
Global PCM market is
$460 million
•
Expected to reach $1.15
billion by 2018
•
Building products, which
ideally suits Syntroleum’s
PCM, is one of the largest
segments
24
1) “Advanced Phase Change Material (PCM) Market, By Type and Application,
Global Trends & Forecast to 2018”, MarketsandMarkets, 2013
$460
$1,150
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2013
2018
Global PCM Market
1
Global PCM Market
1 |
 PCM
Commercialization Strategy •
Phase I: Continue market development work for
renewable PCM
•
Phase II: Become renewable PCM supplier using
contract manufacturers
•
Phase III: Construct a renewable PCM plant
–
Stand-alone or as add-on to a GTL plant
•
Phase IV: Evaluate forward vertical integration into
branded PCM products
25 |
 Syntroleum Robust and Growing IP
Portfolio
2012
2013
Renewables
Total Patents
7
14
Total Patents Pending
19
25
Fischer Tropsch
Total Patents
56
58
Total Patents Pending
4
4
Total
86
101
26 |
 Questions and Answers |