Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - RAYONIER ADVANCED MATERIALS INC. | d384601dex991.htm |
| EX-2.1 - EX-2.1 - RAYONIER ADVANCED MATERIALS INC. | d384601dex21.htm |
| 8-K - 8-K - RAYONIER ADVANCED MATERIALS INC. | d384601d8k.htm |
 to Acquire May 25, 2017 Exhibit 99.3 |
 Disclaimers Forward-Looking Statements This document contains statements that are forward-looking statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date
hereof. All forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are
not limited to: the timing of the closing of the transaction;
whether a transaction will be consummated at all and the ability to
obtain required
regulatory approvals and satisfy the other conditions to closing the
transaction; the expected benefits of the transaction and whether such benefits will be achieved on a timely basis or at all; our ability to successfully integrate acquired businesses; prolonged weakness in
general economic conditions; unfavorable weather conditions or
natural disasters; our reliance on government permits or approvals; risks related to federal, state, local and foreign government laws, rules and regulations; risks related to our reliance on information technology;
manufacturing issues that may arise; adverse consequences of
current or future legal claims; our ability to hire and retain a
sufficient seasonal workforce; risks related to our workforce, including increased labor costs; loss of key personnel; fluctuations in foreign
currency exchange rates; impairments or write downs of our
assets; changes in accounting estimates and judgments, accounting principles, policies or guidelines; a materially adverse change in our financial condition; and other risks detailed in Rayonier Advanced Material’s
filings with the U.S. Securities and Exchange Commission,
including the “Risk Factors” section of Rayonier Advanced Materials’ Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and in Tembec’s filings with the Canadian Securities Administrators, including
the “Risk Factors” section of Tembec’s Annual
Information Form for the fiscal year ended September 30, 2016. All forward-looking statements attributable to us or any persons acting on our behalf are expressly qualified in their entirety by these cautionary
statements. All forward-
looking statements in this document are made as of the date hereof and we do
not undertake any obligation to update any forward- looking
statements whether as a result of new information, future events or otherwise, except as may be required by law. Additional Information Further information regarding the transaction will be contained in an information circular that Tembec will prepare and mail to its
stockholders in connection with the special meeting of the Tembec
shareholders. Investors and security holders are urged to read
the information circular once it becomes available, as it will contain important information concerning the proposed
transaction. Investors and
security holders may obtain a copy of the arrangement agreement, information
circular and other meeting materials when they become available
at www.sec.gov and www.sedar.com. This document is for informational purposes only. It does not constitute an offer to purchase shares of Rayonier Advanced Materials or Tembec or a solicitation or recommendation statement under the rules and
regulations of the Canadian securities regulators, the U.S. Securities and
Exchange Commission or other applicable laws. 2
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 3 Compelling Strategic and Financial Rationale Complementary product offerings and technical capabilities across High Purity Cellulose grades Additional growth opportunities in packaging and forest products Product and geographic diversification Stronger, more balanced business with greater scale to drive growth Shared vision on safety, operational excellence and environmental stewardship Revenue: ~$2.0 billion Adjusted EBITDA: ~$400 million* Annual Run-Rate Cost Synergies: $50 million to be achieved over 3 years Incremental EBITDA benefits of at least $15 million from accelerated capital investment Immediately accretive to EPS Purchase price of 4.6x LTM EBITDA with full synergies* Moderate pro forma leverage of 3.1x* In USD, USD/CAD exchange rate of 0.7429. * Includes $50 million of annual run-rate cost synergies but excludes $15 million benefit of accelerated capital
investment A Diversified High Purity Cellulose, Packaging, Paper and
Forest Products Company |
 4 At a Glance In USD, USD/CAD exchange rate of 0.7429. 90 years as leading supplier of High Purity Cellulose products Global leader in acetate pulp Unparalleled knowledge and expertise serving customers globally LTM Revenue: $852 million LTM EBITDA : $220 million Employees: 1,200 Global leader in ether pulp Diversified forest products manufacturer of High Purity Cellulose products (30% of sales) Forest products (25% of sales) High-yield pulp (19% of sales) Paper (packaging & newsprint) (26% of sales) LTM Revenue: $1,131 million LTM EBITDA : $127 million Employees: 3,000 United States 38% Canada 19% Europe 19% China 12% Other 12% Sales by Region 2 High Purity Cellulose Facilities – Canada & France 7 Sawmills – Canada 2 Paper Mills – Canada 2 High-Yield Pulp Mills – Canada 4 Chemical Plants – Canada, France & US United States 40% Canada 0% China 29% Europe 10% Other 21% Sales by Region 2 High Purity Cellulose Facilities Jesup, Georgia Fernandina Beach, Florida 5 Wood Chipping Facilities Combination of Two Best-in-Class Organizations with Complementary Products |
 5 Transaction Summary Transaction Terms $807 million Purchase Price, including approximately $487 million of net debt
Tembec shareholders will have the right to elect to receive either (i) C$4.05
in cash or (ii) 0.2302 shares of RYAM common stock, for each
common share Elections subject to proration to ensure that no
more than 63% of the aggregate Tembec shares will receive cash
and no more than 37% will receive stock Tembec shareholders
expected to own 12.8% of the combined company
Financing Cash consideration and debt to be financed with cash on hand and fully committed
bank financing
Pro forma net leverage of 3.1x + at closing Benefits to Shareholders For Tembec shareholders: 37% premium to prior close Significant liquidity in cash consideration with larger market capitalization
Ongoing value created through ownership of combined company
For Rayonier Advanced Materials shareholders:
4.6x Enterprise Value/ LTM EBITDA including synergies
$50 million in Annual Run-Rate Cost Synergies to be achieved over 3
years Additional benefits of at least $15 million from
accelerated CapEx Increased
scale creates greater opportunities in cost savings, CapEx and R&D Estimated Closing Second half of 2017, subject to regulatory approvals and Tembec shareholder vote
In USD, unless noted, USD/CAD exchange rate of 0.7429.
+ Includes $50 million of annual run-rate cost synergies. |
 6 Maintain Solid Margins and Modest Leverage in USD millions RYAM Tembec Synergies Pro Forma Revenue * $852 $1,131 $1,983 EBITDA * $220 $127 $50 + $397 Margin 26% 11% 20% Estimated Net Debt at Closing $1,220 Leverage before Synergies 3.5x Leverage after Synergies 3.1x In USD, USD/CAD exchange rate of 0.7429. * Based on Last Twelve Months + Based on full run rate Combination Creates a Larger and More Diversified Company |
 15% 35% 30% 20% 7 Compelling Synergies Drive Incremental Value SG&A/Public Company Costs General corporate cost reductions Consolidation of duplicate systems and spending Supply Chain & Procurement Leverage combined spending Reduce transportation costs Operational/Manufacturing Apply continuous improvement across a larger combined company Increased production yields Less Than 1x Cash Costs to Achieve Synergies *Synergies expected to be realized over a 3 year period Sales & Marketing Optimized sales channel distribution Regional customer alignment $50 million * |
 8 Financing Overview Acquisition financing consists of: $450 million fully committed bank financing, ~$365 million of cash on hand, and ~$110 million from new RYAM common shares issued to Tembec shareholders 8.4 million of new RYAM shares to be issued Net Leverage expected to be 3.1x at closing after synergies Long-term net leverage target of mid-2x, while maintaining common dividend Anticipated ~$250 million of available under Revolving Credit Facility |
 9 Integrated and Complementary Businesses Packaging & Newsprint Forest Products High-Yield Pulp Packaging Multiply Coated Board Newsprint Book Paper Dimensional Lumber Framing Materials Wood Chips Fuel (Chips, Sawdust, Shavings & Bark) Mechanical Hardwood Pulp (Maple & Aspen) High Purity Cellulose Acetate Ethers Specialties Viscose Fluff Pulp |
 80% 13% 4% 3% 28% 12% 6% 14% 15% 14% 11% Pro Forma EBITDA 10 Diversified and Attractive Product Portfolio In USD, USD/CAD exchange rate of 0.7429. * Based on Fiscal 2016 Revenue + Pie chart does not allocate $50 million of synergies ~$2.0 billion ~$400 million + High-Purity Cellulose Packaging & Newsprint High-Yield Pulp Forest Products Pro Forma Revenue RYAM Revenue * Tembec Revenue * 63% 7% 10% 20% Acetate Pulp Ether Pulp Other CS Pulp Commodity & Other 2% 26% 19% 25% 15% 10% Packaging & Newsprint High-Yield Pulp Forest Products Ether Pulp Other CS Pulp Commodity & Other Acetate Pulp Acetate Pulp Commodity & Other Other CS Pulp Ether Pulp 3% |
 11 Expanded Global Presence Increases geographical diversity and mitigates currency risk Rayonier Advanced Materials Rayonier Advanced Materials High Purity Cellulose Plant Fiber Facility Marketing & Research Center Sales Office High Purity Cellulose Facility Other Manufacturing Facility Other Pulp Facility SPF Lumber Facility Sales Office Headquarters Headquarters Sales and Research Tembec |
 12 $50 million Annual Run-Rate Cost Synergies Shared culture of cost optimization Acquisition Broadens Opportunity Complementary product mix Production and Logistics Flexibility Enhanced Security of Supply Leverage R&D expertise across product portfolio Attractive acquisition with significant scale and compelling financial profile |
 13 Combination Drives Successful Earnings Growth Enhanced scale drives ability to execute growth strategy Superior capabilities in high purity cellulose Diversified paper and forest products profile Expansion of cost transformation initiative Significant high return capital project opportunities Acceleration of product innovation |