UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
13E-3
(§240.13e-100)
RULE 13e-3 TRANSACTION STATEMENT UNDER SECTION 13(e)
OF THE SECURITIES EXCHANGE ACT OF 1934
GRAFTECH
INTERNATIONAL LTD.
(Name of the Issuer)
BCP IV
GRAFTECH HOLDINGS LP
ATHENA ACQUISITION SUBSIDIARY INC.
GRAFTECH INTERNATIONAL LTD.
(Name of Person(s) Filing Statement)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
384313201
(CUSIP Number
of Class of Securities)
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John D. Moran, Esq.
GrafTech International Ltd.
Suite 300 Park Center I
6100 Oak Tree Blvd.
Independence, Ohio 44131
(216) 676-2000 |
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David Nowak
Managing Partner c/o BCP
IV GrafTech Holdings LP Brookfield Place, 181 Bay Street, Suite 300
Toronto, Ontario MJ5 2T3
(416) 363-9491 |
(Name, Address, and Telephone Numbers of Person Authorized to Receive Notices and Communications on Behalf of
the Person(s) Filing Statement)
COPIES TO:
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M. Ridgway Barker, Esq.
Withers LLP 157 Church
Street New Haven, Connecticut 06502
(203) 7891320 |
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Steven A. Seidman, Esq.
Michael A. Schwartz, Esq.
Willkie Farr &
Gallagher LLP 787 Seventh
Avenue New York, NY 10019
(212) 728-8000 |
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Michael J. Aiello, Esq.
Jackie Cohen, Esq. Weil,
Gotshal & Manges LLP 767 Fifth Avenue
New York, NY 10153 (212)
310-8000 |
This statement is filed in connection with (check the appropriate box):
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a. |
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¨ |
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The filing of solicitation materials or an information statement subject to Regulation 14A (Sections 240.14a-1 through 240.14b-2), Regulation 14C (Sections 240.14c-1 through 240.14c-101) or
Rule 13e-3(c) (§240.13e-3(c)) under the Securities Exchange Act of 1934. |
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b. |
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¨ |
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The filing of a registration statement under the Securities Act of 1933. |
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c. |
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x |
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A tender offer. |
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d. |
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¨ |
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None of the above. |
Check the following box if the soliciting materials or information statement referred to in checking box (a) are
preliminary copies: ¨
Check the following box if the filing is a final amendment reporting the results of
the transaction: ¨
Calculation of Filing Fee
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Transaction valuation* |
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Amount of filing fee** |
$704,729,817.53 |
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$81,889.60 |
* |
Estimated for purposes of calculating the amount of the filing fee only. The calculation assumes the purchase of all issued and outstanding common shares, $0.01 par value, per share (Shares), of GrafTech
International Ltd., a Delaware corporation (GrafTech or the Company), at a purchase price of $5.05 per Share in cash, without interest and less any applicable withholding tax. As of May 22, 2015, there were 137,240,008
Shares issued and outstanding. The filing fee is calculated based on the sum of (a) the aggregate cash payment for the proposed per Share cash payment of $5.05 for 137,240,008 issued and outstanding Shares other than Shares owned by BCP IV
GrafTech Holdings LP, a Delaware limited partnership (Purchaser), Athena Acquisition Subsidiary Inc., a Delaware corporation (Acquisition Sub) and any of their affiliates, or GrafTech and any of GrafTechs subsidiaries,
plus (b) the product of 524,283 Shares issuable under the Companys outstanding and unexercised options with an exercise price below $5.05, multiplied by $0.81 per Share (which is equal to the difference between $5.05 per share and $4.24,
the exercise price of such options), plus (c) the product of the Companys 2,226,358 outstanding restricted stock units multiplied by $5.05 per share ((a), (b) and (c) together, the Transaction Valuation).
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The amount of the filing fee, calculated in accordance with Exchange Act Rule 0-11(b)(1) and the Securities and Exchange Commission Fee Rate Advisory #1 for Fiscal Year 2015, was calculated by multiplying the
Transaction Valuation by 0.0001162. |
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Check the box if any part of the fee is offset as provided by Section 240.0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing. |
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Amount previously Paid: $ 81,889.60 |
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Filing Party: BCP IV GrafTech Holdings LP and Athena Acquisition Subsidiary Inc. |
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Form or Registration No.: Schedule TO |
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This Schedule 13E-3 Transaction Statement (the Schedule 13E-3), filed by GrafTech, Purchaser and Acquisition Sub
relates to the offer (the Offer) by Purchaser and Acquisition Sub, disclosed in a Tender Offer Statement under cover of Schedule TO, dated as of the date hereof (the Schedule TO), filed with the Securities and Exchange
Commission (the SEC), to purchase any and all issued and outstanding Shares, upon the terms and conditions set forth in the offer to purchase dated May 26, 2015 (the Offer to Purchase) attached as Exhibit (a)(1)(A) to
the Schedule TO and incorporated herein by reference, and the related Letter of Transmittal attached as Exhibit (a)(1)(B) to the Schedule TO and incorporated herein by reference. Unless otherwise defined herein, capitalized terms used in this
Schedule 13E-3 shall have the meaning given to them in the Offer to Purchase.
On the date hereof, the Company is filing a Schedule 14D-9
Solicitation/Recommendation Statement (as amended from time to time, the Schedule 14D-9) under Section 14(d)(9) of the Securities Exchange Act of 1934, as amended, in response to the Schedule TO. The Schedule 14D-9 is incorporated
herein by reference.
The cross references below are being supplied pursuant to General Instruction G to Schedule 13E-3 and show the location in the
Schedule TO and Schedule 14D-9 of the information required to be included in response to the items of Schedule 13E-3. The information contained in the Schedule TO and Schedule 14D-9, including all annexes thereto, is incorporated by reference
herein, and the responses to each Item in this Schedule 13E-3 are qualified in their entirety by the information contained in the Schedule TO and Schedule 14D-9 and the annexes thereto.
Item 1. |
Summary Term Sheet. |
The information set forth in the Offer to Purchase under
Summary Term Sheet is incorporated herein by reference.
Item 2. |
Subject Company Information. |
(a) |
Name and Address: The information set forth in the Schedule 14D-9 under the caption Item 1. Subject Company Information is incorporated herein by reference. |
(b) |
Securities: The information set forth in the Schedule 14D-9 under the caption Item 1. Subject Company Information is incorporated herein by reference. |
(c) |
Trading Market and Price: The information set forth in the Offer to Purchase under the caption The Tender Offer Section 6 Price Range of Shares; Dividends is incorporated herein by
reference. |
(d) |
Dividends: The information set forth in the Offer to Purchase under The Tender Offer Section 6 Price Range of Shares; Dividends is incorporated herein by reference. |
(e) |
Prior Public Offerings: Not applicable. |
(f) |
Prior Stock Purchases: The information set forth in the Schedule 14D-9 under the caption Item 8. Additional Information is incorporated herein by reference. |
Item 3. |
Identity and Background of Filing Person. |
(a) |
Name and Address: The information set forth in the Schedule 14D-9 under the caption Item 1. Subject Company Information and in the Offer to Purchase under the caption The Tender Offer
Section 8 Certain Information Concerning Purchaser and Acquisition Sub is incorporated herein by reference. The subject company is one of the filing persons. The business address and phone number of the directors and executive officers
of the Company is the same as that of the Company noted above. The business address and phone number of the directors and executive officers of Purchaser and Acquisition Sub are the same as those of Purchaser and Acquisition Sub specified in the
Schedule TO. |
(b) |
Business and Background of Entities: The information set forth in the Offer to Purchase under the captions The Tender Offer Section 7 Certain Information Concerning the Company and
The Tender Offer Section 8 Certain Information Concerning Purchaser and Acquisition Sub is incorporated herein by reference. |
(c) |
Business and Background of Natural Persons: The information set forth in the Schedule 14D-9 under the caption Item 8. Additional Information and in the Offer to Purchase under The Tender Offer
Schedule I - Directors and Executive Officers of Purchaser and Acquisition Sub is incorporated herein by reference. |
Item 4. |
Terms of the Transaction. |
(a) |
Material Terms; Tender Offers: The information set forth in the Offer to Purchase under the captions Summary Term Sheet, The Tender Offer Section 1 Terms of the Offer,
The Tender Offer Section 2 Acceptance for Payment and Payment for Shares, The Tender Offer Section 3 Procedures for Accepting the Offer and Tendering Shares, The Tender Offer Section 4
Withdrawal Rights, The Tender Offer Section 5 Certain U.S. Federal Income Tax Consequences of the Offer The Tender OfferSection 11 Conditions of the Offer and The Tender
OfferSection 12 Certain Legal Matters; Regulatory Approvals is incorporated herein by reference. |
(c) |
Different Terms: Not applicable. |
(d) |
Appraisal Rights: The information set forth in the Schedule 14D-9 under the captions Appraisal Rights and Annex C Section 262 of the Delaware General Corporation Law
and in the Offer to Purchase under the caption Special Factors Section 7 Appraisal Rights is incorporated herein by reference. |
(e) |
Provisions for Unaffiliated Security Holders: Not applicable. |
(f) |
Eligibility for Listing or Trading: Not Applicable. |
Item 5. |
Past Contacts, Transactions, Negotiations and Agreements. |
(a)-(c), (e) |
Transactions; Significant Corporate Events; Negotiations or Contacts; and Agreements Involving the Subject Companys Securities: The information set forth in the Schedule 14D-9 under the caption Item
3. Past Contacts, Transactions, Negotiations and Agreements and in the Offer to Purchase under the captions Special Factors Section 1 Background of the Offer; Past Contacts or Negotiations with the Company and
Special Factors Section 6 The Merger Agreement; Other Agreements is incorporated herein by reference. |
Item 6. |
Purposes of the Transaction and Plans or Proposals. |
(b), (c)(1)-(8) |
Use of Securities Acquired, Plans: The information set forth in the Schedule 14D-9 under the captions Item 3. Past Contacts, Transactions, Negotiations and Agreements, Item 4.
Solicitation/RecommendationBackground and Reasons for the Boards Position, and in the Offer to Purchase under the captions Special Factors Section 1 Background of the Offer; Past Contacts or Negotiations with
the Company, Special Factors Section 2 Purpose of the Offer; Plans for the Company and Special Factors Section 5 Certain Effects of the Offer is incorporated herein by reference.
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Item 7. |
Purposes, Alternatives, Reasons and Effects. |
(a) |
Purposes. The information set forth in the Schedule 14D-9 under the caption Item 4. The Solicitation or RecommendationBackground and Reasons for the Boards Recommendation, and in the Offer
to Purchase under the caption Special Factors Section 2 Purpose of the Offer; Plans for the Company is incorporated herein by reference. |
(b) |
Alternatives. Not applicable. |
(c) |
Reasons. The information set forth in the Schedule 14D-9 under the caption Item 4. The Solicitation or RecommendationBackground and Reasons for the Boards Recommendation, and in the Offer
to Purchase under the caption Special Factors Section 2 Purpose of the Offer; Plans for the Company is incorporated herein by reference. |
(d) |
Effects: The information set forth in the Schedule 14D-9 under the caption Item 4. The Solicitation or RecommendationBackground and Reasons for the Boards Recommendation, and in the Offer
to Purchase under the captions Special Factors Section 2 Purpose of the Offer; Plans for the Company, Special Factors Section 5 Certain Effects of the Offer and The Tender Offer
Section 5 Certain U.S. Federal Income Tax Consequences of the Offer is incorporated herein by reference. |
Item 8. |
Fairness of the Transaction. |
(a)-(b) |
Fairness; Factors Considered in Determining Fairness: The information set forth in the Schedule 14D-9 under the caption Item 4. The Solicitation or Recommendation is incorporated herein by reference.
The information set forth in the Offer to Purchase under the captions Special Factors Section 3 Position of the Company Regarding the Fairness of the Offer and the Merger and Special Factors Section 4
Position of the Purchaser Group Regarding Fairness of the Offer and the Merger is incorporated herein by reference. |
(c) |
Approval of Security Holders: The information set forth in the Schedule 14D-9 under the caption Item 4. The Solicitation or Recommendation is incorporated herein by reference. |
(d) |
Unaffiliated Representative: The information set forth in the Schedule 14D-9 under the caption Item 4. The Solicitation or Recommendation is incorporated herein by reference. |
(e) |
Approval of Directors: The information set forth in the Schedule 14D-9 under the caption Item 4. The Solicitation or Recommendation is incorporated herein by reference. |
(f) |
Other Offers: Not applicable. |
Item 9. |
Reports, Opinions, Appraisals and Negotiations. |
(a) |
Report, Opinion or Appraisal: The information set forth in the Schedule 14D-9 under the caption Item 4. The Solicitation or Recommendation is incorporated herein by reference. |
(b) |
Preparer and Summary of the Report, Opinion or Appraisal: The information set forth in the Schedule 14D-9 under the caption Item 4. The Solicitation or Recommendation is incorporated herein by
reference. |
(c) |
Availability of Documents: The reports, opinions or appraisals referenced in this Item 9 will be made available for inspection and copying at the principal executive offices of the Company during its regular
business hours by any interested holder of Shares or representative of any such interested holder who has been so designated in writing. |
Item 10. |
Source and Amounts of Funds or Other Consideration. |
(a) |
Source of Funds: The information contained in the Offer to Purchase under the captions The Tender Offer Section 9 Source and Amount of Funds, Special Factors Section 6
The Merger Agreement; Other Agreements and Special Factors Section 9 Certain Relationships between Purchaser or Acquisition Sub and the Company is incorporated herein by reference. |
(b) |
Conditions: The information contained in the Offer to Purchase under the captions Special Factors Section 6 The Merger Agreement; Other Agreements, The Tender Offer Section
2 Acceptance for Payment and Payment for Shares, The Tender Offer Section 3 Procedures for Accepting the Offer and Tendering Shares, and The Tender Offer Section 11 Conditions of the
Offer is incorporated herein by reference. |
(c) |
Expenses: The information set forth in the Offer to Purchase under the caption The Tender Offer Section 13 Fees and Expenses is incorporated herein by reference. |
(d) |
Borrowed Funds: Not applicable. |
Item 11. |
Interest in Securities of the Subject Company. |
(a) |
Securities Ownership: The information set forth in the Offer to Purchase under the captions Special Factors Section 1 Background of the Offer; Past Contacts or Negotiations with the
Company, Special Factors Section 6 The Merger Agreement; Other Agreements and Special Factors Section 9 Certain Relationships between Purchaser or Acquisition Sub and the Company is
incorporated herein by reference. |
(b) |
Securities Transactions: The information set forth in the Schedule 14D-9 under the caption Item 3. Past Contacts, Transactions, Negotiations and Agreements and in the Offer to Purchase under the
captions Special Factors Section 1 Background of the Offer; Past Contacts or Negotiations with the Company and Special Factors Section 6 The Merger Agreement; Other Agreements is incorporated
herein by reference. |
Item 12. |
The Solicitation or Recommendation. |
(d) |
Intent to Tender or Vote in a Going-Private Transaction: The information set forth in the Schedule 14D-9 under the caption Item 4. The Solicitation or Recommendation is incorporated herein by
reference. The information set forth in the Offer to Purchase under the caption Special Factors Section 6 The Merger Agreement; Other Agreements is incorporated herein by reference. |
(e) |
Recommendations of Others: None. |
Item 13. |
Financial Statements. |
(a) |
Financial Information: GrafTechs Consolidated Financial Statements on pages 61 through 116 of GrafTechs Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as amended (the
10-K), Exhibit 12.1 to the 10-K and GrafTechs unaudited interim Consolidated Financial Statements on pages 3 through 31 of GrafTechs Quarterly Report on Form 10-Q, are incorporated by reference herein. The information set
forth in the Schedule 14D-9 under the caption Item 8. Additional Information and in the Offer to Purchase under the caption The Tender Offer Section 7 Certain Information Concerning the Company is incorporated
by reference herein. |
(b) |
Pro Forma Information: Not applicable. |
Item 14. |
Persons/Assets, Retained, Employed, Compensated or Used. |
(a) |
Solicitations or Recommendations: The information set forth in the Offer to Purchase under the caption The Tender Offer Section 13 Fees and Expenses is incorporated by reference herein.
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(b) |
Employees and Corporate Assets: None. |
Item 15. |
Additional Information. |
(b)-(c) |
Other Material Information: The information set forth in the Schedule 14D-9 under the caption Item 8. Additional Information is incorporated herein by reference. The information contained in the
Exhibits referred to in Item 16 below is incorporated herein by reference. |
ITEM 16. Exhibits.
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(a)(1)(i) |
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Offer to Purchase, dated May 26, 2015 (incorporated herein by reference to Exhibit (a)(1)(A) of the Schedule TO, filed by the Purchaser and Acquisition Sub on May 26, 2015). |
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(a)(1)(ii) |
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Letter of Transmittal (including IRS Form W-9) (incorporated herein by reference to Exhibit (a)(1)(B) of the Schedule TO, filed by Purchaser on May 26, 2015). |
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(a)(1)(iii) |
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Notice of Guaranteed Delivery (incorporated herein by reference to Exhibit (a)(1)(C) of the Schedule TO, filed by Purchaser on May 26, 2015). |
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(a)(1)(iv) |
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Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated herein by reference to Exhibit (a)(1)(D) of the Schedule TO, filed by Purchaser on May 26, 2015). |
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(a)(1)(v) |
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Letter for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated herein by reference to Exhibit (a)(1)(E) of the Schedule TO, filed by Purchaser on May 26, 2015). |
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(a)(1)(vi) |
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Summary Advertisement as published in the Wall Street Journal (incorporated herein by reference to Exhibit (a)(1)(F) of the Schedule TO, filed by Purchaser on May 26, 2015). |
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(a)(1)(vii) |
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Letter to Participants in the GrafTech International Holdings Inc. Savings Plan (incorporated herein by reference to Exhibit (a)(1)(G) of the Schedule TO filed by Purchaser on May 26, 2015). |
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(a)(2) |
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Schedule 14D-9 (incorporated herein by reference to GrafTechs Schedule 14D-9, filed on May 26, 2015). |
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(a)(3) |
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None. |
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(a)(4) |
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None. |
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(a)(5) |
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None. |
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(b) |
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None. |
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(c)(i) |
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Fairness Opinion of J.P. Morgan Securities LLC, dated May 17, 2015, to the Board of Directors of GrafTech International Ltd. (incorporated herein by reference to Annex A to GrafTechs Schedule 14D-9, filed on
May 26, 2015). |
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(c)(ii) |
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Discussion materials prepared by J.P. Morgan Securities LLC for discussion with the board of directors of GrafTech International Ltd., dated May 17, 2015 (filed herewith) |
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(d)(i) |
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Investment Agreement, dated as of May 4, 2015 (incorporated herein by reference to Exhibit 10.1 of GrafTechs Current Report on Form 8-K, filed on May 4, 2015). |
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(d)(ii) |
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Certificate of Designations for Series A Convertible Preferred Stock (incorporated herein by reference to Schedule A to Exhibit 10.1 of GrafTechs Current Report on Form 8-K, filed on May 4, 2015). |
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(d)(iii) |
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Certificate of Designations for Series B Convertible Preferred Stock (incorporated herein by reference to Schedule B to Exhibit 10.1 of GrafTechs Current Report on Form 8-K, filed on May 4, 2015). |
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(d)(iv) |
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Form of Registration Rights Agreement (incorporated herein by reference to Schedule C to Exhibit 10.1 of GrafTechs Current Report on Form 8-K, filed on May 4, 2015). |
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(d)(v) |
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Form of Stockholders Agreement (incorporated herein by reference to Schedule D to Exhibit 10.1 of GrafTechs Current Report on Form 8-K, filed on May 4, 2015). |
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(d)(vi) |
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Limited Guarantee, dated May 4, 2015 (incorporated herein by reference to Exhibit 10.2 to GrafTechs Current Report on Form 8-K, filed on May 4, 2015). |
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(d)(vii) |
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Agreement and Plan of Merger, dated May 17, 2015 (incorporated herein by reference to Exhibit 2.1 of GrafTechs Current Report on Form 8-K, filed on May 18, 2015). |
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(d)(viii) |
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Form of Amended and Restated Stockholders Agreement (incorporated herein by reference to Exhibit A to Exhibit 2.1 of GrafTechs Current Report on Form 8-K, filed on May 18, 2015). |
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(d)(ix) |
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Limited Guarantee, dated May 17, 2015 (incorporated herein by reference to Exhibit 10.1 to GrafTechs Current Report on Form 8-K, filed on May 18, 2015). |
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(d)(x) |
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Tender and Support Agreement, dated May 17, 2015 (incorporated herein by reference to Exhibit 10.2 to GrafTechs Current Report on Form 8-K, filed on May 18, 2015). |
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(d)(xi) |
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Confidentiality Agreement, dated as of March 20, 2015, by and between Brookfield Capital Partners LLC and GrafTech International Ltd.(incorporated herein by reference to Exhibit (d)(3) to the Offer to Schedule TO). |
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(d)(xii) |
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Letters of Intent, dated April 29, 2015, by and between GrafTech and Brookfield Capital Partners Ltd. (incorporated herein by reference to Exhibits 99.1 and 99.2 to GrafTechs Current Report on Form 8-K filed on April 30,
2015). |
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(d)(xiii) |
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Press Releases issued by GrafTech (incorporated herein by reference to Exhibit 99.3 to GrafTechs Current Report on Form 8-K filed on April 29, 2015, Exhibit 99.1 to GrafTechs Current Report on Form 8-K filed on May 4,
2015 and Exhibit 99.1 to GrafTechs Current Report on Form 8-K filed on May 18, 2015). |
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(f) |
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The information set forth in the Schedule 14D-9 under the captions Item 8. Additional InformationAppraisal Rights and Annex B Section 262 of the Delaware General Corporation Law is
incorporated herein by reference. |
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(g) |
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None. |
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and
correct
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GRAFTECH INTERNATIONAL LTD. |
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By: |
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/s/ Joel L. Hawthorne |
Name: |
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Joel L. Hawthorne |
Title: |
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Chief Executive Officer |
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BCP IV GRAFTECH HOLDINGS LP |
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By: |
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BPE IV (NonCdn) GP LP,
its general partner |
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By: |
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Brookfield Capital Partners Ltd.,
its general partner |
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By: |
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/s/ David Nowak |
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Name: |
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David Nowak |
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Title: |
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Managing Partner |
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By: |
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/s/ J. Peter Gordon |
Name: |
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J. Peter Gordon |
Title: |
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Managing Partner |
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ATHENA ACQUISITION SUBSIDIARY INC. |
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By: |
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/s/ David Neiman |
Name: |
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David Neiman |
Title: |
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Senior Vice President |
EXHIBIT INDEX
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(a)(1)(i) |
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Offer to Purchase, dated May 26, 2015 (incorporated herein by reference to Exhibit (a)(1)(A) of the Schedule TO, filed by the Purchaser and Acquisition Sub on May 26, 2015). |
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(a)(1)(ii) |
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Letter of Transmittal (including IRS Form W-9) (incorporated herein by reference to Exhibit (a)(1)(B) of the Schedule TO, filed by Purchaser on May 26, 2015). |
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(a)(1)(iii) |
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Notice of Guaranteed Delivery (incorporated herein by reference to Exhibit (a)(1)(C) of the Schedule TO, filed by Purchaser on May 26, 2015). |
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(a)(1)(iv) |
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Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated herein by reference to Exhibit (a)(1)(D) of the Schedule TO, filed by Purchaser on May 26, 2015). |
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(a)(1)(v) |
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Letter for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated herein by reference to Exhibit (a)(1)(E) of the Schedule TO, filed by Purchaser on May 26, 2015). |
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(a)(1)(vi) |
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Summary Advertisement as published in the Wall Street Journal (incorporated herein by reference to Exhibit (a)(1)(F) of the Schedule TO, filed by Purchaser on May 26, 2015). |
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(a)(1)(vii) |
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Letter to Participants in the GrafTech International Holdings Inc. Savings Plan (incorporated herein by reference to Exhibit (a)(1)(G) of the Schedule TO filed by Purchaser on May 26, 2015). |
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(a)(2) |
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Schedule 14D-9 (incorporated herein by reference to GrafTechs Schedule 14D-9, filed on May 26, 2015). |
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(a)(3) |
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None. |
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(a)(4) |
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None. |
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(a)(5) |
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None. |
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(b) |
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None. |
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(c)(i) |
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Fairness Opinion of J.P. Morgan Securities LLC, dated May 17, 2015, to the Board of Directors of GrafTech International Ltd. (incorporated herein by reference to Annex A to GrafTechs Schedule 14D-9, filed on
May 26, 2015). |
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(c)(ii) |
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Discussion materials prepared by J.P. Morgan Securities LLC for discussion with the board of directors of GrafTech International Ltd., dated May 17, 2015 (filed herewith) |
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(d)(i) |
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Investment Agreement, dated as of May 4, 2015 (incorporated herein by reference to Exhibit 10.1 of GrafTechs Current Report on Form 8-K, filed on May 4, 2015). |
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(d)(ii) |
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Certificate of Designations for Series A Convertible Preferred Stock (incorporated herein by reference to Schedule A to Exhibit 10.1 of GrafTechs Current Report on
Form 8-K, filed on May 4, 2015). |
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(d)(iii) |
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Certificate of Designations for Series B Convertible Preferred Stock (incorporated herein by reference to Schedule B to Exhibit 10.1 of GrafTechs Current Report on Form 8-K, filed on May 4, 2015). |
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(d)(iv) |
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Form of Registration Rights Agreement (incorporated herein by reference to Schedule C to Exhibit 10.1 of GrafTechs Current Report on Form 8-K, filed on May 4, 2015). |
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(d)(v) |
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Form of Stockholders Agreement (incorporated herein by reference to Schedule D to Exhibit 10.1 of GrafTechs Current Report on Form 8-K, filed on May 4, 2015). |
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(d)(vi) |
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Limited Guarantee, dated May 4, 2015 (incorporated herein by reference to Exhibit 10.2 to GrafTechs Current Report on Form 8-K, filed on May 4, 2015). |
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(d)(vii) |
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Agreement and Plan of Merger, dated May 17, 2015 (incorporated herein by reference to Exhibit 2.1 of GrafTechs Current Report on Form 8-K, filed on May 18, 2015). |
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(d)(viii) |
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Form of Amended and Restated Stockholders Agreement (incorporated herein by reference to Exhibit A to Exhibit 2.1 of GrafTechs Current Report on Form 8-K, filed on May 18, 2015). |
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(d)(ix) |
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Limited Guarantee, dated May 17, 2015 (incorporated herein by reference to Exhibit 10.1 to GrafTechs Current Report on Form 8-K, filed on May 18, 2015). |
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(d)(x) |
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Tender and Support Agreement, dated May 17, 2015 (incorporated herein by reference to Exhibit 10.2 to GrafTechs Current Report on Form 8-K, filed on May 18,
2015). |
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(d)(xi) |
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Confidentiality Agreement, dated as of March 20, 2015, by and between Brookfield Capital Partners LLC and GrafTech International Ltd.(incorporated herein by reference to Exhibit (d)(3) to the Offer to Schedule TO). |
|
|
(d)(xii) |
|
Letters of Intent, dated April 29, 2015, by and between GrafTech and Brookfield Capital Partners Ltd. (incorporated herein by reference to Exhibits 99.1 and 99.2 to GrafTechs Current Report on Form 8-K filed on April 30,
2015). |
|
|
(d)(xiii) |
|
Press Releases issued by GrafTech (incorporated herein by reference to Exhibit 99.3 to GrafTechs Current Report on Form 8-K filed on April 29, 2015, Exhibit 99.1 to GrafTechs Current Report on Form 8-K filed on May 4,
2015 and Exhibit 99.1 to GrafTechs Current Report on Form 8-K filed on May 18, 2015). |
|
|
(f) |
|
The information set forth in the Schedule 14D-9 under the captions Item 8. Additional InformationAppraisal Rights and Annex B Section 262 of the Delaware General Corporation Law is
incorporated herein by reference. |
|
|
(g) |
|
None. |
Exhibit (c)(ii)
STRICTLY PRIVATE AND CONFIDENTIAL
PROJECT ATHENA
Presentation to the Board of Directors
May 17,
2015
PROJECT ATHENA
This presentation was prepared exclusively for the benefit and internal use of the J.P. Morgan client to whom it is directly addressed and delivered (including
such clients subsidiaries, the Company) in order to assist the Company in evaluating, on a preliminary basis, the feasibility of a possible transaction or transactions and does not carry any right of publication or disclosure, in
whole or in part, to any other party. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan. Neither this presentation nor
any of its contents may be disclosed or used for any other purpose without the prior written consent of J.P. Morgan.
The information in this presentation
is based upon any management forecasts supplied to us and reflects prevailing conditions and our views as of this date, all of which are accordingly subject to change. J.P. Morgans opinions and estimates constitute J.P. Morgans judgment
and should be regarded as indicative, preliminary and for illustrative purposes only. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from
public sources or which was provided to us by or on behalf of the Company or which was otherwise reviewed by us. In addition, our analyses are not and do not purport to be appraisals of the assets, stock, or business of the Company or any other
entity. J.P. Morgan makes no representations as to the actual value which may be received in connection with a transaction nor the legal, tax or accounting effects of consummating a transaction. Unless expressly contemplated hereby, the information
in this presentation does not take into account the effects of a possible transaction or transactions involving an actual or potential change of control, which may have significant valuation and other effects.
Notwithstanding anything herein to the contrary, the Company and each of its employees, representatives or other agents may disclose to any and all persons,
without limitation of any kind, the U.S. federal and state income tax treatment and the U.S. federal and state income tax structure of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that
are provided to the Company relating to such tax treatment and tax structure insofar as such treatment and/or structure relates to a U.S. federal or state income tax strategy provided to the Company by J.P. Morgan.
J.P. Morgans policies prohibit employees from offering, directly or indirectly, a favorable research rating or specific price target, or offering to
change a rating or price target, to a subject company as consideration or inducement for the receipt of business or for compensation. J.P. Morgan also prohibits its research analysts from being compensated for involvement in investment banking
transactions except to the extent that such participation is intended to benefit investors.
IRS Circular 230 Disclosure: JPMorgan
Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters included herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the
promotion, marketing or recommendation by anyone not affiliated with JPMorgan Chase & Co. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.
J.P. Morgan is the marketing name for the Corporate and Investment Banking activities of JPMorgan Chase Bank, N.A., JPMS (member, NYSE), J.P. Morgan PLC
authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority) and their investment banking affiliates.
|
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PROJECT ATHENA |
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PROJECT ATHENA
Agenda
|
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|
|
PROJECT ATHENA |
|
1 |
|
|
TRANSACTION OVERVIEW
Situation overview
|
|
|
J.P. Morgan has been engaged by GrafTech International (the Company) to act as exclusive financial advisor on its potential sale to Brookfield Asset Management (Brookfield) for a cash
consideration at a firm value of ~$1.2bn |
|
|
|
GrafTech is a publicly traded (NYSE: GTI), leading supplier of graphite solutions for a variety of end markets |
|
|
|
Brookfield is a Canadian asset management company that manages ~$200bn AUM across real estate, infrastructure, renewable power and private equity |
|
|
|
On March 19, 2015, the Company informed J.P. Morgan that it had received an approach from Brookfield |
|
|
|
The proposal, dated March 18, 2015, outlined that Brookfield was prepared to acquire all of the Companys outstanding common stock at a price of $5.00 - $5.25 per share |
|
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|
It also stated that Brookfield would offer the existing Company shareholders the opportunity to continue to hold their shares |
|
|
|
The Company allowed Brookfield to enter into a period of due diligence with the intention of receiving a revised offer |
|
|
|
On April 14th, Brookfield proposed the purchase of $150mm of 7.0% convertible preferred shares and a tender offer for up to 100% of the Companys common
stock at a price of $5.00 per share, subject to a minimum of 35% of the Companys common stock on a fully diluted basis (including the preferred shares) |
|
|
|
The Company, its representatives and Brookfield negotiated the terms of the transaction over the following 2 weeks |
|
|
|
On April 29, 2015, after market close, the Company publicly announced that it had agreed to a letter of intent (LOI) with Brookfield for both the $150mm convertible preferred investment and tender offer
at $5.05 per share, a premium of 16.6% based on the Companys closing stock price as of April 29, 2015 and subject to a minimum of 30% of the Companys common stock on a fully diluted basis (including the preferred shares)
|
|
|
|
The signing of a definitive agreement for the convertible preferred investment was announced to the market on May 4th and is expected to close after receipt of
regulatory approval, including CFIUS |
|
|
|
At the same time of the announcement of the LOI, the Company announced its 1Q 2015 results, lowered its 1H 2015 EBITDA guidance and announced the resignation of the Company CFO |
|
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PROJECT ATHENA |
|
2 |
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|
TRANSACTION OVERVIEW
Company announcements on April 29, 2015
|
|
|
|
|
Q1 earnings |
|
Net sales of $207mm, decrease of 26% from Q1 2014
Adjusted EBITDA of $17mm,
compared to $33mm in Q1 2014
Adjusted net loss of ($0.10)/sh, compared to $0.01/sh same in Q1 2014 |
|
Equity analyst estimates vs. actual ($mm, except EPS)
|
|
|
|
Guidance |
|
1H 2015 EBITDA target of $30mm $40mm
Previous guidance: $45mm
$55mm 1H 2015 operating
cash flow target of c.$30mm $40mm
Previous guidance: $40mm $50mm |
|
Equity analyst EBITDA estimates ($mm)
|
|
|
CFO Resignation |
|
Announced Erick R. Asmussens decision to accept a Chief
Financial Officer role at another company
Appointment of Quinn Coburn as interim Chief Financial Officer |
|
|
Brookfield LOI |
|
Announced Letters of Intent with Brookfield Asset Management for
Preferred Equity investment and tender offer
Postponed the Companys 2015 Annual Meeting to a later date in order to give stockholders
adequate opportunity to consider their options presented by the tender offer |
Source: Company press release, FactSet
|
|
|
|
|
PROJECT ATHENA |
|
3 |
|
|
TRANSACTION OVERVIEW
Transaction snapshot
Key transaction metrics
|
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|
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|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
Pre-LOI and earnings ann1,6 |
|
|
|
|
|
|
|
Brookfield offer |
|
|
|
|
Current |
|
$mm, except per share amounts |
|
|
|
|
$4.33 |
|
|
|
|
|
|
|
$5.05 |
|
|
|
|
$4.95 |
|
Implied premium to current |
|
$ |
4.95 |
|
|
|
(12.5 |
)% |
|
|
|
|
|
|
|
|
2.0 |
% |
|
|
|
|
0.0 |
% |
Implied premium to LOI date (as of 04/29/15) |
|
$ |
4.33
|
1
|
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
16.6 |
% |
|
|
|
|
14.3 |
% |
Implied premium to 30-day average (as of 04/29/15)1 |
|
$ |
4.09 |
|
|
|
5.9 |
% |
|
|
|
|
|
|
|
|
23.5 |
% |
|
|
|
|
21.0 |
% |
Implied premium to 60-day average (as of 04/29/15)1 |
|
$ |
4.03 |
|
|
|
7.5 |
% |
|
|
|
|
|
|
|
|
25.4 |
% |
|
|
|
|
22.9 |
% |
Implied premium to 52-week high |
|
$ |
10.77 |
|
|
|
(59.8 |
)% |
|
|
|
|
|
|
|
|
(53.1 |
)% |
|
|
|
|
(54.0 |
)% |
Implied premium to 52-week low |
|
$ |
3.58 |
|
|
|
20.9 |
% |
|
|
|
|
|
|
|
|
41.1 |
% |
|
|
|
|
38.3 |
% |
Fully diluted shares outstanding (mm) |
|
|
|
|
|
|
138.6 |
|
|
|
|
|
|
|
|
|
168.9 |
2 |
|
|
|
|
138.9 |
|
Equity value |
|
|
|
|
|
$ |
600 |
|
|
|
|
|
|
|
|
$ |
853 |
|
|
|
|
$ |
688 |
|
Plus: debt |
|
|
|
|
|
|
530 |
|
|
|
|
|
|
|
|
|
536 |
3 |
|
|
|
|
678 |
2 |
Less: cash |
|
|
|
|
|
|
18 |
|
|
|
|
|
|
|
|
|
161 |
2 |
|
|
|
|
161 |
2 |
Less: Expected cash proceeds from discontinued division4 |
|
|
|
|
|
|
49 |
|
|
|
|
|
|
|
|
|
49 |
|
|
|
|
|
49 |
|
Firm value |
|
|
|
|
|
$ |
1,064 |
|
|
|
|
|
|
|
|
$ |
1,180 |
|
|
|
|
$ |
1,156 |
|
|
|
|
|
|
|
|
|
Multiples Management |
|
Metric |
|
|
|
|
|
|
|
Metric |
|
|
|
|
|
|
|
|
|
Q1 2015A LTM EBITDA |
|
$ |
106 |
|
|
|
10.0x |
|
|
|
|
$ |
106 |
|
|
|
11.1x |
|
|
|
|
|
10.9x |
|
FV/2015E EBITDA |
|
|
83 |
|
|
|
12.8x |
|
|
|
|
$ |
83 |
|
|
|
14.2x |
|
|
|
|
|
13.9x |
|
FV/2016E EBITDA |
|
|
96 |
|
|
|
11.0x |
|
|
|
|
$ |
96 |
|
|
|
12.2x |
|
|
|
|
|
12.0x |
|
|
|
|
|
|
|
|
|
Multiples Street5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FV/2015E EBITDA |
|
$ |
121 |
|
|
|
9.2x |
|
|
|
|
$ |
72 |
|
|
|
17.1x |
|
|
|
|
|
16.8x |
|
FV/2016E EBITDA |
|
|
161 |
|
|
|
6.9x |
|
|
|
|
|
110 |
|
|
|
11.2x |
|
|
|
|
|
11.0x |
|
Source: Management, company filings, FactSet as of 05/15/15
1 |
LOI announced after market on 04/29/15 |
2 |
Pro forma for the $150mm convertible preferred with a conversion price of $5.00 (assume full conversion if stock price in excess of $5.00) |
3 |
Includes $9mm of make whole on senior subordinated notes |
4 |
AGM division expected to be discontinued; Value represents managements estimation of impairment value |
5 |
$49mm expected cash proceeds from discontinued division excluded from the calculation of firm value for the purposes of the street multiples |
6 |
Shares outstanding, debt, and cash figures based on FY2014A and street estimates based on pre-LOI and earnings announcement |
|
|
|
|
|
PROJECT ATHENA |
|
4 |
|
|
TRANSACTION OVERVIEW
Overview of Brookfield Asset Management
Business overview
|
|
|
Global company with ~$200bn AUM across real estate, infrastructure, renewable power and private equity |
|
|
|
Over $50bn invested over 20 years |
|
|
|
Publicly listed with over $50bn of permanent capital |
|
|
|
100 locations with ~700 investment professionals and ~28,000 operating employees |
|
|
|
Private equity arm has more than 100 investments and $10bn plus of capital deployed |
|
|
|
Specializes in recapitalization and asset investments |
|
|
|
Invests in real estate, financial, manufacturing, forest products, energy and power generation sectors |
|
|
|
Direct experience in steel and other industrial sectors |
|
|
|
Long track record of sponsoring management teams in the execution of turnaround plans |
|
|
|
Headquartered in Toronto, Canada |
Investment strategy
|
|
|
Invest in high quality businesses in niche markets with leading industry positions |
|
|
|
Private Equity & Finance Group targets investments of $100mm to >$1bn |
|
|
|
Common investment characteristics include business having: |
|
|
|
Benefitting from high barriers to entry |
|
|
|
Tangible underlying assets |
|
|
|
Post-acquisition, Brookfield deploys an active management approach focused on strategic, operational and/or financial improvements |
|
|
|
Brookfield generated a ~20% compound return for shareholders over the last 20 years
|
Precedent investments in steel and industrial sector
|
|
|
|
|
Invested in 2007, Manufacturer of kraft paper and containerboard
EBITDA improved from $41mm to a run-rate of ~$200mm |
|
|
|
|
Invested in 2004, Manufacturer of flat rolled steel
Simplified excessively complex steel flow; improved product mix; increased production to record levels |
|
|
|
|
Invested in 2006, Manufacturer of oriented strand board
Focused on operating fewer mills at higher capacity utilization; improved product mix |
|
|
|
|
Invested in 2011, Natural gas producer in W. Canada
Completed 5 follow-on acquisitions over 4 years, increasing production base by 15x, generating significant cost savings & synergies |
|
|
|
|
Invested in 2004, Manufacturer of non-woven airlaid materials
Rationalized unprofitable products and focused on high margin specialty products and customer relationships |
Fund overview
|
|
|
|
|
|
|
Real Estate |
|
Renew. Power |
|
Infrastructure |
|
Private Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$126bn AUM
>350mm sq. ft. of office, retail industrial and opportunistic investments |
|
$22bn AUM
~200 hydro facilities 28 wind farms ~6,700 MW |
|
$32bn AUM
Ports, rails, toll roads, natural gas pipelines, etc. |
|
$21bn AUM
Investments across real asset industry verticals |
Source: Company website, Capital IQ,
Public filings, Brookfield presentation dated 03/19/15
|
|
|
|
|
PROJECT ATHENA |
|
5 |
|
|
PROJECT ATHENA
Agenda
|
|
|
|
|
PROJECT ATHENA |
|
6 |
|
|
VALUATION ANALYSIS
GrafTech summary financials
Management forecast ($mm)1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GrafTech forecasts and management guidance |
|
|
|
|
|
2014A |
|
|
2015E |
|
|
2016E |
|
|
2017E |
|
|
2018E |
|
|
2019E |
|
|
2020E |
|
|
2021E |
|
|
2022E |
|
|
2023E |
|
|
2024E |
|
1 |
|
Revenue |
|
$ |
1,085 |
|
|
$ |
779 |
|
|
$ |
806 |
|
|
$ |
908 |
|
|
$ |
1,032 |
|
|
$ |
1,219 |
|
|
|
1,306 |
|
|
$ |
1,348 |
|
|
$ |
1,397 |
|
|
$ |
1,458 |
|
|
$ |
1,394 |
|
|
|
% growth |
|
|
(7.0 |
%) |
|
|
(28.3 |
%) |
|
|
3.5 |
% |
|
|
12.6 |
% |
|
|
13.8 |
% |
|
|
18.0 |
% |
|
|
7.1 |
% |
|
|
3.2 |
% |
|
|
3.6 |
% |
|
|
4.4 |
% |
|
|
(4.4 |
%) |
2 |
|
EBITDA2 |
|
|
121 |
|
|
|
83 |
|
|
|
96 |
|
|
|
166 |
|
|
|
208 |
|
|
|
289 |
|
|
|
304 |
|
|
|
315 |
|
|
|
328 |
|
|
|
354 |
|
|
|
314 |
|
|
|
% margin |
|
|
11.2 |
% |
|
|
10.7 |
% |
|
|
12.0 |
% |
|
|
18.3 |
% |
|
|
20.1 |
% |
|
|
23.7 |
% |
|
|
23.3 |
% |
|
|
23.4 |
% |
|
|
23.5 |
% |
|
|
24.3 |
% |
|
|
22.5 |
% |
3 |
|
D&A |
|
|
91 |
|
|
|
74 |
|
|
|
69 |
|
|
|
68 |
|
|
|
68 |
|
|
|
69 |
|
|
|
77 |
|
|
|
77 |
|
|
|
80 |
|
|
|
82 |
|
|
|
77 |
|
|
|
% capex |
|
|
100.7 |
% |
|
|
145.2 |
% |
|
|
121.8 |
% |
|
|
114.6 |
% |
|
|
80.5 |
% |
|
|
82.7 |
% |
|
|
113.0 |
% |
|
|
65.4 |
% |
|
|
79.0 |
% |
|
|
110.9 |
% |
|
|
90.0 |
% |
4 |
|
Capex |
|
|
90 |
|
|
|
51 |
|
|
|
56 |
|
|
|
59 |
|
|
|
85 |
|
|
|
84 |
|
|
|
69 |
|
|
|
118 |
|
|
|
101 |
|
|
|
74 |
|
|
|
86 |
|
|
|
% sales |
|
|
8.3 |
% |
|
|
6.6 |
% |
|
|
7.0 |
% |
|
|
6.5 |
% |
|
|
8.2 |
% |
|
|
6.9 |
% |
|
|
5.2 |
% |
|
|
8.8 |
% |
|
|
7.3 |
% |
|
|
5.0 |
% |
|
|
6.1 |
% |
1 |
Revenue as per business plan |
|
|
|
After 2019: business plans for Needle Coke, Graphite Electrodes, and Eliminations; Refactory grows at 0.5% revenue growth per annum, and ES division trends downward to 2.0% perpetuity growth |
|
|
|
EBITDA margins as per business plan |
2 |
After 2019: business plans for Needle Coke, 24.6% EBITDA margin in 2024E; business plan for Graphite Electrodes, 20.8% EBITDA margin in 2024E; Refactory Systems revenue grows at 0.5% each year, COGS grow at 3.0% each
year and SG&A grows at 5.0% each year; COGS, SG&A and R&D as % sales kept constant at 2019 levels for remaining businesses |
3 |
D&A as per business plan |
|
|
|
D&A trends to 90% of capital expenditures by 2024E on a WholeCo basis |
4 |
Capital expenditures as per business plan and guidance for any extrapolations |
|
|
|
After 2019: Needle Coke and Graphite Electrodes as per business plans (2024 Needle Coke capex includes an incremental $10mm capex for drum replacements); All other businesses capex as % of sales kept constant at 2019E
levels, with exception of Advanced Materials (part of Engineered Solutions) where capex trends to 7.9% of sales. |
Source: Management, Company
filings
Note: Consolidated financials adjusted for corporate level items and intercompany eliminations
1 |
Excludes financial contribution of Advanced Graphite Materials division from 2015E onwards |
2 |
Includes corporate allocation |
|
|
|
|
|
PROJECT ATHENA |
|
7 |
|
|
VALUATION ANALYSIS
GrafTech segment level financials
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Graphite Electrodes ($mm) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GrafTech forecasts |
|
|
Mgmt guidance |
|
|
|
2014A |
|
|
2015E |
|
|
2016E |
|
|
2017E |
|
|
2018E |
|
|
2019E |
|
|
2020E |
|
|
2021E |
|
|
2022E |
|
|
2023E |
|
|
2024E |
|
Revenue |
|
|
747 |
|
|
|
581 |
|
|
|
569 |
|
|
|
644 |
|
|
|
712 |
|
|
|
805 |
|
|
|
876 |
|
|
|
891 |
|
|
|
906 |
|
|
|
933 |
|
|
|
869 |
|
% growth |
|
|
|
|
|
|
(22.2 |
)% |
|
|
(2.2 |
)% |
|
|
13.2 |
% |
|
|
10.6 |
% |
|
|
13.1 |
% |
|
|
8.8 |
% |
|
|
1.7 |
% |
|
|
1.8 |
% |
|
|
2.9 |
% |
|
|
(6.9 |
)% |
EBITDA1 |
|
|
66 |
|
|
|
36 |
|
|
|
49 |
|
|
|
110 |
|
|
|
143 |
|
|
|
201 |
|
|
|
226 |
|
|
|
232 |
|
|
|
239 |
|
|
|
256 |
|
|
|
181 |
|
% margin |
|
|
8.8 |
% |
|
|
6.1 |
% |
|
|
8.6 |
% |
|
|
17.2 |
% |
|
|
20.1 |
% |
|
|
25.0 |
% |
|
|
25.9 |
% |
|
|
26.1 |
% |
|
|
26.4 |
% |
|
|
27.4 |
% |
|
|
20.8 |
% |
Capex |
|
|
30 |
|
|
|
27 |
|
|
|
30 |
|
|
|
30 |
|
|
|
50 |
|
|
|
50 |
|
|
|
36 |
|
|
|
37 |
|
|
|
37 |
|
|
|
38 |
|
|
|
40 |
|
% sales |
|
|
4.0 |
% |
|
|
4.6 |
% |
|
|
5.3 |
% |
|
|
4.7 |
% |
|
|
7.0 |
% |
|
|
6.2 |
% |
|
|
4.1 |
% |
|
|
4.1 |
% |
|
|
4.1 |
% |
|
|
4.1 |
% |
|
|
4.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Needle Coke ($mm) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GrafTech forecasts |
|
|
Mgmt guidance |
|
|
|
2014A |
|
|
2015E |
|
|
2016E |
|
|
2017E |
|
|
2018E |
|
|
2019E |
|
|
2020E |
|
|
2021E |
|
|
2022E |
|
|
2023E |
|
|
2024E |
|
Revenue |
|
|
222 |
|
|
|
149 |
|
|
|
164 |
|
|
|
161 |
|
|
|
165 |
|
|
|
177 |
|
|
|
164 |
|
|
|
169 |
|
|
|
187 |
|
|
|
214 |
|
|
|
257 |
|
% growth |
|
|
|
|
|
|
(32.8 |
)% |
|
|
9.6 |
% |
|
|
(1.4 |
)% |
|
|
2.4 |
% |
|
|
7.1 |
% |
|
|
(7.0 |
)% |
|
|
2.9 |
% |
|
|
10.5 |
% |
|
|
14.2 |
% |
|
|
20.3 |
% |
EBITDA1 |
|
|
26 |
|
|
|
26 |
|
|
|
21 |
|
|
|
22 |
|
|
|
24 |
|
|
|
28 |
|
|
|
13 |
|
|
|
15 |
|
|
|
20 |
|
|
|
28 |
|
|
|
63 |
|
% margin |
|
|
11.5 |
% |
|
|
17.7 |
% |
|
|
13.0 |
% |
|
|
13.9 |
% |
|
|
14.5 |
% |
|
|
15.6 |
% |
|
|
7.6 |
% |
|
|
8.8 |
% |
|
|
10.5 |
% |
|
|
13.2 |
% |
|
|
24.6 |
% |
Capex |
|
|
23 |
|
|
|
14 |
|
|
|
15 |
|
|
|
18 |
|
|
|
12 |
|
|
|
13 |
|
|
|
10 |
|
|
|
58 |
|
|
|
40 |
|
|
|
11 |
|
|
|
21 |
|
% sales |
|
|
10.5 |
% |
|
|
9.1 |
% |
|
|
9.3 |
% |
|
|
11.2 |
% |
|
|
7.3 |
% |
|
|
7.2 |
% |
|
|
6.2 |
% |
|
|
34.2 |
% |
|
|
21.2 |
% |
|
|
5.1 |
% |
|
|
8.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Refactory Systems ($mm) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GrafTech forecasts |
|
|
Management guidance |
|
|
|
2014A |
|
|
2015E |
|
|
2016E |
|
|
2017E |
|
|
2018E |
|
|
2019E |
|
|
2020E |
|
|
2021E |
|
|
2022E |
|
|
2023E |
|
|
2024E |
|
Revenue |
|
|
30 |
|
|
|
27 |
|
|
|
37 |
|
|
|
40 |
|
|
|
43 |
|
|
|
44 |
|
|
|
45 |
|
|
|
45 |
|
|
|
45 |
|
|
|
45 |
|
|
|
45 |
|
% growth |
|
|
|
|
|
|
(9.3 |
)% |
|
|
35.9 |
% |
|
|
9.3 |
% |
|
|
7.5 |
% |
|
|
3.3 |
% |
|
|
0.5 |
% |
|
|
0.5 |
% |
|
|
0.5 |
% |
|
|
0.5 |
% |
|
|
0.5 |
% |
EBITDA1 |
|
|
4 |
|
|
|
4 |
|
|
|
6 |
|
|
|
8 |
|
|
|
9 |
|
|
|
10 |
|
|
|
9 |
|
|
|
8 |
|
|
|
6 |
|
|
|
5 |
|
|
|
4 |
|
% margin |
|
|
13.0 |
% |
|
|
13.2 |
% |
|
|
17.8 |
% |
|
|
19.2 |
% |
|
|
20.7 |
% |
|
|
22.2 |
% |
|
|
19.6 |
% |
|
|
17.0 |
% |
|
|
14.3 |
% |
|
|
11.6 |
% |
|
|
8.7 |
% |
Capex |
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
2 |
|
|
|
5 |
|
|
|
2 |
|
|
|
2 |
|
|
|
2 |
|
|
|
2 |
|
|
|
2 |
|
|
|
2 |
|
% sales |
|
|
2.3 |
% |
|
|
4.3 |
% |
|
|
5.8 |
% |
|
|
6.0 |
% |
|
|
12.1 |
% |
|
|
4.7 |
% |
|
|
4.7 |
% |
|
|
4.7 |
% |
|
|
4.7 |
% |
|
|
4.7 |
% |
|
|
4.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Engineered Solutions ($mm)2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GrafTech forecasts |
|
|
Management guidance |
|
|
|
2014A |
|
|
2015E |
|
|
2016E |
|
|
2017E |
|
|
2018E |
|
|
2019E |
|
|
2020E |
|
|
2021E |
|
|
2022E |
|
|
2023E |
|
|
2024E |
|
Revenue |
|
|
245 |
|
|
|
136 |
|
|
|
158 |
|
|
|
179 |
|
|
|
231 |
|
|
|
319 |
|
|
|
351 |
|
|
|
377 |
|
|
|
396 |
|
|
|
408 |
|
|
|
416 |
|
% growth |
|
|
|
|
|
|
(44.5 |
)% |
|
|
16.4 |
% |
|
|
13.2 |
% |
|
|
28.7 |
% |
|
|
38.3 |
% |
|
|
10.0 |
% |
|
|
7.5 |
% |
|
|
5.0 |
% |
|
|
3.0 |
% |
|
|
2.0 |
% |
EBITDA1 |
|
|
26 |
|
|
|
18 |
|
|
|
20 |
|
|
|
26 |
|
|
|
32 |
|
|
|
51 |
|
|
|
56 |
|
|
|
60 |
|
|
|
63 |
|
|
|
65 |
|
|
|
66 |
|
% margin |
|
|
10.8 |
% |
|
|
13.1 |
% |
|
|
12.6 |
% |
|
|
14.4 |
% |
|
|
14.0 |
% |
|
|
16.0 |
% |
|
|
16.0 |
% |
|
|
16.0 |
% |
|
|
16.0 |
% |
|
|
16.0 |
% |
|
|
16.0 |
% |
Capex |
|
|
25 |
|
|
|
4 |
|
|
|
7 |
|
|
|
7 |
|
|
|
15 |
|
|
|
17 |
|
|
|
19 |
|
|
|
20 |
|
|
|
20 |
|
|
|
20 |
|
|
|
20 |
|
% sales |
|
|
10.0 |
% |
|
|
2.9 |
% |
|
|
4.7 |
% |
|
|
4.0 |
% |
|
|
6.7 |
% |
|
|
5.5 |
% |
|
|
5.3 |
% |
|
|
5.2 |
% |
|
|
5.1 |
% |
|
|
5.0 |
% |
|
|
4.9 |
% |
Source: Management, company filings; Post 2024, management assumptions include terminal revenue growth rate of 2.0% and EBITDA
margins of GE 20.8%, NC 24.6%, RS 8.7%, ES 16.0%
1 |
Includes corporate allocation; 2 Excludes financial contribution of Advanced Graphite Materials division from 2015E onwards |
|
|
|
|
|
PROJECT ATHENA |
|
8 |
|
|
VALUATION ANALYSIS
Overview of AGM impairment value
|
|
|
|
|
|
|
|
|
|
|
|
|
AGM impairment breakdown ($mm) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidation value |
|
$mm |
|
2014A |
|
|
% recoverable |
|
|
$mm recoverable |
|
Accounts receivable |
|
|
15 |
|
|
|
100 |
% |
|
|
15 |
|
Inventory |
|
|
58 |
|
|
|
80 |
% |
|
|
46 |
|
Net PP&E |
|
|
16 |
|
|
|
100 |
% |
|
|
16 |
|
Net intangible assets |
|
|
1 |
|
|
|
0 |
% |
|
|
|
|
Deferred tax assets |
|
|
2 |
|
|
|
0 |
% |
|
|
|
|
Other |
|
|
4 |
|
|
|
100 |
% |
|
|
4 |
|
Total assets |
|
|
96 |
|
|
|
85 |
% |
|
|
82 |
|
Accounts payable |
|
|
(7 |
) |
|
|
100 |
% |
|
|
(7 |
) |
Pension liabilities |
|
|
(7 |
) |
|
|
100 |
% |
|
|
(7 |
) |
Deferred tax liabilities |
|
|
(2 |
) |
|
|
0 |
% |
|
|
|
|
Other |
|
|
(5 |
) |
|
|
100 |
% |
|
|
(5 |
) |
Total liabilities |
|
|
(20 |
) |
|
|
91 |
% |
|
|
(18 |
) |
Severance and decommissioning costs |
|
|
|
|
|
|
|
|
|
|
(15 |
) |
AGM liquidation value |
|
|
|
|
|
|
|
|
|
|
49 |
|
Source: Management
Note:
Excludes any tax impact
|
|
|
|
|
PROJECT ATHENA |
|
9 |
|
|
VALUATION ANALYSIS
Preliminary valuation summary
Using
management provided financials
$ per share (rounded to closest $0.05)
Source: Management, company filings, equity research, FactSet
Note: Market data as of 05/15/15; equity analysts trading range included for reference purposes only
1 |
Net debt of $517mm as of 03/31/15; $150mm of convertible preferred with a conversion price of $5.00 (assume full conversion if stock price in excess of $5.00) |
2 |
Assumes valuation date of 03/31/15; 1.50% - 2.50% LTG; 10.5% - 12.5% WACC |
3 |
Excludes financial contribution of Advanced Graphite Materials division |
4 |
Assumes Advanced Graphite Materials division has impairment value of $49mm |
5 |
Net debt of $525mm including $9mm of make whole on senior subordinated notes; $150mm of convertible preferred with a conversion price of $5.00 (assume full conversion if stock price in excess of $5.00)
|
|
|
|
|
|
PROJECT ATHENA |
|
10 |
|
|
VALUATION ANALYSIS
Trading multiples
Trading metrics ($mm, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CYE 12/31 |
|
For reference only |
|
|
Firm value |
|
|
|
|
|
|
|
|
For reference only |
|
|
Share price 5/15/15 |
|
|
% of 52-week high |
|
|
Equity value |
|
|
|
Firm value / |
|
|
Price per share/ |
|
|
Debt/ LTM EBITDA |
|
|
|
|
|
|
2015E EBITDA |
|
|
2016E EBITDA |
|
|
2015E EPS |
|
|
2016E EPS |
|
|
|
|
|
|
|
|
|
|
|
IBIDEN |
|
$ |
19.32 |
|
|
|
98 |
% |
|
$ |
2,668 |
|
|
$ |
2,457 |
|
|
|
4.0x |
|
|
|
4.1x |
|
|
|
18.7x |
|
|
|
17.3x |
|
|
|
1.3x |
|
Showa Denko |
|
|
1.35 |
|
|
|
88 |
% |
|
|
2,027 |
|
|
|
4,840 |
|
|
|
7.1x |
|
|
|
6.4x |
|
|
|
15.4x |
|
|
|
10.7x |
|
|
|
5.9x |
|
SGL Carbon |
|
|
17.39 |
|
|
|
61 |
% |
|
|
1,590 |
|
|
|
2,015 |
|
|
|
14.8x |
|
|
|
11.2x |
|
|
|
N/A |
|
|
|
51.0x |
|
|
|
7.9x |
|
Tokai Carbon |
|
|
2.91 |
|
|
|
91 |
% |
|
|
654 |
|
|
|
870 |
|
|
|
8.1x |
|
|
|
7.0x |
|
|
|
26.0x |
|
|
|
19.5x |
|
|
|
3.0x |
|
Mersen |
|
|
28.39 |
|
|
|
95 |
% |
|
|
590 |
|
|
|
849 |
|
|
|
6.8x |
|
|
|
6.2x |
|
|
|
13.0x |
|
|
|
10.8x |
|
|
|
2.8x |
|
Toyo Tanso |
|
|
17.92 |
|
|
|
82 |
% |
|
|
371 |
|
|
|
330 |
|
|
|
6.8x |
|
|
|
5.4x |
|
|
|
21.7x |
|
|
|
16.5x |
|
|
|
1.1x |
|
Nippon Carbon |
|
|
3.16 |
|
|
|
84 |
% |
|
|
374 |
|
|
|
433 |
|
|
|
10.8x |
|
|
|
10.1x |
|
|
|
26.0x |
|
|
|
22.1x |
|
|
|
2.5x |
|
Graphite India |
|
|
1.31 |
|
|
|
66 |
% |
|
|
255 |
|
|
|
270 |
|
|
|
7.2x |
|
|
|
6.2x |
|
|
|
15.0x |
|
|
|
9.2x |
|
|
|
1.9x |
|
HEG Limited |
|
|
3.28 |
|
|
|
59 |
% |
|
|
131 |
|
|
|
291 |
|
|
|
6.8x |
|
|
|
6.1x |
|
|
|
10.2x |
|
|
|
6.4x |
|
|
|
4.0x |
|
SEC Carbon |
|
|
3.08 |
|
|
|
98 |
% |
|
|
128 |
|
|
|
126 |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
0.7x |
|
Mean |
|
|
|
|
|
|
82 |
% |
|
|
|
|
|
|
|
|
|
|
8.0x |
|
|
|
7.0x |
|
|
|
18.3x |
|
|
|
18.2x |
|
|
|
3.1x |
|
Median |
|
|
|
|
|
|
86 |
% |
|
|
|
|
|
|
|
|
|
|
7.1x |
|
|
|
6.2x |
|
|
|
17.1x |
|
|
|
16.5x |
|
|
|
2.6x |
|
GrafTech (Street) |
|
$ |
4.33
|
2
|
|
|
37 |
% |
|
$ |
600
|
3
|
|
$ |
1,112
|
3
|
|
|
9.2x
|
4
|
|
|
6.9x
|
4
|
|
|
N/M |
|
|
|
32.1x |
|
|
|
5.0x |
|
GrafTech (Mgmt)1 |
|
$ |
4.33
|
2
|
|
|
37 |
% |
|
$ |
600
|
3
|
|
$ |
1,064
|
3
|
|
|
12.8x |
|
|
|
11.0x |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
5.0x |
|
Source: Company filings, equity research, FactSet
Note: Market data as of 05/15/15
1 |
Assumes Advanced Graphite Materials division has impairment value of $49mm; $150mm of convertible preferred with a conversion price of $5.00 (assume full conversion if stock price in excess of $5.00) |
2 |
Pre-LOI announcement closing price as of 04/29/2015 |
3 |
Based on FY2014 shares outstanding, debt and cash |
4 |
Pre-LOI announcement estimates |
|
|
|
|
|
PROJECT ATHENA |
|
11 |
|
|
VALUATION ANALYSIS
Transaction multiples
Change of
control (majority) transactions within the last 10 years
Transaction multiples ($mm)
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
Announced |
|
Acquiror |
|
Target |
|
Transaction value |
|
|
FV/LTM EBITDA |
|
04/08/08 |
|
Murray International Holdings |
|
Hillfoot Steel Group |
|
|
59 |
|
|
|
6.1x |
|
12/21/07 |
|
Morgan Crucible |
|
Certech / Carpenter Advanced Ceramics |
|
|
145 |
|
|
|
7.8x |
|
03/06/07 |
|
Oxbow Carbon & Minerals LLC |
|
Great Lakes Carbon Income Fund |
|
|
671 |
|
|
|
8.0x |
|
10/19/06 |
|
Alcan |
|
Carbone Savoie (GrafTech) (70% stake) |
|
|
135 |
|
|
|
15.1x |
|
05/16/06 |
|
Showa Denko |
|
Showa Highpolymer (62.4% stake) |
|
|
131 |
|
|
|
10.8x |
|
Mean |
|
|
|
|
|
|
|
|
|
|
9.5x |
|
Median |
|
|
|
|
|
|
|
|
|
|
8.0x |
|
Source: Company filings, press releases
|
|
|
|
|
PROJECT ATHENA |
|
12 |
|
|
VALUATION ANALYSIS
Illustrative GrafTech DCF valuation management projections
Free cash flows ($mm)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historicals |
|
|
Management forecasts and guidance |
|
|
|
|
FYE 12/31 |
|
2014A |
|
|
2015E |
|
|
2016E |
|
|
2017E |
|
|
2018E |
|
|
2019E |
|
|
2020E |
|
|
2021E |
|
|
2022E |
|
|
2023E |
|
|
2024E |
|
|
Terminal |
|
Total revenue |
|
$ |
1,085 |
|
|
$ |
779 |
|
|
$ |
806 |
|
|
$ |
908 |
|
|
$ |
1,032 |
|
|
$ |
1,219 |
|
|
$ |
1,306 |
|
|
$ |
1,348 |
|
|
$ |
1,397 |
|
|
$ |
1,458 |
|
|
$ |
1,394 |
|
|
$ |
1,422 |
|
% growth |
|
|
NA |
|
|
|
(28.3 |
%) |
|
|
3.5 |
% |
|
|
12.6 |
% |
|
|
13.8 |
% |
|
|
18.0 |
% |
|
|
7.1 |
% |
|
|
3.2 |
% |
|
|
3.6 |
% |
|
|
4.4 |
% |
|
|
(4.4 |
%) |
|
|
2.0 |
% |
EBITDA |
|
$ |
121 |
|
|
$ |
83 |
|
|
$ |
96 |
|
|
$ |
166 |
|
|
$ |
208 |
|
|
$ |
289 |
|
|
$ |
304 |
|
|
$ |
315 |
|
|
$ |
328 |
|
|
$ |
354 |
|
|
$ |
314 |
|
|
|
320 |
|
% margin |
|
|
11.2 |
% |
|
|
10.7 |
% |
|
|
12.0 |
% |
|
|
18.3 |
% |
|
|
20.1 |
% |
|
|
23.7 |
% |
|
|
23.3 |
% |
|
|
23.4 |
% |
|
|
23.5 |
% |
|
|
24.3 |
% |
|
|
22.5 |
% |
|
|
22.5 |
% |
EBIT |
|
$ |
31 |
|
|
$ |
9 |
|
|
$ |
28 |
|
|
$ |
99 |
|
|
$ |
140 |
|
|
$ |
220 |
|
|
$ |
226 |
|
|
$ |
238 |
|
|
$ |
248 |
|
|
$ |
273 |
|
|
$ |
237 |
|
|
$ |
242 |
|
% margin |
|
|
2.8 |
% |
|
|
1.2 |
% |
|
|
3.4 |
% |
|
|
10.9 |
% |
|
|
13.5 |
% |
|
|
18.0 |
% |
|
|
17.3 |
% |
|
|
17.6 |
% |
|
|
17.8 |
% |
|
|
18.7 |
% |
|
|
17.0 |
% |
|
|
17.0 |
% |
Less: Taxes |
|
|
0 |
|
|
|
(2 |
) |
|
|
(7 |
) |
|
|
(30 |
) |
|
|
(42 |
) |
|
|
(66 |
) |
|
|
(68 |
) |
|
|
(71 |
) |
|
|
(74 |
) |
|
|
(82 |
) |
|
|
(71 |
) |
|
|
(73 |
) |
% tax rate |
|
|
0.0 |
% |
|
|
20.0 |
% |
|
|
25.0 |
% |
|
|
30.0 |
% |
|
|
30.0 |
% |
|
|
30.0 |
% |
|
|
30.0 |
% |
|
|
30.0 |
% |
|
|
30.0 |
% |
|
|
30.0 |
% |
|
|
30.0 |
% |
|
|
30.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIAT |
|
$ |
31 |
|
|
$ |
7 |
|
|
$ |
21 |
|
|
$ |
69 |
|
|
$ |
98 |
|
|
$ |
154 |
|
|
$ |
158 |
|
|
$ |
166 |
|
|
$ |
174 |
|
|
$ |
191 |
|
|
$ |
166 |
|
|
$ |
169 |
|
Plus: D&A |
|
|
91 |
|
|
|
74 |
|
|
|
69 |
|
|
|
68 |
|
|
|
68 |
|
|
|
69 |
|
|
|
77 |
|
|
|
77 |
|
|
|
80 |
|
|
|
82 |
|
|
|
77 |
|
|
|
79 |
|
Less: Capex |
|
|
(90 |
) |
|
|
(51 |
) |
|
|
(56 |
) |
|
|
(59 |
) |
|
|
(85 |
) |
|
|
(84 |
) |
|
|
(69 |
) |
|
|
(118 |
) |
|
|
(101 |
) |
|
|
(74 |
) |
|
|
(86 |
) |
|
|
(87 |
) |
Plus: (Inc) / dec in NWC |
|
|
NA |
|
|
|
50 |
|
|
|
38 |
|
|
|
(16 |
) |
|
|
(28 |
) |
|
|
(42 |
) |
|
|
(35 |
) |
|
|
(10 |
) |
|
|
(11 |
) |
|
|
(13 |
) |
|
|
9 |
|
|
|
(4 |
) |
Less: Proxy contest costs (post-tax) |
|
|
|
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unlevered FCF |
|
|
NA |
|
|
$ |
77 |
|
|
$ |
71 |
|
|
$ |
62 |
|
|
$ |
53 |
|
|
$ |
98 |
|
|
$ |
132 |
|
|
$ |
115 |
|
|
$ |
141 |
|
|
$ |
186 |
|
|
$ |
166 |
|
|
|
157 |
|
Unlevered FCF for discounting |
|
|
NA |
|
|
$ |
58 |
|
|
$ |
71 |
|
|
$ |
62 |
|
|
$ |
53 |
|
|
$ |
98 |
|
|
$ |
132 |
|
|
$ |
115 |
|
|
$ |
141 |
|
|
$ |
186 |
|
|
$ |
166 |
|
|
$ |
157 |
|
Firm value ($mm)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perpetuity growth rate |
|
|
|
|
|
|
1.50% |
|
|
2.00% |
|
|
2.50% |
|
|
|
|
10.5% |
|
|
$ |
1,318 |
|
|
$ |
1,358 |
|
|
$ |
1,403 |
|
Discount rate |
|
|
11.5% |
|
|
|
1,172 |
|
|
|
1,201 |
|
|
|
1,234 |
|
|
|
|
12.5% |
|
|
|
1,052 |
|
|
|
1,074 |
|
|
|
1,099 |
|
Implied share price ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perpetuity growth rate |
|
|
|
|
|
|
1.50% |
|
|
2.00% |
|
|
2.50% |
|
|
|
|
10.5% |
|
|
$ |
5.92 |
|
|
$ |
6.16 |
|
|
$ |
6.42 |
|
Discount rate |
|
|
11.5% |
|
|
$ |
5.05 |
|
|
$ |
5.23 |
|
|
$ |
5.42 |
|
|
|
|
12.5% |
|
|
$ |
4.20 |
|
|
$ |
4.36 |
|
|
$ |
4.54 |
|
Equity value ($mm)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perpetuity growth rate |
|
|
|
|
|
|
1.50% |
|
|
2.00% |
|
|
2.50% |
|
|
|
|
10.5% |
|
|
$ |
1,000 |
|
|
$ |
1,040 |
|
|
$ |
1,085 |
|
Discount rate |
|
|
11.5% |
|
|
|
853 |
|
|
|
883 |
|
|
|
916 |
|
|
|
|
12.5% |
|
|
|
584 |
|
|
|
606 |
|
|
|
631 |
|
Terminal value / Fwd EBITDA (2025E)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perpetuity growth rate |
|
|
|
|
|
1.50% |
|
|
2.00% |
|
|
2.50% |
|
|
|
10.5% |
|
|
5.7x |
|
|
|
6.0x |
|
|
|
6.4x |
|
Discount rate |
|
11.5% |
|
|
5.2x |
|
|
|
5.4x |
|
|
|
5.7x |
|
|
|
12.5% |
|
|
4.7x |
|
|
|
4.9x |
|
|
|
5.2x |
|
Source: Management; Note: Excludes
financial contribution of Advanced Graphite Materials division; net debt of $517mm as of 03/31/15; $150mm of convertible preferred with a strike price of $5.00 (assume full conversion if stock price in excess of $5.00) plus impairment value of
Advanced Graphite Materials division of $49mm; Illustrative valuation as of 03/31/2015
|
|
|
|
|
PROJECT ATHENA |
|
13 |
|
|