Acquisition of a controlling stake in MRI Trading AG
Acquisition of a controlling stake in MRI Trading AG
Acquisition of a controlling stake in MRI Trading AG
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<strong>Acquisition</strong> <strong>of</strong> a<br />
<strong>controll<strong>in</strong>g</strong> <strong>stake</strong> <strong>in</strong><br />
<strong>MRI</strong> Trad<strong>in</strong>g <strong>AG</strong><br />
30 June 2011 – S<strong>in</strong>gapore<br />
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Cautionary note on forward-look<strong>in</strong>g statements<br />
• This presentation may conta<strong>in</strong> statements regard<strong>in</strong>g the bus<strong>in</strong>ess <strong>of</strong> CWT Limited (‘CWT’) and its<br />
subsidiaries (‘Group’) that are <strong>of</strong> a forward look<strong>in</strong>g nature and are therefore based on<br />
management’s assumptions about future developments.<br />
• Such forward look<strong>in</strong>g statements are <strong>in</strong>tended to be identified by words such as ‘believe’,<br />
‘estimate’, ‘<strong>in</strong>tend’, ‘may’, ‘will’, ‘expect’, and ‘project’ and similar expressions as they relate to the<br />
Group.<br />
• Forward-look<strong>in</strong>g statements <strong>in</strong>volve certa<strong>in</strong> risks and uncerta<strong>in</strong>ties because they relate to future<br />
events. Actual results may vary materially from those targeted, expected or projected due to<br />
several factors.<br />
• Potential risks and uncerta<strong>in</strong>ties <strong>in</strong>cludes such factors as general economic conditions, foreign<br />
exchange fluctuations, <strong>in</strong>terest rate changes, commodity price fluctuations and regulatory<br />
developments.<br />
• The reader and/or listener is cautioned to not unduly rely on these forward look<strong>in</strong>g statements.<br />
We do not undertake any duty to publish any update or revision <strong>of</strong> any forward look<strong>in</strong>g<br />
statements.<br />
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• Transaction Overview<br />
• Target Overview<br />
• Investment Rationale<br />
• Management Team<br />
• Summary<br />
• Next Steps<br />
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Presentation Outl<strong>in</strong>e
• Transaction Overview<br />
• Target Overview<br />
• Investment Rationale<br />
• Management Team<br />
• Summary<br />
• Next Steps<br />
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Presentation Outl<strong>in</strong>e
Transaction Overview<br />
• CWT (through its wholly-owed subsidiary Capsolon Pte Ltd) has agreed to<br />
acquire 73.8 % <strong>of</strong> the capital <strong>of</strong> <strong>MRI</strong> Trad<strong>in</strong>g <strong>AG</strong> (‘<strong>MRI</strong>’) from its<br />
owners / management team for a consideration <strong>of</strong> approximately USD<br />
94.0m<br />
• CWT will <strong>in</strong>itially pay upon clos<strong>in</strong>g USD 60.8m be<strong>in</strong>g 73.8% <strong>of</strong> the<br />
estimated net asset value <strong>of</strong> <strong>MRI</strong> as <strong>of</strong> 30th June 2011, subject to<br />
adjustments <strong>in</strong> the purchase price based on f<strong>in</strong>alised completion accounts<br />
– Initial consideration is USD 60.8m <strong>in</strong> cash from CWT’s own funds/borrow<strong>in</strong>gs and through<br />
the issuance <strong>of</strong> 10m new shares <strong>in</strong> CWT Ltd<br />
• CWT will pay an additional USD 33.2m <strong>in</strong> three equal annual cash<br />
<strong>in</strong>stalments<br />
• Transaction is expected to be earn<strong>in</strong>gs and value accretive from first full<br />
year post consolidation<br />
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• Transaction Overview<br />
• Target Overview<br />
• Investment Rationale<br />
• Management Team<br />
• Summary<br />
• Next Steps<br />
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Presentation Outl<strong>in</strong>e
Target Overview<br />
• <strong>MRI</strong> TRADING <strong>AG</strong> is a private commodity market<strong>in</strong>g company owned by its<br />
found<strong>in</strong>g shareholders and management follow<strong>in</strong>g a Management-Buy-Out<br />
completed <strong>in</strong> 2003<br />
• <strong>MRI</strong> is focused <strong>in</strong> base metals non-ferrous concentrates physical trad<strong>in</strong>g<br />
(Copper, Z<strong>in</strong>c and Lead predom<strong>in</strong>antly) where it has established a position<br />
as a challenger to the <strong>in</strong>dustry’s two largest players Glencore and Trafigura<br />
• <strong>MRI</strong> has generated over the past years a consolidated turnover <strong>in</strong> excess <strong>of</strong><br />
USD 2bn through the market<strong>in</strong>g <strong>of</strong> base metals non-ferrous concentrates to<br />
a global smelt<strong>in</strong>g and process<strong>in</strong>g customer base<br />
– Established supplier and client relationships across metals and geographies<br />
– Recognised strategic position especially <strong>in</strong> copper market<strong>in</strong>g with approximately 1m dmt <strong>of</strong><br />
copper concentrates traded annually<br />
• <strong>MRI</strong>’s head Office is located <strong>in</strong> Zug, Switzerland; it benefits from a wide<br />
<strong>in</strong>ternational network <strong>in</strong>clud<strong>in</strong>g representative <strong>of</strong>fices or subsidiaries <strong>in</strong><br />
Australia, Chile, Ch<strong>in</strong>a, Mexico, Peru, and South Africa<br />
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In dmt ms<br />
Total market<br />
Addressable<br />
market<br />
<strong>MRI</strong> market<strong>in</strong>g<br />
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Snapshot <strong>of</strong> Market<strong>in</strong>g Operations<br />
Copper concentrates Z<strong>in</strong>c concentrates Lead concentrates<br />
46.9<br />
6.1<br />
0.8-1.0<br />
24.8<br />
20.0<br />
0.2-0.5<br />
6.2<br />
1.4<br />
0.1-0.2<br />
���� Core competence <strong>in</strong> commodity market<strong>in</strong>g and risk management<br />
���� Scale and critical mass <strong>in</strong> base metals concentrates, esp. copper<br />
���� Longstand<strong>in</strong>g supplier and client relationships through spot and frame<br />
agreements
F<strong>in</strong>ancial Summary<br />
• CWT is acquir<strong>in</strong>g <strong>MRI</strong> follow<strong>in</strong>g a sp<strong>in</strong> <strong>of</strong>f <strong>of</strong> <strong>MRI</strong>’s previous <strong>in</strong>vestments <strong>in</strong><br />
m<strong>in</strong><strong>in</strong>g operations, leav<strong>in</strong>g <strong>MRI</strong> to focus on its core base metals trad<strong>in</strong>g<br />
operations<br />
• <strong>MRI</strong>’s estimated net asset value as <strong>of</strong> 30 th June 2011 is approximately USD<br />
82.41m<br />
– Completion accounts are set to confirm net asset value with<strong>in</strong> 3 months<br />
• <strong>MRI</strong> has generated consistently over USD 2bn <strong>in</strong> turnover over the past<br />
years, and due diligence has demonstrated its capability to generate <strong>in</strong><br />
excess <strong>of</strong> USD 40m gross pr<strong>of</strong>it and USD 20m net pr<strong>of</strong>it on a standalone<br />
basis<br />
• On the above basis, the transaction is expected to be earn<strong>in</strong>gs accretive<br />
from the first full year <strong>of</strong> consolidation<br />
• <strong>MRI</strong>’s 78 employees are evenly split between its Zug, Switzerland<br />
headquarters and <strong>in</strong>ternational <strong>of</strong>fices<br />
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• Transaction Overview<br />
• Target Overview<br />
• Investment Rationale<br />
• Management Team<br />
• Summary<br />
• Next Steps<br />
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Presentation Outl<strong>in</strong>e
• <strong>MRI</strong> is an established commodities marketer, br<strong>in</strong>g<strong>in</strong>g strategic competencies<br />
to CWT:<br />
– Critical understand<strong>in</strong>g <strong>of</strong> commodities market<strong>in</strong>g and risk management<br />
– Established, commodity trad<strong>in</strong>g credit l<strong>in</strong>es for asset backed transactions<br />
– Deep market <strong>in</strong>sights<br />
Investment Rationale<br />
– Longstand<strong>in</strong>g market relationships and valuable forward book<br />
– Immediate critical scale <strong>in</strong> base metals market<strong>in</strong>g<br />
• The comb<strong>in</strong>ation <strong>of</strong> <strong>MRI</strong> and CWT creates a platform for growth and<br />
<strong>in</strong>creased pr<strong>of</strong>itability:<br />
– Significant synergy potential between CWT’s core logistics competencies and <strong>MRI</strong>’s trad<strong>in</strong>g<br />
expertise will create opportunities for new, higher marg<strong>in</strong> and resilient base metals orig<strong>in</strong>ation<br />
flows<br />
– Complementarities <strong>in</strong> geographical networks open new bus<strong>in</strong>ess opportunities<br />
– <strong>MRI</strong> provides the platform to accelerate CWT’s development <strong>in</strong> commodities market<strong>in</strong>g<br />
operations <strong>in</strong> base metals and coal <strong>in</strong> particular with a view to create a more diversified<br />
market<strong>in</strong>g player over time<br />
– The <strong>in</strong>tegration <strong>of</strong> <strong>MRI</strong> <strong>in</strong>to CWT creates a potent alternative to the <strong>in</strong>dustry leaders and aims<br />
to attract the best talents, suppliers, clients and service providers<br />
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• Transaction Overview<br />
• Target Overview<br />
• Investment Rationale<br />
• Management Team<br />
• Summary<br />
• Next Steps<br />
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Presentation Outl<strong>in</strong>e
Management Team<br />
Mark Lowe, Chief Executive Officer, Commodities Trad<strong>in</strong>g<br />
• Mark Jo<strong>in</strong>ed CWT <strong>in</strong> February 2011 <strong>in</strong> order to establish and to run its commodities trad<strong>in</strong>g<br />
operations through the newly formed subsidiary Capsolon Pte Ltd. Mark shares his time<br />
between S<strong>in</strong>gapore and Switzerland<br />
• Mark had previously started, developed and managed Louis Dreyfus Commodities’ entrance to<br />
the base metals markets, hav<strong>in</strong>g spent 10 years <strong>in</strong> charge <strong>of</strong> Ref<strong>in</strong>ed Base Metals operations at<br />
Trafigura Beheer BV, work<strong>in</strong>g from its <strong>of</strong>fices <strong>in</strong> Lucerne, London and Melbourne.<br />
Andrew Jarvis, <strong>MRI</strong> COO (s<strong>in</strong>ce 2007)<br />
• Prior to jo<strong>in</strong><strong>in</strong>g <strong>MRI</strong> <strong>in</strong> 2007, Andrew acted two years as consultant for Metallo<strong>in</strong>vest <strong>in</strong> Moscow<br />
and as Director for Deno GmbH <strong>in</strong> 2005. From 2001 to 2004 he was COO for Coalco Trad<strong>in</strong>g <strong>AG</strong><br />
<strong>in</strong> Zug, where he had held senior positions <strong>in</strong> trad<strong>in</strong>g from 1994 onward. Prior to that he<br />
worked <strong>in</strong> London with Marc Rich + Co. Ltd.<br />
Matthieu Demanget, Head <strong>of</strong> Copper (s<strong>in</strong>ce 2000)<br />
• Matthieu jo<strong>in</strong>ed <strong>MRI</strong> <strong>in</strong> 2000 as co-head <strong>of</strong> copper concentrates global trad<strong>in</strong>g and now heads<br />
the Copper and Cobalt desks. He has more than 17 years <strong>in</strong>dustry experience and worked<br />
previously for Pech<strong>in</strong>ey-Brandeis <strong>in</strong> New York and London.<br />
Outgo<strong>in</strong>g CEO Ashwath Mehra reta<strong>in</strong>s a close relationship with CWT<br />
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• Transaction Overview<br />
• Target Overview<br />
• Investment Rationale<br />
• Management Team<br />
• Summary<br />
• Next Steps<br />
connect<strong>in</strong>g world trade<br />
Presentation Outl<strong>in</strong>e
Summary<br />
CWT <strong>in</strong>stantly becomes a potent force <strong>in</strong> base metals and commodities<br />
market<strong>in</strong>g:<br />
• Key challenger to established <strong>in</strong>dustry leaders <strong>in</strong> base metals…<br />
• …comb<strong>in</strong><strong>in</strong>g potential for outstand<strong>in</strong>g return on equity and accelerated growth by capitalis<strong>in</strong>g on<br />
strategic fit…<br />
• …benefitt<strong>in</strong>g from strong momentum…<br />
• ..and with a clear vision to become a more diversified commodities market<strong>in</strong>g platform supported<br />
by ‘deep bench’ at CWT and <strong>MRI</strong> management level<br />
Cont<strong>in</strong>uation, and acceleration <strong>of</strong> CWT’s focus on the strategic commodities<br />
sector:<br />
• Recognised logistics and warehous<strong>in</strong>g expertise <strong>in</strong>clud<strong>in</strong>g LME<br />
• Development <strong>of</strong> new trad<strong>in</strong>g flows s<strong>in</strong>ce early 2011, <strong>in</strong> particular <strong>in</strong> coal orig<strong>in</strong>ation<br />
• Strategy to develop Asian trad<strong>in</strong>g flows with S<strong>in</strong>gapore as a hub<br />
Compell<strong>in</strong>g f<strong>in</strong>ancial outlook:<br />
• Transaction is expected to be earn<strong>in</strong>gs enhanc<strong>in</strong>g from first full year <strong>of</strong> consolidation<br />
• Potential for fast growth and <strong>in</strong>creased marg<strong>in</strong>s <strong>in</strong> commodities trad<strong>in</strong>g operations <strong>in</strong> the medium<br />
term<br />
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• Transaction Overview<br />
• Target Overview<br />
• Investment Rationale<br />
• Management Team<br />
• Summary<br />
• Next Steps<br />
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Presentation Outl<strong>in</strong>e
Next Steps<br />
• The acquisition <strong>of</strong> a 73.8% <strong>stake</strong> <strong>in</strong> <strong>MRI</strong> is expected to close <strong>in</strong> July 2011<br />
with payment <strong>of</strong> USD 60.8m cash and stock consideration; the latter<br />
consist<strong>in</strong>g <strong>of</strong> 10m newly issued shares <strong>in</strong> CWT Ltd<br />
• Completion accounts will be produced with<strong>in</strong> three months <strong>of</strong> clos<strong>in</strong>g,<br />
result<strong>in</strong>g <strong>in</strong> an adjustment to the purchase price reflect<strong>in</strong>g <strong>MRI</strong>’s audited net<br />
asset value as <strong>of</strong> 30 th June 2011<br />
• CWT will pay <strong>MRI</strong>’s exit<strong>in</strong>g shareholders an additional USD 11.1m <strong>in</strong> cash<br />
on each 30 th June 2012, 2013 and 2014<br />
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<strong>Acquisition</strong> <strong>of</strong> a<br />
<strong>controll<strong>in</strong>g</strong> <strong>stake</strong> <strong>in</strong><br />
<strong>MRI</strong> Trad<strong>in</strong>g <strong>AG</strong><br />
30 June 2011 – S<strong>in</strong>gapore<br />
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