Petroplus Holdings AG

January 27, 2012 January 27, 2012

EXECUTIVE SUMMARY
Opportunity Distressed European refinery negotiating access to its credit facility after violating Q4 2011 maintenance covenants
Notes: Pari passu, trading from 43 to 49 yielding 25-44%; opportunity to create company at 4.9x market with some asset support
Stock: Trades at $1.59 on Swiss Exchange; implied TEV of $2.7 billion (7.2x Clean
(1)
LTM EBITDA); option value if crack spreads recover near-term
Revolver: Trading in a mid-eighties context yielding 29% to October 2012; opportunity to go private and diligence collateral package
Company / Situation Overview
Petroplus is one of the largest independent refiners in Europe and until recently accounted for approximately 5% of European refining volumes
Crude slate: Light Sweet (39%); Medium Sour (20%); Light Sour (19%); Heavy Sour (5%)
Product slate: Diesels and Gasoil (45%); Gasoline (28%); Fuel Oil (12%) and Jet Fuel (7%)
Generated $24.4 billion of revenue and $375 million of Clean EBITDA for LTM 9/30/11; only $60 million of EBITDA in last two quarters combined
Three of the Companys five refineries were EBITDA negative the last two quarters
In late-December, RCF lenders froze the Companys credit lines and cash collateral, preventing the Company from acquiring additional crude
In mid-January, the Company reached a temporary agreement with the RCF syndicate to continue operating its two profitable refineries
The Company is shutting down / exploring a sale of the three unprofitable refineries
Recommendation: Pass on Senior Notes, go private and diligence collateral package on RCF
RCF syndicate may be inclined to seize collateral given trading levels (84 as of January 23)
1
RCF syndicate may be inclined to seize collateral given trading levels (84 as of January 23)
Notes may represent a value trap given bleak macro outlook
Key Merits:
Opportunity to create company at 4.9x vs. comps of 6.7x with 25%+ YTM
Downside capped ~30 by collateral coverage of Coryton facility, worth an estimated $500 million
(2)
Shutdown of marginal facilities will help Company continue to generate cash flow if crack spreads do not recover
Key Risks:
Mid-eighties yield on RCF likely to attract distress funds into syndicate; funds may be inclined to seize collateral and liquidate
o Swiss bankruptcy process strongly favors secured creditors if Company is forced to file (leads to distribution of assets)
With exception of claim on Coryton refinery, Noteholders have no direct guarantees on Companys operating assets
Anticipated global capacity additions and recessionary forces in Europe recession unfavorable to supply / demand dynamic that drives crack spreads
Weak M&A environment; no buyers anticipated for Companys marginal facilities (over a dozen refineries already for sale in Europe and majors have
shown no interest)
1
___________________________________
(1) Reflects the EBITDA if prices did not fluctuate over period.
(2) Based on EDC of ~$190 $/bbl and conversations with sell-side analysts.
CAPITALIZATION
Petroplus is estimated to have $1 billion drawn on its revolving lines as of the end of December; these facilities are secured
by accounts receivable and inventory
Additionally, the Company has $1.75 billion of Senior Notes trading in the mid-forties
Debt / LTM Debt / LTM
Interest Price Face Market Adj. EBITDA Adj. EBITDA - Capex
Maturity Rate 1/23/12 9/30/11 1/23/12 Face Market Face Market YTM
Committed RCF Lines ($1,050MM)
(1)
Oct-12 L + 4.00% 84.0% $1,000 $840 29.1%
Uncommitted RCF Lines ($1,045MM) Oct-12 L + 4.00% 84.0% - - 29.1%
Receivables Factoring (180MM) Evergreen 84.0% - -
Receivables Securitization (130MM) Nov-17 84.0% - -
Total Debt $1,000 $840 2.7x 2.2x 10.4x 8.7x
Senior Convertible Notes 2015
(2)
Oct-15 4.00% 43.0% 150 65 30.8%
Senior Notes 2014 May-14 6.75% 49.6% 600 298 43.9%
2
___________________________________
(1) It is believed the Company had approximately $1 billion of the revolving credit facility outstanding at the end of December per discussions with analysts.
(2) Convertible into equity at holder's option at ~$32/share until October 9, 2015.
Senior Notes 2014 May-14 6.75% 49.6% 600 298 43.9%
Senior Notes 2017 May-17 7.00% 47.1% 600 283 25.9%
Senior Notes 2019 Sep-19 9.38% 47.0% 400 188 25.5%
Total Debt $2,750 $1,833 7.3x 4.9x 28.5x 19.0x
Cash (191) (191)
Net Debt Share Price (USD) $2,559 $1,642 6.8x 4.4x 26.5x 17.0x
Market Capitalization $1.59 151 151
Total Enterprise Value $2,710 $1,793 7.2x 4.8x 28.1x 18.6x
Clean EBITDA $375
LTM EBITDA - Capex 96
OVERVIEW OF FACILITIES
Petroplus refineries are all located in northwest Europe
Coastal refineries (such as Coryton, Antwerp and Petit
Couronne) benefit from wide crude selection and benefit from
international arbitrage opportunities
Inland refineries (such as Cressier and Ingolstandt) have a
more restrictive crude slate (they are tied to a pipeline) but can
serve niche markets without an alternative supply
In general, this portfolio of assets is weak
Average refining capacity is sub-optimal
Average complexity of ~8.0 limits the ability to produce
high-value middle distillates
Company is shutting down and marketing Antwerp, Petit
Couronne and Cressier
Reichstett and Teeside have already been converted to storage
facilities
Asset Geography
3
facilities
Coryton and Ingolstadt generated 52% and 22% of 2010
EBITDA, respectively
Refining Estimated
Capacity Output Nelson Current
Refinery Location (kbbl/d) (kbbl/d) Complexity Status Acquisition
Coryton Southern UK 220,000 180,000 12.0 Operating From BP in May 2007 for $1.6 billion
Ingolstadt Southern Germany 110,000 90,000 7.3 Operating Acquired in March 2007 from Exxon Mobil for
$628 million
Antwerp Belgium 107,500 100,000 4.5 Shutting Down From Belgium Refining Corp. in June 2006 for
$551 million
Petit Couronne Northern France 161,800 120,000 7.3 Shutting Down Acquired in March 2008 from Shell, along with
Reichstett for $475 million
Cressier Switzerland 68,000 60,000 6.4 Shutting Down Acquired in May 2000 from Shell for $131
million
Reichstett Eastern France
Converted to Storage Terminal
Acquired in March 2008 from Shell, along with
Petit Couronne for $475 million
Teesside Eastern UK
Converted to Storage Terminal
Acquired in January 2001 for $110 million
MACRO CONTEXT
In the early 2000s, decades of low profitability in refining
generated no incentive to invest in new capacity
In 2003, capacity began to tighten driving utilization rates up
and causing margins to nearly triple by 2008
In 2005 to 2010, over 6Mbbl/d of new distillation and
4Mbbl/d of conversion capacity was added to the global
refining system
The 2009 recession cut approximately 5Mbbl/d from oil
demand, driving margins and utilization rates to
unprecedented lows
In 2009, 36% of European refineries were below cash flow
breakeven
New capacity continues to come online, with more
competitive facilities being built in emerging markets
European Refining Margins vs. Global Utilization
(1)
4
competitive facilities being built in emerging markets
Spare refining capacity is anticipated to increase from
4Mbbl/d in 2011E to 7.3Mbbl/d in 2015E, driving global
utilization down to 79.0%.
Since 2008, 2.3Mbbl/d of refineries have been closed
Correlation between refining margins and utilization rates
have historically been strong
US refineries continue to benefit from the Crushing
Syndrome to the detriment of European refiners
Likely to continue until 2013 completion of Keystone XL
New Refinery Additions and Shutdowns
(1)
___________________________________
(1) Source: UBS estimates.
COMPANY SITUATION
Rising global capacity and weak demand has continued
to put downward pressure on crack spreads, with the
PMI down to $1.66 in the forth quarter
The Company has also been punished on crude
acquisition costs when the Libyan crisis suddenly cut
1.2Mb/d of light sweet crude out of the market; Saudi
Arabia was slow to ramp up matching capacity
In the second and third quarters of 2011, three of the
Companies five refineries were cash flow negative
Petroplus violated the interest coverage covenant on the
revolving credit facility in Q4 2011, prompting lenders
to freeze the Companys pledged bank accounts,
temporarily preventing the Company from acquiring new
crude
Petroplus Market Indicator
(1)
Crude Acquisition Premium / Discount to Brent
(2)
5
Shortly after losing RCF access, the Company
announced its intention to shut down operations at Petit
Couronne, Antwerp and Cressier refineries and begin a
marketing process for the facilities
In January, Petroplus reached a temporary agreement
with its revolving lenders to meet critical expenses and
maintain operations at the Coryton and Ingolstadt
refineries
Crude Acquisition Premium / Discount to Brent
___________________________________
(1) PMI is a proxy refining margin for a portfolio similar to that of Petroplus. Represents a typical cracking refinery, located in Amsterdam-Rotterdam-Antwerp.
(2) Source: UBS.
HISTORICAL FINANCIALS
The Companys adjusted EBITDA, which represents the cash generation of the business has fluctuated significantly vs. the
Clean EBITDA, which excludes gains / losses on crude acquisition
Petroplus purchases crude on a spot basis so that it can arbitrage price differential among different crude markets
Divergence between adjusted EBITDA and clean EBITDA in 2008 demonstrates impact falling crude prices have on the
Companys bottom line
The Company has ~20 days of crude / feedstock inventory at any given time; as of 9/30/11 the Companys book value of
inventory was nearly $2 billion
Clean EBITDA margins slipped below 1% in the last two quarters as crack spreads have been compressed
Fiscal Year Ended
(1)
Quarter Ended
12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 LTM 9/30/10 12/31/10 3/31/11 6/30/11 9/30/11
Revenues $4,188 $6,923 $13,905 $24,302 $14,798 $20,735 $24,430 $5,146 $5,694 $6,229 $6,013 $6,496
% Growth 65.3% 100.9% 74.8% -39.1% 40.1% 26.2%
6
___________________________________
(1) Growth from 2005 2008 driven by acquisitions.
Material Costs (3,977) (6,377) (12,739) (23,353) (13,592) (19,406) (23,064) (4,911) (5,182) (5,703) (5,822) (6,356)
Material Margin $211 $546 $1,166 $949 $1,205 $1,329 $1,367 $235 $512 $526 $190 $139
% Margin 5.0% 7.9% 8.4% 3.9% 8.1% 6.4% 5.6% 4.6% 9.0% 8.4% 3.2% 2.1%
Operating Expenses (67) (139) (319) (491) (451) (440) (534) (107) (129) (118) (122) (165)
Personnel Expenses (56) (116) (238) (398) (351) (352) (372) (91) (85) (107) (92) (89)
Corporate Expenses (13) (37) (59) (72) (56) (43) (43) (13) (8) (12) (11) (12)
Adjusted EBITDA $75 $255 $549 ($12) $347 $494 $418 $24 $290 $288 ($34) ($126)
% Margin 1.8% 3.7% 4.0% -0.1% 2.3% 2.4% 1.7% 0.5% 5.1% 4.6% -0.6% -1.9%
Capital Expenditures (87) (69) (211) (283) (295) (293) (279) (60) (58) (64) (90) (67)
Adjusted EBITDA - Capex ($12) $187 $338 ($296) $52 $201 $139 ($37) $232 $224 ($124) ($193)
% Margin -0.3% 2.7% 2.4% -1.2% 0.4% 1.0% 0.6% -0.7% 4.1% 3.6% -2.1% -3.0%
Clean EBITDA $1,085 $155 $549 $375 $55 $190 $125 $35 $25
% Margin 4.5% 1.0% 2.6% 1.5% 1.1% 3.3% 2.0% 0.6% 0.4%
EUROPEAN PURE-PLAY REFINERY COMPARABLES
European independent refiners have traded in a 4.5-9.5x EV/EBITDA range over the past five years, averaging 6.5x
Presently, the comp set is trading at a median multiple of 6.7x
Market multiples have historically moved well in advance of crack spreads.
Market multiples peaked at 9.2x in 2007, prior to the peak of refining margins in summer 2008
Multiples troughed at 4.2x in late 2008, almost a year before margins troughed
Despite weakness in crack spreads, current multiples suggest the market believe crack spreads will not recover materially in
the near-term
European Refinery Comparables
Share Market Net LTM Revenue Growth EBITDA Margin TEV/EBITDA
PX Cap. Debt TEV Revenue EBITDA 2009A 2010A 2011E 2012E 2009A 2010A 2011E 2012E LTM 2011E 2012E
11.40 2,918 3,208 6,031 18,338 904 -36.8% 18.1% 41.7% 4.0% 6.4% 4.9% 3.4% 4.4% 6.7x 8.6x 6.5x
Pure-play. Owns ~260,000 bbl/d of refining assets in Finland. Market leader in Finland, #2 in Estonia and Latvia.
1.36 1,263 743 1,981 14,211 557 -37.4% 52.2% 15.3% 0.5% 6.1% 2.4% 2.7% 3.4% 3.6x 5.6x 4.4x
~85% of revenue from refining. Runs the Sarroch refinery in Italy. ~15% of Italy's refining capacity with 300,000 bbl/d.
Neste Oil Corp.
Saras S.p.A.
7
~85% of revenue from refining. Runs the Sarroch refinery in Italy. ~15% of Italy's refining capacity with 300,000 bbl/d.
7.93 2,424 3,125 5,630 12,243 627 -31.6% 17.4% 2.6% 29.7% 6.5% 6.0% 4.4% 5.0% 9.0x 11.0x 7.4x
~92% of revenue from refining. Owns 3 refineries with 325,000 bbl/d in total daily refining capacity. 7.3 average Nelson complexity.
7.32 811 1,655 2,410 11,460 545 -26.6% 46.9% 27.3% -0.2% 5.1% 4.3% 4.3% 4.0% 4.4x 5.3x 5.7x
Pure play. Operates Corinth refinery in Greece with 100,000 bbl/day in capacity.
7.76 1,008 2,104 3,099 8,120 442 -9.2% 33.5% 21.1% 7.0% 5.3% 6.2% 5.8% 5.7% 7.0x 6.6x 6.3x
95%+ of revenue from refining. Operates a refinery in Poland with 120,000 bbl/d in capacity. 10.0 Nelson Index.
10.99 1,628 1,131 2,919 5,240 148 -46.8% -15.8% 42.9% 0.3% 3.1% 2.4% 3.9% 5.3% 19.7x 7.2x 5.3x
~85% of revenue from refining. Has a JV with LUKOIL which controls the ISAB refinery in Italy with 320,000 bbl/d capacity. 9.3 Nelson Index.
11.20 4,792 2,816 8,443 30,452 1,934 -11.8% 19.4% 4.3% 7.5% 4.2% 6.9% 5.2% 4.5% 4.4x 5.4x 6.0x
~75% of revenue from refining. Manages 7 refineries (3 in Polant, 3 in Czech Republic and 1 in Lithuania). ~650,000 bbl/d capacity.
Low -46.8% -15.8% 2.6% -0.2% 3.1% 2.4% 2.7% 3.4% 3.6x 5.3x 4.4x
Mean -28.6% 24.5% 22.2% 7.0% 5.3% 4.7% 4.3% 4.6% 7.8x 7.1x 5.9x
Median -31.6% 19.4% 21.1% 4.0% 5.3% 4.9% 4.3% 4.5% 6.7x 6.6x 6.0x
High -9.2% 52.2% 42.9% 29.7% 6.5% 6.9% 5.8% 5.7% 19.7x 11.0x 7.4x
Petroplus Holdings AG 1.59 151 2,559 2,710 24,430 375 -39.1% 40.1% 15.0% -4.6% 1.0% 2.6% 1.1% 1.7% 7.2x 10.7x 6.9x
PKN Orlen
Hellenic Petroleum SA
Motor Oil Hellas
Grupa Lotos SA
ERG SpA
EUROPEAN ATLANTIC BASIN REFINERY TRANSACTIONS
Prices for refineries have pulled back considerably since the top of the market in 2007-08
Pembroke and Stanlow facilities sold for $185/bbl and $155/bbl
Pembroke is a good comp for Coryton (both in UK, similar complexity and refining capacity)
Atlantic Basin refineries are saturating the market right now, with more than 15 for sale; majors dont appear to be interested
European Refinery M&A Transactions
Refinery Refining
Value Capacity Nelson EDC $/bbl $/bbl
Date Buyer Seller Asset ($MM) (kbbl/d) Complexity (kbbl/d) Capacity EDC
11-Mar-11 Valero Chevron Corporation Pembroke 480 220 11.8 2,596 2,182 185
18-Feb-11 Essar Energy Royal Dutch Schell Stanlow 350 272 8.3 2,258 1,287 155
16-Feb-11 IPIC Total CEPSA 5,196 527 6.6 3,478 9,860 1,494
10-Jan-11 PetroChina Ineos
Lavera;
Grangemouth 1,015 210 5.4 1,134 4,833 895
27-Oct-10 Keele Oy Shell Gothenburg 75 80 6.5 520 938 144
8
27-Oct-10 Keele Oy Shell Gothenburg 75 80 6.5 520 938 144
15-Oct-10 Rosneft
Petroleos de Venezuela
SA Ruhr Oil 800 235 8.1 1,904 3,404 420
19-Jun-09 Lukoil Total SA Vlissingen 800 86 11.3 966 9,357 828
24-Jun-08 Lukoil ERG SpA Priolo 2,000 157 9.3 1,458 12,755 1,372
30-Aug-07 Murphy Oil Corporation Total S.A. Milford Haven 250 76 10.3 783 3,289 319
2-Aug-07 Basell Holdings BV; Access Royal Dutch Schell Berre 700 105 7.2 756 6,667 926
2-Aug-07 Petroplus Holdings AG Royal Dutch Schell
Petit Couronne;
Reichstett 475 239 5.5 1,315 1,987 361
1-Mar-07 BP plc Chevron Corporation Pernis 810 126 9.0 1,133 6,436 715
1-Feb-07 Petroplus Holdings AG BP plc Coryton 1,260 172 14.1 2,425 7,326 520
25-Nov-05 ConocoPhillips TransMontaigne Inc. Wilhelmshaven 1,080 275 5.1 1,403 3,927 770
10-Feb-05 Petroplus International NV
RIVR Acquisition BV;
Riverstone Holdings Antwerp; Teeside 689 240 5.2 1,248 2,871 552
Mean $5,141 $644
Median 3,927 552
POTENTIAL OUTCOMES
Banks may be posturing for additional fees / rate or genuinely concerned with the collateral package
The banks are in the drivers seat and at this point and can force several outcomes:
Scenario 1: Status Quo Company negotiates a waiver or amendment with banks
Syndicate primarily composed of relationship-focused banks (BNP Paribas, ING, Natixis, Commerzbank, Credit Suisse,
Fortis Bank, Societe Generale, Morgan Stanley, UBS and Deutsche Bank) that have been amenable to waivers and rate hikes
in the past
Company would continue operating Coryton and Ingolstadt and convert other assets to storage terminals (release of working
capital would allow banks to reduce exposure)
Noteholder Outcome: Potential for excellent recovery if situation stabilizes and claim on Coryton caps downside in the low-
thirties
Scenario 2: Out-of-Court Restructuring Three-way agreement is reached between Banks, Noteholders and Company in which
9
Scenario 2: Out-of-Court Restructuring Three-way agreement is reached between Banks, Noteholders and Company in which
Notes are converted to ~90% equity in order to lighten interest burden
Banks threaten Noteholders with acceleration if they do not equitize Notes; Noteholders comply
Company would continue operating Coryton and Ingolstadt and convert other assets to storage terminals
Noteholder Outcome: Noteholders lose guarantee on Coryton but gain significant option value if macro conditions improve
Scenario 3: Bankruptcy Petroplus is unable to reach an agreement with the banks and the Company is forced to file insolvency
proceedings in Switzerland
It was reported that $1 billion was drawn in advance of the holidays
Banks have no reason to put additional capital at risk for 500 600 bps
Noteholder Outcome: With the exception of Coryton facility, guarantees at operating entities are structurally subordinated to
general unsecured claims; Noteholders sell Coryton and get de minimis recovery on other assets
FINANCIAL PROJECTIONS STATUS QUO
In each case, Coryton and Ingolstadt operate without incident through 2015 and the remaining facilities are converted into
storage terminals
Conversion to storage facilities costs approximately $150 million and releases ~$500 million in working capital
Base Case: Clean gross margins slowly rise to ~$9/barrel
Conservative Case: Clean gross margins remain flat at average 2011 levels for forecast period
Downside Case: Clean gross margins drop an additional 25%
Base Case Conservative Case Downside Case
2012E 2013E 2014E 2015E 2012E 2013E 2014E 2015E 2012E 2013E 2014E 2015E
($ millions)
Revenue 11,014 11,500 11,533 11,567 11,007 11,433 11,433 11,433 10,953 11,273 11,273 11,273
Revenue Growth (%) 4.4% 0.3% 0.3% 3.9% - - 2.9% - -
EBITDA 304 379 413 447 287 302 302 302 223 132 132 132
EBITDA Margin 2.8% 3.3% 3.6% 3.9% 2.6% 2.6% 2.6% 2.6% 2.0% 1.2% 1.2% 1.2%
10
Capital Expenditure (230) (125) (125) (125) (230) (125) (125) (125) (230) (125) (125) (125)
EBITDA - Capex 74 254 288 322 57 177 177 177 (7) 7 7 7
Cash Restructuring Expense (150) - - - (150) - - - (150) - - -
Cash Interest Expense (174) (148) (141) (131) (175) (153) (153) (152) (177) (166) (179) (192)
Change in Working Capital 585 (65) (2) (2) 586 (63) - - 594 (61) - -
Cash Taxes (1) (11) (15) (19) (0) (2) (2) (3) - - - -
Free Cash Flow 334 31 131 170 318 (40) 22 23 260 (220) (171) (185)
FCF Margin % 3.0% 0.3% 1.1% 1.5% 2.9% -0.4% 0.2% 0.2% 2.4% -2.0% -1.5% -1.6%
Revolving Credit Facility 409 378 247 77 427 468 445 423 487 707 879 1,063
Notes 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750
Total Debt 2,159 2,128 1,997 1,827 2,177 2,218 2,195 2,173 2,237 2,457 2,629 2,813
Cash (200) (200) (200) (200) (200) (200) (200) (200) (200) (200) (200) (200)
Net Debt 1,959 1,928 1,797 1,627 1,977 2,018 1,995 1,973 2,037 2,257 2,429 2,613
Credit Statistics:
Total Leverage 7.1x 5.6x 4.8x 4.1x 7.6x 7.3x 7.3x 7.2x 10.0x 18.6x 19.9x 21.3x
Net Leverage 6.5x 5.1x 4.4x 3.6x 6.9x 6.7x 6.6x 6.5x 9.1x 17.1x 18.3x 19.7x
RECOVERY ANALYSIS STATUS QUO
The conservative case suggests that even if crack spreads do not improve materially, the Company can still generate
approximately $300 million in annual EBITDA
Applying a 5.5x multiple to $300 million in EBITDA provides a high-forties bond recovery
Enterprise Value Sensitivity Noteholder Recovery ($)
EBITDA Run-Rate EBITDA EBITDA Run-Rate EBITDA
Multiple $150 $225 $300 $375 $450 Multiple $150 $225 $300 $375 $450
4.5x $675 $1,013 $1,350 $1,688 $2,025 4.5x - $204 $541 $879 $1,216
5.0x 750 1,125 1,500 1,875 2,250 5.0x - 316 691 1,066 1,441
5.5x 825 1,238 1,650 2,063 2,475 5.5x 16 429 841 1,254 1,666
6.0x 900 1,350 1,800 2,250 2,700 6.0x 91 541 991 1,441 1,750
6.5x 975 1,463 1,950 2,438 2,925 6.5x 166 654 1,141 1,629 1,750
7.0x 1,050 1,575 2,100 2,625 3,150 7.0x 241 766 1,291 1,750 1,750
11
7.0x 1,050 1,575 2,100 2,625 3,150 7.0x 241 766 1,291 1,750 1,750
Noteholder Recovery (% of Par) Shareholder Recovery (Implied Share Price)
EBITDA Run-Rate EBITDA EBITDA Run-Rate EBITDA
Multiple $150 $225 $300 $375 $450 Multiple $150 $225 $300 $375 $450
4.5x - 11.6% 30.9% 50.2% 69.5% 4.5x - - - - -
5.0x - 18.1% 39.5% 60.9% 82.3% 5.0x - - - - -
5.5x 0.9% 24.5% 48.1% 71.6% 95.2% 5.5x - - - - -
6.0x 5.2% 30.9% 56.6% 82.3% 100.0% 6.0x - - - - 1.48
6.5x 9.5% 37.3% 65.2% 93.1% 100.0% 6.5x - - - - 3.84
7.0x 13.8% 43.8% 73.8% 100.0% 100.0% 7.0x - - - 0.69 6.21
FINANCIAL PROJECTIONS OUT-OF-COURT RESTRUCTURING
Out-of-Court restructuring assumes Notes are converted to 90% equity; existing shareholders retain remaining 10%
Coryton and Ingolstadt operate as refineries and other assets are converted to terminals
Case assumptions same as Status Quo case
Interest burden is lightened by ~$125 million
Base Case Conservative Case Downside Case
2012E 2013E 2014E 2015E 2012E 2013E 2014E 2015E 2012E 2013E 2014E 2015E
($ millions)
Revenue 11,014 11,500 11,533 11,567 11,007 11,433 11,433 11,433 10,953 11,273 11,273 11,273
Revenue Growth (%) 4.4% 0.3% 0.3% 3.9% - - 2.9% - -
EBITDA 304 379 413 447 287 302 302 302 223 132 132 132
EBITDA Margin 2.8% 3.3% 3.6% 3.9% 2.6% 2.6% 2.6% 2.6% 2.0% 1.2% 1.2% 1.2%
Capital Expenditure (230) (125) (125) (125) (230) (125) (125) (125) (230) (125) (125) (125)
EBITDA - Capex 74 254 288 322 57 177 177 177 (7) 7 7 7
12
EBITDA - Capex 74 254 288 322 57 177 177 177 (7) 7 7 7
Cash Restructuring Expense (150) - - - (150) - - - (150) - - -
Cash Interest Expense (110) (11) - - (111) (16) (8) - (113) (29) (32) (35)
Change in Working Capital 585 (65) (2) (2) 586 (63) - - 594 (61) - -
Cash Taxes (7) (24) (29) (32) (6) (16) (17) (18) (1) - - -
Free Cash Flow 391 154 257 288 376 82 152 160 323 (83) (25) (27)
FCF Margin % 3.6% 1.3% 2.2% 2.5% 3.4% 0.7% 1.3% 1.4% 2.9% -0.7% -0.2% -0.2%
Revolving Credit Facility 351 197 - - 369 286 134 - 424 507 531 559
Notes - - - - - - - - - - - -
Total Debt 351 197 - - 369 286 134 - 424 507 531 559
Cash (200) (200) (260) (548) (200) (200) (200) (226) (200) (200) (200) (200)
Net Debt 151 (3) (260) (548) 169 86 (66) (226) 224 307 331 359
Credit Statistics:
Total Leverage 1.2x 0.5x 0.0x 0.0x 1.3x 0.9x 0.4x 0.0x 1.9x 3.8x 4.0x 4.2x
Net Leverage 0.5x NM NM NM 0.6x 0.3x NM NM 1.0x 2.3x 2.5x 2.7x
RECOVERY ANALYSIS OUT-OF-COURT RESTRUCTURING
Converting to equity provides Noteholders the opportunity to earn strong upside if crack spreads improve, with the possibility
of a poor recovery (and no asset guarantees) in a downside case
Purchase price of 45% provides 3.2x cash-on-cash return in the base case, 2.0x in a conservative case and 0.3x in a downside
case
Base Case Exit Analysis Cash on Cash Return @ 5.0x 2015E EBITDA Multiple
Exit Multiple 5.0x 2015E Case EBITDA
2015E EBITDA 447 Base Conservative Downside
Implied TEV $2,233 65.0% 2.2x 1.4x 0.2x
Plus: Cash 548 60.0% 2.4x 1.5x 0.3x
Less: RCF Claims - 55.0% 2.6x 1.6x 0.3x
Equity Value $2,780 50.0% 2.9x 1.8x 0.3x
Noteholder Equity Owned 90.0% 45.0% 3.2x 2.0x 0.3x
Equity Value for Noteholders $2,502 40.0% 3.6x 2.2x 0.4x
35.0% 4.1x 2.6x 0.4x
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35.0% 4.1x 2.6x 0.4x
Purchase Price (%) 45.0%
Outstanding 1,750
Purchase Price ($) 788
Cash on Cash Return 3.2x
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RECOVERY ANALYSIS BANKRUPTCY
Petroplus Holdings AG
(Switzerland)
Shareholders
Operating Assets
Guarantor
Petroplus Finance Limited (Bermuda)
Senior Secured Convertible Bonds Due 2015
Bankruptcy proceedings would likely take place in Switzerland
Corporate tax rate of 10% suggests all profits are generated by a Swiss entity (Petroplus Marketing AG)
Company is incorporated in Switzerland and has its headquarters there
Swiss bankruptcy law heavily favors secured creditors; typically an administrator is appointed and the assets are distributed
Critically, Noteholders do not have direct guarantee on any subsidiary with refining assets except for Petroplus Refining &
Marketing, which owns Coryton
Significant labor and severance claims are expected to flow from Petit Couronne to Petroplus Marketing AG, potentially negating
value from other operating subsidiaries
In this environment, Coryton is estimated to be worth ~$500
(1)
, providing a recovery of 29 to the Notes
14
(Switzerland)
Operating Assets
Senior Secured Convertible Bonds Due 2015
Petroplus Finance 3 Limited (Bermuda)
Senior Notes 2014
Senior Notes 2017
Senior Notes 2019
Petroplus International B.V.
(Netherlands)
Petroplus Marketing AG
(Switzerland)
Revolving Credit Facility
Petroplus Finance 2 Limited
(Bermuda)`
Petroplus Refining & Marketing
(United Kingdom)
Coryton refinery
Petroplus Holdings
France SAS (France)
Cressier refinery
Teesside terminal Reichstett terminal Petit Couronne refinery
Antwerp refinery Ingolstadt refinery
2019 Senior Note Intercompany Loans ($90MM)
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(1) Based on EDC of ~$190 $/bbl and conversations with sell-side analysts.