We estimate that the net proceeds to us from the sale of the shares of our
common stock in this offering will be $222 million (or $256 million if the
underwriters exercise in full their option to purchase additional shares of
common stock from us), after deducting estimated underwriting discounts and
offering expenses.
We intend to use the net proceeds received by us in this offering, along with
readily available cash, to (i) redeem all of the outstanding $250 million
principal amount of our PIK Toggle Notes, (ii) pay the redemption premiums of
$5 million and fees in connection with the redemption of the foregoing
indebtedness, (iii) pay interest of approximately $7 million, representing
interest payable from December 18, 2012 through the anticipated date that the
indebtedness will be redeemed and (iv) pay a $35 million fee in connection with
the termination of the Management Consulting Agreement with Apollo.
The PIK Toggle Notes bear interest at a rate of 9.125% per annum and mature on
December 15, 2017. We used the net proceeds from the offering of the PIK Toggle
Notes to make a return of capital to our shareholders and pay certain related
transaction costs and expenses.
Certain affiliates of the underwriters hold a portion of the notes being
redeemed with a portion of the proceeds of this offering as described above.
We believe that our extensive expertise and technology, our existing investments
in profitable, vertically integrated manufacturing facilities, and our current
set of product registrations from environmental, health and safety regulatory
authorities give us a significant advantage over our competitors and new
entrants. We also find it advantageous that some of our competitors have chosen
to enter into certain downstream products that we do not manufacture and that
compete directly with their customers.
Over the past decade, producers in the alkylamine industry that compete in our
geographies have consolidated significantly. Key consolidation events include
Air Product’s UK closure of a 50 kt production line in 2004, Chinook Canada’s
closure of a 68 kt production line in 2004 and sale of contracts to DuPont, our
purchase of Air Product’s North American and Latin American amines business in
2006, Akzo Nobel’s Netherlands closure of a 22 kt production line in 2006 and
sale of contracts to us and Balchem’s purchase of Akzo Nobel’s 18 kt Italian
operations in 2007.
The largest alkylamine building block product by volume is methylamines,
followed by higher alkylamines. We believe consumption of methylamines accounted
for approximately 74% of global consumption of alkylamines by volume and that
higher alkylamines made up the remainder of global consumption. The four
producers of methylamines in North America are Taminco, DuPont, BASF and
Celanese Mexicana, with Taminco having the largest share of production capacity
at approximately 50% in 2012 and DuPont having the next largest share. The two
producers of higher alkylamines in North America are Taminco and U.S. Amines,
with Taminco’s share of production capacity at 75% in 2011. The European
methylamine producers are Taminco (Belgium and Germany), BASF (Germany), Balchem
(Italy), Ak-Kim Kimia (Turkey) and CEPSA (Spain), with Taminco having the
largest share of European production capacity at about 49% and BASF having the
majority of the remaining capacity share. In Asia, the significant methylamine
producers include Zheijiang Jiangshu, Shandong Huala Hengsheng, Luxi Chemical
Corp. and Taminco, with Taminco’s share representing 4% of Asian production
capacity in 2012.
provide
these goods with a variety of ancillary characteristics required for optimal
performance, such as neutralizing acidity, and removing contaminants. We have an
extensive offering of differentiated value-added products that typically
represent a small portion of our customers’ overall costs and are sold into
diversified, global end-markets that benefit from favorable underlying economic
and population growth trends. We currently operate in 19 countries with seven
production facilities and, as of December 31, 2012, had an installed production
capacity of 1,272 kt. According to the report issued by Arthur D. Little Benelux
S.A./N.V. (the “ADL Report”), we hold the #1 or #2 market position globally in
the vast majority of the chemicals we produce, including an approximately 50%
and 75% share of certain products, respectively, in North America and Europe.
During the pro forma year ended December 31, 2012, eight of our products
accounted for more than 57% of our revenue, with six of the eight products
holding a leading global market position. During the pro forma year ended
December 31, 2012, through our worldwide network of production facilities, we
sold 48% of our volume in North America, 36% of our volume in Europe, and 16% of
our volume in the emerging markets (7% in Latin America and 9% in Asia).
Furthermore, we expect to increase the portion of our volume from the Americas
and Asia with our recent capital investments. As a result of our leading market
positions, attractive end-markets, and significant recent capital investments,
we believe we are well positioned for significant growth over the coming years.
In the pro forma year ended December 31, 2012, we generated revenue of $1,116
million, Adjusted EBITDA of $240 million, and Adjusted EBITDA margin of 22%.
Alkylamines are organic compounds produced through the reaction of an alcohol
with ammonia. The immediate results of these processes are the production of
methylamines and higher alkylamines, which can then be further reacted with
other chemicals to produce alkylamine derivatives. Our products are primarily
used in the agriculture, water treatment, personal & home care, animal nutrition
and oil & gas end-markets, which combined accounted for approximately 79% of our
volume during the pro forma year ended December 31, 2012. Our end-markets tend
to be non-cyclical and benefit from strong underlying fundamentals such as
increasing global population, urbanization of emerging markets and rising income
levels.
We currently operate seven plants worldwide dedicated to the production of
alkylamines and alkylamine derivatives, including two larger facilities in each
of the United States and Europe that are among the world’s largest methylamine
and higher alkylamines production facilities, a joint-venture facility with
Mitsubishi Gas Chemical Company and certain of its affiliates (the “MGC Group”)
in China, and two other 100% Taminco-owned facilities in China.
We are also in the process of pursuing numerous growth projects to further
bolster our global footprint and leverage our strategic advantages. Our
currently budgeted future investments include significantly extending production
capacity at our Pace, Florida methylamine facility by the end of 2014 and
further development of other derivative capacity. In total, we have spent $136
million in growth capital expenditures over the past three years, which is more
than we have spent in any similar historical period. We expect to realize
significant growth in our financial results from these investments.
We are organized into three segments: Functional Amines, Specialty Amines, and
Crop Protection.
• Functional Amines. This segment serves the needs of external customers
that use our alkylamines products as the integral element in their
chemical processes for the production of formulated products applied in a
variety of end-markets such as agriculture, personal & home care, animal
nutrition, and oil & gas. Through this segment, we also produce basic
amines, which are captively used as building blocks to produce our
downstream derivatives through our Specialty Amines and Crop Protection
segments, serving a variety of attractive, non-cyclical end-markets.
Approximately 30% of the Functional Amines production is used internally
and forms the basis of our vertically integrated model. In the pro forma
year ended December 31, 2012, the Functional Amines segment accounted for
51% of Adjusted EBITDA.
• Specialty Amines. This segment sells alkylamine derivatives for use in the
water treatment, personal & home care, oil & gas and animal nutrition
end-markets, and specialty additives for use in the pharmaceutical,
industrial coatings and metal working fluid end-markets. This segment is
downstream from the Functional Amines segment and uses that segment’s
production as one of its key raw materials. The Specialty Amines segment’s
customers are typically large, multinational enterprises who are leading
players in their industry. In the pro forma year ended December 31, 2012,
the Specialty Amines segment accounted for 33% of Adjusted EBITDA.
• Crop Protection. This segment sells alkylamine derivatives, active
ingredients and formulated products for use in the agriculture and crop
protection end-markets. The majority of the segment’s customers range from
multinational crop protection and agricultural enterprises to large local
farms. In the pro forma year ended December 31, 2012, the Crop Protection
segment accounted for 16% of Adjusted EBITDA.
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We were incorporated on December 12, 2011 in the state of Delaware. Our
principal executive offices in the U.S. are located at Two Windsor Plaza, Suite
411, 7540 Windsor Drive, Allentown, Pennsylvania 18195, and the telephone number
there is (610) 366-6730. Our website address is www.taminco.com.