chemtrade-marsulex combination - 2011

Enhancing Our Existing Platform – The Acquisition of Marsulex Inc.

MARK DAVIS / President & CEO

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Special Note Regarding Forward-looking Statements

This presentation contains certain statements which may constitute “forward-looking” statements within the meaning ofcertain securities laws, including the “safe harbour” provisions of the Securities Act (Ontario). The use of any of the words“anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe” and similar expressions areintended to identify forward-looking statements. This presentation contains forward-looking statements about theobjectives, strategies, financial condition, results of operations and businesses of Chemtrade Logistics Income Fund. Thesestatements are “forward-looking” as they are based on current expectations about our business and the markets we operatein, and on various estimates and assumptions. Forward-looking statements in this presentation describe our expectations asof the date of this presentation. Our actual results could be materially different from our expectations if known or unknownrisks affect our business, or if our estimates or assumptions turn out to be inaccurate. As a result, we cannot guarantee thatany forward-looking statement will materialize. Forward-looking statements do not take into account the effect thattransactions or non-recurring items announced or occurring after the statements are made may have on our business. Wedisclaim any intention or obligation to update any forward-looking statement even if new information becomes available, asa result of future events or for any other reason. Risks that could cause our actual results to differ materially from ourcurrent expectations are discussed in the RISK FACTORS section of our Annual Information Form. Further information canbe found in the disclosure documents filed by Chemtrade Logistics Income Fund with the securities regulatory authorities,available on www.sedar.com.

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Enhancing Chemtrade’s Existing Platform

! One of the world’s largest suppliers of sulphur-based chemicals

! Leading processor of refinery spent acid

! Leading regional supplier of sodium chlorate and elemental sulphur

! Largest North American producer and marketer of ultra pure acid

! One of two producers of P2S5 in North America

! Leading marketer of sulphuric acid and other sulphur-based products

! Leading processor of refinery spent acid

! Leading provider of environmental compliance services to refineries

! Western Canada’s largest supplier of alum for water treatment

Acquisition of Marsulex significantly enhances Chemtrade’s size, scope and earnings stability

Platform supported by risk mitigating and fee-based contracts with a diversified customer base

Acquisition Aligned with Our Stated Strategic Objectives

Business Model

• Mitigates commodity risk

Operational Excellence

• Ensures sustainable earnings

Increased Size and Scale

• Drives diversity of earnings

Financial Prudence

• Accretive, maintaining distribution and balance sheet strength

Acquisition represents another milestone in Chemtrade’s execution of its four-pronged strategy

5

6

Addition of Complementary Industrial Chemicals Business

• Sodium chlorate

• Tall oil

• Hydrogen

Pulp Chemicals

• Elemental sulphur

• Sulphuric acid

International

Western Markets(2)

• Sulphuric acid

• Liquid SO2

• Acid Regeneration

• SHS

• Molten sulphur

• P2S5

Sulphur Products & Performance Chemicals

• Acid Regeneration

• H2S Processing

• Sulphur Recovery

• Ammonium Sulphate

• Sulphur Prilling

• Petcoke

Refinery Services(2)

• Sulphuric acid

• Liquid SO2

• Niche sulphur products

• Alum based water treatment

Revenue: $321.6

EBITDA (1): $ 65.2

Margin: 20%

Sulphur Products & Performance Chemicals

Revenue: $117.6

EBITDA (1): $ 44.0

Margin: 37%

Revenue: $78.0

EBITDA (1): $26.0Margin: 33%

Revenue: $48.3

EBITDA (1): $16.5

Margin: 34%

Revenue: $188.1

EBITDA (1): $ 25.4

Margin: nmf

Source: Company filings and public disclosureNote: 2010 financial metrics shown in C$ millions1. Excludes corporate costs.2. Marsulex legacy businesses (Refinery Services and Western Markets) illustrated with yellow borders; excludes Marsulex Environment Technologies (“MET”) segment.

Builds on Chemtrade’s Existing Business Portfolio

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Acquisition Highlights

Transaction Value ! $419.5 million; excluding Marsulex’s MET segment

! All cash consideration

Key Statistics ! Combined 2010 EBITDA of ~$132 million (1)

! Additional $10 million of annual synergies expected

! Expected to be highly accretive to distributable cash per unit in year 1

! Significantly reduced payout ratio

Financing ! Fully underwritten:

! $460 million senior credit facility and revolver

! $130 million bought equity deal

Structure ! Transaction to be implemented by way of plan of arrangement

! Unanimously recommended by both Boards

! Irrevocably supported by Marsulex ~60% shareholder, Birch Hill Equity Partners

Conditions ! Marsulex shareholder approval of 66 2/3% of votes cast

! Customary regulatory and court approvals

Indicative Timetable

! Marsulex shareholders’ meeting to be held in late June 2011

! Anticipated transaction completion in late June 2011

Highly Accretive Acquisition

1. Excluding pro forma accounting adjustments of ~$4 million.

Highly Compelling Acquisition Rationale

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• Expands strength in core competencies of regen, sulphuric acid and liquid SO2

• Diversifies customer mix, industry base and product portfolio• Enhances quality of earnings through risk-sharing and fee-based contracts

• Facilitates opportunity for logistical and vertical integration• Expands into attractive new end markets

• Offers highly realizable synergies and preserves balance sheet strength• Robust financial profile and accretion metrics• Improved liquidity and capital markets presence

Strategic

Growth

Financial

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9

Diversifies Product and Service Offerings

! Expands strength in core competencies and adds new product and service offerings! Aluminum sulphate (“alum”)

! H2S processing at Montreal

! Ammonium sulphate manufacturing

! Sulphur prilling

! Niche products, including: Aqua Ammonia and Hydrogen Sulphide

Source: Company Filings, Chemtrade Management GuidanceNote: Based on 2010 revenue. Excludes Chemtrade International segment and inter-company revenue.

Strategic Growth Financial

Chemtrade Revenue Combined Revenue

Acid & SO2 Refinery Services Performance Chemicals Pulp Chemicals Automobile Lubricants

$370 million $561 million

Aluminum Sulphate Other

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Diversifies End-Use Markets

! Diversifies end-use markets! Less reliance on pulp and paper industry

! Increased focus on the petroleum industry


Chemtrade Revenue Combined Revenue

Source: Company Filings, Chemtrade Management GuidanceNote: Based on 2010 revenue. Excludes Chemtrade International segment and inter-company revenue.

Petroleum Pulp and Paper Chemicals Distribution Metals and Mining Fertilizer Electronics Other

$370 million $561 million

Water Treatment

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Enhances Quality of Earnings

! Similar to Chemtrade, Marsulex reduces its exposure to typical commodity risks through risk-sharing and fee-based contracts

! Risk-sharing contracts mitigate but do not eliminate the effects of movements in the price of the product or certain raw materials

! Fee-based contracts completely eliminate the risk of product and raw material pricing

! Chemtrade is acquiring high quality earnings

! Approximately 75% of Marsulex 2010 gross profit is derived from risk-sharing or fee-based contracts

• Almost $29 million or 38% of gross profit comes from fee-based arrangements with little or no commodity risk

• The balance, approximately $27 million, is earned through risk-sharing agreements

! Attractive margin profile

• Addition of two businesses with a combined EBITDA margin greater than 35%


Acquisition of high-quality earnings; Marsulex boasts similar risk-sharing and fee-based contracts

$69

$119

$81 $76

2007 2008 2009 2010

Enhances Quality of Earnings (continued)

! 2008: unprecedented record year

! 2009: strong despite global recession

! 2010: remained strong despite some supply disruptions and incidents at Beaumont


Chemtrade

EBITDA (2)

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$55 $57 $56 $56

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2008 2009 2010 Adjusted

Marsulex excluding MET

EBITDA (2)

633%

7(#34

88.9/00

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Revenue (1)

Source: Company financials, public disclosure and Chemtrade management guidance1. Based on 2010 Revenue.2. Excluding pro forma accounting adjustments.

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! Western Markets: arrangements with Sherritt bear many risk-sharing attributes similar to Chemtrade’s Vale agreement

! Regen assets: contracts contain pass-throughs for natural gas (a principal raw material)

! Montreal/Fort McMurray: earnings are fee-based

Acquisition bolsters earnings stability and facilitates Chemtrade’s growth prospects

Synergies

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Opportunity for Logistical and Vertical Integration

! Operational and Commercial Opportunities

! Extends sulphuric acid and SO2 businesses into Western Canada

• Opportunity to integrate North American acid and SO2 businesses

! Opportunity for logistical integration of Toledo facility with existing acid regen facilities, providing potential for freight, logistics and operational advantages

! Leverage Syncrude and Suncor relationships to grow business

! Western Markets provides diversification into new chemicals, such as alum

• Vertical integration opportunity given alum business is key user of acid

! Additional size, scope and scale enhances ability to drive best practices, realize benefits from improved processes, and better attract and develop our people


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Plant

Office

Marsulex

Legend

Warehouse

Manufacturing Facility

Chemtrade

Conversion Tolling Facility

Intermodal Transfer Station

Office

Customer Service Storage Centre

PlantPlant

OfficeOffice

Marsulex

Legend

WarehouseWarehouse

Manufacturing FacilityManufacturing Facility

Chemtrade

Conversion Tolling FacilityConversion Tolling Facility

Intermodal Transfer StationIntermodal Transfer Station

OfficeOffice

Customer Service Storage CentreCustomer Service Storage Centre

Expands into Attractive New End Markets

Puerto Mejillones Terminal

Essen, Germany

Rotterdam Terminal, Netherlands

Zug, Switzerland

! Addition of a number of new products and services

! Particularly aluminum sulphate (“alum”), where Marsulex is the leading supplier in Western Canada

! H2S processing at Montreal (Quebec) and Toledo (Ohio) facilities

! Sulphur prilling at Mount Vernon

! Expands footprint into Western Canada and Northwestern U.S.

! Particularly critical for sulphuric acid and liquid SO2 businesses

! Strategic relationship with Syncrude at Fort McMurray

! Long-term fee-based contract with potential for expansion as Syncrude grows its Mildred Lake facility

! Potential to benefit from growth in the oil sands

! Strategically located regen plant expected to benefit from continued growth in oil sands production

New Products, Services and Geographies

Fort McMurray, AB

Fort Saskatchewan, AB

Saskatoon, SK

Calgary, AB

Mount Vernon, WA

Prince George, BC

Whiting, IN

Garyville, LAPort Arthur, TX

Baytown, TX

Texas City, TX

Corpus Christi, TX

Toronto, ON

Montreal, QC

Toledo, OH

Cherry Point, WA

ROHIT BHARDWAJ / Vice-President, Finance & CFO

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Offers Highly Realizable Synergies and Preserves Balance Sheet Strength

! Cost Synergies

! $10 million annual run-rate " fully phased in by Q1 2012

• Decrease in SG&A expenses due to the elimination of management fees, salaries and other costs

! Balance Sheet Strength

! Strong near-term cash flow generation supports de-leveraging

Transaction Value: $419.5 million

Credit Facility $460 million ~$383 million drawn to fund acquisition and re-finance existing debt

Bought Deal $130 million New issue of 9.6 million units @ $13.60 per unit

Senior Debt to EBITDA (1) ~2.9x Combined

Notes: Leverage metrics include pro forma run-rate synergies of $10 million 1. Senior leverage includes Fort McMurray project level debt; EBITDA excludes pro forma accounting adjustments.


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Robust Financial Profile and Accretion Metrics

! Expected to be highly accretive

! 31% to 2010A DCPU on a combined basis

C$ millionsChemtrade Marsulex Adjustments (1) Combined

Cash flows from operations $60.5 $54.6 $(2.8) $112.4

Changes in non-cash working capital and other items

(4.8) (12.4) 2.7 (14.4)

Maintenance Capex (14.8) (12.9) -- (27.7)

Distributable Cash 41.0 29.3 (0.0) 70.3

DCPU $1.34 $1.75

Source: Company Filings, Chemtrade Management Guidance, based on 2010 actuals1. Adjusted per 2010 pro forma financial statements. Includes additional adjustments for Incremental run-rate synergies (net $8.8 million) and MET/Stablex management fees (less: $7.2 million). 2. Chemtrade maintenance capital expenditure expected to be ~$19 million on a go-forward basis.

3. Excludes Marsulex one-time capex of $7.9 million, primarily environmental expenditures at Cairo, OH and Toledo, OH. Chemtrade management estimates legacy Marsulex businesses acquired will require approximately $16.3 million of one-time capital expenditures in the years H2 2011 through 2013.

4. Assumes 40.2 million units outstanding.

2010 Combined Metrics


(2)

(4)

(3)

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Robust Financial Profile and Accretion Measures (continued)

85%

48%

82%

90%

69%

2007 2008 2009 2010 Combined

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! No change to current distribution policy

! Cash flow to be used to reduce indebtedness over time

! ~30% of distributions to qualify as taxable Canadian dividends

! Do not expect to pay any taxes under SIFT rules

Distribution Policy Substantially Reduced Payout Ratio

Source: Company Filings, Chemtrade Management Guidance, based on 2010 actuals1. Unprecedented record year.

(1)


69% combined payout ratio; substantially reduced from 90%

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Improved Liquidity and Capital Markets Presence

World Class Pro Forma Profile in Industrial Chemicals Space

Increased Coverage and Liquidity


Increased Capital Markets Presence

2010 EBITDA

Analyst Coverage

Volume Traded (1)

Kemira $256 14 401.3

Olin Corp $190 9 817.9

Arch Chemicals $150 6 120.1

Canexus $ 69 5 227.8

Median -- 8 314.6

Chemtrade (2) $ 76 4 100.6

Marsulex (2) $ 75 3 6.2

Combined (3) $142 -- --

Source: Company financials and BloombergNote: Market data as of May 4, 2011. EBITDA normalized for one-time items.1. Average daily volume traded over the last twelve months (000’s of shares/units).2. 6 discrete research analysts cover Chemtrade and Marsulex.3. Only includes MLX businesses being acquired excluding pro forma accounting adjustments. Includes $10 million of run-rate synergies.

! Pro forma company will be a ~$1 billion+ enterprise value North American chemicals concern

! Equity issuance will represent a ~30% increase to the existing float

Highly Compelling Acquisition Rationale

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• Expands strength in core competencies of regen, sulphuric acid and liquid SO2

• Diversifies customer mix, industry base and product portfolio• Enhances quality of earnings through risk-sharing and fee-based contracts

• Facilitates opportunity for logistical and vertical integration• Expands into attractive new end markets

• Offers highly realizable synergies and preserves balance sheet strength• Robust financial profile and accretion metrics• Improved liquidity and capital markets presence

Strategic

Growth

Financial

Distributable Cash Reconciliation

Appendix A

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Distributable Cash Reconciliation

2010 Combined Distributable Cash

Distributable Cash (Pro Forma) $68.7

Less: MET Management Fee (5.7)

Less: Stablex Management Fee (1.5)

Less: Birch Hill & Directors’ Fees (1.2)

Add: Run-Rate Synergies 10.0

Adjusted Distributable Cash $70.3

C$ millions

Source: Company Filings, Chemtrade Management Guidance, based on 2010 actuals1. Adjustment to reflect non-recurring operating earnings of pro forma entity.2. Included in $10 million of run-rate synergies.

(1)

(1)

(2)

Overview of Selected Significant New Products and Services

Appendix B

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Aluminum Sulphate (“Alum”)

Supply and Demand

! On-site manufacturing at Calgary, Fort Saskatchewan, Prince George, and Saskatoon

! Batch process that combines readily available raw materials (including sulphuric acid produced at Prince George or available from Sherritt by contract)

! Produced in both dry and liquid forms

! Targeted towards regional markets

! Freight sensitive product in liquid form owing to >50% water content

! Demand is highly correlated with economic and population growth

! Growth derived from oil sands has resulted in increased need for municipal and waste water treatment

! Marsulex is the key supplier of alum in Western CanadaUses

! Municipal and industrial water treatment

! Pulp and paper industry process water treatment and paper sizing

! Lake restoration, treatment and nutrient inactivation

! Potential treatment for oil-sands tailings basins

Operations

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Fort McMurray (Ammonium Sulphate)

Operations

Economics

! Facility located on Syncrude’s Mildred Lake site

! Unique technology used to scrub emissions, producing granular ammonium sulphate fertilizer as a value-added by-product

! Provides disposal / placement service for by-product ammonium sulphate slurry from the emissions control system of Syncrude’s upgrader coking process

! Essential process to ensure environmental compliance ! Facility governed by a long-term contract

! Fixed fee with price escalators on direct costs and sulphur price netback

! Potential for growth alongside Syncrude as capacity expands

! Co-investment opportunities

! Potential to benefit from growing oil sands industry

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Montreal (H2S Recovery)

Operations

! Sulphur recovery plant, pipeline connected to Suncor refinery

! Converts by-product H2S from the refinery into molten sulphur using a Claus plant

! Residual emissions of SO2 (tail gas) are captured to ensure compliance with environmental regulations (produces SBS solution)

! Owns and operates plant which includes proprietary technology for the tail gas recovery unit

! Continuous operation: 365 days/year, 24 hours/day

! Exceptional reliability: +/- 1 hour outage in the past 50 years

! Governed by a long-term contract

! Long-term relationship with Suncor

! Fixed fee with price escalators on direct costs

Economics

chemtrade-marsulex combination - 2011

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