coveris lender presentation 53 · pdf filealso held executive and senior management positions...
TRANSCRIPT
Lenders’ Presentation
May 2015
DisclaimerConfidentiality
This Presentation (the “Presentation”) has been prepared in connection with the repricing of certain term loan indebtedness of Coveris Holdings S.A. and certain of its subsidiaries.This Presentation contains confidential material and non-public information. Distribution of this Presentation, or of any information contained in this Presentation, to any person otherthan an original recipient (or to such recipient’s advisors) is prohibited. Any reproduction of this Presentation in whole or in part, or disclosure of any of its contents, without priorconsent of Coveris Holdings S.A., is prohibited. This presentation remains the property of Coveris Holdings S.A. and on request must be returned and any copies destroyed.
The Presentation may only be distributed to persons that are qualified institutional buyers as defined in Rule 144A under the United States Securities Act of 1933, as amended (the“Securities Act”), an institutional “accredited investor” as defined in Rule 501(a) (1), (2), (3) or (7) under the Securities Act, or to persons who are non-US persons as defined inRegulation S under the Securities Act and who are outside the United States in accordance with Regulation S under the Securities Act.
The proposals contained in this Presentation are preliminary. This Presentation does not constitute a prospectus or form part of any offer for sale or subscription of, or solicitation ofany offer to buy, apply or subscribe for, any securities in the Coveris Holdings S.A. or any of the companies that may together constitute Coveris Holdings S.A., nor shall it form thebasis of, or be relied upon in connection with, or act as an inducement to enter into, any contract or commitment whatsoever with respect to Coveris Holdings S.A. or suchcompanies.
The information contained in this Presentation is subject to material updating, completion, revision, amendment and verification. No reliance should be placed on the information andno representation or warranty (whether express or implied) is given or made in relation to the accuracy or completeness of the information set out in this Presentation and noresponsibility, obligation or liability whatsoever is or will be accepted for the accuracy or sufficiency thereof or for any errors or omissions therein.
Forward Looking Statements
All statements, other than statements of historical facts, included in this Presentation that address activities, events or developments which are expected or anticipated to occur orwhich may occur in the future are forward-looking statements. Forward-looking statements convey the current expectations and projections relating to the anticipated financialcondition, results of operations, plans, objectives, future performance and businesses of Coveris Holdings S.A. These statements can be identified by the fact that they do not relatestrictly to historical or current facts. They are subject to uncertainties and factors relating to the operations and business environment of the businesses that it is anticipated willtogether comprise Coveris Holdings S.A., all of which are difficult to predict and many of which are beyond the control of these businesses. Such uncertainties and factors couldcause the Coveris Holdings S.A.’s actual results to differ materially from those stated in the forward-looking statements. Further, any forward-looking statement speaks only as of thedate on which it is made, and except as required by law, no obligation is assumed to update any forward-looking statement to reflect events or circumstances after the date on whichit is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
Market Data Information
Certain market data information in this Presentation is based on estimates. The industry, market and competitive position data used throughout this Presentation was obtained frominternal estimates and research as well as from industry publications and research, surveys and studies conducted by third parties. The estimates are believed to be accurate as ofthe date of this Presentation. However, this information may prove to be inaccurate because of the method by which it was obtained or because this information cannot always beverified due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. No representation,warranty or undertaking whatsoever is given or made regarding such information and the recipient should inform itself as to the accuracy of such data and the reasonableness ofsuch forecasts and their appropriateness for the proposed Coveris Holdings S.A.
1
Today’s Presenters
2
\ Gary Masse
Chief Executive Officer
Appointed as CEO of Coveris in April 2014
More than 25 years of experience in the manufacturing sector
Previously served as CEO of Precision Partners, a $500m engineering and manufacturing company
Served as Group President for Cooper Industries, where he managed the $800m Cooper Tools global business
Also held executive and senior management positions at Danaher Corporation and General Electric
Mike Alger
Chief Financial Officer
Appointed as CFO of Coveris in February 2013
Elected to the Coveris Board of Directors in October 2007
Served as a Group CFO at Sun Capital Partners
Responsibilities included financial oversight for multiple Sun Capital platform companies with focus on large scale multi-plant manufacturing and packaging companies
Over 35 years of experience in senior finance and operations management roles
TRANSACTION OVERVIEW
Transaction Overview
Coveris (“the Company”) is a leading global manufacturer of plastic packaging products offering a broad range of value-added flexible and rigid plastic and paper packaging products
• Global presence with 66 production facilities across North America, Europe, Asia, and the Middle East
• Diversified base of over 3,000 customers, ranging from leading international blue-chip customers to smaller regional businesses
Coveris has continued to demonstrate strong financial performance since the 2013 Refinancing following successful implementation of various restructuring measures, realization of cost synergies, and successful integration of 5 acquisitions
• $61.4m of cost synergies achieved in 2013; and $61.8m of cost synergies achieved in 2014
• $27.8m of annualized cost synergies identified for 2015
For FY 2014, the Company generated Net Sales of $2.8bn and Adjusted EBITDA of $316.4m, an increase of 0.6%¹ and 17.5%¹, respectively
Coveris is seeking to take advantage of strong performance / good markets to reduce its interest expense on the USD and EUR denominated Senior Secured Term Loan
• Coveris is also seeking to raise an additional €50m-€75m of euro-denominated loans, the proceeds of which will be used to repay a portion of its existing dollar-denominated term loans
• The financing is leverage-neutral and pro forma for the re-pricing, the Company will maintain 2.2x Secured Leverage and 4.0x Total Leverage based on 2014 Adjusted Pro Forma EBITDA (including synergies) of $349.5m
• Conference call with lenders scheduled on May 11, 2015 (Monday) with commitments and consents due on May 19, 2015 (Tuesday)
1. Net sales growth and EBITDA growth for 2014 calculated after giving effect to all relevant acquisitions as if they had been acquired on January 1, 2013.4
($ in millions)CurrentAmount
ProposedAmount
x 2014 Adj. PF EBITDA(incl. synergies)
Current Margin
ProposedMargin Maturity
Cash and Cash Equivalents (43.4) (43.4) (0.1)x - - -
North American ABL Facility ($110m) 54.8 54.8 0.0x 2.725% 2.725% 2019
European ABL Facility ($175m) 82.5 82.5 0.3x 2.95% 2.95% 2019
Senior Secured Term Loan ($) 429.6 375.31 1.3x L+4.25%2 L+3.50-3.75%2 2019
Senior Secured Term Loan (€) 187.5 241.81 2.0x E+4.75%2 E+3.50-3.75%2 2019
Existing Capital Leases 50.3 50.3 2.2x Various Various Various
Total Secured Net Debt 761.2 761.2 2.2x
2019 Senior Unsecured Bonds 410.8 410.8 3.4x 7.875% 7.875% 2019
2018 Senior Unsecured Bonds 235.4 235.4 4.0x 10.00% 10.00% 2018
Total Net Debt 1,407.4 1,407.4 4.0x
2014 Adjusted EBITDA 316.4
Pro Forma Adjustments3 5.3
2014 Adjusted Pro Forma EBITDA 321.7
Synergies4 27.8
2014 Adjusted Pro Forma EBITDA (Including Synergies) 349.5
Pro Forma Capital Structure
Source: Company Information1. Proposed amount calculated assuming EUR tranche is upsized by €50m and the proceeds are used to repay portion of the existing USD tranche; USD / EUR FX rate of 1.09.2. Subject to a floor of 1.00%.3. Pro forma adjustments reflect full year results relating to the acquisition of St. Neots and Learoyd.4. Includes annualized procurement savings of $12.9 million and annualized manufacturing and restructuring savings of $14.9 million identified for 2015. 5
Pro Forma Capital Structure (as of Mar-2015)
Summary Terms for Senior Secured Term Loan
2013 Senior Secured Term Loan
Borrower Coveris Holdings S.A. (formerly Exopack Holdings S.A.)
Amount
Current $ Tranche: $429.6m € Tranche: €172.8m
Proposed Existing $ Tranche: $348.2m - $375.3m (OID: 100.00) Existing € Tranche: €172.8m (OID: 100.00) New € Tranche: €50.0m - €75.0m (OID: 99.75)
MarginCurrent
$ Tranche: L + 425bps (floor of 1.0%) € Tranche: E + 475bps (floor of 1.0%)
Proposed $ Tranche: L + 350-375bps (floor of 1.0%) € Tranche: E + 350-375bps (floor of 1.0%)
Ranking Senior Secured
Maturity May 2019 (springing maturity 91 days inside existing 10.0% 2018 Notes)
Amortization 1.0% per annum
Call Protection 101 Soft Call for 6 months
Incremental Facility Not to exceed $50m plus, an unlimited amount so long as after giving effect to such Incremental Facility, the pro
forma Secured Net Leverage Ratio (net of up to $50m of unrestricted cash and cash equivalents) does not exceed 2.4x
Financial Covenants None
Negative Covenants Limitations on indebtedness, liens, restricted payments and acquisitions, among others
Excess Cash Flow For any fiscal year, 50% of Excess Cash Flow if Secured Net Leverage Ratio is >2.0x; 25% if Secured Net Leverage Ratio is <=2.0x and >1.5x; and 0% if Secured Net Leverage Ratio <=1.5x
Guarantee Coverage Consolidated EBITDA and consolidated assets of the Loan Parties to be equal to at least 75.0% of the total consolidated EBITDA and total consolidated assets of the group; subject to certain limitations and exclusions
Governing Law New York Law
6
OVERVIEW OF COVERIS
Who Is Coveris?
Organization Highlights
• Leading global plastics packaging company
• $2.8 billion annual sales
• 66 strategically located facilities
• Over 9,800 employees in 17 countries
• Diverse packaging technology platforms (flexible and rigid)
• Award-winning package development and printing capabilities
Key Market Relationships
• Major manufacturer of Rigid Packaging in Eastern Europe and the United Kingdom
• A leading manufacturer of Natural Cheese Packaging in North America
• One of the largest global manufacturers of Pet Food Packaging
• The largest manufacturer of Private Label Packaging in the United Kingdom
Note: Sales segmentation as per reported 2014 financial information8
Sales by End MarketsSales by Region Sales by Segment
Europe65%
North America
32%
Rest of World
3%
Flexible72%
Rigid28%
Food51%
Beverage9%
Industrial /Inst't.17%
Household Care3%
Personal Care7%
Medical2%
Other12%
Key Products
Company Description Key Products
North American leader in flexible paper and plastic packaging and coated products
Cheese packaging Meat packaging Pet food packaging
Industrial packaging Specialty coatings Collation shrink
European leader in flexible plastic packaging
Pet food packaging Confectionary packaging Agricultural packaging
Beverage packaging Tamper evident bags
European provider of rigid and high-end flexible plastic packaging
“Recloseable” pouches and bags Medical films
Barrier films Meat packaging
One of the largest players in rigid plastic packaging in Eastern Europe
Mono- and multilayer barrier sheets Pre-formed rigid plastic and paper containers
Thermoforming & injection molding technology
A market leader in labels and printed paperboard and top supplier of labels to Private Label in the UK
Labels Reclose applications
Sandwich packaging Intelligent lidding film
One Packaging Company with Combined Strength and Market Reach
9
Sizeable Player in the Global Plastic Packaging Market
$9.8bn
$7.8bn
$5.0bn$4.4bn $4.3bn
$2.8bn$2.4bn $2.4bn
$1.8bn$1.4bn
Source: Company filingsNote: Based on available company disclosures on plastic packaging. Average 2014 exchange rates used for currency conversion: EUR / USD 1.3925; GBP / USD 1.6474; AUD / USD 0.9013
10
Flexible ✓ ✓ ✓ ✓ ✓ ✓ ✓
Rigid ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Selected Global Plastic Packaging Players – Sales ($ billions)
Mission
Customers
Ensure that customers recognize Coveris as a provider of innovative packaging and coatings solutions that:
• Delivers outstanding customer service and quality
• Is flexible and quick to respond
• Invests and grows with them
Employees
Our employees are engaged and empowered to produce world class products in a safe environment
We are committed to operational excellence, continuous improvement and fact based decision making
We are accountable for results
Financial Grow revenue by 5%, increase profit by 15% and drive positive cash flow
Maintain adequate liquidity level
11
Overview of Recent Events
1. Net sales growth and EBITDA growth for 2014 calculated after giving effect to all relevant acquisitions as if they had been acquired on January 1, 2013.12
2011 2012 2013
Acquired UK Britton Group, Austrian Unterland, and the Rigid Pannunion business
Invested $93m in capital projects
Legally combined 5 packaging companies
Refinanced 5 separate debt structures into one
Grew sales by 6.1% and adjusted pro forma EBITDA by 8.6%
Rebranded Company to Coveris
Closed 2 new bolt-on acquisitions in 2nd half
Delivered over $61m of synergies
Invested $124m in capital projects
New CEO Gary Masse to lead Coveris
Closed 3 bolt-on acquisitions (KubeTech, St. Neots, Learoyd)
Grew pro forma net sales by 0.6%¹ and pro forma adjusted EBITDA by 17.5%¹
Achieved $61.8m of synergies
Invested $116m in capital projects
Achieved $46m in synergies Invested over $100m in
capital projects Completed acquisition of UK
labels business Formed Global procurement
organization to leverage savings
Conformed financials to US GAAP standards
Sales: $2,326m Adjusted EBITDA: $216m Adj. EBITDA margin: 9.3%
Sales: $2,507m Adjusted EBITDA: $237m Adj. EBITDA margin: 9.4%
Sales: $2,660m Adjusted EBITDA: $257m Adj. EBITDA margin: 9.7%
Sales: $2,759m Adjusted EBITDA: $316m Adj. EBITDA margin: 11.5%
2014
CoverisBusinessSystem
Commercial Excellence
Operational Excellence
Talent / Leadership
Acquisition Integration
Foundation to Our Culture, Values and Mission
• Strategic Planning Process
• Sales Force Effectiveness
• Pricing Processes
• Enabling Tools
• CPS
• Modernization
• Procurement Practices
• Supply Chain Development• Performance Management
• Compensation Management
• Leadership Skills
• Succession Pipeline
• Acquisition Funnel
Drive Best Practices Across the Business Through Coveris Business System – CBS
13
Strategic Planning Process• Market Driven• 3 Year Outlook• Initiative Based
Strategic Initiatives• Current Year - 2015• Action Based
Budget - 2015• Financial and
Operating Plan
Deploy• Mobilize teams• Keep score
Time Line
Summer (Q3) Fall (Q4) Winter (Q4 – all year)
Coveris Business System (CBS)• Processes & Tools• The ‘How’
Process Driven
14
15
Key Elements of Corporate Strategy
Strategies Key Highlights
● Leverage long-standing customer relationships● Cross-sell the complete product line to customers in all markets● Leverage relationships across the Group to capture new technology and market opportunities
Leverage Customer Relationships to Grow Organically
● Increase the functionality, product quality and shelf-appeal of products by developing and applying innovative new technologies
● Roll out PMDB to provide updated customer/product profitability● Continue to develop complementary product features (e.g. high definition graphics, fitments, easy open)
Enhance Products Through Technology
● Good platform for strategic acquisition opportunities● Track record of successfully integrating acquisitions and achieving operating efficiencies
Selectively Pursue Strategic Acquisition
Opportunities
● Expand the share of the value chain with existing customers● Increase overall market share in attractive product categories by leveraging leadership positions at
different points in the value chain
Operations & Supply Chain Excellence
● Increased scale allows to secure improved volume pricing from suppliers and streamline procurement● Further rationalize manufacturing footprint, institute operational and manufacturing best practices● Annualized procurement savings of $12.9 million and annualized manufacturing and restructuring
savings of $14.9 million identified for 2015
Further Integration and Cost Savings from
Combination
KEY CREDIT HIGHLIGHTS
Key Credit Highlights
Leading Positions in Attractive End Markets
Broad Geographic Reach
Resilient and Diversified Business Model
Established Relationships with Blue-Chip Customers
Proven Capabilities in Developing and Commercializing New Technologies
Large Scale Provides Opportunities for Cost Savings
Stable Earnings
Experienced Management Team with Successful Track Record
17
1
2
3
4
5
6
7
8
Leading Positions in Attractive End Markets (1/3)
18
1
Flexible Rigid
$1,987m $773m
$291m $95m
Leading in North American printed beverage shrink films
A leader in UK Private Labels
#2 in Cheese and Pet Foods in North America
Leader in building market (insulation)
Leader in salt (home, road, pool)
Leader in susceptor technology (popcorn)
Leading global supplier of phototool printed circuit boards
Premier custom coater in the US
Leading supplier of conductive vinyl for medical electrodes
Largest thin wall rigid packaging producer in Europe by volume
Food & Consumer Coatings RigidPerformance
2014 Sales
Market Position and Key Products
Markets
2014 Gross Margin
Leading Positions in Attractive End Markets (2/3)
19
1
Largest UK Provider of
Private Labels
A North American Leader in
Natural Cheese
A Leaderin Shrink Films
Major Player in the Eastern European
Rigid Market
A Global Leader in Pet Food
Leading Playerin Single Use Detergents
Leading Positions in Attractive End Markets (3/3)
5.3%4.5% 4.3%
3.4%
2.5%
Rigid Plastic Flexible Plastic Paper and Board Glass Metal
CA
GR
% (2
013-
2018
)
Source: Smithers Pira1. Includes other consumer packaging substrates (not displayed separately on the chart) with a market value of $38bn, which is expected to grow at 0.5% p.a. (2013-2018).
20
1
Rigid Plastic Flexible Plastic
Key Drivers for Plastic Packaging Demand Growth
Move from glass/metal to rigid plastic and paper Developments in barrier technologies, processing
equipment, heat stability and resin formulation Increasing shelf life Convenience food such as ready meals
Conversion from jars and cans to pouches Single serving/convenience sizes Convenient cook-in packages Material content and weight reduction for
sustainability and cost management Food safety regulations Portable and resealable packages
Estimated Market Size ($bn) 175 172 57243 112
CAGR 2013-2018: 4.1%¹
Coveris Key Markets
Broad Geographic Reach
Note: Sales segmentation as per reported 2014 financial information; Coveris has an additional production facility in China. 21
2
US29%
Europe & Middle East (47 Facilities)North America (18 Facilities)
UK25%
North America Food and Consumer Europe Food and Consumer
UK Food and Consumer
Rigid
North America Performance Packaging
Advanced Coatings (+1 Facility in China)
NA Rigid
Sales by Region
Europe 65%
North America 32%
Rest of World 3%Our unique, multi-local infrastructure allows
us to maintain the flexibility of a local solutions provider and leverage the breadth
of a global innovator to support our customers’ needs everywhere.
Resilient and Diversified Business Model
Source: Smithers PiraNote: Sales segmentation as per reported 2014 financial information
22
3
Wide Geographical Spread… …With Focus on Diverse End Markets… …and Low Customer Concentration
Packaging Industry Resilience Demonstrated by Steady Volume Growth Even During Global Economic Decline
Res
ilien
ce o
f Pa
ckag
ing
Indu
stry
Cov
eris
’sR
esili
ent a
nd
Div
ersi
fied
Bus
ines
s M
odel
US29%
UK25%
Largest Customer <6%
Top 2-10 Customers
<15%
Rest 79%
83.3
24.3
20
21
22
23
24
25
26
55
65
75
85
2008 2009 2010 2011 2012 2013
Flexible Packaging Value Flexible Packaging Volume
$bn
Million Tons
Consumer Flexible Plastic Rigid Plastic
135.6
45.3
35
40
45
50
55
110
115
120
125
130
135
140
2008 2009 2010 2011 2012 2013
Rigid Packaging Value Rigid Packaging Volume
$bn
Million Tons
Industrial18%
Europe65%
North America
32%
Rest of World
3%
Food51%
Beverage9%
Industrial /Inst't.17%
Household Care3%
Personal Care7%
Medical2%
Other12%
Established Relationships with Blue-Chip Customers (1/2)
23
4
US29%
Food
Coatings
Labels
Rigid
Performance
Established Relationships with Blue-Chip Customers (2/2)
24
4
US29%
Contract Based Sales Split
Sales Split by Customer Age (Top 50)
10+ yrs.86%
Less than 10 yrs.14%
Of the top 50 customers, 86% of sales are derived from customers with 10+ years relationship; long term contracts with global customers ensure recurring and visible sales
20+Years
15+Years
10+Years
15+Years
15+Years
15+Years
15+Years
18+ Years
13+Years
15+Years
RigidFlexibleNon-
Contract Based
Customers 32%
Contract Based
Customers 68%
Non-Contract Based
Customers 41%
Contract Based
Customers 59%
Proven Capabilities in Developing and Commercialising New Technologies (1/2)
North America Food & Consumer Europe Food & Consumer North America Performance Packaging
Overview
• Mono and Multi-Layer Film Extrusion• Flexographic & Rotogravure printing • Proprietary Barrier technology• Converting: Pouch and Bag• Vertically integrated
• Barrier Blown and Cast Film• Shelf stable laminate retort technology• Multiple printing and hot stamping
decoration platforms• Value Added Conversion: Bags and
Pouch• Medical Bag Technology
• Mono and Multi-layer Film Extrusion• Susceptor Microwave Technology• Specialized paper converting
technology• Value Added Conversion
Growth Strategy
• Increase share of Fresh Meat Market• Enter forming / non-forming market• Leverage Rigid’s MAP offering• Migrate Pet from Paper to Plastic • Leverage EU retort and barrier tray for
NA Pet clients• Expand Pet pouch / bag offer• Internalize barrier sealant films
• Leverage NA & Rigid Pet Food Position (full product offer)
• Expand MDO • Grow IML with new print technology• Expand Confection bag business in
EU and NA• Expand Medical portfolio
• Invest and grow Insulation Market (FFS)
• Growth in dairy bag market• Leverage MDO from Coveris EU• Food Focus vs. Industrial products• Expand EU Confection business in NA
25
5
Proven Capabilities in Developing and Commercialising New Technologies (2/2)
UK Food & Consumer Advance Coatings Rigid
Overview
• Value Added Fast Response Graphic capabilities
• QSR and FMCG Tailored Service • Cutting Edge Label Innovations
Breathable Film Technology
• Precision application coating technology for electronic and custom applications
• Proprietary material coating development
• Value Added Innovation
• Barrier Thermoforming Technology• High Value Added Innovation Services• IM / IML / Injection Compression• Precision injection molding• In Mold Label Thermoforming• Paper Wrapping, Sleeving, Labeling
Growth Strategy
• Expand labels business into Western and Central Europe
• Grow board business• Leverage position and grow Produce
• Fuel Cell Technology• Breathable Films / Wound Dressing• Expansion in Electronics Markets• Growth in Optical Films• Leverage Back Lit Signage• Micro-porous Paper
• Expand offer into North America• Leverage NA & EU Pet Food Position
(full product offer)• Barrier tray system sell with NA Meat
Team (full product offer)• Next Gen Thermoforming Technology
26
5
Large Scale Provides Opportunities for Cost Savings
Procurement Manufacturing
Key Measures
Leveraging the purchasing power of the combined organization
Aligning prices and eliminating duplicate suppliers
Leveraging economies of scale
Improving supplier performance management
Using central resources to provide additional bandwidth and expertise to local procurement teams
Savings through investment, rationalization of footprint and improving efficiencies through lean manufacturing
Closure of one plant in Hungary
Acceleration of CPS project with Milliken
Integration of acquisitions including 3 in UK, NA Rigid and DI
Consolidation of Finnish production plants
Investment in layer capabilities and capacity increase in CAN
Integration of UK film operations into UK Food & Consumer
Cost Synergies
Note: One-off operating expenses and capital expenditures of approximately $19.7m to achieve 2015 annualized synergies27
6
$123.2m of cost synergies achieved in 2013/14 plus incremental $27.8m of cost synergies identified for 2015
2013 Achieved $61.4m 2014 Achieved $61.8m2015 Annualized Estimated $27.8m
$37.7 $23.7
$28.7$33.1
$12.9 $14.9
$79.3 $71.7
2013 Achieved 2014 Achieved 2015 Annualized Estimated
Stable Earnings
5%
10%
15%
0
50
100
150
200
2007 2008 2009 2010 2011 2012 2013 2014
PE Price¹ PP Price² Coveris Gross Margin³
Despite volatile prices for Polyethylene High Density and Polypropylene the Group was able to maintain stable profit margins of 12.4%, 11.7% and 14.0% for the periods 2012, 2013, and 2014
Exposure to fluctuations in raw material prices are managed through long-term arrangements with preferred suppliers, with various raw material pass-through mechanisms and by managing mix of contracted and spot sales
Plastic packaging price adjustments within 30 to 90 days and paper packing within 90 to 120 days
Source: Company filings and presentations, CMAI Global1. PE denotes Polyethylene High Density prices in North America (Cents/Pound). 2. PP denotes Polpropylene Domestic Market in North America (Cents/Pound). 3. Gross margin based on rolling LTM numbers. Based on reported financials not pro forma for acquisitions.
Adjusted EBITDA – Capex (% Conversion)
Continue ongoing procurement and manufacturing cost saving initiatives:
• Company-wide purchasing programs to enhance our pricing capabilities
• Rationalize manufacturing footprint where opportunities exist to streamline production and utilize more efficient sites
• Consolidation of management and back office functions by establishing a single management and back office team
Capex spend expected to stabilize in future in line with industry spend
Management fees have been reduced to $9.8 million (for 2014)
Commentary
7
CommentaryResilient Profitability of Coveris
133113
200
2012 2013 2014
44%Conversion(%) 56% 63%
28
Name Position Years at Coveris Experience Prior Experience
Gary Masse CEO 1 29
Michael Alger CFO 2 35
Kathleen McJohn General Counsel 1 29
Tony Fogel CHRO 1 27
Xavier Cassignol VP, Procurement 2 24
Dieter Bergner CEO, EU Rigid 9 30
Mark Lapping President, UK Food and Consumer 7 17
David Neal President, Advanced Coatings 36 40 Unilator Technical Ceramics, UK
Lee Marks VP, Global Operational Excellence 1 32
Chris Wrobel VP, Strategy and Global Commercial Excellence 2 15
Gary Rehwinkel President, NA Performance Packaging 5 28
Stefan Gutheil President, EU Food and Consumer 1 29
Gary Masse (Acting) President, NA Food and Consumer 1 29
Experienced Management Team with Successful Track Record
29
8
COVERIS FINANCIAL PROFILE
Financial Performance$ in millions
Net Sales ($m) and Growth (%)
241 229 291
72 8295312 311
386
PF 2012 PF 2013 Reported 2014
11.7% 14.0%Margin (%) 12.4%
Gross Profit ($m) and Margin (%)
0 0 00 0 0Flexible Segment Rigid Segment Consolidated Financials
Note: Breakdowns may not be consistent with the totals presented due to rounding1. Excludes synergies.2. Including pro forma adjustments of $5.3m and synergies of $27.8m identified for 2015. 31
Adjusted EBITDA1 and Margin (%)
1,845 1,881 1,987
662 780 7732,507 2,660 2,759
PF 2012 PF 2013 Reported 2014
6.1%Growth (%) 3.7%
Adjusted EBITDA1 – Capex ($m) and Cash Conversion (%)
316237 257 349
PF 2012 PF 2013 Reported 2014
9.7%Margin (%) 9.4% 11.5%1
133 113
200
PF 2012 PF 2013 Reported 2014
CashConversion(%)
63.2%43.9%56.1%
2
Group Historical Financial Information$ in millions
Group Historical P&L PF 2012 – 2014 (Reported) Comments2014 Sales
Flexible: Sales increased primarily due to two accretive acquisitions, strong performance in industrial packaging applications in North America, strong order volumes in coatings business in the UK, and favourable FX impact
Rigid: Closures acquisition and favourable FX impact offset by lower volumes from general market softness for packaged foods in Europe and prior year closure of KubeTech’s Illinois plant
2014 Adjusted EBITDA
EBITDA increase driven by procurement savings, higher volumes, acquisitions, and manufacturing cost reductions driven by restructuring projects and new cost-efficient manufacturing assets
Synergies: $61.4m of synergies achieved in 2013 and $61.8m of synergies achieved in 2014
321. Pro forma adjustments reflect full year results relating to the acquisition of St. Neots and Learoyd.
FY Ending Dec ($m) PF 2012 PF 2013 Reported 2014Reported 2014 / PF 2013 Growth
Flexible Packaging 1,844.8 1,880.5 1,986.7 5.6%
Rigid Packaging 662.0 779.7 772.6 (0.9)%
Sales 2,506.8 2,660.2 2,759.3 3.7%
COGS (2,194.4) (2,348.8) (2,373.5) 1.1%
Gross Profit 312.4 311.4 385.8 23.9%
Gross Margin 12.4% 11.7% 14.0%
SG&A Expenses (257.7) (277.9) (291.9) 5.1%
Depreciation & Amortization (25.8) (42.6) (43.0) 0.9%
Accelerated Amortization of Legacy Brand Name - (71.0) - NM
Operating Income 28.9 (80.1) 50.8 NM
Operating Margin 1.2% (3.0)% 1.8%
Adjusted EBITDA 236.5 256.9 316.4 23.2%
Adjusted EBITDA Margin 9.4% 9.7% 11.5%
Pro Forma Adjustments¹ 5.3
Adjusted Pro Forma EBITDA 321.7
Adjusted Pro Forma EBITDA Margin 11.7%
Synergies Identified for 2015 27.8
Adjusted Pro Forma EBITDA (Including Synergies) 349.5
Adjusted Pro Forma EBITDA Margin (including synergies) 12.7%
Reported EBITDA to Adjusted PF EBITDA Bridge$ in millions
Reported EBITDA – Adjusted Pro Forma EBITDA Bridge (2014)
197.345.2 9.8 10.1 20.7 5.4 1.1
26.7 316.4 5.3 321.727.8 349.5
UnadjustedEBITDA
Restructuringand
Relocation
ManagementFees
TransactionRelated
Expenses
BusinessImprovement
(Gain)/Loss onDisposal of
Assets
PensionRevaluation
Other Non-OperatingExpense
AdjustedEBITDA
Pro FormaAdjustments
Adjusted ProForma EBITDA
Synergies Adjusted ProForma EBITDA
(includingsynergies)
Comments on Main Adjustment Items Restructuring and Related Relocation Costs. Costs associated primarily with various restructuring activities, employee relocation expenses or employee severance
costs
Management Fees. Costs and expenses associated with financial and management consultancy services provided to Coveris by Sun Capital
Transaction Related Expenses. Costs associated with the Combination, transactions and acquisition costs
Business Improvement. Business Improvement Consulting Costs
Other Non-Operating Expenses. Costs associated with information technology, consulting, rebranding and other infrequent expenses
Pro Forma Adjustments. Reflects full year results relating to the acquisition of St. Neots and Learoyd
Synergies. Includes annualized procurement savings of $12.9 million and annualized manufacturing and restructuring savings of $14.9 million identified for 2015
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Recent Higher Capex to Support Growth and Cost Reduction Projects$ in millions and % of Sales
Capex and Capex as % of Sales by Division
71.4 86.4 65.2
32.4
57.8
51.3
103.8
144.2
116.5
PF 2012 PF 2013 2014
Flexible Rigid
Comments
Significant portion of the capex made to rationalize manufacturing footprint and improve manufacturing efficiencies in each geographic region
Recurring levels of maintenance capex of approximately $75m per year
Capex of $130m - $160m expected to be incurred in 2015, which will include expenditures made to realize synergies and expense reductions
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PF 2012 PF 2013Reported
2014
Flexible Packaging 3.9% 4.6% 3.3%
Rigid Packaging 4.9% 7.4% 6.6%
Coveris Holdings 4.1% 5.4% 4.2%
Capex as % of Sales
Strong Deleveraging Profile and Flexible Capital Structure
Pro Forma Capital Structure (as of Mar-2015)
Note: Leverage ratio calculation based on reported net debt and Adjusted Pro Forma EBITDA (as per quarterly and annual reports)1. Subject to a floor of 1.00%.2. Outstanding amount calculated assuming EUR tranche is upsized by €50m and the proceeds are used to repay portion of the existing USD tranche; USD / EUR FX rate of 1.09.
Net Debt and Net Leverage Ratio
5.0x4.8x 4.8x
4.6x 4.5x
Dec-2013 Mar-2014 Jun-2014 Sep-2014 Dec-2014
1,377 1,450 1,4361,4771,391
● No cash maturities prior to 2018
● Modest principal repayments on the term loan (1% per annum)
● No maintenance financial covenants
● Additionally, the company has other small banking lines, as well as $198m (as of Dec-2014) of deeply subordinated long-maturity shareholder loans (quasi – equity)
IssuerSize($m)
Margin/Coupon Maturity
Out.($m)
TermLoan Coveris Holdings SA $675 L+3.50-3.75%1
E+3.50-3.75%120192019
375.32
241.82
Notes Coveris Holdings SA $410 7.875% 2019 410.8
Notes Coveris Holding Corp $235 10.0% 2018 235.4
Revolver N. America AgreementEuropean Agreement
Up to $110Up to $175
2.7%3.0%
20182019
54.882.5
CapitalLeases Various Various 5.8% Various 50.3
Total Debt 1,450.8
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Current Trading and Recent DevelopmentsFinancial Information Based on Preliminary Management Accounts
Net sales (on a constant currency basis) in Q1 2015 likely to decrease marginally by $(4.6)m or (0.7)% vs. Q1 2014
• Organic growth resulting from strong performance of North American Food & Consumer, UK Food & Consumer, and North American Performance Packaging operations
• Net sales in Q1 2015 negatively impacted by unfavourable FX movement of $(67.9)m; pass through resin price reductions reduced sales by approximately $14m
• Net sales of $633.3m (actual) and $701.2m (on a constant currency basis) in Q1 2015 vs. net sales of $705.8m in Q1 2014
EBITDA (on a constant currency basis) in Q1 2015 expected to increase by $4.8m or 6.2% vs. Q1 2014
• Primarily due to continued realization of synergies driven by procurement savings, manufacturing footprint restructuring, and productivity capital spending initiatives
• EBITDA in Q1 2015 negatively impacted by unfavourable FX movement of $(8.1)m
• EBITDA of $73.8m (actual) and $81.9m (on a constant currency basis) in Q1 2015 vs. EBITDA of $77.1m in Q1 2014
Impact of decrease in oil prices
• During H2 2014 and Q1 2015, oil prices decreased significantly which also affected the prices for resin and polymers. Coveris has a resin pass through lag of 60-90 days, so we benefit during periods of declining resin prices. However, the pass through of lower resin prices results in a reduction of net sales
The Company is contemplating a potential acquisition of a plastic packaging business based in the Americas for an estimated consideration of $110m-$120m. The acquisition will contribute an EBITDA of $15m-$20m and is expected to be fully funded by the incurrence of additional unsecured debt.
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APPENDIX
Summary Corporate and Financing Structure
1. In connection with the Combination, funds managed by Sun Capital transferred all of their ownership interests in the Group (other than certain interests currently held by management) to the Issuer in exchange for equity interests in SCPack Holdings Management S.à r.l. & Partners S.C.A.
2. In October 2013, the Group executed its 2013 Long-Term Incentive Plan between SCPack Holdings Management S.à r.l. & Partners S.C.A. and certain key employees. Under this plan, after achieving the relevant return hurdle a participating manager is entitled to participate in any further interim distribution made by the business prior to any change of control or liquidation, provided that only the portion of the interim distribution attributable to the manager’s vested shares will be paid to the manager at the time of the interim distribution.
3. In connection with the 2013 Refinancing, we entered into the 2013 Term Loan ($435m USD tranche and €175m EUR tranche). The 2013 Term Loan is guaranteed by Coveris Intermediate Holdings, S.à r.l. and all of the Guarantors and secured by certain assets of the Guarantors and a pledge over the shares of the Issuer.
4. Substantially all of the Issuer’s subsidiaries organized in the United States, United Kingdom, Luxembourg, Austria, Canada, Finland, Germany and Poland will guarantee the Notes issued hereby. The Non-Guarantor Subsidiaries include all of our subsidiaries organized in, among other jurisdictions, France, Hungary, The Netherlands, Spain, Bulgaria, Turkey and China. The obligations of the Guarantors will be contractually limited under the applicable Guarantees to reflect limitations under applicable law with respect to maintenance of share capital, corporate benefit, fraudulent conveyance and other legal restrictions applicable to the Guarantors and their respective shareholders, directors and general partners. By virtue of this limitation, a Guarantor’s obligation under its Guarantee could be significantly less than amounts payable with respect to the Notes, or a Guarantor may have effectively no obligation under its Guarantee.
5. In connection with the 2013 Refinancing, certain of our European subsidiaries entered into the European ABL Facilities, which consist of five-year senior secured revolving credit facilities that provide for aggregate borrowings of up to $175.0 million (equivalent), subject to certain borrowing base limitations.
6. Coveris Holding Corp. has issued $235.0 million of 10% Senior Notes due 2018 which, following the 2013 Refinancing, are guaranteed by the Issuer and the Guarantors (other than subsidiaries of the Exopack Business organized in the United Kingdom and certain subsidiaries of the Exopack Business organized in Canada).
7. The North American ABL Facility is a $110.0 million asset-based revolving credit facility.
Sun Capital1 Management2
Coveris Intermediate HoldingsS.à r.l. (Luxembourg) (“Coveris
Intermediate Company”)3
Coveris Holdings S.A. (Luxembourg) (“Issuer”)4
Coveris S.A.(Luxembourg)
$325m of Original Notes$85m of Additional Notes
$675m 2013 Term Loan3
Non-Guarantors Guarantors4 Coveris Holding Corp. (United States)4
Guarantors4Non-Guarantors
$175m (equivalent)
European ABL Facilities5
$235m ExopackNotes6 and $110.0m North American ABL
Facility7
SCPack Holdings Management S.à r.l. & Partners S.C.A.
(Luxembourg)
38