1

November 10, 2014

Tredegar Corporation (NYSE:TG)

Business Description

Tredegar Corporation (“TG”) is a Richmond, Virginia based manufacturer of plastic films and aluminum products with

roots that trace back to prominent Virginia businessman, Floyd Gottwald Sr. As CEO of Albemarle Paper

Manufacturing Company (now Albemarle Corporation, NYSE:ALB), Floyd Sr. began buying businesses in the early

1960s, starting with Ethyl Corporation, which was the largest LBO on record at the time1. This new combined entity,

Ethyl Corporation (now NewMarket Corporation, NYSE:NEU), continued making acquisitions and in 1989 spun off

Tredegar to focus on its chemical business. Today, TG operates two segments: (1) Film Products, which comprises 64%

of LTM sales and serves the personal care, plastic packaging, and surface protection end markets and (2) Aluminum

Extrusions, which comprises 36% of LTM sales and serves the building and construction, consumer durables,

machinery, and transportation end markets.

TG’s long history of shareholder returns and strong free cash flow generation has been marred by a costly and

misunderstood Brazilian acquisition, Terphane, as well as the loss of an account with its largest customer,

Procter & Gamble. As the Brazilian PET films market rebounds from a cyclical trough and the core legacy

businesses stabilizes, TG’s true earnings power will emerge. Shareholder value creation could accelerate with

the June 2014 trade case ruling in Brazil and the April 2015 expiration of the standstill agreement with the

Gottwald family—whose 23% ownership stake and recent activism resulted in the creation of a committee to

explore strategic alternatives.

Investment Set-up

Since TG released its 2Q 2013 earnings on August 1, 2013, shares have declined by 42% and are currently near a 52-

week low. Historically, TG focused on shareholder returns primarily through free cash flow generation, but this

changed in 2010 under current CEO Nancy Taylor when the company shifted its focus towards growth. Thus far, the

strategy has resulted in TG’s largest acquisition in over a decade and record capital investment—all without the expected

earnings contribution and shareholder returns to show for it. Despite market consensus perceptions, we believe TG’s

strategy will ultimately prove to be successful.

Reasons for Mispricing & Variant View

A cursory look at TG presents an obscure company that botched a large acquisition, spent an inordinate amount on

capex, and lost a fifth of its business with its largest customer. While TG appears to be a business in permanent decline,

a deeper look into the company reveals that these setbacks are temporary and fixable.

Obscure & Under the Radar

TG is an obscure company with shareholder communication limited to the CEO’s yearly shareholder letters and the

company’s annual meeting. The company is not followed by any of Wall Street’s major banks resulting in the unique

situation of a $550 million-plus market cap company with no published sellside estimates. This is likely due to TG’s lack

of quarterly conference calls, management’s absence from the Wall Street investor conference scene, and combination of

two unrelated business segments, which causes confusion in the stock’s valuation and assignment of analyst coverage.

These underfollowed and ignored securities provide an opportunity for investors who are willing to dig deeper and

analyze unconventional sources of information.

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Terphane Acquisition

In October 2011, TG acquired Terphane, a Brazilian plastic films manufacturer of food packaging products, for $182.7

million (net of cash acquired and after post-closing adjustments). With sales of $160 million and adjusted EBITDA of

$44 million, TG purchased this business at just over 4x EBITDA. In 2012, during its first full year under TG’s

ownership, Terphane was accretive, contributing $138 million in sales, $19.1 million in operating income, and roughly

$29 million in EBITDA. By contrast, in 2013, Terphane generated $125.7 million in sales, an 8.9% year-over-year

decline. While TG did not disclose Terphane’s operating profit contribution for 2013, we know it was down

significantly (perhaps negative) based on (1) management’s comments, which cite higher production costs, lower pricing,

and slow growth in Brazil and (2) Terphane’s financial information published in Brazilian trade case documents (please

see “Catalyst” section below). If we include the $80 million in capex budgeted to nearly double Terphane’s film

production capacity, most of which has already been spent, the total Terphane investment amounts to approximately

$260 million, or roughly half of TG’s current market capitalization.

In addition to deteriorating fundamentals, Terphane’s new production line, which was expected to come online during

the second quarter of 2014, was pushed back to the fourth quarter, indicating further problems in Brazil. This delay

reduced Film Products’ 2014 volume growth outlook from 2% growth to a 7-10% decline. For these reasons, we believe

the market is currently attributing a negative value to Terphane (please see “Valuation” section below).

While Terphane has certainly been disappointing, concerns regarding the basis of this investment have been overblown.

Management had been very clear about Terphane’s near-term prospects from the on-set. During the October 26, 2011

M&A call, management established a cautious tone. On the seemingly attractive headline multiple, CFO Kevin O’Leary

clarified by saying, “in evaluating this acquisition, we would suggest that taking the average of the multiples based on

2010 and on the last 12 months ended June of this year is more representative of an appropriate multiple for this

transaction.” Using his calculation, the EBITDA multiple ends up being roughly 5.0x—not 4.0x based on the standard

LTM metric. On near-term supply and demand, O’Leary said, “we believe Terphane is at the peak of a cycle right now,”

indicating looming capacity utilization pressures. He accompanied these statements with the following chart:

Source: Tredegar Corporation M&A Presentation (October 26, 2011)

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Lastly, in an effort to further mitigate expectations, O’Leary reiterated the length of time required to install additional

capacity:

To be clear, in this industry, adding a line is truly a step function investment. For those of you who follow our

Films Business, PET lines are much larger and have roughly 10x the capacity of our typical polyethylene lines.

Based on our current assessment of growth in the Brazilian market, we anticipate capital spending for an

equipment and building expansion project approaching $70 million to $80 million, spread over the next 2-plus

years.

Downplaying these initial warnings, investors grew disillusioned as these warnings materialized, and TG’s stock price

tumbled as a result.

Despite recent underperformance, TG’s long-term outlook and acquisition rationale for Terphane have not been

undermined. First, Brazil continues to develop and grow its middle class, which calls for more consumer packaged

goods and greater demand for Terphane’s products.

Source: Brazil’s Ministry of Development, Industry, and Foreign Trade

Since 2009, BOPET (biaxially-oriented polyethylene terephthalate) films demand in Brazil has grown by 22.7%. As

Brazil’s sole BOPET films manufacturer, Terphane remains well positioned to benefit from this demand growth. In

fact, Terphane’s dominant market position has been bolstered through $80 million of additional capital investment,

which increases its annual capacity from 40,000 to 70,000 tons2. Second, management has been proactive in handling

Terphane’s progress, placing a new leadership team in Brazil at the start of the year. Jose Bosco Silveira Jr., who has a

background in engineering and spent over a decade at auto electronics manufacturer Brose in Brazil, was hired as Head

of Flexible Packaging. Lastly, Terphane’s competitive position has been protected by a widening moat in the form of

anti-dumping duties placed against several countries that export PET film into Brazil. While these anti-dumping duties

are currently applied against the UAE, Mexico, and Turkey, they may be extended to China, Egypt, and India3.

Terphane generated $160 million in revenue and earned $44 million in EBITDA when acquired by TG three years ago.

As Brazil’s sole domestic producer with a near doubling of production capacity and pending import protections, we

believe it is highly likely Terphane at least returns to previous levels of sales and profitability.

Loss of Customer Account

TG’s existing film business has also experienced setbacks, with four consecutive quarters of year-over-year declines in

sales and volumes. Much of this decline was due to a loss of business with TG’s largest customer, Proctor & Gamble

(“P&G”), which decided to go with a different supplier for the baby care elastic laminate product used in its diapers.

Brazilian BOPET Films Market

(Indexed at 100 in 2009)

2009 2010 2011 2012 2013

Demand 100 106 108 116 123

Y/Y Growth 6.3% 1.5% 7.1% 6.2%

4

Source: SEC Filings

Investors fear this loss, which is nearly a fifth of all sales to P&G, could portend the end of a longstanding business

relationship. While a $51 million dollar revenue impact—roughly 5% of fiscal 2013 revenues—is significant for a

company of TG’s size, not all business with the customer is at risk. TG has numerous customer relationships with

P&G—and not just with one decision maker. We have verified this dynamic with management, through prior research

on other companies in the P&G supply chain, and through industry channel checks, including conversations with TG’s

direct competitors. When asked about TG losing the baby care elastic laminate business, one competitor responded by

saying further losses are not likely and that this was simply business as usual. Customer relationships tend to be sticky

and large customers like P&G flex their buying power by sourcing from multiple suppliers to ensure adequate supply,

competitive prices, and the highest quality. This dynamic is no different than P&G’s relationship with its largest

customer, Wal-Mart, which is known for exercising tremendous power over its supply chain. Therefore, we believe that

as the $51 million account loss anniversaries, the P&G business will resume its historical steady growth rate.

Additionally, our conversations with a TG competitor revealed that Kimberly-Clark, which was vertically integrated in its

personal care business, recently adopted an outsourcing model. As a leading player in the personal care industry, this

shift could potentially result in significant new business for TG.

Management Team

At Medina Singh, we focus on characteristics such a free cash flow and return on capital when evaluating a business, and

we have found a management team that focuses on these metrics in TG. Most importantly, we look for proven track

records by management teams whose goal is to truly maximizing shareholder returns. TG has been run by a talented,

shareholder friendly management beginning with the Gottwalds, who ran the business for three generations, to Nancy

Taylor, who had been with the company for nearly 20 years before assuming the chief executive role in 2010.

From an operations perspective, management turned around the rapidly declining and unprofitable Aluminum

Extrusions segment back toward profitability and growth in the face of continued industry headwinds.

237

255 259

283

253

273 280

264 262

211

150

200

250

300

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E

Ne

t Sa

les

($M

M)

Sales to Procter & GambleBaby Care Elastic Laminate : $51 million

5

Source: SEC Filings, S&P Capital IQ, Medina Singh Analysis

While shipments fell from 185 million pounds in 2007 to 143.7 million pounds in 2013, operating margins for the

segment increased from 4.4% to 5.9%, due to a successful restructuring effort and removal of fixed costs. The segment

continues to improve with shipments of 149.2 million pounds and operating margins of 7.5% on an LTM basis.

From a capital allocation perspective, management has allocated cash prudently via share repurchases, dividends, and

growth investments.

Source: SEC Filings, S&P Capital IQ, Medina Singh Analysis

During the financial crisis, management took advantage of TG’s discounted share prices and purchased $130.4 million

worth of shares between Q3 2007 and Q3 2010, or roughly 19% of shares outstanding—buying more aggressively as

share prices plummeted. Shareholder return has also been delivered via a growing dividend, which has increased from

$0.045 per share in 2010 to $0.09 per share this most recent quarter, as well as through special dividends, including a

$0.75 per share one-time dividend in 2012.

4.4%

3.0%

(3.7%)

(2.1%)

1.4%

3.7%

5.9%

7.5%

(6.0%)

(4.0%)

(2.0%)

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

80

100

120

140

160

180

200

2007 2008 2009 2010 2011 2012 2013 LTM

Op

era

tin

g M

argi

n

Vo

lum

es

(MM

Lb

s.)

Aluminum Extrusions

Volumes Operating Margin

-$50.0

-$40.0

-$30.0

-$20.0

-$10.0

$0.0

Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11

$10.0

$14.0

$18.0

$22.0

$26.0

$30.0

Shar

e R

ep

urc

has

es

($M

M)

Shar

e P

rice

Share Repurchases

Repo Price

6

Source: SEC Filings

Since 2004, TG has returned a total of $193.5 million to shareholders, which amounts to a third of TG’s current market

capitalization.

By investing in the highest areas of return and managing risk by focusing on geographic and customer diversification,

management has positioned the business to generate significant cash flow while also aligning the business for long term

growth. For example, in Plastic Films, the ~4x EBITDA purchase of Terphane provides diversification from P&G

while expanding TG’s international films business by giving it the number one position for BOPET films in the fast

growing Brazilian market. In Aluminum Extrusions, TG’s $17 million investment in auto aluminum extrusions reduces

the segment’s exposure to the lagging building and construction markets while positioning it with favorable long-term

growth prospects as auto manufacturers look to reduce emission requirements (cars made of aluminum are lighter and

require less fuel).

Source: SEC Filings

TG spent a record $79.7 million in capital expenditures in 2013, the highest in its 25 years as a stand-alone public

company. As the returns on these investments come to fruition, TG will return to its history of healthy free cash flow

generation.

Tredegar Shareholder Returns

Regular Special Net Share Shareholder

Dividends Dividends Repurchases Returns

2004 (6.2) 0.0 1.9 (4.3)

2005 (6.2) 0.0 1.1 (5.1)

2006 (6.2) 0.0 9.7 3.5

2007 (6.1) 0.0 (67.5) (73.6)

2008 (5.4) 0.0 (15.7) (21.2)

2009 (5.4) 0.0 (1.3) (6.7)

2010 (5.1) 0.0 (34.2) (39.3)

2011 (5.8) 0.0 1.2 (4.5)

2012 (6.7) (24.0) 2.4 (28.4)

2013 (9.0) 0.0 3.317 (5.7)

YTD (8.1) 0.0 (0.11) (8.2)

Total (70.3) (24.0) (99.1) (193.5)

(80.0)

(40.0)

0.0

40.0

80.0

120.0

1988 1993 1998 2003 2008 2013

$ M

illio

n

Capex & Free Cash Flow

Operating Cash Flow Capex Free Cash Flow

LTM

7

Valuation

We rely on two primary valuation frameworks to arrive at our estimate of intrinsic value: (1) a sum of the parts valuation

where we layer on Terphane to TG’s core business and (2) a normalized earnings power valuation where we evaluate the

earnings power of the consolidated business.

Sum of the Parts Valuation

On an EBITDA multiples basis, TG trades at a 33% discount to Film Products peers and a 28% discount to Aluminum

Extrusion peers.

Source: SEC Filings, S&P Capital IQ, Medina Singh Analysis. For full list of peers used, please see appendix.

At $17.75 per share, the market is ascribing a negative value to Terphane, which cost nearly $260 million when considering

both price paid and additional capital deployed. Using a sum of the parts analysis, we apply a range of peer multiples to

TG’s two segments and capitalize corporate costs at a weighted average multiple. We use LTM EBITDA for Aluminum

Extrusions and Corporate but use 2011 EBITDA for the legacy Film Products segments, which mostly excludes

Terphane (Terphane was acquired in late 2011).

Source: SEC Filings, Medina Singh Analysis

Our sum of the parts valuation ranges from $773 to $973 million, implying a negative value of $109 to $309 million for

Terphane. Our assumptions are overly conservative as the LTM Corporate expense figure includes costs related to

Terphane, while the earnings attributable to Films Products do not. Furthermore, we believe the legacy Films business

has grown profits over the past two and a half years, yet we use understated 2011 figures.

We believe Terphane, with its dominant market share position, favorable end markets, and protection from import

competition should at the very least be worth TG’s initial investment. As a result, we layer on Terphane to our sum of

the parts valuation above to value TG as a whole.

Relative Valuation Market Enterprise Price / Price / EV / TTM TTM EV / TTM Dividend EBITDA Debt to 3 Yr Avg

Metrics Cap Value LTM EPS BV EBITDA FCF Yield Revenue Yield Margin Capital % Growth

TG 577 664 15.3x 1.4x 6.5x 2.0% 0.70x 2.0% 10.6 25.1% 6.6

Film Peer Median 2,035 2,637 24.5x 3.6x 9.8x 2.9% 1.05x 1.6% 11.5 48.9% 5.3

Aluminum Peer Median 629 898 60.4x 1.1x 9.1x 3.7% 1.04x 1.0% 10.8 31.2% 4.2

Discount to Film Peers (37.6%) (61.9%) (33.1%) (31.9%) (33.1%) 29.3%

Discount to Aluminum Peers (74.7%) 29.9% (28.0%) (46.3%) (32.1%) 111.3%

SUM OF THE PARTS - Excluding Terphane

Film ex Terphane Low Median High 11 EBITDA Film ex Terphane 2011

Peer Multiples 8.0x 9.0x 10.0x 90.7 EBITDA

Enterprise Value 725.7 816.4 907.1 Film Products 95.8

Less: Terphane EBITDA 5.1

Aluminum Extrusions Low Median High LTM EBITDA Film Products ex Terphane 90.7

Peer Multiples 7.0x 8.0x 9.0x 34.4

Enterprise Value 241.0 275.4 309.9

Corporate Low Median High LTM EBITDA

Peer Multiples 7.7x 8.7x 9.7x (25.1)

Enterprise Value (193.8) (218.9) (244.0)

SoTP Valuation 772.9 872.9 973.0

Current Enterprise Value 663.8 663.8 663.8

Implied Terphane Value (109.0) (209.1) (309.1)

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Source: SEC Filings, Medina Singh Analysis

Adding $182.7 million in purchase price and $80 million in capital investment made in Terphane, we derive a total sum

of the parts valuation ranging from $1,036 to $1,236 million, or $29.19 to $35.34 per share, which represents 64% to

99% upside from TG’s current share price of $17.75 per share.

Source: SEC Filings, Medina Singh Analysis

Even if we consider the entire Terphane investment as worthless, applying a 100% haircut, the resulting

valuation still implies a 19% to 54% upside for TG.

Normalized Earnings Power

TG can conservatively earn $140 million in EBITDA by 2016. This compares to $102 million in 2013 when Terphane

was at a cyclical trough and when Aluminum Extrusions volumes—despite adding AACOA (acquired in October

2012)—fell 41 million pounds, or 22%, short of its 2007 peak. In fact, the entire bridge to 2016 profitability can be

achieved with improvements in Terphane alone. With a dominant position in a growing market and impending

restrictions against foreign competition, Terphane can easily exceed the $44 million in EBITDA earned prior to being

acquired. In fact, having had nearly doubled its production capacity, Terphane could potentially achieve $80 million-plus

in EBITDA. Therefore, at $140 million in EBITDA, our 2016 outlook for the entire business is very conservative.

Our modeling assumes volumes reach 305.6 and 169.5 million pounds for Film Products and Aluminum Extrusions,

respectively, as multi-year capital investment projects come online, Terphane—aided by import restrictions—rebounds,

and non-residential and automobile aluminum extrusions improve. As a reference, our volume and EBITDA margin

assumption are slightly below management’s 2016 targets.

SUM OF THE PARTS - Including Terphane

Low Median High

SoTP Valuation (ex. Terphane) 772.9 872.9 973.0

Terphane Price 182.7 182.7 182.7

Terphane CX 80.0 80.0 80.0

SoTP Valuation (incl. Terphane) 1,035.6 1,135.6 1,235.7

Net Debt 86.8 86.8 86.8

Equity Value 948.7 1,048.8 1,148.8

Share Price $29.19 $32.26 $35.34

Upside (Downside) 64.4% 81.8% 99.1%

Share Price after Haircut Upside (Downside)

Low Median High Low Median High

10% $28.38 $31.46 $34.53 59.9% 77.2% 94.6%

20% $27.57 $30.65 $33.72 55.3% 72.7% 90.0%

30% $26.76 $29.84 $32.92 50.8% 68.1% 85.4%

40% $25.95 $29.03 $32.11 46.2% 63.6% 80.9%

50% $25.14 $28.22 $31.30 41.7% 59.0% 76.3%

60% $24.34 $27.41 $30.49 37.1% 54.4% 71.8%

70% $23.53 $26.61 $29.68 32.6% 49.9% 67.2%

80% $22.72 $25.80 $28.88 28.0% 45.3% 62.7%

90% $21.91 $24.99 $28.07 23.5% 40.8% 58.1%

100% $21.10 $24.18 $27.26 18.9% 36.2% 53.6%

9

Source: SEC Filings, Management Commentary, Medina Singh Analysis

Applying EBITDA multiples ranging from 7.0x to 9.0x to our estimate of normalized 2016 earnings power of $140

million results in a share price ranging from $29.99 to $38.60 per share, representing 69% to 118% upside from today’s

$17.75 per share price.

Source: SEC Filings, Management Commentary, Medina Singh Analysis

Even if TG continues to be valued at its currently low multiple of 6.5x, which is the lowest of its peers, the shares are

worth $27.99 per share, or 58% upside, as earnings grow through 2016. Luckily, much optimism is not required for our

investment to be a success, and this provides us with a substantial margin of safety.

Catalysts

While an investment in TG is attractive on a valuation basis alone, this value may be realized in the near-term with the

optionality of three catalysts. The first catalyst enables Terphane to achieve its true earnings potential, the second sets

the stage for a potential sale of the business, and the third involves the monetization of non-core investments.

Anti-dumping Duties on Import Competition

Terphane has a history of successfully petitioning for anti-dumping duties against foreign competition, enabling the

company to maintain its dominant market share in Brazil. On June 27, 2014 Terphane embarked on its third campaign,

filing a petition against Egypt, China, and India. Given Terphane’s successful precedents in its prior anti-dumping

petitions, we like Terphane’s chances of obtaining another favorable ruling.

Terphane’s first campaign began on August 11, 2006 when the company filed a petition with Brazil’s Ministry of

Development, Industry, and Foreign Trade, requesting an anti-dumping investigation on BOPET film exporters based

in South Korea, India, and Thailand. The investigation resulted in a favorable determination with anti-dumping and

countervailing duties placed against Indian and Thai exporters beginning in March of 2007. The impact of this ruling on

Terphane’s competitive positioning has been significant, with Thai and Indian imports declining 90% for the year ending

in September 2010 versus the same period in 20064.

2016 Earnings Power Valuation Assumptions

Volumes (MM Lbs.) EBITDA Margin

Tredegar Medina Tredegar Medina

Target Singh Target Singh

Film Products 313.1 305.6 18.0% 17.2%

Aluminum Extrusions 171.1 169.5 10.0% 9.7%

2016 Earnings Power Valuation

Low Median High Current 16E EBITDA

EBITDA Multiple 7.0x 8.0x 9.0x 6.5x 140.0

Enterprise Value 979.9 1,119.9 1,259.9 915.1

2016E Net Debt 5.2 5.2 5.2 5.2

Implied Market Value 974.7 1,114.7 1,254.7 910.0

Share Price $29.99 $34.29 $38.60 $27.99

Share Price Return 68.9% 93.2% 117.5% 57.7%

Dividend Return 4.6% 4.6% 4.6% 4.6%

Total Return 73.5% 97.8% 122.0% 62.3%

Annualized Return 29.3% 37.4% 45.0% 25.3%

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Terphane’s second successful campaign began on June 14, 2010 with a similar petition against exporters in the UAE,

Mexico, and Turkey. Following a favorable determination, anti-dumping duties have been enforced as of March 2012,

reducing imports to nearly zero from these three nations5.

Since 2007, the anti-dumping duties from the first campaign have expired, and India has reemerged as a major exporter

of BOPET films into Brazil. In 2013, Indian imports have risen nearly by 1900% from 2009 levels.

Source: Brazil’s Ministry of Development, Industry, and Foreign Trade

As a result, On June 27, 2014 Terphane embarked on its third campaign, filing a petition against Egypt, China, and India.

Imports from the three nations as a group have risen over 3,300% relative to 2009 levels.

Source: Brazil’s Ministry of Development, Industry, and Foreign Trade

This dramatic level of import growth has occurred when the domestic market has risen by a comparably low 22.7%

during the same period. Furthermore, prices charged by the three nations under investigation have decreased by 15.1%

while prices have increased by 91.8% for other nations, proving that Egypt, China, and India are likely dumping their

products into Brazil at below market prices. The net effect has been a significant decline in Terphane’s market share and

profitability.

Source: Brazil’s Ministry of Development, Industry, and Foreign Trade. Operating Profits Redacted from 2009-2012.

Following the success of Terphane’s prior anti-dumping petitions, market share peaked in 2011. However, as imports

from Egypt, China, and India flooded the Brazilian market, Terphane’s market share has slipped in 2013 to around 2009

levels. Similarly, gross profits steadily grew year after year, but declined 42.9% in 2013.

The petition cites 2013 import volumes from Egypt, China, and India at 11,212 tons, which equates to 24.7 million

pounds. Assuming Terphane can capture 70% to 80% of these volumes following a successful anti-dumping ruling, this

equates to 17.3 to 19.8 million pounds of recaptured volumes based on 2013 demand. Since Terphane is the only

Brazilian producer of PET films, we believe these recapture assumptions are conservative and reasonable.

Total Volume of BOPET Film Imports

(Indexed at 100)

2009 2010 2011 2012 2013

China 100 465 823 467 637

Egypt 0 0 0 100 211

India 100 676 1,267 2,048 1,908

Total 100 562 1,027 2,194 3,334

Brazilian BOPET Films

Market Statistics

Y/Y % BOPET Films Growth

2009 2010 2011 2012 2013 Total

Brazil N/A 6.3% 1.5% 7.1% 6.2% 22.7%

Y/Y % Change Avg. Price

2009 2010 2011 2012 2013 Total

Egypt/China/India N/A 7.8% 23.4% (31.8%) (6.4%) (15.1%)

Other Countries N/A 30.3% 42.0% (7.0%) 11.5% 91.8%

Brazilian BOPET Films Market Share % Y/Y % Terphane Profitability

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

Egypt/China/India 1.3% 6.8% 12.2% 24.2% 34.7% Gross Profit N/A 77.5% 23.6% 5.2% (42.9%)

Terphane 54.3% 64.2% 64.4% 64.0% 57.7%

11

Source: Brazil’s Ministry of Development, Industry, and Foreign Trade. For EBITDA / Pound assumptions, please see appendix.

Assuming Terphane recaptures 75% of this volume, or 18.5 million tons, this equates to $12.1 million in EBITDA at

0.65 EBITDA / pound—the midpoint of our range. This estimate is inherently imprecise and liable to various

assumptions, but it does serve as a useful guide by quantifying the potential profitability impact of this ruling.

Given the dramatic rise in cheap foreign imports combined with reduced market share in the domestic industry, there is

significant evidence to support Terphane’s anti-dumping claims against Egypt, China, and India. Based on Terphane’s

prior successes in its anti-dumping petitions—and given the greater relative impact that imports from China, Egypt, and

India have had—we like Terphane’s chances of achieving another favorable ruling.

Corporate Actions

A potential sale of TG or one of its businesses may result in further value creation. On September 6, 2013 TG’s former

CEO John Gottwald, his brother and TG board member, William Gottwald, and their father, Floyd Gottwald Jr., filed a

13-D revealing a 23% ownership stake in the company. Citing actions taken by TG’s board and management, as well as

TG’s financial condition, operating results, and prospects, the Gottwalds stated that pursuing “strategic alternatives”

would be in the best interest of shareholders and also indicated that they would be nominating a slate of director at the

following annual meeting6. On February 19, 2014 the Gottwalds entered a one year standstill agreement with TG

contingent on the termination of the company’s poison pill, a reduction in the board from 12 to 11 directors, the

nomination of three additional board members, and the formation of the “Strategic Finance Committee.” The four

member committee, which cites the review and evaluation of “strategies to create additional value for shareholders”

among its principal functions, comprises four members—two of whom were recently added.

Based on the committee’s mandate and its board member composition, we can infer that TG may explore a sale of the

company or one of its businesses. The two recently elected board members on the newly formed Strategic Finance

Committee are ideally suited to help the board explore a deal. Gregory Pratt, serves as the Chairman of the Board for

Carpenter Technology Corp. (NYSE:CRS), a specialty metals manufacturer with a history of successful deal making. His

knowledge of the specialty metals industry is beneficial if the committee explores a sale of the Aluminum Extrusions

business. Carl Tack, III, who most recently served as Managing Partner and Head of Corporate Finance at Delta

Partners, a TMT advisory firm, has 25 years of investment banking experience, and can provide the committee key

insights into closing a deal7.

Asset Monetization

TG currently has non-core investments listed on its balance sheet, which can be sold to create shareholder value. The

first is Kaleo, a specialty pharmaceutical company that licenses its FDA approved product, Auvi-Q, to Sanofi, which is

listed on TG’s balance sheet at $40.0 million. The second is an investment in Harbinger Capital Partners Special

Situations Fund, L.P., which is listed on TG’s balance sheet at $1.8 million. The third is investment property located in

EBITDA ($MM) by

Egyptian, Chinese,and Indian Volumes (MM lbs.)

Imports (MM lbs.) 17.3 18.5 19.8

Year 2013 0.50 8.7 9.3 9.9

Volumes 24.7 0.55 9.5 10.2 10.9

0.60 10.4 11.1 11.9

Volume Recapture 0.65 11.2 12.1 12.9

(MM lbs.) 0.70 12.1 13.0 13.8

70% 75% 80% 0.75 13.0 13.9 14.8

17.3 18.5 19.8 0.80 13.8 14.8 15.8

EB

ITD

A /

Pound

12

Virginia—part of which has already been sold at a gain—that is listed on the balance sheet at $2.6 million. Combined,

these three non-core investments approximate $1.37 per share, or 7.7% of TG’s current market capitalization. Given

TG’s history of selling non-core assets—for example, its stake in Falling Springs, a mitigation banking business, for

$16.6 million in 2012, and corporate real estate for $4.7 million in 1H 2014—and focus on its core manufacturing

businesses, further monetization of non-core assets is conceivable.

Conclusion & Risks

Cheap stocks are usually cheap for a reason and often deserve their low valuations. On rare occasions, we stumble upon

good businesses, run by shareholder friendly management teams, with unjustifiably low valuations—TG is one of them.

It for this reason, TG is one of our core investments in the Medina Singh portfolio. With a market capitalization of

$577 million, the market is extrapolating short-term underperformance indefinitely into the future. An objective and

rational look at the business reveals that Terphane, at the very least, maintains some positive value and that TG’s

longstanding relationship with P&G will remain intact.

An investment in TG, however, is not without its risks. Terphane’s progress may face additional hurdles, and despite

two precedents, Terphane may not receive a favorable determination from Brazil’s government. Continued

underperformance in Brazil will only embolden negative sentiment and place additional pressure on TG’s share price.

Conversely, successful import protections, combined with a growing need for flexible packaging in Brazil, may lead to

additional entrants and increased domestic competition down the road. While our thesis requires a 1-3 year window to

fully realize, we believe an attractive valuation, a strong management team, and substantial assets provide a significant

margin of safety for our investment.

13

CONTACT US:

Kristofer Medina John Choi

Portfolio Manager Analyst

kris@medinasingh.com jchoi@medinasingh.com

Proprietary Rights Notice: By accepting a copy of this letter, you acknowledge and agree as follows: This report is provided to affiliates

of Medina Singh Partners only for your personal, noncommercial use. Except as expressly authorized by Medina Singh Partners you may not

copy, reproduce, transmit, sell, display, distribute, publish, broadcast, circulate, modify, disseminate or commercially exploit the information

contained in this report, in printed, electronic or any other form, in any manner, without the prior express written consent of Medina Singh

Partners. You also agree not to use the information provided in this report for any unlawful purpose.

14

Summary of Your Fund Terms

Subscriptions Monthly

Minimum Investment

$250,000 (may be waived by GP)

Lock-up Period

1 year

Management Fee

2%

Incentive Fee

20% of net profit, subject to a high water mark

Investment Manager

Medina Singh Investment Partners LLC

General Partners

Kristofer L. Medina Jaiveer Singh

Fund Auditor

Spicer Jeffries LLP

Prime Broker

JP Morgan

Introducing Broker

Wells Fargo Prime Services

Fund Administrator

Perennial Fund Services, LLC

Law Firm

Paul, Hastings, Janofsky & Walker LLP

Contact Information

Telephone: (310) 979-6900 Email: investor@medinasingh.com

15

Appendix

1. Peer Multiples & Precedent Transactions

Source: S&P Capital IQ, Medina Singh Analysis

Source: Bloomberg, S&P Capital IQ, Medina Singh Analysis

Tredegar Corp

Peer MultiplesFilm Products Market Enterprise Price / Price / EV / TTM TTM EV / TTM Dividend EBITDA Debt to 3 Yr Avg

Cap Value LTM EPS BV EBITDA FCF Yield Revenue Yield Margin Capital % Growth

TG 577 664 15.3x 1.4x 6.5x 2.0% 0.70x 2.0% 10.6 25.1% 6.6

AEPI 231 493 NM 3.9x 11.3x (9.7%) 0.42x 0.0% 3.7 81.5% 7.9

BERY 3,107 7,032 54.2x NM 9.9x 9.8% 1.45x 0.0% 14.6 103.1% 4.5

MYE 493 761 38.8x 2.8x 8.9x 1.0% 0.90x 3.3% 10.1 61.1% 4.2

TSX:ITP 963 1,095 11.9x 4.1x 10.9x 2.7% 1.38x 3.0% 12.7 37.5% 0.8

RAVN 958 896 24.5x 3.6x 12.1x 3.1% 2.27x 2.0% 18.7 0.0% 4.2

POL 3,463 4,179 32.1x 4.0x 8.5x 4.3% 1.07x 1.1% 12.0 53.0% 11.0

TSE:3402 10,858 16,857 21.2x 1.5x 9.6x 0.0% 1.03x 1.3% 10.3 44.8% 6.4

TSE:4204 6,196 6,134 15.1x 1.5x 5.6x 5.9% 0.63x 1.8% 10.9 12.8% 6.1

Median 24.5x 3.6x 9.8x 2.9% 1.05x 1.6% 11.5 48.9% 5.3

Average 28.3x 3.1x 9.6x 2.2% 1.14x 1.6% 11.6 49.2% 5.6

Discount to Median (37.6%) (61.9%) (33.1%) (31.9%) (33.1%) 29.3%

Discount to Average (45.8%) (54.8%) (32.0%) (7.3%) (38.5%) 29.8%

Aluminium Extrusions Market Enterprise Price / Price / EV / TTM TTM EV / TTM Dividend EBITDA Debt to 3 Yr Avg

Cap Value LTM EPS BV EBITDA FCF Yield Revenue Yield Margin Capital % Growth

TG 577 664 15.3x 1.4x 6.5x 2.0% 0.70x 2.0% 10.6 25.1% 6.6

KALU 1,287 1,377 16.3x 1.2x 7.6x 4.8% 1.04x 1.9% 13.6 26.8% 2.1

RTI 744 898 60.4x 0.9x 8.6x (1.8%) 1.15x 0.0% 13.4 36.1% 15.9

USAP 185 276 NM 0.9x 13.3x 2.0% 1.43x 0.0% 10.8 31.2% (7.3)

OTCPK:CSTW 201 156 90.3x 1.1x 18.8x 3.7% 0.23x 3.3% 1.2 0.0% 10.5

GFF 629 1,350 NM 1.1x 9.1x 9.1% 0.70x 1.0% 7.8 58.7% 4.2

Median 60.4x 1.1x 9.1x 3.7% 1.04x 1.0% 10.8 31.2% 4.2

Average 55.7x 1.0x 11.5x 3.5% 0.91x 1.2% 9.3 30.6% 5.1

Discount to Median (74.7%) 29.9% (28.0%) (46.3%) (32.1%) 111.3%

Discount to Average (72.5%) 32.0% (43.0%) (43.6%) (22.7%) 64.0%

Precedent Transactions

Target Acquirer Date Price EBITDA

Intertape Polymer Littlejohn 6/29/2007 520 9.8x

Pliant (Bankrupty) Apollo 12/3/2009 7.6x

Packaging Dynamics KKR 2/24/2006 266 8.6x

Ivex Alcoa 3/18/2002 773 7.5x

Berry Plastics Apollo 6/28/2006 2,250 15.3x

Spartech PolyOne 10/24/2012 385 7.3x

JW Aluminum Wellspring 11/8/2006 310

Quanex Aleris 2/10/2014 110 18.4x

Average Films 9.3x

16

2) EBITDA per Pound Calculation

Source: Brazil’s Ministry of Development, Industry, and Foreign Trade, SEC Filings, Management Commentary, Medina Singh Analysis

EBITDA / Pound Assumptions:

Production capacity of 33,500 tons was taken from Terphane’s petition filed with Brazil’s Ministry of Development,

Industry, and Foreign Trade on June 27, 2014 and does not reflect recently added capacity. Volumes are estimated using

various capacity utilization assumptions ranging from 60% to 85%. EBITDA / Pound calculations derived using three

disclosed EBITDA figures for Terphane: Full Year 2010 and LTM June 30, 2011 figures, which were provided be TG

management in its October 26, 2011 M&A presentation, and Full Year 2012, which is calculated from disclosures in

TG’s SEC filings.

Terphane EBITDA / Pound Analysis

Production Estimated Volumes by

Capacity Capacity Utilization

Metric 2010 60% 65% 70% 75% 80% 85%

Tons 33,500 20,100 21,775 23,450 25,125 26,800 28,475

Pounds 73,854,770 44,312,862 48,005,601 51,698,339 55,391,078 59,083,816 62,776,555

EBITDA Estimated EBITDA / Pound by

($MM) Capacity Utilization

Terphane 2010 60% 65% 70% 75% 80% 85%

Full Year 2010 28.0 0.632 0.583 0.542 0.505 0.474 0.446

LTM June 30, 2011 44.0 0.993 0.917 0.851 0.794 0.745 0.701

Full Year 2012 29.3 0.661 0.610 0.567 0.529 0.496 0.467

Average 33.8 0.762 0.703 0.653 0.610 0.572 0.538

17

References

1"Tredegar Film Products - Company History." Tredegar Film Products - Company History.

<http://www.tredegarfilms.com/company/companyhistory.aspx>

2"Terphane to Double BOPET-film, Metallization Capacity at Brazil Plant." Converting Quarterly. N.p., 14 Jan. 2014.

<http://www.convertingquarterly.com/industry-news/articles/id/6336/terphane-to-double-bopet-film-

metallization-capacity-at-brazil-plant.aspx>

3"Brazil Approves Anti-dumping Duties on PET Films." ICIS. 1 Mar. 2012.

<http://www.icis.com/resources/news/2012/03/01/9537117/brazil-approves-anti-dumping-duties-on-pet-

films/>

4Brazil. Ministry of Development, Industry and Foreign Trade. Resolution No. 14. CAMEX. 3 Jan. 2012.

<http://www.camex.gov.br/legislacao/interna/id/845>.

5Legisweb. N.p., 30 June 2014. <http://www.legisweb.com.br/legislacao/?id=271989>.

6Tredegar Corporation (2013). Schedule 13D. 6 Sept. 2013. SEC Edgar.

<http://www.sec.gov/Archives/edgar/data/850429/000089183613000205/sc0133.htm>

7Delta Partners. Delta Partners appoints former Deutsche Bank Vice Chairman as Managing Partner & Head of Corporate Finance .

18 Jan 2011.Web. <http://www.deltapartnersgroup.com/asset/download/527/Press_Release_Carl_

Tack.pdf>