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    Apresentação ingles final Apresentação ingles final Presentation Transcript

    • MMX SUDESTE PORT November | 2013
    • DISCLAIMER This presentation does not purport to contain all of the information that a prospective or current investor may require or desire concerning the matters referred to herein. Each investor must conduct and rely upon his/her or its own evaluation of such matters, including the merits and risks of making an investment decision. This presentation is not intended to be, nor shall it be construed as, a complete description of the facts, risks or consequences regarding an investment involving the Sudeste Port. All potential investors should perform their own independent investigations regarding any such investment. All potential investors should consult their own qualified advisors concerning such an investment and the suitability relating to an investor’s ability to sustain a total financial loss of such investment. This presentation speaks as of the date upon which it is presented and the information presented herein may change after the date hereof. Other than to the extent required by applicable law, neither MMX Mineração e Metálicos S.A. (“MMX”) nor any other person (including the Investors) shall be deemed to make any representation or warranty, express or implied, with respect to the information contained in this presentation. To the maximum extent permitted by applicable law, MMX disclaims any and all liability resulting from the reliance by any person on the information contained in this presentation or related to any material fact not included in this presentation regarding the Sudeste Port, the MMXM11 or Port11 securities or any other matter referenced herein. EAV Delaware LLC and IWL Holdings (Luxembourg) S.a.r.l. (the “Investors”), affiliates of Mubadala and Trafigura, respectively, participated in the preparation of this presentation. The Investors and their affiliates disclaim any liability with regards to this presentation. 2
    • DISCLAIMER (Cont’d) This presentation includes “forward-looking statements”, as that term is defined in the Private Securities Litigation Reform Act of 1995, in Section 27A of the Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. All statements other than statements of historical facts are statements that could be deemed forward-looking statements and are often characterized by the use of words such as “projects”, “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, “may”, “will”, or “intends”, or by discussions or comments about our objectives, strategy, plans or intentions and results of operations. Forward-looking statements include projections regarding our operating capacity, operating expenditures, capital expenditures and start-up dates. By their nature, these forward-looking statements involve numerous assumptions, uncertainties and opportunities, both general and specific. The risk exists that these statements may not be fulfilled or, even if they are fulfilled, the results or developments described in such statements may not be indicative of results or developments in future periods. We caution participants of this presentation not to place undue reliance on these forward-looking statements as a number of factors could cause future results to differ materially from these statements. Forward-looking statements may be influenced in particular by factors such as the ability to obtain all required regulatory approvals on a timely basis or at all, exploration for mineral resources and reserves, difficulty in converting geological resources into mineral reserves, and changes in economic, political and regulatory conditions. We caution that the foregoing list is not exhaustive. When relying on forward-looking statements to make decisions, investors should carefully consider these factors as well as other uncertainties and events. No party undertakes to update the forward-looking statements unless required by law. This presentation is neither an offer to sell (which can only be made pursuant to definitive offering documents) nor a solicitation of an offer to buy any securities in the United States, or any other jurisdiction. The securities referred to herein have not been registered in any jurisdiction, and in particular, will not be registered under the U.S. Securities Act of 1933, as amended, or any applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without MMX’s prior written consent. 3
    • TABLE OF CONTENTS 1 ROYALTY BONDS 2 DEBT RESTRUCTURING 3 PORT ECONOMICS 4 GENERAL BONDHOLDER MEETING APPENDIX – FORM OF PORT11 INDENTURE 4
    • EXECUTIVE SUMMARY Positive Impact from Investors’ Involvement: Secures completion of the Port, expected to start operations in Q3 2014 (first royalty cash flow expected in 2015) Increases port capacity thereby enhancing Brazilian infrastructure and unlocking Minas Gerais production Investors aligned with bond economics as they will hold 34% upon completion Transaction Update: Investors and MMX are working on completing CPs: closing expected in December, 2013 Master Amendment Agreement already executed with subordinated lenders Commercial terms of the renegotiation of the senior debt agreed in principle: senior lenders have imposed new cash waterfall requiring the amendment of MMXM11 terms MMXM11 amendment required to facilitate transaction closing 5
    • 1 ROYALTY BONDS
    • MMXM11 - PORT11 ECONOMICS MMXM11 HOLDER PORT11 HOLDER Bonds value significantly impaired if the Price is expected to be the NPV of future Port is not completed (current price royalty cash flows resulting from the supported by the Investors’ involvement) completed port and Investors’ involvement US$5 per tonne adjusted by PPI US$5 per tonne adjusted by PPI, recorded since September 2010 No visibility on first royalty cash flow First royalty cash flow expected in 2015 7
    • POTENTIAL UPSIDE FOR HOLDERS OF PORT11 Additional volumes and trading activity via Port could generate additional cash flow Anticipated opportunities to lower OPEX under new management 8
    • MMXM11 VS. PORT11 INDENTURES Item MMXM11 PORT11 Form Nominative, book-entry registered Nominative, book-entry registered, and convertible Maturity Perpetual Perpetual Termination Amount Appraisal report prepared by an independent first-tier financial institution chosen by Free-Float Appraisal report prepared by an independent first-tier financial institution chosen by Free-Float Trigger for Royalty Payment Triggered when “Sufficient Gross Profit” No defined formula of Gross Profit Triggered when Cash Available for Royalties>0 Defined formula for calculation of Cash Available for Royalties Possibility of annual review by PORT11 holders Royalties(1) US$ 5 / ton adjusted by PPI US$ 5 / ton adjusted by PPI PPI U.S Producer Price Index unspecified U.S Producer Price Index for Finished Goods Reference Date for PPI adjustment May 2011, as per MMX accounting records September 2010 Cumulativeness Yes Yes No Yes for accrued and unpaid royalties 1% per month 1% per month Collateral The Securities are unsecured The Securities are unsecured Mandatory Redemption Securities are not subject to mandatory redemption Securities are not subject to mandatory redemption Cash Sweep for Royalty Payment Default Interest (in case of Trigger) Note: (1) US$5.50 as of December 31, 2013. 9
    • PORT11 CASH WATERFALL NET REVENUES - CASH COSTS FROM OPERATIONS - MAINTENANCE CAPEX - CASH OPERATING EXPENSES CASH FLOW FOR SENIOR DEBT PAYMENT INTEREST / AMORT. SENIOR DEBT1 - CASH FLOW BEFORE TAXES AND PROVISIONS CASH PROVISIONS FOR INCOME TAXES (IRPJ+ CSLL), PLUS OTHER CASH PROVISIONS AS REQUIRED BY AUDITORS - CASH AVAILABLE FOR ROYALTIES ROYALTIES, EXCL. EB2 DEFERRED ROYALTIES - CASH FLOW FOR SUBORDINATED DEBT PAYMENT3 1- Includes Reserve Account for 6 months of senior debt services. 2- EB refers to Eike Batista. 3- All accrued royalties, including the deferred but accrued royalties to EB are senior to subordinated debt payments. 10
    • PORT11 ATTRIBUTES Key Attributes 1 Royalties will be senior in payment to any subordinated debt, dividends, share repurchase and cash distribution to equity holders, and junior to Senior Debt 2 For the purpose of the calculation of “Cash Available for Royalties”, no senior debt other than the current debt facilities will be considered. PortCo shall have the ability to refinance the BNDES debt. 3 The PortCo governance structure among MMX and Investors contemplates: All Southeast Brazilian iron ore trading activities of shareholders to be conducted via the Port Port operated as a profit center Related party transactions are subject to arm’s length terms, and, depending on the size of the transaction, fairness opinions may be sought by non related party shareholders 4 EB’s right to receive payments deferred until 2018 (except if there is excess cash available) 11
    • STRUCTURE AFTER PROPOSED EXCHANGE OFFER TRANSACTION MMXM11 PORT11 FLOW TO HOLDERS OF PORT11 FLOW TO HOLDERS OF MMXM11 (100% OF FREE FLOAT ACCEPT EXCHANGE OFFER) (LESS THAN 100% OF FREE FLOAT ACCEPT EXCHANGE OFFER) MMXM11 EB / Investors Free Float $ Free Float $ 66% $ $ 34% EB / Investors FIP-IE 100% $ PORT11 SECURITY $ FIP-IE 66% PORT11 SECURITY $ PortCo 34% $ $ PortCo MMXM11 holders retaining units (instead of converting into PORT11) will receive royalties through MMX 12
    • FIP-IE BENEFITS Governance FIP-IE will comply with governance requirements provided for by article 1, paragraph 8, of Law 11,478/2007, as amended FIP-IE manager to represent all bond holders in any PORT11 related matter MMX and Investors are currently working on a structure to allow all investors which cannot hold quotas issued by the FIP-IE to hold the Port11 security 13
    • STRONG AND COMMITTED PARTNERS MUBADALA TRAFIGURA Investment and development company wholly owned by the Government of Abu Dhabi, United Arab Emirates STRONG FINANCIAL PARTNERS 3rd largest physical oil trader and 2nd largest non-ferrous metals trader C. $55bn of AuM Turnover of $120bn, profits in excess of $1bn, $41bn financial lines available Strong long-term credit rating: Aa3/AA/AA Stable, resilient and profitable business model based on physical arbitrage, supported by industrial assets ($4.6bn book value) Large portfolio of hard commodities assets COMMODITY KNOWLEDGE Leading position in physical trading market with: Owner of one of the largest single-site aluminium smelters in the world (EMAL) – 103 mn Metric tonnes of oil and oil products and – 35 mn Metric tonnes of non-ferrous and bulk traded in 2012 Recently signed a merger between EMAL and DUBAL Recent acquisition of mining assets in Africa Portfolio of oil & gas assets via Mubadala Petroleum 14
    • 2 DEBT RESTRUCTURING
    • REQUIRED DEBT RESTRUCTURING Debt restructuring of Port required by senior lenders and fundamental to Investors’ investment proposition − Under pre-restructuring case Port company would be unable to meet debt amortization requirements Anticipated that additional US$550mn of capex will be required to make Port operational Completion of Port requires: − Successful debt restructuring − Equity injection by the Investors, together with the release of committed and undrawn debt (BNDES) 16
    • SUMMARY UPDATE ON DEBT RENEGOTIATION  Approximately US$1.1 bn will be held at PortCo  Existing mine debt is transferred to PortCo and will be subordinated to BNDES and Port11 holders  Master Amendment Agreement signed with subordinated lenders (i.e. Itaú and Bradesco)  BNDES restructuring commercially agreed in principle. Board approval expected by the end of November 17
    • ANTICIPATED DEBT RESTRUCTURING Port Debt Profile BNDES Other Senior Lenders Other debt Additional 2 year grace period Final maturity extended to 2029 Additional US$242 mn to finance company CAPEX, already contracted with BNDES and Bradesco Additional 2 year grace period Final maturity extended to 2023 Additional US$67 mn to finance company CAPEX New maturity extended to June 2029 New grace period: June 2018 18
    • 3 PORT ECONOMICS
    • SIGNIFICANT POTENTIAL FOR THE SUDESTE PORT Targeted production capacities:  up to 24.0 mtpy  Gerdau: 18.0 mtpy  Ferrous: 15.0 mtpy  MUSA: 12.0 mtpy  Somisa: 9.5 mtpy  Serra Azul: 7.0 mtpy  Pau de Vinho: 6.0 mtpy  Arcelor Mittal: 3.2 mtpy  MMX Comisa: Minerita: 3.2 mtpy Existing take-or-pay agreement with Sudeste Port With Vale and CSN Ports running at full capacity, Sudeste Port is the only alternative for many mining companies Source: Brasil Mineral Magazine 2013 and company estimates. 20
    • PORT ECONOMICS: KEY ASSUMPTIONS  Volumes  MMX Mines (~7Mt until 2018), Major Miners (~22Mt in 2016 growing to 35Mt in 2019) and Small Miners (5-10Mt)  Depreciation  Blended tariff: ~15 US$/t (gross of PIS/ COFINS, assuming sales mix of 2017)(1)  Port Costs Tariffs  Payment occurs only when Cash Available for Royalties is positive (Net Revenues - Cash Costs From Operations - Maintenance Capex - Cash Operating Expenses - Interest / Amort. Senior Debt(2) - Cash Provisions For Income Taxes (IRPJ+ CSLL) - Other Cash Provisions As Required By Auditors) Current PP&E (US$1,682 mn) and future capex: 15 year depreciation period Costs are split between Fixed and Variable Total fixed costs increases depending on the minimum volume of the Port (from US$9.5 mn (2.5m tonnes) to US$37.9 mn (50m tonnes) Variable costs (per tonne) decreases depending on the minimum volume of the port (from US$3.4 per tonne (2.5m tonnes) to US$1.1 per tonne (50m tonnes)  Capex  Trading Costs Acquisition costs at 45 % of FOB prices  Cost from mine to Road of 6.6 US$/t  Cost of rail transportation of 12.2 US$/t Receivables (Port and Trading): 30 days  Royalties    Payables (Trading): 30 days  Inventories (Trading): 20 days Total of US$5.00(1) per tonne Total expansion capex of US$ 550 mn Source: Company estimates. (1) Price shall be adjusted annually in accordance with the variation of the PPI recorded since September, 2010. (2) Includes Reserve Account for 6 months of senior debt services. Working Capital 21
    • PORT ECONOMICS: PRO FORMA PROJECTED FINANCIALS (US$ millions, otherwise stated) 2014E 2015E 2016E 4 22 33 P&L Net Revenues Gross Profit EBITDA 43 18 (245) 271 187 (21) 441 342 131 Cash Flow Cash Flow Available for Debt Service Debt Drawdown Debt Repayment Trading Revenues (345) 289 (13) - 129 20 (76) 12 296 15 (155) 20 Royalties Royalities Due Royalties Accrued (End of Period) Royalties Paid to All Bondholders Except EB (1) (170) 240 - (200) 263 (117) (204) 200 (177) Net Change in Cash Flow (69) (32) - Projected Volumes (million tonnes) (1) EB’s right to receive payments deferred until 2018 (except if there is excess cash available) 22
    • 4 GENERAL BONDHOLDER MEETING
    • EXPECTED TIMELINE Board of Directors’ Meeting of MMX  Approve the merger of Porto Sudeste S.A. into MMX Call notice of the General Shareholders’ Meeting of MMX  Call notice of the General Meeting of MMXM11 Securities Holders  Approve the amendment to the MMXM11 indenture. General Shareholders’ Meeting of MMX General Meeting of MMXM11 Securities Holders Closing General Shareholders’ Meeting of Porto Sudeste S.A. Approve the merger of Porto Sudeste S.A. into MMX 24
    • CONCLUSION Positive Impact from Investors’ Involvement: Secures completion of the Port, expected to start operations in Q314 (first royalty cash flow expected in 2015) Increases port capacity thereby enhancing Brazilian infrastructure and unlocking Minas Gerais production Investors aligned with debenture economics as they will hold 34% upon completion Transaction Update: Investors and MMX are working on completing CPs: closing expected in December, 2013 Master Amendment Agreement already executed with subordinated lenders Commercial terms of the renegotiation of the senior debt agreed in principle: senior lenders have imposed new cash waterfall requiring the amendment of MMXM11 terms MMXM11 amendment required to facilitate transaction closing 25
    • APPENDIX – FORM OF PORT11 INDENTURE
    • APPENDIX TO COME 27
    • 28