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Ormet Corporation
      Mike Tanchuk
     CEO & President




 Houlihan Lokey’s 4th Annual
Global Industrials Conference
 ...
Any statements made during this presentation that are
    not historical facts are “forward-looking” statements. These
   ...
Introduction - My Background
Ormet Facilities
  • Primary Reduction Plant – Hannibal, OH
     - 265,000 tons/yr capacity
     - Power needs 540 MW
Ormet Facilities
• Alumina Plant – Burnside, LA
   - 540,000 tons/yr capacity
   - Idled December 2006
Ormet’s Raw Material Sourcing
     Has Become Global
Ormet History
1956
  Ormet Corporation organized by Olin
  Corporation and Revere Copper and Brass,
  Inc.

1958
  Ormet’s...
Ormet History
2004
  Ormet files for chapter 11 bankruptcy.
  Union at the reduction plant go on strike

2005
  Emergence ...
Volatile
                              Commodity Market             “Price Majeure”
        Legacy Costs                  ...
2008 Focus
Reach full operating capacity with improved
safety results
Stabilize revenue
Get value from working capital
Sta...
2008
         Achieve Operating Stability
•   Safest year in company
    history
•   Full capacity achieved
•   Positive u...
Stabilize Revenue
• Aluminum priced on London Metal
  Exchange
• Commodity forward pricing
• Hedging plan developed based ...
Gain Value from Working Capital

• Key raw material limited value from
  bank
• Developed tolling approach
• Sold key raw ...
Gain Value from Working Capital
                  (cont.)



• 2006 power contract tied up $35
  million in working capita...
Stabilize Raw Material Prices

• Explored international raw material
  suppliers and brokers expanding Ormet’s
  supplier ...
Sell Unneeded Assets
• Burnside facility has
  ~2000 acres of real
  estate suited for
  industrial development
• Develope...
Minimize Counterparty Risks
•   Increasingly volatile commercial
    environment
•   Balance customer/supplier
    diversi...
Additional Financing

• Requested financing only after
  executing “self help” program
• Strong support from key sharehold...
Long Term Power Contract
               • Worked cooperatively
                 with Ohio Government
                 on n...
2009 Focus
Prepare for low commodity pricing in 2010 but be
ready for better times
Deleverage and prepare for refinancing ...
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  1. 1. Ormet Corporation Mike Tanchuk CEO & President Houlihan Lokey’s 4th Annual Global Industrials Conference February 24, 2009
  2. 2. Any statements made during this presentation that are not historical facts are “forward-looking” statements. These forward-looking statements may include comments on our plans, strategies or beliefs concerning our business and the markets in which we operate. Without limiting the foregoing, the words “believes”, “anticipates”, “expects” and other similar expressions are intended to identify certain forward-looking statements. These statements are based on information currently available to us and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements. 2
  3. 3. Introduction - My Background
  4. 4. Ormet Facilities • Primary Reduction Plant – Hannibal, OH - 265,000 tons/yr capacity - Power needs 540 MW
  5. 5. Ormet Facilities • Alumina Plant – Burnside, LA - 540,000 tons/yr capacity - Idled December 2006
  6. 6. Ormet’s Raw Material Sourcing Has Become Global
  7. 7. Ormet History 1956 Ormet Corporation organized by Olin Corporation and Revere Copper and Brass, Inc. 1958 Ormet’s Hannibal Reduction Plant begins making aluminum. Ormet opens the Burnside Bulk Marine Terminal and Burnside Alumina Plant. 1974 Consolidated Aluminum Corporation acquires Olin’s interest in Ormet and assumes 66 % ownership, with Revere owning 34%. 1986 Oralco purchases what is now Ormet Primary Aluminum Corporation.
  8. 8. Ormet History 2004 Ormet files for chapter 11 bankruptcy. Union at the reduction plant go on strike 2005 Emergence from Chapter 11 2006 Labor contract ratified New power contract Start-up of Hannibal smelter begins Shutdown of Burnside refinery $50 million rights offering 2007 Completion of smelter start-up $175 million credit facilities established $30 million equity raised $35 million convertible note New Management Team put in place Shutdown of casting operations
  9. 9. Volatile Commodity Market “Price Majeure” Legacy Costs from ~$50 million/yr Chinese Suppliers CHALLENGES INTO Liquidity Needs PBGC Waiver 2008 Risk Adverse Operating Costs Banking Environment
  10. 10. 2008 Focus Reach full operating capacity with improved safety results Stabilize revenue Get value from working capital Stabilize raw material prices Minimize counterparty risks Sell unneeded assets Put additional financing in place as needed Set stage for long term power contract
  11. 11. 2008 Achieve Operating Stability • Safest year in company history • Full capacity achieved • Positive union relations continued • Operating efficiency at record levels $ Over $12 million in reduced operating costs
  12. 12. Stabilize Revenue • Aluminum priced on London Metal Exchange • Commodity forward pricing • Hedging plan developed based on revenue certainty • Pricing layered in for 2008 and 2009 • Combined physical and financial contracts
  13. 13. Gain Value from Working Capital • Key raw material limited value from bank • Developed tolling approach • Sold key raw material and product inventory to tolling party • Integrated hedges into toll $ Increase liquidity by a net of $25 million
  14. 14. Gain Value from Working Capital (cont.) • 2006 power contract tied up $35 million in working capital • Developed positive relationship with AEP • Secondary business contracts evolved for barge transportation • Reduced amount of electric deposit required freeing up $15 million
  15. 15. Stabilize Raw Material Prices • Explored international raw material suppliers and brokers expanding Ormet’s supplier base • Developed relationships directly with foreign suppliers • Put in place Chinese monitoring system $ Negotiated better terms as markets slowed - $9 million improvement $ Significant reduction in pricing - $50 million annualized from peak 2008
  16. 16. Sell Unneeded Assets • Burnside facility has ~2000 acres of real estate suited for industrial development • Developed relationship with potential users $ Sold 300 acres for $9 million in late 2008 • Continued marketing of non refinery assets including marine terminal with offers pending
  17. 17. Minimize Counterparty Risks • Increasingly volatile commercial environment • Balance customer/supplier diversity with certainty • Single party exposure $760 million • Decided to lock in revenue, payment terms, inventory with very large and stable international trading company
  18. 18. Additional Financing • Requested financing only after executing “self help” program • Strong support from key shareholders $ Negotiated $10 million loan with warrants before market crisis
  19. 19. Long Term Power Contract • Worked cooperatively with Ohio Government on new legislation • Developed approach to allow for recognition of electric load size, economic impact on the local community and need to retain jobs • Governor signed legislation May 2008 • Began development of detailed contract in late 2008
  20. 20. 2009 Focus Prepare for low commodity pricing in 2010 but be ready for better times Deleverage and prepare for refinancing in 2010 Further improve operating efficiency Get more value from working capital Sell non-core assets Finalize long term power agreement with LME component Increase equity market awareness of Ormet Negotiate longer term commercial agreements Negotiate new labor agreement for the Hannibal facility

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