august 2014 - jefferies · • based on nobel prize-winning innovations in metathesis catalysis •...
TRANSCRIPT
We have prepared this document solely for informational purposes. The information contained herein does not purport to be all-inclusive or contain all of the information that you may desire or need. You should not definitively rely upon it or use it to form the definitive basis for any decision, contract, commitment or action whatsoever, with respect to any proposed transaction or otherwise. You and your directors, officers, employees, agents and affiliates must hold this document and any oral information provided in connection with this document in strict confidence and may not communicate, reproduce, distribute or disclose it to any other person, or refer to it publicly, or use it for any other purpose, in whole or in part, at any time except with the prior written consent of Elevance Renewable Sciences, Inc. (“Elevance” or the “Company”). If you are not the intended recipient of this document, please delete and destroy all copies immediately.
Neither the Company nor any of its affiliates, or any of their respective officers, employees or agents, make any representation or warranty, express or implied, in relation to the accuracy or completeness of the information contained in this document or any oral information provided in connection herewith, or any data it generates and accept no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of such information. Neither the Company nor any of its affiliates, or any of their respective officers, employees or agents, makes any representation or warranty, express or implied, that any transaction has been or may be effected on the terms or in the manner stated in this document, or as to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any.
Any views or terms contained herein are preliminary only, and are based on financial, economic, market and other conditions prevailing as of the date of this document and are therefore subject to change. The Company and its affiliates undertake no obligation or responsibility to update any of the information or opinions contained in this document. Past performance does not guarantee or predict future performance. In addition, the information contained herein includes certain projections, estimates and other forward-looking statements provided by or on behalf of the Company with respect to the anticipated future performance of the Company. Words such as “expects”, “anticipates”, “intends”, “could”, “may”, “believes”, “estimates”, “projected”, “known” or similar examples (but not exclusively) are, or may be deemed to be, forward-looking statements. Such forward-looking statements, estimates and projections reflect various assumptions by the Company or its advisors concerning anticipated results and are subject to significant business, economic and competitive uncertainties and contingencies. There can be no assurance that such forward-looking statements, estimates or projections will be realized and actual results may vary from the projected results and such variations may be material. Statements contained herein describing documents and agreements are summaries only and such summaries are qualified in their entirety by reference to such documents and agreements.
This document and the information contained herein do not constitute an offer to sell or the solicitation of an offer to buy any security, commodity or instrument or related derivative, and do not constitute legal, regulatory, accounting or tax advice to the recipient. We recommend that the recipient seek independent third party legal, regulatory, accounting and tax advice regarding the contents of this document. This document does not constitute and should not be considered as any form of financial opinion or recommendation by the Company or any of its affiliates.
July 2014 2014 Copyright Elevance Renewable Sciences CONFIDENTIAL2
IMPORTANT NOTICE AND DISCLAIMER
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL3
Elevance Renewable Sciences, Inc. is a leading provider of high performance specialty chemicals produced through a proprietary chemical conversion of renewable oil feedstocks
Superior specialty chemicals that outperform existing chemicals in the market today
Chemical products directly address a $100bn+ global market
Strong commercial demand from partners
Ability to produce chemicals at attractive economics
Summary
Well-capitalized with substantial support from leading sponsors
July 2014
Elevance Renewable Sciences
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL5
Who We AreElevance Renewable Sciences is a leader in
the chemical conversion of renewable feedstock into a wide range of both ‘drop in’
and novel specialty chemicals
Key StatsEmployees: ~150Founded: 2007
Headquarters: Woodridge, ILFacilities: Gresik, Indonesia (operating)
Natchez, MS (in development)Raised $300M to date in private equity
capital
What We DoElevance produces specialty chemicals with
performance benefits for a wide range of markets using proprietary, Nobel Prize winning, olefin metathesis technology
Gresik, Indonesia Natchez, Mississippi
Woodridge, Illinois
July 2014
Management Team
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL6
K’Lynne Johnson
Chief Executive Officer
David Kelsey
Chief Financial Officer
Mel Luetkens
Chief Operating Officer
Robert “Bob” Kumpf
Chief Technology Officer
Andy Shafer
EVP, Sales & Marketing
• Over 25 years of experience across a variety of executive roles
• Previously served as SVP and CFO of Sealed Air Corporation, a Fortune 500 Company as
well as holding various executive positions within GE and GE Capital and acting as CFO
of two small-cap growth companies (one public and one private)
• Over 23 years of experience in the chemicals industry
• Previously has held P&L management, R&D leadership, new business and product
development, strategy development and execution responsibilities for Amoco, BP,
Innovene, and INEOS
• Over 25 years of experience across a variety of technical and executive roles
• Previously COO of Plextronics, CAO at Bayer MaterialScience among various other
executive roles at Bayer MaterialScience
• Over 20 years of experience in the specialty chemicals and plastics industries
• Previously an original executive at Cargill-Dow (now NatureWorks, LLC), as well as
holding various management positions for Fortune 50 businesses
• Over 20 years of experience in the oil and petrochemicals industries
• Previously served as the SVP of the Global Derivatives operating company at BP
Innovene among various other executive roles within the global commodity and
specialty chemicals businesses at BP, Innovene and Amoco
July 2014
Palm
Complex Processing
High capital costs
Energy intensive
Large number of process steps
Hazardous & toxic byproducts
Petroleum Feedstocks
Finite resources
Volatile prices
Carbon intensive
Environmental risk
7
Canola
Globally available
Feedstock options create flexibility and value
Low carbon footprint
Simplified Conversion Process
Lower capital costs
Less energy intensive
Efficient operations using standard equipment
Renewable Feedstocks
Soy
Conventional petrochemical process The Advantage
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL
Multiple Advantages over Conventional Petrochemical Process
Output Output
Mono-functional
Specialty Chemicals
Olefins
Oleochemicals
Unique di-functional specialty chemicals
Mono-functional
Olefins
Oleochemicals
July 2014
Olefins
Specialty Chemicals
Oleochemicals
Soy oil
Palm oil
Canola oil
Corn oil
Jatropha oil
Algae oil
Tallow oil
Mustard oil
Metathesis Distillation
Transesterification Distillation
Hydrolysis/Hydrogenation
DerivatizationSeparations
Co-Reactants
Alcohol Glycerol
Broad Feedstock Options
Elevance Proprietary Catalyst Technology
Standard ChemicalUnit Operations
Novel, AdvantagedProducts
Technology proven at scale
Low capital intensity and low cost of production
High value product mix
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL
Elevance’s proprietary catalyst and process technology produces unique specialty chemicals with desirable functional attributes previously unavailable in the marketplace
• Extensive IP portfolio consisting of both exclusively-licensed and internally-developed advancements• Based on Nobel Prize-winning innovations in metathesis catalysis• Uses a variety of renewable feedstocks and standard equipment to create products in a simple and efficient
process
Distillation
Hydrolysis/Hydrogenation
DerivatizationSeparations
Elevance Proprietary Catalyst Technology
Standard ChemicalUnit Operations
Novel, AdvantagedProducts
8
Elevance Biorefinery Process
July 2014
Elevance Technology
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL9
Metathesis results in the rearrangement of double-bond containing chemicals
While traditional processes use small
molecules to build more complex
molecules, the Elevance process
reduces costs by leveraging natural
plant oil complexity.
Chemicals from the Elevance process combine functional
attributes of olefins and oleochemicals in a previously
unachievable single molecule.
Elevance proprietary catalyst & process
Novel, advantaged products
July 2014
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL10 July 2014
Elevance technology creates unique di-functional molecules which provide significant competitive advantages enabling value creation in one of three ways:
Elevance Technology Provides Competitive Advantages
1) Better performance than competitive alternatives at
equal or better cost
2) Viable routes to commercially desired
molecules
3) More efficient routes to manufacture existing
molecules through fewer steps and lower capital
required
Conventional petrochemical process -> 6 Steps
The Advantage -> 3 Steps
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL11
Elevance’s intellectual property portfolio covers an extensive array of innovations in catalysts, compounds, chemical reactions, systems, processes and applicationsPatents and Patent Applications including:
• Received title to U.S. and foreign patent applications from Cargill at its inception in 2007
• Elevance has filed over 200 U.S. Patent Applications since its inception and currently has 34 issued U.S. Patents and 88 pending U.S. Patent Applications
• Currently 286 applications pending globally and 95 issued patents throughout the world
Exclusive perpetual worldwide licenses from:
• Materia, Inc. to a group of over 130 U.S. Patents and Patent Applications, together with the corresponding foreign patents and applications
• Exclusive license extends perpetually provided Elevance reaches a modest catalyst purchase amount (levels met currently in campaign mode)
• XiMo Ltd. to a group of 9 U.S. Patents and Applications, together with the corresponding foreign patents and applications
Trademark protection for its name and logo and the names of several of its products
Intellectual Property Overview
July 2014
Elevance currently manufactures products at its commercial scale facility in Gresik, Indonesia which was designed and constructed using its proprietary metathesis technology
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL13
Plant overview
Location: • Gresik, Indonesia
Ownership:• Elevance (50%) / Wilmar
(50%)
O&M provider: • Wilmar
Plant footprint: • 10 acres
Capacity:• Currently 180,000 MT, may be
expanded to 360,000 MT
EPC contractor: • Wilmar
Construction period: • 16 months
COD: • July 2013
Feedstock: • Palm oil, supplied by Wilmar
Outputs (by volume):
• Specialty chemicals (26%)• Oleochemicals (44%)• Olefins (18%)• Glycerin (10%)
Employees: • 29
180k MT Gresik JV plant
Current status:• Extended 10 – 12 week campaign slated to begin in
September 2014
• Throughput at or above designed capacity
• Elevance has already met or is on-target to meet all plant
design specifications
• Variable consumptions and utility costs below design
• Key specialty chemical product yield and quality
specifications have met and exceeded design
• On-track to achieve design targets for other chemicals
• Consistent safety record and good operator discipline
Gresik JV Overview
July 2014
Natchez Facility Overview
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL14
Elevance is developing a second, larger facility in Mississippi on an existing brownfield site to satisfy demand, expected to exceed Gresik capacity by 2016
Plant overview
Location: • Natchez, Mississippi
Ownership: • Elevance (100%)
O&M provider: • Elevance
Plant footprint: • 25 acres
Capacity: • 280,000 MT
EPC contractor: • URS
Construction period: • 20 months
COD: • Q2 2016
Feedstock: • Canola oil
Outputs (by volume):
• Specialty chemicals (43%)• Oleochemicals (15%)• Olefins (31%)• Glycerin (9%)
Employees:• 165 (expected headcount at
full capacity)
280k MT Natchez Facility
Current status:
• Elevance is developing a second specialty chemicals plant in
Natchez, MS with URS as the EPC contractor
• Engineering has begun and permitting process nearly
complete
• Procurement of long-lead equipment is underway
• LURGI is constructing a separation unit under a separate lump-
sum contract
• Richard Design Services is acting as Advisor to Elevance through
the design phase and as Owner’s Representative during
construction
• Anticipate financial close in 3Q 2014 and NTP in December 2014
July 2014
Genting Biorefinery Collaboration Overview
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL15
Elevance to be exclusively responsible for the sale of all specialty chemicals produced at new biorefinery in Lahad Datu, Malaysia
• Elevance has agreed a 25:75 collaboration with Genting Plantations Berhard through Genting Integrated Biorefinery Sdn Bhd
(GIB) to build a new biorefinery in Malaysia based on Elevance’s proprietary metathesis technology
• As a condition of the collaboration agreement, Elevance will not be responsible for any capital costs related to the facility
• The 240,000 MT facility will be located in Lahad Datu, Sabah, Malaysia
• Plant will be designed to run on palm oil
• Production of renewable, high-performance olefins and specialty chemicals that can be used in multiple end-product
applications, including lubricants, surfactants and detergents
• GIB has agreed to pay Elevance license and design fees, and Elevance will provide IP rights, knowledge transfer and technical
and consulting services
• The entity is in negotiations with a highly regarded engineering firm to complete an initial FEED package
July 2014
Genting Biorefinery Location
Genting facility in Lahad Datu, Malaysia
Gresik facility in Gresik, Indonesia
Products: Market Size and End Use
17
Consumer & Industrial
Ingredients
• Specialty surfactants
• Soy & palm wax for candles, corrugated coatings
• Acid wax• High performance
soy wax• Emulsifiers• Soy petrolatum
• Decene (C10)• Alpha and internal
olefins (C11-C22)
• Fatty acids and esters
• Fatty alcohol feedstocks
$1,100 - $13,250
*LAO and LIO only
$40 billion
Engineering Polymers &
Coatings
• Specialty polyamides and polyurethanes
• Polyester polyols, epoxies
• Crosslinkers, rheology modifiers, coalescents
$1,550 - $13,250
$5 billion
Lubricants, Additives
• Lubricant base oils
• Lubricant and fuels additives
• Advanced biofuels
$5,500 - $13,250
$10 billionAddressable market
Selling price ($/MT)
End market uses
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL
Specialty Chemicals
Elevance specialty products’ novel performance attributes enable sales at premium prices into multiple end markets that represent a $100 billion opportunity
Platforms OlefinsOleochemicals
$1,500 - $2,500$850 - $2,500
$7 billion*$38 billion
Intermediate Chemicals
July 2014
Specialty products meet customer-desired functional attributes
Consumer & Industrial Ingredients
Engineering Polymers & Coatings
Lubricants & Additives
•Improved cold water performance•Better degreasing and low VOC in cleanersDetergents & Cleaners
•Improved hair conditioning and shine•Moisturizing benefits & smoother feel for skin care Personal Care Products
•Improved efficacy and enables higher concentrations•Easier herbicide application•Lower VOC, less run-off, elimination of high toxicity tallow amines
Agriculture Additives
•High thermal stability and increased compatibility•Sharper phase changes at higher melt pointsPerformance Waxes
•Reduction in formulation costs•Improved fuel economyLubricant Base Oils
•Improved lubricity•Formulation solubility enhancementsLubricant Additives
18 2014 Copyright Elevance Renewable Sciences CONFIDENTIAL
Specialty Products
•Feedstocks and monomers that enable existing & new polymers•Improved “use life” of engineering polymers in aggressive environments
such as high solvent and/or salt exposureEngineering Polymers
•Increased toughness and chip-resistance in specialty powder coatings•Improved hydrolytic stability and barrier properties in packaging through
new adhesives, coatings and films
Coatings, Adhesives, Sealants and Elastomers
July 2014
Performance Non-ionic surfactant that performs like a
solvent Effective at 5% concentration Usable across broad pH Kauri-Butanol (KB) value greater than 500
Environmental Potential to replace NMP and methylene
chloride Low Vapor pressure (LVP-VOC)
“Stepan Launches STEPOSOL® MET-10U, a Powerful, Sustainable Surfactant to deliver superior cleaning performance” -March 24, 2014
Paint removal
Diluted to 5% as effective as pure solvents
100% Acetone/NMP 5% Stepasol
Adhesive removal
Stepasol
Near complete adhesive removal
NMPMethylene Chloride
D-Limonene
19 2014 Copyright Elevance Renewable Sciences CONFIDENTIAL
Case Study: Novel Surfactant STEPOSOL™MET-10U
July 2014
Inherent™ C18 Diacid: Polyamides and Polyester Polyols
• Elevance Inherent™ Diacids provide potential superior performance in hydrolytic stability, chemical, solvent and salt resistance, optical clarity and toughness
0
20
40
60
80
4,18 6,18 10,18 4,10 6,10 10,10
deg
. C
Melting Point of Polyester Polyols
0
10
20
30
40
50
60
70
Impact Resistance
• C18 Diacid monomers enable the creation of new base polymer families with core similarities to utilize many standard processing and formulation conditions
C12 C12 C18 C18
C18 Diacid Competition
20 2014 Copyright Elevance Renewable Sciences CONFIDENTIALJuly 2014
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL22
PartnerJV / JDA /
Commercialization OfftakeFeedstock /
Catalyst Date Description
08/2010 • 8 specialty chemicals projects currently actively pursued
01/2012• Specialty chemicals projects under development• MOU for offtake agreement for 10,000 MT by 2020
06/2013• Offtake agreement for 70,000MT of mixed olefins from
Gresik JV
06/2010• JV partner for Gresik JV• Provides palm oil for the Gresik JV Facility
11/2007 • Feedstock provider to Elevance
01/2011• Joint-development and commercialization of new catalyst
technology
11/2007
• Provider of ruthenium-based catalysts• Licensor to Elevance of numerous patents involving olefin
metathesis catalyst compositions and the use of such in cross-metathesis
02/2014
• Joint-development and commercialization of new catalysts• Assessing the feasibility of construction of the first world-
scale ethylene metathesis-based production site using renewable oils
07/2014 • Developing a 240,000 MT biorefinery in Malaysia
Leading Partners
July 2014
Conclusion
2014 Copyright Elevance Renewable Sciences CONFIDENTIAL24
Superior specialty chemicals that outperform existing chemicals in the market today
Chemical products directly address a $100bn+ global market
Strong commercial demand from partners
Ability to produce chemicals at attractive economics
Well-capitalized with substantial support from leading sponsors
July 2014