Stock Monitor: Platinum Group Metals Post Earnings Reporting
LONDON, UK / ACCESSWIRE / December 14, 2017 / Active-Investors issued a free report on Fairmount Santrol Holdings Inc. (NYSE: FMSA) ("Fairmount"), which is readily accessible upon registration at www.active-investors.com/registration-sg/?symbol=FMSA as the Company's latest news hit the wire. On December 12, 2017, the Company, a leading provider of high-performance sand and sand-based product solution to oil and gas Companies, and Unimin Corporation, an application-focused minerals Company and a wholly owned subsidiary of SCR-Sibelco N.V., declared that their Boards of Directors have approved a definitive agreement under which Fairmount and Unimin will combine in a tax-free, cash and stock transaction. Sign up now for our free research reports at:
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Active-Investors.com is currently working on the research report for Platinum Group Metals Ltd (NYSE AMER: PLG), which also belongs to the Basic Materials sector as the Company Fairmount Santrol. Do not miss out and become a member today for free to access this upcoming report at:
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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, Fairmount Santrol Holdings most recent news is on our radar and we have decided to include it on our blog post. Today's free coverage is available at:
www.active-investors.com/registration-sg/?symbol=FMSA
Merger to Create a Leader in Proppant and Industrial Materials Solutions
The Merger would lead to the creation of a new company, which would be listed on the New York Stock Exchange. The combination of the two organizations' strong product portfolios and asset footprints will create an industry-leading provider of Proppant and industrial materials solutions, which would serve energy as well as industrial customers. The combined entity would possess an extensive technical and applications expertise, and would have the largest portfolio of high-purity sands and nepheline syenite production in North America.
Estimated Annual Processing Capacity Of 45 Million Tons
It is expected that the new combined Company would have annual sand and mineral processing capacity of 45 million tons and annual coating capacity of 3.0 million tons.
Financial Position of the Combined Company
On a pro-forma basis, the combined entity would have had revenue of nearly $2.0 billion and adjusted EBITDA of around $400 million, excluding expected synergies, for the 12-month period ended September 30, 2017. Of this, the industrial segment represents 45% of gross profit while the Proppant segment represents 55%.
Diversification across assets, geographies and end-markets
The combined company would operate a comprehensive logistics platform with a large-scale terminal network across North America, comprising 96 distribution terminals with 18 unit-train capable terminals, and access to all major railways serving major oil and gas basins. Therefore, its strategically located plants and an enhanced distribution network would create an extraordinary position to deliver products and services to a broad customer base across energy and industrial markets. Moreover, its complementary asset footprint is also well positioned to serve resilient and attractive markets including oil & gas, glass, construction, ceramics, coatings, polymers, and foundry markets.
Value Creation Through $150 Million in Operational Synergies
- The combined company is expected to benefit from substantial operational synergies, which would help enhance earnings as well as value. The Company targets approximately $150 million in annual synergies, resulting in over $1 billion in value creation. Of which, 50% are expected to be captured in the first-year post closing.
- Besides, diverse revenue streams from the industrial segment coupled with combinational synergies, increased scale, and complementarity of assets would help assure a more predictable cash flow generation for the combined entity.
- This would provide the Company increased financial flexibility, including the ability to reduce leverage and make strategic investments.
Terms for the Transaction
- As per the agreement, current Fairmount's shareholders, including equity award holders, will receive $170 million in cash, or approximately $0.74 per share based on Fairmount's current diluted share count. Besides, they would also get 35% ownership in the combined Company, with Sibelco owning the remaining 65%.
- The transaction would be tax-free for Fairmount's shareholders.
- Sibelco will maintain ownership of Unimin's high-purity quartz business, which mainly serves electronics manufacturers in Asia.
- In fact, on closing, the combined company would list its shares on the New York Stock Exchange while Fairmount would be delisted from the NYSE.
Financing Terms and Conditions
Unimin has secured fully committed financing from Barclays Bank PLC and BNP Paribas to refinance both companies' outstanding debt obligations and certain transaction expenses. Fairmont and Unimin expect that the increased cash flow from the merger would help the combined company pay down its debt promptly.
Management and Leadership Structure
- The combined Company's Board of Directors would comprise 11 members. Of this, 6 would be recommended by Sibelco, including Jean Luc Deleersnyder, Sibelco's Chief Executive Officer, and four would be recommended by Fairmount.
- It is anticipated that Jenniffer Deckard, the current Chief Executive Officer of Fairmount, would serve as the CEO and director of the combined company.
- The executive leadership team would comprise a combination of existing leaders from both Unimin and Fairmount. This way, the combined Company would be able to leverage on the complementary strengths of the quality workforce form both companies.
- However, Sibelco would get the right to nominate the independent Chairman of the combined Company.
Headquarters, yet to Finalized
The companies have not yet finalized the headquarters of the combined entity. It would be determined prior to closing. However, they will maintain their regional offices to capitalize on the significant operating presence, strong partnerships and talented employee bases.
Also, the name of the combined Company will be determined before the closing of the transaction.
Transaction to Close by Mid-2018
The transaction is still subject to the approval of Fairmount's shareholders, certain regulatory approvals, and other customary closing conditions; following which, it is expected to close in mid-2018. In this regard, Fairmount has already entered into a voting agreement with holders of 26% of Fairmount's outstanding common stock, pursuant to which they will vote their shares in favor of the transaction.
Transaction Advisors
Wells Fargo Securities, LLC is acting as the financial advisor to Fairmount while Jones Day is its legal advisor. On the other hand, Morgan Stanley is serving as Sibelco's financial advisor, and Freshfields Bruckhaus Deringer and Hughes Hubbard are serving as its legal advisors.
Stock Performance Snapshot
December 13, 2017 - At Wednesday's closing bell, Fairmount Santrol's stock was marginally down 0.39%, ending the trading session at $5.09.
Volume traded for the day: 6.18 million shares, which was above the 3-month average volume of 5.66 million shares.
Stock performance in the last month – up 9.70%; previous three-month period – up 49.27%; and past six-month period – up 31.52%
After yesterday's close, Fairmount Santrol's market cap was at $1.11 billion.
Price to Earnings (P/E) ratio was at 94.26.
The stock is part of the Basic Materials sector, categorized under the Industrial Metals & Minerals industry. This sector was up 0.3% at the end of the session.
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