Methanex Company Indicators Definitive Settlement to Purchase OCI International’s Worldwide Methanol Enterprise for $2.05 Billion

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Besides the place in any other case famous, all forex quantities are acknowledged in United States {dollars}.

• Distinctive alternative to accumulate world-scale producing methanol belongings with entry to sturdy North American pure gasoline feedstock
• Aligns with Methanex’s strategic priorities and value-creation technique
• Acquisition anticipated to be instantly accretive to free money stream per share
• OCI to carry a 13 p.c possession curiosity upon closing

VANCOUVER, British Columbia, Sept. 08, 2024 (GLOBE NEWSWIRE) — Methanex Company (“Methanex” or the “Firm”) (TSX:MX) (NASDAQ:MEOH) introduced at the moment that it has entered right into a definitive settlement to accumulate OCI International’s (“OCI”) worldwide methanol enterprise for $2.05 billion. The transaction consists of OCI’s curiosity in two world-scale methanol services in Beaumont, Texas, certainly one of which additionally produces ammonia. The transaction additionally features a low-carbon methanol manufacturing and advertising enterprise and a presently idled methanol facility within the Netherlands.

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“This can be a distinctive alternative to create worth by buying two extremely enticing North American methanol belongings that can additional strengthen our international manufacturing base and we count on will probably be instantly accretive to free money stream per share,” mentioned Wealthy Sumner, President and Chief Government Officer of Methanex. “The Beaumont crops profit from entry to North America’s considerable and favourably-priced provide of pure gasoline feedstock, and are anticipated to extend our international methanol manufacturing by over 20 p.c.”

“We consider the transaction will present vital long-term worth to Methanex shareholders whereas aligning with our strategic targets of {industry} management, operational excellence, and monetary resiliency,” mentioned Mr. Sumner. “From an working perspective, now we have a shared tradition of security and operational excellence, and we count on the OCI group will assist us construct new expertise in ammonia whereas enhancing our capabilities within the evolving enterprise of low carbon methanol manufacturing and advertising.”

Nassef Sawiris, Government Chairman of OCI, added, “We’re happy with the chance to realize a major possession place and are extremely assured in Methanex’s potential to create enduring worth for shareholders. As the worldwide chief dedicated to security and operational excellence, we recognized Methanex because the pure proprietor of OCI Methanol on the outset of our strategic course of, which we initiated within the spring of 2023.”

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Strategic match that enhances Methanex’s asset portfolio

OCI’s methanol enterprise enhances Methanex’s asset portfolio with extremely enticing belongings in a low-risk jurisdiction that has an ample and financial provide of feedstock pure gasoline.

As a part of the transaction, Methanex expects to realize roughly $30 million of annual value synergies from decrease logistics prices and decrease promoting, normal and administrative bills. Methanex anticipates low integration prices due to OCI’s related working mannequin and expects that further worth could be obtained by making use of its international experience and in depth operational expertise to the OCI belongings. Methanex plans to combine key operational practices on the services and can incorporate the OCI belongings into its international risk-based administration processes together with turnaround and capital planning post-closing.

OCI’s ammonia manufacturing, whereas modest in contrast with its methanol manufacturing, supplies Methanex with a low-risk entry into a brand new and synergistic commodity in an adjoining and complementary section to methanol with related feedstock-based benefits. Along with industrial and agricultural makes use of, ammonia has low-carbon various gas capabilities for energy era and as a marine gas and is a income diversification alternative for Methanex.

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Dean Richardson, Senior Vice President, Finance & Chief Monetary Officer of Methanex, mentioned, “We count on the acquisition so as to add incremental annual Adjusted EBITDA of $275 million to our anticipated run-rate Adjusted EBITDA of $850 million at a $350/MT realized methanol worth¹. We stay firmly dedicated to sustaining monetary flexibility and have in place a sturdy financing plan that can help de-levering to our goal vary of two.5 to three.0 occasions debt/Adjusted EBITDA inside roughly 18 months from closing, assuming a mean realized worth of $350/MT. The plan consists of the reimbursement of our $300 million bond as scheduled in December 2024.”

Ahmed El Hoshy, CEO of OCI, mentioned, “That is an excellent strategic match for Methanex. We sit up for working carefully with Methanex’s administration to totally combine the enterprise after closing, and to make sure continuity and profitable stewardship of the enterprise.”

As a part of the transaction, Methanex will purchase the next:

• A methanol facility in Beaumont, Texas with an annual manufacturing capability of 910,000 tonnes of methanol and 340,000 tonnes of ammonia. This plant was restarted in 2011 and since that point the plant has been upgraded with $800 million of capital for full website refurbishment and debottlenecking.
• A 50 p.c curiosity in a second methanol facility additionally in Beaumont, Texas, operated by the three way partnership Natgasoline LLC (“Natgasoline”). The Natgasoline plant was commissioned in 2018 and has an annual capability of 1.7 million tonnes of methanol, of which Methanex’s share shall be 850,000 tonnes.
• OCI HyFuels, which produces low-carbon methanol and sells industry-leading volumes with buying and selling and distribution capabilities for renewable pure gasoline (RNG). With 9 years of expertise within the low-carbon methanol enterprise and with an array of blue-chip clients, it will improve Methanex’s current Low Carbon Options perform with further experience on this growing section.
• A methanol facility in Delfzijl, Netherlands with an annual capability to supply 1 million tonnes of methanol. This facility is just not presently in manufacturing as a result of unfavourable pricing for pure gasoline feedstock.

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Buy worth

Beneath a definitive settlement with OCI, the $2.05 billion buy worth will include $1.15 billion in money, the issuance of 9.9 million frequent shares of Methanex valued at $450 million (primarily based on a $45 per share worth) and the idea of $450 million in debt and leases. The acquisition worth implies a a number of of seven.5 occasions Adjusted EBITDA at a $350/MT realized methanol worth, together with anticipated synergies. The world-scale North American working belongings have been acquired beneath reinvestment economics of brownfield or greenfield capability.

After the transaction Methanex could have roughly 77 million shares excellent, of which OCI will personal roughly 13 p.c. Methanex intends to fund the money consideration of the transaction by way of a mix of money available and new debt issuance. The Firm has obtained a completely dedicated debt financing package deal from Royal Financial institution of Canada to help the transaction.

Subsequent Steps

Closing of the transaction is anticipated within the first half of 2025. The transaction has been accredited by the boards of administrators of each corporations and is topic to receipt of sure regulatory approvals and different closing situations together with TSX approval for the issuance of Methanex shares to OCI.

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The transaction can also be topic to approval by a easy majority of the shareholders of OCI. The biggest shareholder of OCI, has signed an settlement to vote for the transaction.

There’s presently a authorized continuing between OCI and its Natgasoline three way partnership accomplice over sure shareholder rights. The duty of Methanex to buy OCI’s 50% stake in Natgasoline is topic to the decision of this authorized continuing. If it’s not settled inside a sure interval, Methanex has the choice to carve out the acquisition of the Natgasoline three way partnership and shut solely on the rest of the transaction. If Methanex elects to finish the transaction on a carved out foundation, it would retain the fitting to accumulate OCI’s three way partnership curiosity for a specified interval thereafter at its sole choice. Roughly 40% of the gross transaction and working metrics are attributable to Natgasoline. Considerably all of the debt within the whole transaction is attributable to Natgasoline.

Advisors

Methanex’s monetary advisors for the transaction have been Deutsche Financial institution and RBC Capital Markets. McCarthy Tétrault LLP, Baker McKenzie LLP, Loyens & Loeff N.V. and Reed Smith LLP acted as authorized counsel for Methanex. Deutsche Financial institution and RBC Capital Markets supplied equity opinions to Methanex’s Board of Administrators.

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Convention name and webcast

A convention name for buyers and analysts shall be hosted on September 9, 2024 at 6 am PST/ 9am EST. A presentation outlining the transaction and particulars on the way to entry the convention name shall be accessible on the Investor Relations web page of our web site.

About Methanex

Methanex is a Vancouver-based, publicly traded firm and is among the world’s largest suppliers of methanol. Methanex shares are listed for buying and selling on the Toronto Inventory Alternate in Canada beneath the buying and selling image “MX” and on the NASDAQ International Market in america beneath the buying and selling image “MEOH”. Methanex could be visited on-line at www.methanex.com.

Cautionary Statements Concerning Ahead-Trying Data

The knowledge on this press launch accommodates sure forward-looking statements, together with inside the that means of relevant securities legal guidelines in Canada and america. These statements relate to future occasions or our future intentions or efficiency. All statements apart from statements of historic reality could also be forward-looking statements. Ahead-looking statements are sometimes, however not all the time, recognized by way of phrases resembling “anticipate”, “proceed”, “show”, “count on”, “could”, “name for”, “can”, “will”, “consider”, “would” and related expressions and embrace statements referring to, amongst different issues: the anticipated advantages of the transaction, together with advantages associated to anticipated synergies and commodity diversification; anticipated improve and potential upside in our international methanol manufacturing; our debt discount and deleveraging plans; elevated methanol manufacturing and its anticipated impression on our monetary profile; integration prices; anticipated synergies and our potential to realize such synergies following closing of the transaction; integration plans, together with incorporating acquired belongings into our international risk-based administration processes; near-term goal markets; and the anticipated deadline of the transaction.

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Sure materials components or assumptions have been utilized in drawing the conclusions or making the forecasts or projections which can be included in these forward-looking statements, together with future expectations and assumptions regarding the receipt of all regulatory approvals required to finish the transaction; our potential to comprehend the anticipated strategic, monetary and different advantages of the transaction within the timeframe anticipated or in any respect; integration prices, logistics prices and normal and administrative bills related to the transaction; the typical realized worth per metric ton of methanol; our continued entry to export transport channels, the price and provide of pure gasoline feedstock in North America; manufacturing capability ranges of acquired belongings and services and subsequent improve in our methanol manufacturing; the commercial and agricultural makes use of of ammonia; the availability of, demand for and worth of methanol, methanol derivatives, pure gasoline, coal, oil and oil derivatives; our potential to obtain pure gasoline feedstock on commercially acceptable phrases; the supply of dedicated credit score services and different financing; absence of a fabric adverse impression from main pure disasters; absence of a fabric adverse impression from modifications in legal guidelines or rules; and absence of a fabric adverse impression from political instability within the international locations during which we function. Readers are cautioned that the foregoing lists of things are usually not exhaustive.

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Nevertheless, forward-looking statements, by their nature, contain dangers and uncertainties that might trigger precise outcomes to vary materially from these contemplated by the forward-looking statements. The dangers and uncertainties primarily embrace those who impression our potential to finish and generate the anticipated advantages of the transaction and dangers and uncertainties attendant producing and advertising methanol and efficiently finishing up main capital expenditure initiatives in varied jurisdictions, together with dangers and uncertainties associated to the receipt of regulatory approvals; our potential to finish or in any other case notice the anticipated advantages of the transaction inside the anticipated timeframe or in any respect; our potential to efficiently combine the acquired enterprise into our current enterprise and the price and timing of such integration;; modifications in future commodity costs relative to our anticipated forecasts; situations within the methanol and different industries, together with fluctuations within the provide, demand and worth for methanol and its derivatives, together with demand for methanol for power makes use of, the worth of pure gasoline, coal, oil and oil derivatives; our potential to acquire pure gasoline feedstock on commercially acceptable phrases to underpin present operations; future manufacturing progress alternatives; our potential to hold out company initiatives and techniques; actions of opponents, suppliers and monetary establishments; situations inside the pure gasoline supply methods which will forestall supply of our pure gasoline provide necessities; competing demand for pure gasoline, particularly with respect to any home wants for gasoline and electrical energy; actions of governments and governmental authorities, together with, with out limitation, implementation of insurance policies or different measures that might impression the availability of or demand for methanol or its derivatives; modifications in legal guidelines and rules together with the adoption of recent environmental legal guidelines and rules and modifications in how they’re interpreted and enforced; potential to adjust to present and future environmental or different legal guidelines; import or export restrictions, anti-dumping measures, will increase in duties, taxes and authorities royalties and different actions by governments which will adversely have an effect on our operations or current contractual preparations; different dangers recognized in our Second Quarter 2024 MD&A.

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Readers are cautioned that undue reliance shouldn’t be positioned on forward-looking info as precise outcomes could fluctuate materially from the forward-looking info. Methanex doesn’t undertake to replace, right or revise any forward-looking info on account of any new info, future occasions or in any other case, besides as could also be required by relevant legislation.

Footnote 1: Illustrative Adjusted EBITDA capabilities assumptions (non-GAAP measures)

Notice that Adjusted EBITDA is a forward-looking non-GAAP measure that does not have any standardized that means prescribed by GAAP and subsequently is unlikely to be corresponding to related measures offered by different corporations.

For an outline and historic Adjusted EBITDA for Methanex Company, refer to Further Data – Non-GAAP Measures within the Firm’s 2023 Annual MD&A and Second Quarter 2024 MD&A.

Adjusted EBITDA displays Methanex’s proportionate possession curiosity. Methanex manufacturing relies on crops working at full capability aside from Chile (1.25 mmt), New Zealand (1 mmt) and in Trinidad, Titan working at full charges and Atlas idled. We goal to hedge ~70% of our current North American pure gasoline necessities. The unhedged portion of our North American pure gasoline necessities are bought beneath contracts at spot costs. Estimates assume Henry Hub pure gasoline worth of ~$3.50/mmbtu primarily based on ahead curve. Gasoline contracts exterior of North America are methanol sharing contracts with a base worth for pure gasoline plus sharing as methanol costs improve.

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Adjusted EBITDA displays OCI’s proportionate possession curiosity. OCI’s manufacturing relies on the Beaumont and Natgasoline crops working at 90% working charges. This consists of ammonia manufacturing from Beaumont. Pure gasoline prices are assumed to be 100% unhedged and assume Henry Hub pure gasoline worth of ~$3.50/mmbtu primarily based on the ahead curve. 

Run-rate Adjusted EBITDA figures embrace ~$30M of value synergies from logistics optimization and SG&A enhancements together with from the anticipated optimization of methanol storage capability.

For additional info, contact:

Methanex Investor Inquiries
Sarah Herriott
Director, Investor Relations
Methanex Company
604-661-2600 or Toll Free: 1-800-661-8851
www.methanex.com

Methanex Media Inquiries
Jim Fitzpatrick
Director, Communications
Methanex Company
604-895-5359

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