121205 bbi presentation - pd ports

8/8/2019 121205 Bbi Presentation - Pd Ports

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OFFER FOR PD PORTS PLC (PDP)

December 2005

Photos Source: PD Ports p lc


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Summary

BBI has made an offer to acquire all of the ordinary shares and

convertible notes in PD Ports plc (PDP), at 148.5 pence plus 1.5p

dividend for the ordinary shares, and 154.1 pence for convertiblebonds which has been unanimously recommended by the PDP Board

BBI has also secured irrevocable undertakings from PDP institutional

shareholders (47.8%) and bondholders (53.3%) that commit 51.9% ofthe issued share capital of PD Ports on a diluted basis.

purchase price represents a 12.6 EV/EBITDA multiple (based on

broker forecasts for FY06). Attractive price when compared to recent

market comparables in the industry

PD Ports generates strong, stable and reliable long term cash flows

with sustainable measured growth opportunities from core operations.

The PDP acquisition meets BBIs key investment criteria.


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About PD Port s

PD Ports is the second largest port in the UK by volume and is listed

on the London Stock Exchange

PD Ports owns the Port of Tees and Hartlepool (Teesport) and acts

as its statutory harbour authority as well as undertaking key

stevedoring activities. PD Ports also operates a series of small ports

and related transport logistics businesses in the UK PD Ports also controls a significant property portfolio of over 900 ha

throughout the UK which encompasses both operational and general

land holdings. Of significant note is the 117 acre Victoria Harbour

development in Hartlepool which has the potential to deliver a steady

boost to cash flow over the course of the next 15 years


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About PD Port s

The PD Ports acquisition will be via take-over offer recommended by

the PDP directors for all issued shares and all issued convertible

bonds

PD Ports shareholders and convertible bond holders have shown their

support for the bid by BBI by providing irrevocable undertakings to

accept the offer BBI has received

47.8% irrevocable undertakings from PDP shareholders; and

53.3% irrevocable undertakings from convertible bond holders With call options over 33.9% of the convertible bonds this equates to

51.9% irrevocable undertakings of the issued share capital of PD Ports

on a diluted basis (assuming conversion of the bonds that BBI has call

rights over).


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Inves tm ent Charac t e ri st i cs

Investment criteria

STRATEGICPD Ports represents essential infrastructure for the Tees Valley region and in particular the multitude ofextensive industrial businesses along the banks of the Tees. The company is located in a strategic

region of the UK in terms of an entry point for trade to and from northern UK and its proximity toindustrial development and the north sea oil fields.

SECURITY HOLDER WEALTHThe acquisition price, earnings and funding structure of PD Ports will contribute positively to BBISecurity Holder wealth on the back of strong, secure, long-life core conservancy and rental incomesupported by a variety of value adding stevedoring and transport logistics activities.

APPROPRIATE RISK/RETURNPD Ports is an asset of top tier quality and condition with proven management and low market andregulatory risk characteristics. The ports business exhibits sound long term contractualarrangements with key customers and has strong barriers to entry to competitors supported by thenaturally deep water of the Tees and the level of customer capital investments at the port. Against

the backdrop of strongly stable underlying returns from conservancy and rental activities, PD Portshas considerable upside potential in terms of the growth of new ports business supported bymiscellaneous property sales to offset future capital expansion and investment.

ABILITY TO OPTIMISE CAPITAL STRUCTUREPD Ports is appropriately leveraged to balance the investment risk profile with the potential tooptimise returns to BBI. BBI sees significant potential to further optimise the capital structure as thecompany grows its revenue base.


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PD Por t s

Business attributes

High revenue certainty: High revenue certainty through

contracted customers or those who use the port because of theirlevel of infrastructure investment along the banks of the Tees.

Low operating risks: Relatively low levels of capital expenditure

required to support current operations and short term growth in

the companys key port and product streams.

Growth prospects: Growth in medium term via growth in traffic

port revenue and creating value from the land bank.

Experienced management team: Quality management team

who have been committed to the business. It is our intention to

retain key management team


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PD Port s Business Ac t iv i t ies

Teesport

PD Teesport is the statutory harbour authority for Teesport.

Located in the north-east of England, it handled 53.7m tonnes inthe year to March 2005. Its principal activities include:

Bulk cargo handling and storage

Operation of two Lo-Lo container terminals at Tees Dock

Operation of a major steel export terminal used by Corus, currently contractedunder a 10 year off-take agreement

Ro-Ro ferry facilities used by inter alia P&O, Renault and General Motors

Has a significant land bank and is continuing to optimise spare

land capacity. Has recently signed an agreement with Wal-Martfor the development of a 20m import terminal, construction of

which is currently underway.


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PD Port Services

provides a range of services including:

Stevedoring ,Warehousing Road haulage, Container handling

Shipping and inspection

On the Humber River it operates Lo-Lo container terminals on

behalf of Associated British Ports (ABP) whilst also providing

various services at the short sea ports of Howden and Keadby.

PD Logistics

offers a wide range of services to a customer base which, to

large degree, is common with Port Services. Traditionally working

with the chemical, automotive and steel sectors, PD Logistics is

looking to increase its exposure to supply chain managementactivities.


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Property

Income from property is generated in one of two principal ways:

Rental income derived from customers under long-term leases atTeesside (PD Ports owns approximately 2,000 acres)

Identification and disposal of non-operating property has historicallygenerated a regular income stream for the Group. Victoria Harbour,a 117 acre brownfield site in Hartlepool, the development of which

has the support of both the Tees Valley Regeneration body andHartlepool Borough Council, is currently awaiting planningpermission. If successful, the development will take place over 15 20 years and it is expected that plots will be released for sale overtime.


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Valuat ion Met r ic

EV / EBITDA

PD Ports (based on BBI offer price)

Actual FY 05 (Year Ending March 2005)

Actual FY05 (Year ending 30 September 05)

Consensus Broker Forecasts FY06 (y/e March 06)

13.4 times

13.2 times

12.6 times

Industry Comparables

P&O

CSX Terminals

Toll Holdings

Patrick Corp

Tauranga (NZ)

Between 16.0 and 16.6 times

15.0 times

Toll trading at 13.5 to 14 times

Patrick trading at > 14 times

Trading at 13.0 to 13.5 times


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121205 bbi presentation - pd ports

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