‘Proyecto de Fusion’ Transaction overview December 2018 Atocongo Plant, Lima
Executive Summary • On November 30 th , UNACEM announced that the Independent Committee of its Board of Directors (“ BoD ”) had approved the merger with Sindicato de Inversiones y Administración S.A. (“SIA”), Inversiones Andino S.A (“IASA”) and Inmobiliaria Pronto S.A (“Pronto”), in which UNACEM will act as the absorbing entity (the “Transaction”) • The Transaction was presented to UNACEM’s Board of Directors by the ‘Grupo de Trabajo ’, conformed by 4 members of the controlling group and the 4 CEO’s of the AFPs 1 , created by approval at a shareholders’ meeting on July 24, 2018, to provide a proposal over SIA and IASA’s services contracts • An Independent Committee was designated by the BoD to analyze the Transaction, and retained Morgan Stanley to provide a Fairness Opinion on the Transaction • UNACEM retained Estudio Miranda & Amado to conduct a legal due diligence on the assets to be contributed in the Transaction • As a result of the Transaction, SIA, IASA and Pronto will be extinguished and their resulting stake in UNACEM will be held by their shareholders as of December 31 st , 2018, Inversiones JRPR S.A (”JRPR”) and Nuevas Inversiones S.A (“NISA”), entities that will hold together a controlling ownership on UNACEM, with 26.55% and 25.25% stake, respectively • The resulting free float of UNACEM will be increased by incorporating minority shareholders of SIA and IASA, totaling 48.20% of UNACEM capital (increased from 31.68% pre transaction) The transaction is subject to the approval of SIA, IASA and Pronto, and UNACEM’s shareholders meetings to be held on December 27 th and 28 th , • 2018, respectively • J.P. Morgan acted as financial advisor to SIA and IASA, and CAPIA acted as financial advisor to the AFPs July 2018 August 2018 November 2018 December 2018 July 24 th , 2018 August 15 th , 2018 November 6 th , 2018 November 29 th , 2018 December 6 th , ‘Grupo de Trabajo ’ is created by ‘ Grupo de Trabajo ’ initiates ‘ Grupo de Trabajo ’ Morgan Stanley 2018 approval at a shareholders’ work on the proposal presented its proposal to presented its Fairness The Board of meeting to provide a proposal the Board of Directors of Opinion indicating the Directors of SIA, over SIA and IASA’s services UNACEM Transaction is ‘fair’ from IASA and Pronto contracts November 7 th , 2018 a financial point of view approved the UNACEM’s Independent November 30 th , 2018 Transaction Committee was The Board of Directors of December 26, 27 designated by the BoD to UNACEM approved the and 28 th , 2018 analyze the Transaction Transaction and called Pronto, SIA, IASA and and retained Morgan for a shareholders’ UNACEM’s Stanley to assess the meeting Shareholders fairness of the proposal Meetings to approve the Transaction 2 Note: 1 AFPs include AFP Integra, Profuturo AFP, Prima AFP and AFP Habitat
Transaction rationale Key objectives of the Transaction ✓ Simplification of UNACEM’s shareholder structure ✓ Increase UNACEM’s EBITDA and Cash Flows , potentially improving its leverage ratios ✓ Consolidation at UNACEM of the knowledge, strategy, experiences, specialization, among other expertise developed, and operations managed, by the absorbed entities ✓ Incorporation of SIA and IASA’s minorities to UNACEM’s float, potentially originating an increase in liquidity (daily trading volume) and faster market reaction to UNACEM’s performance ✓ Elimination of Management Contracts with SIA and IASA and consolidation of related-party outflows to ARPL and Vigiandina UNACEM LTM 3Q18 EBITDA buildup (US$mm) 1 Increase share of public float Current Resulting Management ownership structure ownership structure 1,173 806 contracts would cease to exist Float Controlling Controlling 31.7% Group Group 10.9 4.2 352 51.8% 68.3% Float 48.2% +16.5% Revenues Operating SIA IASA EBITDA expenses mgmt. fee mgmt. fee Controlling Group: Controlling Group: Transaction would also allow UNACEM to capture ARPL and SIA, NISA, IASA, NISA, Inv. JRPR Vigiandina’s EBITDA in its consolidated financial statements Inv. JRPR Note: 1 Foreign Exchange USD/PEN of 3.259 based on the average of the period 3
Overview of corporate structure before the Transaction Current corporate structure Inversiones JRPR 61.9% 60.6% 100.0% NISA B C IASA Inmobiliaria Pronto 58.9% A 18.6% SIA 0.6% 24.3% 43.4% 31.7% Public float A B C SIA IASA Inmobiliaria Pronto • Holding company owned by NISA (58.9%), • Holding company owned by Inversiones JRPR • Holding company fully owned by Inversiones JRPR Inversiones JRPR (18.6%) and other minority (60.6%) and other minority shareholders (39.4%) (100.0%) shareholders (22.5%) In addition to the 24.3% stake in UNACEM, it Owns 100.0% of ARPL, a company that provides • • In addition to the 43.4% stake in UNACEM, it operates a services agreement with UNACEM, technical and engineering services to UNACEM, a • operates a management contract with UNACEM owns a stake in Vigilancia Andina S.A, a stake in stake in Vigilancia Andina S.A, and real estate and owns a minority stake in Skanon Ferrovias Central Andina S.A, and real estate properties, among other assets Investments, UNACEM’s subsidiary, among other properties, among other assets assets 4
Assets to be merged into Unacem in the Transaction SIA, IASA and Pronto would contribute their assets into UNACEM as part of the Transaction Operating assets Real estate assets Others A B C SIA IASA Pronto 1 2 1 3 3 4 Services contract Ferrovias Vigiandina ARPL Vigiandina Management contract with UNACEM with UNACEM (15.0% stake) (55.5% stake) (100.0%) (44.5% stake) 5 7 6 7 6 7 Skanon Investments Inc. Others Real Estate Others Real Estate Others (1.21%) • SIA and IASA’s management contracts with UNACEM – contracts would cease to exist on January 1 st , 2019 1 Ferrovias Central Andina S.A (15.0% stake), an operational company that owns a railway concession in Peru • 2 Vigilancia Andina S.A (100.0% stake), an operational company that provides security services to UNACEM and other companies in Peru • 3 ARPL Tecnologia Industrial S.A (100.0% stake), an operational company that provides technical assistance and engineering consulting services to • 4 UNACEM and its subsidiaries Skanon Investments Inc. (1.21% stake), a holding company that owns a majority interest in Drake Cement, LLC, a cement company in Arizona, • 5 USA, and other related investments. Skanon Investments is a subsidiary and is majority-owned by UNACEM Real Estate assets, direct ownership in the properties and in the subsidiaries that own UNACEM’s headquarter offices, among other properties 6 • 7 Others, cash and outstanding loans to Skanon that will be held by each holding at Transaction closing • 5
Transaction structure New UNACEM’s subsidiaries Overview Corporate structure Post Transaction The Transaction approved by UNACEM’s BoD considers the following • Inv. JRPR two steps that will happen simultaneously: • Merger of SIA, IASA and Pronto (the “Holdings”) into UNACEM 61.85% • Capital increase by contributing various assets from the Holdings to NISA Public float UNACEM SIA, IASA and Pronto ’s shareholders will receive UNACEM shares in 25.25% 26.55% 48.20% • exchange for their respective shares in each of the Holdings • Shares received are attributable to their current stake in UNACEM and the capital increase at UNACEM The exchange ratio agreed considers PEN 2.20 / UNACEM share 2 • 86.3% 93.4% 90.0% 98.9% 50.0% 51.0% 100.0% 100.0% 15.0% UNACEM shares received by the UNACEM shares attributable Preansa Drake / UNACEM Preansa Holdings to the capital increase UNICON CELEPSA Peru / ARPL Vigiandina Ferrovias Skanon Ecuador Chile Colombia % of UNACEM Holding Shares Shares As a result of the Transaction, SIA, IASA and Pronto would extinguish • shares 1 and the resulting shareholders of UNACEM will be: SIA 779,187,892 42.9% 64,876,584 JRPR (26.55%) • NISA (25.25%) • IASA 456,281,363 25.1% 56,302,355 Public Float (48.20%) • • ARPL, Vigiandina and a minority stake in Ferrovias will be absorbed by Pronto 50,445,265 2.8% 50,445,264 UNACEM as new subsidiaries Note: 1 Total UNACEM shares of 1,818,127,611 post capital increase; 2 Share price as of November 6 th , 2018 (date when ‘ Grupo de Trabajo ’ proposal was presented to UNACEM Board of Directors); 3 Considers UNACEM’s share price at PEN 2.20 and a USD/PEN exchange rate of 3.332 6
UNACEM share price performance Market has reacted positively to the Transaction’s announcement Price (PEN) 3.50 3.30 July 24, 2018 Creation of “ Grupo de Trabajo ” 3.10 2.90 November 30, 2018 Announcement of 2.70 Proyecto de Fusion November 6, 2018 2.50 Grupo de Trabajo proposal is presented 2.30 2.10 1.90 1.70 1.50 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Source: Factset as of December 7 2018 7
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