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August 10, 2016
Westlake Chemical Corporation Jefferies 2016 Industrials Conference
The Axiall Acquisition Creates A Diverse, Vertically-Integrated Chemicals Leader
2
Combination with Axiall creates a North American Olefins and Vinyls leader
− #1 North American LDPE capacity
− #2 North American PVC capacity
− #3 North American Chlor-Alkali capacity
Consistent with Westlake’s vertical integration strategy The Axiall acquisition:
− Combination expected to enhance margin stability
− Better positioned to capture value throughout the chain and earnings cycle
− Further integration into PVC building products provides additional operational certainty and growth opportunities
Diverse geographic and product positions
Expanded manufacturing presence expected to enhance future opportunities and global growth potential
Expected annual cost reduction of over $100 million as announced by Axiall on a stand alone basis
Expected annual cost synergies of an additional $100 million from the combination with Axiall
Transaction expected to be accretive in the first year following close
Source: IHS Chemical
3
Structure and Consideration
• $33.00 in cash per Axiall share
9% premium over 52-week average before January 28, 2016
18% discount to 52-week high for same period(a)
• Represents an enterprise value of approximately $3.8 billion including the assumption of certain Axiall liabilities
6.1x Axiall Cycle Average Adjusted EBITDA including expected synergies(b)(c)
Financing
• Westlake to assume approximately $1.4 billion of Axiall debt
• No financing contingency with fully committed bridge facility of approximately $1.8 billion in place
• Westlake committed to maintaining investment grade credit ratings
Conditions Expected to
Closing
• No material regulatory concerns anticipated (HSR and Canadian Antitrust approval required)
• Axiall shareholder vote required
• Transaction expected to close by Q4 2016
(a) Based on intraday high (b) Cycle Average Adjusted EBITDA of approximately $523m, estimated using average Adjusted EBITDA over 2010-2015 based on publicly available
disclosure (c) Multiple reflects $100m in anticipated annual synergies Source: Company SEC filings, FactSet
Axiall Acquisition Transaction Overview
North American Chlorovinyls Leader with Enhanced Scale
4
0
500
1,000
1,500
2,000
2,500
3,000
Shintech Combined Oxy FPC Axiall Mexichem Westlake
kMT North
American PVC
capacity
North American
Chlor-Alkali
capacity 0
1,000
2,000
3,000
4,000
5,000
6,000
Olin Oxy Combined Axiall Shintech FPC Westlake
kMT
Ethylene 3.6B lbs
Highly Integrated Chain in the U.S. Enhances Margin Stability
5
Ethylene Expansion: ~100MM lbs
Polyethylene 2.6B lbs
Styrene 570MM lbs
Chlorine 6.0B lbs
Expansion
Olefins
Vinyls
Vinyls
PVC 4.8B lbs
Building Products 1.8B lbs
All ethane feedstock capability
Chlorinated Products
Chlorinated Products 4.7B lbs
Key:
• Additional ethylene plant expansion in Calvert City in 2017 means further vinyls integration and lower costs
• Westlake, through Axiall’s Lotte JV, provides potential further ethylene integration
Additional Ethylene via JV with Lotte
~220MM to 1.1B lbs
Source: IHS Chemical, Company SEC filings, Westlake Management
Expands Global Geographic Footprint
High quality PVC resin and film products in a growth region
6
The Axiall acquisition gives Westlake a global PVC presence with facilities in North America, Europe and Asia
Highly integrated, low cost production
Global leader in specialty PVC
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
26,000
28,000
30,000
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Capacity (MM lbs.)
Vinyls Olefins
Company Begins Operation in Lake Charles
Acquired VCM in Calvert
• Started Petro 1 • Acquired PVC • Plant
Acquired Geismar VCM/PVC Plant
Acquired 1 Pipe Plant
• Acquired 3 Pipe Plants
• Calgary Window Plant
• Start Suzhou • China Film
Plant
Increased LDPE By 500 MM/lbs
• Acquired CAO • Started Petro 2
Started Poly 3
Started Suzhou PVC Plant
Acquired NY Windows Plant
• Started Styrene • Acquired 3 Pipe Plants
IPO
• 20th Anniversary • Acquired
Longview
7
Acquired Vinnolit, Calvert City Ethylene / PVC Expansion
• Acquired Certain Teed,
• Petro 2 Ethylene & Geismar Chlor Alkali Expansion
Note: Axiall capacity includes PVC and Chlorine based on IHS Chemical North American capacity Source: IHS Chemical
• Acquiring Axiall,
• Petro 1 Ethylene Expansion
Strong Value Creation and Profitable Growth
81nidZpGqzkSDMpD
Combination Expected to Produce Robust Financial Results and Generate Strong Synergies
8
Note: Combined financials exclude pro forma adjustments 1) See page 23 2) Includes only Olefins and Vinyls segment EBITDA, does not include any EBITDA at the corporate level 3) Axiall’s EBITDA has been adjusted for costs relating to: restructuring, divestitures, integration, debt refinancing , legal & settlement claims, amortization of intangible
assets, loss on sale of discontinued operations and other fees
WLK(1) AXLL Combination
Net Sales $4,236 $3,183 $7,419
Adjusted EBITDA(3) $1,095 $268 $1,363
OUR MISSION • profitable growth … • in businesses we understand… • globally in areas we can gain an edge… • in a disciplined and opportunistic manner
Olefins LTM 2Q 2016
Combination EBITDA(2) Vinyls
$745 Combined $649
53% % of Total 47%
(LTM 2Q 2016 in millions)
Pictures: Raumedic, Benecke
World Ethane
Ethane
Other NGL's
NGL Feedstock Flexibility & Infrastructure
Well positioned to take advantage of ethane and other NGL’s: • The shale oil & gas revolution has triggered an increase in infrastructure
build over the last several years • The continuing NGL’s flowing from these basins will drive further pipeline
and infrastructure expansion through 2018 and beyond. • Westlake ethylene plants are fully capable to use ethane and have some
NGL flexibility Lake Charles ethylene plants are able to access ethane in basins
and shale plays from Eagle Ford, Permian, Rockies, Marcellus and Utica
Calvert City ethylene plant is now receiving ethane from the Marcellus and Utica basins
Westlake’s European business (Vinnolit) purchases ethylene which is naphtha based and provides further feedstock diversification 9
Source: IHS Chemical
8% 9%
70%
13%
Ethane Propane Naphtha Other
Westlake’s North American Ethylene Feedslate Capability
Western Europe Ethylene Industry Feedslate
Westlake
100% Ethane Capable
Ethane Non-Ethane Feed
World Ethylene Westlake
4.5 ¢
6.7 ¢
7.8 ¢
9.4 ¢
0
1
2
3
4
5
6
7
8
9
10
LDPE, 58%
LLDPE, 42%
Advantaged Polyethylene Product Mix
10
LDPE Is More Profitable Average Margin Advantage of LDPE vs.
Other PE Grades LDPE 23%
LLDPE 31%
HDPE 46%
2015 Global Industry Demand (% share)
2015 Total Demand: 195 billion pounds Source: IHS Chemical
Westlake Capacity (% share)
Total Capacity: 2.6 billion pounds 2001 – 2015 Average 2011 – 2015 Average
LDPE
vs.
LLD
PE
LDPE
vs.
HD
PE
LDPE
vs.
HD
PE
LDPE
vs.
LLD
PE
¢
Source: IHS Chemical
0% 20% 40% 60% 80%
Chevron Phillips
Dow
ExxonMobil
LyondellBasell
Westlake
Advantaged Product Mix Westlake’s Unique LDPE Focus
11
Source: IHS Chemical
LDPE Capacity as a Percentage of Total Company PE Capacity
Westlake has one of the highest
LDPE product mix percentages in North America
Aver
age
Annu
al L
DPE
Cap
aciti
es (M
M lb
s)
Total Annual North American LDPE Capacity by Company
Source: IHS Chemical
Westlake is the largest producer of LDPE in the Americas
1,000
1,200
1,400
1,600
Westlake ExxonMobil Dow LyondellBasell
Industry Global Polyethylene Growth Focused on LLDPE and HDPE, not on LDPE
12
World Polyethylene Capacity Growth by Product
Westlake is focused on LDPE, a product which: • New additions intended to primarily serve Asian & European markets • Global polyethylene demand grows between 1.0x to 1.5x GDP • LDPE capacity additions are almost all tubular Sources: IHS Chemical,
OECD December 2015
43%
50%
7%
Chlor Alkali
Ethylene
PVC Resin
52%39%
9%
Chlor Alkali
Ethylene
PVC Resin
Low Cost Producer of PVC Due to High Integration Positive Industry Fundamentals
• Majority of margin captured in chlor-alkali and ethylene
• Most producers are integrated into chlor-alkali, not ethylene • In North America, only Westlake in the USA and Formosa
are integrated into both • Integration has historically allowed Westlake to operate its
chlorovinyls plants at higher operating rates than US industry average and enjoy strong margins
• Through backward integration into chlor-alkali (shale gas based power) and ethylene (shale gas based ethane), Westlake is one of the lowest cost producers globally
• Able to export cost competitive PVC, minimizing exposure to domestic housing cycle
Overview of the Vinyls Chain Typical Vinyls Industry Margin Distribution Over the Last Cycle
Source: IHS Chemical
Polyvinyl Chloride (PVC)
Vinyl Chloride Monomer
(VCM)
Ethylene Dichloride
(EDC)
Chlorine
Ethylene
Chlor-Alkali
Caustic Soda
PVC Building
Products)
Merchant Sales
Chlorinated Products
13
Vinyls Industry Margin Distribution: 2010 - 2015
Source: IHS Chemical
Westlake is the Global Leader in Specialty PVC
14
Westlake / Vinnolit is a leading specialty PVC producer
2015 Specialty PVC global capacity: ~3,700 KMT
Source: IHS Chemical
Westlake’s acquisition of Vinnolit provides: • Specialty PVC which enhances Westlake’s product suite • Better margins and reduced volatility • Improved distributions, especially to emerging markets
0
100
200
300
400
500
600
WLK/ Vinnolit(Germany /
UK)
Mexichem(Mexico /
United States/ Germany)
Formosa(Taiwan /
United States/ China)
Inovyn(EU)
Tianjin Bohai(China)
Shenyang(China)
Kaneka(Japan)
Kem One(EU)
SCAC(China)
LG Chemical(Korea /China)
Cap
acity
(km
t)
Growing Global PVC Demand Supports Exports
15
2000 – 2015 Global Demand CAGR = 4.2% 2016 – 2020 Global Demand CAGR = 3.6%
• Global growth in PVC demand has reverted to pre-recession levels • Global growth in PVC demand and advantaged feedstocks in PVC production supports
North American production • Producers with a high level of integration benefit with EBITDA margins over the cycle
Source: IHS Chemical
0%
10%
20%
30%
40%
50%
60%
-
10,000
20,000
30,000
40,000
50,000
60,00020
00
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Nor
th A
mer
ica
PVC
Expo
rts
(as
% o
f To
tal N
orth
Am
eric
a Pr
oduc
tion
)
Glo
bal P
VC D
eman
d(t
hous
and
Met
ric
Tons
)
Global PVC Demand N.A. PVC Exports
Financially Disciplined
• Disciplined Investment Culture • Strong Balance Sheet • Higher Margin Polyethylene and
PVC Products • C-Corp (WLK) and traditional
MLP (WLKP) provide opportunity for maximizing value
16
Strategic & Efficient Investment of Capital
17
Strategic Investment Drives Integration and Specialty Focus
• Highly Integrated Chain Enhances Profit Stability • Recent Large Capital Program Nearly Complete
Ethylene Debottlenecks: 2013, 2014, 2016, 2017
New Geismar Chlor Alkali Facility 2013
Ethane Feedstock Conversion 2014
Recent Strategic Investment and Capital Projects Totaling Approximately $6.0 Billion
PVC Expansion 2014
Acquired PVC Specialty Products Business 2013 Acquired Vinnolit – Specialty PVC 2014
Vinyls Olefins
Axiall Acquisition 2016*
*date based on expected close
Higher Cycle Average Margins Focus on “Bottom Line”
18
Higher margins and returns attributable to: - Focused Growth - Chain Integration - Asset Quality - Product Mix - Operating Rate Advantage - Feedstock
2005 – 2015
Source: Bloomberg *Peer average includes: EMN,
AXLL, HUN, OLN, LYB, DOW
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Return on Assets Return on Capital Employed EBITDA Margin
Westlake Peer Average*
Strong Financial Profile
19
• Strong financial profile and significant cash generation from combined company with the benefit of synergies
• Westlake committed to investment grade credit ratings and continued conservative financial policy
• Axiall transaction also supported by Westlake’s large cash balance position and unlevered balance sheet
• Axiall transaction expected to be accretive in the first year following close
Strategic Investment Drives EBITDA Growth
20
2013 $1,118M EBITDA
Future EBITDA
• Timely investments to integrate the full value chain drive EBITDA • PVC acquisitions provides profitable growth
2013 Added Ethylene Capacity
2013 Added Chlor-Alkali Capacity & Acquired Specialty PVC Products
2014 Added PVC Capacity
2014 Added Ethylene Capacity
2014 Added Vinnolit Specialty PVC Business
2016 Added Ethylene Capacity
Vinyls Olefins
2016 Acquiring Axiall
2017 Adding Ethylene Capacity
Westlake Chemical Corporation NYSE: WLK
Public Shareholders
Westlake Chemical Partners LP
NYSE: WLKP
WLK Assets
Map of OpCo Operations
• Lake Charles Complex (PE, Styrene)
• Calvert City Complex (Chlor-Alkali, PVC)
• Longview Complex (PE) • Geismar Facility (Chlor-Alkali, PVC) • Building Products Plants (PVC) • Vinnolit Holdings (Chlor-Alkali,
PVC) 21
Traditional MLP C-Corp
Wholly Owned Subsidiaries
Public Unit Holders
OpCo Assets
• Lake Charles Petro 1 & 2 • Calvert City Olefins • Longview Pipeline
48% Interest 86.7% Interest
Four levers of distributable cash flow growth for WLKP
• Organic growth opportunities • Periodic drop downs • Acquisition opportunities, either as WLKP or jointly with
WLK • Extend ethylene contract and negotiate higher ethylene
margins
Westlake Chemical OpCo LP
100% Interest
13.3% Interest
Westlake Partners Is Growing Distributions Through Organic Growth To Fuel Low Double Digit Growth Contract structure with Westlake Chemical provides Westlake Partners with the means to make consistent growth in distributions since IPO.
22
Appendix
Reconciliation of Westlake EBITDA to Net Income (Loss) and to Cash Flow from Operating Activities (in $ thousands)
23
Note 1 from page 8: Non-GAAP Financial Measures This presentation includes the non-GAAP measure EBITDA. A reconciliation to net income and to cash flow from operating activities is included above.
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 LTM 2Q 2016
Adjusted EBITDA 411,183$ 280,893$ 87,861$ 236,909$ 511,567$ 583,821$ 779,841$ 1,118,062$ 1,329,756$ 1,243,854$ 1,095,069$ Debt Retirement Cost (25,853) - - - - - (7,082) - - - -
EBITDA 385,330 280,893 87,861 236,909 511,567 583,821 772,759 1,118,062 1,329,756 1,243,854 1,095,069
Less:Income Tax (Provision) Benefit (87,990) (44,228) 28,479 (25,758) (121,567) (142,466) (199,614) (331,747) (398,902) (298,396) (257,489) Interest Expense (16,519) (18,422) (33,957) (34,957) (39,875) (50,992) (43,049) (18,082) (37,352) (34,656) (28,708) Depreciation & Amortization (86,262) (103,514) (111,926) (123,199) (128,732) (131,397) (144,542) (157,808) (208,486) (245,757) (259,739)
Non Controlling Interest - - - - - - - - (6,493) (19,035) (20,308)
Net Income (Loss) 194,559 114,729 (29,543) 52,995 221,393 258,966 385,555 610,425 678,524 646,010 528,825
Non Controlling Interest - - - - - - - - 6,493 19,035 20,308 Changes in operating assets & liabilities 28,773 (57,849) 229,511 151,320 47,412 85,855 232,707 48,572 288,392 374,007 324,554 Deferred income taxes 13,852 5,286 (13,879) 31,207 14,153 14,114 5,793 93,732 58,967 39,784 139,686
Cash flow from operating activities 237,184 62,166 186,089 235,522 282,958 358,935 624,054 752,729 1,032,376 1,078,836 1,013,373
Olefins EBITDA 212,605 220,666 38,090 260,493 546,553 548,994 654,568 943,597 1,126,172 862,777 745,064 Vinyls EBITDA 192,526 65,644 51,540 (17,124) (19,968) 48,083 130,977 207,197 247,086 397,537 381,211 Corporate EBITDA (19,801) (5,417) (1,769) (6,460) (15,018) (13,256) (12,786) (32,732) (43,502) (16,460) (31,206) Westlake Adjusted EBITDA 385,330 280,893 87,861 236,909 511,567 583,821 772,759 1,118,062 1,329,756 1,243,854 1,095,069
Forward Looking Statements Part 1 This communication contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding Westlake Chemical Corporation’s (“Westlake”) proposed transaction to acquire Axiall Corporation (“Axiall”) (including financing of the proposed transaction and the benefits, results, effects and timing thereof), statements regarding Westlake’s (and Westlake’s and Axiall’s combined) expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, estimated synergies from the proposed transaction and statements containing the use of forward looking words, such as “may,” “will,” “could,” “would,” “should,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast,” “approximate,” “intend,” “upside,” and the like, or the use of future tense. Statements contained herein concerning the business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends or other financial items, and product or services line growth of Westlake (and the combined businesses of Westlake and Axiall), together with other statements that are not historical facts, are forward-looking statements that are estimates reflecting the best judgment of Westlake based upon currently available information. Statements concerning current conditions may also be forward-looking if they imply a continuation of current conditions. Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from Westlake’s expectations as a result of a variety of factors, including, without limitation, those discussed below. Such forward-looking statements are based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which Westlake is unable to predict or control, that may cause Westlake’s actual results, performance or plans to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements. These statements involve risks, uncertainties and other factors discussed below and detailed from time to time in Westlake’s filings with the U.S. Securities and Exchange Commission (the “SEC”).
(continued on page 25)
24
Forward Looking Statements Part 2 (continued from page 24)
Risks and uncertainties related to the proposed business combination transaction include, but are not limited to: (i) the ultimate outcome of the proposed transaction between Westlake and Axiall, (ii) the ultimate outcome and results of integrating the operations of Westlake and Axiall if a transaction is consummated, (iii) the ability to obtain regulatory approvals and meet other closing conditions to the proposed transaction, including any necessary stockholder approvals, (iv) potential adverse reactions or changes to business relationships resulting from the announcement, pendency or completion of the proposed transaction, (v) competitive responses to the announcement or completion of the proposed transaction, costs and difficulties related to the integration of Axiall’s businesses and operations with Westlake’s businesses and operations, (vi) the inability to obtain, or delays in obtaining, cost savings and synergies from the proposed transaction, (vii) uncertainties as to whether the completion of the proposed transaction will have the accretive effect on Westlake’s earnings or cash flows that are expected, (viii) unexpected costs, liabilities, charges or expenses resulting from the proposed transaction, (ix) litigation relating to the proposed transaction, (x) the inability to retain key personnel, (xi) potential adverse effects on Westlake’s ability to operate Westlake’s business due to the increase in Westlake’s overall debt level contemplated by the proposed transaction, (xii) potential diminished productivity due to the impact of the potential transaction on Westlake’s and/or Axiall’s current and prospective employees, key management, customers, suppliers and business partner and (xiii) any changes in general economic and/or industry-specific conditions. In addition to the factors set forth above, other factors that may affect Westlake’s plans, results or stock price are set forth in Westlake’s Annual Report on Form 10-K and reports on Forms 10-Q and 8-K. Many of these factors are beyond Westlake’s control. Westlake cautions investors that any forward looking statements made by Westlake are not guarantees of future performance. Except as may be required by law, Westlake does not intend, and undertakes no obligation, to publish revised forward looking statements to reflect events or circumstances after the date of this communication or to reflect the occurrence of unanticipated events
25
Investor Relations Contact Steve Bender
Sr. Vice President & Chief Financial Officer Westlake Chemical Corporation
2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056
713-960-9111
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