Amsterdam, 14 June 2019 (Regulated Information) — AMG Advanced Metallurgical Group N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”) has launched the marketing of $300 million of senior unsecured 30-year tax-exempt bonds to expand its resid spent catalyst recycling capacity by building a new, greenfield plant in the operational vicinity of its current resid spent catalyst processing plant in Cambridge, Ohio. The Ohio Air Quality Development Authority has approved the issuance of the bonds.
Moody’s Investors Service has affirmed its B1 corporate family rating for AMG with a stable outlook, upgraded its secured rating from B1 to Ba3 and assigned a rating of B3 to the unsecured tax-exempt bonds.
S&P Global Ratings, a division of The McGraw Hill Companies, Inc. has affirmed its BB-issuer credit rating for AMG with a stable outlook, upgraded its secured rating from BB- to BB and assigned a rating of B with a stable outlook to the unsecured tax-exempt bonds.
As part of the Preliminary Official Statement associated with the issuance of the tax-exempt bonds, which was published today, AMG has included a recent events section highlighting new developments post the publication of our first quarter results.
These recent events are as follows:
AMG is currently in the process of executing a buyback program for the purposes of returning cash to shareholders and funding future share-based employee compensation programs. The program will remain open until October 9, 2019. ABN AMRO Bank N.V. as purchase agent is managing the process through purchases during open and closed periods.
| Share Repurchase Program (as of June 7, 2019) | |
| Overall progress Share Repurchase Program: | |
| Total Repurchase Amount in Shares | 2,915,630 |
| Cumulative Repurchase Amount | EUR 44,976,164 |
| Cumulative Quantity Repurchased | 1,813,317 |
| Cumulative Average Repurchase Price | EUR 24.80 |
| Start Date | April 9, 2019 |
| End Date | October 9, 2019 |
| Percentage of program completed as at June 7, 2019 | 62.19% |
On May 1, 2019, AMG’s shareholders approved the payment of a dividend of €0.50 per ordinary share over the financial year 2018.
In terms of liquidity, AMG’s balance sheet is strong, and the Company is in full compliance with all debt covenants as of March 31st, 2019.
Though the Critical Materials business continues to experience strong demand for its products, it is experiencing very high price volatility, with spot prices for vanadium, chrome, silicon, tantalum and spodumene down significantly versus year end 2018. In light of this and similar weaknesses in other materials, in conjunction with the first quarter 2019 press release, the Company updated the adjusted EBITDA target for 2019 to be $150 million and announced a target adjusted EBITDA of $200 million for 2020. Subsequent to this announcement, market conditions and index prices have continued to weaken in the second quarter of 2019 for many of the business’s materials.
As noted above, AMG had a $9.9 million exceptional non-cash expense related to a net realizable value adjustment to the vanadium inventory cost position on March 31, 2019. As the index prices for vanadium continued to decline in the second quarter of 2019, an additional non-cash net realizable value adjustment of approximately $40 million has been recorded using the index price as of May 31, 2019.
In AMG Brazil, the lithium concentrate plant startup is proceeding well. In terms of future lithium projects, the Company has decided to shift attention to increasing capacity at the Spodumene I plant. This project is known as Spodumene I+, and the Company expects it to add an incremental thirty thousand tons of capacity. The significant advantage of Spodumene I+ over Spodumene II is that Spodumene I+ can be done within the infrastructure of Spodumene I and therefore implies substantially lower capital expenditures and a higher return on capital employed compared to Spodumene II. As a result of this change in strategic plans, AMG recorded non-cash impairments of approximately $6 million associated with capitalized costs for the engineering of Spodumene II in the second quarter 2019.
The AMG Technologies segment continues to grow given increasing market share for low pressure turbine blades destined for the LEAP-X program and focus on titanium aluminide powders for additive manufacturing. Given the growth opportunities across the technology offerings of AMG Engineering and the product offerings of AMG Titanium & Coatings into the aerospace engine value chain and given the business opportunities embedded in opening up the Build-Own-Operate business model, successfully demonstrated by Heat Treatment Services for applications in the metallurgical upgrading value chain, AMG is presently completing a long-term business plan that lays the groundwork for the option to organize AMG Technologies as a separately listed company.
On May 1, 2019, Dr. Heinz Schimmelbusch, CEO and Chairman of the Management Board, presented a comprehensive update on the Company’s strategic growth projects, including guidance on AMG’s long-term financial goals. Based on the growth opportunities that exist throughout AMG’s portfolio, including AMG Vanadium’s spent catalyst recycling expansion in Cambridge, Ohio, AMG Mineração’s Lithium project in Brazil and the creation of AMG’s new segment, AMG Technologies, AMG expects to deliver an adjusted EBITDA level of $350 million, or more, in 5 years, or less.
On June 10, 2019, AMG’s Supervisory Board announced that it has authorized the Management Board to explore a separate public listing of AMG Technologies. As previously announced, AMG Technologies was formed on January 1, 2019 by combining AMG Titanium Alloys and Coatings and AMG Engineering.
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This press release contains regulated information as defined in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
About AMG Vanadium LLC
AMG Vanadium LLC is a wholly-owned subsidiary of AMG Advanced Metallurgical Group N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”), a global leader in the production of highly engineered specialty metal products and advanced vacuum furnace systems. Located in Cambridge, Ohio, AMG Vanadium specializes in the environmentally beneficial conversion of oil refinery and power plant waste products into specialty metals used by global steel producers in automotive, energy transmission and infrastructure applications. By using materials which would otherwise be discarded as waste, AMG Vanadium encourages environmental stewardship, energy conservation and resource recovery, making it the environmental leader in this global industry. AMG Vanadium is the North American ferrovanadium market share leader and has two primary product lines: FEROVAN®, its ferrovanadium alloy used in the production of steel to improve its strength, and FeNiMoly® which is a valuable additive utilized in the production of stainless and carbon steels.