EX-99.2 4 d800587dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

On November 1, 2024, pursuant to the previously announced Purchase and Sale Agreement, dated September 1, 2023 (the “Purchase Agreement”), by and among Terphane LLC (“Terphane LLC”), Terphane Limitada (“Limitada” and together with Terphane LLC, the “Companies” or “Terphane”), Tredegar Film Products (Latin America), Inc. (“LatAm”), Terphane Acquisition Corp. II (“Tac II”), TAC Holdings, LLC (“TAC”), Tredegar Investments LLC (“Investments” and together with LatAm, Tac II and TAC, the “Sellers”), and Tredegar Corporation (“Tredegar”), in its capacity as representative of the Sellers and for the purposes of guaranteeing Sellers’ payment and performance obligations under the Purchase Agreement, Packfilm US, LLC (“Packfilm”), Film Trading Importaçãcao e Representaçãcao Ltda. (“Film Trading” and together with Packfilm, the “Buyers”) and Oben Holding Group S.A.C. (“Oben”), in its capacity as representative of the Buyers and for the purposes of guaranteeing Buyers’ payment and performance obligations under the Purchase Agreement, the Sellers completed the sale to the Buyers of 100% of the issued and outstanding equity interests of the Companies (the “Terphane Divestiture”).

On November 1, 2024 (“Closing Date”), Tredegar completed the sale of Terphane to Oben. At closing, Tredegar received $60 million in cash, which is net of Terphane debt assumed by Oben of $20 million and Terphane cash retained by Oben of $2 million. Accordingly, on a cash-free and debt-free basis, the enterprise value of the Terphane Divestiture transaction at closing for Tredegar was $78 million. Tredegar anticipates receiving an additional $7 million in cash following the release of certain escrow funds within 120 days of closing. The cash proceeds received by Tredegar at closing are after deducting projected Brazil withholding taxes, net working capital adjustments, escrow funds, U.S. capital gains taxes and transaction expenses. The total estimated proceeds from the Terphane Divestiture are required to be used to pay down the outstanding borrowings under Tredegar’s senior secured asset-based revolving credit facility (the “ABL Facility”).

The following unaudited pro forma condensed consolidated financial information has been derived from Tredegar’s historical consolidated financial statements, which were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The unaudited pro forma condensed consolidated balance sheet as of June 30, 2024, reflects Tredegar’s financial position as if the Terphane Divestiture had occurred on that date. The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2024, and for each of the years ended December 31, 2023, 2022, and 2021 reflect Tredegar’s operating results as if the Terphane Divestiture had occurred as of January 1, 2021. In addition, the unaudited pro forma condensed consolidated balance sheet and condensed consolidated statements of operations reflect certain adjustments, as described herein, that are incremental to those related to the Terphane Divestiture, as if they occurred on June 30, 2024 and January 1, 2021, respectively.

The Companies sold in the Terphane Divestiture comprise Tredegar’s Flexible Packaging Films business, which is currently reported by Tredegar as a separate reportable business segment. In Tredegar’s future public filings, the historical financial results of the Flexible Packaging Films business will be reflected in Tredegar’s consolidated financial statements as discontinued operations under GAAP for all periods.

The unaudited pro forma condensed consolidated financial statements and the accompanying notes should be read in conjunction with:

 

   

Tredegar’s audited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in its Annual Report on Form 10-K for the year ended December 31, 2023; and

 

   

Tredegar’s unaudited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024.

The unaudited pro forma condensed consolidated financial information was prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed consolidated financial information was prepared for illustrative and informational purposes only and does not necessarily reflect what Tredegar’s results of operations or financial position would have been had the Terphane Divestiture occurred on the dates indicated. The unaudited pro forma condensed consolidated financial information has been prepared based upon the best information available to Tredegar’s management and is subject to the assumptions, estimates and related adjustments described below and in the accompanying notes to the unaudited pro forma condensed consolidated financial information. In addition, the unaudited pro forma condensed consolidated financial information is not necessarily indicative of Tredegar’s future operating results or financial position at any future date. Tredegar’s actual financial position and results of operations may materially differ from the pro forma amounts reflected herein due to a variety of factors. The Terphane Divestiture column removes the assets, liabilities and results of operations and also gives effect to adjustments to reflect the net cash proceeds from Oben. Management believes these assumptions and adjustments are reasonable, given the information available at the filing date.


Tredegar Corporate and Subsidiaries

Pro Forma Condensed Consolidated Balance Sheet

(Unaudited)

 

 

     June 30, 2024  

(in thousands)

   Historical
Tredegar
    Less: Terphane
Divestiture
Note 1
    Note   Use of
Proceeds
    Note   Other
Transaction
Adjustments
    Note   Pro Forma
Tredegar
 

Assets

                

Current assets:

                

Cash and cash equivalents

   $ 3,510     $ 56,694     [2](i)   $ (59,565   [3]   $ 4,789     [5]   $ 5,428  

Restricted cash

     5,159       (370       —          (4,789   [5]     —   

Accounts and other receivables, net

     83,895       (14,159       —          —          69,736  

Income taxes recoverable

     789       —      [2](iv)     —          —          789  

Inventories

     89,242       (32,895       —          —          56,347  

Prepaid expenses and other

     8,170       (1,124       —          —          7,046  
  

 

 

   

 

 

     

 

 

     

 

 

     

 

 

 

Total current assets

     190,765       8,146         (59,565       —          139,346  

Property, plant and equipment, at cost

     538,181       (41,594       —          —          496,587  

Less: accumulated depreciation

     (366,336     12,809         —          —          (353,527
  

 

 

   

 

 

     

 

 

     

 

 

     

 

 

 

Net property, plant and equipment

     171,845       (28,785       —          —          143,060  

Right-of-use leased assets

     16,209       (557       —          —          15,652  

Identifiable intangible assets, net

     8,811       (606       —          —          8,205  

Goodwill

     35,717       —          —          —          35,717  

Deferred income taxes

     23,600       (2,369   [2](iii)     —          7,017     [2](iii)     28,248  

Other assets

     3,465       (155       —          —          3,310  
  

 

 

   

 

 

     

 

 

     

 

 

     

 

 

 

Total assets

   $ 450,412     $ (24,326     $ (59,565     $ 7,017       $ 373,538  
  

 

 

   

 

 

     

 

 

     

 

 

     

 

 

 

Liabilities and Shareholders’ Equity

                

Current liabilities:

                

Accounts payable

   $ 93,006     $ (24,254     $ —        $ —        $ 68,752  

Accrued expenses

     27,015       (6,925       —          —          20,090  

Lease liability, short-term

     2,877       (164       —          —          2,713  

ABL revolving facility (matures on June 30, 2026)

     122,000       —          (59,565   [3]     (62,435   [5]     —   

Income taxes payable

     257       (205   [2](iv)     —          —          52  
  

 

 

   

 

 

     

 

 

     

 

 

     

 

 

 

Total current liabilities

     245,155       (31,548       (59,565       (62,435       91,607  

Lease liability, long-term

     14,610       (399       —          —          14,211  

Long-term debt

     20,000       (20,000       —          62,435     [5]     62,435  

Pension and other postretirement benefit obligations, net

     6,524       —          —          —          6,524  

Other non-current liabilities

     4,159       (182       —          —          3,977  
  

 

 

   

 

 

     

 

 

     

 

 

     

 

 

 

Total liabilities

     290,448       (52,129       (59,565       —          178,754  

Shareholders’ equity:

                

Common stock, no par value

     62,493       —          —          —          62,493  

Common stock held in trust for savings restoration plan

     (2,233     —          —          —          (2,233

Accumulated other comprehensive income (loss):

                

Foreign currency translation adjustment

     (90,273     100,379     [2](ii)     —          —          10,106  

Gain (loss) on derivative financial instruments

     (564     (60   [2](ii)     —          —          (624

Pension and other postretirement benefit adjustments

     484       —          —          —          484  

Retained earnings

     190,057       (72,516   [2](ii)         7,017     [2](iii)     124,558  
  

 

 

   

 

 

     

 

 

     

 

 

     

 

 

 

Shareholders’ equity

     159,964       27,803         —          7,017         194,784  
  

 

 

   

 

 

     

 

 

     

 

 

     

 

 

 

Total liabilities and shareholders’ equity

   $ 450,412     $ (24,326     $ (59,565     $ 7,017       $ 373,538  
  

 

 

   

 

 

     

 

 

     

 

 

     

 

 

 

See the accompanying Notes to Pro Forma Condensed Consolidated Financial Statements


Tredegar Corporate and Subsidiaries

Pro Forma Condensed Consolidated Statement of Operations

(Unaudited)

 

 

     Six Months Ended June 30, 2024  

(in thousands, except per share data)

   Historical
Tredegar
     Less:
Terphane
Divestiture
Note 1
    Note     Use of
Proceeds
    Note     Pro Forma
Tredegar
 

Revenues and other items:

             

Sales

   $ 365,971      $ (68,059     $ —        $ 297,912  

Other income (expense), net

     331        (3       —          328  
  

 

 

    

 

 

     

 

 

     

 

 

 
     366,302        (68,062       —          298,240  

Costs and expenses:

             

Cost of goods sold

     290,708        (56,589       —          234,119  

Freight

     13,748        (3,403       —          10,345  

Selling, general and administrative

     38,144        (2,529     [6     —          35,615  

Research and development

     519        (396       —          123  

Amortization of identifiable intangibles

     948        (48       —          900  

Pension and postretirement benefits

     109        —          —          109  

Interest expense

     6,834        (1,142       (2,489     [3     3,203  

Asset impairments and costs associated with exit and disposal activities, net of adjustments

     587        —          —          587  
  

 

 

    

 

 

     

 

 

     

 

 

 

Total

     351,597        (64,107       (2,489       285,001  
  

 

 

    

 

 

     

 

 

     

 

 

 

Income (loss) before income taxes

     14,705        (3,955       2,489         13,239  

Income tax expense (benefit)

     2,625        (752       473       [4     2,346  
  

 

 

    

 

 

     

 

 

     

 

 

 

Net income (loss)

   $ 12,080      $ (3,203     $ 2,016       $ 10,893  
  

 

 

    

 

 

     

 

 

     

 

 

 

Earnings (loss) per share:

             

Basic

   $ 0.35              $ 0.32  

Diluted

   $ 0.35              $ 0.32  

Shares used to compute earnings (loss) per share:

             

Basic

     34,350                34,350  

Diluted

     34,350                34,350  

See the accompanying Notes to Pro Forma Condensed Consolidated Financial Statements


Tredegar Corporate and Subsidiaries

Pro Forma Condensed Consolidated Statement of Operations

(Unaudited)

 

 

     Year Ended December 31, 2023  

(in thousands, except per share data)

   Historical
Tredegar
    Less:
Terphane
Divestiture
Note 1
    Note     Use of
Proceeds
    Note     Pro Forma
Tredegar
 

Revenues and other items:

            

Sales

   $ 704,825     $ (131,502     $ —        $ 573,323  

Other income (expense), net

     (2,147     (2       —          (2,149
  

 

 

   

 

 

     

 

 

     

 

 

 
     702,678       (131,504       —          571,174  

Costs and expenses:

            

Cost of goods sold

     599,110       (118,669       —          480,441  

Freight

     26,933       (5,177       —          21,756  

Selling, general and administrative

     76,207       (10,819     [6     —          65,388  

Research and development

     3,761       (867       —          2,894  

Amortization of identifiable intangibles

     1,897       (139       —          1,758  

Pension and postretirement benefits

     10,844       —          —          10,844  

Interest expense

     11,607       (384       (4,907     [3     6,316  

Asset impairments and costs associated with exit and disposal activities, net of adjustments

     5,167       (107       —          5,060  

Pension settlement loss

     92,291       —          —          92,291  

Goodwill impairment

     34,891       —          —          34,891  
  

 

 

   

 

 

     

 

 

     

 

 

 

Total

     862,708       (136,162       (4,907       721,639  
  

 

 

   

 

 

     

 

 

     

 

 

 

Income (loss) before income taxes

     (160,030     4,658         4,907         (150,465

Income tax expense (benefit)

     (54,125     1,375         1,450       [4     (51,300
  

 

 

   

 

 

     

 

 

     

 

 

 

Net income (loss)

   $ (105,905   $ 3,283       $ 3,457       $ (99,165
  

 

 

   

 

 

     

 

 

     

 

 

 

Earnings (loss) per share:

            

Basic

   $ (3.10           $ (2.91

Diluted

   $ (3.10           $ (2.91

Shares used to compute earnings (loss) per share:

            

Basic

     34,133               34,133  

Diluted

     34,133               34,133  

See the accompanying Notes to Pro Forma Condensed Consolidated Financial Statements


Tredegar Corporate and Subsidiaries

Pro Forma Condensed Consolidated Statement of Operations

(Unaudited)

 

 

     Year Ended December 31, 2022  

(in thousands, except per share data)

   Historical
Tredegar
     Less:
Terphane
Divestiture
Note 1
    Note     Use of
Proceeds
    Note     Pro Forma
Tredegar
 

Revenues and other items:

             

Sales

   $ 938,564      $ (176,579     $ —        $ 761,985  

Other income (expense), net

     1,009        51         —          1,060  
  

 

 

    

 

 

     

 

 

     

 

 

 
     939,573        (176,528       —          763,045  

Costs and expenses:

             

Cost of goods sold

     764,042        (133,493       —          630,549  

Freight

     34,982        (8,440       —          26,542  

Selling, general and administrative

     78,790        (9,179     [6     —          69,611  

Research and development

     6,214        (891       —          5,323  

Amortization of identifiable intangibles

     2,520        (396       —          2,124  

Pension and postretirement benefits

     14,569        —          —          14,569  

Interest expense

     4,990        78         (927     [3     4,141  

Asset impairments and costs associated with exit and disposal activities, net of adjustments

     622        —          —          622  
  

 

 

    

 

 

     

 

 

     

 

 

 

Total

     906,729        (152,321       (927       753,481  
  

 

 

    

 

 

     

 

 

     

 

 

 

Income (loss) before income taxes

     32,844        (24,207       927         9,564  

Income tax expense (benefit)

     4,389        (7,705       295       [4     (3,021
  

 

 

    

 

 

     

 

 

     

 

 

 

Net income (loss)

   $ 28,455      $ (16,502     $ 632       $ 12,585  
  

 

 

    

 

 

     

 

 

     

 

 

 

Earnings (loss) per share:

             

Basic

   $ 0.84              $ 0.37  

Diluted

   $ 0.84              $ 0.37  

Shares used to compute earnings (loss) per share:

             

Basic

     33,806                33,806  

Diluted

     33,826                33,826  

See the accompanying Notes to Pro Forma Condensed Consolidated Financial Statements


Tredegar Corporate and Subsidiaries

Pro Forma Condensed Consolidated Statement of Operations

(Unaudited)

 

 

     Year Ended December 31, 2021  

(in thousands, except per share data)

   Historical
Tredegar
     Less:
Terphane
Divestiture
Note 1
    Note     Use of
Proceeds
    Note     Pro Forma
Tredegar
 

Revenues and other items:

             

Sales

   $ 826,455      $ (147,311     $ —        $ 679,144  

Other income (expense), net

     20,265        (8,469       —          11,796  
  

 

 

    

 

 

     

 

 

     

 

 

 
     846,720        (155,780       —          690,940  

Costs and expenses:

             

Cost of goods sold

     649,690        (102,678       —          547,012  

Freight

     28,232        (7,334       —          20,898  

Selling, general and administrative

     74,964        (7,231     [6     —          67,733  

Research and development

     6,347        (635       —          5,712  

Amortization of identifiable intangibles

     1,704        (392       —          1,312  

Pension and postretirement benefits

     14,160        —          —          14,160  

Interest expense

     3,386        46         (395     [3     3,037  

Asset impairments and costs associated with exit and disposal activities, net of adjustments

     1,127        —          —          1,127  
  

 

 

    

 

 

     

 

 

     

 

 

 

Total

     779,610        (118,224       (395       660,991  
  

 

 

    

 

 

     

 

 

     

 

 

 

Income (loss) before income taxes

     67,110        (37,556       395         29,949  

Income tax expense (benefit)

     9,284        (8,306       87       [4     1,065  
  

 

 

    

 

 

     

 

 

     

 

 

 

Net income (loss)

   $ 57,826      $ (29,250     $ 308       $ 28,884  
  

 

 

    

 

 

     

 

 

     

 

 

 

Earnings (loss) per share:

             

Basic

   $ 1.72              $ 0.86  

Diluted

   $ 1.72              $ 0.86  

Shares used to compute earnings (loss) per share:

             

Basic

     33,563                33,563  

Diluted

     33,670                33,670  

See the accompanying Notes to Pro Forma Condensed Consolidated Financial Statements


Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

Terphane Business Discontinued Operations

Note 1.

The Terphane Divestiture reflects Tredegar’s assets, liabilities, shareholders’ equity, revenue and expenses of the Flexible Packaging Films business prepared in accordance with discontinued operations guidance set forth in Accounting Standards Codification (“ASC”) 205. Furthermore, an allocated portion of the historical income tax expense (benefit) has been attributed to the Terphane Divestiture discontinued operations pursuant to ASC 740 Income Taxes for each of the periods.

The amounts are considered preliminary, and as such, actual results could materially differ from these estimates.

Use of Proceeds and Other Transaction Adjustments

Note 2.

Reflects the Terphane Divestiture pursuant to the Purchase and Sale Agreement, adjustments required to record the estimated cash proceeds (net of transaction costs) received in connection with the Terphane Divestiture and recognition of the estimated loss on sale in retained earnings as if the transaction had occurred on June 30, 2024.

 

  (i)

Estimated net cash proceeds in connection with the Terphane Divestiture are as follows:

 

(in thousands)

      

Base purchase price

   $ 116,000  

Purchase price adjustment(a)

     (41,553

Costs to sell(b)

     (4,114

Brazil withholding taxes(c)

     (10,768
  

 

 

 

Net cash proceeds(d)

   $ 59,565  

Terphane cash and cash equivalents as of June 30, 2024

     (2,871
  

 

 

 

Cash and cash equivalents as shown on the unaudited pro forma condensed consolidated balance sheet

   $ 56,694  
  

 

 

 

 

   a.

Purchase price adjustment includes items specified in the terms of the Purchase and Sale Agreement, including preliminary estimates for closing net working capital, closing indebtedness, retention incentives, and escrow funds.

   b.

Represents the estimated impact of the costs associated with the Terphane Divestiture, such as legal, consulting, accounting fees and other professional services incurred to effect the Terphane Divestiture that are not already reflected in historical Tredegar or Terphane results.

   c.

Represents Brazilian withholding tax paid to the Brazilian Tax Authorities on the Closing Date, which is a foreign tax credit for Tredegar that will reduce U.S. taxes to be paid over the next ten years.

   d.

At closing, Tredegar received $60 million in cash, which is net of Terphane debt assumed by Oben of $20 million and Terphane cash retained by Oben of $2 million. Accordingly, on a cash-free and debt-free basis, the enterprise value of the Terphane Divestiture transaction at closing for Tredegar was $78 million. Tredegar anticipates receiving an additional $7 million in cash following the release of certain escrow funds within 120 days of closing. The total estimated proceeds from the Terphane Divestiture are required to be used to pay down the outstanding ABL Facility debt.

 

  (ii)

Estimated loss on the Terphane Divestiture, assuming Tredegar had completed the transaction as of June 30, 2024, is as follows:

 

(in thousands)

      

Net cash proceeds

   $ 59,565  

Net assets sold

     (31,762

Realized accumulated other comprehensive loss:

  

Foreign currency translation adjustment

     (100,379

Gain on derivative financial instruments

     60  
  

 

 

 

Pre-tax loss on sale

   $ (72,516

Estimated accrued tax expense (benefit)

     (7,017
  

 

 

 

Estimated after-tax loss on sale

   $ (65,499
  

 

 

 


For purposes of the unaudited pro forma condensed consolidated balance sheet, the estimated loss recognized in retained earnings is based on the net carrying value of Terphane as of June 30, 2024 rather than as of the Closing Date. As a result, the estimated loss reflected herein may differ materially from the actual loss on the Terphane Divestiture as of the Closing Date because of the differences in the carrying value of assets and liabilities at the Closing Date.

 

  (iii)

Includes an adjustment of $4.6 million for changes in deferred taxes as a result of the Terphane Divestiture.

 

  (iv)

Includes an adjustment of $0.2 million for tax receivables and tax liabilities as a result of the Terphane Divestiture.

Note 3.

This adjustment reflects the estimated impact on the unaudited pro forma condensed consolidated balance sheet as of June 30, 2024, of the $59.6 million net cash proceeds from the Terphane Divestiture required to be used to pay down the outstanding borrowings under the ABL Facility. As a result of the required repayment towards the outstanding ABL Facility debt, an adjustment has been made to the Tredegar historical ABL Facility interest expense. The additional $7 million expected to be released from escrow funds within 120 days of closing will also used to pay down the ABL Facility once received.

Note 4.

This adjustment reflects the income tax effects on an accrual basis of the adjustments describe herein using enacted statutory rates applicable in each period in which pre-tax adjustments were made.

Note 5.

On November 1, 2024, with the closing of the Terphane Divestiture, the ABL Adjustment Date (as defined in the ABL Facility as the earlier of September 30, 2025 or the date the Company receives the proceeds from Terphane Divestiture) has occurred.

Under the terms of the ABL Facility, certain domestic bank accounts are subject to blocked account agreements, each of which contains a springing feature whereby the lenders may exercise control over those accounts during a cash dominion period (any such period, a “Cash Dominion Period”). A Cash Dominion Period was implemented on the date the Company entered into the ABL Facility and remained in effect at all times prior to the ABL Adjustment Date. Prior to the ABL Adjustment Date, cash receipts that have not yet been applied to the ABL Facility were classified as restricted cash. Accordingly, this pro forma adjustment represents a reclassification to cash and cash equivalents as the unapplied cash receipts are no longer restricted after the ABL Adjustment Date.

Moreover, the ABL Facility has customary representations and warranties, including, as a condition to each borrowing, that all such representations and warranties are true and correct in all material respects (including a representation that no Material Adverse Effect (as defined in the ABL Facility) has occurred since December 31, 2022). In the event that Tredegar cannot certify that all conditions to the borrowing have been met, the lenders can restrict Tredegar’s future borrowings under the ABL Facility. As the Cash Dominion Period is no longer in effect, the outstanding debt under the ABL Facility (all contractual payments due on June 30, 2026) has been reclassified to long-term debt in the unaudited pro forma condensed consolidated balance sheet.

Note 6.

For the periods ended June 30, 2024, December 31, 2023, and December 31, 2022, the Company incurred non-routine legal, consulting, accounting fees and other professional services related to the Terphane Divestiture of $0.7 million, $5.0 million, and $0.5 million, respectively. These amounts are included in the Terphane Divestiture discontinued operations. There were no non-routine expenses incurred for the period ended December 31, 2021.