Ferroglobe PLC
Ferroglobe PLC (Form: 424B3, Received: 11/14/2016 08:53:02)

Filed Pursuant to Rule 424(b)(3)

Registration No. 333-209595

PROSPECTUS SUPPLEMENT NO. 2

To Prospectus dated July 13, 2016

 

LOGO

Ferroglobe PLC

106,810,523 Ordinary Shares

 

 

This prospectus supplement supplements the prospectus dated July 13, 2016, relating to the offering and resale by the selling stockholders of up to 106,810,523 of our ordinary shares, nominal value $0.01 per share (the “Ordinary Shares”). We will not receive any proceeds from the sale of these shares by the selling stockholders.

This prospectus supplement incorporates into our prospectus the information contained in the attached press release issued by Ferroglobe on November 13, 2016 and filed with the Securities and Exchange Commission on November 14, 2016 in a Report of Foreign Private Issuer on Form 6-K.

You should read this prospectus supplement in conjunction with the prospectus, including any supplements and amendments thereto. This prospectus supplement is qualified by reference to the prospectus except to the extent that the information in this prospectus supplement supersedes the information contained in the prospectus.

This prospectus supplement is not complete without, and may not be delivered or utilized except in connection with, the prospectus, including any supplements and amendments thereto.

The Ordinary Shares are currently traded on the NASDAQ Global Select Market (the “NASDAQ”) under the symbol “GSM”. On November 11, 2016, the closing price for the Ordinary Shares on the NASDAQ was $11.52 per Ordinary Share.

 

 

Investing in our Ordinary Shares involves risks. See “ Risk Factors ” beginning on page 5 of this prospectus.

 

 

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

 

The date of this prospectus supplement is November 14, 2016


Ferroglobe Reports Results for Third Quarter 2016

 

    Q3 2016 revenue of $365.0 million, down from $398.0 million in Q2 2016

 

    Net loss of $(28.5) million, or $(0.17) on a fully diluted per share basis; Adjusted net loss of $(14.6) million, or $(0.09) on a fully diluted per share basis for the quarter

 

    Reported EBITDA loss of $(3.2) million, which includes an impairment charge of $9.0 million for the company’s mining operations in South Africa as well as an inventory impairment charge of $4.3 million; Adjusted EBITDA of $12.8 million for the quarter

 

    Operating cash flow generation of $22.5 million and free cash flow generation of $11.7 million for Q3

 

    Exceeded working capital synergies target of $100 million by reducing working capital by $136.5 million year-to-date

 

    Increased synergies target to $85 million annualized, up from $65 million previously

 

    Maintained dividend, reflecting confidence in underlying strength of the business

LONDON , November 14, 2016 – Ferroglobe PLC (NASDAQ: GSM), the world’s leading producer of silicon metal, and a leading silicon- and manganese-based specialty alloys producer, announced today results for the third quarter of 2016.

In the third quarter of 2016, Ferroglobe posted a net loss of $(28.5) million, or $(0.17) per share on a fully diluted basis. Excluding an inventory impairment charge and an additional impairment charge for South Africa, the company posted an adjusted net loss of $(14.6) million, or $(0.09) per share on a fully diluted basis.

Ferroglobe reported an EBITDA loss of $(3.2) million for the third quarter due to an inventory impairment charge of $4.3 million in Venezuela and China, and a further $9.0 million impairment charge of the company’s mining assets in South Africa. Excluding these charges Q3 2016 adjusted EBITDA was $12.8 million.

Net sales in the third quarter totalled $365.0 million, down from $398.0 million sequentially. In the third quarter, Ferroglobe’s average selling price for silicon metal declined by 6% from the previous quarter’s average selling price, primarily due to pressure from low-priced imports. During this period, the average selling price for silicon-based alloys decreased 3% from the second quarter of 2016 and the average selling price for manganese alloys increased 11% from the second quarter of 2016.

In terms of sales volumes, silicon metal experienced a decline of 5% quarter over quarter, silicon alloys experienced a decline of 7% quarter over quarter, and manganese alloys experienced a decline of 16% quarter over quarter, reflecting some seasonality of demand in summer months.


     Nine Months Ended
September 30, 2016
     Quarter Ended
September 30,
2016
     Quarter Ended
June 30, 2016
 

Shipments in metric tons:

        

Silicon Metal

     259,016         81,091         85,242   

Silicon Alloys

     218,271         69,539         74,786   

Manganese Alloys

     193,985         59,368         70,756   
  

 

 

    

 

 

    

 

 

 

Total shipments*

     671,272         209,998         230,784   
  

 

 

    

 

 

    

 

 

 
     Nine Months Ended
September 30, 2016
     Quarter Ended
September 30,
2016
     Quarter Ended
June 30, 2016
 

Average selling price ($/MT):

        

Silicon Metal

   $ 2,240       $ 2,090       $ 2,230   

Silicon Alloys

   $ 1,421       $ 1,391       $ 1,430   

Manganese Alloys

   $ 801       $ 865       $ 777   
  

 

 

    

 

 

    

 

 

 

Total*

   $ 1,558       $ 1,512       $ 1,525   
     Nine Months Ended
September 30, 2016
     Quarter Ended
September 30,
2016
     Quarter Ended
June 30, 2016
 

Average selling price ($/lb.):

        

Silicon Metal

   $ 1.02       $ 0.95       $ 1.01   

Silicon Alloys

   $ 0.64       $ 0.63       $ 0.65   

Manganese Alloys

   $ 0.36       $ 0.39       $ 0.35   
  

 

 

    

 

 

    

 

 

 

Total*

   $ 0.71       $ 0.69       $ 0.69   

 

* Excludes by-products and other

“Despite the poor results this quarter, primarily as a result of this year’s pricing pressures caused by low priced imports, we are now in the pricing season for 2017 and we are beginning to see some meaningful improvements. The market is adjusting to the realities of production costs, rebalanced inventories and idle capacity, with prices above the reported indexes. Additionally, we are changing our contract structures by removing all discounts to index for silicon metal, and will be utilizing those index providers who modify their reporting criteria to better reflect the overall market,” said CEO Pedro Larrea. “In the meantime, we have adapted to circumstances by relentlessly pursuing increased efficiencies, driving higher-than-expected synergies from our merger, and positioning ourselves to benefit from the forthcoming improving pricing environment. To that end, we have taken proactive steps to optimize our asset portfolio and achieved a 13% reduction in our overall cost structure as compared to pro-forma 2015. Combined, these measures have driven positive free cash flow and positive EBITDA on an adjusted basis and our balance sheet remains strong. We are well-positioned to benefit once prices recover,” concluded Larrea.

Financial discipline and cost management remain core priorities

Ferroglobe reported an EBITDA loss of $(3.2) million, primarily due to the impact of a continued challenging pricing environment as well as inventory impairment charges and an additional impairment charge of our South African mining assets.

Excluding these charges, Q3 2016 adjusted EBITDA was $12.8 million. Overall the price decline adversely impacted EBITDA by $6.5 million quarter-over-quarter in addition to volume declines of $1.6 million which were partially offset by reductions in production costs.

Ferroglobe is increasing its expectations for synergy attainment to $85 million on a run rate basis, up from $65 million previously. Year-to-date, already $43 million in synergies have been captured, and a total of $60 million is expected to be achieved in full year 2016. All in all, production costs have been reduced by $13%year-to-date.


In addition to cost management, the company also takes a proactive approach to managing its asset portfolio. As part of this, the company is currently pursuing strategic options regarding its hydro-electric assets in Spain and France. These discussions are at a preliminary stage and the company will provide further detail as and when appropriate.

Ferroglobe generated operating cash flows of $22.5 million in Q3 2016, or $76.3 million year-to-date. A significant part of the operating cash flows comes from working capital improvements of $39.9 million during Q3 2016, bringing improvements year-to-date to $136.5 million. The company has generated $23.1 million of free cash flow year-to-date, of which $11.7 million was generated during Q3 2016. 1 Ferroglobe’s net debt was $430 million at the end of Q3 2016, compared to $422 million at the end of Q2 2016.

The Board has decided to maintain the quarterly interim dividend of $0.08 per share, further reflecting the confidence in the underlying strength of the business and the company’s long-term outlook. The dividend will have a record date of December 8, 2016 and a payment date of December 29, 2016.

 

 

1   Free cash-flow defined as “Net cash provided by operating activities” minus “Payments for property, plant and equipment.”.


Adjusted EBITDA:

 

     Nine Months Ended
September 30, 2016
    Quarter Ended
September 30,
2016
    Quarter Ended
June 30, 2016
 

Loss attributable to the parent

   $ (96,460     (28,523     (42,238

Loss attributable to non-controlling interest

     (15,836     (2,545     (7,080

Income tax benefit

     (38,419     (10,158     (29,038

Net finance expense

     21,216        6,693        6,908   

Exchange differences

     2,880        876        276   

Depreciation and amortization charges, operating allowances and write-downs

     97,972        30,440        24,534   

EBITDA

     (28,647     (3,217     (46,638

Transaction and due diligence expenses

     7,979        111        5,227   

Impairment loss

     67,630        9,043        58,587   

Globe purchase price allocation adjustments

     10,022        —          —     

Business interruption

     2,532        2,532        —     

Inventory impairment

     4,330        4,330        —     
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA, excluding above items

   $ 63,846        12,799        17,176   
  

 

 

   

 

 

   

 

 

 

Adjusted diluted loss per share:

 

     Nine Months Ended
September 30, 2016
    Quarter Ended
September 30,
2016
    Quarter Ended
June 30, 2016
 

Diluted loss per ordinary share

     (0.56     (0.17     (0.25

Tax rate adjustment

     0.06        0.01        (0.01

Transaction and due diligence expenses

     0.03        —          0.02   

Impairment loss

     0.27        0.04        0.23   

Globe purchase price allocation adjustments

     0.04        —          —     

Business interruption

     0.01        0.01        —     

Inventory impairment

     0.02        0.02        —     
  

 

 

   

 

 

   

 

 

 

Adjusted diluted loss per ordinary share

     (0.13     (0.09     (0.01
  

 

 

   

 

 

   

 

 

 

Adjusted net loss attributable to Ferroglobe:

 

     Nine Months Ended
September 30, 2016
    Quarter Ended
September 30,
2016
    Quarter Ended
June 30, 2016
 

Loss attributable to the parent

   $ (96,460     (28,523     (42,238

Tax rate adjustment

     9,810        3,035        (3,964

Transaction and due diligence expenses

     5,426        75        3,555   

Impairment loss

     45,988        6,149        39,839   

Globe purchase price allocation adjustments

     6,815        —          —     

Business interruption

     1,722        1,722        —     

Inventory impairment

     2,944        2,944        —     
  

 

 

   

 

 

   

 

 

 

Adjusted loss attributable to the parent

   $ (23,755     (14,598     (2,808
  

 

 

   

 

 

   

 

 

 

Conference Call

Ferroglobe will review third quarter 2016 results during a conference call at 9:00 a.m. Eastern Time on November 14, 2016. The dial-in number for the call for participants in the United States is 877-293-5491 (conference ID 16304340). International callers should dial +1 914-495-8526 (conference ID 16304340). Please dial in at least five minutes prior to the call to register. The call may also be accessed via an audio webcast available at http://edge.media-server.com/m/p/p9w9vtyt.


About Ferroglobe

Ferroglobe PLC is one of the world’s leading suppliers of silicon metal, silicon-based specialty alloys, and ferroalloys serving a customer base across the globe in dynamic and fast-growing end markets, such as solar, automotive, consumer products, construction and energy. The company is based in London. For more information, visit http://investor.ferroglobe.com.

Forward-Looking Statements

This release contains “forward-looking statements” within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Forward-looking statements are not historical facts but are based on certain assumptions of management and describe the company’s future plans, strategies and expectations. Forward-looking statements generally can be identified by the use of forward-looking terminology, including, but not limited to, “may,” “could,” “seek,” “guidance,” “predicts,” “potential,” “likely,” “believe,” “will,” “expect,” “anticipate,: “estimate,” “plan,” “intends,” “forecast” or variations of these terms and similar expressions, or the negative of these terms or similar expressions.

Forward-looking statements contained in this press release are based on information presently available to us and assumptions that we believe to be reasonable, but are inherently uncertain. As a result, our actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements, which are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control.

You are cautioned that all such statements involve risks and uncertainties, including without limitation, risks that the legacy businesses of Globe and FerroAtlántica will not be integrated successfully or that we will not realize estimated cost savings, value of certain tax assets, synergies and growth, or that such benefits may take longer to realize than expected. Important factors that may cause actual results to differ include, but are limited to: (i) risks relating to unanticipated costs of integration, including operating costs, customer loss and business disruption being greater than expected; (ii) our organizational and governance structure; (iii) the ability to hire and retain key personnel; (iv) regional, national or global political, economic, business, competitive, market and regulatory conditions including, among others, changes in metals prices; (v) increases in the cost of raw materials or energy; (vi) competition in the metals and foundry industries; (vii) environmental and regulatory risks; (viii) ability to identify liabilities associated with acquired properties prior to their acquisition; (ix) ability to manage price and operational risks including industrial accidents and natural disasters; (x) ability to manage foreign operations; (xi) changes in technology; (xii) ability to acquire or renew permits and approvals; (xiii) changes in legislation or governmental regulations affecting Ferroglobe; (xiv) conditions in the credit markets; (xv) risks associated with assumptions made in connection with critical accounting estimates and legal proceedings; (xvi) Ferroglobe’s international operations, which are subject to the risks of currency fluctuations and foreign exchange controls; and (xvii) the potential of international unrest, economic downturn or effects of currencies, tax assessments, tax adjustments, anticipated tax rates, raw material costs or availability or other regulatory compliance costs. The foregoing list is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect our business, including those described in the “Risk Factors” section of our Annual Reports on Form 20-F, Current Reports on Form 6-K and other documents we file from time to time with the United States Securities and Exchange Commission. We do not give any assurance (1) that we will achieve our expectations or (2) concerning any result or the timing thereof, in each case, with respect to any regulatory action, administrative proceedings, government investigations, litigation, warning letters, consent decree, cost reductions, business strategies, earnings or revenue trends or future financial results. Forward-looking financial information and other metrics presented herein represent our key goals and are not intended as guidance or projections for the periods presented herein or any future periods.

All information in this press release is as of the date of its release. We do not undertake or assume any obligation to update publicly any of the forward-looking statements in this press release to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. We caution you not to place undue reliance on any forward-looking statements, which are made only as of the date of this press release.


Non-GAAP Measures

EBITDA, adjusted EBITDA, adjusted loss attributable to parent and adjusted diluted loss per ordinary share are non-GAAP measures.

We have included these measures to provide supplemental measures of our performance which we believe are important because they eliminate items that have less bearing on our current and future operating performance and so highlights trends in our core business that may not otherwise be apparent when relying solely on GAAP financial measures. Reconciliations of these measures to the comparable GAAP financial measures are provided above and in the attached financial statements.

*    *    *

INVESTOR CONTACT:

Ferroglobe PLC

Joe Ragan, 786-509-6925

Chief Financial Officer

Email: jragan@ferroglobe.com


Ferroglobe PLC and Subsidiaries

Unaudited Condensed Consolidated Income Statement

(in thousands of U.S. dollars, except per share amounts)

 

     Nine Months Ended
September 30, 2016
    Quarter Ended
September 30,
2016
    Quarter Ended
June 30, 2016
    Year Ended
December 31,
2015 *
 

Sales

   $ 1,186,159      $ 364,727      $ 397,953      $ 2,039,608   

Cost of sales

     (771,238     (236,631     (252,764     (1,225,313

Other operating income

     11,013        4,963        3,717        20,455   

Staff costs

     (206,819     (67,586     (72,050     (330,382

Other operating expense

     (179,805     (60,490     (64,374     (351,929

Depreciation and amortization charges, operating allowances and write-downs

     (97,972     (30,440     (24,534     (141,097

Impairment losses

     (67,631     (9,044     (58,587     (52,042

Other (loss) gain

     (326     844        (533     (3,473
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

     (126,619     (33,657     (71,172     (44,173

Finance income

     1,233        548        442        1,343   

Finance expense

     (22,449     (7,241     (7,350     (34,521

Exchange differences

     (2,880     (876     (276     29,993   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before tax

     (150,715     (41,226     (78,356     (47,358

Income tax benefit (expense)

     38,419        10,158        29,038        (62,546
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss for the period

     (112,296     (31,068     (49,318     (109,904

Loss attributable to non-controlling interest

     15,836        2,545        7,080        13,308   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss attributable to the parent

   $ (96,460   $ (28,523   $ (42,238   $ (96,596
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     (28,647     (3,217     (46,638     96,924   

Adjusted EBITDA

     63,846        12,799        17,176        294,799   

Weighted average shares outstanding

        

Basic

     171,838        171,838        171,838     

Diluted

     171,838        171,838        171,838     

Loss per ordinary share

        

Basic

     (0.56     (0.17     (0.25  

Diluted

     (0.56     (0.17     (0.25  

 

* — Represents combined Globe and FerroAtlantica results on a pro forma basis.


Ferroglobe PLC and Subsidiaries

Unaudited Condensed Consolidated Statement of Financial Position

(in thousands of U.S. dollars)

 

     September 30,
2016
     June 30,
2016
     December 31,
2015
 

ASSETS

  

Non-current assets

        

Goodwill

   $ 402,491         404,015         403,929   

Other intangible assets

     70,130         71,247         71,619   

Property, plant and equipment

     929,217         941,580         1,012,367   

Non-current financial assets

     10,541         10,091         9,672   

Deferred tax assets

     55,228         51,337         36,098   

Non-current receivables from related parties

     2,233         —           —     

Other non-current assets

     21,302         21,881         20,615   
  

 

 

    

 

 

    

 

 

 

Total non-current assets

     1,491,142         1,500,151         1,554,300   

Current assets

        

Inventories

     369,996         374,795         425,372   

Trade and other receivables

     197,817         216,322         275,254   

Current receivables from related parties

     10,312         3,705         10,950   

Current income tax assets

     30,826         22,302         9,273   

Current financial assets

     14,204         18,005         4,112   

Other current assets

     13,236         12,299         10,134   

Cash and cash equivalents

     119,166         135,774         116,666   
  

 

 

    

 

 

    

 

 

 

Total current assets

     755,557         783,202         851,761   
  

 

 

    

 

 

    

 

 

 

Total assets

   $ 2,246,699         2,283,353         2,406,061   
  

 

 

    

 

 

    

 

 

 

EQUITY AND LIABILITIES

  

Equity

   $ 1,170,774         1,220,184         1,294,973   

Non-current liabilities

        

Deferred income

     5,259         6,512         4,389   

Provisions

     85,846         82,250         81,853   

Bank borrowings

     96,870         231,202         223,676   

Obligations under finance leases

     79,780         84,059         89,768   

Other financial liabilities

     7,748         8,283         7,549   

Other non-current liabilities

     4,295         3,741         4,517   

Deferred tax liabilities

     178,577         183,878         206,648   
  

 

 

    

 

 

    

 

 

 

Total non-current liabilities

     458,375         599,925         618,400   

Current liabilities

        

Provisions

     17,688         13,867         9,010   

Bank borrowings

     357,004         219,922         182,554   

Obligations under finance leases

     15,118         13,841         13,429   

Payables to related parties

     6,220         2,353         7,827   

Trade and other payables

     150,733         134,122         147,073   

Current income tax liabilities

     4,987         2,139         10,887   

Other current liabilities

     65,800         77,000         121,908   
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     617,550         463,244         492,688   
  

 

 

    

 

 

    

 

 

 

Total equity and liabilities

   $ 2,246,699         2,283,353         2,406,061   
  

 

 

    

 

 

    

 

 

 


Ferroglobe PLC and Subsidiaries

Unaudited Condensed Consolidated Statement of Cash Flows

(in thousands of U.S. dollars)

 

     Nine Months Ended
September 30, 2016
    Quarter Ended
September 30,
2016
    Quarter Ended
June 30, 2016
 

CASH FLOWS FROM OPERATING ACTIVITIES:

      

Loss for the period

   $ (112,296   $ (31,068   $ (49,318

Adjustments to reconcile net loss to net cash provided by operating activities:

      

Income tax benefit

     (38,419     (10,158     (29,038

Depreciation and amortization charges, operating allowances and write-downs

     97,972        30,440        24,534   

Finance income

     (1,233     (548     (442

Finance expense

     22,449        7,241        7,350   

Exchange differences

     2,880        876        276   

Impairment losses

     67,631        9,044        58,587   

Loss on disposals of non-current and financial assets

     408        217        242   

Other adjustments

     4,248        3,269        291   

Changes in operating assets and liabilities

      

Decrease in inventories

     59,831        2,135        14,347   

Decrease in trade receivables

     71,783        17,547        28,439   

Increase in trade payables

     1,093        9,834        (10,651

Other*

     (59,504     (603     (16,050

Income taxes (paid) received

     (20,188     (8,911     1,497   

Interest paid

     (20,306     (6,837     (5,767
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     76,349        22,478        24,297   
  

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

      

Payments due to investments:

      

Other intangible assets

     (2,543     (2,020     (87

Property, plant and equipment

     (53,289     (10,805     (15,676

Non-current financial assets

     (684     (411     (273

Current financial assets

     (9,930     3,988        (13,865

Disposals:

      

Intangible assets

     —          —          (30

Property, plant and equipment

     —          —          (104

Current financial assets

     —          (99     99   

Interest received

     2,037        1,328        466   
  

 

 

   

 

 

   

 

 

 

Net cash used by investing activities

     (64,409     (8,019     (29,470
  

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

      

Dividends paid

     (41,243     (27,496     —     

Increase/(decrease) in bank borrowings:

      

Borrowings

     105,331        22,362        25,978   

Payments

     (57,698     (19,623     11,623   

Other amounts paid due to financing activities

     (8,313     (3,750     (3,851
  

 

 

   

 

 

   

 

 

 

Net cash (used) provided by financing activities

     (1,923     (28,507     33,750   
  

 

 

   

 

 

   

 

 

 

TOTAL NET CASH FLOWS FOR THE PERIOD

     10,017        (14,048     28,577   
  

 

 

   

 

 

   

 

 

 

Beginning balance of cash and cash equivalents

     116,666        135,774        114,019   

Exchange differences on cash and cash equivalents in foreign currencies

     (7,517     (2,560     (6,822
  

 

 

   

 

 

   

 

 

 

Ending balance of cash and cash equivalents

   $ 119,166      $ 119,166      $ 135,774   
  

 

 

   

 

 

   

 

 

 

 

* Includes the cash outflow impact of the $32.5M shareholder settlement during the quarter ended March 31, 2016.