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Transammonia Inc.

Project Ice. Transammonia Inc. CONFIDENTIAL. September 6, 2014. Project Ice. Transaction Timeline. Confidentiality Agreement signed (with 6 month non-poach) September 6, 2000 Initial introductory meeting with Transammonia November 6, 2000

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Transammonia Inc.

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  1. Project Ice Transammonia Inc. CONFIDENTIAL September 6, 2014

  2. Project Ice Transaction Timeline • Confidentiality Agreement signed (with 6 month non-poach) September 6, 2000 • Initial introductory meeting with Transammonia November 6, 2000 • Transammonia engages CSFB as financial advisor January 2001 • Non-poach clause in CA extended until August 6, 2001 February 6, 2001 • Enron initiates preliminary on-site due diligence February 6, 2001 • Enron presents non-binding initial valuation February 16, 2001 • Additional due diligence to follow TBA CONFIDENTIAL

  3. Project Ice Valuation Analysis Summary - Without Synergies Equity Valuation • Normalized Adjusted EBITDA $32MM @ 7 EBITDA Multiple - $73MM $32MM @ 8 EBITDA Multiple - $105MM • Adjusted Book Value @ 50% of Book Value - $75MM @ 70% of Book Value - $94MM • Asset Value (LPG terminals plus W/C) - $77MM • DCF Analysis - $74MM EQUITY VALUATION $70MM - $80MM ENTERPRISE VALUATION $250MM - $260MM The valuation includes all $26MM in cash from the balance sheet. CONFIDENTIAL

  4. Project Ice Transaction Value / Synergies • Quick effective entry into the fertilizer market • Acquisition at less than book value - accretive to earnings • Opportunity to create ammonia and urea financial markets • Opportunity to generate origination business • Significant cross-commodity selling opportunities • SG&A reduction opportunities • Good fit with existing LPG & chemicals businesses • Valuable LPG storage terminals (2) • Opportunities to integrate fertilizer businesses into EOL • Strong and experienced senior management team • Strong existing business relationships CONFIDENTIAL

  5. Project Ice Transaction Issues • Credit Exposure • Sovereign risk (China, Russia, Ukraine, Turkey) • Counterparty risk in 3rd world countries • Integration • ENE must retain and incentivize traders and key personnel • Review of international business methods CONFIDENTIAL

  6. Project Ice Additional Due Diligence Needed • Environmental (terminals site visits and permitting review) • Legal (product off-take and sales contract review, FCPA review) • Accounting (inventory review, seek MTM opportunities) • Credit (sovereign risk and counterparty risk analyses, A/R, A/P review) • HR (integration, identification of key employees, retention strategy) • Trading (further review of controls and positions) • Tax (further discussion of $100MM offshore profits never repatriated) • Finance (possible monetization of LPG in storage, lease contract analysis) • General (international office visits, key employee background checks) CONFIDENTIAL

  7. Project Ice Trading Books: Initial Impressions • TA’s petrochemical and LPG businesses warehouse about $300,000 of VAR • Petrochemical and LPG businesses would easily integrate into existing book • TA’s fertilizer business warehouses $300,000 to $400,000 of VAR • Term does not exceed July 2001 • No company established VAR • No aggregate positions system • Limited policy not fully covering trading • No documented limit policy Note: TA position report dated November 28, 2000. Assumptions on UOM were made. CONFIDENTIAL

  8. Project Ice Transammonia Breakdown by Segment Corporate income is the interest rate spread charged to trading and paid to banks. LPG London business was discontinued in 2000. Sea-3 business includes the 2 LPG terminals. CONFIDENTIAL

  9. Project Ice Transammonia, Inc. Overview • A leading international physical trader, distributor, and transporter of ammonia and other fertilizer products, LPG, petrochemicals and methanol • Privately held with 100% of stock owned by the Stanton family • Headquartered in New York. Employs 230 people in 26 cities worldwide • 2000 sales of over 17.2 million tons of all products, with revenues of $2.4 billion • Owns or leases several terminal, tanks and warehouses in various parts of the world Petrochemicals & MTBE LPG’s Other Fertilizers Ammonia • World’s leading independent marketer and transporter of anhydrous ammonia • In 2000 traded 11.6 million metric tons of fertilizer • Broad base of supply and sales in over 57 countries • Strong domestic presence with product available along the Gulf Central ammonia pipeline system • Imports or trades to the US market through direct purchase, swaps and other trading arrangements • Its wholly-owned 36,000 short ton Meredosia facility is a big factor in the domestic business • Sold over 2.8 million metric tons of urea worldwide in 2000 • Has been appointed exclusive marketer of 500,000 metric tons of granular urea produced in Bangladesh by Karnaphuli Fertilizer Company, Ltd. • Sells about 1.1 million metric tons of other nitrogenous fertilizers around the world • Sales of sulfur exceeded 1.8 million metric tons • Phosphatic fertilizer sales above 1 million metric tons • Sulfuric acid trading of over 660,000 metric tons in 2000 • Sales of around 600,000 metric tons of potash to worldwide markets • In 1995, Transammonia started the TrammoGas Division, located in Houston, Texas trading LPG in the US. 2000 volume reached 1.7 million metric tons. Majority of the volume is propane but also includes ethane, butane, iso-butane, and natural gasoline • Sea-3, an operating unit, owns LPG terminals in NH and FL. It is the largest importer of LPG into the north-east and Florida providing interesting arbitrage opportunities between MT Bellevue and world LPG prices • Sea-3 also participates in gas marketing on the Gulf Coast and other parts of the US. Annual volume is about 300,000 metric tons • The TrammoChem Division is active in all significant petrochemicals markets around the world with sales of about 3.8 million metric tons • A trader of MTBE worldwide and a major exporter of petrochemicals from China • Started with an emphasis on trading aromatics: Benzene, Toluene, Xylene, etc. Methanol and MTBE have become the largest volume products over the years. Recently, Trammochem started trading Propylene, Ethylene and Butadiene CONFIDENTIAL

  10. Breda Moscow Calgary London Newington Odessa Paris Portsmouth Beijing Darien Istanbul Seoul Madrid New York Tokyo Houston Lachen Amman Tampa Bucharest Cairo Hong Kong Dhaka Guatemala City Sao Paulo Montevideo Offices Project Ice Transammonia Worldwide Offices CONFIDENTIAL

  11. Project Ice Sources By Country - All Products Year 2000 Tonnage - 11,411,804 MT CONFIDENTIAL

  12. Project Ice Sales By Country - All Products Year 2000 Tonnage - 11,411,804 MT CONFIDENTIAL

  13. Project Ice Transammonia Breakdown by Segment Corporate income is the interest rate spread charged to trading and paid to banks. LPG London business was discontinued in 2000. The Sea-3 business includes the 2 LPG terminals. CONFIDENTIAL

  14. Project Ice World Market Size ( $35B) ^ Denotes Ammonia and Urea markets only # Defined as only the petrochemical products that Enron is considering: monomers, aromatics, and polymers. * Defined as only the refined products that Enron is considering: gasoline, distillates, residuals, and jet fuel. Sources: Lehman Brothers, Energy Information Administration (EIA), and United Nations Statistics Division Homepage CONFIDENTIAL

  15. Project Ice Ammonia Market: Largest Industrial Gas Consumer Pulp & Paper Metals Petroleum Ammonia Source: Natural Gas Supply Association CONFIDENTIAL

  16. Project Ice Fertilizer Products: Market Characteristics • FAVORABLE • Large numbers of international buyers and sellers • Existence of intermediaries • High price volatility • Poor price discovery • Commoditized / standardized product • Largely a wholesale product • Gas represents up to 80% of input costs • UNFAVORABLE • Sovereign and counterparty risk • Potential for government supply influence / interference CONFIDENTIAL

  17. Project Ice Supplemental Financial Data CONFIDENTIAL

  18. Project Ice CONFIDENTIAL

  19. Project Ice 1996 Income Statement reflects a change from C-Corp to S-Corp and thus reflects only partial year results. 2000 Income Statement is based on preliminary, unaudited results. Complete 2000 data is not yet available. CONFIDENTIAL

  20. Project Ice Transammonia Valuation Details ($000) Adjusted EBITDA is the average of 1999 and 2000 EBITDA adjusted for discontinued operations, extraordinary shareholders’ expenses, and value foregone from not transacting in Libya and Iran. CONFIDENTIAL

  21. Project Ice Transammonia Valuation Details ($000) The New Hampshire LPG terminal is valued at 7 times 1999 EBITDA. In late 2000, the Florida LPG terminal came on-line and is being valued at book. The remaining assets were valued at a fraction of book value. Accounts receivable and inventory were discounted at 90% and 75%, respectively. CONFIDENTIAL

  22. Project Ice Transammonia DCF Analysis Without Synergies ($000) 1 - Average of 1999 and 2000 EBIT more accurately reflects future business prospects (pre-1999 results are less indicative). 2 - EBIT adjusted upward for extraordinary owners’ compensation, discontinued operations, and reduced for estimated value to be lost from not transacting in certain countries. 3 - Assumes 4% growth rate in existing physical business trading profit. 4 - Assumes a 35% income tax rate. 5 - Decrease in net working capital (year 1) occurs from the normalization of EBIT but net working capital grows thereafter. 6 - Assumes 11% WACC. CONFIDENTIAL

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