Filed by Maverick Tube Corporation
Pursuant to Rule 425
Under the Securities Act of 1933
Subject Company: Maverick Tube Corporation
Registration No. 333-42144
The following is a slide show presentation by Maverick Tube Corporation on
August 29, 2000.
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[LOGO] [LOGO]
MAVERICK TUBE CORPORATION PRUDENTIAL STEEL
Partners In Quality
INVESTOR PRESENTATION
AUGUST 2000
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Forward Looking Statements
These slides accompany an oral presentation by Maverick Tube Corporation and
Prudential Steel Ltd., which, except for the historical information, contain
forward-looking statements representing our expectations or beliefs about future
events and financial performance. Forward-looking statements are subject to
known and unknown risks, uncertainties and assumptions, including:
oil and gas price volatility;
steel price volatility;
domestic and foreign competitive pressures;
fluctuations in industry-wide inventory levels;
the presence or absence of governmentally imposed trade restrictions;
asserted and unasserted claims; and
those other risks and uncertainties described on Exhibit 99.1
to our Annual Report on Form 10-K for our fiscal year ended
September 30, 1999.
In light of these risks, uncertainties and assumptions, some or all of the
forward-looking events to be discussed by Maverick and Prudential and included
in the slides might not occur. In addition, actual results could differ
materially from those suggested by the forward-looking statements. Maverick and
Prudential undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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On June 11, Maverick and Prudential Announced . .
A combination of the companies to create the leading North American
welded tube producer
Prudential holders to receive 0.52 Maverick shares in an Exchangeable
Share transaction
Tax deferred transaction
Pooling of Interests accounting treatment expected
Regulatory approval process substantially completed
Authorized to list on NYSE - symbol MVK
Closing expected by September 22, 2000
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Combined Company Overview
1.5 million tons of tubular products capacity
Largest North American welded OCTG producer
Diverse operations with 10 mills and 5 locations
Highly efficient and low cost operations
Well positioned for future growth
Financially strong
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<PAGE>
Combined Company's Expanded
Prime Distribution Capabilities
[Picture Graphic Omitted - Picture of United States with combined
distribution capabilities from Calgary, Canada; Longview, WA;
Beaver Falls, PA; Hickman, AR; Conroe, TX]
[Pie graph omitted - demonstrates 25% industrial products and 75%
energy products]
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Historical Combined Sales Volume
[Graph Omitted - Tabular representation for EDGAR filing below]
Short Tons (000)
1994 505
1995 489
1996 629
1997 877
1998 628
1999 595
2000* 913
Does not include the large diameter mill which will be fully operational in
2001.
*Annualized first six months of CY 2000 for Prudential and first nine months of
FY 2000 for Maverick and includes Prudential's by-product and conversion tons
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Broad Product Line
Energy Products
- new and reworked wells, transportation of oil and gas,
and other products
- Casing 1 1/2" thru 16"
- Tubing Carbon and alloy grades
- Line Pipe Complete end finishing
- Couplings HIC resistant products for sour gas service
- Premium connections 80 ft Line Pipe
Industrial Products
- construction, agricultural and industrial equipment, and other products
- HSS 1 1/2" - 12"
- Standard Pipe Rounds, squares, rectangles
- Piling Custom products
- Cold drawn tubing High tolerance products
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Potential Significant Financial Benefits
- Increased earnings potential with reduced volatility
- Combines earnings potential of US OCTG market with relative
stability of Canadian OCTG market
- Larger market capitalization provides access to broader potential
investor base
- Strong balance sheet should reduce cost of capital
- Improved cash flow through tax optimization
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<PAGE>
Expected Substantial Operating Synergies
- Combined company becomes one of the largest purchasers of hot rolled
steel in North America
- $10/ton reduction in steel costs = $.18/share EPS
- Opportunities to expand energy and industrial market shares in US
and Canada
- Sales of large diameter energy and HSS products to
Prudential customers
- Sales of Longview plant HSS to Maverick West Coast customers
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Expected Substantial Operating Synergies
- Improved plant utilization and reduced distribution costs
- Supply some existing Maverick Canadian sales from
Prudential's Calgary plant
- Information technology efficiencies
- Expanded utilization of recent Maverick systems investments
- Broader application of ongoing E-commerce initiatives
- Adoption of "best practices" from both companies
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1997 Combined Earning Capacity
Energy and industrial tube markets were strong in 1997 and the combined
company produced impressive results . . . . .
Maverick(1) Prudential(2,3) Combined
Short Tons Shipped 498 407 905
Revenue (US$) 313 255 568
EBITDA (US$) 36 51 87
(1) Maverick data is for calendar 1997
(2) Converted to US Dollars at average 1997 exchange rate of: CN$1.38=
US$1.00
(3) Includes by-product and conversions tons
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Capabilities Added Since 1997 Cycle
- Additional finishing line at Hickman, AR and improved process
efficiency at Conroe, TX
- Acquisition of cold drawn tubing facility
- Large diameter mill at Hickman, AR expands OCTG, line pipe
and HSS product line
- New Longview, WA facility
- Calgary mill #1 restart and new finishing equipment
- New premium thread facility for critical applications
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<PAGE>
Strong Combined Balance Sheet
(In millions of US$, except for percentages)
June 30, 2000
Pro Forma
Maverick Prudential(1) Combined
-------- ---------- ----------
Working Capital 69.5 83.6 153.1
Total Assets 235.9 150.7 386.6
Total Debt 62.7 30.7 93.4
Shareholder's Equity 115.9 93.4 209.3
Total Debt/Book Capitalization 35.1% 24.7% 30.8%
(1) Converted to US Dollars at exchange rate of CN$1.48=US$1.00
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Combined Company Business Strategy
Supply North American energy markets with broader OCTG and Line Pipe
product offerings
Complete large mill expansion with successful energy and industrial
market entry
Expand market penetration of Longview and Beaver Falls facilities
Increase margins by implementing actions to achieve operating and
financial synergies
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[LOGO] [LOGO]
MAVERICK TUBE CORPORATION PRUDENTIAL STEEL
Partners In Quality
Business Overview
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Maverick's History of Growth
Capacity grew at a 16% CAGR from 1989-2000
Sales grew at a 12% CAGR from 1989-1999
[Graph Omitted- Tabular representation for EDGAR filing below]
<TABLE>
<CAPTION>
Capacity (Short Tons 000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ----
427 477 477 577 669 669 669 669 974
Sales (Short Tons 000)
1992 1993 1994 1995 1996 1997 1998 1999 2000E
---- ---- ---- ---- ---- ---- ---- ---- -----
172 229 215 276 345 470 428 338 508
</TABLE>
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<PAGE>
Prudential's History of Growth
Significant expansion of capacity and sales
Canadian energy pipe market share increased to 25%
[Graph Omitted - Tabular representation for EDGAR filing below]
<TABLE>
<CAPTION>
Capacity (Short Tons 000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ----
265 265 265 350 350 375 440 550 550
Sales (Short Tons 000)(1)
1992 1993 1994 1995 1996 1997 1998 1999 2000E
---- ---- ---- ---- ---- ---- ---- ---- -----
110 229 290 213 284 407 200 257 405
(1) Includes by-product and conversion tons
</TABLE>
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Competitive Strengths
Innovative and diversified product lines
Full range of products with new large diameter mill
Low cost manufacturer - economies of scale
High quality reputation - customer service focus
Significant market share in sizes produced
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U.S. Drilling Activity Rapidly Approaching 1997 Levels
Source: Baker Hughes
[Graph Omitted - Tabular representation for EDGAR filing below]
Rigs Running
Gas Rigs Oil Rigs
-------- --------
1Q95 457 352
2Q95 372 324
3Q95 342 316
4Q95 404 321
1Q96 423 329
2Q96 414 287
3Q96 461 291
4Q96 494 296
1Q97 489 353
2Q97 496 358
3Q97 550 383
4Q97 593 396
1Q98 624 369
2Q98 598 363
3Q98 584 276
4Q98 557 235
1Q99 504 188
2Q99 434 119
3Q99 396 128
4Q99 530 118
1Q00 625 148
2Q00 615 156
3Q00 646 199
8/25/00 = 996 [Gas, Oil and other Rigs]
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<PAGE>
Strong Canadian Drilling Levels Expected in 2000/2001 Drilling Season
[Graph Omitted - Tabular representation for EDGAR filing below]
Canadian Rigs Running
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
FQ1 327 341 395 463 290 480
FQ2 146 150 255 174 104 245
FQ3 220 275 398 205 253 310
FQ4 225 317 451 201 337
8/25/00 = 339
Source: Baker Hughes
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Oil Prices and Oil Drilling
Source: Baker Hughes, Spears & Associates
[Graph Omitted - Tabular representation for EDGAR filing below]
Oil Drilling Oil Prices
(Rigs Drilling) (WT 1 $/BBL)
------------ -----------
1Q95 352 $17.53
2Q95 324 $18.41
3Q95 316 $19.35
4Q95 321 $17.89
1Q96 329 $18.16
2Q96 287 $19.61
3Q96 291 $21.63
4Q96 296 $21.94
1Q97 353 $24.65
2Q97 358 $23.46
3Q97 383 $19.92
4Q97 396 $19.73
1Q98 369 $20.22
2Q98 363 $16.08
3Q98 276 $14.77
4Q98 235 $14.13
1Q99 188 $13.09
2Q99 119 $13.09
3Q99 128 $17.68
4Q99 118 $21.59
1Q00 148 $24.30
2Q00 156 $28.88
3Q00 199 $29.04
8/25/00 = 200
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<PAGE>
Gas Prices and Gas Drilling
Source: Baker Hughes, Spears & Associates
Gas Drilling Gas Prices
(Rigs Drilling) ($/MCF)
------------ -----------
1Q95 457 $1.50
2Q95 372 $1.36
3Q95 342 $1.46
4Q95 404 $1.40
1Q96 423 $1.84
2Q96 414 $2.79
3Q96 461 $2.19
4Q96 494 $2.04
1Q97 489 $2.88
2Q97 496 $2.59
3Q97 550 $2.04
4Q97 593 $2.37
1Q98 624 $2.80
2Q98 598 $2.11
3Q98 584 $2.18
4Q98 557 $1.96
1Q99 504 $1.87
2Q99 434 $1.73
3Q99 396 $2.19
4Q99 530 $2.49
1Q00 625 $2.45
2Q00 615 $2.53
3Q00 646 $3.53
8/25/00 794
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U.S. Tubular Shipments and Prices Continue to Increase
[Graph Omitted - Tabular representation for EDGAR filing below]
<TABLE>
<CAPTION>
(Price Indexed to 1/96) (Tons Shipped 000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jan-96 Feb-96 Mar-96 Apr-96 May-96 Jun-96
U.S. OCTG Price Index 100 100.3802 100.6337 100.7605 101.2674 102.0279
U.S. Domestic Shipments 145 134 151 158 154 147
Jul-96 Aug-96 Sep-96 Oct-96 Nov-96 Dec-96 Jan-97 Feb-97
U.S. OCTG Price Index 102.0279 103.2953 103.8023 104.0558 104.436 104.943 105.1965 105.7034
U.S. Domestic Shipments 155 178 183 186 166 211 164 182
Mar-97 Apr-97 May-97 Jun-97 Jul-97 Aug-97 Sep-97 Oct-97
U.S. OCTG Price Index 107.4778 108.4918 110.0127 111.4068 112.4208 113.6882 114.0684 114.3219
U.S. Domestic Shipments 195 222 262 252 282 268 242 239
Nov-97 Dec-97 Jan-98 Feb-98 Mar-98 Apr-98 May-98 Jun-98
U.S. OCTG Price Index 114.5754 114.8289 115.0824 114.9556 114.1952 113.1812 112.9278 111.7871
U.S. Domestic Shipments 214 221 230 227 213 205 168 150
Jul-98 Aug-98 Sep-98 Oct-98 Nov-98 Dec-98 Jan-99 Feb-99
U.S. OCTG Price Index 109.7592 108.1115 104.6895 102.9151 101.1407 98.47909 96.07098 93.91635
U.S. Domestic Shipments 145 126 108 107 56 72 91.136 70.459
Mar-99 Apr-99 May-99 Jun-99 Jul-99 Aug-99 Sep-99
U.S. OCTG Price Index 91.3815 90.36755 89.48035 89.6071 89.73384 90.36755 92.14195
U.S. Domestic Shipments 65.085 80.676 84.749 84.315 94.65 108.883 135.431
Oct-99 Nov-99 Dec-99 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00
U.S. OCTG Price Index 94.04309 95.81749 98.47909 100.2535 101.7744 103.9 105.2 107.1 109.4
U.S. Domestic Shipments 171.53 171.027 177.251 189.325 201.137 243.2 224.2 235
Source: Raymond James and Assoc.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Canadian Tubular Shipments and Prices Approach 1997 Levels
[Graph Omitted - Tabular representation for EDGAR filing below]
(Price Indexed to 1/96) (Tons Shipped 000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jan-96 Feb-96 Mar-96 Apr-96 May-96 Jun-96 Jul-96
Canadian OCTG Price Index 100 100 99.8 100.5 102.7 101.3 103.5
Canadian Domestic Shipments 41 41 39 14 19 34 38
Aug-96 Sep-96 Oct-96 Nov-96 Dec-96 Jan-97 Feb-97 Mar-97 Apr-97
Canadian OCTG Price Index 102.1 102.9 100.3 102.7 102.2 102.6 101.8 103.4 102
Canadian Domestic Shipments 43 34 46 45 39 46 47 45 28
May-97 Jun-97 Jul-97 Aug-97 Sep-97 Oct-97 Nov-97 Dec-97 Jan-98
Canadian OCTG Price Index 101.2 101.1 101.2 103.2 102.6 103.2 104.3 104.7 103.8
Canadian Domestic Shipments 42 48 59 49 53 59 56 53 56
Feb-98 Mar-98 Apr-98 May-98 Jun-98 Jul-98 Aug-98 Sep-98 Oct-98
Canadian OCTG Price Index 104.9 106.4 108.6 107.4 109.7 109.4 109.3 109.2 106.4
Canadian Domestic Shipments 53 38 15 26 29 21 25 22 21
Nov-98 Dec-98 Jan-99 Feb-99 Mar-99 Apr-99 May-99
Canadian OCTG Price Index 106.8 107.2 106.5 106.3 106 104.4 102.6
Canadian Domestic Shipments 23 21 24 21 14 4 12
Jun-99 Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99
Canadian OCTG Price Index 102.7 102.9 103.1 103 103.8 105.3 105.9
Canadian Domestic Shipments 23 22 31 41 33 39 39
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00
Canadian OCTG Price Index 106.5 107.1 107.9 107.9 107.9 107.9
Canadian Domestic Shipments 44 44 40 17.1 36.5 42.7
</TABLE>
Source: Raymond James and Assoc.
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U.S. OCTG Industry Utilization And Maverick's Selling prices
Source: Preston Pipe Report, Historical Data
[Graph Omitted - Tabular representation for EDGAR filing below]
Utilization Prices
(Percentage) ($/Ton)
------------ -----------
1Q95 59.1% $642
2Q95 59.1% $667
3Q95 57.3% $657
4Q95 59.4% $644
1Q96 57.4% $664
2Q96 60.3% $663
3Q96 67.9% $649
4Q96 72.0% $652
1Q97 75.4% $656
2Q97 82.2% $668
3Q97 85.6% $681
4Q97 85.4% $698
1Q98 73.9% $717
2Q98 66.6% $736
3Q98 57.8% $724
4Q98 32.7% $669
1Q99 27.1% $630
2Q99 32.2% $577
3Q99 42.0% $542
4Q99 54.1% $536
1Q00 73.0% $559
2Q00 79.0% $618
3Q00 80.0% $637
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<PAGE>
Maverick Steel Prices
[Graph Omitted - Tabular representation for EDGAR filing below]
$/Ton
-----
F1Q95 $346.00
F2Q95 $340.00
F3Q95 $357.00
F4Q95 $345.00
F1Q96 $320.00
F2Q96 $316.00
F3Q96 $314.00
F4Q96 $326.00
F1Q97 $325.00
F2Q97 $336.00
F3Q97 $336.00
F4Q97 $323.00
F1Q98 $324.00
F2Q98 $318.00
F3Q98 $311.00
F4Q98 $307.67
F1Q99 $295.00
F2Q99 $272.33
F3Q99 $258.00
F4Q99 $256.67
F1Q00 $294.33
F2Q00 $296.67
F3Q00 $299.00
F3Q00 (Repl. Cost) $280.00
Source: Historical Data
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U.S. OCTG Imports
Source: U.S. Census Bureau, Mgmt. Estimates
[Graph Omitted - Tabular representation for EDGAR filing below]
Import
Import Market
Tons (000) Share
------------ -----------
1Q95 98,817 18.4%
2Q95 52,829 13.1%
3Q95 63,014 13.8%
4Q95 28,319 6.6%
1Q96 36,235 8.0%
2Q96 40,550 8.6%
3Q96 50,628 10.1%
4Q96 64,025 11.6%
1Q97 58,259 13.1%
2Q97 97,275 18.4%
3Q97 94,142 16.6%
4Q97 110,342 15.1%
1Q98 107,251 19.2%
2Q98 115,194 20.5%
3Q98 93,041 23.0%
4Q98 86,952 17.5%
1Q99 47,969 13.2%
2Q99 26,353 9.2%
3Q99 25,222 8.1%
4Q99 33,991 9.0%
1Q00 83,123 17.0%
2Q00 136,086 28.0%
3Q00 175,942 30.3%
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<PAGE>
U.S. OCTG Industry and Months of Supply
Source: Duane Murphy & Associates, Mgmt. Estimates
OCTG Inventory Months
(Tons (000)) Supply
------------ -----------
1Q95 699,619 5.2
2Q95 728,000 4.8
3Q95 693,697 4.9
4Q95 683,035 4.5
1Q96 698,035 4.5
2Q96 725,035 4.3
3Q96 739,035 4.0
4Q96 763,035 5.2
1Q97 782,034 4.4
2Q97 854,034 4.5
3Q97 1,027,034 4.2
4Q97 1,062,034 5.7
1Q98 1,131,034 6.0
2Q98 1,196,034 8.9
3Q98 1,279,377 7.7
4Q98 1,128,377 9.3
1Q99 975,377 10.3
2Q99 909,377 9.1
3Q99 830,000 6.6
4Q99 758,000 4.7
1Q00 773,000 4.8
2Q00 874,000 4.5
3Q00 994,000 4.5
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Conclusions
The Maverick / Prudential combination creates a stronger company with
minimal redundancy
Strong commodity prices and drilling activity expected to provide
near-term earnings growth
Larger market capitalization and broader shareholder base improves
liquidity and capital access
Combined company is well positioned to pursue future growth
opportunities
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[LOGO] [LOGO]
MAVERICK TUBE CORPORATION PRUDENTIAL STEEL
Partners In Quality
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Investors and security holders are advised to read the proxy statement and other
documents related to the Maverick Tube Corporation and Prudential Steel Ltd.
combination previously disseminated to securityholders and any amendments to
these documents when they become available because they contain (or will
contain) important information. Investors and security holders may obtain these
documents free of charge and other documents filed by Maverick or Prudential
with the Securities and Exchange Commission at the SEC's Internet web site
(www.sec.gov) and these documents may be obtained for free, in the case of
Maverick, from Maverick by directing such request to Maverick Tube Corporation,
1640 Swingley Ridge road, Seventh Floor, Chesterfield, MO 63017, (636) 733-1600;
and in the case of Prudential from Prudential by directing such request to
Prudential Steel Ltd., Suite 1800, 140 Fourth Avenue S.W., Calgary, Alberta,
Canada T2P 3N3, (403) 267-0300.
