Koppers Chinese Joint Venture Restructures Supply Agreement for $30M Payment

Koppers (Jiangsu) Carbon Chemical Company Limited ("KJCC"), a majority held Chinese joint venture of Koppers International B.V., a wholly-owned subsidiary of Koppers Holdings Inc.

, announced today an agreement with C-Chem (Jiangsu) Needle Coke Co., Ltd ("C-Chem"), a subsidiary of Nippon Steel Sumikin Chemical Co. Ltd ("NSCC") to revise certain terms of its previously executed soft pitch supply agreement in exchange for a one-time payment of $30 million. When the original supply agreement was signed in September 2013, it was contemplated that both the KJCC and C-Chem facilities would begin operations around the same date. As of the current date, however, C-Chem has yet to commence operations and KJCC has had to sell production into a challenging domestic market since bringing its distillation facility online in July 2014. The revised agreement calls for shipments to begin no later than March 31, 2016. Another key change to the original supply agreement is a revision of the pricing formula to accommodate the current unfavorable market conditions that C-Chem faces while still allowing for improvements from KJCC based upon stronger end markets in the future. James A. Sullivan, senior vice president of Global Carbon Materials and Chemicals, said, "Gaining agreement on a revised supply agreement with C-Chem was extremely beneficial to both parties. What we receive is an important influx of cash to assist our struggling China business as we await the start-up of C-Chem's plants while they receive relief on raw material costs." Mr. Sullivan continued, "Once C-Chem completes its start-up phase and begins receiving full contractual volumes in the latter part of 2016, KJCC should still be able to generate EBITDA on an annualized basis of at least $9 million." Leroy Ball, president and CEO of Koppers, added, "This agreement is consistent with my directive to improve the economics of our businesses in China over the long-term and vastly improves what was a tenuous situation as we await commencement of C-Chem's operations. In addition, this agreement reflects a continuing commitment by NSCC to this project even in the face of difficult economic circumstances. As for the use of proceeds, we expect to use up to half of the $30 million payment to restructure the debt of our KJCC joint venture with the remainder used to pay outstanding construction obligations and fund working capital as we bring the facility to full production later this year to meet C-Chem's needs."