Highly Confidential

Sun Capital Partners

Raw Materials Opportunity Analysis

Luis Pacheco: Director of Sourcing

February 17th 2011

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Agenda

• Executive Summary• Approach• Potential Savings• Findings• Risks and Opportunities • Next steps

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The Current Situation• Split of resin/film spend is 50% Europe,47% America, and 3% Asia.• Many locations make it challenging to leverage global purchasing• The top 5 resin materials, PE, PS, PP, Nylon, and PET account for 93% of spend• Work on synergies has already started, typically “2” company projects• Different operational situations may dictate different priorities e.g. cash flow needs vs. cost• Current market conditions: volatile commodity market leading to increasing costs

The Opportunity• Potential savings of $8.6M to $13.7M identified with an additional $3.3M to $6.9M improvement in Working

Capital• Quick Wins by eliminating price inconsistencies, some supplier consolidation, and improved payment terms• Additional opportunity if we expand into other direct and indirect categories • Future review of technical cost reduction to be considered

Data Resins Film Total

Portfolio Companies 6 6 7

Countries 16 6 16

Resins/Films Classifications 104 22 126

Suppliers 59 79 133

Skus 490 427 917

Annual Volume (Tons) 225 K 43K + 268K +

Spend (USD) 414 million 167 million 581 million

Payment Terms Pay in advance → Net 150

Key Focus Unit price → Product breadth

Executive Summary

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Approach• Reviewed high level direct material spend from packaging companies buying

polymers… total spend of $922M

• Focused on resin and film which gave combined spend of $581M… 63% of direct material spend reviewed

• Inks, plastic components, and other items to be analyzed later• Collected, cleaned, and standardized detailed data to analyze resins and film• Completed calls to clarify doubts on data. Key feedback: “suppliers market today”

and “ability to buy regional”• Generated a first pass database that will be the basis for a broader project

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Albea168.854531247303

18%Betts

66.90732385938987%

Exopack387.353871

42%Famosa7.29755

1%

Paccor90.1484011682265

10%

Reuther33.2348810298

4%

Veriplast168.521221808134

18%

Spend ($M) by Company

Resin414.253629911043

45%Film

166.76359635608418%Components

47.0295%

Inks, Dyes, Solvents $79 9%

Adhesives14.3085006915961

2%

Paper107.96

12% Misc92.8007076273215

10%

Spend ($M) by Category

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Database is Basis for Estimating Savings

• Does internal price benchmarking show opportunity for reductions?

• How much spend can be leveraged by supplier, item, and category?

• What are the contracted periods and exit restrictions?

• What are our payment terms?• What is the key focus when purchasing?• How much of the spend is customer

specified? What is required to qualify a new supplier?

• Are products purchased contractually or spot-buys?

Portfolio Companies

• How fragmented is the supply base?• Is there opportunity to leverage

purchasing scale? Regional or Global?

• What is the range of products offered vs. SCP needs?

• Are we buying from the right suppliers?

• What are we buying from distributors that we could buy from manufacturers?

• Should LCC suppliers be included?• What are the supply/demand

conditions for that product?

Supply Base

Savings Opportunity

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Potential Savings: $8.6M - $13.7M (1.5% -2.4%)

Under Contract?

Customer Specified?

Recently Addressed?

Resin and Film Spend

$581M Annual

$67M recently addressed

$2.5M saved in 2010

$514M not recently

addressed

Yes$172M

Yes$69M

No$103M

No$342M

Yes$188M

No$154M

$0.7M - $1.4M Long term savings

$1M -$2.1MMid term savings

$3.8M -$5.6M Long term savings Long approval on $75M

$2.5M -$3.7M Short term savings on $123M

$0.6 - $0.9 Long term savings Long approval on $31M

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Estimated savings of $8.6 -$13.7M on spend of $581M

• Low percentage savings applied to a large spend makes it an attractive opportunity• $2.5-$3.7M can be captured in the short term (less than 6 months)• Additional $3.3M - $6.9M improvement in working capital

1%-2%

1%-2%

2%-3%

2%-3%

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66897598.791

63%

38925136.222734137%

186400.450%

Spend ($) for Polystyrene

PS High ImpactPS General-PurposePS

LDPE; 61819845.63822; 37%

HDPE; 19175059.449; 11%

LLDPE/Octene; 16909000; 10%

LLDPE/Hexene16807000

10%

Spend ($) for Polyethylene

Closer Look At High Spend Items: Resin

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• Polyethylene and polystyrene give 66% of resin spend. Multiple subgrades within each grade

• LDPE is the grade with the most spend (37%) within polyethylene

• PS-GP has 37% of the spend within Polystyrene

Polyethyle

ne (PE)

Polystyr

ene (

PS)

Polypro

pylene (

PP)Nylo

n

Copolymer

All Others

$0$20$40$60$80

$100$120$140$160$180$200

0%10%20%30%40%50%60%70%80%90%100%

167

106 82

15 8

37

Spend by Polymer

Spend

Cum Percent

$(M)

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• Low value outliers were due to purchase of discontinued LDPE grades

• High values outliers are grades specified by customer, which use specialty additives, and are currently bought from distributors

Albea Exopack Veriplast0

1,0002,0003,0004,0005,000

LDPE Price Range Across PortfolioUSD/ Ton • LDPE has 36 resin grades with

70% price spread• Removing 13 outliers gives a

price range of: Max $1,906/ton Min $1,698/ton 12% spread on price

Price Distribution Example: LDPE Resin

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Price spread needs to be filtered before analyzing variation

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,5000

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

LDPE Price vs. Spend

AlbeaExopackVeriplast

Price (USD/Ton)

Spend (USD )

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Paccor Veriplast0

5001,0001,5002,0002,5003,000

PS-GP Price Range Across PortfolioUSD/ Ton

• PS-GP has 18 resins grades. • Removing 4 specialty outliers• Price range of:

Max $1,703/ton Min $1,619/ton 5% spread on price

• High values are grades which need to be approved by customers

• Terms may be an area we can leverage with volume where price can not

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Price Distribution Example: PS-GP Resin Narrow non-typical price-volume curve for standard product

1,500 1,600 1,700 1,800 1,900 2,0000

2,000,0004,000,0006,000,0008,000,000

10,000,00012,000,00014,000,000

PS- GP Price vs. Spend

PaccorVeriplast

Price (USD/Ton)

Spend (USD )

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Note: Std days = Payments terms + Consignment inventory

Payment Terms Comparison

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• Potential WC improvement for resin and film of $3.3M - $6.9M– Low improvement scenario factored with 5 days improvement for Albea, Betts,

and Exopack. Famosa improved to 15 days– High Improvement scenario factored with 10 days improvement for Albea, Betts,

and Exopack. Famosa improved to 30 days• Different expectations for payment terms in Europe vs. North America• Resin has better terms than films, except for Betts. Typically 10-20 days better.

Albea Betts Exopack Famosa Paccor Veriplast0

20

40

60

80

100

120

140

160

Payment Terms for Resin Purchases

MinNet Days

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Opportunity to Consolidate Supplier Base

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Film Suppliers Spend USDTredegar 13,209,984Toray 8,713,810Treofan 7,937,776NEX AND BEMIS 7,606,162Berry Pliant 7,583,400Polyplex 7,551,749Huhtamaki 7,114,571DNP Indonesia 6,729,542All others 100,316,660

0 10 20 30 40 50 60 70 800

50100150200250300350400450

Distribution of Film Spend by Suppliers

Count of Suppliers

Annualized Cumulative Spend ($M)

$167M total spend with 79 suppliersTop 20 suppliers give 71% of spend15 suppliers < $200,000Bottom 30 suppliers give 4% of spend

0 10 20 30 40 50 60 70 800

50100150200250300350400450

Distribution of Resin Spend by Suppliers

Count of Suppliers

Annualized Cumulative Spend ($M) $414M total spend 59 suppliers

Top Ten suppliers give 82% of spend

• Potential to consolidate supplier base, particularly for films.

• More detailed understanding of technical specification will be needed for making final decisions

Resin Suppliers Spend ($)Total Petrochemical 71,099,724 Ineos Nova 45,063,248 LyondellBasell 33,257,629 Borealis 30,705,157 Chevron Phillips 29,688,800 Dow Chemical 28,709,150 Dupont 28,361,189 Synthos 26,269,183 All Others 204,439,072

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Opportunities

$2.5M-$3.7M Short Term < 6 months

• Do not slow down current projects• Reduce cost by internal benchmarking

– 3.8% achieved in 2010 by Exopack– Validated from data from 3% to 12% variation in

“narrowed” pricing distribution

• Improved terms– Variations across portfolio within same supplier

clearly shown– Famosa terms $300-$600K– Terms may be a bigger lever than cost in some

cases

• Supplier consolidation– How can we collaborate to make it a win/win?

• Bundling– Global suppliers but regional market conditions

likely to dictate format

$6.1M-$10M Medium to Long Term

• Expand to other categories– Inks, solvents, cap ex etc.

• Third Party Benchmarking– Do opportunities exist in non competing industries

or via third parties?• Low cost country sourcing

– Exopack has extensive experience in this area– Middle East?– Asia?

• Technical Cost Reduction– Grades?– Specifications?– Blend in house?

• Hedging indexes?• Support customer base expansion

overseas e.g. China

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Risks and Concerns

• Volatile Market Conditions– “It’s a nightmare”

• Suppliers Market– Some consolidation in progress

• Regional Markets– What ability do we have to work across continents?... Do suppliers serve all the markets where we are

purchasing?– Are the same expectations applicable on all locations?... Payment terms in Europe vs. North America– Inter Europe regional play

• Customers– Approval process could force us to expose cost reduction

• Historical Credit Issues– Lowest common denominator?

• Forecasting savings on categories that have been under continuous improvement– Historically we have seen cost reductions in resins and films– Some synergies between two portfolio companies already started

• Sun Capital Company Consolidation and Exits– Implications?

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Next Steps• Determine project approach

– Internal and/or consultants– Select team

• Determine project scope– Resin and film– Develop Supplier Strategy

• Agree buying process– Group process– Consortium buy

• Additional opportunities:• Plastic components• Inks, solvents, and dyes.• Printing plates

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Appendix

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Direct Spend Details ($M)

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Category Albea Betts Exopack Famosa Paccor Reuther Veriplast Total

Resin 68 4 121 7 77 - 137 414

Film 10 28 103 - 2 12 13 167

Components 22 25 - - - - - 47

Inks, Dyes, Solvents 18 3 29 - 9 4 16 79

Adhesives - - 14 - 0 - 0 14

Paper - - 101 - - 7 - 108

Misc 51 7 21 - 1 10 3 93

Total 169 67 387 7 90 33 169 922

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Paccor Veriplast0

5001,0001,5002,0002,5003,000

PS HIPS Price Range Across PortfolioUSD/ Ton

• HIPS has 13 resins grades. • Removing 2 outliers gives a

price range of: Max $1,856/ton Min $1,749/ton 6% spread on price

1,600 1,800 2,000 2,200 2,400 2,600 2,8000

5,000,00010,000,00015,000,00020,000,00025,000,00030,000,00035,000,000

HIPS Price vs. Spend

PaccorVeriplast

Price (USD/Ton)

Spend (USD x1,000)

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Price Distribution Example: PS HIPS Resin

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Resin Payment Terms Comparison by Company

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Albea Betts Exopack Famosa Paccor Veriplast TotalSpend (Millions) $68.0 $3.8 $120.7 $7.3 $77.3 $137.0 $414.2

Average 52 31 52 0 72 78 New average net days low improvement 57 36 57 15 72 78 New average net days high improvement 62 41 62 30 72 78

Working capital current $9.8 $0.3 $17.2 $0.0 $15.3 $29.1 $71.8Working capital with low improvement $10.6 $0.4 $18.9 $0.3 $15.3 $29.1 $74.6 $2.8Working capital with high improvement $11.6 $0.4 $20.5 $0.6 $15.3 $29.1 $77.6 $5.7

• Used 2.5 and 5 days as the low and high improvement for film.• Low/High improvement for film of $0.5M-$1.2M• Total working capital improvement of $3.3-$6.9M

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Resin Payment Terms Comparison by Supplier

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Supplier Albea Betts Exopack Paccor Veriplast

Borealis 73 70 92

LyondellBasell 66 30 30 39 84

Total Petrochemical 72 105 100 80

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Platts Resin Prices 2007-2010

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Jan-

08

Feb-

08

Mar

-08

Apr-

08

May

-08

Jun-

08

Jul-0

8

Aug-

08

Sep-

08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb-

09

Mar

-09

Apr-

09

May

-09

Jun-

09

Jul-0

9

Aug-

09

Sep-

09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb-

10

Mar

-10

Apr-

10

May

-10

Jun-

10

Jul-1

0

Aug-

10

Sep-

10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

GPPS

PP

LDPE

PET

€/to

nne