UPDATE CALL

PROPOSED COMBINATION

OF KRATON PERFORMANCE POLYMERS, INC.

WITH THE SBC BUSINESS OF LCY CHEMICAL CORP.

KRATON PERFORMANCE POLYMERS, INC.

KEVIN M. FOGARTY, PRESIDENT AND CHIEF EXECUTIVE OFFICER

June 24, 2014

Filed by Kraton Performance Polymers Limited

Pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934

Subject Company: Kraton Performance Polymers, Inc.

Commission File No.: 001-34581

Commission File No. for Registration Statement

on Form S-4: 333-195597

2

Forward-Looking Statements

This presentation includes forward-looking statements that reflect our plans, beliefs, expectations and current views with respect to, among other things, the combination

and future events and financial performance. Forward-looking statements are often characterized by the use of words such as "outlook," "believes," "estimates,"

"expects," "projects," "may," "intends," "plans" or "anticipates," or by discussions of strategy, plans or intentions, including statements regarding expected synergies from

the combination and the costs and timing to obtain them; expectations regarding the dilution / accretiveness of the combination; capabilities and advantages of the

combined company; whether the transaction will close and the expected timing thereof; projected debt levels and leverage ratios and estimates; and other projected

financial metrics, including revenue, margins, ROIC, free cash flow conversion and EBITDA, including components thereof, adjustments thereto and related multiples.

All forward-looking statements in this presentation are made based on management's current expectations and estimates, which involve known and unknown risks,

uncertainties and other important factors that could cause actual results to differ materially from those expressed in forward-looking statements.  Our expectations and

assumptions regarding cost rationalizations, variable cost optimizations and reductions in overhead may not materialize, or our costs to achieve synergies may exceed our

estimates, any of which would adversely affect our ability to achieve projected synergies. Our expectations and assumptions regarding the financial performance of the

combined company may not materialize, which would adversely affect our ability to achieve expected accretion and the expected timing of the accretion.  Regulatory

approvals that are conditions to the closing may not be obtained as anticipated, which could delay or prevent closing of the transaction.  Our performance or that of LCY’s

could be adversely affected by other risks and uncertainties, which would adversely affect the ability of the combined company to achieve expected advantages.  In the

case of Kraton, these risks and uncertainties include, but are not limited to, those described in our latest Annual Report on Form 10-K, including but not limited to "Part I,

Item 1A. Risk Factors" and "Part I, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" therein, our Registration Statement

described below, including, but not limited to “Risk Factors”, and in our other filings with the Securities and Exchange Commission, and include, but are not limited to, risks

related to: conditions in the global economy and capital markets; declines in raw material costs; limitations in the availability of raw materials we need to produce our

products in the amounts or at the prices necessary for us to effectively and profitably operate our business; competition in our end-use markets, from other producers of

SBCs and from producers of products that can be substituted for our products; and other factors of which we are currently unaware or deem immaterial. Readers are

cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and we assume no obligation

to update such information in light of new information or future events.

Additional Information and Where to Find it

THIS COMMUNICATION DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES OF KRATON OR THE COMBINED COMPANY. 

KRATON WILL FILE A REVISED PRELIMINARY PROXY STATEMENT/PROSPECTUS (AND AN AMENDMENT TO THE RELATED REGISTRATION STATEMENT (FILE NO. 333-195597))

AND OTHER DOCUMENTS WITH THE SEC .  INVESTORS AND SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE REVISED PRELIMINARY PROXY

STATEMENT/PROSPECTUS AND AMENDMENT TO THE REGISTRATION STATEMENT (INCLUDING ANY FURTHER AMENDMENTS OR SUPPLEMENTS THERETO) WHEN THEY

BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION REGARDING KRATON, LCY AND THE COMBINATION.  A DEFINITIVE PROXY

STATEMENT/PROSPECTUS WILL BE SENT TO THE SECURITY HOLDERS OF KRATON SEEKING THEIR APPROVAL OF THE COMBINATION.  INVESTORS AND SECURITY HOLDERS

MAY OBTAIN A FREE COPY OF THE PROXY STATEMENT/PROSPECTUS  AND THE REGISTRATION STATEMENT (WHEN AVAILABLE) AND OTHER DOCUMENTS FILED BY KRATON

WITH THE SEC AT THE SEC’S WEBSITE AT WWW.SEC.GOV.  THE PROXY STATEMENT/PROSPECTUS AND THE REGISTRATION STATEMENT AND OTHER SUCH DOCUMENTS

(RELATING TO KRATON) MAY ALSO BE OBTAINED FOR FREE FROM KRATON BY ACCESSING KRATON’S WEBSITE AT WWW.KRATON.COM    

Participants in the Solicitation

Kraton, its directors, executive officers and certain members of management and employees may be considered “participants in the solicitation” of proxies from Kraton’s

stockholders in connection with the combination.  Information regarding such persons and a description of their interest in the combination is contained in the proxy

statement/prospectus.  Information concerning beneficial ownership of Kraton common stock by its directors and certain executive officers is included in its proxy

statement dated April 15, 2014 and subsequent statements of changes in beneficial ownership on file with the SEC.

3

USE OF NON-GAAP FINANCIAL MEASURES

This communication includes the use of both GAAP and non-GAAP financial measures. The non-GAAP financial measures are EBITDA

and Adjusted EBITDA.  We consider these non-GAAP financial measures important supplemental measures of financial performance

and believe they are frequently used by investors, securities analysts and other interested parties in the evaluation of our

performance and/or that of other companies in our industry, including period-to-period comparisons. Further, management uses

these measures to evaluate operating performance.

These non-GAAP financial measures have limitations as analytical tools and in some cases can vary substantially from other measures

of financial performance. You should not consider them in isolation, or as a substitute for analysis of results under GAAP in the United

States. In the case of EBITDA, these limitations include: EBITDA does not reflect cash expenditures, or future requirements for capital

expenditures or contractual commitments; EBITDA does not reflect changes in, or cash requirements for, working capital needs;

EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments,

on debt; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to

be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; EBITDA calculations under the

terms of debt agreements may vary from EBITDA presented herein, and our presentation of EBITDA herein is not for purposes of

assessing compliance or non-compliance with financial covenants under debt agreements; and other companies in our industry may

calculate EBITDA differently from how we do, limiting its usefulness as a comparative measure. As an analytical tool, Adjusted EBITDA

is subject to all the limitations applicable to EBITDA. In addition, we prepare Adjusted EBITDA by adjusting EBITDA to eliminate the

impact of a number of items we do not consider indicative of ongoing performance, but you should be aware that in the future,

expenses similar to the adjustments in this presentation may be incurred. Our presentation of Adjusted EBITDA should not be

construed as an inference that future results will be unaffected by unusual or non-recurring items.

4

Status Update

Kraton -

estimate for 2014 Adjusted EBITDA @ ECRC remains $150 million

First quarter 2014 Adjusted EBITDA at ECRC of $37.5 million

Estimate 2014 Adjusted EPS of $1.50 to $1.60

Waiting period under Hart-Scott-Rodino has expired, providing antitrust clearance for

transaction in the U.S.; we have also received antitrust regulatory approval in Taiwan and

Turkey

China competition law and other necessary regulatory approvals in progress

Based upon current view of regulatory review process, and subject to

satisfaction of remaining conditions, we continue to anticipate closing the

transaction in 4Q14

Shareholders of LCY approved combination on March 31, 2014

1Q14 results for LCY’s SBC business below expectations; expect improvement

2H14

5

1Q14 performance significantly below 1Q13 and expectations

1Q14 volume 62 kT, Adjusted EBITDA $2.9 million vs. 1Q13  volume

65 kT, Adjusted

EBITDA $20.6 million

Approx. 80% of Adjusted EBITDA shortfall vs. expectations due to

gross profit decline

in China

China market –

very difficult trading conditions for SBS

China represents >50% of LCY’s SBC business (by volume)

SBS market decline began in 3Q13 and accelerated 4Q13, carrying over into 1Q14

Lower demand growth, excess inventory, effect of 2013 capacity additions

LCY has provided a revised forecast for 2014 Adjusted EBITDA of

$37 million

2Q14 similar to 1Q14; significant improvement expected in 2H14

LCY’s SBC Business - Recent Performance

6

Anticipated SBS growth did not materialize in 2013 as key markets softened, with demand

weakness carrying over into 2014

China Market –

Short-term Decline in Demand Growth

Paving

–

China

government

policies

to

tighten

liquidity

and

scrutiny

of

investment

and

infrastructure

projects

Footwear

–

high

finished

shoe

inventory

built

in

2011/2012

impacted

SBS

demand

as

footwear

production

reduced in 2013

Weakness in paving and footwear demand was partially offset by continued growth in Adhesives,

Compounding and Roofing

(1) Source: SAI and Kraton Estimates

We expect growth in demand will recover in the second half of 2014 and continue into 2015

624

632

656

692

2012

2013

2014F

2015F

Est. China SBS Demand (kT)

1

Y-o-Y

Growth                               1.3%                 3.8%  

5.5%

7

79%

64%

74%

2012

2013

2014F

2015F

68%

2013 production rates significantly higher vs. 2012 in anticipation of growth that did not

materialize, resulting in a build in SBS inventories

China Market –

Inventory Build

Production continued despite paving slowdown and build in footwear inventory

Result was a significant increase in inventory in 2H13

LCY brought 100 kT of SBS capacity on line in 3Q13

*

(1)  Source: SAI, SCI99 and Kraton estimates

*Based on adjusted nameplate capacity of 845kT, which reflects partial year availability of LCY capacity

Est. inventory levels

increased to ~6 weeks

(50kT) vs. typical levels of

~2 weeks

Producers reducing output in 2014, and we estimate that excess SBS inventory will be

eliminated by mid-2014

China

-

Estimated

SBS

Capacity Utilization

1

8

Significant SBS capacity was added in China in 2H13, mostly LCY

China Market –

Capacity Additions

Historically, capacity additions have been more in line with demand growth

~ 50 kT added in 2011 and 2012 respectively

In 2013, capacity additions were significantly above historical norms

~140 kT or 17% (100 kT LCY in Aug 2013, 40 kT Jusage end-2013)

(1) Source: SAI, SCI99 and Kraton estimates

Y-o-Y

Incr.  (kT)              

50         50         140         0           0

No SBS capacity additions in China are expected in 2014 or 2015

Resulting inventory build, combined with 2H13 capacity additions, created pricing pressure,

which accelerated through 2H13 and carried over into 1Q14

China Market –

Near-term Pricing and Margin Pressure

Raw material margin decreased >$400/ton in 4Q13

Widely-held industry assumption that margins would improve after Chinese New

Year was incorrect –

in fact, they continued to decline

Margins appeared to reach a low in April, increasing in May, and

are

continuing to increase in June

9

*  Preliminary – based upon first two weeks of June 2014

Note: China market SBS-butadiene raw material margin defined as China market SBS price ‘less’ 70% of the spot price for butadiene

Source: SCI99 (Sinopec H791 benchmark grade), IHS/CMAI (Northeast Asia spot butadiene price)

10

The China SBS Market Recovery Appears to be Underway

Producers

have

taken

steps

to

improve

margins

from

unsustainable

levels

Market prices have increased since mid-April 

Production output is at reduced levels as excess SBS inventory is being worked off

We expect market conditions to improve in the second half of 2014 as the

market absorbs 2013 SBS capacity expansions

Footwear supply/demand in balance

Second half of the year is normally the peak season for paving demand

LCY projects 2014 sales volume of 294 kT, up 12% vs. 2013

In 2015, we expect overall SBS demand in China to return to longer term

growth rates of 5-6% per annum

Paving demand should improve, driven by need to complete projects included in 5

year plan, which ends in 2015

Continued high single-digit growth for adhesives, compounding and roofing

As China recovers, LCY’s SBC business should benefit from

its leading market share position (>30%)

11

Impact of Revised Market Outlook

LCY’s outlook for its 2H14 is significantly better than 1H14

Producers in China are taking actions to improve margins from unsustainable levels,

industry

production

was

reduced

1Q14

and

excess

SBS

inventory

is

being

worked

off

YTD, SBS exports are higher and imports are lower, compared to same period in 2013

2H14 sales volume should be higher than both 2H13 sales volume and 1H14 sales

volume

Based upon the improvement in 2H14, full-year Adjusted EBITDA for LCY’s

SBC business estimated at $37 million

We estimate it could take up to 2 years (i.e. until 2016) for the China market

to rebalance.  Assuming a 2 year delay, we estimate:

LCY

Adjusted

EBITDA

for

2015

of

~$71

million,

reflecting

a

modest

improvement

over

the

annualized

2H14

run

rate;

LCY

Adjusted

EBITDA

for

2016

of

~$105

million

Our original LCY SBC business Adjusted EBITDA forecasts could be delayed by up to 2 years

Transaction Rationale Remains Unchanged

The combination addresses strategic objectives of both Kraton and LCY:

Kraton: a long-term strategy to access Asian growth markets with cost-effective assets

LCY: access to Kraton’s differentiated products, R&D platform and global market reach

Enables projected $65 million in annual run-rate cost synergies by 2017

Results in stronger capital structure, reduced leverage and creates a platform for growth

Financial metrics still attractive, especially with full run-rate synergies of $65

million

2015 EBITDA multiple* 9.9x pre-synergies and 5.2x post-synergies

Dilutive to EPS by $0.19 in 2015; accretive to EPS by $0.29 in 2016

We expect LCY China margins to rebound as market conditions improve

Combination

gives

Kraton

immediate

access

to

local

capacity

in

a

high

growth

region,

with

less

risk

and

capital

cost

than

a

“build”

option

Despite near-term headwinds, China and Asia continue to represent

the best long-term growth potential for Kraton

*Based on Jan 24, 2014 KRA stock price of $21.66

12

Asia continues to represent significant long-term growth potential

13

Appendix

14

Kraton Historical Financials

12 months ended

December

3 Months

Ended

3 Months

Ended

($ Millions)

2012

2013

3/31/2013

3/31/2014

Sales Volume (kT)

313

314

78

74

Revenue

$1,423

$1,292

$340

$312

EBITDA

(1)

$97

$89

$26

$15

EBITDA Margin

6.8%

6.9%

7.6%

4.7%

Adjusted EBITDA

(1)

$113

$110

$29

$42

Adjusted EBITDA Margin

8.0%

8.5%

8.4%

13.3%

Capex

$70

$86

$15

$21

Adjusted EBITDA less

Capex

$44

$24

$14

$20

(1) Refer to reconciliation of net income (loss) attributable to Kraton to EBITDA and Adjusted EBITDA.

15

LCY SBC Historical Financials

12 months ended

December

3 Months

Ended

3 Months

Ended

($ Millions)

2012

2013

3/31/2013

3/31/2014

Sales Volume (kT)

222

263

66

62

Revenue

$619

$611

$171

$131

EBITDA

(1)

$94

$52

$23

$2

EBITDA Margin

15.2%

8.5%

13.2%

0.1%

Adjusted EBITDA

(1)

$91

$48

$21

$3

Adjusted EBITDA Margin

14.7%

7.8%

12.1%

0.2%

Capex

$18

$13

$3

$2

Adjusted EBITDA less Capex

$73

$35

$18

$1

(1)

Refer to reconciliation of net income (loss) for the LCY SBC business to EBITDA and Adjusted EBITDA.

Note: 2012 data revised from January 28, 2014 presentation, reflects final audited results and eliminates

adjustments to corporate overhead for purposes of calculating Adjusted EBITDA

16

Reconciliation of Net Income (Loss) Attributable to Kraton to EBITDA and Adjusted EBITDA

a)

Reflects the benefit of the settlement with LyondellBasell.

b)

Reflects a charge associated with the resolution of a property tax dispute in France.

c)

Reflects a storm related charge at our Belpre, Ohio facility.

d)

Includes other professional fees, severance expenses, fees associated with the public offering of our senior notes and the secondary public offering of our common stock, and charges

associated with the restructuring of our European organization.

e)

Reflects an impairment of long-lived assets, of which $3.4 million and $2.0 million were associated with the HSBC facility and other long-term assets, respectively.

f)

Reflects the non-recurring portion of the $6.1 million of aggregate turnaround costs in 2013.  The adjustment relates to the production downtime at our Belpre, Ohio facility, in

preparation for the installation of natural gas boilers to replace the coal-burning boilers required by the MACT legislation.

g)

Reflects a retirement plan settlement charge associated with a disbursement from a benefit plan upon the retirement of an employee.

h)

Primarily professional fees related to our proposed combination with the styrenic block copolymer operations of LCY Chemical Corp., which are recorded in selling, general and

administrative expenses.

i)

Reflects $4.2 million of the Asia J.V. pre-startup costs, of which 50% are included in net income/(loss) attributable to Kraton.

3 months

ended

3 months

ended

Forecast

($ Thousands)

2012

2013

3/31/2013

3/31/2014

2014

Net income (loss) attributable to Kraton

$(16,191)

$     (618)

$   (3,748)

$   (7,909)

$  16,421

Net loss attributable to noncontrolling interest

-

(357)

(76)

(285)

(2,134)

Consolidated net income (loss)

(16,191)

(975)

(3,824)

(8,194)

14,287

Add:

Interest expense, net

29,303

30,470

13,298

6,338

24,652

Income tax expense (benefit)

19,306

(3,887)

1,446

122

6,608

Depreciation and amortization expenses

64,554

63,182

15,098

16,409

65,193

EBITDA

$  96,972

$  88,790

$   26,018

$   14,675

$110,740

EBITDA

$  96,972

$  88,790

$   26,018

$   14,675

$110,740

Add (deduct):

Settlement gain

(a)

(6,819)

-

-

-

-

Property tax dispute

(b)

6,211

-

-

-

-

Storm related charges

(c)

2,481

-

-

-

-

Restructuring and other charges

(d)

1,359

815

55

521

653

Non-cash compensation expense

6,571

7,894

2,523

3,614

10,613

Impairment of long-lived assets

(e)

5,434

-

-

-

-

Production downtime

(f)

-

3,506

-

13,013

13,013

Retirement plan settlement

(g)

1,100

-

-

-

-

Transaction and acquisition related costs

(h)

-

9,164

81

9,236

18,511

Pre-startup costs on Asia JV

(i)

-

-

-

459

4,194

Adjusted EBITDA

$113,309

$110,169

$   28,677

$   41,518

$157,724

Add (deduct):

Spread between FIFO and ECRC

$  30,533

$  30,737

$        507

$   (4,024)

$  (7,682)

Adjusted EBITDA at ECRC

$143,842

$140,906

$   29,184

$   37,494

$150,042

12 months ended

December

17

Reconciliation of Net Income (loss) of the LCY SBC Business to EBITDA and Adjusted EBITDA

3 months

ended

3 months

ended

($ Thousands)

2012

2013

3/31/2013

3/31/2014

Net income (loss)

$  64,145

$ 27,581

$   13,893

$   (3,291)

Add:

    Interest expense, net

         498

       (752)

         (110)

         (127)

    Income tax expense

     11,748

      7,521

       4,410

          572

    Depreciation and amortization expenses

     17,367

    17,899

       4,433

       4,727

EBITDA

$  93,758

$ 52,249

$   22,626

$     1,881

EBITDA

$  93,758

$ 52,249

$   22,626

$     1,881

Add (deduct):

     

(Gain) / loss on currency transactions and financial instruments

(a)

     (2,588)

    (4,914)

      (2,006)

       1,017

    Transaction costs

(b)

           -  

         230

            -  

            26

Adjusted EBITDA

$  91,170

$ 47,565

$   20,620

$     2,924

12 months ended

December

a)

Reflects (gain)/losses on currency transactions and financial instruments

b)

Reflects costs associated with the combination with Kraton

Note: 2012 data revised from January 28, 2014 presentation, reflects final audited results and eliminates adjustments to corporate overhead for

purposes of calculating Adjusted EBITDA

18

Reconciliation of Net Income Attributable to Kraton and Income Per Diluted Share  to Adjusted

Net Income and Adjusted Earnings per Diluted Share

$ in thousands except per share data

Estimated 12 Mos.

Ended 12/31/14

Per

Diluted

After Tax

Share

Net income attributable to Kraton

and income per diluted share

$  16,421

$   0.51

Restructuring and other charges

(a)

$      532

$   0.02

Transaction and acquisition related costs

(b)

$  18,511

$   0.58

Production downtime

(c)

$  13,013

$   0.40

Asia startup costs, net of non-controlling interest

(d)

$   1,741

$   0.05

Adjusted net income and adjusted

earnings per diluted share

$  50,218

$   1.56

a)

Severance expenses, which are primarily recorded in cost of goods sold. 

b)

Primarily professional fees, related to our proposed combination with the styrenic block copolymer operations of LCY Chemical Corp., which are

recorded in selling, general and administrative expenses.

c)

Production downtime at our Belpre, Ohio and Berre, France facilities, of which $12.4 million is recorded in costs of goods sold and $0.6 million is

recorded in selling, general and administrative expenses.

d)

Startup costs of $4.194 (pre-tax) related to the joint venture company, Kraton Formosa Polymers Corporation, which are recorded in selling,

general and administrative expenses, presented net of the associated impact on non-controlling interest.

UPDATE CALL

PROPOSED COMBINATION

OF KRATON PERFORMANCE POLYMERS, INC.

WITH THE SBC BUSINESS OF LCY CHEMICAL CORP.

KRATON PERFORMANCE POLYMERS, INC.

KEVIN M. FOGARTY, PRESIDENT AND CHIEF EXECUTIVE OFFICER

June 24, 2014