Mercury Nz Ltd. · NZX:MCY
Mercury Nz — Debt Investor Presentation (May 2022)
24 slides from Mercury Nz's debt investor presentation, May 2, 2022
Slide 1: Capital Bond Offer
MERCURY CAPITAL BOND OFFER VINCE HAWKSWORTH WILLIAM MEEK GEOFF SMITS Chief Executive Officer Chief Financial Officer Acting Treasury Manager (ee) 2 May 2022 Mercury
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared by Mercury NZ Limited (“Company” or “Mercury”) for informational purposes. This disclaimer applies to this document and the verbal or written comments of any person presenting it. Information in this presentation has been prepared by the Company with du
Slide 3: Important Information
IMPORTANT INFORMATION The offer (“Offer”) of unsecured, subordinated, interest bearing capital bonds ("Capital Bonds”) by Mercury described in this presentation is made in reliance upon the exclusion in clause 19 of schedule 1 of the Financial Markets Conducts Act 2013 (FMCA’). The Offer is an offer
Slide 4: Offer Summary
OFFER SUMMARY Mercury NZ Limited Unsecured, subordinated, redeemable, cumulative, interest bearing debt securities Expected Issue Credit Rating: BB+ by S&P Global Ratings (Mercury has an Issuer Credit Rating of BBB+ (stable)) Up to NZ$200m plus oversubscriptions of up to NZ$50m (at Mercury's discret
Slide 5: & = Zz &
& 5 = Zz & 3 5
Slide 6: Country, Industry & Mercury
COUNTRY, INDUSTRY & MERCURY Be Stable regulatory framework gD 100% renewable generation > Underpinned by strong industry performance on > Low cost hydro, geothermal and wind generation Reliability, Renewability and Pricing (the electricity delivering strong and stable cash flows ‘trifecta’) > Turite
Slide 7: Mercury at a Glance
MERCURY AT A GLANCE 8,606 ‘ANNUAL MEAN ENERATION DPERATIONOR > Vertically integrated 100% renewable “um predominantly North Island generator and S) | Ss national energy retailer WIND : GEOTHERMAL ~1,570GWh > New Zealand's second largest gentailer! NORTH ISLAND °2,6006Wh Tosh icy j CONNECTIONS? and l
Slide 8: Mercury's Long Term Track Record
MERCURY'S LONG TERM TRACK RECORD FY2022F includes the partial year EBITDAF patna of Bik assets Tuttes and OPEX' © Operating expenditure One-off costs DISTRIBUTIONS mShare buyback —_m Special dividend 600 Trustpower retail 600 600 = Final dividend Interim dividend 500 400 400 400 & & Flat from FY2014
Slide 9: Long Term Industry Trends
LONG TERM INDUSTRY TRENDS SECTOR EARNINGS DEMAND AND GENERATION CAPACITY CARBON EMISSIONS —— Demand 3 50 Max. G tion C: ity (RHS) 10.4 10,000 Emissions and renewability CAGR: 2.4% ax. Generation Capacity (RHS) 102 subject to annual hydrology = 40 — 100 8,000 Le 2 . 3 30 98 3 8 6,000 a 20 96 © 4,000
Slide 10: Portfolio Approach to Risk Management
PORTFOLIO APPROACH TO RISK MANAGEMENT > Mercury operates an integrated electricity portfolio with NET POSITION BREAKDOWN! electricity sales to customers providing a natural price f 10,000 hedge to generation > Usually net long position with movement year-on-year 9,000 due to hydrology, plant availab
Slide 11: Capital Expenditure
CAPITAL EXPENDITURE > Annual stay-in-business capital expenditure subject to CAPITAL EXPENDITURE timing of refurbishments, technology investment and 1400 geothermal make-up well drilling > Ongoing hydro refurbishment programme delivering significant yoo life extension, capacity and efficiency gains
Slide 12: Trustpower Retail Acquisition
TRUSTPOWER RETAIL ACQUISITION > Trustpower retail acquisition for $467m includes: > Trustpower's retail business > 10-year electricity supply hedge agreement (CFD) > ISP network > Restructured Tauranga Energy Consumer Trust (TECT) rebate arrangements > Intended settlement of 2 May 2022 > Integration
Slide 13: Capital Structure Flexibility Enables Growth
CAPITAL STRUCTURE FLEXIBILITY ENABLES GROWTH > Debt/EBITDAF expected to peak in FY2022 following the acquisition of Trustpower Retail and prior to the full year contribution of generation development and acquisitions completed within the year > S&P Global re-affirmed Mercury's credit rating of BBB+/
Slide 14: Diversified Funding Profile
DIVERSIFIED FUNDING PROFILE DEBT MATURITIES AS AT 31 MAR 2022 Commercial Paper Undrawn Bank Facilities Undrawn Rolling Bank Facilities’ = Drawn Bank Facilities 350 = NZ Senior Bonds US Private Placement = AU Senior Bonds m Capital Bonds 300 Proposed Capital Bond issue 2 250 neenent = 200 mo wr | 1 .
Slide 15: Capital Bonds
15 CAPITAL BONDS
Slide 16: Key Terms of the Capital Bonds
KEY TERMS OF THE CAPITAL BONDS Instrument Ranking No guarantee Credit Rating Issue Amount Term Reset Dates Optional early Redemption by Mercury Interest Rate Deferral of interest Quotation! Unsecured, subordinated, redeemable, cumulative, interest bearing debt securities The Capital Bonds will rank
Slide 17: Interest Payments
INTEREST PAYMENTS Interest Rate > The Interest Rate until the First Reset Date will be the higher of: > Minimum Interest Rate; and > Benchmark Rate (on the Rate Set Date) plus the Margin > Before each Reset Date, Mercury may propose, through an Election Process, that new terms and conditions (includ
Slide 18: Issuer Redemption Rights
ISSUER REDEMPTION RIGHTS Mercury may redeem the Capital Bonds before the Maturity Date as per the conditions below Early redemption Redemption price Mercury may redeem: The Redemption Price will be: i. All or some of the Capital Bonds on any Reset Date; > If redemption is as a result of (ii) or (v)
Slide 19: Key Early Redemption Drivers
KEY EARLY REDEMPTION DRIVERS Year 5 — Reset Date > Potential Election Process or Mercury can call the Capital Bonds > Step-up in Margin (0.25%) if no Successful Election Process > Potential refinancing risk at year 10 if not called > Call is at par (any subsequent issuer call between Reset Dates is
Slide 20: Offer Structure and Key Dates
OFFER STRUCTURE AND KEY DATES Offer structure > Bookbuild process > NZX firms, institutional investors, and certain other parties > No public pool > Minimum applications > NZS$5,000 and multiples of NZS$1,000 thereafter > Fees > Retail brokerage of 0.50% > Firm fee of 0.50% to those participating in
Slide 21: Appendix
cs 21 APPENDIX )
Slide 22: Election Process - A Reminder
ELECTION PROCESS - A REMINDER Election Notice given proposing new conditions Bondholders decide: a) Accept New Conditions; b) Reject New Conditions; or c) Do nothing or make no election Mercury declares a Successful Election Process { y 1 Bondholders who did nothing Bondholders who accepted Bondhold
Slide 23: Non-GAAP Measures
NON-GAAP MEASURES >EBITDAF (or Operating Earnings) is earnings before net interest expense, tax expense, depreciation, amortisation, change in the fair value of financial instruments, gain on sale and impairments > Operating Expenditure represents employee compensation and benefits, maintenance expe
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