Slide 1: Public Offering and Sheerness Proposal
Public Offering and Sheerness Proposal TransAlta Power, L.P. TSX : TPW.UN June 16, 2003
Slide 2: Forward looking statements
Forward looking statements • This presentation may contain forward-looking statements, including statements regarding the business and anticipated financial performance of TransAlta Power, L.P. These statements are subject to a number of risks and uncertainties that may cause actual results to diffe
Slide 3: Overview
Overview • TransAlta Power, L.P. owns 49.99% of TransAlta Cogeneration, L.P.; TransAlta Corporation owns the other 50.01% • TA Cogen is purchasing TA Corp.’s interest in Sheerness Generating Station for $630 million • Acquisition expected to close July 31, 2003 • TransAlta Power will issue subscript
Slide 4: Overview (continued)
Overview (continued) • Solid operating cash flows and minimal leverage • S&P and DBRS affirmed credit ratings on partnership at SR-1 (negative outlook) and STA-2 (middle), respectively • Strong market position and asset quality
Slide 5: Summary of impact on TransAlta Power
Summary of impact on TransAlta Power Existing With Sheerness Market capitalization (millions) $ 325 $ 650 Capacity (MW) 157 346 Annual distributions per unit $ 0.750 $ 0.7848 Distributable cash (millions) * $ 6.4 $ 17.4 Geographic distribution ** Ontario 77% 36% Alberta 23% 64% Fuel diversification
Slide 6: Overview: TransAlta Power
Overview: TransAlta Power Fort Saskatchewan Sheerness Ottawa Mississauga Windsor
Slide 7: Sheerness plant description
Sheerness plant description • 756 MW (189 MW net to TransAlta Power) coal-fired mine mouth thermal plant located approximately 200 km northeast of Calgary, near Hanna, Alberta • 50/50 joint venture with TransAlta and Canadian Utilities (Canadian Utilities operates, TransAlta oversees operations) • S
Slide 8: Strategic rationale
Strategic rationale • Principal benefits of acquisition: • On pro forma basis, acquisition 4.6% accretive to distributable cash flow per unit • Expected to further reduce Partnership’s risk profile • Providing Partnership with more geographically diverse portfolio of assets • Adding coal-fired facil
Slide 9: Strategic rationale (cont’d)
Strategic rationale (cont’d) • Principal benefits of acquisition: • Technology incorporated into Sheerness proven method of energy recovery, enabling it to meet or exceed physical parameters set forth in PPA • Operator of Sheerness (Canadian Utilities) has demonstrated capacity to manage, operate an
Slide 10: Other related issues
Other related issues • Independent Committee has also agreed to: • Remove management fee deferral mechanism and obligation to pay future fees for payment of $6 million from TA Cogen • TransAlta maintaining obligation to manage operation of TransAlta Power • Remove buy-back provision • Inconsistent w
Slide 11: Related party nature
Related party nature • Partnership established Independent Committee of the board of directors, comprised of directors unrelated to TransAlta, to negotiate acquisition • To assess acquisition, Independent Committee retained: • Independent legal counsel (Macleod Dixon LLP) • Independent financial adv
Slide 12: Expected timetable
Expected timetable JUNE 2003 JULY 2003 AUGUST 2003 S M T W T F S S M T W T F S S M T W T F S 1 2 3 4 5 6 7 1 2 3 4 5 1 2 8 9 10 11 12 13 14 6 7 8 9 10 11 12 3 4 5 6 7 8 9 15 16 17 18 19 20 21 13 14 15 16 17 18 19 10 11 12 13 14 15 16 22 23 24 25 26 27 28 20 21 22 23 24 25 26 17 18 19 20 21 22 23 29
Slide 13: Impact on TA Corp.
Impact on TA Corp. • Cash inflow of $150 million initially - $315 million total • Discontinuance of management fee agreement • Elimination of Dec. 31, 2018 buy-back obligation • Immediate recognition of $100 million after-tax ($0.54/share) unamortized portion of gain on initial assets • Earnings in
Slide 14: Appendix
Appendix
Slide 15: TransAlta Power, L.P. structure
TransAlta Power, L.P. structure TransAlta Corporation Public Investors 100% Ownership 99.99% Partnership Interest TransAlta TransAlta Energy TransAlta Power Ltd.** Cogeneration Ltd.* Corporation 0.01% 0.01% 50% Partnership Partnership Partnership Interest Interest Interest 49.99% Partnership TransAl
Slide 16: Overview: TransAlta Power assets
Overview: TransAlta Power assets Fort Mississauga Ottawa Plant Windsor Plant Saskatchewan Plant Plant Net Maximum Capacity 108 MW 68 MW 68 MW 118 MW TA Cogen ownership 100% 100% 100% 60% Commercial operation Nov 1992 Nov 1992 Dec 1996 Nov 1999 Gas contract Nov 2012 Nov 2007 Dec 2011, 2014 flow throu
Slide 17: Alberta Power Purchase Arrangements (PPAs)
Alberta Power Purchase Arrangements (PPAs) • Legislated by the Alberta government • PPA holders: have rights to prescribed amount of output from specified generating unit • Generator: obligated to deliver prescribed power • See preliminary prospectus for further information