Contact Energy Limited · NZX:CEN
Contact Energy — Debt Investor Presentation (September 2024)
30 slides from Contact Energy's debt investor presentation, Sep 23, 2024
Slide 1: Contact Energy Limited Green Capital Bond Offer
Contact Energy Limited Green Capital Bond Offer Joint Lead Managers: Investor presentation 23 September 2024 1
Slide 2: Disclaimer and important information
Disclaimer and important information Important Notice This presentation does not constitute financial advice or a recommendation from the Arranger, any Joint Lead Manager or the Supervisor or any of their respective directors, officers, employees, affiliates or agents. This presentation has been pre
Slide 3: Agenda
Agenda Offer Highlights 4 Electricity Market Overview 5-8 Contact Energy Strategy and 9-13 Performance Update Manawa Acquisition 14-17 Capital Structure and Funding 18-21 Key Terms and Dates 22-27 3
Slide 4: Offer highlights
Offer highlights 30 year Subordinated $200m With additional oversubscriptions Legal tenor, maturing debt 3 October 2054 Sits below senior debt and above equity Fixed Green BB+ Interest rate for 5 years Certified with the CBI under Contact’s Expected issue credit paid quarterly Sustainable Finance Fr
Slide 5: Contact Strategy and Update
Contact Strategy and Update Electricity Market Overview Strategy and Performance Update Manawa Acquisition 5
Slide 6: New Zealand's reliable, competitive and environmentally sustainable electricity system
New Zealand’s reliable, competitive and environmentally sustainable electricity system Competitive Regulated monopolies Competitive Spot 5+ electricity pool 1 29 8 2.3 Generators National Distribution Retailers Million consumers1 transmission businesses over 50k connections grid operator NZAS 21% 13
Slide 7: NZ electricity supply is highly renewable
NZ electricity supply is highly renewable Contact has led the way in decarbonising the NZ electricity system through geothermal development Electricity generation carbon emissions (units of CO2e)1 New Zealand has limited hydro storage and high variability Calendar year Annual hydro generation volume
Slide 8: The market responds to changes in supply and demand by sending price signals
The market responds to changes in supply and demand by sending price signals And the fundamental requirement for thermal to support a hydro dominated system supports forward electricity prices Short-term external factors that Wholesale and futures electricity pricing ($/MWh) can influence the market
Slide 9: Our strategy to lead NZ's decarbonisation
Our strategy to lead NZ’s decarbonisation Strategic Grow Grow renewable Decarbonise Create outstanding theme demand development our portfolio customer experiences Objective Attract new industrial demand with Build renewable generation and Lead an orderly transition Create New NZ's leading energy and
Slide 10: Contact is preparing for further investment in renewable generation and storage
Contact is preparing for further investment in renewable generation and storage Geothermal generation potential (TWh p.a.) Wind and solar options under development (TWh p.a.)3 +1.8 Key updates (including grid-scale batteries) 6.3 0.7 • Kōwhai Park solar (0.3TWh) and Glenbrook battery 5.2 0.3 (100MW)
Slide 11: Impacts of the energy transition in New Zealand are starting to become clearer
Impacts of the energy transition in New Zealand are starting to become clearer Domestic natural gas Thermal power stations High level of activity to Theme production in decline closing as more intermittent advance renewable renewables come online electricity builds • Ageing natural gas fields with l
Slide 12: Key themes from the FY24 financial results
Key themes from the FY24 financial results Accelerated domestic gas decline Shift in national fuel mix leading Sales channels repricing to better leading to more expensive risk to more pronounced align with wholesale market; management products summer / winter pricing Retail facing headwinds from ne
Slide 13: Uplift in Contact's expected FY25 EBITDAF driven by realisation of growth investment
Uplift in Contact’s expected FY25 EBITDAF to be driven by the realisation of growth investment FY25 normalised and expected EBITDAF includes generation from Tauhara and Te Huka 3 Guidance vs Actual Normalised and expected EBITDAF ($ million)1 Guidance CAGR FY21 to FY25 (~13% p.a.) Like-for-like incr
Slide 14: Manawa Energy Acquisition
Manawa Energy Acquisition 14
Slide 15: A highly strategic and financially compelling acquisition
A highly strategic and financially compelling acquisition 1 2 3 Geographically diversified Accelerates Contact’s strategy Transaction structure hydro schemes are to grow its renewable maintains Contact’s BBB complementary, enhancing generation portfolio and credit rating, retains capital portfolio r
Slide 16: Important combination for the New Zealand energy market and energy transition
Important combination for the New Zealand energy market and energy transition Combination benefits Enhanced Contact abilities Expected energy market benefits Increased hydro generation Greater ability to offer competitive ✓ risk management products to the ✓ Ability for customers to reduce diversific
Slide 17: Acquisition summary
Acquisition summary Contact has entered into a Scheme Implementation Agreement with Manawa to acquire 100% of Manawa via a mixture of Contact shares and cash • Contact has entered into a Scheme Implementation Agreement (Scheme) to acquire 100% of Manawa • As consideration, eligible Manawa shareholde
Slide 18: Capital Structure & Funding
Capital Structure & Funding 18
Slide 19: Strong balance sheet
Strong balance sheet Contact’s sustainable finance principles are built on diversified sources of funding Closing net debt ($m) Borrowing maturities ($m) Face value of borrowings less cash Average tenor of 5.9 years as at 30 June 2024 625 • A Green Australian Medium Term Note (AMTN) 1,652 was issued
Slide 20: Sustainable finance
Sustainable finance • Contact established its Green Borrowing Programme in 2017 – the first such certification completed by a New Zealand issuer and the first green certification of an entire debt programme globally. This demonstrates Contact’s commitment to investing in renewable energy assets (i.e
Slide 21: Green Borrowing Programme
Green Borrowing Programme • Contact recognises the importance investors place on transparency and disclosure relating to Green Debt Instruments. Our Framework, CBI programmatic certification, annual independent assurance statement and annual Integrated Reports are available on our website. Contact’s
Slide 22: Key Terms and Dates
Key Terms and Dates 22
Slide 23: Key terms of the Capital Bonds
Key terms of the Capital Bonds Issuer Contact Energy Limited (Contact) Instrument Unsecured, subordinated, redeemable, cumulative, interest bearing debt securities The proceeds from the issue of the Capital Bonds will be used by Contact for the financing and refinancing of renewable generation and o
Slide 24: Interest payments
Interest payments Interest Rate Interest deferral The Margin and the Interest Rate for the period until the First Reset Date (3 An interest payment may be deferred at Contact's sole discretion for up to October 2029) is to be set by the bookbuild five years Before each Reset Date, Contact may propos
Slide 25: Issuer redemption rights
Issuer redemption rights Contact must Redeem Capital Bonds on the The redemption price will be: Maturity Date or if an Event of Default occurs If Redemption is on the Maturity Date, a Reset Date, occurs where there are less than a 100m Contact also has a right to Redeem: Capital Bonds on issue or du
Slide 26: Key early redemption drivers
Key early redemption drivers 2029 2034 Year five Year ten Contact can Redeem the Capital Bonds or run an Election Process • Equity content falls to minimal, S&P treats the Capital Bonds as 100% debt in Contact's financial ratios • If the Election Process is unsuccessful the effective Margin will inc
Slide 27: Key information and timeline
Key information and timeline The Offer Opening Date Monday, 23 September Indicative pricing and Terms Sheet released Bookbuild process NZX Firms, institutional investors and other Closing Date (11am) approved parties to be invited to participate Thursday, 26 September Rate Set Date in the bookbuild
Slide 28: Appendix
Appendix 28
Slide 29: A reminder of the Election Process
A reminder of the Election Process Election Notice given proposing New Conditions Bondholders decide to: a) accept New Conditions b) reject New Conditions: or c) do nothing Contact declares a Successful Election Process Election Process not successful Bondholders who did nothing Bondholders who acce
Slide 30: Thank you
Thank you 30
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