Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Merger or Acquisition (June 2006)
26 slides from Duke Energy Corporation (Holding Company)'s merger presentation, Jun 29, 2006
Slide 1: Creating Two Leading Energy Companies
Creating Two Leading Energy Companies June 29, 2006 Paul Anderson Chairman of the Board Jim Rogers President and Chief Executive Officer Fred Fowler Group Executive and President, Duke Energy Gas David Hauser Group Executive and Chief Financial Officer
Slide 2: Safe Harbor Statement
Safe Harbor Statement Some of the statements in this document concerning future company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and you should refer to the additiona
Slide 3: Creating Two Companies
Creating Two Companies The Duke Energy Board of Directors voted unanimously to pursue a plan to separate the natural gas and electric power businesses into two publicly traded companies. • Targeting the separation to be effective Jan. 1, 2007 • Still need to work through details Analyst Call – Creat
Slide 4: Creating Two Leading Energy Companies
Creating Two Leading Energy Companies Paul Anderson Chairman of the Board
Slide 5: Background & Rationale
Background & Rationale Background • Deregulation of energy markets did not happen Anticipated electric/gas synergies failed to materialize Combined businesses prohibited from some interactions that could have brought real value to stakeholders Rationale • Spin will create value from Day One • Bu
Slide 6: Pros & Cons
Pros & Cons Pros Pure-play businesses will increase management’s focus and create greater transparency Business complexity will be reduced With privatization of Kinder-Morgan, we expect “scarcity value” in pure-play gas assets Cons Flexibility is reduced with lower market cap and less divers
Slide 7: Snapshot of the Companies
Snapshot of the Companies Duke Energy “GasCo” Name Duke Energy To be determined Traded NYSE: DUK To be determined Headquarters Charlotte Houston Businesses • US Franchised Electric & Gas • Gas Transmission (Houston) (Charlotte) • Union Gas (Chatham, ON) • Commercial Power (Cincinnati) • Field Servic
Slide 8: Creating Two Leading Energy Companies – Financial Overview
Creating Two Leading Energy Companies – Financial Overview David Hauser Group Executive and Chief Financial Officer
Slide 9: Financial Overview
Financial Overview Two strong companies • Both expected to maintain solid, investment-grade balance sheets • Will spin a newly formed entity holding Duke Capital, excluding DEI and Crescent • Expect Duke Capital debt of approximately $3 billion at December 31 to go with “GasCo” Analyst Call – Creati
Slide 10: Expected Credit Metrics
Expected Credit Metrics Maintain solid, investment-grade credit metrics Duke Energy “GasCo” assumed business assumed business S&P Credit Risk Profile risk profile of 5 risk profile of 4 Debt-to-Total upper 30% range 60% range Capitalization Ratio FFO Interest Coverage ~5.5 – 6.5 times ~3 – 4 times A
Slide 11: Dividend & Cash Update
Dividend & Cash Update • Board approved quarterly dividend increase of one cent per share Effective with distribution made September 2006 Annual dividend becomes $1.28 • Dividend will be maintained in total after the separation Duke Energy’s assumed payout ratio 70-75% GasCo’s assumed payout
Slide 12: Growth Projections
Growth Projections “GasCo” • Expects long term ongoing earnings per share CAGR of 5-7% DEGT expects CAGR of ongoing EBIT of 7-9% over the long-term Increased growth rate primarily resulting from changing dynamics in the industry that are creating unusual number of expansion opportunities Antic
Slide 13: Creating Two Leading Energy Companies – the Gas Side
Creating Two Leading Energy Companies – the Gas Side Fred Fowler Group Executive and President, Duke Energy Gas
Slide 14: “GasCo” – Businesses
“GasCo” – Businesses Lines of Business Value Drivers Leading full midstream natural gas • Strategically placed assets in business in North America, moving fastest growing markets with gas from producer to end-user many growth opportunities Duke Energy Gas Transmission • Increased transparency into •
Slide 15: “GasCo” – Active Projects
“GasCo” – Active Projects Pine River West Doe Plant St. Clair Power Dawn Delivery Enhancement Dawn Area Canaport Storage Dawn-Trafalgar Phase 1 – 3 Cape Cod Excelerate NE Gateway Islander East Time II Ramapo Lebanon East / BP Logan TEMAX Accident Mid-Continent Jewell Ridge Crossing Piedmont Egan Exp
Slide 16: “GasCo” – Businesses
“GasCo” – Businesses Lines of Business Value Drivers Leading full midstream natural gas • Strategically placed assets in business in North America, moving fastest growing markets with gas from producer to end-user many growth opportunities Duke Energy Gas Transmission • Increased transparency into •
Slide 17: “GasCo” – Challenges to Execution
“GasCo” – Challenges to Execution Risk Mitigation Adverse regulatory decisions Rate settlements & initiatives Competition for projects Financial structuring & partnering Canadian exchange rate Natural hedge & asset optimization Commodity pricing Contract restructuring & asset optimization Analyst Ca
Slide 18: “GasCo” – Value Proposition
“GasCo” – Value Proposition What we plan to do Be a premier pure-play North American gas company Grow ongoing EPS by an annual average of 5-7%, while maintaining a solid balance sheet and delivering strong operating cash flows Expect dividend growth consistent with 60% payout ratio How we plan
Slide 19: Creating Two Leading Energy Companies – the Power Side
Creating Two Leading Energy Companies – the Power Side Jim Rogers President and Chief Executive Officer
Slide 20: Duke Energy – Businesses
Duke Energy – Businesses Lines of Business* Value Drivers US Franchised • Solid organic growth Electric & Gas • Significant infrastructure Crescent reinvestment plans 9% International • Operational cost leadership 10% fueled by merger savings 70% 11% Commercial • Constructive regulatory Power enviro
Slide 21: Duke Energy – Challenges to Execution
Duke Energy – Challenges to Execution Risk Mitigation Multi-party settlements & legislative Adverse regulatory decisions initiatives Timely return of future capital Pre-approval of projects & assurance investment of timely capital recovery Industry policy leadership shaping Environmental regulations
Slide 22: Duke Energy – Value Proposition
Duke Energy – Value Proposition What we plan to do Be an industry leader by providing competitive rates, superior reliability, and top-quartile customer satisfaction Grow ongoing EPS by an annual average of 4–6%, while maintaining a solid balance sheet and delivering strong operating cash flows
Slide 23: Anticipated Timeline
Anticipated Timeline Aug. 3, 2006 2Q06 Earnings release 3rd Quarter 2006 File Form 10 for “GasCo” with SEC Nov. 3, 2006 3Q06 Earnings release Dec. 2006 Road shows Jan. 1, 2007 Targeted effective separation date Analyst Call – Creating Two Leading Energy Companies June 29, 2006 23
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Slide 25: Non-GAAP Reconciliation for SEC Regulation G
Non-GAAP Reconciliation for SEC Regulation G Duke Energy Analyst Presentation, June 29, 2006 FFO Interest Coverage Ratios The slides and prepared remarks for Duke Energy’s June 29, 2006, Analyst Presentation include a discussion of expected Funds From Operations (FFO) interest coverage ratios for 20
Slide 26: Anticipated Ongoing Earnings per Share Growth Percentages
Anticipated Ongoing Earnings per Share Growth Percentages The slides and prepared remarks for Duke Energy’s June 29, 2006, Analyst Presentation include a discussion of anticipated growth in ongoing earnings per share (“EPS”) for “Future Duke Energy” and for “GasCo.” These ongoing growth percentages