Xcel Energy Inc. · NASDAQ:XEL
Xcel Energy — Merger or Acquisition (February 2002)
27 slides from Xcel Energy's merger presentation, Feb 20, 2002
Slide 1: Xcel Energy
‘eC, Xcel Energy”
Slide 2: Tender Offer for NRG Energy's Publicly-Traded Shares
Tender Offer for NRG Energy's Publicly-Traded Shares
Slide 3: Presentation Outline
Presentation Outline _ Transaction terms _ NRG overview Current market environment Strategic rationale for recombination _ Proposed NRG action plan od Eneray financial plan
Slide 4: Transaction Terms
Transaction Terms _ Tax-free stock-for-stock exchange NRG shareholders receive 0.4846 shares of Xcel Energy common stock for each share of NRG stock ~ 15% premium Targeted close April 2002
Slide 5: NRG Energy
|| Xcel Energy NRG Energy (19,582 MVV in-operation at 12/31/01) om ea * oe 1.755 MW A aa North America a, 15,097 MW Rk * Bike Pos seh Ok hag AustraliafAsia Latin beg & 2,297 MW ea 42 | 3rd Largest IPP Worldwide _ Euromoney Portfolio Rating of 92
Slide 6: NRG Portfolio Diversity - 2001
NRG Portfolio Diversity - 2001 Risk Reduction through Diversification Geographic Location Fuel Source (MW) ayy “He 18% sprox. 20% Dual-Fuel Power Sales Strategy Long-Term Baseload 35%, ontracts Peaki De
Slide 7: NRG — Significant Growth
NRG — Significant Growth _ NRG Mivs* NRG Net Income MW. Dollars in millions \ 1999 2000 * MWs In operation 1999 2000 2001
Slide 8: Current IPP Market Environment
Current IPP Market Environment Wholesale Markets
Slide 9: IPP Stock Price Trends
IPP Stock Price Trends —NRG —AES —CPN | —DYN ——MIR s & Os s wat ole Pe ec ok’
Slide 10: NRG Experiencing Impact of Market Change
NRG Experiencing Impact of Market Change as Liquidity Cee
Slide 11: NRG Issues
NRG Issues _ Anticipated high Mw growth rate _ Significant capital requirements High cost of equity financing; severe dilution Increasing credit quality constraints Lack of liquidity
Slide 12: Action Plan Elements
Action Plan Elements _ Infuse equity into NRG Energy Slow Mw growth _ Sell selected assets __ Reduce exposure to and pull back from non-core markets Cancel selected new development Improve portfolio profitability economies of combined operations dependence on external financing
Slide 13: Xcel Direction for NRG
Xcel Direction for NRG _ Largely domestic-based non-regulated power with regionally-based businesses around high load centers Selective growth expansion Continue focus on optionality of fuel source, _ dispatch mix and power sales Strengthen balance sheet _ Capture benefits of combined operations and
Slide 14: NRG Plan Highlights
NRG Plan Highlights _ Xcel Energy will infuse $600 million of equity into NRG following completion of the tender; this consists of Xcel’s initial commitment of $300 million plus an additional $300 million and eliminates NRG’s contemplated equity issuance
Slide 15: NRG Plan Highlights (cont)
NRG Plan Highlights (cont) _ Monetize projects $1.9 billion gross proceeds; $1.1 billion net cash, approximately 2,800 Mw _ Cancel projects $0.7 billion, approximately 3,900 Mw __ Defer projects $0.9 billion Sell 28 turbines _ Reduce business development and A&G costs approximately $45 million Reduc
Slide 16: NRG Construction Expenditures
1, NRG Construction Expenditures Dollars in Billions q 4.0 35 Tt iee clniinale Revised sss) 3.0 25 2.0
Slide 17: NRG Megawatt Growth
(2) Xcel Energy NRG Megawatt Growth In operation and under construction 45 Mw (Thousands) 15. 2001 2002 2003 2004 2005
Slide 18: Xcel Energy 2002 Equity Plans
Xcel Energy 2002 Equity Plans _ Up to $400 million equity issuance as soon as practical $100 million dividend reinvestment and customer stock purchase _ Approximately 25 million shares to be __ issued pursuant to exchange offer
Slide 19: Credit Rating Objectives
(2) Xcel Energy” Credit Rating Objectives ~ Xcel Energy high quality credit - Rating objective A range Xcel Energy 2002 2005 Debt/Capitalization Estimated Estimated Without Nonrecourse Debt 50% 45% With Nonrecourse Debt 63% 60% ~ NRG Energy — Rating objective Investment Grade NRG Energy 2002 2005 De
Slide 20: Xcel Energy Financial Guidance
Xcel Energy Financial Guidance - 2002 earnings guidance of $2.40 - $2.50 _ Average annual earnings growth of 7% -9% _ Current $1.50 per share dividend sustainable with proposed plan
Slide 21: 2002 EPS Guidance
2002 EPS Guidance Utility $1.65 to $1.70 NRG $0.90 to $0.95 Enterprises $-0.04 to $0.00 Unallocated interest $-0.14 to $-0.10 Range $2.40 to $2.50 Note: After impact of equity issuances
Slide 22: NRG Energy Investor Benefits
NRG Energy Investor Benefits > Premium to current market price © Increased financial strength and liquidity © Attractive yield from Xcel Energy dividend © Enhanced credit quality Diversified earnings and cash flows ‘Share in Xcel Energy future valuation ones significant dilution from equity offering
Slide 23: Xcel Energy Investor Benefits
Xcel Energy Investor Benefits © Aceretive for Xcel Energy shareholders © Shared best practices © Efficiencies gained through integrated operation © Mitigates risk of NRG contribution erosion » Supports asset-based energy merchant strategy - Optimizes asset utilization through consolidation of tradin
Slide 24: Key Required Approvals
Key Required Approvals _ Approximately 60% of NRG publicly-held shares _ Authority from the Securities and Exchange Commission to increase Xcel Energy’s investment in NRG
Slide 25: Transaction Timing
Transaction Timing _ Exchange offer commences on Xcel Energy filing of Form S-4 and Schedule TO in early March NRG will advise its shareholders (Schedule 14D-9) Exchange offer remains open for at least 20 business days successful completion of the exchange , Xcel Energy will effect a short-form merg
Slide 26: Xcel Energy
(2) Xcel Energy In connection with the proposed transaction, Xcel Energy will file an exchange offer prospectus and related materials with the SEC. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THIS DOCUMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and
Slide 27: Xcel Energy
‘eC, Xcel Energy”