Vistra Corp. · NYSE:VST
Vistra — Texas Competitive Electric Holdings Company — Debt Investor Presentation (July 2016)
39 slides from Vistra's debt investor presentation, Jul 12, 2016
Slide 1: Texas Competitive Electric Holdings Company LLC Lender Presentation
Texas Competitive Electric Holdings Company LLC Lender Presentation | July 12, 2016
Slide 2: Important Information
Important Information This presentation and the oral statements made in connection therewith may contain “forward looking statements” within the meaning of securities laws. Any forward looking statements involve risks, uncertainties and assumptions. Although we believe that the assumptions and analy
Slide 3: Section 1: Introduction
Section 1 Introduction
Slide 4: Introduction
Introduction In anticipation of exit from bankruptcy protection, Texas Competitive Electric Holdings Company LLC, (“TCEH”, or the “Company”) has received court approval to refinance its existing DIP credit facilities via a DIP “Roll-to-Exit” financing (the “Credit Facilities”) – The new Credit Fac
Slide 5: Reorganized TCEH Simplified Capital Structure
Reorganized TCEH Simplified Capital Structure Pre-Emergence Post-Emergence EFH TCEH 1st Lien “Energy Future Holders(2) Holdings” Reorganized TCEH EFIH EFCH “Energy Future “Energy Future Intermediate Holdings” Competitive Holdings” TCEH Oncor Debt Debt “Texas Competitive OpCo Holdings $34.2bn(1) $3.5
Slide 6: Section 2: Company Overview
Section 2 Company Overview
Slide 7: Company Overview
Company Overview Largest ERCOT retail electric provider Largest merchant generation fleet in ERCOT – 1.7 million total customers(1) – 8,017 MW (5) lignite and PRB coal – ~88% of meter count and ~53% of load is residential – 3,455 MW (5) natural gas CTs/STs – 25% residential market customer share
Slide 8: ERCOT Market Overview
ERCOT Market Overview Generator Transmission and Distribution Utility Retailer Competitive Regulated Competitive Generating Station Transmission wires Transmission sub-station Distribution Wires Customers Total Generation in Total Competitive ERCOT (87,400 MW(1)) Total Meters (>7 Million(2)) Custome
Slide 9: Luminant – Largest Generation Fleet In ERCOT
Luminant – Largest Generation Fleet In ERCOT Diversified Portfolio – Nuclear, Gas and Coal Luminant Geographic Footprint Top Five Competitive Generators in ERCOT(1) 16,760 Comanche Peak (2,300 MW) Decordova (260 MW) Lake Hubbard (921 MW) 10,586 9,427 MW Forney (1,912 MW) Lamar (1,076 MW) Graham (630
Slide 10: Large, Diversified, and Efficient Generation Fleet
Large, Diversified, and Efficient Generation Fleet ERCOT Supply Stack Illustrative Average Peak Demand Demand Marginal Unit Cost ($ / MWh) Coal Units CCGT Units 0 10 20 30 40 50 60 70 80 90 Cumulative Generation Capacity / ERCOT Demand (GW) Hydro, Wind, and Solar Nuclear Coal CCGT Gas Turbine / Gas
Slide 11: Luminant – Low Cost Nuclear
Luminant – Low Cost Nuclear Comanche Peak North American Relative Total Cost Comanche Peak (2,300 MW) Comparison for Nuclear Plants(1) $70 $60 $50 Total cost ($ / MWh) $40 Quartile $30 Decile $20 Comanche Comanche Peak Peak $10 Capacity (MW) 2,300 Capacity Factor – Avg Last 3 Yrs (%) 97.7% $0 70% 80
Slide 12: Luminant – Highly Efficient CCGTs
Luminant – Highly Efficient CCGTs Forney and Lamar Forney (1,912 MW) Lamar (1,076 MW) Within the top decile by efficiency for CCGTs in ERCOT(1) Forney Lamar Capacity (MW) 1,912 Capacity (MW) 1,076 Capacity Factor – Avg Last 3 Yrs (%) 54.3% Capacity Factor – Avg Last 3 Yrs (%) 60.3% COD 2003 COD 2000
Slide 13: Luminant – Two of The Newest Coal Plants in ERCOT
Luminant – Two of The Newest Coal Plants in ERCOT Oak Grove and Sandow Unit 5 Oak Grove (1,600 MW) Sandow Unit 5 (580 MW) Oak Grove Sandow Unit 5 (1) Capacity (MW) 1,600 Capacity (MW) 580 Capacity Factor – Avg Last 3 Yrs (%) 87.3% Capacity Factor – Avg Last 3 Yrs (%) 79.6% COD 2010 / 2011 COD 2010 H
Slide 14: Luminant – Seasonally Flexible Capacity
Luminant – Seasonally Flexible Capacity Remaining Fleet Optimized to Provide Seasonal Coverage Facility Capacity (MW) Capacity Factor(1) COD Fuel Technology Big Brown 1,150 77% 1971 / 1972 Coal ST Seasonal Martin Lake 2,250 66% 1977 / 1978 / 1979 Coal ST Dispatch Monticello 1,880 39% 1974 / 1975 / 1
Slide 15: Overview of Retail
Overview of Retail Attractive ERCOT Retail Market Economics of the Retail Business Represents ~31% of competitively served US retail load Retail businesses engage customer directly Consumption per residential customer ~30% higher than US (willing buyer / willing seller) average Realized marg
Slide 16: TXU Energy – Leading Retail Platform
TXU Energy – Leading Retail Platform Unique Position as the Top Retailer in Texas Unmatched Brand Complementary Generation Stable Cash Flows and Capabilities Multi-channel marketing and sales strategy Luminant’s generation fleet largely present TXU Energy provides stability in varying focused
Slide 17: TXU Energy – Largest Retail Electric Provider In ERCOT
TXU Energy – Largest Retail Electric Provider In ERCOT Largest Residential Market Share in ERCOT(1) … … With Stable Customer Base(2)… 25% 1.560 1.516 1.500 1.489 22% 11% 7% 5% 5% 2% 2% 2012 2013 2014 2015 Residential customer count (millions) … And Strong Cost Management(3)… … Leads to Resilient Ret
Slide 18: Section 3: Key Credit Highlights
Section 3 Key Credit Highlights
Slide 19: Key Credit Highlights
Key Credit Highlights Repositioned TCEH will be refinanced at or near the bottom of the commodity cycle with conservative leverage levels and impressive free cash flow generation 1 TXU Energy is the largest retail electric provider in Texas with 1.7 million total customers and a 25% Leading Retail s
Slide 20: Leading Retail Platform
1 Leading Retail Platform Stable Retail Customer Count and EBITDA production Maintaining Market Share … (4.0%) 1.560 1.516 1.500 1.489 (2.8%) (1.1%) (0.7%) 2012 2013 2014 2015 Residential customer count (millions) Attrition rate … While Growing Sales Volumes (GWh)(1)… 39,570 37,994 38,511 41,212 16,
Slide 21: Large, Diversified, and Efficient Generation Fleet
2 Large, Diversified, and Efficient Generation Fleet Luminant is the largest generator in Texas … … with a well positioned fleet throughout the supply stack Illustrative 16,760 2017E Luminant EBITDA Contribution by Fuel Type Average Peak Demand Demand Marginal Unit Cost ($/MWh) Coal Nuclear Natural
Slide 22: Proven Integrated Business Model
3 Proven Integrated Business Model Integrated and Complementary Business Leads to Value Creation … Wholesale / Generation • Proven integrated risk Retail / Customers management of generation • Largest generator of • ERCOT’s largest REP and retail positions ERCOT electricity • Offers full suite of tr
Slide 23: Proven Integrated Business Model – Diversified EBITDA
3 Proven Integrated Business Model … And Produces Diversified, Balanced EBITDA Contribution Luminant EBITDA did not realize full benefit Increasing power prices benefit generation while from increasing power prices in 2014 due to declining power prices benefit retail Comanche Peak’s scheduled refuel
Slide 24: Conservative Capital Structure and Strong Cash Flows
4 Conservative Capital Structure and Strong Cash Flows Conservatively Financed Capital Structure … Total Debt / 2016E EBITDA(1) Total Debt / TEV(2) 6.5x 82% 6.2x 6.1x 80% 77% 71% 4.9x 1.9x 26% TCEH TCEH … Supported by Balanced Business Model … Retail vs. Generation – Contribution to 2015 EBITDA TCEH
Slide 25: Best In Class Collateral Coverage
4 Conservative Capital Structure and Strong Cash Flows … And Best In Class Collateral Coverage $14,000 $12,000 $11,600 $10,454 $9,852 $10,000 $ in millions $8,000 $6,000 $4,000 Exit Financing $2,850(1) $2,000 $0 (2) (3) (4) Current Pre-Petition Debt Trading Level Trading Multiples POR Valuation Midp
Slide 26: Right Sized Cost Structure and Improved Operations
5 Right Sized Cost Structure and Improved Operations SG&A Expenses 2009 – 2017E; $ in millions(1)(2) Responding to low power prices, Luminant 35% reduction in SG&A manages plant capital, fuel and O&M expense in $983 $794 $744 $641 order to increase / maximize profitability Reduced Reduced Corpor
Slide 27: Section 4: Financial Overview
Section 4 Financial Overview
Slide 28: Key Projection Assumptions
Key Projection Assumptions Gas Prices (Houston Ship Channel)(1)(2) ERCOT North Hub ATC Power Prices(1)(3) $5.00 $40.00 Increase due to polar vortex $4.33 $33.93 Increase due to polar vortex $4.00 $30.00 $34.76 $32.84 ($/mmBtu) ($/MWh) $3.69 $30.50 $30.97 $3.00 $28.93 $3.18 $27.22 $3.03 $3.10 $2.79 $
Slide 29: Historical and Projected Financials
Historical and Projected Financials EBITDA(1) ($ in millions) $2,923 $2,296 $1,722 $1,733 $1,520 $1,315 $1,327 $1,397 $1,517 2013A 2014A 2015A 2016E 2017E 2018E 2019E 2020E 2021E TXU Energy Luminant excl. CHP (3) Forney and Lamar Corporate Hedge Program ("CHP") Capital Expenditures(1)(2) ($ in milli
Slide 30: Strong Deleveraging Profile
Strong Deleveraging Profile Total Debt(1) ($ millions) Net Debt(2) ($ millions) $1,561 $2,837 $2,802 $2,769 $2,738 $971 $2,708 $277 ($529) ($1,285) 2017E 2018E 2019E 2020E 2021E 2017E 2018E 2019E 2020E 2021E Total Debt / EBITDA Total Debt / Capitalization(3) 2.2x 2.1x 2.0x 25.6% 25.2% 24.9% 1.8x 24.
Slide 31: Section 5: Transaction Overview
Section 5 Transaction Overview
Slide 32: Sources and Uses and Pro Forma Cap Table
Sources and Uses and Pro Forma Cap Table Step 1: New DIP Facility on 8/1/2016 Sources Uses New Term Loan B $2,850 Repay existing DIP Revolver draw(1) $1,455 New Funded L/C Term Loan (“Term Loan C”) 650 Repay existing DIP Term Loan B 625 Release existing DIP L/C Facility cash 800 Repay existing DIP T
Slide 33: Summary Term Sheet
Summary Term Sheet Texas Competitive Electric Holdings Company LLC (the “Company”) or, after exit/conversion a new domestic entity resulting from Borrower: consummation of the Plan that succeeds to the business and operations of the Company Guarantees: Certain domestic subsidiaries of the Borrower a
Slide 34: Timeline
Timeline July 2016 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Holiday Week of Key Financing Dates 11-Jul July 12: Bank meeting in New York 25-Jul July 26: Commitments due from lenders Finalize and execute legal documentation 1-Aug Close
Slide 35: Appendix
Appendix
Slide 36: Tax Receivables Agreement (“TRA”)
Tax Receivables Agreement (“TRA”) Long term agreement between Reorganized TCEH and the TRA rights holders (initially, the TCEH TRA structurally subordinated to Debt issued by OpCo First Lien creditors) Allows holder to monetize 85% of the benefit from Shareholders Management the tax basis step-u
Slide 37: Unlevered Free Cash Flow Build
Unlevered Free Cash Flow Build 2016E(1) 2017E 2018E 2019E 2020E 2021E EBITDA $1,520 $1,315 $1,327 $1,397 $1,517 $1,733 Capital Expenditures (384) (309) (387) (335) (330) (387) (incl. Nuclear Fuel) Working Capital (123) 70 8 (16) (16) (22) Tax Payments (24) (65) (15) 16 (17) (115) Tax Receivable 0 0
Slide 38: TCEH Reg G Financials
TCEH Reg G Financials Net Loss to EBITDA Reconciliation 2013 2014 2015 Net loss attributable to TCEH ($2,197) ($6,229) ($4,677) Income tax benefit (732) (2,320) (879) Interest expense and related charges 1,916 1,749 1,289 Depreciation and amortization 1,333 1,270 852 EBITDA before other adjustments
Slide 39: TCEH Reg G Financials
TCEH Reg G Financials Unlevered Free Cash Flow Reconciliation 2013 2014 2015 Cash provided by (used in) operating activities ($270) $444 $237 Capital expenditures(1) (472) (336) (337) Nuclear fuel purchases (116) (77) (123) Purchase of right to use certain computer-related assets from affiliate (29)
Texas Competitive Electric Holdings Company — Debt Investor Presentation (July 2016) on 6ix