GSC Acquisition — SPAC Merger (May 2008)
41 slides from GSC Acquisition's SPAC merger presentation, May 12, 2008
Slide 1: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "anticipates", "may", "can", "believes", "expects", "projects",
Slide 2: Additional Information and Where to Find It
ADDITIONAL INFORMATION AND WHERE TO FIND IT This communication is being made with respect to a proposed merger and related transactions involving GSCAC and Complete Energy. In connection with these proposed transactions, GSCAC intends to file with the Securities Exchange Commission ("SEC") a prelimi
Slide 3: Additional Information and Where to Find It
(9) ADDITIONAL INFORMATION AND WHERE TO FIND IT This communication is being made with respect to a proposed merger and related transactions involving GSCAC and Complete Energy. In connection with these proposed transactions, GSCAC intends to file with the Securities Exchange Commission (“SEC”) a pre
Slide 4: Why Complete Energy?
Why Complete Energy? o Attractively priced all-equity transaction with compelling upside o Unprecedented growth in demand for energy and power infrastructure o Highly efficient, low emissions, gas-fired combined cycle facilities utilizing proven technology o Favorable power market dynamics and robus
Slide 5: Complete Energy to Access the Public Markets
Complete Energy to Access the Public Markets o Complete Energy Holdings becomes a public company through a merger transaction with GSCAC o Complete Energy is an independent power generating company established in 2004 o Founded and managed by an experienced team of energy industry professionals with
Slide 6: Transaction Overview
Transaction Overview Transaction o Purchase price of $1.3 billion enterprise valuation for 100% of Complete Energy and all of the equity in its two natural gas-fired generating facilities o $900 million purchase price for La Paloma o $400 million purchase price for Batesville Consideration o Approxi
Slide 7: Complete Energy Investment Thesis
Complete Energy Investment Thesis Strong fundamental asset valuation with significant upside Near-Term Upside in California o Reserve margins are close to minimum requirements o Substantial power revenue increases likely required to stimulate the construction of new capacity o Power Purchase Agreeme
Slide 8: Strong Sponsor Support
Strong Sponsor Support [Graphic Appears Here] GSCAC Founder & Manager o Alternative asset manager with $22 billion of AUM as of 12/31/07 o Senior management team with over 60 years of combined experience in both private and public investments o Experience across many industries o Demonstrated abilit
Slide 9: Overview of the Complete Energy Portfolio
Overview of the Complete Energy Portfolio La Paloma o 1,022 MW gas-fired, four unit combined cycle facility located in Kern County, California, approximately 110 miles northwest of Los Angeles o One of the most efficient and cleanest fossil-fueled generation stations in operation in California o The
Slide 10: Overview of the Complete Energy Portfolio
Overview of the Complete Energy Portfolio 1m 1,022MW gas-fired, four unit combined cycle facility located m_ 837 MW gas-fired, three unit combined cycle facility located in in Kern County, Catifornia, approximately 110 miles Batesville, Mississippi, about 60 miles south of Memphis, northwest of Los
Slide 11: Valuation Thesis
Valuation Thesis o Pro forma enterprise value represents a discount of 40% to blended replacement cost o Pro forma enterprise value represents a discount of approximately 28% to the average EV/EBITDA multiple for comparable companies (1) o Clear path to significant EBITDA growth as supply/demand bal
Slide 12: Attractive Relative Valuation
Attractive Relative Valuation Pro Forma Valuation ($mm) Share Price ($)(1) 10.00 Fully Diluted Shares (mm) (2,3) 75.4 Pro Forma Fully Diluted Equity Value Pro Forma Net Project Debt (4) 622 New Senior Subordinated Note 50 Pro Forma Enterprise Value Allocated EV: La Paloma 987 Allocated EV: Batesvill
Slide 13: La Paloma Investment Thesis: Visible and Significant Upside
La Paloma Investment Thesis: Visible and Significant Upside Current Market Signals Indicate Tight Supply / Demand Balance o Generation supply is lagging strong demand growth in California o A new record for peak demand was set in 2006 exceeding forecasts by 8% and the previous year's peak demand by
Slide 14: Declining Reserve Margins Will Benefit Existing Generators
Declining Reserve Margins Will Benefit Existing Generators Tightening reserve margins drive increasing capacity factors and eventual need for new build Reserve margins in California are declining... ....which has led to higher spark spreads... ....and requires new capacity to be constructed (1) o Bl
Slide 15: Recent Announced Construction Projects
Recent Announced Construction Projects Peaking facilities in California are currently being built at costs in the range of $1,000/kW Humboldt Starwood-- Panoche Sentinel Bay Midway Energy Energy Sponsor PG&E Starwood Energy Investors Competitive Energy Fund (EIF) Power Ventures Offtaker PG&E PG&E PG
Slide 16: Translating Replacement Cost into Earnings Potential for La Paloma
Translating Replacement Cost into Earnings Potential for La Paloma Tightening reserve margins in California should lead to valuations approaching replacement cost in the near term New build cost translates into a minimum required level of EBITDA... ....implying significantly improved market equilibr
Slide 17: Implications of Current PPA Market Pricing
Implications of Current PPA Market Pricing Panoche Energy Center Overview: NP-15 Zone, CA Project Overview Net Installed Capacity (MW) 400 Construction Cost ($mm) (1) 415 Implied Cost / kW ($) 1,038 Estimated Commission Date August 2009 Technology Simple-Cycle GE LMS 100 Fuel Type Gas-Fired Guarante
Slide 18: Valuation of La Paloma Based on Replacement Cost
Valuation of La Paloma Based on Replacement Cost The purchase price for La Paloma represents a substantial discount to replacement cost Replacement Cost Estimates Notes: 1 As per Black & Veatch estimates taken from Black & Veatch data compiled solely for use by GSC Acquisition Company pursuant to Co
Slide 19: Development Opportunities at La Paloma
Development Opportunities at La Paloma The La Paloma site is well situated for a variety of potential expansion projects Potential Gas-Fired Expansion o Construction of additional capacity at material cost savings to greenfield construction due to: o Existing transmission interconnections with avail
Slide 20: Batesville Investment Thesis: Near Term Visibility and Stability
Batesville Investment Thesis: Near Term Visibility and Stability Fully contracted facility with future upside in the fastest growing region in the U.S. Stable Cash Flows through 2013 from Attractive Contracts o All of the plant's output is sold under long-term PPAs with creditworthy counterparties t
Slide 21: Declining Reserve Margins Will Benefit Existing Generators
Declining Reserve Margins Will Benefit Existing Generators Tightening reserve margins drive increasing capacity factors and eventual need for new build capacity Reserve margins in SERC are declining... Source: Ventyx ....which has led to higher spark spreads... Source: Based on Entergy on-peak power
Slide 22: Valuation of Batesville Based on Replacement Cost
Valuation of Batesville Based on Replacement Cost The purchase price for Batesville represents a substantial discount to replacement cost Replacement Cost Estimates o Utilities are increasingly looking to acquire existing generation facilities as the most effective means to meet growing peak demand
Slide 23: Compelling Valuation of Batesville Based on Recent Precedents
Compelling Valuation of Batesville Based on Recent Precedents Southaven is a recent and comparable transaction supporting Batesville's valuation TVA's Acquisition of Southaven o On April 3, 2008, TVA announced that it would acquire the three-unit, 810 MW Southaven Power combined-cycle combustion tur
Slide 24: Translating Replacement Cost into Earnings Potential for Batesville
Translating Replacement Cost into Earnings Potential for Batesville Tightening reserve margins in SERC should eventually lead to a significant improvement in profitability Replacement cost translates into a ...implying significantly improved minimum required level of EBITDA... market equilibrium eco
Slide 25: Carbon Legislation Creates Upside for La Paloma and Batesville
Carbon Legislation Creates Upside for La Paloma and Batesville Gas-fired units minimize greenhouse gas emissions Situation Overview o Complete Energy's highly efficient, modern gas-fired plants consume significantly less fuel than older facilities and emit less air pollutants compared to coal-fired
Slide 26: Carbon Legislation Creates Upside for La Paloma and Batesville
Carbon Legislation Creates Upside for La Paloma and Batesville Gas-fired units minimize greenhouse gas emissions Situation Overview ™ Complete Energy’s highly efficient, modern gas-fired plants consume significantly less fuel than older facilities and emit less air pollutants compared to coal-fired
Slide 27: Experienced Management Team
Experienced Management Team Hugh Tarpley Lori Cuervo Peter Tellegen Tom Romesberg Joseph Richardson Carla Banks, PhD Nick Park Ken Thorp 27
Slide 28: Complete Energy's In-House Capabilities
Complete Energy's In-House Capabilities Foundation necessary to own and operate a growing generation company Business Function Energy Management & Commercial Operations Plant Operations & Maintenance Asset Management Origination & M&A Execution 28
Slide 29: Operational Strategies
Operational Strategies Complete Energy has a strong operational focus o In-house expertise translates into high quality, low cost operations o Highly-skilled and experienced staff o Implement "best in class" O&M programs o Network with other non-competing entities to exchange lessons learned and tec
Slide 30: Operations -- Initial Challenges and Accomplishments
Operations -- Initial Challenges and Accomplishments Despite initial challenges, management has positioned the portfolio for long-term reliability Initial Challenges Resolution / Current Status 30
Slide 31: M&A Strategy
M&A Strategy To supplement intrinsic growth, Complete Energy expects to pursue attractive M&A opportunities o There is currently over 17,000 MW of generating capacity available for sale in the U.S. o Complete Energy's management team is well positioned to execute on an M&A strategy in order to build
Slide 32: M&A Strategy
M&A Strategy To supplement intrinsic growth, Complete Energy expects to pursue attractive M&A opportunities @ There is currently over 17,000 MW of generating capacity available for sale in the U.S. = Complete Energy’s management team is well positioned to execute on an M&A strategy in order to build
Slide 33: Summary of Normalized EBITDA
Summary of Normalized EBITDA Notes: 1 2008 reflects Q1 2008 actual results and management forecast for the remainder of the year. La Paloma and Batesville EBITDA includes $4.6 million of allocated corporate overhead 2 2007 and 2008 financials reflect 100% consolidation and reporting basis 3 Batesvil
Slide 34: Normalized 2007 EBITDA
Normalized 2007 EBITDA Notes: 1 2007 financials reflect 100% consolidation and reporting basis 2 Market revenue related to an incremental 65 days of merchant availability that were lost in 2007 due to non-recurring forced outages 3 Fuel cost related to an incremental 65 days of merchant availability
Slide 35: Normalized 2008 EBITDA
Normalized 2008 EBITDA Notes: 1 2008 Pro Forma reflects Q1 2008 actual results and management forecasts for the remainder of the year 2 Market revenue related to an incremental 99 days of merchant availability due to a normalized outage schedule (one "C" inspection per year) 3 Fuel cost related to a
Slide 36: La Paloma Normalized EBITDA Bridge
La Paloma Normalized EBITDA Bridge La Paloma EBITDA Bridge - 2007 Normalized to 2008 Normalized Normalized 2007 EBITDA 44.1 Impact of higher market prices 7.5 Impact of SCE contract expiration 9.7 Higher 2008 fixed costs (1.9) Normalized 2008 EBITDA 59.4 o $7.2 million difference associated with imp
Slide 37: 2007 Results and 2008 Outlook
2007 Results and 2008 Outlook o Several factors affect 2007 and 2008 expected EBITDA at La Paloma and Batesville o Timing of major maintenance, improved contract structures, improving market conditions and non-recurring outage events o La Paloma o Less favorable SCE contracts on two units expired 12
Slide 38: Normalized EBITDA Methodology
Normalized EBITDA Methodology o "Normalized" results and projections include adjustments for timing of planned major maintenance and non-recurring events including: o Major Maintenance - Each of La Paloma's four units requires a 45-day "C" inspection approximately every four years. A normalized year
Slide 39: Normalized EBITDA Methodology
Normalized EBITDA Methodology = “Normalized” results and projections include adjustments for timing of planned major maintenance and non- recurring events including: ‘Major Maintenance Each of La Paloma’s four units requires a 45-day “C” inspection approximately every four years. A normalized year a
Slide 40: Transaction Structure
Transaction Structure GSCAC acquires Complete Energy for $1.3 billion Sources & Uses of the Consideration Offered 1 Assumes share price of $10.00, excludes the 5mm contingent shares issuable when the stock price reaches $14.50 and 5mm contingent shares issuable when the stock price reaches $15.50. T
Slide 41: Transaction Structure
Transaction Structure GSCAC acquires Complete Energy for $1.3 billion Sources & Uses of the Consideration Offered Uses ‘sm armen ee = Sr sisacss Ee @ eas a ome : —— o Son 2 are a Beas : GSCAC Shares to Current CEH Owners? ry GSCAC Shares to Minority Investors? 200 aa a = = — — paced i—# Equity” 754