Slide 1: Shareholder Update
Western Shareholder Update July 2005 ss NEW STRENGTH. NEW STRATEGY. NEW ENERGY.
Slide 2: Forward-Looking Statement
Forward-Looking Statement During the course of this presentation today, we will be discussing certain subjects including those pertaining to our strategy, and our discussions may contain forward-looking information. Although our expectations and beliefs are based on reasonable assumptions, actual re
Slide 3: Montana Public Power, Inc. Proposal
Montana Public Power, Inc. Proposal ¢ MPPI would purchase in cash all NorthWestern common stock at $32.50 per share «Upon closing, MPP! would sell non-Montana assets and related liabilities to South Dakota Power Company « MPPI to fund purchase entirely by debt financing « MPPI states it would mainta
Slide 4: NorthWestern Board's Response to MPPI Proposal
NorthWestern Board’s Response To MPPI Proposal + NorthWestern’s Board, in conjunction with financial and legal advisors, has evaluated MPPI’s informal and formal proposals + Board’s review process included numerous meetings with advisors, who also met with MPPI and its advisors + At each stage, Nort
Slide 5: Financing Risk
NorthWestern’s Concerns With the MPPI Proposal Financing Risk ¢ MPPI relies on a highly leveraged, “no equity” financial plan consisting of 100% debt structure = Rating agencies uncertain as to whether such debt will be investment grade without regulatory safety net = Financed by customers and utili
Slide 6: Risks to Stockholders
Risks to Stockholders What MPPI Says (June 30, 2005) “MPPI has had preliminary discussions about the transaction with rating agencies, and is confident that projected coverage ratios are consistent with investment grade credit ratings.” What Standard & Poor's Says (July 1, 2005) S&P gave “NorthWeste
Slide 7: Regulatory Risk
NorthWestern’s Concerns With the MPPI Proposal Regulatory Risk MPPI assumes it can obtain unprecedented regulatory flexibility and cooperation to obtain financing = Ability to raise rates to assure lenders + Montana PSC may not have authority to provide flexibility without changing Montana law = Unc
Slide 8: Legal Risk
NorthWestern’s Concerns With the MPPI Proposal Legal Risk + Montana Attorney General opinion does not cover all legal concerns = Montana law may not permit MPPI to own and operate a utility outside of the cities’ or state’s jurisdiction = Subsequent sale of non-Montana assets raises the potential fo
Slide 9: Local Control/Authority
NorthWestern’s Concerns With the MPPI Proposal ocal Control/Authority * MPPI states the primary reason for the acquisition is to provide local control = Communities will have no control over operations, spending or use of proceeds on a community-by- community basis = Many communities are telling Nor
Slide 10: Timing/Ability to Close
NorthWestern’s Concerns With the MPPI Proposal Timing/Ability to Close Significant regulatory, legal, financial and other risks raise concern whether transaction can close + If concerns could be resolved, it would require at least 18 months to close transaction = Business and legal due diligence = M
Slide 11: The financial consideration is not compelling vs. NorthWestern's stand-alone prospects
NorthWestern’s Concerns With the MPPI Proposal The financial consideration is not compelling vs. NorthWestern’s stand-alone prospects + Company’s improved financial and operational performance provides significant opportunities for near and long-term growth prospects + Enhanced opportunities exist i
Slide 12: 2005 Cash Flow Overview
2005 Cash Flow Overview & &D & $215-$220 million* Value Creation Strategy dtnhance) $80 milli land Enhance Operations $ million $30-$35 million Reduce Debt ‘Assunmes asset sales proceeds of $65.70 rion aed Uses 2004 cash fow komoperstons oF8t00 calor arnt 35:1 proxy for ongoing cash fow femmoparston
Slide 13: Stand-Alone Prospects
NorthWestern’s Stand-Alone Prospects + Company’s stand-alone prospects have dramatically improved since emergence + Anticipating solid 2005 earnings and cash flow from continuing operations + Company achieving targeted capital structure ahead of schedule + Significantly lower interest expense = Both
Slide 14: Opportunities to Improve Shareholder Value
Opportunities to Improve Shareholder Value NorthWestern may use excess cash in one or more of the following ways: «Increase common stock dividend « Share and/or warrant repurchase « Balance sheet liabilities improvement = Buy down Qualifying Facility contract liability = Buy out Colstrip 4 lease = I
Slide 15: Improving Near-Term Shareholder Value
Improving Near-Term Shareholder Value * Board increases dividend = 14% increase effective Sept. 30, 2005 = Moves annualized rate to $1.00 per share = Board will review future action when 2006 guidance is provided « S-3 Registration Statement revised and submitted to SEC = Could go effective in 10 da
Slide 16: Searchable
Searchable text section of graphics shown above