Channel Infrastructure Nz Limited · NZX:CHI
Channel Infrastructure Nz — Debt Investor Presentation (October 2023)
32 slides from Channel Infrastructure Nz's debt investor presentation, Oct 30, 2023
Slide 1: Offer of Unsecured, Unsubordinated, 6 year fixed rate bonds
Offer of Unsecured, Unsubordinated, 6 year fixed rate bonds Investor Presentation 30 October 2023
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer This presentation has been prepared by Channel Infrastructure NZ Limited (Channel Infrastructure or No representation or warranty, express or implied, is made as to the accuracy, reliability, Channel) in relation to the offer (Offer) of unsecured, unsubordinated, fixe
Slide 3: Important Notice and Disclaimer (cont.)
Important Notice and Disclaimer (cont.) Not an offer You must make your own independent investigation and assessment of the financial condition and This presentation is not, and should not be construed as, an offer to sell or, a solicitation of an offer affairs of Channel Infrastructure before decid
Slide 4: Overview of the Offer
Overview of the Offer Issuer Channel Infrastructure NZ Limited (Channel Infrastructure). Description Unsecured, unsubordinated, fixed rate bonds (Bonds). Up to $75m (with the ability to accept oversubscriptions of up to an additional $25m at Channel Infrastructure’s Offer amount discretion). The net
Slide 5: Business Summary
‘S2 Channel Business Summary
Slide 6: About Channel Infrastructure
About Channel Infrastructure Own critical Receive, store, test Transformed from infrastructure on a and distribute Refining NZ to Channel 180ha site including transport fuels owned Infrastructure on 1 April jetties on the by our customers to 2022. Fundamental deep-water the Northland and reset in wh
Slide 7: Ownership of critical infrastructure
Ownership of critical infrastructure Highly efficient infrastructure supplying the Auckland and Northland markets • New Zealand’s largest transport fuels storage terminal Marsden Point Throughput* (Million Litres) • c.180 ML of shared capacity under the Terminal Services 4,000 Agreements 3,500 • c.1
Slide 8: World-class delivery and execution through conversion
World-class delivery and execution through conversion Safely shutdown the refinery and commenced import terminal operations to plan Transitioned business model to stable and predictable earnings through long-term customer agreements, with a Take-or-pay underwrite and PPI escalation, and strong free
Slide 9: Conversion projects substantially complete and significantly de-risked
Conversion projects substantially complete and significantly de-risked • Conversion costs remain within budget: Terminal and private storage conversion cost phasing • c.$189 million spent to 30 September 2023, including c.$36 Terminal conversion: $200-220m million of private storage costs Demolition
Slide 10: Focus on Health, Safety, Environment and Workforce
Focus on Health, Safety, Environment and Workforce Strong focus on safety systems, culture, environment and workforce, born from operating one of NZ’s most complex and hazardous industrial facilities, provides a strong foundation for establishing a world-class energy infrastructure company • Maintai
Slide 11: Our refreshed strategy: helping fuel NZ's future to 2050 and beyond
Our refreshed strategy: helping fuel NZ's future to 2050 and beyond OUR VISION World-class energy infrastructure company OUR PURPOSE Delivering resilient infrastructure solutions to meet changing fuel and energy needs OUR STRATEGIC PRIORITIES World-Class High Performance Grow from Support Energy Dis
Slide 12: Our infrastructure will help fuel NZ's future to 2050 and beyond
Our infrastructure will help fuel NZ's future to 2050 and beyond The enablers for Channel's strategy What Channel will be called on to deliver • Strong and stable • Key supply route for • Meet expected • Support New Zealand’s cash flows jet to Auckland growing jet reliance on long-haul air Internati
Slide 13: 1. Strong and stable cash flows
1. Strong and stable cash flows Long-term customer contracts • Initial term of 10-years, with two 5-year rights of renewal • Fixed and minimum fee components • Third-party access to unutilised Marsden Point-to-Auckland Pipeline capacity after 1 April 2025 • Key customers are strong counterparties[3]
Slide 14: 2. Strong capabilities
ong capabilities Y% Deals we've done: - Terminal Services Agreements - Private Storage Contracts Y world-class conversion Technical ~ Import Terminal capability ~ Tonks = the technical know-how to % Conversion delivered in line with budget schedule in post COVID/high inflation environment fuels infr
Slide 15: 3. Uniquely strategic assets
3. Uniquely strategic assets 180ha of land of which only 1/3 is Close proximity Deep water harbour and currently in use. Book to Northport jetties capable of value of unutilised land receiving refined product Industrial natural gas, c.$15million ships amongst the largest water, and electricity in th
Slide 16: 4. Key supply route for jet fuel to Auckland International Airport
4. Key supply route for jet fuel to Auckland International Airport [1] Assuming 40,000 litres/truck [2] Assuming all electricity supplied from 2024 under the new long-term electricity supply agreement is sourced from renewable generation [3] Based on Envisory mid case projection to 2050 16
Slide 17: The future for New Zealand fuels in a decarbonising world
The future for New Zealand fuels in a decarbonising world What Channel will be called on to deliver for New Zealand: 5. Support a stable medium term diesel demand outlook and a resilient transition of petrol Stable diesel demand expected in the medium term with longer-term “harder to shift” agricult
Slide 18: Marsden Point has several brownfield fuels opportunities
Marsden Point has several brownfield fuels opportunities Strategic Diesel Reserves • NZ Government tendering up to 70 million litres of diesel storage capacity • Energy (Fuels, Levies, and References) Amendment Bill passed May 2023 • Tender documents released September 2023 • Product quality require
Slide 19: Financial Update
SA Channel Financial Update 19
Slide 20: Import terminal delivers stable financial profile
Import terminal delivers stable financial profile Disciplined capital Stable and predictable earnings Strong cash flow and balance sheet management Targeting credit Revenue [1] EBITDA Margin[1] Leverage[3] metrics consistent 30-40% 68% 3.6x 95% Stable Ordinary with a Normalised Dividend Yield shadow
Slide 21: Strong 1H23 financial result, with EBITDA margin of 68%
Strong 1H23 financial result, with EBITDA margin of 68% (up 3% on 2H22) Profit & Loss from continuing operations • Terminal operations commenced on 1 April 2022 $’m (six months ended) 30 Jun 2023 31 Dec 2022 30 Jun 2022 • For comparative purposes, we report the results for the last 6 months of 2022,
Slide 22: Strong balance sheet
Strong balance sheet Strong balance sheet supports future growth opportunities Assets ($m) HY23 FY22 • Import terminal assets at fair value based on independent Cash 2 2 valuation in Dec 2021 Receivables and inventory 28 29 Current assets 30 31 • Further asset optimisation opportunities – surplus la
Slide 23: Leverage remains within the targeted range
Leverage remains within the targeted range • Strong cash flows from operations, funded 93% of the conversion spend and capex in 1H23 • Net debt increased to $295 million as at 1H23 ($315 million as at 30 September 2023) as expected with the conversion spend and FY22 dividend • Leverage at 3.6x[1] wi
Slide 24: New retail senior bond to replace Subordinated Notes
New retail senior bond to replace Subordinated Notes[5] [1] Debt profile • Debt facilities of $380 million with significant liquidity headroom available (c.$62 million as at 30 September 2023) • Expected debt will peak at around $15 to $35 million above the 30 September 2023 level in the next 6 - 12
Slide 25: Clear capital allocation framework
Clear capital allocation framework [2] [1] Normalised Free Cash Flow is calculated as net cash flow from operations less maintenance capex (excluding conversion costs and growth capex). The dividend policy is subject to the Board’s due consideration of the Company’s medium term asset investment prog
Slide 26: FY23 guidance reconfirmed. Outlook for FY24
FY23 guidance reconfirmed. Outlook for FY24 FY24 guidance[3] to be released with FY23 results. Key drivers include: • The PPI escalator applying to 2024 import terminal services and private storage Indicative FY23 financial metrics[1] revenue published mid-November • Private storage revenue at full
Slide 27: Bond Offer
Channel Bond Offer 27
Slide 28: Key terms
Key terms The following section provides a summary of certain key terms only. Full details of the terms of the Offer and the Bonds are contained in the Terms Sheet, which must be read carefully and in full. Issuer Channel Infrastructure NZ Limited. Description Unsecured, unsubordinated, fixed rate b
Slide 29: Key terms (cont.)
Key terms (cont.) The net cash proceeds raised under the Offer (excluding the value of any Subordinated Notes purchased under the Exchange Mechanism) are intended to be applied towards: a) repaying a portion of Channel Infrastructure's existing bank debt; b) redeeming on 1 March 2024 any Subordinate
Slide 30: Key terms (cont.)
Key terms (cont.) If the bookbuild for the Offer is successful, Subordinated Noteholders that hold Subordinated Notes through a custodial account and who wish to apply for the Bonds (Custodial Subordinated Noteholders) may be able to exchange all or some of their Subordinated Notes for an equal numb
Slide 31: Key dates
Key dates* Opening Date Monday, 30 October 2023. Closing Date Friday, 3 November 2023 at 11.00am NZT. Rate Set Date Friday, 3 November 2023. Issue Date Tuesday, 14 November 2023. Expected date of initial quotation and Wednesday, 15 November 2023. trading Maturity Date Wednesday, 14 November 2029. In
Slide 32: Questions
CA See} Channel Questions
Channel Infrastructure NZ — Debt Investor Presentation (October 2023) on 6ix