Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — Merger or Acquisition (July 2013)
24 slides from Capstone Infrastructure's merger presentation, Jul 3, 2013
Slide 1: Arrangement Agreement with Renewable Energy Developers Inc.
VALUE EVERY DAY Arrangement Agreement with Renewable Energy Developers Inc. July 3, 2013
Slide 2: Notice to Readers
Notice to Readers Certain information presented in this presentation contains forward-looking statements and forward-looking information under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements, which incl
Slide 3: Michael Bernstein, President & CEO, Capstone
Michael Bernstein President & CEO, Capstone
Slide 4: New Partners
New Partners Diversified infrastructure Proven developer, company with total assets of owner and operator of ~$1.6B in Canada and renewable energy internationally projects 4
Slide 5: Transaction Highlights
Transaction Highlights 465 MW Significantly larger portfolio of operating renewable power facilities 79 MW Contracted wind power development projects 2015 Improved cash flow profile 5
Slide 6: Pro Forma Net Wind Capacity
Wind Capacity (Net)1 Pro forma company will immediately add operating capacity with potential additional future growth through development and optional projects PRO FORMA NET WIND CAPACITY (megawatts) 79 MW 273 MW 95 MW 99 MW Current Capstone ReD Operating Assets ReD Contracted Potential Development
Slide 7: Pro forma Company – Combined Assets
Pro forma Company – Combined Assets RENEWABLE ENERGY DEVELOPERS - OPERATING RENEWABLE ENERGY DEVELOPERS - DEVELOPMENT PROJECTS CAPSTONE INFRASTRUCTURE Bristol Water Värmevärden Hluey Lakes Whitecourt Chapais Springhill & Glace Bay I & II Sechelt Higgins Mountain Glen Dhu I Riverhurst Amherst Dryden
Slide 8: Consideration to ReD Shareholders
Consideration to ReD Shareholders Current value Total value of of 10.8% transaction= $1.01 premium $70M per share1 over 20-day VWAP of shares based on 20-day VWAP of as at July 2, 20132 Capstone and ReD shares as at July 2, 20132 1. Shareholders of ReD will receive 0.26 of a Capstone common share an
Slide 9: Post-Transaction Team and Board
Post-Transaction TEAM ► Capstone executive leadership remains ► ReD employees to: ￚ Continue to develop and grow project pipeline ￚ Maintain asset management responsibilities at operating facilities ► Jeff Jenner to assist with transition and project pipeline through to the end of 2013 BOARD ► ReD’s
Slide 10: ReD & Capstone: A Stronger Company for All Shareholders
ReD & Capstone A Stronger Company for All Shareholders
Slide 11: Broader, More Diversified Renewable Power Presence in Canada
Broader, More Diversified Renewable Power Presence in Canada Operating: Capstone Operating: ReD Development: ReD 370 MW 95 MW 79 MW of installed capacity of installed capacity of contracted capacity 6.8 years 8.7 years 10.4 years weighted average weighted averaged PPA weighted average PPA PPA term t
Slide 12: Internal Capital Available to Support Development
Internal Capital Available to Support Development Deeper complement of $60M in equity financing for development and project development projects mostly management personnel satisfied through internally generated cash Track record of completing renewable power projects New credit facility available o
Slide 13: Vision and Mission
VISION To be Canada’s pre-eminent diversified infrastructure company. MISSION To build and responsibly manage a high quality portfolio of infrastructure businesses in Canada and internationally in order to deliver a superior total return to shareholders by providing reliable income and capital appre
Slide 14: Jeff Jenner, CEO of ReD
JS amie Jeff Jenner CEO of ReD
Slide 15: Capstone: The Right Partner for ReD
Capstone: The Right Partner for ReD QUARTERLY DIVIDEND PER SHARE 10.8% premium over ReD’s 1 20-day VWAP $0.020 20% INCREASE $0.0195 Quarterly dividend to $0.018 2 increase by 20% $0.01625 3 well-funded enterprise ~20% stake in a larger, $0.016 4 Broader diversified infrastructure $0.014 ReD pre Pro
Slide 16: Michael Smerdon, Executive VP & CFO, Capstone
Michael Smerdon Executive VP & CFO, Capstone
Slide 17: Project Financing
Project Financing $60M in equity financing required ► Expect to primarily satisfy through internally generated funds and new credit facility Expect to establish project-level debt ► Consistent with Capstone’s approach to current portfolio ► Starting with Goulais and Saint Philemon in 2013 (construct
Slide 18: Debt Profile
Debt Profile Capstone will assume $129M in project-level debt and ~$34.5M of ReD’s outstanding 6.75% convertible debentures ► Total long-term debt of combined entity will be ~$770M Debt to capitalization ratio of approximately 61.2%1 upon completion of transaction ► No significant change in Capstone
Slide 19: Diversified Longer Life Assets
Diversified Longer Life Assets Wind will contribute roughly a quarter of Adjusted EBITDA1 in the Pro forma company CAPSTONE ADJUSTED EBITDA (2012A)1 CAPSTONE + ReD ADJUSTED EBITDA (2012A)2 Wind 13% Gas 17% Gas 18% Wind 24% 99MW Hydro 8% 194MW Biomass 6% Hydro 7% Biomass 5% Solar 13% Utilities 43% Ut
Slide 20: Next Steps
Next Steps File and Mail Special Transaction Information Shareholder Closes Circulars Meetings J U LY AUGUST SEPTEMBER 20
Slide 21: Michael Bernstein, President & CEO, Capstone
Michael Bernstein President & CEO, Capstone
Slide 22: Strategic Rationale
Strategic Rationale ► Quality portfolio of operating wind facilities & development projects Newly Built ► Long-term power purchase agreements (PPA) with credit-worthy Long Life Assets counterparties ► Pipeline of near-term development projects Unlock Value in ► Capstone’s finance, tax and developmen
Slide 23: Questions
JS amie Questions
Slide 24: Non-GAAP Performance Measures
Non-GAAP Performance Measures Adjusted EBITDA and EBITDA are non-GAAP financial measures and do not have any standardized meaning prescribed by International Financial Reporting Standards. Capstone calculates Adjusted EBITDA as revenue less operating and administrative expenses plus interest income
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