Hawaiian Electric Industries · NYSE:HE
Hawaiian Electric Industries — Merger or Acquisition (December 2014)
37 slides from Hawaiian Electric Industries's merger presentation, Dec 4, 2014
Slide 1: NextEra Energy and Hawaiian Electric Industries to Combine
NextEra Energy and Hawaiian Electric Industries to Combine Achieving a More Affordable Clean Energy Future For Hawaii Hawaiian Electric Industries Announces Plan to Spin off ASB Hawaii into an Independent Publicly Traded Company December 3, 2014
Slide 2: Forward Looking Statements
Forward Looking Statements This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as “may,” “will,” “anticipate,” “estimate,” “expect,” “project,” “inte
Slide 3: Additional Information for Shareholders
Additional Information for Shareholders ADDITIONAL INFORMATION AND WHERE TO FIND IT This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in whic
Slide 4: Participants
Transaction Overview Jim Robo Chairman & Chief Executive Officer NextEra Energy, Inc. Benefits to HEI Stakeholders Connie Lau President & Chief Executive Officer Hawaiian Electric Industries, Inc. Chairman of Hawaiian Electric Company and Chairman of American Savings Bank Participants 4 American Sav
Slide 5: Transaction Overview
TRANSACTION OVERVIEW 5 JIM ROBO
Slide 6: Transformational Opportunity
Transformational Opportunity Hawaiian Electric Industries, Inc. (HEI) to combine with NextEra Energy Expands NextEra Energy regulated utility operations and provides additional opportunities to deploy core operational and investment capabilities Opportunity to strengthen and accelerate Hawaiian Elec
Slide 7: Transaction At A Glance
Transaction At A Glance 7 Median of six equity research analyst estimates as of 12/02/2014; excludes benefits of Durbin recapture (see page 27) Transaction Considerations HEI shareholders to receive NextEra Energy common stock, shares in ASB, and a one-time cash dividend Stock components expected to
Slide 8: Hawaiian Electric to be Integral Member of NextEra Energy Family
Hawaiian Electric to be Integral Member of NextEra Energy Family 8 One of the largest U.S. electric utilities 4.7 million customer accounts 25,586 MW in operation Current $45.9 billion market capitalization 44,257 MW in operation (2) $72 billion in total assets U.S. leader in renewable generation As
Slide 9: Compelling Strategic Rationale
Compelling Strategic Rationale 9 After spinoff as an independent company, American Savings Bank becomes a “pure-play” with singular focus on Hawaii banking market strategies and priorities American Savings Bank profitability improves with exemption from fee income limits under banking regulations (D
Slide 10: North American Leader in Clean Energy Generation
North American Leader in Clean Energy Generation 10 Top U.S. Wind Developers/Owners (MW) (1) NextEra Energy Solar Generation (MW) 2010–2014E CAGR = 50% 833 1,314 Top 50 U.S. Power Producers’ CO2 Emissions Rate (Lbs/MWh) (2) NEE NextEra Energy’s expertise and resources can help Hawaiian Electric achi
Slide 11: Proven Track Record of Reducing Oil Dependence, Improving Fuel Efficiency and Lowering Emissions
Proven Track Record of Reducing Oil Dependence, Improving Fuel Efficiency and Lowering Emissions 11 Since 2001, FPL has reduced its reliance on imported oil by over 99% and improved fuel efficiency by 20%, saving customers over $6.8 billion Millions of Barrels Millions of Barrels
Slide 12: Industry Leading Operational Performance
Industry Leading Operational Performance 12 NextEra Energy’s focus on efficiency has driven best-in-class cost performance to the benefit of its customers 2013 Operational Cost Effectiveness FERC Form 1, 2013. Operating Costs defined as non-fuel O&M. Excludes pensions and other employee benefits. Ho
Slide 13: Operational Excellence at Florida Power & Light
13 Florida Power & Light Company (FPL), one of NextEra Energy’s principal subsidiaries, is one of the nation’s largest and most well-respected electric utilities Typical residential customer electric bills are the lowest in the State of Florida for the fifth consecutive year and approximately 25% be
Slide 14: Strong Balance Sheet and Experience Executing Large Capital Projects
Strong Balance Sheet and Experience Executing Large Capital Projects Strong Investment grade credit ratings Robust access to capital Approximately $7 billion of capital raised by NextEra Energy per year since 2011 Experience executing large capital projects 95 major projects totaling over $24 billio
Slide 15: NextEra Energy's Strong Track Record of Shareholder Value Creation
CAGR: ~7.2% Adjusted Earnings Per Share CAGR: ~8.2% Dividends Per Share Total Shareholder Return NEE S&P 500 Utility Index S&P 500 One Year Three Year Five Year Ten Year NextEra Energy’s Strong Track Record of Shareholder Value Creation 15 (1) (2) See non-GAAP reconciliation in Appendix. Source: Fac
Slide 16: Key Approvals / Clearances
Key Approvals / Clearances HEI shareholders Hawaii Public Utilities Commission Federal Energy Regulatory Commission Federal banking regulators SEC registration process Hart-Scott-Rodino 16 We expect the transaction to close within approximately 12 months
Slide 17: Benefits to HEI Stakeholders
17 CONNIE LAU BENEFITS TO HEI STAKEHOLDERS
Slide 18: Two Strong and Distinct Companies for Hawaii
Two Strong and Distinct Companies for Hawaii 18 Transformational opportunity for Hawaiian Electric, customers, communities and shareholders Hawaiian Electric gains a partner who can provide additional financial resources and expertise to invest in and significantly accelerate the actions we’re takin
Slide 19: Creating Significant Value for HEI Shareholders
Creating Significant Value for HEI Shareholders 19 Per share values (except as noted) Based on implied value received for Hawaiian Electric + HoldCo by HEI shareholders Total value (including $8 estimated bank value)¹ $33.50 Implied premium to 20-day VWAP2 21% Merger consideration3 $25.00 HEI specia
Slide 20: HEI Shareholders to Receive Special Cash Dividend
Source: Equity research, FactSet and I/B/E/S; Note: Market data as of 12/02/2014; Per share amounts based on fully diluted shares of 103.5 million Assumes 0.2413 exchange ratio; NextEra Energy EPS and DPS based on I/B/E/S consensus median estimates American Savings Bank EPS based on equity research;
Slide 21: Ensuring Customer Interests are Protected
Ensuring Customer Interests are Protected Hawaiian Electric Hawaiian Electric filed plans with the Hawaii Public Utilities Commission that seek to: Enhance Hawaii’s energy future by lowering electric bills Give customers more service options Triple the amount of distributed solar Achieve nation’s mo
Slide 22: Maintaining Commitment to Hawaii and Local Communities
Maintaining Commitment to Hawaii and Local Communities Hawaiian Electric Hawaiian Electric Company name to continue Headquarters to remain in Honolulu, Hawaii Hawaiian Electric will be NextEra Energy’s third principal business reporting directly to the NextEra Energy Chairman and CEO NextEra Energy
Slide 23: Greater Opportunities for Employees
Greater Opportunities for Employees Hawaiian Electric No involuntary workforce reductions for at least two years after close For at least two years after the close, compensation and benefits for active non-union employees will be comparable to those in place before closing All of Hawaiian Electric’s
Slide 24: Great Opportunity for All Stakeholders
Great Opportunity for All Stakeholders Bringing together two industry leaders in clean and renewable energy that share common vision and goals Provides additional financial resources and considerable expertise to invest in and significantly accelerate utility’s actions to: Strengthen Hawaii’s energy
Slide 25: Overview of the Bank Separation
Overview of the Bank Separation 25 Company Benefits to Hawaiian Electric Industries Shareholders Spinoff Company: ASB Hawaii, Inc., parent company of American Savings Bank, FSB. Remaining Company: Hawaiian Electric Industries, Inc. Midpoint of recent analysts estimates – $8.00¹ Additional value crea
Slide 26: Establishing American Savings Bank as an Independent Public Company
ESTABLISHING AMERICAN SAVINGS BANK AS AN INDEPENDENT PUBLIC COMPANY 26 RICHARD WACKER
Slide 27: Durbin Recapture, Tax Basis Step-up and Capital Management
Durbin recapture Prior to July 1, 2013, ASB was exempt from regulatory caps on debit card interchange income under the Durbin Amendment to the Dodd- Frank Act and earned approximately $6 million (after-tax) higher fee income After the spinoff, with consolidated assets below $10 billion, ASB will reg
Slide 28: Investment Highlights
Investment Highlights 28 Well-positioned within attractive Hawaiian markets Strong and experienced management team Profitable and diversified business model Disciplined credit and risk management culture Strong balance sheet and liquidity position
Slide 29: Well-Positioned Within Attractive Hawaiian Markets
Well-Positioned Within Attractive Hawaiian Markets 29 ($ million) 3Q14 Total assets $5,442 Total loans 4,338 Total deposits 4,534 Equity 538 Tangible common equity 455 Business Overview Financial highlights One of the state’s leading residential, commercial and commercial real estate lenders Headqua
Slide 30: Strong and Experienced Management Team
Strong and Experienced Management Team 30 President and CEO of American Savings Bank since 2010 Previously Chairman and CEO of Korea Exchange Bank (KEB), where he led the turnaround of the major Korean commercial bank with $80 billion in assets and operating in 22 countries. Enjoyed a 20 year career
Slide 31: Disciplined Risk Management Culture, Strong Balance Sheet, Liquidity and Capital
Disciplined Risk Management Culture, Strong Balance Sheet, Liquidity and Capital 31 NPAs / loans + OREO (%) Total gross loans: $4,338mm as of Q3 2014 American Savings Bank loan composition Source for peer data: SNL Financial Median for peer group based on publicly traded banks and thrifts between $3
Slide 32: Profitable and Diversified Business Model
Return on Assets (%) Peers YTD Peers YTD American Savings Bank Target American Savings Bank QTD Annualized American Savings Bank YTD Annualized Peers¹ High Performing Peers² Fee Income (%) Profitable and Diversified Business Model 32 Source for peer data: SNL Financial Median for peer group based on
Slide 33: Closing Remarks
CLOSING REMARKS JIM ROBO NextTera’ ENERGY 2 ‘ommenne” | 33,
Slide 34: Transformational Opportunity
Transformational Opportunity NextEra Energy to expand regulated utility operations and further deploy and leverage core operational and investment capabilities Hawaiian Electric to deepen and accelerate its clean energy transformation American Savings Bank positioned for success as a focused, indepe
Slide 35: Questions & Answers
QUESTIONS & ANSWERS NextTera’ ENERGY
Slide 36: Appendix
APPENDIX NexTera’ ENERGY 2
Slide 37: Reconciliation of Adjusted Earnings Per Share to Earnings Per Share
NextEra Energy, Inc. Reconciliation of Adjusted Earnings Per Share to Earnings Per Share 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Earnings Per Share (assuming dilution) $2.53 $2.48 $2.34 $3.23 $3.27 $4.07 $3.97 $4.74 $4.59 $4.56 $4.47 Adjustments: Net unrealized mark-to-market losses (
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