Avista Corporation · NYSE:AVA
Avista — Merger or Acquisition (July 2017)
19 slides from Avista's merger presentation, Jul 20, 2017
Slide 1: Hydro One To Acquire Avista Creating a North American Utility Leader
Hydro One To Acquire Avista Creating a North American Utility Leader July 19, 2017 A preliminary short form prospectus containing important information relating to securities described in this document has not yet been filed with the securities regulatory authorities in each of the provinces and ter
Slide 2: Disclaimers and cautionary statements
Disclaimers and cautionary statements A preliminary short form prospectus containing important information relating to securities described in this document has not yet been filed with the securities regulatory authorities in each of the provinces and territories of Canada. A copy of the preliminary
Slide 3: Disclaimers and cautionary statements (continued)
Disclaimers and cautionary statements (continued) Forward-Looking Information: This presentation contains “forward-looking statements” and “forward-looking information” within the meaning of applicable securities laws of the U.S. and Canada, respectively. Statements that are not historical facts, in
Slide 4: Agenda
Agenda Executive Summary of Transaction Avista Overview Strategic Rationale Commitment to Customers, Communities and Employees Indicative Timeline 1 2 3 4 5
Slide 5: Highlights of the transaction
Highlights of the transaction Transaction brings together two industry-leading regulated utilities with over 230 years of collective operational experience, similar corporate cultures and shared values Increased growth profile through expansion of Hydro One into complementary and diversified regulat
Slide 6: Transaction details
Transaction details Key transaction terms Offer price of US$53.00 per Avista common share in cash Represents a 24% premium to Avista’s closing price on 18 July, 2017 of US$42.74 Equity purchase price of US$3.4 billion (C$4.4 billion) Total enterprise value of US$5.3 billion (C$6.7 billion), includin
Slide 7: Financing plan
Financing plan Planned Transaction Financing Structure Transaction structure intended to provide clarity and minimize execution risk Planned financing contemplates a combination of 5-year, 10-year and 30-year US$ denominated notes in order to balance maturities and create a natural currency hedge US
Slide 8: Avista overview
Avista overview Avista is a regulated utility headquartered in Spokane, WA Avista Utilities, an operating division of Avista supplying retail electric and natural gas service to customers in Washington, Idaho, Oregon and Montana service territories 30,000 square miles and population of 1.6 million A
Slide 9: Avista financial & operating overview
Avista financial & operating overview Includes combined electric and gas customers Based on maximum capacity and excludes Alaska generation 2016 Customers 2016 Electric Generation2 2016 Rate Base 2016 Rate Base by State Strong financial profile together with a diverse and growing regulated rate base
Slide 10: Strategic rationale
Strategic rationale 1 Building quality regulated asset scale Maintains revenue base as nearly all regulated Earnings and cash flow accretion in the first full year following close, excluding transaction costs Increases Hydro One’s total assets pro forma by C$6.8B (26.6%) Establishes top tier North A
Slide 11: Increased scale reinforces top tier status
Increased scale reinforces top tier status 1 | | | hydtOOne + Hydro One becomes a Top 20 North American investor owned utility with an attractive growth profile Total Enterprise Value’ C$ in billions Top 20 Top 25 <<< ° ars Bs Bs segs gg eR Be sigis sz oes 83 bak ieee e5Sanh poiaegdés ss Be § eee e8
Slide 12: Sizeable increases in stable regulated earnings
Sizeable increases in stable regulated earnings 1 2 3 4 Avista’s capital program will further enhance scale, strengthen quality of asset mix and reinforce Hydro One’s growth profile 2017—2021 est. CAGR: ~5% 2017—2021 est. CAGR: ~6% Pro Forma Capital Expenditures (’17E-’21E) C$ in millions Pro Forma
Slide 13: Diversification across geographies and utility businesses
12|5|4 hydroQ,, (C$ in mm) "16 Rate Base "16 Rate Base by Geography ‘16 Net Income by Geography _ + AK, A% 22% Gos On i Avista Avista 10.30% (I $3,877, wa, =. 59% Teitory 78% Electric Oe WA 7 3% Gor De 19% Pro-Forma AK, 1% Hydro Hydro One $21,708 ‘One, 81% Ontario 97% Electric 82% Diversification ac
Slide 14: Regulatory diversity
Regulatory diversity 1 2 3 4 Avista’s assets provide an opportunity to expand and diversify the footprint to new regulatory jurisdictions with higher ROEs and attractive allowed capital structures Current Rate Base1 Allowed ROE Equity Capitalization WA $ 2,286.6 M 9.50% 48.50% OR $ 277.6 M 9.40% 50.
Slide 15: Shared culture and values
Shared culture and values 1 2 3 4 Scott Morris Chairman, President and CEO Scott is an experienced utility executive who has served in a variety of leadership positions since joining Avista in 1981 He began his career in the company’s utility marketing division and has served in leadership positions
Slide 16: Innovation and knowledge transfer
Innovation and knowledge transfer 1 2 3 4 Opportunity to reduce operating costs and gain strategic benefits by leveraging and sharing innovation and best practices Avista is a proven leader in utility innovation with a deep track record of investments in advanced technologies, including energy manag
Slide 17: Commitment to customers, communities and employees
Commitment to customers, communities and employees Customers Customer rates in the markets served by Hydro One and Avista will be unaffected by transaction costs An enhanced transmission and distribution system will achieve operational excellence leading to cost savings over time Greater financial c
Slide 18: Indicative timeline to transaction close
Indicative timeline to transaction close Develop and Initiate Transition Implementation Plans Initiate Federal and State Regulatory Filings Avista Files Proxy Statement Avista Shareholder Approval Receive Regulatory Approvals (State: WUTC, PUCO, IPUC, RCA, PSCSM; Federal: FERC, CFIUS and HSR) Q3 201
Slide 19: Hydro One To Acquire Avista Creating a North American Utility Leader
Hydro One To Acquire Avista Creating a North American Utility Leader July 19, 2017