Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — Proxy Contest (February 2009)
30 slides from Nrg Energy's proxy contest presentation, Feb 2, 2009
Slide 1: Schedule 14A Proxy Statement Information
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A (RULE 14a-101) SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant ¨ Filed by a Party other than the Registrant x Check the appropriate b
Slide 2: Exelon began using slides at Credit Suisse 2009 Energy Summit
On February 2, 2009, Exelon began using the following slides at the Credit Suisse 2009 Energy Summit in discussions with investors:
Slide 3: Exelon + NRG: Committed, Moving Forward
Exelon+ NRG:Committed,Moving Forward William A. Von Hoene, Jr. Executive Vice President and General Counsel Credit Suisse 2009 Energy Summit February 2-3, 2009
Slide 4: Important Information
Important Information This presentation relates to the offer (the “Offer”) by Exelon Corporation (“Exelon”) through its direct wholly-owned subsidiary, ExelonXchangeCorporation(“Xchange”),to exchangeeachissuedand outstandingshareof commonstock (the “NRGshares”) of NRGEnergy,Inc. (“NRG”)for 0.485 of
Slide 5: Forward-Looking Statements
Forward-Looking Statements This presentation includes forward-looking statements. These forward-looking statements include, for example, statements regarding benefits of the proposed merger, integration plans and expected synergies. There are a number of risks and uncertainties that could cause actu
Slide 6: Full and Fair Offer
Full and Fair Offer • On November 12 th , Exelon launched an exchange offer for all of the outstanding shares of NRG common stock • Filed Form S-4 with the SEC • Fixed exchange ratio of 0.485 Exelon share for each NRG common share th • Representsa 37%premiumto the October17 NRGclosingprice 4
Slide 7: Committed to Execution
Committed to Execution Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 10/19: Announce Offer 11/12: 2/25: Exchange Exchange Offer Offer Expires Filed Proxy Solicitation NRG and Exelon Shareholder Meetings Make Filings and Work to Secure Regulatory Approvals (FERC, NRC, DOJ/FTC, PUCT, NYPSC, PAPUC, CPUC, ICC
Slide 8: Strong Initial Exchange Offer Results
Strong Initial Exchange Offer Results • As of Januaryth6 , 45.6% of NRG shares had been We remain tendered into the exchange offer committed to and are moving forward • Many NRG shareholders have informed Exelon they want to with the transaction see meaningful discussions, and due diligence, sooner
Slide 9: Moving Forward with Proxy Solicitation
Moving Forward with Proxy Solicitation • Pursuing, and soliciting proxies for, two shareholder actions at NRG annual meeting • Proposed an expansion of the NRG board from 12 to 19 directors • Nominated nine well-qualified, independent candidates who we believe will act in the best interest of NRG an
Slide 10: Making Progress on Regulatory Approvals
Making Progress on Regulatory Approvals • Initial filings have been made with the following (1): • FERC (Docket #EC09-32-000) • Hart-Scott-Rodino (DOJ/FTC) • Request for additional information was issued by the DOJ on January 16th , extending HSR waiting period • State regulatory commissions, includ
Slide 11: Financing Is Not an Obstacle
Financing Is Not an Obstacle • Believe we can obtain committed financing for the entire ~$8 billion of NRG debt, if needed, at the appropriate time • Decision to defer commitments allows us to take advantage of improving credit markets • Exelon’s relationships with many of NRG’s banks should facilit
Slide 12: Appendix
as Exelwn. 10
Slide 13: Compelling Value for NRG Shareholders
Compelling Value for NRG Shareholders • Full and generous price upfront – premium of 37% • Tax-free opportunity to participate in the future growth of the largest and most diversified US power company, with a substantially improved credit profile and access to liquidity • Requisite scope, scale and
Slide 14: Exelon Unlocks NRG Value
Exelon Unlocks NRG Value Price per Kilowatt Comparison for Texas Baseload Generation Even with premium, purchase 3,000 price is 66% of conservative 3,000+ long-term DCF value Price 2,000 Less than 45% of ($/kilowatt) replacement value 2,050 1,000 1,350 975 0 Without With Conservative Replacement Pre
Slide 15: Combination Expected to Create Substantial Synergies
Combination Expected to Create Substantial Synergies ($ in Millions) Exelon Operations & Maintenance: $4,2891 1 NRG Maintenance & Other Opex: $950 General & Admin Expenses: $309 Other COGS: $454 Pro Forma Combined Non-fuel Expenses: $6,002 Estimated Annual Cost Savings:$180 -$3002 % of Combined Expe
Slide 16: NRG Shareholders Capture Value
NRG Shareholders Capture Value Creates compelling value for NRG shareholders today and allows them to share in growth of Exelon stock. $12.8 billion $12.8 billion = $46.50 per NRG share > NRG’s 52-week high $5.1 Value Creation $0.4 $7.7 billion to NRG Value to NRG Shareholders Shareholders $2.0 $2.4
Slide 17: Percent Contribution of Free Cash Flow
Percent Contribution of Free Cash Flow • NRG states they contribute 30% of the free cash flow while getting 17% ownership of the pro-forma company based on offer1 • NRG’s position is only a 2008 calculation • Ignores PECO PPA roll-off in 2011 and Exelon carbon uplift • Factoring in these two omitted
Slide 18: Combination Will Result in Scope, Scale and Financial Strength
Combination Will Result in Scope, Scale and Financial Strength Combined company expected to have requisite scope, scale and Pro Forma Quick Stats ($s in millions) financial strength to succeed in an increasingly volatile energy market Combined assets 1 $68,900 $70 LTM EBITDA 2 $9,400 Market cap (as
Slide 19: Credit Ratings Are a Valuation Differentiator
Credit Ratings Are a Valuation Differentiator Investment grade 1-yearForwardEV/EBITDA credit ratings 14.0 Investment Grade Non-Investment Grade provide access to capital markets for 12.0 growth capital and 10.0 minimize collateral requirements 8.0 which maximizes liquidity and 6.0 contributes to sup
Slide 20: Stable, Predictable Cash Flow Is Awarded Premium Valuation
Stable, Predictable Cash Flow Is Awarded Premium Valuation Exelon’s strong, Enterprise Value / LTM EBITDA diversified cash 12.0 flow streams have 10.0 provided for a more stable 8.0 7.5x valuation during 6.0 Current Average EV / LTM EBITDA for last: 1 month 6 months 1 year periods of NRG Exelon 4.6
Slide 21: World Class Nuclear & Fossil Operations
World Class Nuclear & Fossil Operations Combined Company: • Largest U.S. power company in terms of generating capacity: ~51,000 MW fleet (18,000 MW nuclear) • Best-in-class nuclear and fossil operations • Second lowest carbon emitting intensity in the industry • Geographic and fuel diversification w
Slide 22: EXC: World-Class Nuclear Fleet Operator
EXC: World-Class Nuclear Fleet Operator Average Capacity Factor Range of Fleet 2-Yr Avg Capacity Factor (2003-2007) 100% 100 EXC 93.5% 95 90% 90 80% 85 70% 80 60% 75 50% 70 Range 5-Year Average 40% 65 Exelon Industry Operator (# of Reactors) Sustained production excellence Note: Exelon data prior to
Slide 23: EXC: Lowest Cost Nuclear Fleet Operator
EXC: Lowest Cost Nuclear Fleet Operator 2006-2007 Average Production Cost for (1) Major Nuclear Operators Average 1st Quartile 2 nd Quartile 3rd Quartile 4th Quartile Among major nuclear plant fleet operators, Exelon is consistently the lowest-cost producer of electricity in the nation 1.Source:2007
Slide 24: Operating in Most Attractive Markets
Operating in Most Attractive Markets • Geographically complementary generation asset base • Predominantly located in competitive markets • Strong presence in PJM (Mid-Atlantic and Midwest) and ERCOT By RTO Combined¹ PJM 22,812 ERCOT 13,027 MISO 1,065 ISO NE 2,174 NYISO 3,960 CAL ISO 2,085 Contracted
Slide 25: Combined Entity Will Continue to Benefit from Low Cost, Low Volatility Fuel Sources
Combined Entity Will Continue to Benefit from Low Cost, Low Volatility Fuel Sources 2009 Historical Forward Coal Prices <1% <1% Exelon 6.00 Powder River Basin ~150,000 GWh¹ 5.00 Northern Appalachian 6% 4.00 Central Appalachian Coal $/mmbtu 3.00 2.00 93% 1.00 0.00 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2
Slide 26: Largest Fleet, Lowest Carbon Intensity
Largest Fleet, nd 2 Lowest Carbon Intensity CO2 Emissions of Largest US Electricity Generators Bubble size represents carbon Top Generators by CO2 Intensity intensity, expressed in terms of metric 150 tons of CO2 per MWh generated 10 AEP 0.83 AEP 2006 CO2 Emissions Southern NRG 0.80 from Electricity
Slide 27: Exelon 2020 and NRG
Exelon 2020 and NRG Options to Evaluate: • Expand internal energy efficiency, SF6, Reduce or offset our footprint by greening vehicle, and supply chain initiatives to NRG our operations portfolio • Offset a portion of NRG’s GHG emissions Help our customers Adapt Elements of and the communities Exelo
Slide 28: Exelon Offers Lower Risk Growth Opportunities
Exelon Offers Lower Risk Growth Opportunities We believe I/B/E/S ’09-’11 EBITDA¹ 5.5% 3.2% Exelon’s near- I/B/E/S ’09-’11 EPS¹ 15.6% 7.4% term growth drivers are more predictable and • Nuclear uprates have dramatically • Utility rate base growth • STP nuclear expansion less capital at risk Growth Dr
Slide 29: Clear Value under Multiple Scenarios
Clear Value under Multiple Scenarios We look at fundamental value creation under a wide range of future commodity price scenarios and our analysis suggests $1-3 billion of value, possibly more. Value Gas Prices $6.50 $7.30 $7.10 $7.30 $8.60 Coal Prices $11.00 $20.00 $20.00 $20.00 $11.00 New Build Co
Slide 30: Exelon More Than Meets the Five Imperatives Outlined by NRG
Exelon More Than Meets the “Five Imperatives”Outlined by NRG on May 28, 2008 Exelon Combination More NRG’s Stated Imperatives than Meets These Imperatives 1. MUSTaccumulategeneration at competitivecost Deal expected to provide NRG stakeholders with significant value and upside and a share of the lar