Edp S.a. · EURONEXT:EDP
Edp — Merger or Acquisition (March 2007)
36 slides from Edp's merger presentation, Mar 27, 2007
Slide 1: Building a leading global renewables player: Acquisition of Horizon Wind Energy
Building a leading global renewables player Acquisition of Horizon Wind Energy HOTIZON wire cnerey FEEEST YW" March 27, 2007
Slide 2: Forward-looking statements
! " This presentation contains forward-looking statements within the scope of the United States Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and business of edp and some of the plans and objectives of edp with respect to these items.
Slide 3: Transaction Summary
Transaction Summary Strategic Rationale US Market Growth Potential Horizon Wind Energy Overview Transaction Structure and Impact on edp Conclusions
Slide 4: Consolidating edp's position as a global leader in renewables
"" Consolidating edp´s position as a global leader in renewables and developing a strong growth platform in the US Horizon overview Transaction overview • Leading player in the US wind sector • edp to acquire Horizon Wind Energy from (expected to be #3 by the end of 2007) Goldman Sachs for cash • Di
Slide 5: Strategic Rationale
Transaction Summary US Market Growth Potential Horizon Wind Energy Overview Transaction Structure and Impact on edp Conclusions
Slide 6: EDP strategic plan 2007-2010 priorities
- " " . 1 Sustain low risk profile Controlled Develop profitable supply strategy risk Manage and reduce CO2 emissions 2 Launch of cost efficiency program Superior Discipline on capex efficiency Divest from non-core assets 3 Deliver high quality wind farm pipeline in Iberia and roll out international
Slide 7: Europe and North America focus markets
" ( " * " Europe Focus on attractive markets both in terms of stability, profitability and growth potential Strong and established renewable energy player in Portugal and Spain and footprint in France and Belgium 1.6 North America Take advantage of edp’s leading position and 0.1 knowledge to partici
Slide 8: Fully consistent with edp's Strategic Plan 2007-2010
. ( 1 Fully consistent with edp’s Strategic Plan 2007-2010 2 Enhances edp’s global leadership in renewable generation 3 Provides entry into high growth US market with a leading position 4 Diversifies income sources reducing portfolio/regulatory risk
Slide 9: Growth waves: Iberia, Europe, North America
/ " Wave 3 Wave 2 Capture new growth options Wave 1 Consolidate top position and lead future growth Establish a strong position in Iberian Core market • European high growth • Potential to develop other • Strong Iberian greenfield growth markets renewables in several • Consolidation of existing • US
Slide 10: Global Wind Ranking (Installed Capacity)
0 Wind Generation Capacity (Installed) Global Wind Ranking (Installed Capacity) Gross GW 2007E Gross GW 2007E 5.0 1.6 3.8 4.8 4.2 2.2 + 3.8 / PPM 2.3 2.2 1.9 1.6 1.5 + 1.2 Source: edp, Horizon, companies websites and annual reports
Slide 11: One of the most balanced renewable energy portfolios
0 ( 0 Wind Generation Capacity (Installed) Gross GW 2010E (Percent) + Rest of Europe Rest of Portugal 7% 12% Spain Europe 12% 36% Portugal 22% Spain 66% North America 45% TOTAL: 4.2 GW TOTAL: 7.6 GW edp expected to have one of the most balanced renewable energy portfolios Source: Horizon, edp
Slide 12: EBITDA Breakdown by Business
0 / ( 12 . &#! 3 " EBITDA Breakdown by Business (Percent) Renewables 6% 16% Brazil 18% 26% 16% 14% Distribution 24% 19% 17% Generation 46% 42% and Supply 37% Gas 6% 7% 6% 2006 2010E 2010E + Source: Horizon, edp
Slide 13: Generation Breakdown
& 4 5 . / %' " Generation Breakdown GWh (Percent) Coal + Fuel + 33% 28% Cogeneration 48% 18% 21% CCGTs 17% 46% 54% Green Energy 35% 2006 2010E 2010E + Source: Horizon, edp
Slide 14: US Market Growth Potential
Transaction Summary Strategic Rationale Horizon Wind Energy Overview Transaction Structure and Impact on edp Conclusions
Slide 15: Growth Potential by Country
)$ " * * ( ( " * Growth Potential by Country Capacity Growth potential 2006, GW Additional capacity 2007-2010, GW US 11.6 16.5 edp positions itself in the most attractive renewables Portugal + Spain 13.3 10.6 markets, namely: India 6.3 6.0 • Portugal: fastest growing Germany 20.6 5.9 market in Europ
Slide 16: Wind Generation Capacity growth to 2020
)$ " " * 3 Wind Generation Capacity (Installed) GW 51.8 ~80 • Significant growth potential beyond 2010 • Up to ~80 GW total capacity by 2020 Potentially ~3 times higher than 2010E 16.5 28.1 9.0 11.6 2.6 2000 Net 2006 Net 2010E Net 2020E addition addition addition Source: BTM consult, Emerging Energy
Slide 17: US renewable policy: RPS and tax credits
- . )$ • Renewable energy targets set at state level (Federal targets Renewable possible in the future) Portfolio • Increasing number of states implementing new RPS and Standards improving existing ones (RPS) • Targeting 8% to 33% of net generation from renewables • US$ 19 /MWh of tax credit for Pro
Slide 18: State governments lead renewable push (RPS)
- , $ 6-,$7 8 ( 2001 2007E 7 states 21 states States with RPS States currently considering RPS • State governments lead the push for increased renewable generation • RPS establish the target capacity or production from renewable sources by specific dates • Several states (e.g. Texas, California, Min
Slide 19: Horizon Wind Energy Overview
Transaction Summary Strategic Rationale US Market Growth Potential Transaction Structure and Impact on edp Conclusions
Slide 20: Horizon: leadership, asset quality, development team
)$ / " " "0 • Leading player in US wind market Leadership Leadership • Leadership in many attractive states • Strong pipeline for future growth • Early mover in key states, consistently securing highly attractive sites Asset Asset quality • Diversified portfolio of Active Projects in attractive rene
Slide 21: US Wind Market and Horizon platform
0 )$ " * Installed capacity GW 80 GW US Wind Market • The high growth in the US market offers wind participants attractive opportunities • Horizon provides edp 28 GW the ideal platform to edp/Horizon capture a 12 GW relevant market share in the 3.4 GW 1.6 GW long term 2006 2007 2010 2020 ~9% ~12% Ma
Slide 22: Investment Highlights and Wind Generation Portfolio
( )$ ( " 0 Investment Highlights Wind Generation Portfolio (Gross MW) • High-quality portfolio: Active Projects Operating 559 Active Projects* (operating + under construction assets) Assets 1,556 gross MW comprising 1,556 MW of gross generation Under (1,324 net MW) (1,324 net MW) with an average of
Slide 23: Active projects located across 6 states
0 ( ( , 9 ( " * 0 Oregon Minnesota Illinois Gross MW 101 Gross MW 101 Gross MW 396 Net MW 101 Net MW 101 Net MW 396 New York # Projects 1 # Projects 1 # Projects 2 Gross MW 333 Net MW 172 # Projects 3 Total (MW) Gross Net Operating 559 327 Under Construction 997 997 # Total Projects 11 Active projec
Slide 24: Territorial Footprint and Energy Market Diversification
0 9 . " : " Territorial Footprint Diversification Spread over Energy Markets WA Energy Market Footprint (State) MW MT ME OR MN NYISO-NEPool NY, ME 1,000 WI NY IL PJM 750 IA NV ERCOT TX 1,100 IL CO CA KS CALISO CA 1,300 OK MISO MN, IA, WI 600 WECC CO, MT, NV, OR, WA 3,400 TX SPP KS, OK 900 TOTAL 9,05
Slide 25: Turbine Needs vs Secured
3 2 ( " ;88 ; <6 7 Turbine Needs vs Secured (MW) • Possibility to leverage edp’s + relationships with turbine manufacturers to ensure supply 100% • Horizon on its own has secured 71% turbines for all projects under 50% construction and is in advanced negotiations regarding pipeline projects 1,597 1,
Slide 26: Leveraging edp capabilities across development and construction
( ( ( Development Wind Use of in-house wind resource analysis, recognized as one Assessment of the best in the industry Leadership Turbine Leveraging purchasing power with wind turbine suppliers: Procurement secure access; improved pricing; increased flexibility Asset quali Construction ty Applying
Slide 27: Transaction Structure and Impact on edp
Transaction Summary Strategic Rationale US Market Growth Potential Horizon Wind Energy Overview Transaction Structure and Impact on edp Conclusions
Slide 28: Purchase price, debt financing and tax equity
, " = >? ( • US$2.15 billion for equity of Horizon • Assumption of US$0.18 billion of existing Horizon debt – Will be redeemed upon closing Purchase Price • Estimated purchase price adjustment of additional US$0.6 billion – Based on Goldman Sachs net investments in Horizon between 31/12/06 and closi
Slide 29: Enterprise Value: short and medium term
'( @ 2 " ( 9 Enterprise Value (US$ billion) Short Term Value Medium Term Value up to end of 2007 after 2007 • ~US$ 1.5 billion Price Paid ~2.3 of enterprise value attributable to ~1.5 projects that come online by the end of 2007 ~US$1 billion capex • Remainder already incurred attributable to signif
Slide 30: Price and funding sources
" / A " ) $= >< ) $= >1 US$ billion Price Funding proceeds Definition at closing US$0.18 billion 0.6 0.4 Existing Debt Price 2.3 2.9 2.5 Funding sources Enterprise Estimated Estimated Tax Bridge Loan Value 31.12.06 Capex EV at closing Equity Debt Adjustment (end 2Q) Partner (end 2Q)
Slide 31: EBITDA and EPS CAGR impact
&#! 0 EBITDA CAGR (2005-2010) EPS CAGR (2005-2010) > 14% > 14% > 13% > 11% + + The acquisition of Horizon will …and EPS impact is enable edp to anticipate its expected to become targets in terms of EBITDA accretive by 2010 growth…
Slide 32: Wind capacity and capital expenditures
0 ( Wind Generation Capacity (Installed) Wind Capital Expenditures Gross GW € billion edp current operations edp current operations* 7.6 Horizon Horizon 6.5 2.0 5.2 3.4 1.8 2.8 1.5 3.8 1.0 2.2 0.9 0.8 0.9 2.1 1.6 0.6 3.6 4.2 3.0 1.0 0.9 0.8 1.6 2.2 0.6 0.1 2006 2007 2008 2009 2010 2007 2008 2009 201
Slide 33: Credit ratios and net debt impact
/ " ( " FFO / Interest • The acquisition of Horizon is expected to lead to an increase in net debt of 5.0x 4.7x approximately €3.2 billion by 2010 • Ratios are expected to gradually improve after acquisition to levels consistent with edp’s low risk business portfolio 2006 2010 FFO / Net Debt Net Deb
Slide 34: Conclusions
Transaction Summary Strategic Rationale US Market Growth Potential Horizon Wind Energy Overview Transaction Structure and Impact on edp
Slide 35: Powerful leadership position in renewables worldwide
. ( 1 Fully consistent with edp’s Strategic Plan 2007-2010 2 Enhances edp’s global leadership in renewable generation 3 Provides entry into high growth US market with a leading position 4 Diversifies income sources reducing portfolio/regulatory risk The acquisition of Horizon ensures edp a powerful
Slide 36: edp - feel our energy
&) edp feel our energy