Algonquin Power & Utilities Corp. · TSX:AQN
Algonquin Power & Utilities — Merger or Acquisition (March 2016)
24 slides from Algonquin Power & Utilities's merger presentation, Mar 2, 2016
Slide 1: Algonquin Acquires The Empire District Electric Company
Algonquin Acquires The Empire District Electric Company Continuing the Evolution of our Utility Business February 9th, 2016 A preliminary short form prospectus containing important information relating to the securities described in this document has not yet been filed with the securities regulatory
Slide 2: Forward-looking information and securities notice
The securities described in this document may not be offered or sold in the United States. Algonquin Power & Utilities Corp. (“Algonquin”) includes forward-looking information in these materials within the meaning of applicable securities laws in Canada (“forward looking information”), including for
Slide 3: Agenda
Ian Robertson CEO – Algonquin Power and Utilities Corp. Agenda David Bronicheski CFO – Algonquin Power and Utilities Corp. Transaction Highlights Strategic Alignment and Commentary Financing Overview Timeline for Transaction Combined Business Profile Concluding Thoughts Ian Robertson CEO – Algonquin
Slide 4: Transaction Highlights and Strategic Rationale
Transaction Highlights and Strategic Rationale 4
Slide 5: Purchase Price, Transaction Drivers and Financing Plan
Purchase Price Algonquin to acquire Empire for US$34.00 per Empire share in cash Represents a reasonable 21% premium to the last close of US$28.04 Transaction Drivers Strategically aligned with Algonquin’s disciplined approach to growth Enterprise value of US$2.4B and equity purchase price o
Slide 6: Strategic alignment of the Transaction
Strategic alignment of the Transaction Opportunity to add management depth and pursue efficiencies Allows Algonquin to fortify its mid-states leadership with a deep Empire management team Opportunity to consolidate Algonquin’s mid-States utility operations under Empire’s senior management team
Slide 7: Consistent with Algonquin's growth strategy
Consistent with Algonquin’s growth strategy Continues successful track record of regulated acquisitions - 9 acquisitions since 2009 - West ~ 189,000 customers Arizona, California, and Montana - East - Central Pro forma utility platform will enhance Algonquin’s regional management focus ~338,000 cust
Slide 8: The Empire District Electric Company - Profile
The Empire District Electric Company - Profile 8
Slide 9: Empire operates in transparent regulatory jurisdictions
Empire operates in transparent regulatory jurisdictions Kansas City Oklahoma City St. Louis Omaha KS NE IA MO OK AR IL Joplin IN KY TN Jefferson City EDE Electric Territory EDE Gas Territory EDE Power Plant Empire’s service area complements Algonquin’s Net Income US$58M(2) Rate base US$1.6(3) Total
Slide 10: Reliable, efficient, rate-based electric generation fleet
Reliable, efficient, rate-based electric generation fleet Generation fleet is well structured to meet environmental standards EPA Clean Power Plan likely to provide opportunities for new rate base eligible clean generating assets Algonquin core expertise in developing wind and solar generation
Slide 11: Steady growth in net income and asset base
Steady growth in net income and asset base (US$M) (US$M) Strong historical operating and net income CAGR Robust historical asset base growth Attractive, predictable earnings growth from expanding asset base Operating Income Net Income 11
Slide 12: Financing Overview and Transaction Timeline
Financing Overview and Transaction Timeline 12
Slide 13: Immediate and material accretion
Immediate and material accretion Immediately accretive to EPS and FFO per share average annual EPS accretion of 7% – 9%, for the first three years post-closing average annual FFO per share accretion of 12% – 14%, for the first three years post-closing Accretion remains robust notwithstanding s
Slide 14: Long-term financing plan structured to maintain current BBB credit profile
Long-term financing plan structured to maintain current BBB credit profile Successful concurrent convertible debenture financing addresses Algonquin’s common equity requirements Flexibility to fulfill remaining financing needs by combination of bonds and bank debt, at or before acquisition close
Slide 15: Indicative timeline for transaction
Indicative timeline for transaction Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q1 201 Q2 201 Q3 201 Q4 201 Q1 201 2/9/2016 - Announced transaction and debenture financing Commence regulatory filings with U.S. Federal + State Regulatory Agencies Secure approvals from FERC, CFIUS(1), and State Commission
Slide 16: Combined Business Profile and Concluding Remarks
Combined Business Profile and Concluding Remarks 16
Slide 17: Major increase in scale and diversification
Following the acquisition, APUC will have a portfolio comprised of: Power generation infrastructure totaling approximately 2,281 MW of net generating capacity Additional secured generation capacity of 86 MW through contracted PPAs Utility assets serving 778,000 customers in the U.S. The ac
Slide 18: Significantly more regulated earnings
Significantly more regulated earnings Improves liquidity, credit, capital access % Increase Rate base (C$B) $1.8 $2.3 $4.1 127% Total customers 560,000 218,000 778,000 39% Pro forma regulated utility structure The Empire District Electric Company Total Assets C$2.4B Segment Electricity 95% Natural G
Slide 19: Complementary service areas and regulatory jurisdictions
Complementary service areas and regulatory jurisdictions Transaction capitalizes on Algonquin’s existing positive regulatory presence in Missouri and Arkansas Algonquin’s commitment to preserve Empire structure expected to facilitate approval process Missouri: Experiencing an improving economi
Slide 20: Growth opportunities leverage Algonquin strengths
Capital expansion, greening the fleet within rate base Opportunities relate to tightening environmental standards, gas pipe upgrades, and system reliability Foothold in new states of Kansas and Oklahoma allows for further regional utility consolidation Generation development and operational skil
Slide 21: Commitments to customers, employees and community
Customers No rate impact on account of acquisition Continue to provide reliable local, responsive service through Empire Empire water and gas customers will have access to Algonquin’s broader platform, knowledge, and expertise Leverage best practices and scale of Algonquin and Empire to enha
Slide 22: Why are Algonquin and Empire Better Off Together?
Why are Algonquin and Empire Better Off Together? 22 (1) Based on APUC management estimate of Empire 2017 EBITDA (2) Excludes EV of small non-regulated fiber optics business Combined entity enjoys increased operational effectiveness in its mid-west utility operations and the transaction provides a
Slide 23: Appendix
Appendix 23
Slide 24: Missouri – keeping pace with improving U.S. economy
Missouri – keeping pace with improving U.S. economy Real Personal Income(2) Unemployment Rate(1) Key Industries 3,046,743 3,012,575 3,017,076 3,057,566 3,094,661 2011 2012 2013 2014 2015 January 2010 – May 2015 Index: 2005 annual average=100 By percentage of gross domestic product, 2014 MO U.S. MO U
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