Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — Merger or Acquisition (February 2009)
22 slides from Nrg Energy's merger presentation, Feb 19, 2009
Slide 1: The True Value of NRG
The True Value of NRG February 19, 2009
Slide 2: Safe Harbor Statement / Important Information
Safe Harbor Statement Important Information This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of proxy of any stockholder of NRG Energy, Inc. ("NRG"). NRG plans to file with the Securities and Exchange Commission (the "SEC
Slide 3: Exelon's proposed exchange offer does not fairly compensate NRG shareholders
Exelon's proposed exchange offer does not fairly compensate NRG shareholders for value contributed or risk assumed Summary of Reasons NRG Shareholders Should Reject EXC's Buyout Offer Entitles NRG to only 17% ownership while generating 30% of free cash flow Sharply dilutive on a free cash flow basis
Slide 4: NRG is All About Cash
NRG is All About Cash In these times, cash IS the critical financial metric Implied Exchange Ratio Percent Contribution of Recurring FCF Even with the so-called share price "premium" offered by Exelon, NRG shareholders would be contributing 30% of recurring free cash flows to the combined company fo
Slide 5: The Exelon Proposal: What is the Value Proposition?
The Exelon Proposal: What is the Value Proposition? Under the Exelon acquisition, NRG shareholders would experience massive free cash flow dilution ($1.87) $3.82 $1.95 $4.03 $3.04 $0.99 ($2.31) $4.36 $2.05 Accelerated usage of NOLs And It's Only Getting Worse for NRG Shareholders What It Really Mean
Slide 6: NRG Other Growth Projects and International Assets
NRG Other Growth Projects and International Assets As per Exelon's own statements, their offer would give them NRG Texas assets at a discount to replacement costs, and then the rest of the NRG portfolio for FREE NRG Replacement Cost Value Note: Pricing date of 10/17/2008. Replacement cost for assets
Slide 7: Liquidity and Particularly Strong Cash Flows are Key to Valuation
IPPs NRG 10/17/2008 5.9 4.8 2/13/2009 5.8 4.9 NRG share price performance should remain relatively supported due to its strong free cash flows and liquidity Liquidity and Particularly Strong Cash Flows are Key to Valuation in this Market Liquidity Strongly Rewarded in Current Crisis EV / EBITDA Mult
Slide 8: The proposed buyout does not fairly compensate NRG shareholders
The proposed buyout does not fairly compensate NRG shareholders for value contributed or risk assumed Summary of Reasons NRG Shareholders Should Reject EXC's Buyout Offer Entitles NRG to only 17% ownership while generating 30% of free cash flow Sharply dilutive on a free cash flow basis for NRG shar
Slide 9: Key Financial Performance Indicators
Key Financial Performance Indicators 2005 2006 2007 2008 2009E Adjusted EBITDA 732 1502 2279 2291 2200 FCF 347 679 1377 1197 1212 Liquidity 758 2227 2715 3364 Note: all numbers exclude collateral movements and include discontinued operations Debt Management Growth Capital Business Reinvestment Share
Slide 10: Managing Commodity Price and Volatility Risk
Managing Commodity Price and Volatility Risk for Near to Medium Term Baseload Hedge Position1,2 Gross margin is substantially hedged for the next 24 months; well positioned to outlast the down market 1 Portfolio as of 01/29/2009; 2009 values reflect positions from February 09 through December 09 onl
Slide 11: Market Trends Favor Recovery
Market Trends Favor Recovery Decreased energy prices and closed capital markets constrain power generation and natural gas E&P investments Increased environmental capital requirements and regulatory uncertainty for new and existing generation (retrofitting) Coal prices lower in sympathy with oil and
Slide 12: Committed Projects and Development Pipeline
Committed Projects RepoweringNRG/ecoNRG decarbonize and enhance value of assets in key markets and technologies Middletown Gas Peaker - 200 MWs PPA Contract Awarded Construction to begin in 2010 Active Development In Construction Portfolio Benefits Additional scale at value in core markets Reduced f
Slide 13: Development Partnerships are the Cornerstone of Value Creation
Partnerships on key individual projects creates more value, sooner for NRG shareholders Development Partnerships are the Cornerstone of Value Creation at NRG Accelerated cash returns Mitigated risk Complementary skills Additional opportunities Proprietary technologies Not credit ratings dependent Pr
Slide 14: Nuclear Innovation North America: Leading the Nuclear Renaissance
Nuclear Innovation North America: The Unique Value of Leading the Nuclear Renaissance Value will continually be created in several ways as the STP 3&4 Project advances towards construction & operation NRG has initiated a process to selldown a portion of STP 3&4 Recent Developments Comparative Advant
Slide 15: NRG's Cost of Capital Advantage
NRG's Cost of Capital Advantage NRG mitigates and diversifies its balance sheet strategy with partners and government loans, while Exelon's strategy absorbs full risk and higher cost of debt to its balance sheet For the same economic result... Exelon strategy requires 5x multiple of NRG capital cont
Slide 16: We Have Charted a Clear Path to Future Growth
We Have Charted a Clear Path to Future Growth Future Growth Current Portfolio M&A Consolidation Low Carbon Technologies And in pursuing this growth, NRG management knows who we work for... NRG shareholders Operating excellence Bullish long term natural gas outlook Tightening reserve margins Repoweri
Slide 17: The proposed buyout does not fairly compensate NRG shareholders
The proposed buyout does not fairly compensate NRG shareholders for value contributed or risk assumed Summary of Reasons NRG Shareholders Should Reject EXC's Buyout Offer Entitles NRG to only 17% ownership while generating 30% of free cash flow Sharply dilutive on a free cash flow basis for NRG shar
Slide 18: Value Created for Shareholders, Not for Ratings Agencies
NRG Value Created for Shareholders, Not for Ratings Agencies Exelon Business Plan: Denying NRG's shareholders the benefit of NRG capital in order to placate rating agencies Exelon's singular focus on maintaining credit ratings means debt holders are prioritized "Committed to returning Exelon Generat
Slide 19: Value Created for Shareholders, Not for Regulatory Clawback Risk
NRG Value Created for Shareholders, Not for Regulatory Clawback Risk Exelon's so called "growth opportunities" are uncertain and cash would be subject to regulatory reach-through (1) EXC/NRG Pro Forma based on 2009 estimate on management guidance and Wall street research Integrated Utility Model Put
Slide 20: Exelon's Highly Conditional Offer Gives Exelon a Free Call Option
Exelon's Highly Conditional Offer Gives Exelon a Call Option... for Free Exelon proposal, if it succeeds at all, could take 12 months or more to consummate During that time, Exelon reserves unto itself the unilateral right to withdraw from the transaction without consequences NRG shareholders would
Slide 21: Conclusion
Conclusion The price does not fairly compensate NRG Shareholders A Standalone NRG is protected from near term recessionary risk... The risks embedded in the transaction are too high .... and has greater potential for value creation from market opportunities now and in the future Is successfully exec
Slide 22: NRG
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