Infratil Limited · NZX:IFT
Infratil — Z Energy — Merger or Acquisition (June 2015)
17 slides from Infratil's merger presentation, Jun 2, 2015
Slide 1: Mike Bennetts, -C
Mike Bennetts, -C Chris Day, Chief Financial Officer
Slide 2: Disclaimer
Disclaimer Please read this page before the rest of the presentation Please do not read this presentation in isolation This presentation should be read in conjunction with other information released by us to NZX and ASX, including (in particular) our results announcement dated 7 May 2015, our most r
Slide 3: Transaction overview
Transaction overview Z Energy Limited (Z) has agreed to acquire Chevron New Zealand’s (CNZ) downstream fuels business Z has agreed to acquire 100% of CNZ, a wholly-owned subsidiary of Chevron Corporation * Subject to New Zealand Overseas Investment Office approval and New Zealand Commerce Commission
Slide 4: Acquisition themes
Acquisition themes Transaction achieves Z’s strategic objectives of scale, network optimisation and offer differentiation |. Reinforce an industry leadership position 2. Complementary infrastructure assets, operating model and market positioning 3. Attractive acquisition parameters and anticipated e
Slide 5: CNZ earnings and sales mix
Historical Cost (NZIFRS) Estimated Replacement Cost 129 132 110 68 FY12 FY13 FY14 FY14E • • • • Other Aviation 172ml • 28% 286ml Retail • Other 51% 676ml CNZ C&I • 21% 632ml
Slide 6: CNZ volumes by channel and product
Lubricants 148 0.3% 129 132 124 2,322 2,345 Bulk 110 2,235 9% Aviation 68 Retail 16% 38% C&I 2012 2013 2014 2012 2013 2014 36% Historical Cost Estimated Replacement Cost Other 2,000 2,000 1,765 1,697 1,765 etrol - P 8% 1,686 1,697 1,686 1,617 1,617 Premium 7% 1,500 1,500 Jet Fuels Diesel ml
Slide 7: CNZ supply chain and terminal network
Processing agreement • at NZR • Marsden Point Access to Refinery to Auckland pipeline • Auckland (Wiri) Mt Maunganui Auckland (Airport) New Plymouth Napier Nelson Wellington 25% shareholding in Timaru coastal shipping JV Dunedin
Slide 8: CNZ retail marketing
CNZ retail marketing Secure long-term supply contracts with predominantly Retailer owned network Key facts * 186 of the 146 sites throughout New Zealand are Retailer- Owned, Retailer-Operated (RORO) * 10 sites are Company-Owned, Retailer-Operated (CORO) * Contributed 55% of CNZ Gross Margin ° Supply
Slide 9: CNZ commercial marketing
CNZ commercial marketing Nationwide truckstop network and valued distributor and customer relationships C&l Bulk Aviation Lubricants Distributors - Primarily supply to Farmlands and McKeown - Farmlands distributes to 90 Challenge-branded stations (CNZ receives a supply margin) Direct customers - Acr
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Slide 11: Financial metrics and financing approach
Financial metrics and financing approach Increased short-term leverage expected to decline over two to three years Acquisition metrics $m Purchase Price / Enterprise Value (EV) 785 Five year average HC EBITDAF' N4 FY14 Estimated RC Operating EBITDAF* 132 EV / FY14 RC Operating EBITDAF® 5.9x Sources
Slide 12: Indicative financial impact
Indicative financial impact Earnings accretive transaction from day one Indicative pro-forma accretion Z CNZ Pro forma Oo: $m (Mar 161) (Dec 14) Z + CNZ 75 (Ines Volume (ml) 2,408 1,765 4,173 73% RC Operating EBITDAF 255 1322 387 52% RC Net Profit After Tax 137 201 46% RC EPS (pre synergies) 34 46 3
Slide 13: Commerce Commission clearance required
Commerce Commission clearance required Z’s competition analysis supports no lessening of competition as a result of the transaction Z is confident there are strong grounds for clearance * The transaction will not have a material impact on competition within the supply chain - Shared infrastructure a
Slide 14: Key approvals and indicative timetable
Key approvals and indicative timetable Settlement date dependent on approvals and Z’s business readiness Regulatory approvals * Seeking clearance from New Zealand Commerce Commission - Application filed 2 June, expect clearance in late 2015 * Application for New Zealand Overseas Investment Office ap
Slide 15: Transition targeted for November
Transition targeted for 30 November Strategy is to firstly minimise risks in 2015 and then pursue value $15-25m of annual synergies from supply chain efficiencies and reduced overhead costs * Transition opex of ~$41m, including ~$9m contingency to fund any delay in cutover to 31 March 2016 * Transit
Slide 16: Pro rata equity raise
Pro rata equity raise Modest equity raising to address near term capital structure * Deal structure lends itself to an equity raising post regulatory approvals * Animplied equity raising of ~$185m given targeted credit metrics of 2.6x net debt / FY15 RC Operating EBITDAF post settlement and a 2.0x n
Slide 17: Acquisition themes
Acquisition themes Transaction achieves Z’s strategic objectives of scale, network optimisation and offer differentiation |. Reinforce an industry leadership position 2. Complementary infrastructure assets, operating model and market positioning 3. Attractive acquisition parameters and anticipated e