The Aes Corporation · NYSE:AES
The Aes — AES — Merger or Acquisition (April 2011)
29 slides from The Aes's merger presentation, Apr 20, 2011
Slide 1: The AES Corporation Acquisition of DPL Inc.
The AES Corporation Acquisition of DPL Inc. April 20, 2011
Slide 2: Safe Harbor Disclosure: Additional Information and Where to Find it
Safe Harbor Disclosure Additional Information and Where to Find it This document does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, s
Slide 3: Safe Harbor Disclosure
Safe Harbor Disclosure Certain statements in the following presentation regarding AES’ business operations may constitute “forward -looking statements.” Such forward -looking statements include, but are not limited to, those related to future earnings growth and financial and operating performance.
Slide 4: Agenda
Agenda Key Terms & Strategic Rationale Paul Hanrahan President & Chief Executive Officer Overview of DPL Inc. Ned Hall Executive Vice President & President of North America and Global Wind Generation Transaction Overview & Timing Victoria Harker Executive Vice President & Chief Financial Officer
Slide 5: Executive Summary
Executive Summary AES Growth Strategy Concentrate on select markets to drive shareholder returns Improved profitability Simplified investment thesis Leverage existing platforms and footprint Within U.S. utility sector, pursing optimization opportunities through expansion of our U.S. utility platform
Slide 6: Key Terms & Strategic Rationale
Key Terms & Strategic Rationale
Slide 7: Key Transaction Terms
Key Transaction Terms Transaction Acquisition of DPL Inc. (NYSE: DPL) Transaction value of $4.7 billion with a cash purchase price of $3.5 billion and the assumption of $1.2 billion of net debt Offer Price & Consideration $30.00 per share 100% cash consideration Implied acquisition P/E of 12.4x base
Slide 8: U.S. Growth Strategy
U.S. Growth Strategy Opportunities: Leverage existing asset base to create value through ownership of competitively located sites and environmental attributes (e.g. repower Southland) Execute M&A in regulated utilities, using our existing platform at IPL and advantageous tax position Expand renewabl
Slide 9: Building Upon Our Successful Ownership & Management of IPL
Building Upon Our Successful Ownership & Management of IPL Among the lowest rates in Indiana Superior customer satisfaction amongst Mid-West utilities Ranked in the top quartile in a national study of 121 utilities by J.D. Power & Associates Constructive relationship with all stakeholders Proven pla
Slide 10: Key Post Acquisition Metrics
Key Post Acquisition Metrics 44,316 MW 12,061,720 utility customers $18,530 billion revenue in 2010
Slide 11: Overview of DPL
Overview of DPL Contains Fora Looking Stteents
Slide 12: Ohio Regulatory Structure
Ohio Regulatory Structure History of constructive regulation for electric utilities Adjustment mechanisms for fuel, capacity, transmission, environmental investments and other costs Hybrid market Transmission and distribution follow traditional cost of service model Retail choice for generation sinc
Slide 13: DPL Business Drivers
DPL Business Drivers DPL Inc. T&D Generation Electric Security Plan (ESP) Retail Competitive Retail Traditional rate base driven regulated utility ~515,000 distribution customers ~$800 million net plant Utility owned generation sells into PJM 2,830 MW base load coal units; 432 MW peaker 556 MW gas-f
Slide 14: T&D: Overview
T&D: Overview Traditional cost of service regulation – FERC and PUCO Approximately $800 million net T&D plant 1 Expect earnings growth from ongoing T&D investment Opportunities to leverage AES utility platform sourcing 1. Source: FERC Form 1 as of December 31, 2009.
Slide 15: Generation: Overview
Generation: Overview DPL Service Territory Key Highlights Totals 3,818 MW of generating capacity Coal: 2,830 MW Other: 988 MW of peaking assets 99% of DPL’s energy is produced with coal Diversified generation fleet with partners: Over 65% of generating capacity is owned in combination with other uti
Slide 16: Generation: Fleet is Well Positioned for Changing Environmental Regulation
Generation: Fleet is Well Positioned for Changing Environmental Regulation 45% of PJM coal capacity is significantly at-risk under proposed EPA regulations Environmental construction program completed on majority of base load coal units Under Electric Security Plan (ESP), DP&L can seek recovery of f
Slide 17: Electric Security Plan (ESP) Retail: Overview
Electric Security Plan (ESP) Retail: Overview ESP includes the regulated, standard service offer for generation customers DP&L’s last ESP filing was made in October 2008; settlement among interested parties approved in June 2009 ESP components Residual generation charge Fuel and purchased power adju
Slide 18: Competitive Retail: Overview
Competitive Retail: Overview Dayton Energy Resources “DPLER” Retail Strategy Switching in DPL Service Territory in 2010 Aggressively compete to retain customers in franchise service territory where name recognition for both DP&L and DPLER are high Retail operations provide natural market for DP&L an
Slide 19: Transaction Overview & Timing
Transaction Overview & Timing
Slide 20: Transaction/Financing Overview
Transaction/Financing Overview Committed Acquisition Facility $3.3 billion committed bridge facility from Bank of America Merrill Lynch $2.05 billion bridge facility at AES Corp. $1.25 billion bridge facility at DPL Inc. Financing term extends beyond the expected timing of regulatory approvals AES C
Slide 21: Financial Impact
Financial Impact Earnings & Cash Flow $0.05-$0.07 anticipated earnings per share accretion beginning in first year after close Expected to provide subsidiary distributions 1 of $200-$300 million per year Certain operational savings are expected to be achievable Reduction of public company costs Shar
Slide 22: Transaction Timeline: Expected to Close in 6-9 months
Transaction Timeline: Expected to Close in 6-9 months 1 April 2011 Q2 2011 Q3 2011 Q4 2011/Q1 2012 Transaction Announced Make Regulatory Filings Secure Regulatory Approvals (FERC, SEC, DOJ, PUCO) File DPL Proxy Statement DPL Shareholder Meeting Receive Regulatory Approvals Permanent Financing Close
Slide 23: 2011-2012 Guidance Expectations
2011-2012 Guidance Expectations Reflects forwards as of March 31, 2011, except for Brazilian Real (BRL) in 2012 2012 BRL reflects a consensus rate of 1.69, which is 7% stronger than forward as of March 31, 2011 Includes estimated purchase accounting adjustments Assumes tax rate in the low 30s in 201
Slide 24: Appendix
Appendix Contains Fora Looking Stteents
Slide 25: Reconciliation of 2011 Guidance, Including Proportional Metrics
Reconciliation of 2011 Guidance, Including Proportional Metrics 2011 Guidance (as of 4/20/11) 1 $ in Millions, Except Earnings Per Share Consolidated Adjustment Factors 2 Proportional 2.3 Income Statement Elements Gross Margin $4,000-$4,200 $1,550 $2,450-$2,650 Adjusted Gross Margin 3 $4,850-$5,050
Slide 26: Reconciliation of 2012 Guidance, Including Proportional Metrics
Reconciliation of 2012 Guidance, Including Proportional Metrics 2012 Guidance (as of 4/20/11) 1 $ in Millions, Except Earnings Per Share Consolidated Adjustment Factors 2 Proportional 2.3 Income Statement Elements Diluted Earnings Per Share from Continuing Operations $1.15-$1.25 Adjusted Earnings Pe
Slide 27: Assumptions
Assumptions Forecasted financial information is based on certain material assumptions . Such assumptions include, but are not limited to: (a) no unforeseen external events such as wars, depressions, or economic or political disruptions occur; (b) businesses continue to operate in a manner consistent
Slide 28: Definitions
Definitions Non-GAAP Financial Measures Adjusted earnings per share (a non-GAAP financial measure) is defined as diluted earnings per share from continuing operations excluding gains or losses of the consolidated entity due to (a) mark-to-market amounts related to derivative transactions, (b) unreal
Slide 29: Definitions, Cont'd.
Definitions, Cont’d. Subsidiary Distributions Subsidiary Distributions should not be construed as an alternative to Net Cash Provided by Operating Activities which is determined in accordance with GAAP. Subsidiary Distributions are important to the Parent Company because the Parent Company is a hold