Transcript
1
Institutional Presentation
October, 2008
2
Agenda
►Financial Performance
►Portfolio Overview
►Value Creation
►Company Profile
3
Agenda
►Financial Performance
►Portfolio Overview
►Value Creation
►Company Profile
4
Equatorial Overview
Holding company with investments in the energy sector, focused on distribution and generation
Differentiated experience in operating and financial restructuring of companies in the Brazilian energy sector
Controlled by PCP Fund, investment vehicle owned by former partners of Banco Pactual (sold in 2006 to UBS)
Current investments:
• Distribution company in the State of
Maranhão
• 2nd largest distribution company in the
Northeast of Brazil, in terms of
concession area*
• 4th largest distribution company in the
Northeast of Brazil, in terms of billed
energy*
• Annual gross revenues of R$1.2 billion in
2007
• Holding company with investments in
distribution, generation and trading.
Located in the State of Rio de Janeiro
• 3rd largest distribution company of Brazil in
terms of billed energy*
• 4th largest customer base in Brazil*
• 852 MW of installed capacity
• Annual gross revenues of R$8.1 billion in
2007
RS
SC
PR
SP
MG
GO
MT
AC
AM
RR
ROBA
PI
MAPA
AP
TO
CE RN
PEAL
SE
MS
RJ
ES
DF
PB
RS
SC
PR
SP
MG
GO
MT
AC
AM
RR
ROBA
PI
MAPA
AP
TO
CE RN
PEAL
SE
MS
RJ
ES
DF
PB
• Company responsible for implementing
and operating the Tocantinópolis and
Nova Olinda thermoelectric plants in the
State of Maranhão
• Fuel: high-viscosity heavy oil.
• Joint installed capacity of 331 MW
• 240 MW of energy sold at the A-3 auction
in 2007.
• Start-up scheduled for January 2010
Geranorte
*Source: ABRADEE
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Equatorial’s History
May 2004 Mar. 2006 Apr. 2006 Dec. 2007 Feb. 2008 Apr. 2008
CEMAR’s acquistion
PCP Fund acquires a
controlling stake of
Equatorial
Equatorial’s IPO
Control concentrated in
PCP Fund
Incorporation of a
controlling stake of
Light
Equatorial migrates to
the “Novo Mercado”
Oct. 2008
Acquisition of 25% of
Geranorte
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Ownership Structure
• Total no. of shares:
• Share price*:
• Free float:
• ADTV90:
105,638,030
R$ 11,50
44.4% / R$540 MM
R$2,8 MM
* On 09/30/2008
PCP Latin America
Power S.A.
55.5%
CEMAR New Projects
RME
Rio Minas e Energia
Participações SA
Light S.A.
25.0%
52.1% 65.1%
Equatorial Energia
Geranorte
25.0%
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Corporate Strategy
CEMAR and Light
Increased returns through outstanding financial and
operating performance
Consolidation of
distributors in Brazil and
Latin America
Acquistion of full or shared control
Added value through financial and operational restructuring, synergy
gains and loss reduction
Geranorte and other
investments in
generation
Brazil’s investment needs in generation over the next few years will create
growth opportunities for Equatorial.
Geranorte thermal plants present an above average rate of return
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Firmino Sampaio
Chairman of the Board
of Directors
• CEO of Eletrobrás (1996-2001), CEO and CFO of COELBA (1984-1996)
• Member of the boards of directors of Furnas, Itaipu Binacional, CHESF, Eletrosul, Gerasul, CEMIG, ENERSUL, CEMAT and Light
• Degree in Economics from the Federal University of Bahia and postgraduate degree in Industrial Planning from SUDENE/IPEA/FGV
Management
• CEO of Equatorial since March, 2007. CEO and CFO of CEMAR (2004-2006)
• Worked for 6 years at Banco Pactual in the Principal Investments and Corporate Finance divisions
• Degree in Computer Science from PUC-RJ and in Business Administration from IBMEC. CFA chartered by CFA Institute in 2003. Concluded the Owner and
President Management Program of Harvard Business School in 2008
Carlos Piani
CEO
Eduardo Haiama
CFO & IRO
Tinn Amado
Regulatory Affairs
Officer
Management is composed by professionals with substantial experience in the financial, operational and regulatory areas
• CFO and IRO of Equatorial since 2008. IRO of CEMAR since 2008.
• Between 2004 and 2008, Mr. Haiama worked at Banco UBS Pactual on the equities’ research team as senior analyst of the utilities segment.
• Received a degree in electric engineering at USP – University of São Paulo (Escola Politécnica) and postgraduated at a MBA Course at Duke University.
• Regulatory Affairs Officer of Equatorial since April 2008 and of CEMAR since August 2006
• Consulting partner of Amado Consultoria, providing advisory services in economic regulation
• Worked at ANEEL for 3 years as an analyst for the Distribution Service Regulation Department
• Degree in Electrical Engineering from the Federal University of Itajubá (UNIFEI) and a Master’s degree in Regulation and Protection of Fair Trading from Brasília
University (UnB)
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PCP Fund
Long Term
Investments
Hedge Funds Brazil
and EMFund of Funds (G7)
Public Equities
Private Equity
Real Estate
• In 2001, Banco Pactual created a Principal
Investment Unit to manage the partnership’s
excess capital and diversify its investments
• In 2006, with the sale of Banco Pactual to UBS,
part of the proceeds from the sale was reinvested
in the Principal Investment Unit, which was
renamed UBS Pactual Alternative Investments
• Today, UBS Pactual Alternative Investments
manages the capital of Pactual’s former
partners through a major fund of funds entitled
PCP, formerly named Pactual Capital Partners
• PCP has over US$3 billion under management
with investments in fund of funds, hedge funds,
public equities, private equity and real estate
History
PCP Fund
• Fundamental and long-only
strategy
• Acquisition of control or shared
control of private and public
companies (Ex: Iven, Light,
Equatorial)
• Investments through PCP’s
associated company PDG Realty
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Agenda
►Financial Performance
►Portfolio Overview
►Value Creation
►Company Profile
11
Since CEMAR’s acquisition, Equatorial has been presenting an excellent
financial performance
Net Operating Revenues
R$ million
CAGR = 21%
EBITDA and Margin EBITDA
R$ million / % of NOR
CAGR = 42%
Financial Performance
423
526
629
810879
2003 2004 2005 2006 2007
93 85
189
341379
43%42%
30%
22%
16%
2003 2004 2005 2006 2007
12
Net Income
R$ millionDeclared Dividends
R$ million
85
165151
2003 2004 2005 2006 2007
Total = R$401million
Sustained positive results allowed Equatorial to pay out R$401 million in
dividends
Financial Performance
(57)
123
229
125
154
2003 2004 2005 2006 2007
13
105
225
339
305
627
0.6
0.3
1.6
6.7
4.0
2003 2004 2005 2006 2007
Consolidated Net Debt and Net
Debt/EBITDAR$ million / Times
Improved operating performance and financial restructuring led to a
significant reduction in leverage
Financial Performance
14
24
3647
65
93
165173
208
31 34
68 67
10998
104
77
104
39%
36%
18%20%
24%
28%
42% 39%
36%
44%
48%45% 45%
43%
29%
24%
32%
-
50
100
150
200
250
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
Quarterly EBITDA and EBITDA Margin
R$ million/% of Net Revenues
Growth (3Q08/3Q07)
= 100%
Light’s incorporation in the 1Q08 substantially increased Equatorial’s operating result…
Financial Performance
15
Consolidated Net Debt and Net Debt /
EBITDA
R$ million / Times
…without affecting financial leverage
Financial Performance
385360
180
242
582
806
749
339373
305332
105 105
244
176
225
382
1,1
0,5
3,9 4,0
3,32,4
1,6
1,5
0,7
0,3
0,3
0,6 0,7 0,6
0,9
3,0
1,3
-
100
200
300
400
500
600
700
800
900
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
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Agenda
►Financial Performance
►Portfolio Overview
►Value Creation
►Company Profile
17
CEMAR: Highlights
MA
Distribution company in the State of Maranhão
1.4 million clients (4th largest in the Northeast region)*
Billed energy (2007): 3,219 GWh (5th largest in the
Northeast)*
Annual gross revenues of R$1.2 billion in 2007
Energy Sales (2007)
Clients (2007)
1.4 million
3,219 GWh
*Source: ABRADEE
RS
SC
PR
SP
MG
GO
MT
AC
AM
RR
ROBA
PI
MAPA
AP
TO
CERN
PE
ALSE
MS
RJ
ES
DF
PB
RS
SC
PR
SP
MG
GO
MT
AC
AM
RR
ROBA
PI
MAPA
AP
TO
CERN
PE
ALSE
MS
RJ
ES
DF
PB
40%
31%
18%
11%
Residential Commercial Industrial Others
87%
7%5%
1%
Residential Commercial Industrial Others
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CEMAR: History
CEMAR under control of
Equatorial
1958-
Jun. 2000
Aug.2000-
Aug.2002Aug.2002-May
2004
May 2004-
Present
State owned
CEMAR under PPL Global’s
control
ANEEL’s intervention
CEMAR under control of
Equatorial
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CEMAR: Ownership Structure
65.1%
Eletrobrás OthersEquatorial Energia
CEMAR
Eletrobrás
33.6% 1.2%
OthersEquatorial Energia
CEMAR
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CEMAR: Distribution
• 1.4 million clients in 217 municipalities, covering the
whole state of Maranhão (total area 333,000 km²)
• Energy sales reached 3,219 GWh in 2007, 10.5%
higher than in 2006. Maranhão presented one of the
highest growth rates of energy consumption in Brazil
• Service quality has been presenting positive evolution.
Since 2003, DEC and FEC indices have dropped 58%
and 49%, respectively
• More than 151 thousand clients connected through the
Light for All Program
• In 12/07, energy losses reached 28.7%, 1.1 pp lower
than in 2006
• Tariff readjustments occur every August, with next tariff
revision set to 08/09
2005 2006 2007 9M08
Net Revenues R$ MM 665 810 879 721
PMSO R$ MM 126 129 126 105
EBITDA R$ MM 189 341 379 305
Clients '000 1.254 1.349 1.438 1.511
PMSO/Client R$/Client 101 95 88 70
EBITDA/Client R$/Client 150 253 264 201
DEC (*) Hours/Year/Client 54.6 42.6 28.7 27.8
FEC (*) Times/Year/Client 39.3 32.9 24.6 18.6
Losses (LTM) % 29.5% 29.8% 28.7% 28.6%
CAPEX R$ MM 103 137 199 172
PLPT(**) R$ MM 129 169 195 120
(*) Last 12 months
(**) Light for All Program
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Holding company with distribution, generation and trading interests
3rd largest distributor in Brazil in terms of energy sales*
4th largest customer base in Brazil*
Generation plants with 852 MW of installed capacity
Gross revenues of more than R$8 billion in 2007
*Source: ABRADEE and Light
Light S.A.: Highlights
Energy Sales (2007)
18,307 GWh
EBITDA by Segment (2007)
R$1.1 billion
RS
SC
PR
SP
MG
GO
MT
AC
AM
RR
ROBA
PI
MAPA
AP
TO
CERN
PE
ALSE
MS
RJ
ES
DF
PB
RS
SC
PR
SP
MG
GO
MT
AC
AM
RR
ROBA
PI
MAPA
AP
TO
CERN
PE
ALSE
MS
RJ
ES
DF
PB
84,5%
15,2%0,3%
Distribution Generation Trading
40,1%
31,4%
7,5%
11,0%
Residential Commercial Industrial Others
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• After a negative result in its 2003 tariff revision process and poor management, Light became insolvent and was forced to renegotiate its debt with creditors
• In March, 2006, a consortium (RME) formed by PCP, Cemig, AG Concessões and Luce Fund won a competitive bidding process for the acquisition of a
controlling stake at Light
• The consortium acquired 79.4% of Light’s total and voting capital for US$320 milllion
• After fulfilling a series of prerequisites, including the approval of regulatory authorities in Brazil and France, the consortium effectively took over the
company in August, 2006
Creation of Light, a
private CompanyLight’s Privatization
Eletropaulo’s
acquistion
Split of EDF-AES
Acquisiton by EDF
1905 1979 May 1996 Apr. 1998 Oct.2001 Jan.2002 Jul.2005 Aug. 2006
Light joined
Bovespa’s Novo
Mercado
RME acquires
control of Light
Acquisition by
Eletrobrás
Light S.A.: History
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Light S.A.: Ownership Structure
CEMIGCompanhia Energètica
de Minas Gerais
AGCAndrade Gutierrez
Concessões
LUCELUCE do Brasil
Fundo de Investimento
em Participações
EQTLEquatorial Energia
RMERio Minas Energia
Participações S.A
LIGHT S.A.(Holding)
BNDESPAR
MARKET
25.0% 25.0% 25.0% 25.0%
52.2% 33.7%
14.1%
Free Float: 47,8%
Light S.E.S.A (Distribution)
Light Energia(Generation)
Light EscoLtda(Trading)
Lightger(New Projects)
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• 3.9 million clients in 31 municipalities in Rio de Janeiro,
covering 25% of the state, which represents a 10,970 km² area
• Energy sales reached 18,307 GWh, accounting for
approximately 72% of all electricity consumed in the State in
2007
• Service quality among the highest in Brazil. In the 1H08, the
FEC (LTM) index reached 7.8x and the DEC (LTM) index
11.4 h
• Collection rate improved significantly after the change in
control, increasing from 93% in 2006 to 99.4% in 2007
• Energy losses, which totaled 20.4% in 2Q08, represent a
challenge in the concession area
• The last tariff revision, held in november 2008, Light’s tariff
increased by 1.96%
Light S.A.: Distribution
2005 2006 2007 9M08
Net Revenues R$ MM 4.875 4.743 4.755 3.579
PMSO R$ MM 511 533 567 413
EBITDA R$ MM 751 599 938 748
Clients '000 3.732 3.802 3.881 3.741
PMSO/Client R$/Client 137 140 146 110
EBITDA/Client R$/Client 201 158 242 199
DEC (*) Hours/Year/Client 8.8 8.0 9.1 11.5
FEC (*) Times/Year/Client 7.7 6.3 6.3 7.1
Losses % 18.7% 19.8% 20.6% 20.4%
CAPEX R$ MM 277 322 330 405
(*) Last 12 months
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• Light owns and operates 5 hydro power plants
and two water pumping stations
• The 5 plants are located in three generation
regions: Santa Branca, Lajes and Ilha dos
Pombos
• Total installed capacity of 852 MW, for assured
energy of 537 MW
• Light Generation has average contract selling
price of R$60/MWh, with the bulk of contracts
expiring in 2012 and 2013
• 3 new hydro power plants currently being
developed: SHP Paracambi (25 MW of
installed capacity) and SHP Lajes (17 MW) in
the Lajes complex and HPP Itaocara on the
Paraíba do Sul River (195 MW)
Light S.A.: Generation
2005 2006 2007 9M08
Net Revenues R$ MM 20 249 271 197
PMSO R$ MM 3 55 60 93
EBITDA R$ MM 14 147 169 153
Assured Capacity MW 537 537 537 537
EBITDA/Assured Cap. R$'000/MW 26 274 314 284
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• Through its subsidiary Light Esco, Light acts as a
trader and broker for free clients
• In its trading activities, Light has 30 clients with total
energy sales of 90 GWh in 2007
• Clients include Unilever and InBev
• As a broker, Light has 10 clients, including TV Globo
and Gerdau Steel and traded 1,200 GWh in 2007
Light S.A.: Trading
2005 2006 2007 9M08
Net Revenues R$ MM - 4 31 24
PMSO R$ MM - 2 9 22
EBITDA R$ MM - 2 4 2
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25.0%
GNP*
50.0%
Fundo de Investimento em
Participações BrasilEquatorial Energia
Geranorte
*GNP is composed by Servtech (50%) and Grupo Ligna (50%)
25.0%
Geranorte: Ownership Structure
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Geranorte: Highlights
• Two thermoelectric power plants fueled by high-viscosity heavy oil
• Location: Miranda do Norte, Maranhão.
• Joint installed capacity of 331 MW
• 240 MW of energy sold at the A-3 auction in 2007
• Total fixed annual revenue (for both plants) of R$ 136.2 million, during 15 years
• Start-up scheduled for January of 2010
• Total CAPEX: Between R$500 million and R$ 550 million
• Equatorial’s share of CAPEX (25%): R$125 million. Equity = approximately R$45 million
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Agenda
►Financial Performance
►Portfolio Overview
►Value Creation
►Company Profile
30
Strengths
Financial strength and solid
management team with
turnaround experience
Growth prospects and
consolidation opportunities
Result-oriented management
model
High level of
Corporate Governance
31
Carlos Piani
CEO
Eduardo Haiama
CFO and IRO
Thomas Newlands
IR Analyst
Phone 1: 55 21 3206-6635
Phone 2: 55 21 3206-6607
E-mail: ir@equatorialenergia.com.br
Website: http://www.equatorialenergia.com.br/ir
Contacts
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► This presentation may contain forward-looking statements, which are subject to risks and uncertainties, as they
were based on the expectations of Company’s management and on available information. These prospects include
statements concerning the Company’s current intensions or expectations for our clients.
► Forward-looking statements refer to future events which may or may not occur. Our future financial situation,
operating results, market share and competitive positioning may differ substantially from those expressed or
suggested by said forward-looking statements. Many factors and values that can establish these results are
outside Company’s control or expectation. The reader/investor is prevented not to completely rely on the
information above.
► The words “believe", “can", “predict", “estimate", “continue", “anticipate", “intend", “forecast" and similar words, are
intended to identify affirmations. Such estimates refer only to the date in which they were expressed, therefore
Company has no obligation to update said statements.
► This presentation does not consist of offering, invitation or request of subscription offer or purchase of any
marketable securities. And, this statement or any other information herein, does not consist of a contract base or
commitment of any kind.
Disclaimer
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