Financial Advisory Services Clarification of Scope Meeting 22 July - PowerPoint PPT Presentation

Financial Advisory Services Clarification of Scope Meeting – 22 July 2020 July 2020

SCOPE OF WORK: PANEL A Financial Advisory Services 1/3 The following is included in the scope of work: 1. Providing holistic solutions to restore the viability / financial sustainability of Eskom and its subsidiaries in financial distress. Delivery of ideas, research and innovative solutions for dealing with the financial challenges faced by Eskom 2. Balance sheet and working capital optimisation including capital structuring; cost minimisation; debt reduction and improved liquidity. Financing across the capital structure of the organization. Advisory services on financial and Treasury funding structures 3. Advisory services on the impact of significant global events on the global and domestic economy, including the impact of disruptions to the business e.g. new technologies, environmental issues etc. Assist with long term financial modelling 4. Financial Modelling (Corporate and Project Finance Models), Valuations and Transaction structuring Structure, analysing and facilitation of domestic and Cross-border transaction (e.g. PPA’s for both purchases and sales of energy) 5. Advice regarding how to utilise and leverage climate funding and other climate-related financial opportunities and incentives 6. Undertaking financial scenario analysis and opportunity costing with respect to funding and hedging transactions 7. Advising in South Africa and internationally in: debt management transactions, sovereign debt exchanges and liquidity management exercises (LME). Assistance to Eskom in the elaboration of a funding and debt management strategy. 2

SCOPE OF WORK: PANEL A Financial Advisory Services 2/3 8. Sovereign credit ratings advisory services to address Credit Rating Agency issues, requirements, concerns and engagements, advice regarding strategies to improve ratings 9. Communication and stakeholder management support in relation to all financial solutions under consideration 10. Advisory services related to the financial elements of Eskom’s turnaround strategies and plans, including review of the financial plans, assumptions and feasibility thereof. 11. Valuations CVA/DVA, Embedded Derivatives and other IFRS related valuations. The consultants will be expected to perform valuations of complex financial instruments such as: o Credit Default Swap (CDS) valuations o Calculation of Credit Value Adjustment (CVA) / Debit Value Adjustment (DVA) using the Expected Future Exposure (EFE) method and stochastic modelling * o Valuations of Embedded Derivatives o Valuations of other debt structures and instruments in compliance with International Financial Reporting Standards (IFRS) as required from time to time for which internal expertise does not exist 12. Advisory services on industry restructuring and financial aspects of divisionalisation and unbundling. 3

SCOPE OF WORK: PANEL A Financial Advisory Services 3/3 13. Financial Risk Management - Advisory on credit risk solutions and credit risk appraisals, advice and assistance with analysis of credit rating impact of economic regulation environment and potential implications of regulatory decisions and methodologies for creditworthiness/credit risk ratings, also in the context of comparator SOEs ’ ratings and their key credit metrics. 14. Financial and Operational Benchmarking of the main elements of Eskom’s performance against other peer companies i.e. revenues, costs, stand-alone credit rating profile overnight cost of construction, Levelised cost of energy, etc. 15. Assistance with capital prioritisation and capital budget allocation. 16. Review of mine specific plans and operations to determine profitability and viability of mining operations, determining whether there is a case for hardship, review of underlying income statement, balance sheet and cash flow statements and models; Advice regarding mining economic factors, mining regulation, mining inflation, environmental rehabilitation trusts, investment options for mine rehabilitation trusts, limitation of environmental rehabilitation liabilities; Analysis and review of life of mine plans and specific capital investment reviews, analysis of mine specific models e.g. Xerus/Xpac This scope relates to financial advisory services, other specific Treasury related and execution type services such as debt raising etc. are excluded from this scope. 4

Functional evaluation criteria Panel A: Treasury and Financial Advisory Services 5