Hafslund E-CO Investor presentation August 2019
Disclaimer This presentation has been prepared by, and the information contained herein (unless otherwise indicated) has been provided by Hafslund E-CO AS (the "Company"). By viewing this presentation you agree to be bound by the following conditions: This document may only be used internally for business purposes and shall not be used for any unlawful or unauthorized purposes. This document and the information therein are being furnished to you solely for your information and may not be reproduced, redistributed or passed on, in whole or in part, to any other person. This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution or reception, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This document is not a prospectus and does not comply with rules or regulations regarding investor information, and has not been approved by or filed with any stock exchange or regulatory authority. Amongst others, this document does not disclose risks and other significant issues related to an investment in any securities. This presentation includes and is based on, among other things, forward-looking information and statements. Such forward-looking information and statements are based on the current expectations, estimates and projection of the Company or assumptions based on information available to the Company. Such forward looking information and statements reflect current views with respect to future events and are subject risks, uncertainties and assumptions. The Company cannot give any assurance as to the correctness of such information and statements. Investors should only subscribe for any transferable securities on the basis of information in a relevant prospectus and term sheet, and not on the basis of any information provided herein. The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. The Company shall have no liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The information contained in this document is provided as at the date of this document and is subject to change without notice. Because of the possibility of human or mechanical error by the Company, its affiliates or its third party licensors, the Company, its affiliates and its third party licensors do not guarantee the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. The Company gives no express or implied warranties, including, but not limited to, any warranties of merchantability or fitness for a particular purpose or use. In no event shall the Company, its affiliates and its third party licensors be liable for any direct, indirect, special or consequential damages in connection with subscriber's or others use of the data/information contained herein. Access to the data or information contained herein is subject to termination in the event any agreement with a third party of information or software is terminated. This presentation is subject to Norwegian law, and any dispute arising in respect of this presentation is subject to the exclusive jurisdiction of Norwegian courts. 2
Agenda Short introduction • • Hafslund E-CO pre Transaction The Transaction in brief • Credit assessments and proforma financials • Debt handling process • “New” Hafslund E -CO group after the Transaction • • Appendix 3
The “Transaction” in short - seen from Hafslund E-CO • Eidsiva Energi and Hafslund E-CO signed a Letter of Intent in November 2018 in which they agreed to look in more detail at the possibility of merging the two groups’ core businesses (the “Transaction”). The Transaction is approved by the companies’ board of directors, and the owners of Eidsiva Energi AS and Hafslund E-CO AS. The Transaction is also approved by all relevant authorities. • We expect to close the Transaction on 30 September 2019, with economic effect from 1 January 2019. The strategic rationale for the Transaction is to create larger units that are better • equipped to meet the energy system of the future. By merging the power- and grid operations into two separate units, we will establish a power generating company with the capacity to produce around 18 TWh 1 per year and a new grid company with almost 900,000 customers. This will ensure synergies through streamlined operations. Following the Transaction, Hafslund E-CO will continue to be wholly owned by the City • of Oslo, and own: 78.6% (57.2%) 2 in the combined power generating unit, – – 90% in Hafslund Produksjon Holding AS (the power stations in Glomma, previously owned by Hafslund ASA, is not part of the Transaction), 50% of the power grid operator and other business activities through Eidsiva – This presentation describes the Transaction between Hafslund E-CO Energi. and Eidsiva Energi (seen from Hafslund E-CO) and the consequences • As part of the Transaction, Hafslund E-CO will receive a cash payment of NOK 3.3 for the capital structure and for the creditors, including the proposed billion from Eidsiva Energi, to obtain the desired capital structure in the two groups. debt handling process for the bond debt in Hafslund. 1) Including ongoing projects 4 2) 57.2% directly, 78.6% including 50% ownership in Eidsiva Energi AS
Agenda Short introduction • • Hafslund E-CO pre Transaction The Transaction in brief • Credit assessments and proforma financials • Debt handling process • “New” Hafslund E -CO group after the Transaction • • Appendix 5
City of Oslo’s reorganization of its ownership in the energy sector started in 2017 Structure until Aug 4 th 2017 Structure between Aug 4 th 2017 and July 3 rd 2018 Other shareholders City of Oslo City of Oslo 100% 54% 34% 12% 100% 100% 50% 50% 100% 1 Heat Markets 100% 100% 100% 100% 100% 100% 90% 10% 100% Hafslund Hafslund E-CO Energi Grid Heat Markets Grid E-CO Energi Produksjon Produksjon 6 1) As part of the reorganization on 4 August 2017, Hafslund ASA was de-listed from Oslo Børs.
The ownership of Hafslund and E-CO was merged in 2018 Structure until July 2018 Current structure pre Eidsiva Transaction City of Oslo City of Oslo 100% 100% 100% 100% Grid Hydropower Grid Hydropower 7
Hafslund E-CO pre Transaction Hydropower New Energy 1 Grid ▪ 50 power plants ▪ Development and use of ▪ 730,000 grid customers new technology in areas ▪ 14 TWh owned ▪ Number of customers outside hydropower and doubled since year 2000 ▪ +6 TWh since year 2000 regulated grid TOTAL ASSETS (2018) – NOK 49 billion EBITDA (2018) – NOK 5,5 billion 1) New Energy is currently under development and is not a separate legal entity, but part of Hafslund E-CO AS. 8 For further details regarding the Hafslund E-CO companies, please see appendix page 36-41
Legal structure pre Transaction – Hafslund E-CO AS HAFSLUND E-CO AS 100% owned by the City of Oslo 100% 100% E-CO ENERGI HOLDING AS HAFSLUND AS 100% 100% 90% 1 100% HAFSLUND HAFSLUND HAFSLUND NETT AS E-CO ENERGI AS PRODUKSJON HANDEL AS 3 HOLDING AS 2 1) 10% owned by Svartisen Holding AS. 2) The production assets owned by Hafslund ASA prior to 4 August 2017. 9 3) Hafslund Handel AS owns 49% in Fredrikstad Energi AS and has a few other insignificant investments.
Experienced management team Finn Bjørn Ruyter CEO Deputy CEO / Tore Olaf Rimmereid SVP Corporate Strategy Heidi Ulmo 1 / CFO Martin S. Lundby (acting) SVP HR and Organizational Siw Hellesen Development SVP Communications and Per-Arne Torbjørnsdal public affairs Anders Østby SVP Power Markets SVP/ Managing SVP/Managing SVP Director Director New Energy Hafslund Nett AS E-CO Energi Kristin Lian Toril Benum Alf Inge Berget 10 1) Parental leave until mid August 2019
Agenda Short introduction • • Hafslund E-CO pre Transaction The Transaction in brief • Credit assessments and proforma financials • Debt handling process • “New” Hafslund E -CO group after the Transaction • • Appendix 11
Approved Transaction with Eidsiva Energi • Exchange of assets Hafslund E-CO will receive Eidsiva Vannkraft and 50% of the share capital in new Eidsiva Energi AS in o exchange for Hafslund Nett and 21.4% 1 of E-CO Energi. In addition, Hafslund E-CO will receive a cash payment of NOK 3.3 billion to obtain the desired capital o structure in the groups. • Two new focused business operations One production group (E-CO Energi Holding) and one grid group (Eidsiva Energi). o Significant potential for synergies through streamlined operations. o Well positioned for further growth and consolidation. o 12 1) Direct and indirect Hafslund E-CO still own 78.6% of E-CO Energi AS
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