mpx corporate presentation - september 2012
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MPX CORPORATE PRESENTATION
The material that follows is a presentation of general background information about MPX Energia S.A. and its subsidiaries (collectively, “MPX” or the “Company”) as of the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of this information.
This presentation may contain certain forward-looking statements and information relating to MPX that reflect the current views and/or expectations of the Company and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like “may”, “plan”, “believe”, “anticipate”, “expect”, “envisages”, “will likely result”, or any other words or phrases of similar meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. In no event, neither the Company, any of its affiliates, directors, officers, agents or employees nor any of the placement agents shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this presentation or for any consequential, special or similar damages.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities.
Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever.
Recipients of this presentation are not to construe the contents of this summary as legal, tax or investment advice and recipients should consult their own advisors in this regard.
The market and competitive position data, including market forecasts, used throughout this presentation were obtained from internal surveys, market research, publicly available information and industry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in any material respect, we have not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or other publications. MPX, the placement agents and the underwriters do not make any representation as to the accuracy of such information.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without MPX’s prior written consent.
DISCLAIMER
2
MPX AT A GLANCE
1
A PROVEN RECORD OF ACHIEVEMENT
4
IPO: US$ 1.1
billion raised
1,080 MW
contracted in the
A-5 Auction
2007 First acquisition of
mining rights in
Colombia
365 MW contracted in
the A-5 Auction
Construction works at
TPP Pecém I begin
2008 Construction works
at TPPs Itaqui and
Pecém II begin
Acquisition of
interest in 7 onshore
exploratory blocks in
the Parnaíba basin
2009
MPX Colombia – 1st
Technical Report:
coal resources of
144 MM tons
License granted for
TPP Parnaiba
(1,863 MW)
Initiation of drilling
campaign in the
Parnaíba basin
2010
TPP Parnaíba licensed
capacity increased to
3,722 MW
Power supply
contracts secured for
1,193 MW and
construction works at
TPP Parnaíba begin
D&M estimates for
risked resources in the
Parnaíba basin
amount to over 11Tcf
Declaration of
commerciality for 2
gas fields with
estimated production
of 6 MM m3/day
2011 MPX/E.ON
partnership
Drawdown of bridge-
loans totaling R$ 1.6
billion for natural gas
production and
power generation in
the Parnaíba Basin
Spin-off of
Colombian coal
assets to a new
company listed at
the BM&FBOVESPA
Acquisition of
Greenfield Wind
Projects in Northeast
Brazil (600 MW)
2012
4
The First Five Years
Power Generation
Power agreements secured for 3.0 GW
Environmental license for an additional 10 GW
Joint-Venture with leading global player E.ON AG
Natural Resources
Natural Gas: >11 Tcf of risked resources in the Parnaiba Basin
5
JV
MPX
Amapari Energia23 MW
Itaqui TPP360 MW
Parnaíba TPP1.531 MW
Exploratory blocks11,3 Tcf GN
Parnaíba TPP2.191 MW
Seival mine
Seival TPP600 MW
Sul TPP 727 MW
Açu TPP2,100 MW – Coal3,300 MW – Natural Gas
Castilla TPP2.100 MW
Desalination Plant
740 l/s
Largest Portfolio Of Integrated Projects In South America
A DIVERSIFIED ENERGY COMPANY
Pecém I720 MW
Pecém II 365 MW
Solar Tauá1 MW
Ventos Wind Complex600 MW + 600 MW
MPX OWNERSHIP STRUCTURE
EIKE BATISTA
Free Float
Contracted Power
Generation
Natural Resources
100% 100%
50%
Energia Pecém (360 MW)Pecém II (365 MW)Itaqui (360 MW)Parnaíba TPP (1,087 MW)Amapari (12 MW)
Seival
OGX Maranhão
MPX- E.ON JV50/50
53.9% 11.7%34.3%
Parnaíba TPP (1,534 MW) Açu – Natural Gas (3,300 MW)Açu – Coal (2,100 MW)Castilla - Coal (2,100 MW)Sul and Seival - Coal (1,327 MW)
Greenfield Thermal
Generation
50% 50%
50%
Supply & Trading
Renewables New Projects
100%
Tauá Solar(5 MW)Greenfield Wind Developments (600 MW)
6
EXPERIENCED MANAGEMENT TEAM TO EXECUTE ON
STRATEGIC VISION
Partner at Villemor Amaral Advogados (2002-2004) and Tozzini, Freire & Silva Advogados (2001-2002)
General Counsel at MMX Mineração e Metálicos S.A.
Legal Director at General Motors Corp. in Lisbon and Delphi Automotive Systems
Marcus Bernd Temke COO
Over 20 years of experience in operations at multinational corporations
COO at Rio Polímeros S.A.
Holds an MBA from COPPEAD-UFRJ
Over 25 years of experience in the financial area at multinational corporations
CFO at MMX Mineração e Metálicos S.A.
CFO at Unisys in Brazil and Germany
Eduardo KarrerCEO & IRO
Over 22 years of experience in a wide range of M&A and corporate finance transactions related to the natural resources, electricity, sanitation and logistics sectors
CEO at El Paso Brasil Ltda.and Rio Polímeros S.A..
Executive manager for the Gas&Energy and International Markets divisions at Petrobrás
Rudolph IhnsCFO
Xisto Vieira FilhoOfficer for Regulatory Affairs & Commercialization
Former National Secretary for Energy
Coordinator of the Subcommittees for Electricity Studies of the Interconnected System and Secretary of National Energy Policy Committee of Brazil
Chairman of the Board of Directors of CHESF and Eletrosul and Board member of Eletrobrás, Furnas, Cepel and Grupo Rede
Former president of the National Committee of Cigré (Conference Internationale des Grand Réseaux Électriques)
Bruno ChevalierGeneral Counsel
7
INVESTMENT CONSIDERATIONS
2
Exposure to Brazil’s growing energy demand
Tax-advantaged thermal power plants coming on-line in 2012
Attractive monetization of natural gas resources
Robust pipeline of thermal projects to meet Brazil’s need for a more reliable
electric system
Joint-venture with E.ON to develop strong portfolio of energy assets while
unlocking value of Colombian coal assets
Experienced management team to execute on strategic vision
INVESTMENT CONSIDERATIONS
9
EXPOSURE TO BRAZIL’S GROWING ENERGY DEMAND
3
Energy Deficit starting in 2015 = Investment Opportunities
BRAZIL WILL NEED ADDITIONAL 10 AVG GW FROM
2015-2019Power Supply/Demand
Source: ANEEL 11
2015-on: new generation required10 GW avg required from 2015 to 2019
Firm Energy
Energy Load (forecast)
Water storage capacity has stagnated, leading to decreased system autonomy
BRAZIL NEEDS NEW THERMAL CAPACITY TO
INCREASE SUPPLY RELIABILITY
12Source: ONS
Storage Capacity (Southeast)
Storage Capacity (SIN):
Autonomy = [Storage Capacity / (Load – Thermal Generation)]
New thermal plants are necessary to guarantee a reliable power supply.
Northeast = 19%
North = 5%
Storage capacity
stagnation
Southeast = 69%
South = 7%
2001: Energy Deficit(load reduction)1
Actual Reservoir Autonomy: ~ 5 months
Transmission expansion delays will affect reliability of energy supply: greater need for thermal plantes located close to power consumption centers
TRANSMISSION DELAYS REINFORCE THE IMPORTANCE
OF THERMAL PLANTS
13Source: ANEEL
Average delay = 1.2 year103 delays of up to 1 year100 delays greater than 1 year
TAX-ADVANTAGED THERMAL POWER PLANTS COMING ON-LINE STARTING IN 2012
4
POWER AGREEMENTS SECURED FOR 3.0 GWMinimum guaranteed revenues will reach R$ 1.4 billion in 2015
15
TOTAL CAPACITY
(MW)
ADJUSTED CAPACITY
(MW)
ENERGY SOLD (AVG MW)
ANNUAL CAPACITY PAYMENT3 FUEL SOURCE
PPA PERIOD
Pecém I 720 360 615 R$ 278 million Coal 2012-2027
Itaqui 360 360 315 R$ 294 million Coal 2012-2027
Pecém II 365 365 276 R$ 264 million Coal 2013-2028
Parnaíba I 676 473 450 R$ 289 million Natural Gas 2013-2028
Parnaíba II 517 362 450 R$ 242 million Natural Gas 2014-2034
Parnaíba (Free Market) 338 237 200 R$ 188 million Natural Gas 2019-2029
Total 2,976 2,157 2,306 R$ 1,555 million
Adjusted Capacity/Annual Capacity Payment: Figures adjusted for MPX’s ownership in each project
Notes: 1. Pecém I is a partnership between MPX (50%) and EDP Brasil (50%); 2. Parnaíba is a partnership between MPX (70%) and Petra (30%); 3. Capacity Payments are escalated
annually by the IPCA inflation index (Figures as of June, 2012). 4. Total Capacity: Does not include Amapari TPP and Taua Solar Plant.
STEADY AND PREDICTABLE CASH FLOWS
16
Minimum Guaranteed Gross Revenues3 (MM)Installed Capacity (MW)
2012 2013 2014
720
1,558
1,920
Pecém I1
Itaqui
Pecém II
Parnaíba2 I
Parnaíba2 II
Figures adjusted considering MPX’s interest in each project
Notes: 1. Pecém I is a partnership between MPX (50%) and EDP (50%); 2. Parnaíba I & II are partnerships between MPX (70%) and Petra (30%); 3. Capacity Payments are escalated annually by
the IPCA inflation index (Figures as June, 2012); 4. EBITDA assuming no dispatch; it is no including the participation interest in gas onshore blocks in the Parnaíba Basin.
2012 2013 2014 2015
88
730 817 819 155
1,125
1,3051,367
EBITDA Minimum Guaranteed Gross Revenues
COAL POWER PLANTS5
TAKEOVER OF CONSTRUCTION WORKS
In July 2012, MPX and EDP announced the joint acquisition of MABE, the EPC consortium formed by
Tecnimont and Efacec to build the Pecém and Itaqui TPPs
As part of the agreement:
Tecnimont and Efacec injected R$421MM at MABE, relinquished the R$185MM cash
retention withheld by the projects and paid in full all liabilities preceding Apr 30, 2012
Performance guarantees remained unchanged
Contractor pending claims and legal actions were eliminated
PECÉM I PECÉM II ITAQUI TOTAL
Cash injection at MABE 196 110 115 421
Cash retention relinquished 100 47 38 185
Performance guarantees 200 104 107 411
Guarantees for claims and contingencies 83 42 41 166
18
More effective management of Pecém and Itaqui TPPs
Pecém I: Unit #1Repair turbine rotor bearings and machine turbine rotor journals. Restart unit –> first synchronization –> electrical load tests –> DCO.
Itaqui
Steam blowing –> reinstatement –> by-pass operation –> steam to turbine –> electrical tests –> first synchronization –> electrical load tests –> DCO.
Pecém I: Unit #2Cold commissioning –> first fire –> steam blowing –> reinstatement –> by-pass operation –> steam to turbine –> electrical tests –> first synchronization –> electrical load tests –> DCO.
Pecém II
Construction completion –> cold commissioning –> first fire –> steam blowing –> reinstatement –> by-pass operation –> steam to turbine –> electrical tests –> first synchronization –> electrical load tests –> DCO.
MILESTONES LEADING TO COMMERCIAL OPERATIONS
19
Coal Plants Under Construction
3Q12 4Q12 1Q13
360
1,080
1,445
360
360
365
Pecém I #1 Pecém I #2Itaqui Pecém II
Capacity Ramp-up (MW)
Overview
PECÉM I & II
20
21
Overview
PECÉM I & II
21
ITAQUIOverview
22
ITAQUIITAQUIOverview
23
GAS POWER PLANTS AND TREATMENT UNIT
6
TPP PARNAÍBA I (676 MW) & II (517 MW)Execution highlights
EPC contracts with Duro Felguera (Parnaíba I)
and Initec Energia (Parnaíba II)
Partnership with GE ensures timely equipment
supply
Electromechanical construction of 5 out of the
7 gas turbines completed
5 turbines on-site and 2 additional (Parnaíba II)
to be shipped to Brazil by the end of 3Q12
R$ 1,375 million in bridge-loans disbursed to
fund Parnaía I & II.
25
MPX OWNS 23% OF A UNIQUE ONSHORE NATURAL
GAS PORTFOLIOOwnership Structure:
2 commercial production fields under development: Gavião Real and Gavião Azul
Prospective risked resources surpass 11 Tcf (2.0 bi boe)
5 drill-rigs in operation
3 seismic crews in the region
Exploratory campaign has identified 4 accumulations and over 20
prospects
Drill-stem test in well OGX-88 (Bom Jesus) concluded with 36
meters of net pay, supporting future development
26
OGX MaranhãoBlocks
Total area:24,500 km²
On schedule to start production at Gavião Real in Jan, 2013 Estimated capacity in 2013: 6 MM m³/day
(212 MM ft³) 15 production wells already drilled Commissioning of Gas Treatment Unit
expected in 4Q12
Competitive costs: Average operating cost: US$ 0.30/1,000ft³
R$ 600 million bridge-loan to fund production development disbursed in January 2012
GAS PRODUCTION IS PLANNED TO START IN 2H12Initial production of 6 MM m3/day will supply Parnaíba I & II TPPs
27
Thermal power plant located at < 2km from gas fields 2.2 GW licensed and still
uncontracted could demand further 11 MM m3/day
Inexpensive connection to the electrical grid
Limited competition in natural gas
Tax-advantaged region can attract industrial investments with gas is available
ATTRACTIVE OPPORTUNITIES TO MONETIZE
ADDITIONAL PRODUCTIONEfficient Integration of Natural Gas Resources with Energy Production
28
JOINT-VENTURE WITH E.ON TO DEVELOP ROBUST PIPELINE OF THERMAL PROJECTS
7
MPX and E.ON AG* recently formed a 50/50 joint-venture to develop a strong portfolio of energy
assets in Brazil and Chile
E.ON has committed to support MPX’s investment needs at the JV, at E.ON’s cost of equity in
Brazil, to expedite the development of the power generation projects of the JV
MPX raised R$1.0 billion through a capital increase E.ON acquired a 11.7% equity interest in MPX
E.ON’s participation in MPX shall be adjusted according to put/call option arrangements between Mr.
Eike Batista and E.ON to reach 10%
CREATING VALUE THROUGH JOINT-VENTURE WITH
E.ONLeveraging Strong Complementary Capabilities to Enhance Growth
30
(*) E.ON has one of the broadest and most diverse power and gas asset bases in Europe.
Installed Capacity: 69 GW
2011 Traded Volumes: 2,000 billion kWh of power / 2,500 billion kWh of gas / 600 million tons of carbon / 300 million tons of coal
2011 Figures : Cash Position: EUR 6,610 million / Total assets: EUR 152,872 million / Sales: EUR 112,954 million
MPX E.ON JOINT VENTURE
31
50%
MPX- E.ON JV50/50
Greenfield Thermal
Generation
50%
Supply & Trading
Renewables New Projects
10 GW in greenfield licensed thermal capacity
50% 100% 100% 100%
600 MW in greenfield wind developments
FUTURE GROWTH OPPORTUNITIESMPX is positioned for leadership in the Brazilian energy market
CURRENT THERMAL PIPELINE
TOTAL CAPACITY
(MW)FUEL SOURCE
Ventos1 600 Wind
Parnaíba2 2,191 Natural Gas
Açu 3,300 Natural Gas
Açu 2,100 Coal
Sul and Seival 1,327 Coal
Castilla (Chile) 3 2,100 Coal
Total 11,618
321 MPX has call option on additional 600 MW; 2 Parnaíba - partnership between MPX (70%) and Petra (30%); 3 In August 2012, Chilean Supreme Court Decision Cancels the Castilla Project Environmental Permit
João Câmara
RN
VENTOS: A 600 MW WIND COMPLEX IN ONE OF
BRAZIL’S BEST WIND RESOURCE AREAS
Total Capacity: 600 MW + call option on
additional 600 MW
Estimated Load Factor: 48% (P50)
Location: Rio Grande do Norte, NE Brazil
Grid connection 30km from Complex
All land rights secured
158.7 MW registered for 2012 energy auctions
Environmental license granted
High-quality greenfield assets in northeast Brazil
33
AÇU: A 5.4 GW GREENFIELD GENERATION COMPLEX3.3 GW in gas-fired + 2.1 GW in coal-fired capacity located in Brazil’s load center
Located in one of the most important port-industrial complex in Latin America
Total capacity of 5,400 MW Coal: 2,100 MW
Natural Gas: 3,300 MW
Located 150km from natural gas
accumulations discovered in the Campos Basin
The industries located within the Superport will
benefit from auto production sharing, which at
current prices represents a reduction in energy
costs by approximately 30%34
MPX Sul and MPX Seival: Capacity: 727 MW + 600 MW
Fluidized Coal Bed technology
Lower emissions resulting from the mix burning of coal and wood chips
Seival Mine: Partnership between MPX and Copelmi –
one of Brazil’s largest coal miner
Operating License granted
152 MM tons in proven reserves and 459 MM tons in total resources
Located in a region with limited hydro potential and transmission constraints.
SUL + SEIVAL: 1.3 GW INTEGRATED TO A LIGNITE
MINE Open-pit mine with low mining costs, located adjacent to the power plants, resulting in competitive fuel costs
35
Integrated Project: Power Plant + Deep-Water Port + Desalination Plant
SIC: Central Interconnected System (90% of GDP & 92% of population)
Located 700 Km North of Santiago
Power plant capacity: 6 x 350 MW = 2,100 MW
Desalination plant capacity: 740 l/s
CASTILLA: 2.1 GW IN COAL-FIRED CAPACITY IN
CHILEStrategically located in a region with significant pent-up demand for energy and water
36
FINANCIAL HIGHLIGHTS
8
CONSOLIDATED CASH POSITION
38
Consolidated Cash & Cash Equivalents
* cash withheld by projects transferred to JV (50%) and CCX (100%)
1,325.1
78.8 78.9
686.4
151.9
445.0
610.9 394.5
178.0 14.8
1,113.3
Debt Maturity Profile*
(R$ million)
CONSOLIDATED DEBT
39
Total Consolidated Gross Debt: R$ 5,103.8 million
Short term: R$ 1,662.2 million
R$ 825 million bridge loan to Parnaíba I and R$ 325 million to
Paraníba II => to be paid-off with draw down from long-term financing
expected in 2H2012
With the conclusion of CCX’s spin-off, a balance of R$ 422.5 million in
short-term debt was transferred to CCX
Long term: R$ 3,441.6 million
Average amortization: 14 years
Average cost of debt: 9.4%
Average tenure: 5.6 years
Debt (R$ million)
*Values incorporate principal + capitalized interest + charges and exclude outstanding convertible debentures. ** R$ 258.7 million in 2012 and R$ 1,168.4 million in 2013 of bridge loan to Parnaíba, to be paid-off with draw down from long-term financing expected for 2H12.
Cash & Cash Equivalents
2012 2013** 2014 2015 From 2016 on
1,113.2
541.9
1,288.8
262.0 228.5
2,803.7
For more information, contact:Investor Relations (55 21) 2555-9215
ri.mpx@mpx.com.br
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