ENEVA Corporate Presentation ? November 2014

8/10/2019 ENEVA Corporate Presentation ? November 2014

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November, 2014


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Company Overview

1


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One of the largest private sector power generators in Brazil

ENEVA currently operates 2.4GW in coal and gas-fired power plants (2.9 GW until

Integrated energy platform, with privileged access to natural resources

Only private power generator in Brazil with access to onshore gas

Ongoing restructuring initiatives

- Reorganization of the companys structure and continuous TPPs operation stabiliz

- Strengthening of the companys capital structure

Competitive greenfield portfolio

Licensed coal, gas and wind power generation projects

Company overview


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A Brazilian thermal generator with asset exposure to energy fossil fuels (natural gas

ENEVA at a glance

2.9GW inflation-protected, long-term PPAs

o 2.4GW in operation

o 518MW under construction

Long-term PPAs guarantee R$2.2 billion in annual inflation-adjusted

capacity payments

PPAs provide hedge against commodity price exposure

Integrated gas E&P assets supply up to 8.4MM m/day to ENEVAspower

plants

Competitive portfolio of licensed greenfield wind, coal and gas fired

capacity

Company Description

ENEVA ownership structure

Geographic Footp

Amapari EnergiaENEVA 51% / Eletronorte 49%

Diesel - 23MW

ItaqENEVCoal

Natural GasExploratory

blocksContracted production

of 8.4MM m3/day

Free Float (37.1%)

42.9%20.0%

Other

ENEVA ParticipaesENEVA/E.ON

Joint Venture

50%

50%

BNDES

8.6%

EikeBatista

Controlling Block

28.5%

Note: 1) Ownership structure assumes future ENEVA Participaes (JV ENEVA/E.ON) incorporation, as disclosed on the Material Fact Notice as of July 3, 2013


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Pecm I

Capacity: 720MW

Fix. Rev.: R$600.3MM /year

CVU: R$99/MWh

Auction: A-5/2007

COD: Dec, 2012

Capacity: 360MW

Fix. Rev.: R$317.3MM/year

CVU: R$103/MWh

Auction: A-5/2007

COD: Feb, 2013

Itaqui

Note: (1) Fixed revenues are indexed to inflation index IPCA (Database: Nov, 2013)

Capaci

Fix. Re

CVU: R

Auctio

COD: O

Coal generation portfolio overview1.4 GW of installed capacity in full operation


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Parnaba II2 GE GTs x 168,8MW+ 1 GE ST x 181MW

Parnaba I4 GE GTs x 168,8MW

Parnaba III1 GE GT x 168,8MW

+ 1 Wrtsil GM x 7,3MWParnaba IV

3 Wrtsil GMs x 18MW

Capacity: 56MW

46% efficiency

Fix. Rev:R$54MM/year

CVU: R$69/MWh

Free market

COD: Dec, 2013

Capacity: 178MW

38% efficiency

Fix. Rev: R$98MM/year

CVU: R$160/MWh

Auction: A-5/2008

COD: Dec, 2013

Capacity: 676MW

37% efficiency

Fix. Rev: R$443MM/year

CVU: R$114/MWh

Auction: A-5/2008

COD: Apr, 2013

Parnaba IV Parnaba III Parnaba I

Notes: (1) Bertin project developed by ENEVA; (2) Fixed revenues indexed to infl ation index IPCA (Database: Nov, 2013)

Parnaba Complex overviewA unique case in Brazil power generation sector with 910MW already in operation


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Cambuhy/E.ON investment in Parnaba Gs NaturalSecuring ENEVAs power plants gas supply

In 2H13, ENEVA and E.ON led efforts to rescue PGN from

OGPsjudicial recovery process and secure the gas supply for

ENEVAspower plants

o Cambuhy Investimentos was brought onboard to replace OGP in

the shareholding structure of PGN

o Reinforcing its commitment to Brazil, E.ON agreed to join the

control group of PGN

In Feb, 2014, Cambuhy and E.ON carried out a Capital

Increase at PGN amounting to R$250MM, guaranteeing funds

to cover PGNscapex needs in 2014o Additional R$750MM in LT financing were secured

Cambuhy also entered into a share purchase agreement to

buy OGPsremaining stake at PGN for R$200MM

o This last step of the transaction will be completed as part of

OGPsjudicial recovery process

ENEVA and E.ON have the right for a 2-year term to increase

their joint participation at PGN to 33.3%

After execution of the sale and

18.2%

Parnaba Gs Na

9.1%

Controlling Block (1

18.2%9.1% 36.4%

Controlling Block (63.7%)

Current

Successful rescue plan of PGN

GaBTG 30%

Shareholding Structure


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Only part of Parnaba Basin is yet l icensed an

Declaration of commerciality for 3 gas field

Azul and Gavio Branco

o Santa Vitria discovery in Jan, 2014 (well OGX

New management team led by Pedro Zinner

o New COO Hubert Mainitz (E.ON E&P)

Challenges

o High dispatch scenario increases draw on

analysis on optimization of reservoir managem

o Additional investment may be required to keep

Overview

Parnaba Gs Natural (PGN)3 commercial gas fields fully committed to supply ENEVA power plants


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Operating & Financial Performance of Power

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Operating Costs

Operational Performance (Itaqui)

EBITDA (R$MM)

Availability

Sources: ONS & Company

Ash disposal solution hit Operational costs in the quarter

NOTE: 1) Does not include Depreciation & Amortization.

3Q14

Operating Costs (R$ million) 21.1

Gross Energy Generated (GWh) 679.5

Operating Costs per Gross EnergyGenerated (R$/MWh)

31.1

63%

83% 84%

87%

75% 77%

87%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

3Q14 (Adj) excludes unavailability costs reimbursemen

20.1-1.8 -6.1

100.5

-0.6

112.1

EBITDA 2Q14 NetOperatingRevenues

OperatingCosts

UnavailabilityAdjustments

OperatingExpenses

EBITDA 3Q14

Highest historical availability recorded in

Significant decrease in Operating coimproved availability

Operating revenues positively impact

leading to higher variable revenues

decrease in Energy for resale (-R$22.2M

Operating costs increased by higher

plants higher availability (+R$14.5MM)

reflecting incremental cost for ash dispos


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Operational Performance (Parnaba I)


Reduced availability undermined 3Q14 EBITDA despite lower fuel costs

NOTE: 1) Does not include Depreciation & Amortization.

N.A.

91%

97% 96% 99% 98%

94%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

50.3-35.8

-11.017.8

-0.9

20.3

EBITDA 2Q14 NetOperatingRevenues

OperatingCosts


OperatingExpenses

EBITDA 3Q14

3Q14


Gross Energy Generated (GWh) 1,173


161.8

3Q14 (Adj) excludes unavailability costs adjustment (R

Availability reduction since mid-May 201

by Parnaba Complex

Operating revenues negatively impact

which compromised variable revenues in

Despite lower fuel costs (-R$15.9MM), a

availability, operating costs increased ma

o Unavailability costs (+R$12.1MM, ne

Court ruling, accounted in Sep, 2014)

o Lease cost (+R$13.9MM), due to fixe

contract readjustment

Availability

Operating CostsEBITDA (R$MM)


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Operational Performance (Pecm I)

NOTES: 1) Figures consider 100% of Pecm I; 2) Does not include Depreciation & Amortization.

Revenues and costs compromised by GU01 stator burnout on Aug 25, 2014


72%

41%

66%51%

83%77%

70%

72%

32%

73%

26%

80%71%

50%

N.A.

73%

59%

78%

86%83% 86%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Pecm I UG1 UG2

32.5 -20.3 -7.1

237.0

1.9

244.1

EBITDA 2Q14 Net OperatingRevenues

OperatingCosts


OperatingExpenses

EBITDA 3Q14

UG01 stator burnout on Aug 25, 2014 h

2014, GU02 recorded 2ndbest historical ava

Operating revenues negatively impacted by

which decreased variable revenues in the q


availability, operating costs increased main

o Unavailability costs (+R$14.4MM) an

(+R$3.5MM), both due to higher spot p

o Equipment and machinery repair (+R$4

3Q14 (Adj) excludes unavailability costs reimbursemen

3Q14




27.4


Availability


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N.A. N.A. N.A.

100% 99%

77% 82%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Operational Performance (Parnaba III)

NOTES: 1) Figures consider 100% of Parnaba III; 2) Does not include Depreciation & Amortization.


Recurring negative EBITDA as a result of gas optimization at Parnaba Complex since

-8.4

-1.5

-17.0 18.7

-0.6

-8.8

EBITDA 2Q14 Net OperatingRevenues

OperatingCosts


OperatingExpenses

EBITDA 3Q14 3Q14 (Adj) excludes unavailability costs adjustment (R

3Q14




272.2


Availability reduction since mid-May 201

by Parnaba Complex

Operating revenues negatively impact

which decreased variable revenues in th

offset by higher revenue from surplus ba


availability, Operating costs up main

Unavailability costs (+R$23.4MM), whic

spot prices (+46.3%)

Availability


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Regulatory Update

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Background: Delayed 450MW PPA, with initial supply date as of

Mar 2014

Balanced negotiation with Aneel, preserving the PPA and

mitigating potential high regulatory/contractual penalty

Main agreement conditions:

o Conclude construction by Dec 31, 2014

o 20-year PPAs start date postponed to Jul 1, 2016

o Penalty amounting to R$333MM, to be paid:

In annual installments as of 2022

Through the partial reduction in annual fixed revenues over the

term of PPAs

o Commitment to close the cycle of Parnaba I OCGT in next 5 years

(extendable for +5 years by Aneel), subject to certain conditions

precedent, such as:

Sale of energy in the regulated market

Ability to secure long-term financing for the project

Parnaba II Agreement with Aneel

Pecm II and Parnaba I & III

Regulatory developments (1)Parnaiba II PPA restructuring

Gas optimization of Parnaba Thermo

by Aneel: Parnaba III and 2 gastemporally substituted by Parnaba I

available.

All plants PPAs terms and conditions

gas production, as recommended

development of other gas areas (4.4-4

Parnaba Gas Optimization


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Unavailability charges were being paid on an hourly-based methodology, while PPAs provided for a 60-month rolling

In Jan 2014 and Sep 2014, Federal Court ruled in favor of ENEVA, in line with PPAs terms and conditions

All operating plants currently protected against hourly-based unavailability charges

Unavailability costs paid amount to +R$315MM1, 2

In Sep 2014, Aneel granted to Pecm I and Itaqui reimbursement of unavailability charges overpayment. On No

received approx. R$336MM

Pecm II, Parnaba I and Parnaba III will request to Aneel to be also reimbursed for overpayment

Plant 100% Ownership adjusted

Itaqui R$100.6MM R$100.6MM

Pecm I R$247.4MM R$123.7MM

Pecm II R$61.0MM R$30.5MM

Parnaba I R$61.9MM R$43.3MM

Parnaba III R$39.6MM R$20.8MM

Total R$510.5MM R$318.9MM

Regulatory developments (2)Unavailability charges (ADOMP) now calculated and paid as provided for in PPAs

NOTES: 1) Consider hourly-based methodology for unavailability charges until Aug 2014; 2) Does not consider amounts paid since Federal Court decisions.


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Financial Stabilization Update

4


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May 12, 2014 2Q14 / 3Q14

Signing of term-sheet with banks for:

R$1.5Bi capital increase

o Phase I:R$316.5MM cash-only; and

o Phase II:R$1.5Bi minus funds raised on

Phase I (cash or asset capitalization or

debt conversion)

HoldCo. Debt renegotiation

o R$600-700MM debt drop-down to

ENEVAssubsidiaries/projects

o 5-year maturity extension of remaining

HoldCo. debt (approx. R$1.5Bi), with

amortization starting only in Jun, 2017

Sale of Pecm II

o Backstop guarantee by E.ON of up to

R$400MM for 50% of the asset

R$100MM short-term bridge financingto Pecm II disbursed

Capital Increase Phase I concluded,

raising R$174MM (R$120MM by E.ON)

Shareholding Structure after CI I

Pecm II partial sale by executing

E.ON backstop guarantee (R$408MM)

Successful regulatory outcomes

o Parnaba II Agreement with Aneel

o All plants protected from hourly-based

unavailability charges

42.9%20.0%

FreeFloat

EikeBatista

Controlling Block

37.1%

Financial Stabilization on course

4Q14

R$300MM long-tPecm II approv

Launch of Capita

comprising of

o Cash;

o Debt conversio

o Asset capitaliza

Execution/effecdown/roll over


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Brazilian Power Market and Greenfield Por

5

l


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Southeast Reservo

~70% of total storage ca

Source: ANEEL

Brazils Generation Capacity: 136 GW

Breakdown by source April, 2014

Brazil is highly dependent on hydro generation with increasingly faster depletion of re

Brazilian energy matrix

63,5%10,5%

2,5%

1,5%

2,2%

19,8%

Hydro Gas Coal Nuclear Wind Others

67%

75%

38%

43%39%

40% 43% 42% 43% 40%

3

20%

30%

40%

50%

60%

70%

80%

90%

Jan Feb Mar Apr May Jun Jul A

Average 2007-2011 2012


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ENEVA fi ld tf li


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ParnabaComplex

Integrated to natural gas resources

Located in a tax-advantaged region

Ventos WindComplex

Located in one Brazilsbest wind resource areas

Attractive load factor

Just 30km from grid connection

Land ownership assured

Au(Coal + Gas)

Located at a port with a regasification terminal buildlicense

150km from Campos Basin natural gas accumulations

Environmental licensed to both coal and gas operations

Sul & Seival Integrated to the Seival Mine (proven reserves: 152 M ton)

Low operation costs

Power

supply-demand

unbalanced

Hydropower

concentrated

matrix

Spot prices at

historical highs

Demand for base-

load generation2 3 4 51

Sul727 MW

ParnabaComplex

2,166 MW

Se600

Solar 1 MW

ENEVAs greenfield portfolioAttractive licensed greenfield projects in various development stages

P b I Cl i f th l (1)


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Part of Parnaba II Agreement settled with Aneel in Sep, 2014

Bottoming of open cycle gas turbines from Parnaiba I powerplant provides extra 360MW

Competitive project as no additional gas needed

Installation Environmental License issued

Plug and Play: 500kV electrical substation and water supply

already built

Known technology, original design of Parnaiba Generation

Complex done to enable modular expansion, leading toefficient implementation and operation

o ENEVA recent experience in Parnaba II combined-cycle plant at

neighboring site

Cost sharing efficiency (O&M, administrative, HSSE, spare

parts etc.) with Parnaba Generation Complex make the project

even more competitive

Highlights Parnaba Site

Bottoming #1

Note:(1) To enable expansion additional fuel mainly for PPA/contract harmonization and internal consumption

Parnaba I: Closing of the cycle (1)Highly competitive expansion to existing site

Parnaba I: Closing of the cycle (2)


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Net power output: 352,8 MW

Plantsupside efficiency: 51% (previously 37%)

Additional gas consumption: zero

Contractor: TBD (first phase performed by Duro Felguera)

Implementation schedule: 36 months

CAPEX: approx. R$1.75 billion

Target capital structure: 70/30, with BNDES financing

Target IRR: 15% real

Main equipment/delivery time

o Steam Turbine + Generator: 18 months

o Heat Recovery Steam Generator (boilers): 14 months

o Cooling Tower: 13 months

o Pumps (feed water, condensate, cooling water): 13 months

New equipment

Parnaba I: Closing of the cycle (2)Highly competitive expansion to existing site

Disclaimer


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The material that follows is a presentation of general background information about ENEVA S.A. and its subsidiaries (collectively, ENE

the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty,

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 ENEVA that reflect the current view

Company and its management with respect to its performance, business and future events. Forward looking statements include, with

that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like may, p

expect, envisages, will likely result, or any other words or phrases of similar meaning. Such statements are subject to a numb

assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, object

and intentions expressed in this presentation. In no event, neither the Company, any of its affiliates, directors, officers, agents o

placement agents shall be liable before any third party (including investors) for any investment or business decision made or ac

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 shou

in this regard.

The market and competitive position data, including market forecasts, used throughout this presentation were obtained from intern

publicly available information and industry publications. Although we have no reason to believe that any of this information or these

material respect, we have not independently verified the competitive position, market share, market size, market growth or other dat

by industry or other publications. ENEVA, the placement agents and the underwriters do not make any representation as to the accurac

This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or i

written consent.

Disclaimer


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ENEVA Corporate Presentation ? November 2014