Attached files
| file | filename |
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| EX-2.1 - EX-2.1 - UIL HOLDINGS CORP | d687617dex21.htm |
| EX-99.1 - EX-99.1 - UIL HOLDINGS CORP | d687617dex991.htm |
| 8-K - 8-K - UIL HOLDINGS CORP | d687617d8k.htm |
 Acquisition of Philadelphia Gas
Works Operations
Investor Presentation
March 3, 2014
Exhibit 99.2 |
 Note To Investors
2
Visit our website at www.UIL.com
James Torgerson
President and Chief Executive Officer
Richard Nicholas
Executive Vice President and Chief Financial Officer
Certain statements contained herein, regarding matters that are not
historical facts, are forward-looking statements (as defined in the
Private Securities Litigation Reform Act of 1995). These include
statements regarding management’s intentions, plans, beliefs,
expectations or forecasts for the future. Such forward-looking
statements are based on UIL Holdings’ expectations and involve risks
and uncertainties; consequently, actual results may differ materially from
those expressed or implied in the statements. Such risks and
uncertainties include, but are not limited to, general economic
conditions, conditions in the debt and equity markets (particularly as
they affect the terms on which UIL Holdings and its subsidiaries can issue
equity securities and incur borrowings in connection with the
acquisition of the PGW Operations), legislative and regulatory changes, changes in demand for electricity, gas and other products
and services, unanticipated weather conditions, changes in accounting
principles, policies or guidelines, and other economic,
competitive, governmental, and technological factors affecting the
operations, markets, products and services of UIL Holdings’
subsidiaries, The United Illuminating Company, The Southern Connecticut
Gas Company, Connecticut Natural Gas Corporation and The Berkshire
Gas Company as well as the PGW Operations (including UIL Holdings’ ability to complete the announced
acquisition of those operations and achieve related financial, operational
and other benefits). The foregoing and other factors are discussed
and should be reviewed in our most recent Annual Report on Form 10-K and other subsequent filings with the Securities
and Exchange Commission. Forward-looking statements included herein
speak only as of the date hereof and we undertake no obligation to
revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events or circumstances. |
 Transaction Details
3
Description
Acquisition of assets and certain liabilities of Philadelphia Gas Works
(“PGW Operations”)
Purchase
Price
Financing
Plan
Selected
Approvals &
Timing
Philadelphia City Council (Late Spring / Summer 2014)
Pennsylvania Public Utility Commission (Q1 2015)
No shareowner vote required
Expected closing by Q1 2015
Total
consideration
of
$1.86
billion;
PGW
Operations
acquired
on
a
cash-free
and debt-free basis
UIL intends to issue long-term debt and equity in amounts consistent
with maintaining investment grade credit ratings to permanently
fund the transaction at close
UIL has secured a $1.90 billion fully committed facility to support the
transaction |
 Compelling Opportunity
Builds on core strategy of owning regulated businesses with opportunity
to invest in growth
»
UIL has proven experience integrating, operating, and managing regulated
distribution systems with similar demographics
»
Opportunities for infrastructure investment
»
Provides regulatory diversification
Immediate cash flow accretion; initially earnings neutral, long-term
earnings accretion Significantly increases exposure to natural
gas »
More than doubles UIL’s gas customer base
»
Proximity to abundant regional supply (Marcellus & Utica)
Ability to unlock full potential of PGW Operations under traditional
utility model »
Opportunity to accelerate needed infrastructure investments
»
Potential growth opportunities related to LNG operations
Increased scale strengthens business profile and improved
profitability »
Leverage business expertise, processes and IT infrastructure
»
Increased financial flexibility and access to capital markets
»
Maintains UIL investment-grade rating
4 |
 Philadelphia Gas Works Overview
Founded in February 1836, came under City ownership in 1841
Since December 1972, has been operated and managed by the Philadelphia
Facilities Management Corporation, a City-created and
controlled not-for-profit corporation Nation’s largest
municipally-owned gas utility; manages a distribution system of approximately 6,000 miles of gas
mains and service pipes
Serves the entire 129 square mile area contained within the boundaries of
Philadelphia and is the distributor and principal supplier of
natural gas in the City Approximately 500,000 customers
Rates and charges are regulated by the Public Utility Commission
of the Commonwealth of Pennsylvania
Owns two LNG facilities, one at the Richmond Plant and one at the Passyunk
Plant 5
PWG Positioning & Service Area
PGW Operations Service Area Detail & Infrastructure
See Insert
City Detail |
 Committed to Building Stronger PGW
Operations
UIL brings a proven operating track record to Philadelphia
»
Well known for investing in its local distribution companies to enhance
system reliability »
Leverages best practices across its utilities to deliver superior
customer service »
Committed to energy efficiency programs, environmental stewardship and
safety »
Edison
Electric
Institute
award
winner:
Emergency
Response
Award
for
restoration
(2011
&
2012)
and Emergency Response Award for assistance (2012)
Dedicated
to
serving
PGW
Operations’
customers
»
Natural gas base rate freeze through 2017
»
PGW
Operations’
headquarters
will
remain
in
Philadelphia
»
UIL dual corporate headquarters (New Haven and Philadelphia)
»
No planned changes to six Customer Service Centers locations in
Philadelphia »
Potential to accelerate ongoing gas main replacement project
A strong, local employer
»
Honoring existing PGW Operations collective bargaining agreement
»
Offering employment to all existing PGW employees
A valued corporate partner
»
Increase
PGW
Operations’
level
of
community
support
»
Preserve local assistance programs available to customers requiring
additional support 6 |
 Combined Business Overview
7
CT
MA
NY
RI
NJ
PA
NH
Pro Forma Service Territory
(1)
Pro Forma Statistics
Customers
Net PP&E
(1)
UIL Holdings Corporation subsidiary-level net PP&E as of
9/30/2013 and PGW Operations net PP&E as of 8/31/2013.
Map Legend
Current Customers
Net
PP&E
(1)
317,000
$1,744 MM
188,000
$521 MM
169,000
$451 MM
39,000
$126 MM
500,000
$1,155 MM
Total:
1,213,000
$3,997 MM |
 Experienced LDC Operator
UIL
has
experience
operating
and
managing
regulated
distribution
systems
with
similar
demographics
Pennsylvania currently the nation’s third largest natural gas
producer, behind Texas and Louisiana Supports favorable supply
dynamics for natural gas distributors and lower cost base LNG
emerging
as
an
alternative
to
fuel
oil/diesel
for
oil
&
gas,
marine,
mining
and
rail
industries
~1.2 million customers
8
(1)
“Asset Base”
defined as net PP&E.
Pro Forma Customer Mix
Pro Forma Asset Base: Gas vs. Electric
(1)
Status Quo Asset Base
Pro Forma Asset Base
Development of the Marcellus and Utica shales has fueled rapid growth in
Pennsylvania gas production
PGW Operations expected to increase UIL pro forma consolidated gas LDC
asset base to approximately 56%, vs. 39% currently
UIL has demonstrated success in integrating gas LDC operations
|
 Financial Considerations
Immediate operating and free cash flow accretion
Long-term EPS accretion
Initially earnings neutral and long-term earnings accretive to
UIL Target efficiencies from combining existing systems, improved
capital allocation, scale benefits related to fuel costs and/or
other products and services UIL Holdings currently has an undrawn
$400 MM committed, credit agreement that extends to November 30,
2016 Expect to replace existing credit agreement with new, larger
5-year facility upon transaction close Ability to meet the
existing liquidity needs of the Company as well as incremental liquidity
requirements of the PGW Operations
Moody's recently upgraded UIL Holdings and subsidiaries by one notch;
outlooks are stable UIL to Baa2 from Baa3
UI to Baa1 from Baa2
CNG to A3 from Baa1
SCG to Baa1 from Baa2
BGC to Baa1 from Baa2
9 |
 Substantial Transaction Benefits
Growth
Opportunities
Opportunities under UIL platform to drive long-term growth through
infrastructure investments
Diversification
Increased operational diversification improves business profile and
profitability
LDC Platform
Leverage business expertise, processes and IT / back-office
infrastructure Regulatory
Improves regulatory diversification
Attractive
Financial Profile
Increases financial flexibility and scale while maintaining an
investment- grade credit rating
10 |
 Questions |