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transcript
Rio de Janeiro | March, 2012
2011 Earnings Release
DISCLAIMER
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.
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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.
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MPX/E.ON partnership: accelerated growth to build a more sizable and profitable power business in
Brazil.
Competitive advantage in gas-fired power generation confirmed: long-term PPAs secured for an
additional 1,553 MW. Total contracted capacity reached 3,000 MW.
Declaration of commerciality for 2 gas fields in the Parnaíba Basin: available capacity expected to reach
6 million m3 per day in 2013. 3 rigs currently operating in the Basin to identify additional potential.
Funding for growth secured:
R$1.4 billion raised through convertible debentures
R$ 1.0 billion capital increase as part of the E.ON transaction
R$ 825 million bridge-loan + R$ 1.6 billion long-term financing for TPP Parnaíba
R$ 600 million bridge-loan for gas production development
Significant progress in Colombia: over 30,000 meters drilled, confirming existence of multiple coal
seams, up to 14 m thick:
Pre-feasibility study on San Juan mine expected in 1H12
2011 HIGHLIGHTS & SUBSEQUENT EVENTS
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The boilers first firing has already taken place;
Plant in commissioning phase: all peripheral systems
tested and are ready to support testing of main
components and systems (boiler, steam turbine and
electric generator);
Electrical system and connection to CHESF’s electrical
substation fully operational;
570,000 tons of coal unloaded from 5 ships: full fuel
supply secured;
In January 2012, ANEEL approved a postponement of 60
days for the commercial operation date (COD) of Pecém I
first turbine (360 MW) and 150 days for the second one
(360 MW).
TPP PECÉM I
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TPP PECÉM I – MARCH 2012
Main equipments in final stage of construction and
assembly: (i) Welding of pressure parts of boiler finalized,
(ii) coverage of metal structure in turbine building and
assembly of surface condenser near completion;
Main metal structure, hoppers and bag filter panels of Flue
Gas Desulfurizer (FGD) are being assembled;
Coal yard and final coal silo supply system under
construction.
TPP PECÉM II
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TPP PECÉM II – MARCH 2012
Hot commissioning stage in process and first firing of
boiler carried out;
Power substation and transmission line, intake water
pipeline and coal conveyor belt finalized;
Performance tests initiated;
In January 2012, ANEEL approved a postponement of 90
days for the COD.
TPP ITAQUI
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TPP ITAQUI – MARCH 2012
1,553 MW contracted in 2011
EPC contracts (Engineering, Procurement and Construction) signed
with Spanish companies Duro Felguera and Initec Energia S.A to
build Phases I and II, respectively
Timely equipment supply secured by partnership with GE
• 3 turbines and 3 electrical generators have already been shipped to
Brazil and a 4th is currently undergoing testing
Implementation initiated and site preparation advanced
Installation license granted for further 2.2 GW
R$ 825 million bridge-loan disbursed to fund Parnaíba – Phase I (R$
600 million in December 2011)
TPP PARNAÍBA
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TPP PARNAÍBA– 3D PERSPECTIVE
On schedule to start production at Gavião Real and Gavião
Azul in 2H2012
Estimated available capacity in 2013 of 6 MM m³/day
5 development wells concluded and 1 in progress
Construction of Gas Treatment Unit initiated
Exploratory campaign already identified 4 accumulations
2 drill-rigs in operation and 3 seismic crews in the region
3rd onshore rig already being mobilized
R$ 600 million bridge-loan to fund production development
disbursed in January 2012.
NATURAL GAS E&P AT PARNAÍBA BASIN
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27,714 m completed in 2011 and an additional 10,536 m
since beginning of 2012
38 positive boreholes drilled in 2011: multiple coal seams,
including seams of up to 14 meters thick
Pre-feasibility Study on San Juan mine expected in 1H2012
Geological model for certification process finalized by AMEC Americas
15 engineers from Golder Associates working on mine planning and
reserve certification
Drilling campaign expanded southwards to assess full
potential concessions in Southern Guajira
6 drill rigs operating on 24/7 basis
MPX COLOMBIA (CCX) - DRILLING
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DRILLING MPX COLOMBIA
Process of public consultation on licensing for port formally initiated in Feb, 2012
Meeting with 4 leading native communities schedule to May, 2012
5 teams currently negotiating rights of ways in railroad and mine areas
Licensing for San Juan underground mine will be initiated upon completion of the
mine plan and reserves certification in 1H2012
MPX COLOMBIA (CCX) – LICENSING
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Creation one of the largest private energy solutions provider in Brazil, with
the goal of reaching 20 GW
E.ON will acquire a 10% stake at MPX through a R$1.0 billion capital
increase
Potential financing by E.ON of MPX’s equity proportion at the JV to
accelerate the implementation of its pipeline of projects
Colombian coal assets will be spun-off and become an independent
company, listed at the BM&FBovespa Novo Mercado, with a cash position of
up to R$ 814 million
MPX/E.ON JOINT-VENTURE
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Eike Batista Free Float
MPX
Current Thermal Power
Pipeline
Power Generation(with PPA)
Supply & Trading
E.ON
MPX- E.ON JV50/50
Current Renewable
Pipeline
Natural Resources
~10.0%
100% 100%
50%
50%
100%100%50%
50% NewGeneration Projects
100%
NEW MPX OWNERSHIP STRUCTURE AFTER CCX SPIN-OFF
Energia Pecém (365 MW)Pecém II (365 MW)Itaqui(365 MW)TPP Parnaíba (1,087 MW)Amapari(12 MW)
Seival
OGX Maranhão
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TPP Parnaíba (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)
MPX Power and Fuel Trading
Solar Tauá (1 MW)
PARTNERSHIP WITH E.ON
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Signing of definitive documents expected to end of Mar, 2012
Organizational structure of JV defined
Estimated timetable of the transaction:
D + 0
D + 20
D + 85
Extraordinary General Shareholders’
Meeting
Signing of Definitive
Documents
Conclusion of MPX Capital
Increase
Debenture HoldersGeneral Meeting
D + 30
D + 80
Conclusion of CCX Spin-Off - listed at the BM&FBOVESPANovo Mercado
MPX Holding SG&A
FINANCIAL PERFORMANCE
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Personnel and management: 21.3% decrease as
compared to 2010
(-R$ 19.6 million) - Reduced payroll expenses
resulting from the transfer of employees to the
Company’s projects.
(-R$13.4 million) - Lower expenses related to
outstanding stock options plans.
Operating expenses2011 2010 % Var
(In R$ thousands)
Personnel and managers
(92,592) (117,583) -21.3%
Outsourced services (46,683) (33,679) 38.6%
Leases and Rentals (7,803) (7,187) 8.6%
Other expenses (8,107) (8,527) -4.9%
Total (155,185) (166,976) -7.1%
Depreciation and amortization
(1,120) (66) 68.2%
Total (156,305) (167,642) -6.8%
Consolidated SG&A
FINANCIAL PERFORMANCE
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Operating expenses2011 2010 % Var
(In R$ thousands)
Personnel and managers
(148,690) (131,278) 13.3%
Outsourced services (93,516) (66,694) 40.2%
Leases and Rentals (13,856) (11,263) 23.0%
Other expenses (12,053) (10,010) 20.4%
Total (274,576) (224,150) 22.5%
Depreciation and amortization
(3,358) (2,017) 66.5%
Total (277,934) (226,167) 22.9%
Increase in the number of employees at Parnaíba e Castilla, following
recent advances in the projects, and at Itaqui, given the approach of
start-up.
Colombia (+R$ 9.4 million): engineering, geology, environmental
and legal consultancies.
Chile (+R$ 6.5 million): environmental, legal and communication
consultancies.
Parnaíba (+ R$ 4.4 million): start of construction works.
Consolidated Net Financial Results (as December, 2011)
FINANCIAL PERFORMANCE
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Increased financial expenses as a result of the impact of
the outstanding convertible debentures (R$ 115.9 million):
Fair Value: R$ 62.0 million
Interest: R$ 50.8 million
Cost: R$ 3.0 million
Financial Result
(In R$ thousands) 2011 2010 % Var
Derivatives (Hedge) (62,197) (98,272) -36.7%
Fair Value - Debentures (62,003) - -
Interest - Debentures (50,857) - -
Cost - Debentures (3,018) - -
Other financial expenses (24,310) 55,527 -146.3%
Net Financial Result (202,385) (45,745) 342.4%
Debt Maturity Profile*
(R$ million)
DEBT (as of Dec 31, 2011)
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Total Consolidated Gross Debt: R$ 4,359.4 million
Short term: R$ 1,020.2 million
R$ 600 million bridge loan to Parnaíba => to be paid-off
with draw down from long-term financing expected for
2H2012
R$ 279.7 million allocated at MPX Colombia => to be spun-
off as part of the E.ON transaction
Long term: R$ 3,339.2 million
Average amortization: 14 years
Average cost of debt: 8.9%
Average tenure: 6.7 years
Debt (R$ million)
1,020.223%
3,339.277%
Short Term Long Term
Cash & Cash Equivalents
2012 2013 2014 2015 and until the maturity
1,451.9
672.9910.8
242.0
2516.0
From 2015 on
Capital Expenditures in Power Generation
FINANCIAL PERFORMANCE
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Projects2010 2011 4Q11
(R$ milliion)
Pecém I 455.0 295.5 78.8
Pecém II 406.4 462.4 80.3
Itaqui 615.3 571.8 147.2
Parnaíba – Phase I 6.7 423.1 120.5
Parnaíba – Phase II - 22.4 22.4
Total 1,483.5 1,775.2 449.2
In 2011, MPX invested a total of R$ 1,775.2
million (R$ 449.2 million in 4Q11) in the
construction of TPPs.
These values exclude Capitalized Interest, which
amounted to R$ R$ 480.2 million on December 31,
2011.
Including capital expenditures in Colombia, the total
investment in 2011 would amount to R$ 2,091.3
million
CAPITAL MARKETS
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Best performing stock in the
Bovespa in 2011: up 90.2%
Daily average traded volume in
2011: R$ 15.2 million -> 30%
higher than in 2010
56,754
R$ 24.50
R$ 46.50
32,613
60,0
80,0
100,0
120,0
140,0
160,0
180,0
200,0
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MPXE3(R$) Performance 201112/31/2010 = 100
IBOV MPXE3 IEEX