29
Corporate Presentation March, 2015
Corporate Presentation March, 2015
The material that follows is a presentation of general background information about ENEVA S.A. and its subsidiaries (collectively, “ENEVA” 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 ENEVA 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. ENEVA, 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 ENEVA’s prior
written consent.
Disclaimer
ENEVA Overview
1
A Brazilian thermal generator with asset exposure to energy fossil fuels (natural gas and coal)
ENEVA at a Glance
2.9GW inflation-protected long-term PPAs
Long-term PPAs guarantee R$2.3 billion in annual inflation-
adjusted capacity payments
PPAs provide hedge against commodity price exposure
Integrated gas E&P assets supply ENEVA’s power plants
Competitive portfolio of licensed greenfield wind, coal and gas
fired capacity
Company Description
4
ENEVA ownership structure
Geographic Footprint
Parnaíba I ENEVA 70% / Petra 30% Natural Gas - 676MW
Amapari Energia ENEVA 51% / Eletronorte 49% Diesel - 23MW
Itaqui ENEVA 100% Coal - 360MW
Natural Gas Exploratory
blocks Operated by PGN
(Cambuhy PE, ENEVA and E.ON partnership)
Contracted production of 8.4MM m3/day
Pecém I¹ ENEVA 50% / EDP 50% Coal - 720MW
Pecém II ENEVA 50% / E.ON 50% Coal - 365MW
Parnaíba II ENEVA 100% Natural Gas - 518MW
Parnaíba III² ENEVA 70% / Petra 30%
Natural Gas - 176MW
Parnaíba IV² ENEVA 70% / Petra 30% Natural Gas - 56MW
Free Float (37.1%)
42.9% 20.0%
Other
ENEVA Participações ENEVA/E.ON Joint Venture
50%
50%
BNDES
8.6%
Eike Batista
Controlling Block
28.5%
Solar Tauá ENEVA 100% Solar - 1MW
NOTES: (1) Sale agreement of ENEVA’s interest for EDP executed on Dec 2014; (2) Ownership structure assumes future merger of ENEVA Participações
Operations
2
Coal Fleet Itaqui, Pecém I and Pecém II
2.1
Pecém I¹
Capacity: 720MW
Fx. Rev.²: R$637.0MM /year
CVU: R$107/MWh
Auction: A-5/2007
COD: Dec 2012
Capacity: 360MW
Fx. Rev.²: R$336.7MM/year
CVU: R$111/MWh
Auction: A-5/2007
COD: Feb 2013
Itaqui
Capacity: 365MW
Fx. Rev.²: R$302.1MM /year
CVU: R$116/MWh
Auction: A-5/2008
COD: Oct 2013
Pecém II
Coal Generation Portfolio Overview 1.4 GW of installed capacity in full operation
7 NOTES: (1) Sale agreement of ENEVA’s interest for EDP executed on Dec 2014; (2) Fixed revenues are indexed to inflation index – IPCA (Database: Nov 2014)
Availability¹
Technical improvements and additional spares totaling up
to an estimated R$40MM will allow for reduced downtime
EBITDA (R$MM)
Itaqui
8
3Q14 EBITDA hit by reimbursement of past
unavailability cost overpayment(+R$100.5MM)
NOTE: (1) Based on Company and ONS data
-95,3
-31,3
5,9 24,2
36,1 20,1
112,1
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
80.2%
80.5%
82.7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Feb-1
3
Mar-
13
Apr-
13
May-1
3
Jun-1
3
Jul-
13
Aug-1
3
Sep-1
3
Oct-
13
Nov-1
3
Dec-1
3
Jan-1
4
Feb-1
4
Mar-
14
Apr-
14
May-1
4
Jun-1
4
Jul-
14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan-1
5
Feb-1
5Availability Historical Availab. 1 year Availab. 6 months Availab.
Auction 95%
Availability¹
Technical improvements and additional spares totaling up
to an estimated R$30MM will allow for reduced downtime
EBITDA (R$MM)
Pecém I
9
3Q14 EBITDA hit by reimbursement of past
unavailability cost overpayment(+R$237.0MM)
NOTE: (1) Based on Company and ONS data
-151,2 -143,4
-63,8
40,1 61,7 48,8
32,5
244,1
4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
68,1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Jan-1
3
Feb-1
3
Mar-
13
Apr-
13
May-1
3
Jun-1
3
Jul-
13
Aug-1
3
Sep-1
3
Oct-
13
Nov-1
3
Dec-1
3
Jan-1
4
Feb-1
4
Mar-
14
Apr-
14
May-1
4
Jun-1
4
Jul-
14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan-1
5
Feb-1
5
Unit 1 Unit 2 Historical Availab.
Auction 90%
Availability¹
Improved commissioning resulted in more stable operations, incorporating lessons learned from other plants
Monitoring of auxiliary equipment to keep good performance
EBITDA (R$MM)
Pecém II
10 NOTE: (1) Based on Company and ONS data
55,4
46,3
33,5
45,8
4Q13 1Q14 2Q14 3Q14
91,5%
92,7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Availability Historical Availab. 6 months Availab.
Auction 95%
Natural Gas-fired Assets Parnaíba I, Parnaíba III and Parnaíba IV
2.2
Gas Treatment
Unit
Parnaíba II 2 GE GTs x 168,8MW + 1 GE ST x 181MW
Parnaíba I 4 GE GTs x 168,8MW
Parnaíba III 1 GE GT x 168,8MW
+ 1 Wärtsilä GM x 7,3MW Parnaíba IV
3 Wärtsilä 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. Rev²: R$104.9MM/year
CVU: R$171/MWh
Auction: A-5/2008
COD: Dec 2013
Capacity: 676MW
37% efficiency
Fix. Rev²: R$472.6MM/year
CVU: R$109/MWh
Auction: A-5/2008
COD: Apr 2013
Capacity: 518MW
51% efficiency
Fix. Rev²: R$398.3MM/year
CVU: R$63/MWh
Auction: A-3/2011
Op. in substitution: Dec 2014
Parnaíba IV Parnaíba III¹ Parnaíba I¹ Parnaíba II
Notes: (1) Bertin project developed by ENEVA; (2) Fixed revenues indexed to inflation index – IPCA (Database: Nov 2014)
Parnaíba Complex overview A unique case in Brazil power generation sector with 910MW already in operation
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93,7% 91,6% 86,1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Feb-1
3
Mar-
13
Apr-
13
May-1
3
Jun-1
3
Jul-
13
Aug-1
3
Sep-1
3
Oct-
13
Nov-1
3
Dec-1
3
Jan-1
4
Feb-1
4
Mar-
14
Apr-
14
May-1
4
Jun-1
4
Jul-
14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan-1
5
Feb-1
5
Availability Historical Availab.
1 year Availab. 6 months Availab.
Auction 95%
Availability¹
All gas turbines in continuous operation for over 10,000 hours with high availability
First inspections on all gas turbines and generators executed by GE with no major findings
EBITDA (R$MM)
Parnaíba I
13 NOTE: (1) Based on Company and ONS data *As a result of gas optimization of Parnaíba Thermoelectric Complex, Parnaíba II operates partially to substitute Parnaíba I since Dec / 14.
28,2
58,8
32,0
44,8
50,3
20,3
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
*
Availability¹ EBITDA (R$MM)
Parnaíba III
14 NOTE: (1) Based on Company and ONS data
Availability reduction as of May 2014 as a result of natural gas optimization run by PGN
Despite availability reduction, lower financial impact due to highest CVU among Parnaíba Complex TPPs
1,1
14,4
-8,4
1Q13 2Q13 3Q13
87,1%
82,8%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Availability Historical Availab. 6 months Availab.
Auction 95%
Availability¹
Ongoing project to improve the reliability of Parnaíba IV Wärtsilä engines
EBITDA (R$MM)
Parnaíba IV
15 NOTE: (1) Based on Company and ONS data
2,6
10,3
-10,9
15,4
1Q13 2Q13 3Q13 4Q13
82,7% 81,6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Availability Historical Availab. 6 months Availab.
Recent Highlights
3
Background: Delayed 450MWa PPA, with initial supply date as of
Mar 2014
Balanced negotiation with Aneel, preserving the PPA and mitigating
potential high regulatory/contractual penalty
Final terms and conditions:
o 20-year PPAs start date postponed to Jul 1, 2016
o R$334MM, to be paid as tariff contribution
In installments starting in 2022
- 2022 to 2025: R$13.0MM/year
- 2026 to 2036: R$25.6MM/year
Through the partial reduction in annual fixed revenues over PPAs’ term
o Commitment to close the cycle of Parnaíba 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
Parnaíba II Final Agreement with Aneel
Pecém II and Parnaíba I & III
Regulatory Developments (1) Parnaiba II PPA restructuring
17
Gas optimization of Parnaíba Thermoelectric Complex approved by
Aneel: Parnaíba I substituted by Parnaíba II, as soon as it becomes
available.
All plants PPAs terms and conditions fulfilled with a restricted gas
production, as recommended by ANP until further development of
other gas areas (4.4-4.8 million m³/day)
Parnaíba Gas Optimization
Unavailability charges were being paid on an hourly-based methodology, while PPAs provided for a 60-month rolling average
In January 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 Pecém I and Itaqui reimbursement of unavailability charges overpayment. On Nov 2014, these plants received
approx. R$336MM
Pecém II, Parnaíba I and Parnaíba III will request to Aneel to be also reimbursed for overpayment
Plant 100% Ownership adjusted
Itaqui R$100.6MM R$100.6MM
Pecém I R$247.4MM R$123.7MM
Pecém II R$61.0MM R$30.5MM
Parnaíba I R$61.9MM R$43.3MM
Parnaíba 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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Highlight to Personnel expenses reduction in the last 12 months (-15.8%)
o Headcount drop (-24.5%)
o Streamlining of organization structure
Ongoing HoldCo expenses cut and optimization program
o R$80MM/year targeted until 2015 year-end
o Further reductions in IT and consulting costs over the coming months
HoldCo Operational Expenses1/2/3
NOTES: (1) Does not include Depreciation & Amortization; (2) Does not include stock options cost; (3) Holding comprises ENEVA and ENEVA Participações
HoldCo Headcount3
HoldCo Expenses Reduction and Optimization Plan Ongoing Consistent reduction of costs in recent quarters
19
33.2
27.9
29.8
1Q13 2Q13 3Q13
159
147 148
1Q13 2Q13 3Q13
Non-solicited proposal from EDP to acquire ENEVA interest in Pecém I
Proceedings: R$300.0MM
Involved assets
o ENEVA’s shares, corresponding to 50% of Pecém I share capital on the transaction signing date
o ENEVA credit conversion (R$409.9MM), comprised of:
- Intercompany loan: R$178MM
- Coal supply contract: R$208MM
- Electric energy contract: R$23.9MM
Release of ENEVA of future contributions in the asset
o Outstanding CAPEX and investments on operational stabilization plan; and
o Debt service
Next steps
o Brazilian anti-trust agency (CADE) approval; and
o ENEVA’s lenders approval, considering JR requested on Dec 2014
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Pecém I Sale Immediate liquidity to move forward in challenging times
Judicial Recovery Request
4
Efforts made by officers of the Company in the last months
Judicial request reasons
o No renewal of agreement to suspend amortization and payment of interest on financial transactions, expired on Nov 2014
o No agreement with financial institutions to implement a stabilization plan, comprised of:
- Capital structure strengthening; and
- Debt reprofiling
Involved assets
o ENEVA S.A.
o ENEVA Participações S.A.
o None of operating subsidiaries were part of JR request
Judicial request approved by Court and confirmed by shareholders on Dec 2014
22
Judicial Recovery Request (1) Necessary protection to continue operations
Private capital increase: R$133MM (net proceedings)
Partial sale of Pecém II: R$408MM
Adjustment on calculation and payment of plants unavailability (ADOMP)
Unavailability cost overpayments reimbursement for Pecém I and Itaqui: R$360MM
Agreement with Aneel to preserve Parnaíba II PPAs
Sale of ENEVA interest in Pecém I: R$300MM
Significant improvement in power plants availability
Significant reduction in HoldCo expenses
Judicial Recovery Request (2) Judicial Recovery Plan Filed in Feb-12
Recovery Plan Purposes
o Financial debt restructure; and
o Balance the capital structure
Plan Terms and Conditions
o Full payment to each creditor the amount of up to R$250,000;
o Global reduction of 40% to 65% of the credits held by creditors through the capitalization of credits and/or the waiver of credits and
subsequent re-profiling of the remaining balance;
o Launch of a capital increase, in the estimated amount of up to R$3 billion, at the issue price of R$0.15/share, comprised of:
(a) capitalization of credits held by creditors;
(b) contribution of assets by shareholders, creditors and investors; and
(c) contribution in cash.
o The steps of the Plan related to the capital increase are subject to a shareholder’s meeting resolution.
Brazilian Power Market and Greenfield Portfolio
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Southeast Reservoirs
~70% of total storage capacity
Source: ANEEL
Brazil’s Generation Capacity: 134GW
Breakdown by source – March 2015
Brazil is highly dependent on hydro generation with increasingly faster depletion of reservoirs
Brazilian Energy Matrix
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67% 56%
75%
31% 38%
43% 43%
39% 40%
43% 42% 43% 40%
34%
29%
23% 19%
22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Average 2007-2011 2012 2013 2014
66,3%
15,9%
9,5%
4,2%
2,7% 1,5%
Hydro Others Gas Wind Coal Nuclear
Parnaíba Complex
Integrated to natural gas resources
Located in a tax-advantaged region
Ventos Wind Complex
Located in one Brazil’s best wind resource areas
Attractive load factor
Just 30km from grid connection
Land ownership assured
Açu (Coal + Gas)
Located at a port with a regasification terminal build license
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 Mton)
Low operation costs
Power
supply-demand
unbalanced
Hydropower
concentrated
matrix
Spot prices at
historical highs
Demand for base-
load generation
Opportunities
for ENEVA’s
growth 2 3 4 5 1
Sul 727 MW
Parnaíba Complex 2,166 MW
Seival 600 MW
Açu 2,100 MW – Coal 3,300 MW – Natural Gas
Solar Tauá 1 MW
Ventos Wind Complex 600 MW
Seival Mine License granted 152 Mton in proven reserves
ENEVA’s Greenfield Portfolio
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Attractive licensed greenfield projects in various development stages
Part of Parnaíba II Agreement settled with Aneel in Nov 2014
Bottoming of open cycle gas turbines from Parnaiba I power
plant provides extra 360MW
Competitive project as no additional gas needed¹
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 to
efficient implementation and operation
o ENEVA recent experience in Parnaíba II combined-cycle plant at
neighboring site
Cost sharing efficiency (O&M, administrative, HSSE, spare
parts etc.) with Parnaíba Generation Complex make the project
even more competitive
Highlights Parnaíba Site
Bottoming #1 Bottoming #2
NOTE: (1) To enable expansion additional fuel mainly for PPA/contract harmonization and internal consumption
Parnaíba I: Closing of the Cycle (1) Highly competitive expansion to existing site
27
Net power output: 352,8 MW
Plant’s upside 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
Existing facilities
New equipment
Parnaíba I: Closing of the Cycle (2) Highly competitive expansion to existing site
28
Notes:
