ENEVA Corporate Presentation ? October 2014

8/10/2019 ENEVA Corporate Presentation ? October 2014

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October, 2014


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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 the end of year)

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 stabilization

- 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 and coal)

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-adjustedcapacity payments

PPAs provide hedge against commodity price exposure

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

Competitive portfolio of licensed greenfield wind, coal and gas firedcapacity

Company Description

ENEVA ownership structure

Geographic Footprint

Amapari EnergiaENEVA 51% / Eletronorte 49%

Diesel - 23MWItaquENEVCoal -

Natural GasExploratory

blocksContracted production

of 8.4MM m 3 /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 i nflation index IPCA (Database: Nov, 2013)

Capacity

Fix. Rev.

CVU: R

Auction:

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 IV3 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$443 MM/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 2H2013, ENEVA and E.ON led efforts to rescue PGN fromOGPs judicial recovery process and secure the gas supply forENEVAs power plants

o Cambuhy Investimentos was brought onboard to replace OGP inthe shareholding structure of PGN

o Reinforcing its commitment to Brazil, E.ON agreed to join thecontrol group of PGN

In Feb, 2014, Cambuhy and E.ON carried out a CapitalIncrease at PGN amounting to R$250MM, guaranteeing funds

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

Cambuhy also entered into a share purchase agreement tobuy OGPs remaining stake at PGN for R$200MM

o This last step of the transaction will be completed as part ofOGPs judicial recovery process

ENEVA and E.ON have the right for a 2-year term to increasetheir joint participation at PGN to 33.3%

After execution of the sale and purchase a

18.2%

Parnaba Gs Natural

9.1%

Controlling Block (100%)

18.2% 9.1% 36.4%

Controlling Block (63.7%)

Current

Successful rescue plan of PGN

GasBTG 30%

Shareholding Structure


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Only part of Parnaba Basin is yet l icensed and explore

Declaration of commerciality for 3 gas fields: GaviAzul and Gavio Branco

o Santa Vitria discovery in Jan, 2014 (well OGX-121)

New management team led by Pedro Zinner (ex-BG di

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

Challenges

o High dispatch scenario increases draw on existinganalysis on optimization of reservoir management

o Additional investment may be required to keep productio

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 Plants

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Operational performance (Parnaba I)

EBITDA (R$MM)

Availability Variable Revenue X Variable Cost

Sources: ONS & Company OBS: Dispatch margin captured by Parnaba Gs Na

Operating costs per MWh followed Henry Hub prices decrease and reflected lower unavailabilitycosts

NOTE: 1) Does not include Depreciation & Amortization.

Operating Costs

1Q14

Operating Costs 1 (R$ million) 221.9 19

Gross Energy Generated (GWh) 1,411 1

Operating Costs per GrossEnergy Generated (R$/MWh) 157.2

N.A.

91% 97% 96%99% 98%

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

44.8

-20.6 25.3

0.7

50.3

EBITDA 1Q14 Net OperatingRevenues

OperatingCosts

OperatingExpenses

EBITDA 2Q14

77 74 65 75 80 68 77 78 74 79

80 82 9499 100 96 93 99 95 92

Variable Cost Gross Vari


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Operating Costs

Operational performance (Pecm I)

Availability

NOTES: 1) Figures consider 100% of Pecm I; 2) Does not include Depreciation & Amortization; 3) 1Q14 unavailability figure considers ONS review (previously 71%).

Variable Revenue X Variable Cost

Lower Operating Costs per MWh mainly offset by higher fuel and unavailability costs

Sources: ONS & Company

1Q14


Gross Energy Generated (GWh) 1,014 1


EBITDA 1 (R$MM)

72%

41%

66%

51%

83%3 77%

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

48.8

9.6

-26.1

0.3

32.5


OperatingCosts

OperatingExpenses

EBITDA 2Q14

71% 151127 118

136154

117139 138

109 119 107

111 105 104 100 99 99 97 102 105 106110

Variable Cost Gross Variab


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Operational performance (Pecm II)

Variable Revenue X Variable CostAvailability


EBITDA negatively impacted by higher outsourced services and unavailability costs

EBITDA (R$MM) Operating Costs

1Q14

Operating Costs (R$ million) 99.4 10

Gross Energy Generated (GWh) 720.8 7


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

85%97% 96%

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

46.3

-7.1

-6.0 0.3

33.5


OperatingCosts

OperatingExpenses

EBITDA 2Q14

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

92 99111 99 106

114 118 122 125 125

Variable Cost Gross Varia


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Operating Costs

Operational performance (Parnaba III)

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

Availability Variable Revenue X Variable Cost


OBS: Dispatch margin captured by Parnaba Gs Na

Operational dispatch adjustment impacted Operating Costs

1Q14


Gross Energy Generated (GWh) 344


EBITDA 1 (R$MM)

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

100% 99%

77%

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

14.4 -19.6

-3.30.04

-8.4


OperatingCosts

OperatingExpenses

EBITDA 2Q14

75 71 69 69

161 161 161 161 161

Variable Cost Gross Varia


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Regulatory Update

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

Mar, 2014

Successful 6-month negotiation with Aneel, preserving plants

PPA and mitigating potential high regulatory/contractual penalty

Agreement main conditions:

o Conclude plants construction in Dec, 2014

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

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

In installments as of 2022Through the partial reduction in annual fixed revenues over theterm of PPAs

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

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

precedent, such as:

Sale of energy in the regulated marketSecure long-term financing for the project

Parnaba II Agreement with Aneel

Pecm II and Parnaba I & III

Successful regulatory achievements (1)Parnaiba II PPA restructuring

Gas optimization of Parnaba Thermoelectric

by Aneel: Parnaba III and 2 gas turbintemporally substituted by Parnaba II, as so

available.

All plants PPAs terms and conditions fulfille

gas production, as recommended by A

development of other gas areas (4.4-4.8 million

Parnaba Gas Optimization


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Financial Stabilization Update

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

ENEVAs subsidiaries/projectso 5-year maturity extension of remaining

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

amortization starting only in Jun, 2017

Sale of Pecm IIo 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 executingE.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-termPecm II approved by

Launch of Capital Inccomprising of

o Cash;

o Debt conversion;

o Asset capitalizatio

Execution/effective ofdown/roll over


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Brazilian Power Market and Greenfield Portfolio

5


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Southeast Reservoirs

~70% of total storage capacity

Source: ANEEL

Brazils Generation Capacity: 136 GW

Breakdown by source April, 2014

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

Brazilian energy matrix

63.5%10.5%

2.5%1.5%2.2%

19.8%

Hydro Gas Coal Nuclear Wind Others

Dry Seas

67%

76%

38%

40%

35% 36%39%

20%

30%

40%

50%

60%

70%

80%

90%

Jan Feb Mar Apr May Jun Jul Aug

Average 2007-2011 2012


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Source: ONS

Autonomy = Storage Capacity / (Load Thermal Generation)

Economic growth will boost power deleading to a supply deficit in 20

Water storage capacity has stagnated,leading to decreased system autonomy

65

65

60

65

70

75

80

85

90

2013 2014 2015 2016 2017

G W a v g

2016-on: New generation require~8 GWavg required until 2020

Electric system reliabilityNew thermal plants are necessary to guarantee reliable power supply

0

5

10

15

20

25

30

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1 9 7 2

1 9 7 4

1 9 7 6

1 9 7 8

1 9 8 0

1 9 8 2

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1 9 9 0

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R e s e r v o

i r s

A u t o n o m y

( M o n

t h s )

2 0 1 3

Current reservoirautonomy ~6 months

f f


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ParnabaComplex

Integrated to natural gas resources

Located in a tax-advantaged region

Ventos WindComplex

Located in one Brazils best 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 & SeivalIntegrated to the Seival Mine (proven reserves: 152 M ton)

Low operation costs

Powersupply-demand

unbalanced

Hydropowerconcentrated

matrix

Spot prices athistorical highs

Demand for base-load generation2 3 4 51

Sul727 MW

ParnabaComplex2,166 MW

Sei600

Solar Ta1 MW

ENEVAs greenfield portfolio Attractive licensed greenfield projects in various development stages


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P b I Cl i f th l (2)


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Net power output: 352,8 MW

Plants 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% realMain 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

Di l i


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The material that follows is a presentation of general background information about ENEVA S.A. and its subsidiaries (collectively, ENEthe 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 madeconcerning, and no reliance should be p laced 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 theCompany and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statementthat 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 number of risks, uncer tainties anassumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimatesand 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 theinformation 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 b asis 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 advisorsin 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 i ndustry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in anymaterial respect, we have not independently verified the competitive position, market share, market size, market growth or other data provided by third parties orby 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

written consent.

Disclaimer


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Thank you. www.eneva.com.br

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ENEVA Corporate Presentation ? October 2014

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