Aquila SA · EURONEXT:ALAQU
Aquila SA — Proxy Contest (April 2007)
33 slides from Aquila SA's proxy contest presentation, Apr 4, 2007
Slide 1: A Bad Deal for Aquila, Inc. Shareholders
Home Page Loft What you should know. te Aaa PRESENTATION A Bad Deal for Aquila, Inc. Shareholders PRESS RELEASE iar2007 FOR IMMEDIATE RELEASE PIRATE CAPITAL DESCRIBES FLAWS OF AQUILA TRANSACTION AND RECOMMENDS ALTERNATIVES IN INVESTOR PRESENTATION. Norwalk, Connecticut, Api 4, 2007 (Primezone) ~ Pat
Slide 2: Your Comments
‘Your Comments Page 1 of Your Opinion... Tell us what you think. We want to hear your thoughts, comments and ideas. In order for you to provide your comments to Pirate Capital, please fllin ALL the information below ‘Home. PLEASE SEE OUR TERMS OF SERVICE BEFORE POSTING YOUR COMMENTS. comments: = IA
Slide 3: Aquila Share Price
Aquila Share Price Hame ‘Gieyaur comments IDs Steck Price a Aqui See what ILA has done for its shareholders recently. aA Daily = Page | of 2 29/2007 Ney Jun ul ug Sep ct. Noy seca.
Slide 4: Legal Terms
termOfService Page 1 of L LEGAL TERMS ‘Comment Instructions: IN ORDER FOR PIRATE CAPITAL TO TAKE YOUR COMMENT(S) , PLEASE PROVIDE ANSWERS TO THE QUESTIONS MARKED WITH AN ASTERISK (**). PLEASE BE ADVISED THAT IN ORDER TO COMPLY WITH APPLICABLE SECURITIES LAWS AND INTERPRETATIONS THEREOF BY THE SECURI
Slide 5: Contact Aquila
Contact Aquila = Home Let Aquila's Management know what you think! “Ghe your comments ; = eAStockPrice Aquila Inc. Contact Aquila 20 West Ninth Street Kansas City, MO 64105 1-816-421-6600 1-800-487-6661 Management: Richard C Green Jr. - Chairman/President/CEO Ph: 816-467-3532 Fax: 816-467-3556 reen@
Slide 6: Aquila, Inc. Shareholder Perspective
Aquila, Inc. Shareholder Perspective April 4, 2007 e PIRATE CAPITAL LLC
Slide 7: Disclosures
DISCLOSURES This presentation was prepared by Pirate Capital LLC solely for the purpose of explaining Pirate's position with respect fo the proposed acquisition of Aquila, Inc. It may not be relied upon by any other person or used for any other purpose. In the analysis of Aquila in this Presentation
Slide 8: 1. Executive Summary
1. Executive Summary © Pirate Capital believes the announced sale of Aquila, Inc. (‘Aquila,” “ILA,” or “Company’) to Great Plains Energy Inc. (“GXP") and Black Hills Corporation ("BKH’) ("GXP Transaction’) is the result of a faulty process, and significantly undervalues Aquila — We value, on a prese
Slide 9: 2. Review of GXP Transaction
2. Review of GXP Transaction e While Rick Green characterized the GXP Transaction process as “robust,” upon closer review we believe the process was flawed — The process appeared to be designed exclusively for a sale of the Company as a whole — Only nine potential bidders were identified and approac
Slide 10: 2. Review of GXP Transaction
2. Review of GXP Transaction « When considering GXP price targets from Goldman Sachs and Lehman Brothers, we value the Merger Consideration at $4.10 per share. Based on GXP's 20-trading day average closing price, the present value is $4.24. Low High Stock Component: ‘Stock Component: GXP Price Targe
Slide 11: 2. Review of GXP Transaction
2. Review of GXP Transaction — Trading spreads are widening, despite the ‘roadshow’ activities conducted by the ILA and GXP management teams since the announcement of the transaction = The market's negative sentiment is even more pronounced when comparing ILA’s spreads to the Recent Precedent Transa
Slide 12: 2. Review of GXP Transaction
2. Review of GXP Transaction * GXP has substantially underperformed the utility industry (Dow Jones Utliies ("DJU’) and S8P Utilities (‘SPXU’) Indices) over the last two years, and particularly in the last 6 months. ILA shareholders are directly exposed to further poor performance of GXP’s stock. 6
Slide 13: 3. Aquila Current Value
3. Aquila Current Value e Based on our analysis of comparable companies, precedent transactions and premiums paid, we believe Aquila’s current value is in the $4.50 - $5.00 range, well in excess of the GXP Transaction Implied Equity Value Per Share ‘$50 75, ss00 525 sss0 ‘comparable compay Anais rao
Slide 14: 3. Aquila Current Value
3. Aquila Current Value Comparable Company Peer Analysis» (USS in millions, except per share data) Selected Multiple Range Enterprise Value Period Metric®™ Low High Low High 2008E EBITDA $289.0 75x B.5x 2009E EBITDA $345.0 70x B.0x Reference Value $2,291.3 $2,608.3 Net Debt and Non-Operating Assets’
Slide 15: 3. Aquila Current Value
3. Aquila Current Value Precedent Transaction Analysis (USS in millions, except per share data) Selected Multiple Range) Enterprise Value Period Metric™? Low High Low High 2008E EBITDA $289.0 8.0x 9.0% 2009E EBITDA $345.0 T.0x 8.0x Reference Value $2,560.5 _ $2,680.5 Net Debt and Non-Operating Asset
Slide 16: 3. Aquila Current Value
3. Aquila Current Value Premiums Paid Analysis (USS in millions, except per share data) (b) C) Assumed Implied Price Per Share Current Undisturbed _Premium Range_ Current Price _Undisturbed Price ILAPrice ILAPrice_ Low High Tow High Low High All Cash Transactions $4.62 S412 19.7% 428% $553 $659 $493
Slide 17: 4. Alternative Shareholder Value Enhancement Strategy
4. Alternative Shareholder Value Enhancement Strategy e Aquila should reject the GXP Transaction and embark on a “self-help” shareholder value enhancement plan — Divest the non-Missouri electric and gas assets to BKH (or another party) at the announced $940 million price and sell other non-core asse
Slide 18: 4. Alternative Shareholder Value Enhancement Strategy
4. Alternative Shareholder Value Enhancement Strategy — Phase Ill (2008 / 2009) = Evaluate the timing of a common stock dividend program > Q4'08 / Q1'09: Initiate a $0.12 per share annual dividend, targeting a modest mid-40% payout ratio as latan-2 comes on-line in 2010 = Repositioned equity story:
Slide 19: 5. Aquila Shareholder Value Enhancement Strategy
5. Aquila Shareholder Value Enhancement Strategy Formation of Holding Company Structure « Independently of the previously discussed strategies, Aquila should form a holding company, with the utility and remaining non-regulated units becoming operating subsidiaries Since the August 2005 repeal of the
Slide 20: 5. Aquila Value Creation
5. Aquila Value Creation Aquila value creation potential from the Pirate Strategy should be at least in the $5.00 to $5.50 per share range, if not greater, or approximately 25% greater than the value of the Merger Consideration of $4.10 to $4.24 per share Implied Equity Value Per Share x00 $525=SEED
Slide 21: 5. Aquila Value Creation
5. Aquila Value Creation Comparable Companies Peer Analysis — Recap Scenario (USS in millions, except per share data) Selected Multiple Range Enterprise Value Period Metric™ Low High Low High 2008E EBITDA” $177.0 80x 9.0x 2009E EBITDA' $228.0 75x 85x [Reference Value S1568.0 $1, 765.5 Net Debt and N
Slide 22: 5. Aquila Value Creation
5. Aquila Value Creation Premium-Adjusted Comparable Companies Analysis — Recap Scenario (USS in millions, except per share data) Equity Value Low High Implied Equity Value per Share” $4.68 $5.22 Assumed Control Premium®! 20.0% 20.0% [implied Equity Value per Share 562 36.26 Notes ‘Gg From Comparail
Slide 23: 5. Aquila Value Creation
5. Aquila Value Creation Present Value of Future Share Price Analysis — Recap Scenario (USS in millions, except per share data) Selected Multiple Range Equity Value per Share Period Metric Low High 2012E EPS $0.51 13.0x 15.0x implied Equity Value per Share as of 12/34/12 implied Equity Value per Sha
Slide 24: Appendix A: Precedent Transactions & Premiums Paid Analysis
APPENDIX A: PRECEDENT TRANSACTIONS & PREMIUMS PAID ANALYSIS Pirate CapiTaL LLC Jolly Roger Funds
Slide 25: Appendix A: Precedent Transactions Analysis
APPENDIX A: Precedent Transactions Analysis (USS in rilons, except per share data) Equity Firm EWEBITDA Implied Premium EBITDA Growth ‘Ann.Date, _TargetName __AcquirorName__Value__Value_ “LTM-FY#1-FYSZ —Taay"“Tweek 4 WaBKS— FY DIFYT O7TODG Peoples Energy WPSResources S15006 S24076 Bix 10x 89x 150% 1
Slide 26: Appendix A: Premiums Paid Analysis
APPENDIX A: Premiums Paid Analysis@ (USS in millions, except per share data) Implied Premiums Date Value of “Tday fweek 4weeks — Formof Announced Target Name ‘Acquiror Name Transaction _(%) __(%)__(%) __Consideration ‘Ds21106 KES Energy inc Petrohavik Energy Comp S1e107 96 187 30.8 Cash and Stock 09
Slide 27: Appendix A: Premiums Paid Analysis
APPENDIX A: Premiums Paid Analysis@ (USS in millions, except per share data) Implied Premiums Date Value of “Tday tweek 4weeks — Formof Target Name Acquiror Name Transaction (| __ (4) 41 Consideration ‘8/08/08 — Alene nierational Inc "Texas Pactie Group ine 30070 268 298 155 Cash 08/08/08 Reynolds &
Slide 28: Appendix B: Comparable Companies Analysis
APPENDIX B: COMPARABLE COMPANIES ANALYSIS PiraTE CAPITAL LLC Jolly Roger Fuads
Slide 29: Appendix B: Comparable Companies Analysis
B APPENDIX B: Comparable Companies Analysis@ (USS in millions, except per share data) Equity Net Debt Fim Value Stock %in Range Market Firm LTH. Dividend _ Stock Price EPS EBITDA CompanyName Ticker Prise of S2W0k Valle Vale EBITDA Dividend Yield (Rau. ne a a a Electr and Gas Uses Pista Core. AVA s24
Slide 30: Appendix C: Financial Profile - Recap Scenario
APPENDIX C: FINANCIAL PROFILE — RECAP SCENARIO PiraTE CAPITAL LLC Jolly Roger Fuads
Slide 31: Appendix C: Financial Profile - Recap Scenario
APPENDIX C: FINANCIAL PROFILE - RECAP SCENARIO Pirate CAPITAL LLC Tolly Roger Funds
Slide 32: Appendix C: Financial Profile - Recap Scenario
APPENDIX C: Financial Profile - Recap Scenario (USS in milions, except per share data) ‘Years Ending December 31, Income Statement Data® 2006A___2007P___2008P__—«2009P_—«2N10P_—=«aOTIP __—_—-20t2P EBITDA (862) $1820 «$1377 = $2083 $2500 $2850 © $3040 EBITDA Growth NM NM -24.3% 51.3% © 200% «14.0% 6.
Slide 33: Appendix C: Financial Profile - Recap Scenario
APPENDIX C: Financial Profile - Recap Scenario (USS in millions, except per share data) Cash Flow Statement Data®! Years Ending December 34, 2007P___—-2008P__—«2009P__—«-2010P__—2011P__—«2012P Operating Cash Flow $723 $8949 $1682 $2107 $247.5 «82699 Capital Expenditures, net® (43.0) (260) (1900) (15