The Empire District Electric Company
The Empire District Electric — Empire District Electric — Merger or Acquisition (May 2016)
35 slides from The Empire District Electric's merger presentation, May 18, 2016
Slide 1: Introductions
Introductions Christopher Krygier Director, Regulatory & Government Affairs Liberty Utilities (Midstates) David Pasieka President, Liberty Utilities Peter Eichler Vice President, Strategic Planning Liberty Utilities Scott Keith Director, Regulatory Empire District Sarah Knowlton Sr. Director, Legal
Slide 2: Introductions
Introductions David Pasieka President, Liberty Utilities Sarah Knowlton Sr. Director, Legal Christopher Krygier Director, Regulatory & Government Affairs Liberty Utilities (Midstates) Peter Eichler Vice President, Strategic Planning Liberty Utilities Scott Keith Kelly Walters Director, Regulatory CO
Slide 3: Objectives
Objectives Safety Moment Overview - APUC, LU and EDE Transaction Overview and Benefits Transition Update Wrap up 4
Slide 4: Overview: Algonquin Power & Utilities, Liberty Utilities, Empire District Electric
Overview: Algonquin Power &Utilities Liberty Utilities Corp. TheEmpire DistrictElectric Company 5
Slide 5: Our Values
Our Values Quality Efficiency Care “Safety is not a value, it’s the price of admission” 6
Slide 6: Local, Responsive, Caring
Local, Responsive, Caring Local • • • Walk in service centers providing local ‘touch’ De-centralized operations creating local jobs Building notable presence in our communities, including through “Liberty Days” Responsive • Empowered local management rewarding superior service and support State-wide
Slide 7: Algonquin Power & Utilities Corp. Overview
Algonquin Power & Utilities Corp. Overview r...ALGONQUIN Power & Utilities Corp. I UThe utility company most admired by customers, communities and investors for our people, passion and performance" Natura/Gas --------Transmission and and Pipelines Distribution Distribution Focused business developme
Slide 8: Liberty Utilities – A growing utility operator
Liberty Utilities – A growing utility operator • • • Started in utility business over 15 years ago Long term owner of electric, natural gas, water and wastewater utilities 7 acquisitions in the last 5 years 9
Slide 9: Liberty Utilities Distribution Map
Liberty Utilities Distribution Map 10
Slide 10: Empire District Overview
Empire District Overview • • Established in 1909 Operations in four states: MO, KS, OK, AR and FERC 170,000 Electric customers • • 8,100 miles of line (transmission & distribution) 1,377 megawatts generating capacity • • • • • Service center in Joplin and Ozark 44,000 Natural Gas customers Fiber Opt
Slide 11: Transition Overview and Benefits
Transition Overview and Benefits 12
Slide 12: Key Commitments
Key Commitments 1. Customers: 1. No impact to customer rates resulting from the acquisition Forgo recovery of acquisition premium and transaction costs in rates Maintain or enhance EDE service and reliability levels 2. 3. 2. Employees: 1. 2. 3. Retain Management Team Retain Employees Expand responsi
Slide 13: Key Commitments (cont)
Key Commitments (cont) 1. Community: 1. 2. 3. Retain Joplin Headquarters Retain Empire Brand Maintain community giving levels 2. Regulator 1. Proven utility owner with 10+ years Missouri operating experience Smooth transition by retaining workforce Access to books and records 2. 3. 15
Slide 14: Financial Analysis and Auditing
Financial Analysis and Auditing 16
Slide 15: Company Structure
Company Structure Business Groups 17 Distribution Transmission Generation
Slide 16: Transaction Financing / Capital Markets
Transaction Financing / Capital Markets Financing designed to maintain strong BBB investment grade credit rating • Purchase Price - $2.4 billion • Assumed Debt - $0.9 billion • Equity - $0.8 billion APUC / LU have robust capital markets access • Already raised via mandatorily convertible debentures
Slide 17: Transaction Accounting
Transaction Accounting Day 1 entries will include “1 for 1” import of EDE’s financial statements a Wholly owned subsidiary of LU Central Goodwill to be recorded LU Central books on ADIT will come over EDE’s books as is on 19
Slide 18: Possible Empire Personnel Allocations
Possible Empire Personnel Allocations Example of Allocation IT Billing Senior Leadership Operations Supervision Operating Staff Specific Utility Business Line Allocation State Operations State Allocation Central Region Regional Allocation EDE Distribution Business Group Business Group Allocation APU
Slide 19: Transition Planning Process Overview
Transition “Same Planning ProcessOverview: as it ever was…but together” better 21
Slide 20: Transition Objectives
Transition Objectives • A timely, successful closing that will enable a smooth seamless transition and continue reliable and safe service for our all customers • Identify opportunities to join Empire and Liberty so as to bring about efficacies of scale through the state, regional and central shared
Slide 21: Guiding Principles for the Transition
Guiding Principles for the Transition • Commitment to delivering customer, regulator and employee facing functions locally remains unchanged • “Same as it ever was” • Joplin, MO to be the head office of Distribution Central region • No job losses in Empire result of the acquisition; as a • Empire br
Slide 22: Transition Governance Approach
Transition Governance Approach • Cross Company Teams formed (Leads for each Function) • Each team develops a Transition Plan for their function with guidance and support from the Project Management Office (PMO) templates will be provided – • Reporting • • • Teams submit progress updates bi-weekly to
Slide 23: Lessons Learned from Previous Transitions
Lessons Learned from Previous Transitions Communication: • • Collaborative approach works best Pay special attention to employee and customer impacts Management of people issues: • • • Don’t leave employees wondering Be clear on compensation and benefits Recognize, understand and address cultural ga
Slide 24: Transition Project Structure
Transition Project Structure Transition Steering Committee Monthly progress update PMO Bi-Weekly Reports Bi-Weekly Reports Legal Engineering & HR/Payroll Finance IT Customer Regulatory EHS&S Procurement Operations 26 Transition Leads Project Managers George TrisicJennifer Watson Ron GatzBlake Merten
Slide 25: Transition Team Leads
Transition Team Leads 27 Function APUC Empire Distribution Business Group Regional Structure David Pasieka Brad Beecher Finance Todd Mooney Rob Sager Financial Reporting & Consolidation Luisa Read Laurie Delano Treasury Arthur Kacprzak Mark Timpe Human Resources Greg Rooney Pete Babb Enviromental He
Slide 26: Timeline
Timeline April 2016 July 2016 Sept 2016 Q1 2017 output discovery Day 1 Plan: “Same as it ever was…but better together” Transition is planned in two phases prior to closing date: - First phase: Mutual discovery between functional teams Develop blueprint for Liberty Central Region and for the merged s
Slide 27: Empire Transition Highlights
Empire Transition Highlights Empire represents opportunity to carry on with business as usual without significant IT transition Empire is a stand alone company that already has people and processes Atmos was building from the ground up The drive to “Day 1” is simplified by keeping all employees, Jop
Slide 28: Empire Transition Highlights
Empire Transition Highlights = Empire represents on 5 % ~ , Transition Empire Prior opportunity to carry on with Function Transitions business as usual without Leadership _Inplace, already None, had to significant IT transition Team Tunning utility hire Accounting, In place, staying None, had to = E
Slide 29: Activity completed since announcement
Activity completed since announcement March 16, 2016 – Acquisition applications in MO, AR, KS, OK and FERC Transition Team named and planning activities under way filed Proxy approved for filing by SEC April 11, 2016 – EDE Employee townhall Sent to shareholders April 20, 2016 – APUC / EDE leadership
Slide 30: Customer Care
Customer Care “Same as it ever was…but better together” Maintain current customer service reporting metrics Keep all walk-in open with same centers availability Maintain current payment methods of Retain all customer service employees Maintain current locations pay station Retain all billing employe
Slide 31: Information Technology
Information Technology “Same as it ever was…but better together” Continue utilizing same customer information and accounting systems Continue utilizing same SCADA systems Continue utilizing same email systems 33
Slide 32: Employees
Employees Honor pre-merger payment obligations Non-union employees Same wages Substantially comparable benefits, incentive opportunities Honor existing contracts, etc. No termination to company benefit plans that are materially adverse to participants (i.e. health, welfare, retirement, SERP, etc) 34
Slide 33: Transition Next Steps
Transition Next Steps • June 2-3 – Transition Team meets in Joplin • June 16, 2016 – Shareholder vote • Active dockets in Arkansas, Kansas, and Missouri 35
Slide 34: Wrap up
Wrap up Strong progress since acquisition announcement Approvals received from FERC and Oklahoma Shareholder vote scheduled Transition Planning on schedule and moving forward Same as it ever was…but better together! 36
Slide 35: Additional Information and Where to Find It
Additional Information and Where to Find It The proposed transaction will be submitted to shareholders of Empire for their consideration at a special meeting to be held on June 16, 2016. In connection with the proposed transaction, on May 3, 2016, Empire filed a definitive proxy statement and a form
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