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Exhibit (c)(2)
Preliminary Draft Analysis
Strictly Confidential
Presentation to the Conflicts Committee of the Board of Directors of CPP GP LLC
October 13, 2016 / Confidential
Jefferies LLC
Member SIPC
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Disclaimer
Strictly Confidential
The following pages contain materials provided to the Conflicts Committee of the Board of Directors (the “Committee”) of CPP GP LLC, the general partner of Columbia Pipeline Partners, LP (“CPPL”), by Jefferies LLC (“Jefferies”) in connection with a potential transaction involving CPPL and Columbia Pipeline Group (“CPGX”).
These materials were prepared on a confidential basis in connection with an oral presentation to the Committee and not with a view toward complying with the disclosure standards under state or federal securities laws. These materials are for use of the Committee and may not be used for any other purpose or disclosed to any party without Jefferies’ prior written consent.
The information contained in this presentation is based solely on publicly available information or information furnished to Jefferies by CPGX management. Jefferies has relied, without independent investigation or verification, on the accuracy, completeness and fair presentation of all such information and the conclusions contained herein are conditioned upon such information (whether written or oral) being accurate, complete and fairly presented in all respects. These materials are necessarily based on economic, market and other conditions as they exist on, and information made available as of, the date hereof. None of Jefferies, its affiliates or its or their respective employees, directors, officers, contractors, advisors, members, successors or agents makes any representation or warranty in respect of the accuracy, completeness or fair presentation of any information or any conclusion contained herein.
Neither Jefferies nor any of its affiliates is an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction. These materials are not and should not be construed as a fairness opinion.
Jefferies consents to the use of this presentation by CPPL for purposes of public disclosure in the Schedule13E-3.
Jefferies LLC / October 2016
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Jefferies
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Table of Contents Strictly Confidential
Situation Overview 1
Market Update 6
Preliminary Valuation Analysis 13
Appendix
Weighted Average Cost of Capital Analyses 28
Jefferies LLC / October 2016 ii
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Strictly Confidential
Situation Overview
Jefferies LLC / October 2016 1
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Transaction Overview Strictly Confidential
Offer Summary
Jefferies has been engaged by the Conflicts Committee of the Board of Directors of CPP GP LLC to act as financial advisor to the Committee in connection with a potential acquisition of Columbia Pipeline Partners, LP (“CPPL”) by Columbia Pipeline Group (“CPGX”)
On September 26, 2016, CPPL announced that it was in receipt of an offer from CPGX to acquire all of the 53,843,466 outstanding common units of CPPL
— The offer price as originally proposed was $15.75 per common unit, payable in cash, which implies an aggregate common unit equity purchase price of ~$848 MM
CPGX is a now wholly-owned subsidiary of TransCanada Corporation (TSX/NYSE:TRP)
Proposed Transaction Structure
Proposed Offer Economics
CPGX’s Offer TSX/NYSE: TRP
Offer Price Per CPPL Unit $ 15.75 100.0% Interest
CPPL Common Units Oustanding 53.8
Common Unit Equity Purchase Price $ 848.0
84.3% Interest
53.8 MM$848.0 MM
CPPL UnitsIn Cash
($15.75 Per Unit)
46.5% LP Interest CPG OpCo LP
~46.8 MM LP Units (“Columbia OpCo”)
15.7% Interest
53.5% LP Interest
~53.8 MM LP UnitsPublic
NYSE: CPPLUnitholders
Jefferies LLC / October 2016 2
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CPGX Offer Analysis Strictly Confidential
($Millions, except per unit values)
Transaction Overview
CPGX’s Offer
Offer Price Per CPPL Unit $ 15.75
CPPL Common Units Outstanding 53.8
Implied Common Unit Equity Purchase Price $ 848.0
Offer Price
Offer Analysis Metric Price$ 15.75
Premium / (Discount) to CPPL: Unaffected Price (as of 09/23/16) $ 15.302.9%
10-Day VWAP (as of 09/23/16) 14.925.6%
20-Day VWAP (as of 09/23/16) 14.677.3%
30-Day VWAP (as of 09/23/16) 14.528.4%
52-Week High 19.49(19.2%)
52-Week Low 11.7733.8%
Current Price (as of 10/12/16) 16.22(2.9%)
Median Wall Street Consensus Price Target(1) 17.00(7.4%)
IPO Price (as of 02/06/15) 23.00(31.5%)
Offer Price $ 15.75
CPPL Fully Diluted Units Outstanding (MM) 100.7
Implied CPPL Transaction Equity Value $ 1,585.3
Plus: Implied GP Value(2) $ 9.1
Plus: CPPL Revolver(3) 53.8
Plus: OpCo Debt Attributable to CPPL(4) 179.1
Plus: Preferred(3) -
Plus: Non-Controlling Interest(3) -
Less: Cash & Cash Equivalents(4) 1.6
Implied CPPL Enterprise Value $ 1,825.7
Implied
Transaction
CPPL Statistics Statistic(3)Multiple
Implied Transaction Total Enterprise Value / 2017E EBITDA Attributable to CPPL $ 120.2 15.2x
Implied Transaction Total Enterprise Value / 2018E EBITDA Attributable to CPPL 166.8 10.9x
Implied Transaction Total Enterprise Value / 2019E EBITDA Attributable to CPPL 252.7 7.2x
Source: Public filings, Capital IQ and Wall Street research. (1) See page 12.
(2) Implied value of GP interest based on 2016E GP distributions capitalized at current LP yield. (3) Per Q3 2016E Financial Summary provided by CPGX Management.
(4) CPPL’s pro rata share of OpCo’s consolidated net debt, per Q3 2016E Financial Summary provided by CPGX Management.
Jefferies LLC / October 2016 3
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Summary Market Data Strictly Confidential
($Millions, except per unit values)
Side-by-Side Analysis
CPPL(2)
Unaffected Unit Price Current Unit Price$15.75 Offer
(As of 09/23/16) (As of 10/12/16)(As of 09/26/16)
Unit Price $ 15.30 $ 16.22$ 15.75
% Premium to 09/23/16 2.9%
LP Equity Value $ 1,540.0 $ 1,632.6$ 1,585.3
Implied GP Value(1) 9.1 9.19.1
Total Equity Value $ 1,549.1 $ 1,641.7$ 1,594.4
Net Debt & Noncontrolling Interest 231.4 231.4231.4
Total Enterprise Value $ 1,780.4 $ 1,873.0$ 1,825.7
Implied Multiples
TEV / EBITDA
2017E 14.8x 15.6x15.2x
2018E 10.7x 11.2x10.9x
2019E 7.0x 7.4x7.2x
Price / LP Distributable Cash Flow
2017E 18.5x 19.6x19.0x
2018E 14.8x 15.7x15.2x
2019E 10.7x 11.4x11.0x
Distribution Yield
Current 5.2% 4.9%5.0%
2017E 5.2% 4.9%5.1%
2018E 6.5% 6.2%6.4%
Debt / EBITDA
2017E 1.9x 1.9x1.9x
Source: Public filings, Capital IQ and Wall Street Research.
(1) Implied value of GP interest based on 2016E GP distributions capitalized at current LP yield.
Jefferies LLC / October 2016 4
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Analysis at Various Prices Strictly Confidential
Offer Consideration Sensitivity
Offer—Cash Per Unit
$ 15.75$ 16.00$ 16.50$ 17.00$ 17.50$ 18.00$ 18.50$ 19.00
CPPL Common Units To Be Acquired (MM) 53.8
Unaffected CPPL Unit Price (as of 09/23/16) $ 15.30$ 15.30$ 15.30$ 15.30$ 15.30$ 15.30$ 15.30$ 15.30
Implied Premium / (Discount) to Reference Price 2.9%4.6%7.8%11.1%14.4%17.6%20.9%24.2%
CPPL Unit Price (as of 10/12/16) $ 16.22$ 16.22$ 16.22$ 16.22$ 16.22$ 16.22$ 16.22$ 16.22
Implied Premium / (Discount) to Reference Price (2.9%)(1.4%)1.7%4.8%7.9%11.0%14.1%17.1%
Indicative Total Common Unit Equity Purchase Price ($ MM) $ 848$ 861$ 888$ 915$ 942$ 969$ 996$ 1,023
Source: Capital IQ.
Jefferies LLC / October 2016 5
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Strictly Confidential
Market Update
Jefferies LLC / October 2016 6
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Annotated CPPL Unit Price PerformanceStrictly Confidential
IPO to October 12, 2016
2/6/15: 3/17/16: 9/26/16:
IPO priced at $23.00 per unit (above CPGX announced it had entered into a CPPL announced it had received an offer from
the initially-proposed range); CPPL definitive agreement to be acquired by TRP CGPX to acquire all of the 53,843,466
units closed up 16.5% at $26.79 on for $25.50 / share in cash outstanding public common units of the
the first day of trading Partnership for $15.75 per unit in cash
$35 35.0
$30 30.0
$25 25.0
$20 20.0 Units)
Price (MM
Share $15 15.0 Volume
$10 10.0
$5 5.0
$- -
Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16
Volume Price
CPPL Valuation Overview
($Millions, except per unit data)
Valuation
Unit Price (as of 10/12/2016) $ 16.22
52-Week High 19.49
% of 52-Week High 83.2%
FD Units Outstanding 100.7
LP Market Value $ 1,633
Implied Value of GP(1) 9
Total Market Value $ 1,642
Net Debt(2) 231
Total Enterprise Value $ 1,873
Trading
Current Yield 4.9%
Price / Metric:
2017E DCF / unit $ 0.83 19.6x
2018E DCF / unit 1.04 15.7x
TEV / Metric:
2017E EBITDA $ 120.2 15.6x
2018E EBITDA 166.8 11.2x
Credit
Ratings (Moody’s / S&P) NR / NR
Total Debt / 2016E EBITDA 1.9x
Source: Company filings.
(1) Based on 2016E GP distributions capitalized at the current yield of the underlying MLP.
(2) CPPL’s pro rata share of OpCo’s consolidated net debt and CPPL Revolver, per Q3 2016 Financial Summary provided by CPGX Management.
Jefferies LLC / October 2016 7
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Relative Unit / Share Price PerformanceStrictly Confidential
As of October 12, 2016
Since CPPL IPO – 02/06/15(1)
140%
120% TRP
+5.7%
100% S&P 500
+4.1%
80% CPPL
(29.5%)
AMZ
60% (31.7%)
40%
20%
Feb-15 May-15 Jul-15 Oct-15 Jan-16Apr-16Jul-16Oct-16
CPPL TRP S&P 500Alerian MLP Index
LTM Unit Price Performance
150%
TRP
+36.1%
130%
CPPL
+13.5%
110% S&P 500
+6.8%
AMZ
90% (7.2%)
70%
50%
Oct-15 Dec-15 Jan-16 Mar-16 May-16Jun-16 Aug-16 Oct-16
CPPL TRP S&P 500Alerian MLP Index
Since TRP Announcement of CPGX Acquisition – 03/17/16
140%
130%
TRP
+23.7%
120%
AMZ
+12.9%
110% S&P 500
+4.8%
100% CPPL
+1.4%
90%
80%
Mar-16 Apr-16 May-16Jun-16Jul-16Aug-16Oct-16
CPPL TRPS&P 500Alerian MLP Index
3-Month Unit Price Performance
110%
CPPL
+2.0%
TRP
100% +0.6%
S&P 500
(1.1%)
AMZ
(3.6%)
90%
80%
Jul-16 Aug-16 Sep-16Oct-16
CPPL TRP S&P 500Alerian MLP Index
Source: CapitalIQ.
(1) Based on an IPO price of $23.00 per unit.
Jefferies LLC / October 2016 8
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CPPL Trading Volume and Price Analysis Strictly Confidential
LTM Unit Trading
Units have closed at or below $16.00 on 83% of trading days over the past 12 months Average daily trading volume over that time was 442,360 units
LTM Close Price Distribution
100%
83% 98%100%
80%
59%
60%
40%
25%
20% 15%
25%
2%
0%
$12.00—$14.00 $14.00—$16.00 $16.00—$18.00$18.00—$20.00
% Close Prices in Range Cumulative %
LTM Volume-Weighted Average Price (VWAP) Analysis
100%
99%100%
80% 71%
(%)
Price 60% 54%
at
40%
Volume 28%
20% 17%
17%1%
0%
$12.00—$14.00$14.00—$16.00$16.00—$18.00$18.00—$20.00
Source: Bloomberg Financial, Capital IQ.
Jefferies LLC / October 2016 9
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CPPL Ownership
Strictly Confidential
Trading Statistics
Unit Price (as of 10/12/2016) $16.22
52-Week High $19.49
% of 52-Week High 83.2%
52-Week Low $11.77
% of 52-Week Low 137.8%
Float % 48.0%
Avg 90-Day Trading Volume (MM) 0.65
Top 10 Institutional Holders – Latest SEC Filings
% of CPPL
Holder # of Units Value ($MM)O/S
ClearBridge Investments, LLC 7,328,502 $118.47.3%
Tortoise Capital Advisors L.L.C. 5,675,870 $91.75.6%
Kayne Anderson Capital Advisors, L.P. 5,414,713 $87.45.4%
Energy Income Partners LLC 4,986,227 $80.55.0%
Magnetar Capital, LLC 2,787,884 $45.02.8%
Harvest Fund Advisors, LLC 2,678,196 $33.32.7%
Center Coast Capital Advisors, LP 2,152,869 $34.82.1%
Eagle Global Advisors, LLC 2,073,553 $33.52.1%
Massachusetts Financial Services Company 1,741,317 $28.11.7%
Morgan Stanley Investment Banking 1,571,690 $25.41.6%
Total 36,410,821 $588.036.2%
General Ownership Structure (By Units Owned)
5.4% 0.9%
0.1%
Institutions
Corporations (Public)
47.5% Individuals/Insiders
VC/PE Firms (>5% stake)
46.9% Public and Other
Institutional Ownership Structure (By Units Owned)
2.7% 0.7% 0.2% 0.0%
Traditional Investment Managers
9.2%
Hedge Fund Managers (<5% stake)
Banks/Investment Banks
Family Offices/Trusts
26.5%
60.7% Government Pension Sponsors
VC/PE Firms (<5% stake)
Unclassified
Source: Capital IQ.
Jefferies LLC / October 2016 10
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CPPL Ownership Changes Over Time Strictly Confidential
Top 25 Institutional Holders – December 31, 2015 (Unaffected by the TRP Acquisition Announcement) vs. Latest SEC Filings
Holder # of Units (12/31/15) # of Units (Current)# Increase / (Decrease)% Increase / (Decrease)
Tortoise Capital Advisors L.L.C. 9,004,055 5,675,870(3,328,185)(37.0%)
ClearBridge Investments, LLC 5,929,200 7,328,502+1,399,302+23.6%
Kayne Anderson Capital Advisors, L.P. 5,888,378 5,414,713(473,665)(8.0%)
Massachusetts Financial Services Company 3,441,040 1,741,317(1,699,723)(49.4%)
Energy Income Partners LLC 3,298,245 4,986,227+1,687,982+51.2%
Harvest Fund Advisors, LLC 2,268,103 2,678,196+410,093+18.1%
Morgan Stanley Investment Management Inc. 2,267,056 1,477,591(789,465)(34.8%)
Center Coast Capital Advisors, LP 1,925,483 2,152,869+227,386+11.8%
Liberty Street Advisors, Inc. 1,832,190 -(1,832,190)(100.0%)
Eagle Global Advisors, LLC 1,798,331 2,073,533+275,222+15.3%
Goldman Sachs Asset Management, L.P. 1,599,039 -(1,599,039)(100.0%)
JPMorgan Chase & Co, Private Banking 1,253,596 1,336,648+83,052+6.6%
Dividend Assets Capital, LLC 1,105,987 1,291,784+185,797+16.8%
UBS Asset Management 953,893 580,857(373,036)(39.1%)
Baron Capital Group, Inc. 901,843 -(901,843)(100.0%)
Brookfield Asset Management Inc. 821,000 31,010(789,990)(96.2%)
Credit Suisse Investment Banking 623,639 513,315(110,324)(17.7%)
Duff & Phelps Investment Management Co. 620,000 620,000--
Bank of America Corporation, Asset Management 533,098 2,195(550,900)(99.6%)
BlackRock, Inc. 553,540 507,420(26,120)(4.9%)
Cushing Asset Management, LP 511,016 471,384(39,632)(7.8%)
Tiedemann Wealth Management, LLC 509,524 1,201,141+691,617+135.7%
Zimmer Partners, LP 474,729 -(474,729)(100.0%)
Waddell & Reed Investment Management Co 474,100 -(474,100)(100.0%)
CBRE Clarion Securities 463,400 -(463,400)(100.0%)
Total 49,050,482 40,084,592(8,965,890)(18.3%)
Source: Capital IQ.
Jefferies LLC / October 2016 11
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CPPL Wall Street Price Targets Strictly Confidential
Price atPricePrice at Report
Broker Date RatingReportTargetas a % of Target
UBS 10/04/16 Neutral$16.12$15.75102.3%
Goldman Sachs 09/30/16 Neutral16.1418.0089.7%
D.A. Davidson & Co 09/27/16 Neutral16.1015.75102.2%
J.P. Morgan 09/27/16 Neutral16.1017.0094.7%
Morgan Stanley 09/26/16 Restricted16.05NANA
Credit Suisse 09/26/16 Outperform16.0518.0089.2%
Scotia Howard Weil 09/26/16 Sector Perform16.0520.0080.3%
MUFG Securities 09/26/16 Buy16.0516.00100.3%
Barclays 08/02/16 Equalweight14.7917.0087.0%
Wolfe Research 08/01/16 Peerperform15.2314.50105.0%
Mean $15.87$16.8994.5%
Median 16.0517.0094.7%
Source: Bloomberg Financial and Capital IQ.
Jefferies LLC / October 2016 12
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Strictly Confidential
Preliminary Valuation Analysis
Jefferies LLC / October 2016 13
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OpCo Financial Summary Strictly Confidential
($ Millions, unless otherwise noted)
Key Assumptions
OpCo projections based on the financial summary provided by CPGX Management to Jefferies on October 7, 2016
Financial Summary
2017E 2018E2019E2020E2021E
Total Net Revenue $ 1,539.6 $1,948.2$2,548.0$2,638.3$2,823.0
Less: O&M 718.5 758.8785.7784.9790.3
Less: Operating Expenses 261.2 379.5475.6468.7530.7
Plus: Partnership Earnings 65.9 69.784.285.688.3
Operating Income $ 625.8 $879.6$1,370.9$1,470.2$1,590.2
Plus: Other Income / (Expenses) 88.1 46.6(108.2)(78.0)(117.5)
Net Income $ 713.9 $926.2$1,262.7$1,392.2$1,472.6
EBITDA $ 791.5 $1,088.3$1,635.3$1,743.8$1,878.4
Jefferies LLC / October 2016 14
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CPPL Financial Summary Strictly Confidential
($ Millions, unless otherwise noted)
Key Assumptions
CPPL EBITDA and Distributable Cash Flow summary based on the financial summary provided by CPGX Management to Jefferies on October 7, 2016 Jefferies assumed a distribution coverage ratio of 1.05x and 100.7 MM CPPL units for 2017E – 2021E to calculate LP Distributable Cash Flow / Unit and LP Distributions / Unit
Financial Summary
2017E 2018E2019E2020E2021E
CPPL Share of OpCo EBITDA(1) $ 124.3 $170.9$256.7$273.8$294.9
Less: MLP Standalone O&M (includes Partnership Expenses) (4.0) (4.0)(4.1)(4.1)(4.3)
EBITDA $ 120.2 $166.8$252.7$269.7$290.6
Less: Earnings from Partnerships (10.3) (10.9)(13.2)(13.4)(13.9)
Less: Partnership Distributions Received 9.7 10.512.712.813.2
Less: MLP Ownership of OpCo Maintenance CapEx (20.3) (20.3)(20.4)(20.4)(20.6)
Less: MLP Ownership of OpCo Interest Expense (1.5) (8.4)(19.8)(18.8)(25.3)
Less: MLP Standalone Interest Expense (10.2) (19.5)(19.8)(27.6)(28.7)
Less: Cash Received from Sale, Less Loss (Gain) - ----
Less: MLP Ownership of OpCo Interest Income 0.4 0.71.01.92.9
Total Distributable Cash Flow $ 88.0 $118.9$193.2$204.1$218.2
Coverage Ratio 1.05x 1.05x1.05x1.05x1.05x
Total Distributed Cash Flow $ 83.9 $113.3$184.0$194.4$207.8
GP Distributed Cash Flow 3.6 12.544.850.056.7
LP Distributed Cash Flow 80.2 100.8139.2144.4151.1
Units 100.7 100.7100.7100.7100.7
LP Distributable Cash Flow / Unit $ 0.83 $1.04$1.43$1.48$1.55
LP Distribution / Unit $ 0.80 $1.00$1.38$1.43$1.50
(1) Reflects CPPL’s 15.7% interest in OpCo.
Jefferies LLC / October 2016 15
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CPPL Forecast Comparison Strictly Confidential
Due Diligence Summary
October 3rd
On , Jefferies submitted a comprehensive list of diligence questions to CPGX through its financial advisor, Morgan Stanley The OpCo and CPPL financial summary was provided by CPGX Management to Jefferies on October 7th
Comparison of Financial Projections: Management vs. Wall Street Research
$166.8$170.0
$120.2 $128.0
EBITDA Attributable to
CPPL
20172018
ManagementWall Street Research
$113.3
$83.9 $81.0$86.0
CPPL Distributable Cash
Flow
20172018
ManagementWall Street Research
Jefferies LLC / October 2016 16
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Summary of Valuation Methodologies Strictly Confidential
Jefferies’ approach to analyzing potential exchange ratios in connection with a possible transaction entails several standard and customary analyses, including, but not limited to, the following:
— Selected Public Companies Analysis, a method of valuing an entity relative to publicly-traded partnerships or companies with similar products or services, similar operating or financial characteristics or similar customers or markets
— Selected Precedent Transaction Analysis, a method of valuing an entity relative to precedent merger and acquisition (“M&A”) transactions involving partnerships having similar products or services, similar operating or financial characteristics or similar customers
— Discounted Cash Flow Analysis, a method of valuing an entity relative to the estimated present value of future cash flows
Jefferies did not attribute any particular weight to any analysis, methodology or factor considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor; accordingly, Jefferies’ analyses must be considered as a whole. Considering any portion of the analyses or the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of Jefferies’ analyses
Jefferies LLC / October 2016 17
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Preliminary Valuation Range – CPPL
($ in Millions)
Strictly Confidential
Methodology Implied CPPL Unit ValueAssumptions
CPGX Offer:
$15.75
Selected Public Companies Analysis
OpCo Valuation
TEV / 2017E EBITDA $14.90$16.14Based on OpCo 2017E EBITDA of $791.5 MM,
multiple range of 13.5x—14.5x
Based on OpCo 2018E EBITDA of $1,088.3 MM,
TEV / 2018E EBITDA $15.21$16.91multiple range of 10.0x – 11.0x
CPPL Distribution Valuation
2017E Distribution Yield $13.28$15.94Based on 2017E yield of 5.0% – 6.0%
2018E Distribution Yield $14.30$16.69Based on 2018E yield of 6.0% – 7.0%
Selected Precedent Transactions Analysis
TEV / 2017E EBITDA $14.90$16.14Based on OpCo 2017E EBITDA of $791.5 MM,
multiple range of 13.5x—14.5x
DCF Analysis
OpCo Valuation
Discounted Cash Flows—EBITDA $13.62$16.44Discount rate range of 8.8% – 9.8%,
terminal EBITDA multiple range of 10.0x – 11.0x
CPPL Distribution Valuation
Discounted Cash Flows—Distributions $16.68$19.11Discount rate range of 8.8% – 9.8%,
terminal distribution yield range of 7.0% – 8.0%
Premiums Paid Analysis(1)
Based on precedent premiums paid
Affiliate MLP Mergers (Common Control) $15.01$17.02(25% / 75% quartiles) to:
1-day, 7-day and 30-day prior unit pricing
$10 $12$14$16$18$20$22
(1) Premiums Paid Analysis is solely for informational purposes and not valuation methodology used by Jefferies.
Jefferies LLC / October 2016 18
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Selected Peer Comparables Analysis – Long-Haul Pipelines
($ Millions, unless otherwise noted)
Strictly Confidential
TEV / 2017E EBITDA
15.6x
14.1x
12.1x12.0x
11.8x
9.8x
CPPL TCP WPZKMISEPTEP
TEV / 2018E EBITDA
12.4x
11.4x 11.2x10.9x10.8x
7.2x
TCP KMI CPPLWPZSEPTEP
Unit PriceTotal LP’16E-‘19E% of CurrentCurrent
Price on vs. LTMEquity MarketEnterpriseEV / EBITDADistribution Yield(4)DistributionDistributionsMarginal
Partnership 10/12/16 HighLowValue(1)Value(2)(3)2016E2017E2018ECurrent2017E2018ECAGRto GPSplit to GP
Kinder Morgan $ 20.75 63.3%185.3%$ 46,321$90,15712.4x12.0x11.4x2.4%2.4%3.4%40.8%0.0%0.0%
Williams Partners 37.01 91.7%291.6%22,38654,11112.8x12.1x10.9x9.2%9.2%9.3%0.6%31.2%50.0%
Spectra Energy Partners 43.01 85.2%118.8%13,01425,55513.5x11.8x10.8x6.2%6.7%7.2%7.0%27.4%50.0%
TC PipeLines 57.47 95.0%167.8%3,8996,03015.2x14.1x12.4x6.5%6.8%7.2%5.4%4.9%25.0%
Tallgrass Energy Partners 47.69 93.9%184.7%3,4395,73813.4x9.8x7.2x6.3%7.6%8.7%13.1%32.6%50.0%
Average 13.4x12.0x10.6x6.1%6.5%7.1%13.4%19.2%35.0%
Median 13.4x12.0x`10.9x6.3%6.8%`7.2%7.0%27.4%50.0%
Columbia Pipeline Partners 16.22 83.2%137.8%1,6331,87316.5x15.6x11.2x4.9%4.9%6.2%20.3%0.4%15.0%
OpCo Valuation
Valuation MultipleImplied TEV(Less)Implied Equity ValueCPPL Equity Value(5)Implied Value Per Unit
TEV / EBITDA MetricLow- HighLow- HighNet DebtLow- HighLow-HighLow-High
2017E $791.513.5x- 14.5x$10,685.8- $11,477.3($1,131)$9,555.0- $10,346.5$1,500.1-$1,624.4$14.90-$16.14
2018E 1,088.310.0x- 11.0x10,882.8- 11,971.0(1,131)9,751.9- 10,840.21,531.1-1,701.915.21-16.91
Source: Public filings, Capital IQ, Wall Street Research and materials provided by CPGX Management. (1) Includes common units and other classes of LP units.
(2) Defined as equity market value + net debt + non-controlling interest + preferred; GP valuation based on 2015E GP distributions capitalized at current LP distribution yield. (3) CPPL enterprise value based on LP market value plus CPPL’s pro rata share of OpCo’s consolidated net debt, per Q3 2016 Financial Summary provided by Management. (4) Based on latest declared quarterly distribution, annualized.
(5) CPPL Equity Value is 15.7% of the Implied Equity Value reflecting CPPL’s 15.7% ownership in OpCo.
Jefferies LLC / October 2016 19
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Selected Peer Comparables Analysis – Drop-Down MLPs
($ Millions, unless otherwise noted)
Strictly Confidential
TEV / 2017E EBITDA
15.6x
13.7x 13.3x
12.6x12.2x
12.2x11.7x11.4x
CPPL WES EQMSHLXPSXPAMMPLXVLP
TEV / 2018E EBITDA
11.7x 11.4x 11.2x
10.1x
9.8x9.4x
8.7x8.5x
EQM WES CPPLAMSHLXMPLXVLPPSXP
Unit PriceTotal LP’16E-‘19E% of CurrentCurrent
Price on vs. LTMEquity MarketEnterpriseEV / EBITDADistribution Yield(4)DistributionDistributionsMarginal
Partnership 10/12/16 HighLowValue(1)Value(2)(3)2016E2017E2018ECurrent2017E2018ECAGRto GPSplit to GP
MPLX $ 30.36 66.5%185.8%$ 10,311$19,07814.2x11.7x9.4x6.7%7.5%8.3%9.0%22.6%50.0%
Western Gas Partners 54.90 97.8%216.1%7,83015,17515.6x13.7x11.4x6.0%6.6%7.1%7.0%33.4%50.0%
EQT Midstream Partners 76.96 95.4%136.2%6,2029,16616.2x13.3x11.7x4.1%4.9%5.7%16.7%27.7%50.0%
Phillips 66 Partners 46.99 70.3%101.7%4,8508,73120.9x12.2x8.5x4.3%5.4%6.6%20.0%33.7%50.0%
Shell Midstream Partners 29.92 70.7%102.0%5,3056,14919.1x12.6x9.8x3.3%4.2%5.3%24.5%9.6%50.0%
Antero Midstream Partners 27.38 95.3%161.1%4,8245,94916.2x12.2x10.1x3.7%5.0%5.9%24.6%5.8%25.0%
Valero Energy Partners 42.59 80.0%109.1%2,8134,10715.8x11.4x8.7x3.4%4.4%5.4%23.0%16.6%50.0%
Average 16.9x12.4x10.0x4.5%5.4%6.3%17.8%21.3%46.4%
`
Median 16.2x12.2x9.8x4.1%5.0%5.9%20.0%22.6%50.0%
Columbia Pipeline Partners 16.22 83.2%137.8%1,6331,87316.5x15.6x11.2x4.9%4.9%6.2%20.3%0.4%15.0%
OpCo Valuation
Valuation MultipleImplied TEV(Less)Implied Equity ValueCPPL Equity Value(5)Implied Value Per Unit
TEV / EBITDA MetricLow- HighLow- HighNet DebtLow- HighLow-HighLow-High
2017E $791.513.5x- 14.5x$10,685.8- $11,477.3($1,131)$9,555.0- $10,346.5$1,500.1-$1,624.4$14.90-$16.14
2018E 1,088.310.0x- 11.0x10,882.8- 11,971.0(1,131)9,751.9- 10,840.21,531.1-1,701.915.21-16.91
Source: Public filings, Capital IQ, Wall Street Research and materials provided by CPGX Management. (1) Includes common units and other classes of LP units.
(2) Defined as equity market value + net debt + non-controlling interest + preferred; GP valuation based on 2015E GP distributions capitalized at current LP distribution yield. (3) CPPL enterprise value based on LP market value plus CPPL’s pro rata share of OpCo’s consolidated net debt, per Q3 2016 Financial Summary provided by Management. (4) Based on latest declared quarterly distribution, annualized.
(5) CPPL Equity Value is 15.7% of the Implied Equity Value reflecting CPPL’s 15.7% ownership in OpCo.
Jefferies LLC / October 2016 20
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Comparable Company Yield Analysis Strictly Confidential
2017E Yield
2017E Yield
CPPL
LP Distributed Cash Flow per Unit $0.80
Yield 5.00%6.00%
Implied LP Unit Price $15.94$13.28
2018E Yield
2018E Yield
CPPL
LP Distributed Cash Flow per Unit $1.00
Yield 6.00%7.00%
Implied LP Unit Price $16.69$14.30
Jefferies LLC / October 2016 21
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Selected Precedent Transactions Since 2012
($ Millions, unless otherwise noted)
Strictly Confidential
High GrowthLong-HaulTEV /
Date Buyer SellerAssetMidstreamPipelinesTEVEBITDA
07/10/16 Southern Company Kinder MorganSouthern Company acquired a 50% equity interest in the 7,600 mile Southern Natural Gas pipeline systemP$ 1,47010.4x
04/28/16 Tallgrass Energy Partners, LP Sempra U.S. Gas and Power25% interest in Rockies Express Pipeline LLCP4406.3x
01/04/16 Tallgrass Energy Partners, LP Tallgrass Pony Express Pipeline, LLCAdditional 31.1% interest in Tallgrass Pony Express Pipeline, LLCP7449.0x
11/30/15 Kinder Morgan Myria Holdings IncAcquisition of 30% interest in Natural Gas Pipeline Company of AmericaP1368.6x
11/06/15 TC PipeLines TransCanada Corporation49.9% interest in interstate pipeline in New EnglandP2239.8x
11/02/15 Western Refining Logistics Western Refining Inc.375-mile segment of TexNew Mex pipelineP1809.5x
08/03/15 NextEra Energy Partners NET MidstreamPurchase of NET Midstream, including NET Midstream’s portfolio of seven long-term contracted natural gasP1,80012.0x
07/16/15 Genesis Energy Enterprise Products PartnersOffshore pipeline and services business of Enterprise Products PartnersP1,5007.5x
04/06/15 Williams Partners EV Energy Partners21% interest in Utica East Ohio Midstream which includes various facilities in the UticaP57515.4x
12/01/14 ONEOK Partners Chevron West Texas LPGNGL pipelines spanning from the Permian Basin to Mont Belvieu, TXP80020.0x
11/06/14 Plains All American Pipeline Occidental Petroleum50% interest in BridgeTex Pipeline Company LLCP1,07510.6x
10/28/14 Western Gas Partners Nuevo MidstreamNuevo Midstream; assets in the Delaware BasinP1,50016.5x
05/05/14 Martin Midstream Partners Atlas Pipeline Partners19.8% limited partner interest in West Texas LPG Pipeline LP from Atlas Pipeline PartnersP13513.5x
01/22/14 American Midstream Partners Penn Virginia Corporation~120-miles natural gas gathering and redelivery system in the Eagle Ford ShaleP10012.5x
10/10/13 Crestwood Midstream Partners LP Arrow Midstream Holdings, LLC460 miles of natural gas and crude oil gathering pipeline and 150 miles of water gathering pipeline in the BakkenP75024.8x
06/05/13 Summit Midstream MarkWest Energy Partners, L.P.High-pressure gas gathering pipelines and compressor in Doddridge County, WVP21010.6x
04/16/13 Atlas Pipeline Partners TEAK MidstreamNatural gas gathering and processing operations in Eagle FordP1,00017.5x
02/22/13 Magellan Midstream Partners Plains All American PipelineRocky Mountain and New Mexico common-carrier pipeline systemsP1909.0x
12/12/12 Tesoro Logistics Chevron CorporationChevron Pipe Line Company’s Northwest Products SystemP35511.8x
12/11/12 Spectra Energy Borealis/Kinder/Ontario Teachers100% of the ownership interests in the Express-Platte Pipeline SystemP1,49011.5x
11/15/12 Targa Resource Partners Saddle Butte PipelineWilliston Basin crude oil pipeline and terminal system and its natural gas G&P operationsP95013.7x
04/10/12 Penn Virginia Resource Partners, L.P. Chief Oil and GasChief Gathering LLC (Natural gas gathering systems in WY and PA)P1,00018.5x
03/19/12 Williams Partners Caiman EnergyCaiman Eastern Midstream; assets in the Appalachian regionP2,50013.5x
02/27/12 Crestwood Midstream Partners Antero ResourcesMarcellus Shale gathering assetsP37511.5x
Total Mean 12.3x
Total Median 11.5x
High Growth Midstream Mean 14.3x
High Growth Midstream Median 13.5x
Long-Haul Pipeline Mean 14.3x
Long-Haul Pipeline Median 13.5x
OpCo Valuation
Valuation MultipleImplied TEV(Less)Implied Equity ValueCPPL Equity Value(5)Implied Value Per Unit
TEV / EBITDA MetricLow- HighLow- HighNet DebtLow- HighLow-HighLow-High
2017E $791.513.5x- 14.5x$10,685.8- $11,477.3($1,131)$9,555.0- $10,346.5$1,500.1-$1,624.4$14.90-$16.14
Source: Public filings and press releases.
(1) CPPL Equity Value is 15.7% of the Implied Equity Value reflecting CPPL’s 15.7% ownership in OpCo.
Jefferies LLC / October 2016 22
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Discounted Cash Flow Analysis – OpCo Valuation
($ Millions, unless otherwise noted)
Strictly Confidential
Implied Valuation Summary For the Years Ending December 31,Terminal
2017E2018E2019E2020E2021EValue
EBITDA $791.5$1,088.3$1,635.3$1,743.8$1,878.4Terminal EBITDA$ 1,878.4
Less: Growth Capital Expenditures (2,787.0)(2,956.8)(1,046.5)(1,057.1)(887.9)Terminal Exit Multiple10.5x
Free Cash Flow $(1,995.4)$(1,868.5)$588.8$686.8$990.4Terminal Value$ 19,722.7
Discount Period (Mid-Period Convention) 0.5001.5002.5003.5004.5005.000
8.78% Discount Rate
PV of Free Cash Flow $(1,913.2)$(1,646.9)$477.1$511.5$678.1PV of Terminal Value$ 12,947.5
Implied Enterprise Value $11,054.2
9.78% Discount Rate
PV of Free Cash Flow $(1,904.5)$(1,624.5)$466.3$495.4$650.8PV of Terminal Value$ 12,368.5
Implied Enterprise Value $10,452.0
Discount Rate Range 8.8%-9.8%Implied Enterprise Value$11,054.2$10,452.0
Sum of Discrete Present Values ($1,893.4)-($1,916.5)Less: Debt(1)(1,140.8)-(1,140.8)
PV of Terminal Value $12,947.5-$12,368.5Plus: Cash & Cash Equivalents10.0-10.0
Implied Enterprise Value $11,054.2-$10,452.0Implied Equity Value9,923.3-9,321.2
CPPL Ownership15.7%-15.7%
CPPL Implied Equity Value$1,558.0-$1,463.4
Divided by: Units Outstanding100.7-100.7
Implied Unit Value$15.48-$14.54
DCF Sensitivity
Discount Rate 8.78%9.28%9.78%
Terminal EBITDA Multiple 10.0x 10.5x11.0x10.0x10.5x11.0x10.0x10.5x11.0x
Terminal EBITDA $ 1,878.4 $1,878.4$1,878.4$1,878.4$1,878.4$1,878.4$1,878.4$1,878.4$1,878.4
Terminal Value $ 18,783.6 $19,722.7$20,661.9$18,783.6$19,722.7$20,661.9$18,783.6$19,722.7$20,661.9
PV of Terminal Value $ 12,331.0 $12,947.5$13,564.1$12,051.5$12,654.0$13,256.6$11,779.5$12,368.5$12,957.5
PV of Free Cash Flow (1,893.4) (1,893.4)(1,893.4)(1,905.1)(1,905.1)(1,905.1)(1,916.5)(1,916.5)(1,916.5)
Implied Enterprise Value $ 10,437.6 $11,054.2$11,670.7$10,146.3$10,748.9$11,351.5$9,863.1$10,452.0$11,041.0
Implied Equity Value $ 9,306.8 $9,923.3$10,539.9$9,015.5$9,618.1$10,220.7$8,732.2$9,321.2$9,910.2
CPPL Ownership 15.7% 15.7%15.7%15.7%15.7%15.7%15.7%15.7%15.7%
CPPL Implied Equity Value 1,461.2 1,558.01,654.81,415.41,510.01,604.61,371.01,463.41,555.9
Implied Per Unit Value $ 14.52 $15.48$16.44$14.06$15.00$15.94$13.62$14.54$15.46
Source: Financial Summary provided by CPGX Management.
Jefferies (1) OpCo’s LLC consolidated / October debt, 2016 per Q3 2016E Financial Summary provided by CPGX Management. 23
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Discounted Cash Flow Analysis – Distribution Valuation
Strictly Confidential
DCF Projection Summary
For the Years Ending December 31,
2017E2018E2019E2020E2021E
Cash Flows
LP Distributable Cash Flow / Share $0.83$1.04$1.43$1.48$1.55
LP Distributed Cash Flow / Share 0.801.001.381.431.50
Discount Period (Mid-Period Convention) 0.5001.5002.5003.5004.500
Terminal Values
Low 18.76
High 21.44
Present Value of Distributable Cash Flow (Low) $0.79$0.90$1.13$1.07$1.02
Present Value of Distributable Cash Flow (High) $0.79$0.91$1.16$1.10$1.06
Valuation Analysis LowHigh
Discount Rate 9.78%8.78%
Terminal Value Yield 8.00%7.00%
Present Value of Distributable Cash Flow $4.91$5.03
Present Value of Terminal Value 11.7714.08
Implied Unit Reference Range $16.68$19.11
Terminal Value as % of Total Value 70.5%73.7%
Implied Premium / (Discount) to Current Unit Price 2.8%17.8%
Jefferies LLC / October 2016 24
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Affiliate MLP Mergers (Common Control) Premiums Paid Analysis
Selected Midstream Transactions
Strictly Confidential
Price% Premium
1-Day7-Day30-Day1-Day7-Day30-Day
Date Buyer SellerOfferPrior SpotPrior AveragePrior AveragePrior SpotPrior AveragePrior Average
01/26/15 Energy Transfer Partners Regency Energy Partners26.8923.7522.7723.3213.2%18.1%15.3%
11/10/14 Enterprise Products Partners(1) Oiltanking Partners48.9144.8044.8646.169.2%9.0%5.9%
10/26/14 Access Midstream Partners Williams Partners52.7250.0050.1851.125.4%5.1%3.1%
08/27/13 Plains All American Pipeline PAA Natural Gas Storage22.8921.0920.9421.358.5%9.3%7.2%
07/11/11 Vanguard Natural Resources(2) Encore Energy Partners24.1723.1523.0822.754.4%4.7%6.2%
02/23/11 Enterprise Products Partners Duncan Energy Partners42.0032.7332.3932.5428.3%29.7%29.1%
06/29/09 Enterprise Products Partners TEPPCO Partners31.3628.6928.2328.819.3%(3)11.1%8.8%
Max 28.3%29.7%29.1%
75% Quartile 11.3%14.6%12.1%
Mean 11.2%12.4%10.8%
Median 9.2%9.3%7.2%
25% Quartile 7.0%7.0%6.1%
Min 4.4%4.7%3.1%
09/26/16 Columbia Pipeline Group Columbia Pipeline Partners$ 15.75$15.30$14.84$ 14.142.9%6.2%11.3%
Source: Bloomberg Financial, public filings and press releases.
(1) Initial EPD proposal as of 10/1/14 consisted of a 1.230x exchange ratio, which represented a ~0% premium to the previous day’s close.
(2) Represents premium to unaffected price at initial offer date of 03/24/11.
(3) Initial offer by EPD of 1.24x on 3/9/09 implied an 18.6% premium to TEPPCO’s unaffected on 3/6/09.
Jefferies LLC / October 2016 25
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Affiliate MLP Mergers (Common Control) Premiums Paid Analysis (Cont’d)
Based on Unaffected Price (As of 09/23/16)
Strictly Confidential
% Premium
1-Day 7-Day30-Day
Implied Price per Unit Valuation Prior Spot Prior AveragePrior Average
Unit Price Before Offer $15.30$14.84$14.14
High 28.3%29.7%29.1%
75% Quartile 11.3%14.6%12.1%
Mean 11.2%12.4%10.8%
Median 9.2%9.3%7.2%
25% Quartile 7.0%7.0%6.1%
Low 4.4%4.7%3.1%
Implied Value per Unit
High $19.63$19.24$18.26
75% Quartile 17.0217.0015.85
Mean 17.0116.6815.68
Median 16.7016.2215.17
25% Quartile 16.3715.8815.01
Low 15.9715.5314.59
Source: Bloomberg Financial, public filings and press releases.
Jefferies LLC / October 2016 26
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Strictly Confidential
Appendix
Jefferies LLC / October 2016 27
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Strictly Confidential
Weighted Average Cost of Capital Analyses
Jefferies LLC / October 2016 28
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CPPL Weighted Average Cost of Capital Analysis
($Millions, except where otherwise noted)
Strictly Confidential
Unlevered Beta Analysis
Equity TotalTotalD / ETotal Debt /LeveredUnlevered
Company Value(1) Debt (2)Cap.RatioTotal Cap.Beta(3)Beta(4)
Kinder Morgan $ 46,321 $43,654$89,97594%49%1.120.58
Williams Partners 22,386 20,09842,48490%47%1.630.86
Spectra Energy Partners 13,014 6,57619,59051%34%0.960.64
TC PipeLines 3,8991,9535,85250%33%1.010.67
Tallgrass Energy Partners 3,4391,2784,71737%27%1.080.79
Mean64%38%1.160.71
Columbia Pipeline Partners $1,633$231$1,86414%12%0.980.85
Weighted Average Cost of Capital
Cost of Equity Analysis ComponentWeightPre-TaxEff. Tax RateTax RateAfter-TaxContribution
Unlevered Beta(4) 0.71 Debt(9)12.4%6.0%0%0%6.0%0.7%
Relevered Beta(5) (â) 1.16 Equity87.6%9.7%NANA9.7%8.5%
Risk-Free Rate(6) (Rf) 2.2% WACC9.2%
Market Risk Premium(7) (Rm) 5.0% Debt(9)12.4%6.0%0%0%6.0%0.7%
Equity Size Premium(8) (Re) 1.7% Adjusted Equity87.6%9.7%NANA9.7%8.5%
Cost of Common Equity = Rf + â*(Rm)+Re 9.7% Adjusted WACC9.3%
Implied Current GP Take 0.4%
Adjusted Cost of Common Equity(8) 9.7%
Source: Public filings, Bloomberg and Capital IQ. (1) Represents LP equity value.
(2) Based on total debt balance, adjusted for current market value of debt; for MLPs with no publicly-traded debt, it is weighted at 100% of total debt. (3) Two-year historical, weekly adjusted beta per Bloomberg as of 10/12/16.
(4) Unlevered Beta = Levered Beta / (1+D/E*(1-t)); reflects 0.0% tax rate. (5) Relevered based on selected companies’ average capital structure. (6) 20-year U.S. government bond yield as of 10/12/16 per Bloomberg. (7) Long-horizon equity risk premium per Duff & Phelps.
(8) Seventh decile size premium per Duff & Phelps.
(9) Pre-tax cost of debt based on assumed CPPL cost of debt as of 10/12/16.
Jefferies LLC / October 2016 29