Exhibit 99.2
TECO ENERGY
TECO Energy
Acquisition of New Mexico Gas Company
New Mexico
GAS COMPANY
May 28, 2013
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TECO ENERGY
Presenters
John Ramil
President and Chief Executive Officer
Sandra Callahan
Chief Financial Officer
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TECO ENERGY
Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a
“safe harbor” for forward-looking statements. Certain information included in this presentation contains statements that are forward-looking, including statements relating to an acquisition transaction and financing plans. Such statements are based on the company’s current expectations, and the company does not undertake any obligation to update or revise such statements, except as may be required by law. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, including the risk that the transaction described herein may not be consummated or that the anticipated benefits from the transaction cannot be fully realized, and, accordingly, such results may differ from those expressed in any forward-looking statements made by TECO Energy.
For more information regarding these risks and uncertainties, review the Risk Factors section of the TECO Energy Annual Report on Form 10-K for the period ended Dec. 31, 2012 as filed with the SEC.
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TECO ENERGY
“I see New Mexico Gas Company as a well-run business with as yet untapped growth potential. We look forward to sharing with New Mexico Gas Company our significant marketing expertise and our commitment to economic development.”
- John Ramil
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TECO ENERGY
Transaction Summary
Transaction and Purchase Price
TECO Energy to acquire New Mexico Gas Company (“NMGC”) from Continental Energy Systems, LLC
Fully regulated local gas distribution company with ~509,000 gas customers $950MM transaction aggregate value, subject to customary closing adjustments LTM EBITDA (non-GAAP) $86MM (1)
Financing Plan
Permanent financing plan contemplates TECO Energy common equity issuance and long term debt issuance at New Mexico Gas Company Includes assumption of $200MM of Senior Secured Notes at New Mexico Gas Company Financing supported by a fully committed bridge facility from Morgan Stanley No change to TECO Energy’s existing credit ratings expected
Key Approvals
New Mexico Public Regulation Commission (“NMPRC”) Hart-Scott-Rodino No shareholder approval required
Timing
Expected closing in first quarter of 2014
(1) LTM as of 1/31/13
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TECO ENERGY
Compelling Strategic Rationale
Enhances Scope and Opportunities for Growth
Increases total customer base by ~50%, adding ~509,000 gas customers in a single state
Pro forma TECO Energy will serve a total of ~855,400 regulated gas customers and over 1.5MM total regulated customers in two states
Provides platform to invest growth capital in a growing sunbelt location
Opportunity to bring TECO Energy’s growth oriented marketing skills to a new jurisdiction
Rebalances Business Toward Regulated Operations
Rebalances the business mix toward regulated earnings
89% of TECO Energy’s pro forma EBITDA will be from regulated businesses
Reduces earnings volatility associated with coal business
Earnings Accretive
Expected to be earnings accretive in first full calendar year post close, 2015
Credit Enhancing
Maintains TECO Energy’s current credit metrics
Diversifies geographic, weather and regulatory risk
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TECO ENERGY
Enhancing TECO Energy’s Scale and Regulated Business Mix (1)
EBITDA (2) Customers Rate Base
TECO ENERGY Tampa Electric $657MM 690,200 $4,348MM
TECO ENERGY Peoples Gas $126MM 346,400 $646MM
New Mexico GAS COMPANY $86MM 509,000 $520MM (3)
TECO ENERGY Coal $103MM NA NA
Total: $972MM 1,545,600 $5,514MM
Tampa Electric
Peoples Gas
New Mexico Gas
TECO Coal
EBITDA 89% Regulated
9% 11% 13% 68%
Customers
33% 45% 22%
Rate Base 9% 12% 79%
(1) TE LTM as of 3/31/2013, NMGC LTM as of 1/31/2013, unless otherwise noted
(2) See Reconciliation of Net Income to EBITDA (Non-GAAP) in Appendix
(3) Estimated 2012 rate base
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TECO ENERGY
New Mexico Gas Company Overview
Largest natural gas LDC in New Mexico, serving 23 of New Mexico’s 33 counties
- ~10,030 miles of mains and service lines and
~1,600 miles of transmission pipelines
- ~92% residential customers Strategically located service territory
- High growth areas of New Mexico
- Located between the San Juan and Permian Basins High quality, well run system
- ~43% of the transmission pipelines and
~69% of the distribution gas mains installed after 1970
- No manufactured gas plant sites or material environmental liabilities Entirely non-union workforce of 740 employees with no pension liabilities
Service Territory Natural Gas Basin
NMGC Systems
Transmission
Other Pipelines
Transwestern El Paso Natural
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TECO ENERGY
Regulatory Environment for New Mexico Gas
Regulated by New Mexico Public Regulation Commission (“NMPRC”)
Purchased gas adjustment (“PGA”) clause in effect
Fuel cost hedging authorized with cost recovery through PGA
Recent adoption of future test year for ratemaking
Recent rate proceeding implemented new rates in 2012
- Higher fixed customer charge rate design implemented
- $22.4MM increase in rates
- 10.0% ROE, 52% equity ratio
NMPRC supportive of economic development efforts
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TECO ENERGY
Significant Opportunities for Growth
Residential
Propane conversion
System expansion
Commercial
Commercial and industrial conversions
Economic development to attract new customers
CNG for transportation
Other
Storage opportunities
Midstream development
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TECO ENERGY
Financing Strategy
Transaction aggregate value of $950MM
Supported by fully committed bridge facility from Morgan Stanley
Purchase price to be financed with:
– Cash at TECO Energy
– TECO Energy common equity
– Assumption of $200MM of senior secured notes at NMGC
– Long-term debt issuances at NMGC
Financing strategy consistent with TECO Energy’s existing credit metrics and NMGC’s existing capital structure
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TECO ENERGY
Ready to Execute
History of forging constructive regulatory outcomes
- Will work with NMPRC to achieve timely approvals
- Long term owner with focus on customers, regulators, employees, communities and shareholders
Experienced in acquiring and integrating gas LDC operations
- Integration planning well underway
- Strong cultural fit between organizations
Seasoned marketing capabilities transferable to NMGC to deliver growth
Best practices focused organization will drive results at NMGC
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TECO ENERGY
“I see New Mexico Gas Company as a well-run business with as yet untapped growth potential. We look forward to sharing with New Mexico Gas Company our significant marketing expertise and our commitment to economic development.”
- John Ramil
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TECO ENERGY
Q&A
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TECO ENERGY
TECO Energy
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TECO ENERGY
Appendix
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TECO ENERGY
Reconciliation of Net Income to EBITDA (Non-GAAP)
$MM, twelve months ended 3/31/2013, unless otherwise noted
Tampa Electric
Peoples Gas
TECO Coal
New Mexico Gas Company(1)
Net Income (GAAP) $193.6 $36.9 $43.4 $23.2
Income Tax 121.2 23.3 12.6 15.4 Interest 103.2 14.9 7.0 13.2
Depreciation and Amortization 239.1 51.0 39.9 32.0
Normalizing Adjustments - - - 2.3
EBITDA (2) $657.1 $126.1 $103.1 $86.0
(1) As of 1/31/2013
(2) Numbers may not foot due to rounding
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