4Q12 Institutional Presentation

INSTITUTIONAL

PRESENTATION

April, 2013

2

Agenda

►Financial Performance

►Portfolio Overview

►Value Creation

►Company Profile

3



►Value Creation

►Company Profile

Agenda

4

Equatorial Overview

� Holding company with investments in the energy sector, focused on distribution and

generation

� Differentiated experience in operating and financial restructuring of companies in the

Brazilian energy sector

� Sponsored by PCP Fund, investment vehicle owned by former partners of Banco Pactual

and managed by Vinci Partners.

� Current investments:

• Distribution company in the State of

Maranhão

• 2nd largest distribution company in

the Northeast of Brazil, in terms of

concession area*

• 4th largest distribution company in

the Northeast of Brazil, in terms of

billed energy*

• Annual gross revenues of R$3.0

billion in 2012.

• Company responsible for

implementing and operating the

Tocantinópolis and Nova Olinda

thermoelectric plants in the State of

Maranhão

• Fuel: high-viscosity heavy oil.

• Joint installed capacity of 331 MW

• 240 MW of energy sold at the A-3

auction in 2007.

• Start-up: January 2010

*Source: ABRADEE

• Electricity trading company and

developer of new products and

services

• Broker the purchase and sale

of energy without physical delivery

• Custom of solutions to

satisfy consumers’ specific

needs (consumers and

generators)

• Experienced executives and well-

recognized in the trading market

PA MA

CELPA

• Distribution company in the

State of Pará.

• Annual gross revenues of R$3.3

billion in 2012.

Aug. 2011

Equatorial acquires 51% of

Sol Energias,

energy trader

CEMAR’s acquistion

PCP Fund acquires a controlling stake of

Equatorial

Equatorial’s IPO

Control concentratedin PCP Fund

Incorporation of a controlling stake of

Light

Equatorial migrates to“Novo Mercado”

Acquisition of 25% of Geramar

FIP PCP sells its indirect stake in

Light

Equatorial’s Spin Off

Equatorial’s History

May. 2004 Mar. 2006 Abr. 2008 Out. 2008 Abr. 2010 Ago. 2011Apr. 2006 Dec. 2007 Feb. 2008 Abr. 2008 Oct. 2008 Dec. 2009 Apr. 2010 Aug. 2011 Feb. 2012

Equatorial acquires 50% of

Vila Velha

Termoelétricas, a

pre-operationalcompany

Nov. 2012

Equatorial acquires 63.1% of

CELPA, energy

distributorcompany

Dec. 2012

Equatorial’s Follow On

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Ownership Structure – Current

• Total no. of shares:

• Share price**:

• Free float:

• ADTV90:

198,447,352

R$ 20.04

77.1% / R$3.065 MM

R$ 16,465 MM

**On 22/03/13ADTV90 represents the average volume traded in the past 90 days

* Prior to the capital increase

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Corporate Strategy

CEMAR � Increased returns through outstanding financial andoperating performance

Consolidation ofdistributors in Brazil and

Latin America

� Acquistion of full or shared control

� Added value through financial and operational restructuring, synergygains and loss reduction

Geramar and otherinvestments in generation

� Brazil’s investment needs in generation over the next few years will creategrowth opportunities for Equatorial.

� Geramar thermal plants present an above average rate of return

Celpa � Increased returns through operational and financial turnaround strategy

Felipe Borges

Officer

• Officer of Equatorial since January 2013.

• Previously worked (2009-2012) at Banco Original Bank as Chief Legal Officer. From 1999 to 2011 worked at law offices such as Ulhôa Canto Advogados, from 2004 to 2007 at Mattos Filho Advogados and, from 2001 to 2003, at Velloza Advogados performing multiple functions.

• Degree in Law at University of São Paulo (USP) and Master’s degree in Tax Law at PUC-SP since 2007.

Management

Management is composed by professionals with substantial experience in the financial, operational and regulatory areas

Carlos Piani

Chairman of the

Board of Directors

• CEO of Equatorial from March, 2007 until April, 2010. CFO of CEMAR (2004-2006) and CEO of CEMAR (2007-2010). Currently, he is a partner of Vinci Partners.

• Worked for 6 years at Banco Pactual in the Principal Investments and Corporate Finance divisions

• Degree in Computer Science at PUC-RJ and in Business Administration at IBMEC. CFA chartered by CFA Institute in 2003. Concluded the Owner andPresident Management Program of Harvard Business School in 2008

Firmino Sampaio

CEO

• CEO of Eletrobrás (1996-2001), CEO and CFO of COELBA (1984-1996)

• Former member of the boards of directors of Furnas, Itaipu Binacional, CHESF, Eletrosul, Gerasul, CEMIG, ENERSUL, CEMAT and Light

• Degree in Economics at the Federal University of Bahia and postgraduate degree in Industrial Planning at SUDENE/IPEA/FGV

Eduardo Haiama

CFO & IRO

Tinn Amado

Regulatory AffairsOfficer

• CFO and IRO of Equatorial since 2008. IRO of CEMAR since 2008.

• Between 2004 and 2008, Mr. Haiama worked at Banco UBS Pactual on the equities’ research team as senior analyst of the utilities segment.

• Degree in Electric Engineering at USP – University of São Paulo (Escola Politécnica) and MBA at Duke University. CFA chartered by CFA Institute in 2004

• Regulatory Affairs Officer of Equatorial since April 2008 and of CEMAR since August 2006

• Consulting partner of Amado Consultoria, providing advisory services in economic regulation, also worked at ANEEL for 3 years as an analyst for the Distribution Service Regulation Department

• Degree in Electrical Engineering at the Federal University of Itajubá (UNIFEI) and a Master’s degree in Regulation and Protection of Fair Trading at Brasília University (UnB)

Ana Marta Horta Veloso

Officer

• Officer of Equatorial since November 2008.

• Worked as an executive at Banco UBS Pactual S.A., from 2006 untill 2008 . Before joining Pactual, she worked for 12 years at the Brazilian Development

Bank (BNDES), where she held several executive positions, mostly in the capital market area.

• Degree in Economics at the Federal University of Minas Gerais (UFMG) and Master’s degree in Industrial Economics at the Federal University of Rio de Janeiro (UFRJ).

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Vinci Partners

PRIVATE EQUITY PUBLIC EQUITIES MULTIMARKET

• In 2001, Banco Pactual created a Principal Investment Unit to manage the partnership’s excess capital and diversify its investments;

• In 2006, with the sale of Banco Pactual to UBS, part of the proceeds from the sale was reinvested in the Principal Investment Unit, which was renamed PCP;

• In 2009, with the sale of Pactual to BTG, Vinci Partners was created, an independent asset management, composed by Pactual’s ex-partners;

• Today, Vinci has almost US$ 3.0 billion under management (75% own capital), investing in Private Equity, Public Equities and Multimarket Funds.

History

PCP Fund

LONG TERM MEDIUM TERM SHORT TERM

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Agenda



►Value Creation

►Company Profile

11

Since 2004, Equatorial has been presenting an excellent financial performance.

Net Operating RevenuesR$ million

EBITDA (R$ million)

Financial Performance

(*) As from 2010, all values are according to IFRS

2004 2005 2006 2007 2008 2009 2010 (*) 2011 2012

Net Revenue 526 629 810 879 2,346 2,506 1,799 1,981 2,987

EBITDA 85 189 341 379 784 757 510 504 567

% EBITDA 16% 30% 42% 43% 33% 30% 28% 25% 19%

12

Distributions to Shareholders/Net IncomeR$ million


* 2008 figure includes R$82 million in Capital Reduction

2004 2005 2006 2007 2008 2009 2010 2011 2012

Consolidated Dividends (R$ MM) - 54 108 151 284 51 197 50 34

CEMAR - 54 108 112 91 58 200 94 76

Light - - - 27 111 56 - - -

Capital Reduction (holding) - - - - 82 - - - -

Net Income (R$ MM) 123 229 119 153 300 207 189 160 141

CEMAR (31) 234 116 117 148 129 279 248 385

Celpa - - - - - - - - (160)

Geramar - - - - - - 6 11 18

Equatorial Soluções - - - - - - - - 3

Light - - - - 130 79 - - -

The Consolidated div idends incorporate 100% of CEMAR

54

108

151

284

51

197

50 34

123

229

119

153

300

207 189

160 141

2004 2005 2006 2007 2008 2009 2010 2011 2012

Dividends Net Income

2004 2005 2006 2007 2008 2009 2010 2011 2012

Payout 0% 24% 90% 99% 95% 25% 104% 32% 24%

Dividend Yield N/A N/A 10% 13% 27% 3% 18% 4% 2%

13

Consolidated Net Debt and Net Debt/EBITDA (*)R$ million / Times

Improved operating performance and financial restructuring led to a significant reduction in leverage,


(*) Consolidated (65.1% CEMAR, 61.4% Celpa, 25.0% Geramar and 13.03% Light). Light is no longer consolidated as from 2010.

It’s important to mention that Equatorial consolidated 100% of Celpa’s Net Debt for the year 2012, however, only

consolidated Celpa’s EBITDA for the months of November and December 2012. For that reason, The Net

Debt/EBITDA ratio in 2012 was considerably higher compared to previous year’s.

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made a longer debt amortization schedule possible…

Debt Amortization Schedule - R$ MM

Short Term 2014 2015 2016 2017 Após 2017 Total

CEMAR 418 164 186 170 151 523 1,612

Celpa 400 6 6 6 7 1,468 1,893

Geramar - - - - 43 123 166

Total 818 170 192 176 200 2,114 3,671

Equatorial’ s Cash Position in 2012: R$ 1,134.9 million

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Investments

Investments - R$ MM

and a significant increase in investments.

2004 2005 2006 2007 2008 2009 2010 2011 2012

CEMAR 70 232 306 394 465 419 399 497 619

Celpa - - - - - - - - 42

Light - - - - 137 141 - - -

Geramar - - - - 24 107 16 0.4 0.4

Total 70 232 306 394 626 667 415 497 661

* Celpa's inv estments from 2012 count only inv estments made in November and December 2012.

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Agenda



►Value Creation

►Company Profile

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CEMAR: Highlights

MA

� Distribution company in the State of Maranhão

� 2.0 million clients (4th largest in the Northeast region)*

� Billed energy (2012): 4,796 GWh (5th largest in the

Northeast)*

� Annual gross revenues of R$ 3.0 billion in 2012.

Energy Sales (2012)

Clients (2012)2.0 million

4,796 GWh

*Source: ABRADEE

RS

SC

PR

SP

MG

GO

MT

AC

AM

RR

ROBA

PI

MAPA

AP

TO

CERN

PE

ALSE

MS

RJ

ES

DF

PB

RS

SC

PR

SP

MG

GO

MT

AC

AM

RR

ROBA

PI

MAPA

AP

TO

CERN

PE

ALSE

MS

RJ

ES

DF

PB

88.9%

0.5%

6.3% 4.3%

Residential Industrial

Commercial Others

47.6%

22.5%

20.1%

9.8%


Commercial Others

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CEMAR: History

CEMAR under control of Equatorial

1958-Jun. 2000

Aug.2000-Aug.2002

Aug.2002-May 2004

May 2004-Present

State owned

CEMAR under PPL Global’scontrol

ANEEL’s intervention

CEMAR under control of Equatorial

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CEMAR: Ownership Structure

CEMAR

OthersEquatorial EnergiaEletrobras

65.1% 1.3%33.6%

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Tariff Review Results

CEMAR 2005 2009

Gross RAB 1,756 2,247

Net RAB 836 1,121

Reference Company 217 265

Regulatory Depreciation 68 102

Regulatory EBITDA 157 271

Regulatory Losses 28.0% 25.6%

Deliquency Rate 0.5% 0.9%

X Factor 1.19% 1.06%

*All values are nominal and in R$ million.

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CEMAR: Distribution

• 2.0 million clients in 217 municipalities, covering

the whole state of Maranhão (total area 333,000

km²)

• Energy sales reached 4,804 GWh in 2012, 9.7%

higher than in 2011.

• In 4Q12, energy losses represented 20.7% of

required energy, 0.3 p.p. less than the 21.2%

recorded in 4Q11.

• Service quality has been presenting positive

evolution. Since 2004, DEC and FEC indices

have dropped 65.8% and 72.1%, respectively.

• More than 320 thousand clients connected by

the Light for All Program.

2004 2005 2006 2007 2008 2009 2010 (***) 2011 (***) 2012

Energy Sold GWh 2.593 2.793 2.917 3.223 3.347 3.566 4.146 4.379 4.804

Net Revenues R$ MM 495 665 810 879 999 1.148 1.756 1.912 2.348

PMSO R$ MM 127 126 129 126 139 171 245 291 321

PDA + Contingencies R$ MM 47 20 14 30 32 33 68 46 69

EBITDA R$ MM 93 189 341 379 415 470 500 482 533

Net Income R$ MM (31) 359 177 222 227 198 279 248 385

Dividends R$ MM - 85 165 172 140 58 200 94 76

Net Debt R$ MM 362 305 291 421 673 768 759 898 1.102

Net Debt / EBITDA times 3,9 1,6 0,8 1,1 1,6 1,6 1,5 1,9 2,1

Clients '000 1.161 1.254 1.349 1.438 1.535 1.688 1.822 1.939 2.037

PMSO/Client R$/Client 109 101 95 88 90 101 134 150 158

EBITDA/Client R$/Client 80 150 253 264 270 278 274 249 262

DEC (*) Hours/Year/Client 63,4 54,6 42,6 28,7 27,3 23,6 21,8 21,4 21,7

FEC (*) Times/Year/Client 39,3 32,9 24,6 19,8 16,8 15,2 14,1 11,6 11,0

Total Losses (*) % 29,9% 29,5% 29,8% 28,7% 28,9% 25,2% 22,0% 21,0% 20,7%

CAPEX R$ MM 45 103 137 199 278 239 197 322 441

PLPT (**) R$ MM 25 129 169 195 187 180 202 175 178

(*) Last 12 months

(**) Light For All Program

(***) Values according to IFRS

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CEMAR: Energy Losses

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Celpa: Highlights

� Distribution company in the State of Pará

� 1.9 million clients

� Billed energy (2012): 6,384 GWh

� Annual gross revenues of R$ 3.3 billion in 2012.

Energy Sales (2012)

Clients (2012)1.9 million

6,384 GWh

RS

SC

PR

SP

MG

GO

MT

AC

AM

RR

ROBA

PI

MAPA

AP

TO

CERN

PE

ALSE

MS

RJ

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DF

PB

RS

SC

PR

SP

MG

GO

MT

AC

AM

RR

ROBA

PI

MAPA

AP

TO

CERN

PE

ALSE

MS

RJ

ES

DF

PB

PA

PA

85.0%

7.3%

7.6%

0.2%


Commercial Others

40.0%

18.3%

23.7%

18.0%


Commercial Others

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Celpa: History

Celpa under Equatorial’scontrol

1962-Jul.1998Jul.1998-Oct.2012

Nov.2012-Present

State owned

Celpa under Grupo Rede’scontrol

Celpa’s Judicial Recovery Filing

Feb. 2012

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Celpa: Ownership Structure

(*) Prior to the capital increase

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Tariff Review Results

All values are nominal and in R$ million.

CELPA 2011

Gross RAB 2,338

Net RAB 1,472

Operating Costs (starting point) 429

Operating Costs (upper limit) 352

Regulatory Depreciation 95

Regulatory EBITDA 253

Deliquency Rate (% GOR) 1.0%

X Factor (ex-ante) 2.42%

Regulatory Losses* 41.55% - 34.00%

* Non-technical ov er low -v oltage market

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• 1.9 million clients in 144 municipalities, covering the whole state of Pará (total

area 1,247,955 km²)

• Energy sales reached 6,383 GWh in 2012, 1.5% higher than in 2011.

• In 2012, energy losses represented 35.0% of required energy, 3.4 p.p. more than

the 31.6% recorded in 2011.

• In 2012, DEC and FEC for Celpa (accumulated over the last 12 months) were

101.6 hours, up 1.9%, and 50.9 times, a 4.2% decrease when compared

to indices observed at the end of 2011.

• More than 334 thousand clients connected by the Light for All Program.

CELPA: Distribution

2011 2012

Energy Sold GWh 6,288 6,383

Net Revenues R$ MM 2,434 2,350

Manageable Costs (*) R$ MM 525 1,069

Non-Manageable Costs R$ MM 965 1,233

EBITDA R$ MM 256 (355)

Net Income R$ MM (391) (697)

Net Debt R$ MM 1,552 1,219

Net Debt / EBITDA times 6.1 N/A

Clients '000 1,836 1,931

EBITDA/Client R$/Client 139 N/A

DEC (**) Hours/Year/Client 99.7 101.6

FEC (**) Times/Year/Client 55.9 50.9

Total Losses (**) % 31.6% 35.0%

CAPEX R$ MM 487 433

PLPT (***) R$ MM 165 46

(*) Includes Construction Costs/Rev enues

(**) Last 12 months

(***) Light For All Program

All v alues according to IFRS

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Celpa: Energy Losses

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CEMAR: DEC/FEC 2012 Evolution Comparison

Better

10266

6455

4239

36343431

292726

2422222120201917171413

8

CELPAELETROACRECEMAR 2004CEMAR 2005CEMAR 2006

CELTINSCELG

CEPISACEMATCERON

CEMAR 2007CEMAR 2008

CEALCEMAR 2009CEMAR 2010CEMAR 2012CEMAR 2011

CEBCOELBACELPE

SULGIPECHESP

COSERNENERSULCOELCE

DEC (hours)

5551

3933

312626

25242423

2020

1817

151413

1211

9888

5

ELETROACRECELPA

CEMAR 2004CEMAR 2005

CHESPCEPISACERON

CEMAR 2006CEMATCELG

CELTINSCEAL

CEMAR 2007CEB

CEMAR 2008CEMAR 2009CEMAR 2010

SULGIPECEMAR 2011CEMAR 2012

COELBAENERSUL

CELPECOSERNCOELCE

FEC (times)

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Geramar: Ownership Structure

GNP

Geramar

Ligna

50%

25%

Servtech

Equatorial

Energia

Fundo de

Investimento em

Participações Brasil

50%

25%50%

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Geramar: Highlights

• Two thermoelectric power plants fueled by high-viscosity heavy oil.

• Location: Miranda do Norte, Maranhão.

• Joint installed capacity of 331 MW.

• 240 MW of energy sold at the A-3 auction in 2007.

• Total fixed annual revenue (for both plants) of R$ 136 million* (in R$ of 2007), during 15 years.*Revenues adjusted by inflation (IPCA)

• Start-up: January of 2010

• Total CAPEX: R$ 550 million.

• Equatorial’s share of CAPEX (25%): R$137 million. Equity = approximately R$45 million.

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Agenda



►Value Creation

►Company Profile

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Financial strength and solid management team with turnaround experience

Growth prospects and consolidation opportunities

Result-oriented management model

High level of

Corporate Governance

Agenda

34

Firmino SampaioCEO

Eduardo HaiamaCFO and IRO

Thomas NewlandsIR Analyst

Phone 1: 55 21 3206-6635Phone 2: 55 21 3206-6607

E-mail: [email protected]

Website: http://www.equatorialenergia.com.br/ir

Contacts

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► This presentation may contain forward-looking statements, which are subject to risks and uncertainties, as theywere based on the expectations of Company’s management and on available information. These prospects includestatements concerning the Company’s current intensions or expectations for our clients.

► Forward-looking statements refer to future events which may or may not occur. Our future financial situation,operating results, market share and competitive positioning may differ substantially from those expressed orsuggested by said forward-looking statements. Many factors and values that can establish these results areoutside Company’s control or expectation. The reader/investor is prevented not to completely rely on theinformation above.

► The words “believe", “can", “predict", “estimate", “continue", “anticipate", “intend", “forecast" and similar words, areintended to identify estimates. Such estimates refer only to the date in which they were expressed, therefore theCompany has no obligation to update said statements.

► This presentation does not consist of offering, invitation or request of subscription offer or purchase of anymarketable securities. And, this statement or any other information herein, does not consist of a contract base orcommitment of any kind.

Disclaimer

4Q12 Institutional Presentation

Economy & Finance

Transcript of 4Q12 Institutional Presentation