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  • 1. INSTITUTIONALPRESENTATION March, 2011
  • 2. Agenda ►Company Profile ►Financial Performance ►Portfolio Overview ►Value Creation 2
  • 3. Agenda ►Company Profile ►Financial Performance ►Portfolio Overview ►Value Creation 3
  • 4. Equatorial Overview Holding company with investments in the energy sector, focused on distribution and generation RR AP Differentiated experience in operating and financial restructuring of companies in the Brazilian energy AM PA MA CE RN PI PB sector AC TO PE AL SE RO BA MT Controlled by PCP Fund, investment vehicle owned by former partners of Banco Pactual GO DF MG and managed by Vinci Partners. MS ES SP RJ PR Current investments: SC RS • Distribution company in the State of • Company responsible for implementing • Electricity trading company and Maranhão and operating the Tocantinópolis and developer of new products and services Nova Olinda thermoelectric plants in the • 2nd largest distribution company in the • Broker the purchase and sale of energy State of Maranhão Northeast of Brazil, in terms of without physical delivery concession area* • Fuel: high-viscosity heavy oil. • Custom of solutions to • 4th largest distribution company in the • Joint installed capacity of 331 MW satisfy consumers’ specific Northeast of Brazil, in terms of billed needs (consumers and generators) • 240 MW of energy sold at the A-3 auction energy* in 2007. • Experienced executives and well- • Annual gross revenues of R$2.6 billion in recognized in the trading market • Start-up: January 2010 2011. *Source: ABRADEE 4
  • 5. Equatorial’s History Equatorial FIP PCP sells its acquires 51% of PCP Fund acquires a controlling stake of Control concentrated Equatorial migrates to indirect stake in Sol Energias, Equatorial in PCP Fund the “Novo Mercado” Light energy trader May. 2004 Mar. 2006 Apr. 2006 Dec. 2007 Feb. 2008 Apr. 2008 Oct. 2008 Dec. 2009 Apr. 2010 Aug. 2011 Abr. 2010CEMAR’s acquistion Equatorial’s IPO Incorporation of a Acquisition of 25% Equatorial’s controlling stake of of Geramar spin off Light
  • 6. Ownership Structure – Current PCP Latin Free Float America Power 53.7% 46.3% Equatorial Energia S.A. 65.1% 25% 100% Equatorial CEMAR Geramar Soluções Other Projects 51% SOL Energias • Total no. of shares: 109,226,672 • Share price*: R$ 12.67 • Free float: 46.3% / R$641 MM • ADTV90: R$ 1.805 MM *On 30/12/11 ADTV90 represents the average volume traded in the past 90 days 6
  • 7. Corporate Strategy Increased returns through outstanding financial and CEMAR operating performance Consolidation of Acquistion of full or shared control distributors in Brazil and Added value through financial and operational restructuring, synergy Latin America gains and loss reduction Geramar and other Brazil’s investment needs in generation over the next few years will investments in create growth opportunities for Equatorial. generation Geramar thermal plants present an above average rate of return 7
  • 8. Management Management is composed by professionals with substantial experience in the financial, operational and regulatory areas • 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 Carlos Piani Partners.Chairman of the Board of • Worked for 6 years at Banco Pactual in the Principal Investments and Corporate Finance divisions Directors • Degree in Computer Science at PUC-RJ and in Business Administration at IBMEC. CFA chartered by CFA Institute in 2003. Concluded the Owner and President Management Program of Harvard Business School in 2008 • CEO of Eletrobrás (1996-2001), CEO and CFO of COELBA (1984-1996) Firmino Sampaio • Former member of the boards of directors of Furnas, Itaipu Binacional, CHESF, Eletrosul, Gerasul, CEMIG, ENERSUL, CEMAT and Light CEO • Degree in Economics at the Federal University of Bahia and postgraduate degree in Industrial Planning at SUDENE/IPEA/FGV • CFO and IRO of Equatorial since 2008. IRO of CEMAR since 2008. Eduardo Haiama • Between 2004 and 2008, Mr. Haiama worked at Banco UBS Pactual on the equities’ research team as senior analyst of the utilities segment. CFO & IRO • 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 Tinn Amado • Consulting partner of Amado Consultoria, providing advisory services in economic regulation, also worked at ANEEL for 3 years as an analyst for the Regulatory Affairs Distribution Service Regulation Department Officer • 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) • Officer of Equatorial since November 2008.Ana Marta Horta Veloso • 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. Officer • 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). 8
  • 9. PCP Fund History Vinci Partners • In 2001, Banco Pactual created a Principal Investment Unit to manage the partnership’s excess capital and diversify its investments; PRIVATE EQUITY PUBLIC EQUITIES MULTIMARKET • In 2006, with the sale of Banco Pactual to UBS, part MEDIUM TERM LONG TERM SHORT TERM 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. 9
  • 10. Agenda►Company Profile►Financial Performance►Portfolio Overview►Value Creation 10
  • 11. Financial PerformanceSince 2004, Equatorial has been presenting an excellent financial performance. Net Operating Revenues EBITDA (R$ million) R$ million 2,506 2,346 784 757 1,981 1,799 39 1,358 1,347 36 368 287 510 504 29 24 1,912 482 1,756 416 999 379 879 341 470 500 810 1,148 526 629 189 85 2004 2005 2006 2007 2008 2009 2010 (*) 2011 2004 2005 2006 2007 2008 2009 2010 (*) 2011 CEMAR Light Geramar CEMAR Light Geramar 2004 2005 2006 2007 2008 2009 2010 (*) 2011 Net Revenue 526 629 810 879 2.346 2.506 1.799 1.981 EBITDA 85 189 341 379 784 757 510 504 % EBITDA 16% 30% 42% 43% 33% 30% 28% 25%(*) As from 2010, all values are according to IFRS 11
  • 12. Financial Performance 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011Consolidated Dividends (R$ MM) - 54 108 151 284 51 197 50 (*) Payout 0% 24% 90% 99% 95% 25% 104% 32% CEMAR - 54 108 112 91 58 200 94 (*) Dividend Yield N/A N/A 10% 13% 27% 3% 18% 4% Light - - - 27 111 56 - - * 2008 figure includes R$82 million in Capital Reduction Capital Reduction (holding) - - - - 82 - - -Net Income (R$ MM) 123 229 119 153 300 207 189 160 CEMAR (31) 234 116 117 148 129 279 248 Geramar - - - - - - 6 11 Light - - - - 130 79 - -(*) The dividends for the fiscal year 2011 were submitted to AEGM to be held on March 19, 2012. Distributions to Shareholders/Net Income R$ million 300 284 229 207 197 189 151 153 160 123 119 108 - 54 51 50 2004 2005 2006 2007 2008 2009 2010 2011 Dividends Net Income 12
  • 13. Financial Performance Improved operating performance and financial restructuring led to a significant reduction in leverage, Consolidated Net Debt and Net Debt/EBITDA (*) 4.0 R$ million / Times 2.0 1.6 1.6 1.5 0.9 684 0.3 499 0.0 402 689 221 198 5 77 2004 2005 2006 2007 2008 2009 2010 2011 (*) Consolidated (65.1% CEMAR, 25.0% Geramar and 13.03% Light). Light is no longer consolidated as from 2010. 13
  • 14. Financial Performance made a longer debt amortization schedule possible… Debt Amortization Schedule - R$ MM Short Term 2012 2013 2014 2015 After 2015 CEMAR 282 384 171 148 400 1.385 Geramar 65 - - - 43 107 Total 347 384 171 148 442 1.493 107 65 Geramar 282 384 1.385 171 148 CEMAR 43 400 Gross Debt Short Term 2013 2014 2015 After 2015 14
  • 15. Investments and a significant increase in investments. Investments - R$ MM 2004 2005 2006 2007 2008 2009 2010 2011 CEMAR 70 232 306 394 465 419 399 497 Light - - - - 137 141 - - Geramar - - - - 24 107 16 0.4 Total 70 232 306 394 626 667 415 497 24 107 137 141 0.4 465 16 419 394 306 497 399 232 70 2004 2005 2006 2007 2008 2009 2010 2011 CEMAR Light Geramar 15
  • 16. Agenda ►Company Profile ►Financial Performance ►Portfolio Overview ►Value Creation 16
  • 17. CEMAR: Highlights Energy Sales (2011) RR AP 4,372 GWh 23% AM MA CE PA RN PB PI 47% AC TO PE AL MA RO SE 10% BA MT GO DF 20% MG MS ES SP RJ PR SC Clients (2011) RS 0.5% 5% 1.9 million 7% Distribution company in the State of Maranhão 1.9 million clients (4th largest in the Northeast region)* Billed energy (2011): 4, 372 GWh (5th largest in the Northeast)* 88% Annual gross revenues of R$ 2.6 billion in 2011. Residential Commercial Industrial Others *Source: ABRADEE 17
  • 18. CEMAR: History CEMAR under PPL Global’s CEMAR under control of control Equatorial 1958- Aug.2000- Aug.2002-May May 2004- Jun. 2000 Aug.2002 2004 Present State owned ANEEL’s intervention 18
  • 19. CEMAR: Ownership Structure Eletrobras Equatorial Energia Others 33.6% 65.1% 1.3% CEMAR 19
  • 20. 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. 20
  • 21. CEMAR: Distribution 2004 2005 2006 2007 2008 2009 2010 (***) 2011 (***) Energy Sold GWh 2,593 2,793 2,917 3,223 3,347 3,566 4,146 4,372 Net Revenues R$ MM 495 665 810 879 999 1,148 1,756 1,912 PMSO R$ MM 127 126 129 126 139 171 245 299 PDA + Contingencies R$ MM 47 20 14 30 32 33 68 42 EBITDA R$ MM 93 189 341 379 415 470 500 482 • 1.9 million clients in 217 municipalities, covering Net Income R$ MM (31) 359 177 222 227 198 279 248 the whole state of Maranhão (total area 333,000 Dividends R$ MM - 85 165 172 140 58 200 94 km²) Net Debt R$ MM 362 305 291 421 673 768 759 598 Net Debt / EBITDA times 3.9 1.6 0.8 1.1 1.6 1.6 1.5 2 Clients 000 1,161 1,254 1,349 1,438 1,535 1,688 1,822 1,939 • Energy sales reached 4,372 GWh in 2011, 5.4% PMSO/Client R$/Client 109 101 95 88 90 101 134 154 higher than in 2010. EBITDA/Client R$/Client 80 150 253 264 270 278 274 249 DEC (*) Hours/Year/Client 63.4 54.6 42.6 28.7 27.3 23.6 21.8 21 • In 2011, energy losses represented 21.0% of FEC (*) Times/Year/Client 39.3 32.9 24.6 19.8 16.8 15.2 14.1 12 Total Losses (*) % 29.9% 29.5% 29.8% 28.7% 28.9% 25.2% 22.0% 21.0% required energy, 1.0 p.p. less than the 22.0% CAPEX R$ MM 45 103 137 199 278 239 197 320 recorded in 2010. PLPT (**) R$ MM 25 129 169 195 187 180 202 175(*) Last 12 months • Service quality has been presenting positive(**) Light For All Program(***) Values according to IFRS evolution. Since 2003, DEC and FEC indices have dropped 66.2% and 70.4%, respectively. • More than 301 thousand clients connected by the Light for All Program. 21
  • 22. CEMAR: Energy Losses Total Losses over Required Energy (last 12 months) 28.7% 28.9% 28.6% 28.9% 28.5% 28.1% 28.1% 26.4% 25.2% 24.2% 23.1% 22.2% 22.2% 22.0% 21.6% 21.4% 21.2% 21.0% 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Regulatory Target Total Losses (from Aug-11 until Jul-12) Non-technical Losses over Low-Voltage Market (last 12 months) 30.4% 30.6% 29.9% 30.0% 29.0% 28.7% 27.3% 23.7% 21.5% 19.5% 18.9% 15.7% 15.9% 15.7% 15.2% 15.4% 15.3% 15.3% 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Regulatory Target Non-technical Losses (from Aug-11 until Jul-12) 22
  • 23. CEMAR: DEC/FEC 2009 Evolution Comparison Better DEC (hours) FEC (times) COELCE 8 10 COELCE 6 ENERSUL CHESP 12 CELPE 7 COSERN 7 COSERN 13 ENERSUL 7 SULGIPE 14 COELBA 11 CEB 15 SULGIPE 13 CELPE 17 CEMAR 2010 14 CEAL 21 CEAL 14 CELG 21 CEMAR 2009 15 CEMAR 2010 22 CEB 15 CEMAR 2009 24 CELG 16 CEMAR 2008 27 CEMAR 2008 17 COELBA 27 CEMAR 2007 20 CEMAR 2007 29 CEMAT 22 CEMAT 29 CEMAR 2006 25 CHESP 25 CERON 32 30 CERON CEPISA 41 CEPISA 32 CEMAR 2006 42 CEMAR 2005 33 ELETROACRE 45 CELTINS 33 CELTINS 46 CEMAR 2004 39 CEMAR 2005 55 ELETROACR 44 CEMAR 2004 64 CELPA 53 CELPA 102 23
  • 24. CEMAR: Accident Index – Total Workforce 2009 Frequency Index Severity Index CEMAR 2007 Better 1.0 1.1 CEMAR 2009 1.2 CEMAR 2008 64 CPFL PIRATININGA 73 AMAZONAS 1.4 ELEKTRO 189 CEB 1.8 CEMAR 2005 474 COELCE 1.9 CEMAR 2006 599 CEMAT 2.4 ELETROPAULO 646 CEMAR 2007 2.6 CPFL PIRAT. 656 CELG 2.8 BANDEIRANTE 693 CEMAR 2008 3.1 AMAZONAS 717 ENERGISA SE 3.1 COELCE 736 ELEKTRO 3.9 COELBA 959 ELETROPAULO 3.9 CEEE 963 CEMIG 4.2 CEMIG 1,069 CEMAR 2005 4.2 CPFL PAUL. 1,082 CPFL PAULISTA 4.3 CEMAR 2004 1,083 ENERGISA PB 4.5 CELPE 1 23 ,1 RGE 4.9 CELPA 1,208 LIGHT 5.0 AMPLA 1,302 BANDEIRANTE 5.3 ESCELSA 1,372 COSERN 5.4 LIGHT 1,446 CELPE 5.5 COPEL 1,487 CEMAR 2009 5.8 ENERGISA PB 1,540 AMPLA 5.8 COSERN 1,574 COPEL 6.0 CEB 1,589 CEEE 6.2 RGE 1,843 COELBA 6.6 ENERGISA SE 2,042 CELESC 2,203 CELTINS 6.8 ENERSUL 2,489 ENERSUL 7.6 CELG 2,510 CEMAR 2004 7.6 CEMAR 2003 2,918 CEMAR 2003 7.7 CEPISA 3,229 ESCELSA 8.7 CELESC 4,010 CELPA 19.1 CEMAT 4,591 CEMAR 2006 20.6 CELTINS 24
  • 25. Geramar: Ownership Structure Ligna Servtech 50% 50% Fundo de Equatorial GNP Investimento em Energia Participações Brasil 50% 25% 25% Geramar 25
  • 26. 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$45 million. 26
  • 27. SOL Energias – Energy Trader • In November, Equatorial invested R$ 6.0 million into SOL Energias equity (energy trading and developer of new products and services), thus retaining 51.0% of its total shares. • The amount invested will be used in the energy trading working capital. Executives 51% 49%
  • 28. SOL Energias – Energy Trader • Main Executive-Partners: • Paulo Cezar Tavares (former CPFL’s vice-president of Energy Management). • Roberto Wainstok (former CPFL Brasil’s Executive Officer of Energy Purchase and Sales) • Antonio Pinhel (former Neoenergia Energy Market and Commercial Manager) • Energy Trading Business: • Complex regulation and energy pricing • Potential market: • Free customers (representing between 25% and 30% of the brazilian energy market), with more than 980 consumers; • Captive (government auctions); • Fragmented market: more than 90 active tradings. • Intermediation of energy purchase and sale, without physical delivery; • Solutions customizing to supply specific needs from clients (consumers and generators).
  • 29. SOL Energias – Energy Trader PAULO CEZAR TAVARES (SOL’s CEO) • Pioneer in this market and main responsible by the development of CPFL Brasil – biggest brazilian trading (aprox. R$200 million in annual net income) and NC Energia (energy trading of the Neoenergia Group); • Professional with a huge experience in energy trading, active since 2001; • Brief Resumee: • CPFL Energia: Vice-president of Energy Management (2002-2011) • Abraceel: Board member of the Brazilian Energy Trading Association since 2003. • NC Energia (former GCS Energia): CEO (2001-2002) • Celpe: CEO (1998-2000) • Grupo Eletrobras: several.
  • 30. Agenda►Company Profile►Financial Performance►Portfolio Overview►Value Creation 30
  • 31. Agenda Financial strength and solid Growth prospects and management team with consolidation opportunities turnaround experience Result-oriented management High level of model Corporate Governance 31
  • 32. Contacts Firmino Sampaio CEO Eduardo Haiama CFO and IRO Thomas Newlands IR Analyst Phone 1: 55 21 3206-6635 Phone 2: 55 21 3206-6607 E-mail: ir@equatorialenergia.com.br Website: http://www.equatorialenergia.com.br/ir 32
  • 33. Disclaimer► This presentation may contain forward-looking statements, which are subject to risks and uncertainties, as they were based on the expectations of Company’s management and on available information. These prospects include statements 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 or suggested by said forward-looking statements. Many factors and values that can establish these results are outside Company’s control or expectation. The reader/investor is prevented not to completely rely on the information above.► The words “believe", “can", “predict", “estimate", “continue", “anticipate", “intend", “forecast" and similar words, are intended to identify estimates. Such estimates refer only to the date in which they were expressed, therefore the Company has no obligation to update said statements.► This presentation does not consist of offering, invitation or request of subscription offer or purchase of any marketable securities. And, this statement or any other information herein, does not consist of a contract base or commitment of any kind. 33