EX-99.(C)(10) 9 d842696dex99c10.htm EX-99.(C)(10) EX-99.(c)(10)

Exhibit (c)(10) Considerations February 2024


Indiana’s Rationale for Acquiring Arizona’s Outstanding Shares • US is a key market for Indiana Transaction Consistent with • Networks and renewables are core to Indiana’s growth strategy Indiana’s Strategy • Transaction further increases exposure to A-rating countries • Market does not ascribe Arizona the same value as its peers (1) - L6M/L12M performance of (7.4%)/(22.3%) vs (2.3)%/(12.3%) of Arizona’s peers and (1.6%)/(4.9%) of UTY Index • Unappealing acquisition currency Unclear Benefits, If Any, of Arizona - Arizona currently trading at 13.8x 2024E P/E vs. peers mean and median of 14.3x Being Listed (2) (2) (1) - Low liquidity of the stock ($30 MM ADTV over last 6 months vs $193 MM ADTV for peers ) • Arizona’s listed nature demands a dividend policy that might not be underpinned by its growth prospects and capital needs • Facilitates capital allocation and avoids dividend leakage Transaction will Simplify Indiana’s • Reduces complexities derived from a U.S. listed subsidiary Group Structure • Full integration should unlock operational benefits and enhance the group’s operating and strategic flexibility Transaction • Price expected to be in line with comparable companies trading multiples Consistent with • EPS neutral Indiana’s Financial • Rating neutral (BBB+ / Baa1) Policy Source: Capital IQ as of February 22, 2024 Notes: 1. Arizona’s peers include Exelon Corporation, FirstEnergy, Eversource Energy and PPL Corporation 2. Average daily trading volume 2


Arizona’s Rationale for Acquisition • Market does not ascribe a premium valuation to Arizona relative to peers Cash Premium • Cash premium above current share price provides certainty of value to Arizona shareholders • Market expectations that long-term EPS guidance will be reset lower at the upcoming Capital Markets Day Declining EPS • Any reduction in long-term guidance will likely pressure Arizona’s stock price and limit shareholder upside for the next several years • Arizona’s limited public float will likely make future equity raises more difficult Future Capital Needs • There is greater fundraising optionality as a subsidiary of Indiana Integration • Ability to unlock benefits of full integration with the broader Indiana group • Arizona’s listed nature demands a dividend policy that might not be underpinned by its growth prospects and capital Dividend Policy needs Governance • Transaction will reduce uncertainty around governance 3


Talking Points for Queens • US is a key market for Indiana Transaction • Networks and renewables are core to Indiana’s growth strategy Consistent with Indiana’s Strategy • Transaction further increases exposure to A-rating countries • Market does not ascribe Arizona the same value as its peers (1) - L6M/L12M performance of (7.4%)/(22.3%) vs (2.3)%/(12.3%) of Arizona’s peers and (1.6%)/(4.9%) of UTY Index • Unappealing acquisition currency Unclear Benefits, If Any, of Arizona - Arizona currently trading at 13.8x 2024E P/E vs. peers mean and median of 14.3x Being Listed (2) (2) (1) - Low liquidity of the stock ($30 MM ADTV over last 6 months vs $193 MM ADTV for peers ) • Arizona’s listed nature demands a dividend policy that might not be underpinned by its growth prospects and capital needs • Facilitates capital allocation and avoids dividend leakage Transaction will • Reduces complexities derived from a U.S. listed subsidiary Simplify Indiana’s Group Structure • Full integration should unlock operational benefits and enhance the group’s operating and strategic flexibility Transaction • Price expected to be in line with comparable companies trading multiples Consistent with • EPS neutral Indiana’s Financial • Rating neutral (BBB+ / Baa1) Policy Since Queens’ investment in Indiana, unrealized capital gain for Queens has been €2.9 Bn and Queens has received €2.6 Bn in dividend distribution (metrics include Queen’s investment in both Indiana and Arizona) Source: Capital IQ as of February 22, 2024 Notes: 1. Arizona’s peers include Exelon Corporation, FirstEnergy, Eversource Energy and PPL Corporation 2. Average daily trading volume 4


APPENDIX Additional Materials 5


Historical Trading Performance of Arizona Share Price Performance # Date Description (1) Indexed Share Price Performance Since Platinum Acquisition Announcement A A Dec-21 Platinum transaction rejected by NMPRC (%) Jan-22 Appealed to the NMSC B B 140 C C Sep-22 Arizona Analyst Day May-23 NMSC denies remand to NMPRC D D E E Jan-24 Termination of Platinum deal 120 100 B A (6.4%) C (9.1%) 80 D L3M SPP L6M SPP L12M SPP Arizona 1.0% (7.4%) (22.3%) Arizona Peers (2.0%) (2.3%) (12.3%) E (36.6%) 60 UTY (2.9%) (1.6%) (4.9%) 40 Oct-20 Feb-21 Jun-21 Oct-21 Feb-22 Jun-22 Oct-22 Feb-23 Jun-23 Oct-23 Feb-24 (2) Arizona Arizona Peers UTY Source: Capital IQ as of February 22, 2024 Notes: 1. Arizona’s acquisition of Platinum announced on October 21, 2020 2. Arizona peers include Exelon Corporation, FirstEnergy, Eversource Energy and PPL Corporation ADDITIONAL MATERIALS 6


Transaction Impacts (1) Assuming No Synergies and No Transaction Costs S&P Moody´s (2) Acquisition Financing Accretion / (Dilution) FFO/ND FFO/ND Indiana 22.1% 22.0% Standalone Indiana BBB+ 17.0% 17-18% Thresholds Premium over Acquisition Debt 2024PF 2025 2026 2024PF 2024PF (3) Share Price $35.0p.s. 9.8% $2.5Bn (0.4%) 1.0% 0.9% 21.0% 21.1% Offer Price $38.0p.s. 19.2% $2.7Bn (0.6%) 0.9% 0.8% 20.9% 21.0% Offer Price $40.0p.s. 25.5% $2.9Bn (0.7%) 0.8% 0.7% 20.8% 21.0% Offer Price $35.0p.s. 9.8% $2.5Bn (0.4%) 0.7% 0.7% 21.0% 21.1% Offer Price $38.0p.s. 19.2% $2.7Bn (0.6%) 0.6% 0.5% 20.9% 21.0% Offer Price $40.0p.s. 25.5% $2.9Bn (0.7%) 0.5% 0.4% 20.8% 21.0% Offer Price Source: Capital IQ as of February 22, 2024, Credit Rating Reports and Company Information Notes: 1. Assuming additional debt at 4.81% interest rate cost and 26.5% corporate tax rate as per Indiana management. Indiana TSO (Total Shares Outstanding) of 6,239MM based on public company numbers. Exchange rate of $1.096 per euro 2. Assuming 388MM FDSO (Fully Diluted Shares Outstanding) for Arizona based on Q4 TSO of 387MM and including 1.5MM in PSUs (Phantom Shared Units) and RSUs (Restricted Stock Units) nonvested as of Dec 2023 and 0.01MM in RSUs granted and settled in January 2024, based on public company numbers 3. Premium over current price of $31.9 p.s. as of 22 February 2024 ADDITIONAL MATERIALS 7 No Power Delay Power Delay


Net Profit and Loss from Queens Investment in Indiana and Arizona Investment in Indiana (March 2011) Investment in Arizona (May 2021) Total Implied Implied # MM # MM (1) (1) (1) % Stake Acq. EUR MM % Stake Acq. EUR MM EUR MM Shares Shares Share Price Share Price Initial Investment 358.8 6.2%€5.63p.s. (2,021) 14.4 3.7% $51.40p.s. (613) (2,634) Change in Number 194.1 2.5%€4.44p.s. (862) 0 0% n.a. 0 (862) (2) of Shares Total Net Investment as of 552.9 8.7%€5.21p.s. (2,883) 14.4 3.7% $51.40p.s. (613) (3,496) February 2024 Collected Dividends Over 2,541 64 2,605 (3) Time Value of Queens’ 552.9 8.7%€10.75p.s. 5,943 14.4 3.7% $31.87p.s. 404 6,348 Current Position Net Profit / (Loss) 5,602 (144) 5,457 Source: Company information, Indiana and Arizona Annual Accounts, and Capital IQ as of February 22, 2024 Notes: 1. Assuming FX spot exchange rate price at the date 2. Change in number of shares over time net of shares acquired, shares sold and shares received from the script dividend policy and based differences on reported number of shares as of December year end from annual accounts for each respective period. Quantification of impact from change in number of shares estimated as: (The variation of numbers of shares for each year) X (volume weighted share price for that period) 3. Based on reported dividend per share for the period multiplied by the average number of shares held by Queens during the yearly period ADDITIONAL MATERIALS 8


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