Barclays Investment Banking Pitch Book
Summary Pro Forma Assumptions
Assumptions
KMI purchases all of the publicly owned equity in KMP, KMR, and EPB on 1/1/15
• All share / unit prices as of 8/8/2014
▪ KMI price: $36.12
. Trading Prices: KMP: $80.34/KMR $77.02/EPB: $33.60
. Acquisition Prices KMP: $89.98/KMR: $89.75/EPB: $38,79
. Assumes year-end 2014 share counts and balance sheet per KMI management
Assumes aggregate merger consideration broken down as follows:
. KMP Consideration
.
Assumes an exchange ratio of 2.1931x shares of KMI Class P common stock and cash consideration of $10.77 per unit
. KMR Consideration
Assumes an exchange ratio of 2.4849x shares of KMI Class P common stock (no cash for KMR shareholders)
EPB Consideration
.
.
•
•
Assumes an exchange ratio of 0.9451x shares of KMI Class P common stock and cash consideration of $4.65 per unit
Assumes KMI finances the KMP and EPB acquisitions with -88% equity / -12% debt and assumes outstanding KMP and EPB debt
. $4.0 billion of new acquisition debt, issued at a 4.75% interest rate(¹)
. Assumes $200 million of transaction expenses, assumed to be paid for with debt (4.75% interest rate)
• Assumes 2015 - 2019 KMP/EPB debt maturities are refinanced at KMI's assumed interest rate, ranging from 4.75% in 2015 and stepping up to
5.75% by 2017(1)
All operating assumptions per KMI management
Assumes KMI steps-up the value of the assets at KMP and EPB for tax purposes
.
• Tax depreciation schedules as provided by management (2)
.
KMI targets a 2015 dividend of $2.00 per share and a 10% dividend growth rate through 2020)
Fairness Opinion Analysis
• KMI funds growth capex with -$4.0 billion in aggregate equity issuance from 2016-2017 and funds the remaining growth capex with debt(¹)
• Assumes $20 million in savings of public company expenses due to consolidation (3)
• Assumes pro forma KMI warrant conversion into -68 million KMI shares calculated assuming 298 million warrants outstanding with a strike price of
$40.00 and KMI share price at conversion of $51.87 (4.5% yield)
1. Assumptions per KMI management
Adjusted for change in share and unit prices.
3. Per KMI management
BARCLAYS
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