TPW announces conditional sale of its Retail Business

Infratil Limited 5 Market Lane, PO Box 320, Wellington, New Zealand Tel +64-4-473 3663 www.infratil.com

21 June 2021


Trustpower agrees terms with Mercury for conditional sale of its retail business
Trustpower Limited (Trustpower), in which Infratil is a 51% shareholder, this morning announced
the sale of its gas, telecommunications and retail electricity supply business (excluding the supply
of electricity to commercial and industrial customers) to Mercury NZ Limited (Mercury). The sale
is conditional on, among other things, Trustpower shareholder approval.
Infratil advises that it is supportive of the sale of Trustpower’s retail business to Mercury, and
intends to vote in favour of the sale at the Trustpower annual shareholder meeting on
22 September 2021.
Trustpower has advised that, subject to all conditions being satisfied, it expects the sale to
complete late 2021 or early 2022.
A copy of the Trustpower release is attached.

Any enquiries should be directed to:
Mark Flesher, Investor Relations, Infratil Limited mark.flesher@infratil.com

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NZX Release
Monday 21 June 2021

Title: Trustpower agrees terms with Mercury for conditional sale of its retail business.
Trustpower today announces the conditional sale of its gas, telecommunications, and retail
electricity supply business (excluding the supply of electricity to commercial and industrial
customers) to Mercury NZ Limited (Mercury) for $441million, subject to post-completion
adjustments. The sale of the retail business will take effect following the conditions of the sale being
met, which is expected to be late 2021 or early 2022.
Key conditions of sale include Commerce Commission approval, Trustpower shareholder approval
(which is expected to be sought at its Annual Shareholder meeting on 22 September 2021) and the
TECT restructure being completed.
An electricity hedge structure has been agreed to support the customer retail demand. More details
of this are provided in the separate Investor Presentation released along with this statement. The
terms of this hedge underpin Trustpower’s earnings for the medium term and the initial price has
been set taking advantage of current firm wholesale prices.
The Trustpower name and brand is included in the transaction and will transfer at the completion of
the sale. Trustpower will select a new name in due course.
Chairman Paul Ridley-Smith says there were several interested parties in the acquisition of the retail
business, validating the opportunity that exists to continue to grow the successful offering of
electricity, gas, broadband, mobile and wireless connection services.
“We are pleased that our business will stay in local hands, with a future owner committed to
retaining Trustpower’s Tauranga and Oamaru offices for the foreseeable future. Mercury clearly
understands the business and the strategic value of a proven multi product
offering, quality customer base and opportunities for future growth” Ridley-Smith says.
Ridley-Smith says the conditional sale of the retail business enables the Board and leadership team
to continue to drive operational excellence in its generation business and focus on new generation
and related opportunities.
“Until the sale goes unconditional and then completes, it is business as usual for Trustpower. We will
continue to do our best for our customers until the business joins with Mercury,” said Ridley-Smith.
Trustpower Chief Executive David Prentice says the opportunities for employees has been an
important consideration in this process.
“The capability and performance of our people is what makes the difference for our customers,
communities, and shareholders. The majority of employees will get the opportunity to transfer to
Mercury and of the rest of the employees most will remain with the generation business” said Mr
Prentice.
Equally, Trustpower is confident once Mercury completes the purchase it will maintain and enhance
the value and quality of Trustpower’s customer service.
“As to the future, this is an exciting time for Trustpower. New Zealand needs to greatly increase
renewable energy generation to aid the de-carbonisation and electrification of the economy and we

are in a unique position to play a role in helping the country achieve its climate change targets,” says
Prentice.
David Prentice will be the Chief Executive of the new generation business going forward.
Trustpower will consider capital structure, dividend policy and opportunities for re-investment of the
proceeds as settlement of the transaction approaches. A further update will be provided at the
Annual Shareholder meeting on 22 September 2021.
Forsyth Barr acted as Trustpower’s Financial Advisor in respect of this transaction.
END
10am Conference Call: Analysts and media are invited to a Trustpower conference call presentation
via Zoom Webinar at 10am today (21 June). Please access the meeting via this
link: https://trustpower.zoom.us/j/92626467225

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Paul Ridley-Smith -Chair
David Prentice -Chief Executive
Kevin Palmer -Chief Financial Officer
21 June 2021

•Overview
•Transaction summary
•Trustpower generation
•Energy risk management
•Looking forward
•Questions
Investor Presentation| 21 June 2021

In late January Trustpower announced a strategic review to test market interest in its retail business, while also exploring themerits of a standalone generation
business.
Trustpower confirms the conditional sale of its retail business to Mercury NZ Limited for $441million, subject to post-completion adjustments
•Retail business comprises the gas, telecommunications and retail electricity supply business (excluding the supply of electricity to commercial and industrial
customers).
•Sale of the retail business will take effect following the conditions of sale beingmet, late 2021 or early 2022.
•Key conditions of sale include:
•Commerce Commission approval;
•Approval by Trustpower’sshareholders;
•Completion of the TECT restructure; and
•Other usual conditions of a transaction of this nature
•An electricity hedge structure has been agreed to support the customer retail demand.
•All assets used in the retail business including debtors and other working capital will be transferred.
Transaction Thesis
•Retail utility markets are, and are expected to remain, highly competitive.
•The more successful participants will be those that make substantial investments over an extended period in digitising, brand, products and service to meet
evolving customer expectations. Rather than make these investments, Trustpower has preferred to focus on generation opportunities.
•Trustpower has created a valuable multi-utility platform with substantial grow opportunities that others with utility retail ambitions would value highly. Mercury’s
purchase, and other interest from unsuccessful bidders, has validated that view.
•Trustpower believes that, for a generator of its size, it doesn't need to own retail customers as a hedge.
Overview
Investor Presentation| 21 June 2021

The transaction includes:
•The mass market retail business of ~231,000 customers which includes:
•Nationwide carrier grade ISP network
•Mercury will offer roles to Trustpower’smass market employees
•IT systems and other business assets to ensure success from day one are included
•An assignment of Trustpower’sleases at its Tauranga and Oamaru premises
•Normal levels of working capital
Transaction summary
252,000 electricity connections
112,000 total telco connections
44,000 gas connections
8,000 mobile connections
52% of customers now have two or more products
Investor Presentation| 21 June 2021

Trustpower Generation will retain:
•All generation assets
•Energy trading capability
•~14,000 C&I electricity connections
•Power Purchase Agreements with Tilt Renewables and other generators
•Existing hedge contracts
Trustpower Generation will:
•Play its role in helping the country achieve its climate change targets.
•Continue to drive operational excellence in its generation business and focus on
new generation and related opportunities.
•Trustpower name and brand will transfer to Mercury and Trustpower will rename to
better reflect its generation focus.
•Review its capital structure and dividend policy.
•David Prentice will be the Chief Executive of the new generation business going
forward.
Trustpower Generation
Investor Presentation| 21 June 2021

Current Energy risk position
New hedge with Mercury to
replace Mass market load
Investor Presentation| 21 June 2021

Energy hedge
When the transaction completes Trustpower will enter into a new energy hedge (CfD) with Mercury.
•Arms length pricing independent of the
retail sale gives increased price certainty.
•Allows for an orderly transition between
a bi-lateral hedge and a portfolio of
hedges/sales into the C&I market.
•Volume shaped by season and time of
day and price set at mutually agreed
locations and with prevailing peaking
factors.
•Trustpower believes that the wholesale
energy market is sufficiently efficient
that as these hedges roll off it can place
its generation into market, or enter into
further hedges, at fair prices.
0
500
1000
1500
2000
2500
FY22FY23FY24FY25FY26FY27FY28FY29FY30FY31
Electrity Hedge
Fixed priceASX linkedMass Market Load
Investor Presentation| 21 June 2021

Trustpower will be holding its Annual Shareholder Meeting on 22 September 2021
•At that meeting we will be asking shareholders to approve the transaction for the purposes of NZX Listing Rule
5.1.1 (a) and will provide further guidance on capital structure, dividend policy and opportunities for re-
investment of the proceeds.
•Until the sale goes unconditional and then completes, it is business as usual for Trustpower. We will
continue to do our best for our customers until the business joins with Mercury.
•The majority ofemployees will get the opportunity to transfer to Mercury and of the rest of the
employees most will remain with the generation business.
•New Zealand needs to greatly increase renewable energy generation to aid the de-carbonisation and
electrification of the economy and we are in a unique position to play a role in helping the country
achieve its climate change targets.
Updated guidance will be issued when completion occurs. However, Trustpower confirms it current
guidance of FY22 EBITDAF in the range of $200-225 million assuming the retail business is held for the
entire financial year.
Looking forward
Investor Presentation| 21 June 2021

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Investor Presentation| 21 June 2021

•Tauranga based national electricity generator and retailer of energy and telco
•History dates back to 1923 as the Tauranga Electric Power Board
•Market capitalisation circa $2.6 billon
•Key shareholders Infratil (51.0%) and TECT (26.8%)
•New Zealand generation capacity (hydro) 498MW producing an average of circa 1,937 GWh per annum
•Approximately 421,000 utility accounts
•Fifty-two per cent of customers have more than one product
•Approximately 801FTE employees
Trustpower key facts
Investor Presentation| 21 June 2021

•While all reasonable care has been taken in the preparation of this presentation, Trustpower Limited and its related entities, directors, officers and employees
(collectively "Trustpower") do not accept, and expressly disclaim, any liability whatsoever (including for negligence) for any loss howsoever arising from any use of
this presentation or its contents. No representation or warranty, expressed or implied, is made as to the accuracy, completenessor thoroughness of the content of
the information. All information included in this presentation is provided as at the date of this presentation. Except as required by law or NZX listing rules,
Trustpower is not obliged to update this presentation after its release, even if things change materially.
•The reader should consult with its own legal, tax, investment or accounting advisers as to the accuracy and application of the information contained herein and
should conduct its own due diligence and other enquiries in relation to such information. The information in this presentation has not been independently verified by
Trustpower.
•Some of the information set out in the presentation relates to future matters, that are subject to a number of risks and uncertainties (many of which are beyond the
control of Trustpower), which may cause the actual results, performance or achievements of Trustpower and its related entities (collectively, the “Trustpower
Group”) to be materially different from the future results set out in the presentation.The inclusion of forward-looking information should not be regarded as a
representation or warranty by Trustpower or any other person that those forward-looking statements will be achieved or that the assumptions underlying any
forward-looking statements will in fact be correct.
•This presentation may contain a number of non-GAAP financial measures. Because they are not defined by GAAP or IFRS, they shouldnot be considered in isolation
from, or construed as an alternative to, other financial measures determined in accordance with GAAP. Although Trustpower believes they provide useful
information in measuring the financial performance of the Trustpower Group, readers are cautioned not to place undue relianceonany non-GAAP financial
measures.
•This presentation is for general information purposes only and does not constitute investment advice or an offer, inducement,invitation or recommendation in
respect of Trustpower securities. The reader should note that, in providing this presentation, Trustpower has not considered theobjectives, financial position or
needs of the reader. The reader should obtain and rely on its own professional advice from its legal, tax, investment, accounting and other professional advisers in
respect of the reader’s objectives, financial position or needs.
Disclaimer
Investor Presentation| 21 June 2021