Transcript Document
Introduction to CIT Energy January 16, 2007 IPAA Confidential. For discussion purposes only. 1 The World’s Largest Independent Finance Company Headquartered Over in New York City $80 billion in managed assets Rated A/A2 Market Capitalization of $4 Billion Fortune 500 Company; member of the S&P 500 80% of clients are Fortune 1000 companies Over 7,000 employees worldwide Confidential. For discussion purposes only. 2 The World’s Largest Independent Finance Company CIT is not… …a commercial bank – we are not regulated like a bank allowing us to invest across the entire capital spectrum … a hedge fund - we are an arranger, underwriter and distributor of both 1st and 2nd Lien paper, as well as junior capital investments. CIT is… …an Energy Merchant Bank with a unique ability to arrange and underwrite solutions across the entire capital spectrum. Confidential. For discussion purposes only. 3 CIT Energy - Overview Industry Sub-Vertical Focus Houston Upstream New York Midstream CIT Energy provides advice and financial solutions for clients that operate throughout the energy industry value chain Power/Renewables Power Generation E&P Gathering & Service Transmission & Services Oil Field Services Transmission Alternative Energy Sources Conversion Confidential. For discussion purposes only. Delivery 4 U.S. Middle Market Lead Arranger “Traditional Middle Market” = Deal size $100-500 million 2004 U.S. Traditional Middle Market Lead Arranger Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Bank Holding Company Bank of America JP Morgan Wachovia Securities Wells Fargo & Company PNC Bank ABN AMRO Bank N.V. General Electric Capital Corporation Antares Capital Corporation KeyBank National City Corporation Harris Nesbitt Ableco Finance/Dymas Capital U.S. Bancorp BNP Paribas Merrill Lynch & Company Madison Capital Funding LLC CIT Group Goldman Sachs & Company SunTrust Bank Credit Suisse First Boston Bank of New York Company GMAC Commercial Finance CIBC World Markets Citigroup Fifth Third Bank Comerica M&T Bank Scotia Capital Citizens Bank Rabobank Lead Arranger Volume 10,514,708,519 7,246,041,164 5,151,032,500 4,453,867,338 3,507,517,000 2,750,350,192 2,563,580,000 1,599,000,000 1,581,954,999 1,556,351,425 1,358,430,000 1,311,600,000 1,123,515,000 1,082,216,370 961,048,824 949,255,689 932,000,000 877,500,000 791,000,000 755,000,000 654,875,000 432,000,000 381,000,000 376,000,000 314,900,000 305,900,000 302,000,000 301,535,149 262,500,000 258,760,000 # of Deals 232 157 94 90 124 52 58 33 37 33 27 26 22 22 18 21 25 11 15 14 15 7 7 8 7 7 5 7 6 5 2006 U.S. Traditional Middle Market Lead Arranger Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Bank Holding Company Bank of America JP Morgan General Electric Capital Corporation PNC Bank Wells Fargo & Company ABN AMRO Bank N.V. National City Corporation Wachovia Securities CIT Group Inc BMO Capital Markets Madison Capital Funding LLC Merrill Lynch & Company CapitalSource Finance LLC KeyBank Credit Suisse U.S. Bancorp BNP Paribas SunTrust Bank Fifth Third Bank Bank of New York Company Royal Bank of Scotland Plc Ableco Finance/Dymas Capital Citigroup CIBC World Markets RBC Capital Markets Freeport Financial LLC GMAC Commercial Finance Union Bank of California Credit Agricole SA AC Finance LLC Lead Arranger Volume 7,759,692,230 5,532,200,000 4,387,626,067 3,898,504,497 3,793,489,465 2,961,120,500 1,768,660,000 1,742,343,000 1,580,700,000 1,497,307,043 1,474,920,000 1,077,051,000 967,850,000 920,603,851 835,500,000 751,900,000 723,297,337 711,000,000 492,100,000 431,592,000 418,000,000 390,000,000 330,000,000 267,500,000 263,500,000 260,000,000 255,600,000 238,100,000 236,500,000 236,200,000 # of Deals 153 109 80 120 76 54 38 41 28 29 32 20 20 21 12 14 12 13 10 10 6 5 7 5 7 6 5 7 5 7 Source: Reuters Loan Pricing Corporation Confidential. For discussion purposes only. 5 CIT Energy – Life Cycle Solution Life Cycle Example Initial CapitalizationEquity Financing Stage of Growth Company Acreage acquired, drilling begins; reserve mix of some PDPs, but mostly PUDs CIT provides $10 million Stretch 1st Lien CIT Solution Additional drilling; more PDPs, some PDNPs & PUDs; large acreage position CIT provides $25 million Stretch 1st Lien Refinancing 6 months later; 1st & 2nd Lien structure now available CIT provides $25 million Conforming 1st Lien & $15 million 2nd Lien $100 million Acquisition CIT arranges, underwrites and syndicates $100 million 1st Lien & $40 million 2nd Lien CIT begins initial dialogue Time Confidential. For discussion purposes only. 6 CIT Energy: Start-Up Acquisition Financing Profile Former executive of major oil companies making a $15 million start-up acquisition Situation Start-up acquisition with drop dead date CIT Energy to underwrite debt (Unitranche equivalent to 1st, 2nd, and Mezz) Equity bows out of transaction at 5:00 p.m. on Friday with deal set to close the following Wednesday CIT Solution CIT Energy obtains approval to bridge the equity (based on soft circle from new equity provider) on the following Tuesday and the deal closes on Wednesday as scheduled Confidential. For discussion purposes only. 7 CIT Energy: Early Development Financing Profile Early Stage Development Financing - $12 million Situation Very small producer in business for two years No PDPs and in need of development capital Use of proceeds: 1) buy out other 50% owner, 2) lay gathering line, 3) refinance existing debt, 4) fund drilling and acquisition of additional acreage CIT Solution Arranged and hold both 1st ($0 outstanding) and 2nd Lien facility Debt facilities structured to grow with the company with appropriate pricing for 1st and 2nd Lien risks Confidential. For discussion purposes only. 8 CIT Energy: Gulf of Mexico Profile Gulf of Mexico - $34 million development capital Situation Producer seeking financing for additional development capital Positioning company for sale CIT Solution CIT Energy arranged $16 million 1st Lien and $18 million 2nd Lien Use of proceeds: $30 million refinancing and $4 million for new drilling capital Noteworthy 2nd Lien underwriting and hold on GOM properties Confidential. For discussion purposes only. 9 CIT Energy Overview – Sample Transactions $25,000,000 $15,000,000 $18,000,000 $18,000,000 Senior Secured 2nd Lien Credit Facility Senior Secured 2nd Lien Credit Facility Senior Secured Revolving Credit Facility Senior Secured Revolving Credit Facility Ascent Oil and Gas, Inc. ERG Resources, LLC Corkran Energy, LP TransEnergy, Inc. July 2007 October 2007 June 2007 June 2007 Co-Lead Arranger Sole Lead Arranger Sole Lead Arranger Sole Lead Arranger $15,000,000 $400,000,000 $65,000,000 $38,000,000 Senior Secured Credit Facility Senior Revolving Facility Term Financing Senior Secured Revolving Credit Facility and 2nd Lien Credit Facility Natural Gas Compression August 2007 March 2007 Sole Lead Arranger Co-Syndication Agent September 2007 Sole Lead Arranger Confidential. For discussion purposes only. Sole Lead Arranger 10 Questions and Follow-Up Confidential. For discussion purposes only. 11