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DRAFT FOR DISCUSSION

PRIVATE & CONFIDENTIAL

Eneva S.A.

Proposal for professional services

April 2015
CORPORATE FINANCE

ABCD

KPMG Corporate Finance Ltda.

Av. Almirante Barroso, 52 4th
20031-000 - Rio de Janeiro, RJ - Brazil
P.O. Box 2888
20001-970 - Rio de Janeiro, RJ Brazil

Phone
Fax
Internet

55 (21) 3515-9400
55 (21) 3515-9000
www.kpmg.com.br

Private & Confidential

April 9th, 2015
Eneva S.A.- Praia do Flamengo, n 66, 6th floor, Flamengo, Rio de Janeiro/RJ, Brazil

Provision of valuation analysis services

Dear Mr. Ricardo Levy,
Thank you for this opportunity to submit our proposal (Proposal) for the provision of professional services to Eneva S.A. (Eneva or
Client) related to the valuation of Parnaba Gs Natural S.A. (PGN), BPMB Parnaba S.A. (BPMB), and Eneva Participaes
S.A.(Eneva Participaes), altogether referred to as (Target Assets), in the context of a potential capital increase process.

We are looking forward to working with you. Please do not hesitate to contact us should you have any questions in relation to this
document.
Yours faithfully,
For
KPMG Corporate Finance Ltda.

Paulo Guilherme Coimbra

Partner

KPMG Corporate Finance Ltda. uma sociedade brasileira,

simples, de responsabilidade limitada, membro da KPMG
International, uma cooperativa sua.

KPMG Corporate Finance Ltda. is a Brazilian limited liability company,

member firm of KPMG International, a Swiss cooperative.

Confidentiality

This document has been prepared by KPMG Corporate Finance Ltda. (KPMG) upon the request of Eneva. The distribution of this
document to any third party is prohibited.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Contents
The contacts at KPMG
responsible
for
the
preparation of this Proposal
are:

Paulo Guilherme Coimbra

Partner
Corporate Finance
Tel: +55 21 3515-9219
Fax: +55 21 3515-9000
pgcoimbra@kpmg.com.br
Rben Palminha
Senior Manager
Corporate Finance
Tel: +55 21 3515-9072
Fax: +55 21 3515-9000
rubenpalminha@kpmg.com.
br

Introduction and objective

Scope of work
Valuation Methodology
Reporting and timetable
Engagement team
Fees
Alterations of Terms and Conditions
Acceptance
Appendix
Appendix I Terms and Conditions

Fabiano Delgado
Manager
Corporate Finance
Tel: +55 41 3544-4835
Fax: +55 41 3544-4747
fgdelgado@kpmg.com.br

Appendix II Thomson rankings and KPMG credentials

The curricula of these

professionals are included
in Appendix III.

Appendix VI Disclaimers

Appendix III Curricula Vitae

Appendix IV Example of Hold Harmless Letter & Authorization Letter
Appendix V Example of a Representation Letter

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Introduction and objective

Introduction (cont.)
E.ON Participation in the Capital Increase

Introduction
General Background

Currently, Eneva and Eneva Participaes are under Judicial Recovery.

Eneva Participaes is a joint venture (50:50) owned by Eneva and E.ON
SE (E.ON), through its subsidiary DD Brazil Holdings S.A.R.L.. Eneva is
a publicly-listed company with the following shareholding structure:
Relevant shareholders

% total shares
1

43%

DD Brazil Holdings S.A.R.L. ( ) ( )

2

Eike Batista ( )

20%

Free float

37%
100%

Total
(1 ) - Controlled directly/indirectly by E.ON

Notwithstanding the fact that upstream (gas fields) and downstream

operations (thermalgas power plants) are, at the moment, separate, the
asset subscription would, as a consequence to their integration in Eneva,
combine both operations.
Banco BTG Pactual S.A. (BTG)s Participation in the Capital Increase

Within such context, and in addition to possible credit capitalizations (item ii

of the capital increase in the JRP), KPMG has been informed by BTG that,
in case the JRP is approved for execution, BTG intends to participate in the
capital increase of Eneva through a possible subscription of the shares BTG
holds in BPMB (item iii of the JRP).

BPMB is a gas producer (upstream energy segment), and holds a 30%

stake of gasfields in Northeast Brazil (the other 70% is owned by Parnaba
Gs Natural S.A.). These gasfields are responsible for the supply of fuel to
the Parnaba Complex (a thermalgas electricity park with a 1425MW
installed capacity).

(2) - Part of controlling block

Enevas and Eneva Participaes Judicial Recovery Plan

Eneva and Eneva Participaes, on February 12th, 2015, filed a Plan for
Judicial Recovery (JRP), in accordance with Article 53 of the Brazilian
Judicial Recovery Law. Within this context, Eneva seeks to initiate a
capital increase. Such potential capital increase envisages a change in
Enevas shareholding structure, and, in case the JRP obtains full approval
for execution, such mutations in shareholding structure are planned to be
made through the following contributions: (i) cash; (ii) credit capitalization;
(iii) and asset subscription .The contributions values are estimated as
follows:
Type of contribution in
capital increase
(i) Cash
(ii) Credit cap italization
(iii) Asset sub scrip tion
Total

Estim ated values (in R$

m illions)
600
1.100
1.300
3000

Within such context, E.ON is interested in subscribing assets in the

potential capital increase of Eneva (item iii of the capital increase in the
JRP). In effect, E.ON is willing to contribute with its 50% stake in Eneva
Participaes (downstream) and a 9.09% stake PGN (upstream). Please
refer to corporate structure on page 11.

Objective

Given the above mentioned context and background, Eneva has requested
KPMG to provide two valuation reports: one regarding BPMB; and one
regarding PGN and Eneva Participaes (please refer to page 11 for
corporate structure), in order to underpin the possible asset subscription by
E.ON and BTG in Enevas capital increase. The reports, in accordance to the
JRP, will be presented to Enevas creditors. Should the JRP be approved by
Enevas creditors, the reports will be presented to Enevas shareholders.
Source: Enevas Judicial Recovery Plan, E.ONs management and BTGs management

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Objective (cont.)
Objective (cont.)

In case the JRP is approved by Enevas creditors, and therefore presented

to Enevas shareholders, the valuation will be subject to the Brazilian Act of
Public Limited Companies (Law 6.404/1976, Article 8, 1).

According to Enevas management the main operational companies

belonging to Eneva Participaes are identified bellow, which will be
evaluated according to the Discount Cash Flow approach.
Eneva Participaes S.A.s m ain operational assets
Parnab a III Gerao de Energia S.A.
Parnab a IV Gerao de Energia S.A.
Parnab aGerao e Comercializao
de Energia S.A.
g

The other Eneva Participaes subsidiaries, namely Seival Participaes

S.A., Seival Gerao de Energia Ltda., Au II Gerao de Energia S.A., UTE
Porto do Au Energia S.A., MPX Chile Holding Ltda., Sul Gerao de
Energia Ltda., Eneva Comercializadora de Combustveis Ltda., Eneva
Comercializadora de Energia Ltda., Au III Gerao de Energia Ltda., Eneva
Solar Empreendimentos Ltds., Tau Gerao de Energia Ltda., SPEs
Ventos (jointly, the Eneva Participaes Subsidiaries), will be evaluated
according to the Cost approach (book value), as identified in page 11.

Considering that the reports will be used in the analysis of a potential

capital increase transaction (Transaction) involving Evena, which is a
Brazilian company listed with the So Paulo Stock Exchange (Bovespa),
as well as subject to the reporting requirements of the Brazilian Stock
Exchange Commission (CVM), Eneva may be required to give access to
the Proposal and the reports to CVM. In this sense, Eneva may give such
access only to the extent required by law.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Scope of work
Scope

Important notes

The scope of our work comprises the following activities:

i.

We emphasize that the determination of the fair value of

inventories, tangible assets and contingencies, as well as other
relevant assets and liabilities, are not part of the scope of this
Proposal. Thus, with respect to such items we will base our work
on information and analysis to be made available by the Client,
E.ON, BTG, Target Assets and / or their respective auditors,
lawyers and / or other advisors.

In the course of the work, we will perform the analysis procedures

deemed appropriate in accordance with the scope set forth in this
Proposal. However, KPMG is not responsible for the information
provided to it and will not be liable or pay, in any event, damages
or losses arising or resulting from the omission of data and
information by the Client, E.ON, BTG or Target Assets. We
emphasize also that the work does not constitute an audit
according to generally accepted auditing standards or otherwise
and, therefore, should not be interpreted as such.

We understand that we will have adequate access to the

information necessary for the development of our work, and that
we will be able to count on the cooperation of the Client. If our
access to information is restricted, we will not be able to perform
the work according to the scope and the timetable planned. Any
difficulties in obtaining the information will be communicated and
discussed with you, and that may result in impacts and changes in
the terms of this Proposal.

KPMG does not state an opinion in relation to the probability of the

future results of the Target Assets reaching the projected values. It
must be emphasized that the actual future realization of
projections depends on the continuing validity of the assumptions
they are based on. Any advice, opinion or recommendation
provided by KPMG as part of the engagement shall not amount to
any form of guarantee that KPMG has determined or predicted
future events or circumstances.

Valuation analysis of the Target Assets

o
o

o
o

Analysis of the Target Assets financial statements available

and its key performance indicators;
Interviews with the management of each one of Eneva, E.ON
and BTG to expand and check our understanding of the Target
Assets business operation and future perspectives;
Analysis of the files containing projections of the Target Assets
financial results, prepared by BTG, E.ON and Eneva;
Discussion with the management of each one of Eneva, E.ON
and BTG on the assumptions to be used in the projection of
discounted cash flow (income approach) or other
methodologies;
Analysis of market data provided by the Target Assets and
Eneva, and comparison of data disclosed with information on
the internet, when available;
Gathering of external information aiming at the improvement of
the understanding on the business operational environment in
which the Target Assets are inserted and the identification of
the Target Assets performance main factors;

Discussions with the management od each one of Eneva, E.ON

and BTG on the consistency of criteria used in the valuation;

Estimation of the discount rate to be adopted.

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International, a Swiss entity. All rights reserved.

Scope of work (cont.)

Valuations in general present significant degrees of subjectivity.

Furthermore, the projections and assumptions used in
valuations are based on future expectations, which could be
confirmed or not, in view of the fact that projected events may
not occur, due to a number of exogenous economic and
operating factors. Thus, there are no guarantees that any
assumptions, estimates, projections, results or conclusions
presented in the reports will be effectively observed and/or
verified, entirely or partially. The figures observed in the future
may be different and the differences may be significant. These
possibilities are not a bias or a defect of the valuation process
and are recognized as part of its nature. Hence, KPMG is not
responsible and cannot be held responsible for any differences
between the valuation results and the results observed a
posteriori.

The work will consider the assets and liabilities as presented in

the financial statements. Therefore it will not include the
analysis of potential contingencies not accounted for in the
respective financial statements.

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International, a Swiss entity. All rights reserved.

Methodology Valuation Approaches

Discounted Cash Flow

This methodology estimates the economic value (or the market value) of a
company by calculating the present value of projected cash flows, i.e. the
income and expenses (including investments needed for maintaining and
expanding the companys activities) that are predictable from the
perspective of perpetuity of the entity. These projections should take into
consideration the business plan established by the companys
management, the prospects of the sector in which the company operates
and macroeconomic aspects.

The Discounted Cash Flow Methodology can be used to value any type of
company provided it has a business plan that is consistent and feasible.
This methodology is recommended for companies that have reasonable
prospects for significant expansion of their activities and whose business
plan may be considered appropriate for achieving this growth, since the
methodology is cash flows based on future.

This methodology also reflects the value of the intangible assets, such as
brand name, client portfolio, product portfolio, among others, as all these
assets have an effect on the companys capacity to generate results.

This is the methodology that is most commonly used in estimating the

market value of companies that are considered going concerns, except
when the resulting value is less than the liquidating value of the company
(adjusted net worth).

Free Cash Flow to Firm

The Free Cash Flow to the Firm aims to evaluate the company as a whole,
that includes, beyond the stockholding, the participation of others holders
of rights in the company (holders of bonds, shareholders, etc). The Free
Cash Flow to the Firm can be represented by the following formula:

Free Cash Flow to the Firm

=
Net Profit
+
Depreciation and Amortization
+/Working Capital
Investments (Capex)

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Methodology Valuation Approaches (cont.)

Cost Approach (book value)

DCF (Primary)

Historical
balance sheet

Historical
Income statement

Assumptions (*)

Projections by planning
line

Projected balance sheet

Projected income
statement

The cost approach estimates the value of an asset based on the current
cost or replacement of these assets. The cost approach reflects the idea
that the fair value of an asset should not exceed the cost to obtain a
replacement of this asset, with comparable features and functionality.
However, it should be noted that there may be a very little equivalence
between the cost incurred and the fair value of an asset.

Projected Capex R&D,

working capital

Projected free cash

flow

DCF
Discount Rate
DCF - summary

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Methodology Valuation Approaches (cont.)

BTG

E.ON

100%

50%

9,09%

ENEVA
Parnaba Gs

BPMB

PARTICIPAES

Natural S.A.

S.A.

100%
50%

Seival
Participaes
S.A.

50%

Au II Gerao
de Energia S.A.

50%

UTE Porto
do Au
Energia S.A .

50%

50%

Holding Ltda.

Parnaba
Participaes

100%

Sul Gerao de

Comerc. de

Energia Ltda. .

Combustveis

S.A.

Ltda.

ENEVA

Au III Gerao

ENEVA Solar

Comerc. de

de Energia

Empreendimen -

Energia Ltda..

Ltda.

tos Ltda.

100%
Seival
Gerao de
Energia
Ltda.

100%

100%

50%
ENEVA

MPX Chile

100%

SPEs Ventos*

100%
70%
Energias
Renovables
Ltda.

Parnaba III
Gerao de

Tau Gerao

Energia S.A.

De Energia
Ltda.

70%

Parnaba IV
Gerao de
Energia S.A.

70%

Parnaba
Gerao e
Comerc. de
Energia S.A.

DCF
Not Material (Cost Approach)
Sum of the parts

* Central Elica Algaroba Ltda.

Central Elica Asa Branca Ltda.
Central Elica Boa Vista I Ltda.
Central Elica Boa Vista II Ltda.
Central Elica Boa Vista III Ltda.
Central Elica Bonsucesso Ltda.
Central Elica Bonsucesso II Ltda.
Central Elica Milagres Ltda.
Central Elica Morada Nova Ltda.
Central Elica Ouro Negro Ltda.
Central Elica Pau Branco Ltda.
Central Elica Pau DArco
Central Elica Pedra Branca Ltda.
Central Elica Pedra Rosada Ltda.
Central Elica Pedra Vermelha I Ltda.
Central Elica Pedra Vermelha II Ltda.
Central Elica Santa Benvinda I Ltda.
Central Elica Santa Benvinda II Ltda.
Central Elica Santa Luzia Ltda.
Central Elica Santo Expedito Ltda.
Central Elica So Francisco Ltda.
Central Elica Ubaeira I Ltda.
Central Elica Ubaeira II Ltda.

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International, a Swiss entity. All rights reserved.

10

Reporting and timetable

Reporting

Our findings will be delivered to the Client in two reports: one regarding
BPMB; and other regarding PGN and Eneva Participaes. The reports will
be issued in English and Portuguese. Our reports will describe the
procedures applied, the methodology and assumptions used in the work.

Our reports will include a statement that the information presented is

based on discussions with and information prepared and provided by the
management of each one of Eneva, E.ON, BTG and Target Assets. We
will not verify the data and/or information gathered and, accordingly, we
will express no opinion or any form of assurance on the reasonableness,
completeness, accuracy, integrity and timeliness of the data and/or
information at the date of the presentation.

Because of its special nature, our reports may not be suitable for any
purpose other than the defined in the objective of our Proposal. As such
our reports are restricted to your internal use only and distribution to any
third parties, except any disclosure required for purposes of the
contribution (e.g., creditors assembly, shareholders meeting,), is
prohibited. Additionally, our reports will indicate that we have no obligation
to update our reports or to revise the information contained therein
because of events and transactions occurring subsequent to the date of
the reports.
The Results of the Services or the Work Products (as defined in Appendix I
Terms and Conditions) are confidential and for the sole use of Eneva. If
Eneva has the intention of revealing/disclosing any part of the results of
the Services or Work Products to third parties in a non-public context,
Eneva shall consult KPMG, in accordance with the Terms and
Conditions, prior to any revelation/disclosure. If KPMG consents with the
revelation/disclosure, it will require Eneva to sign an Authorization Letter
and require the third party to sign a Hold Harmless Letter. A draft of such
letters are included herein as Appendix IV.

On the completion of our work KPMG will provide the draft reports containing
the results of its findings, so that the management of the Client may provide
their comments within a maximum period of 10 (ten) days as to whether (i) the
information and data contained in the reports provided by the Client is true and
correct; and (ii) there are differences, to any extent, between the contents of
the reports and the information and data that are known to the management of
Client.

Our engagement is subject to the Terms and Conditions (Appendix I) set out
in this Proposal.

If there is any disagreement with respect to the contents of the reports and the
Client does not provide any comments the lack of manifestation by the Client
will be considered a tacit agreement by the Client with the contents of the
reports and the services performed by KPMG.

Notwithstanding the aforesaid, KPMG will request from the Client, prior to the
issuance of the reports, a Representation Letter to be drafted by KPMG based
upon the sample attached to this Proposal as Appendix V.

Client agrees that the value analysis may include disclaimers such as those
listed in Appendix VI.

Timetable

The estimated timetable for the performance of the work is April 10th, 2015, for
DRAFT Reports, and April 16th, 2015, for Final Reports.

The time estimates are based on normal working conditions and the availability
of information on a timely basis. We will not be responsible for delays occurring
due to circumstances out of our control. During our work, we will promptly
make You aware of any significant issues that may arise as well as provide You
with regular informal feedback on the progress of our work.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

11

Engagement Team

Engagement Partner
Paulo Guilherme Coimbra (Partner)
Corporate Finance,
Responsible for this engagement. Paulo
has extensive experience in this kind of
projects and works with economic and
financial
valuations
and
deal
management.

Engagement Manager

Engagement Manager

Rben Palminha (Senior

Manager)

Fabiano Delgado (Manager)

Corporate Finance

Corporate Finance

Rben has over 8 years of

experience
in
Corporate
Finance related activities, with
specific focus on Energy and
Infrastructure projects. He will
coordinate the work.

Fabiano is a Manager with focus on

valuations. He has experiences in
mergers and acquisitions,
preparation of business plans and
business models.

Consultation team

Andr Schwartzman (Partner)

and Mrcia Yagui (Director)
Corporate Restructuring
Andr and Mrcia have an extensive experience in
transactions dealing with judicial and extra-judicial
recovery. They will be supporting the engagement team.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

12

Fees

Our estimated fees for this engagement are based on the

responsibility, skill and experience level of our professionals involved,
and the time incurred in the engagement.
In respect of the services to be rendered under this Proposal, based
on our experience, our fees will be R$ 320,000.00 (Three Hundred
Twenty Thousand Reais) charged as follows:
These professional fees do not include applicable taxes and out of
pocket expenses which will be billed by KPMG on an actual incurred
costs basis. Our fees will be submitted during the course of our
work as follows:

50% payable upon counter signature of this Proposal

50% payable upon submission of the draft reports

The fees of KPMG will be grossed up by the applicable taxes (5% ISS,
3% COFINS and 0,65% PIS). The fees were determined considering the
legislation in force and applicable to the City of Rio de Janeiro. Thus,
changes in tax law involving , increases in the tax burden directly
applicable to the services offered, in the form of increases in existing
taxes or the creation or replacement of taxes, will be passed on
automatically to the price of the services in order to adjust the economic
and financial balance of this contract. Likewise, the burden related to
any municipal taxes arising from the location in which the contracting
party is established or from where the services are totally or partially
rendered, under any denomination or form, will be borne directly by the
contracting party or added to the amount of the fees due, as the case
may be.

Circumstances encountered during the performance of these

services that warrant additional time or expense could cause us to
be unable to deliver them within the above estimate. We will
endeavour to notify you of any such circumstances as they are
assessed. If such matters exceed the scope of this Proposal, we will
issue a new proposal to confirm the scope and related terms of any
additional work.
The scope of our services includes attending the Creditors Meeting
and on the Shareholders Meeting, but does not include providing
further explanations. Given that these requests may or may not arise
after we submit our reports, if made, we may need to incur
additional hours not included in our estimate described above. We
will calculate our additional fees based on an hourly rate of R$
700,00 (Seven Hundred Brazilian Reais), and will seek your
acceptance of such expenses before the hours are incurred.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

13

Alterations to the Terms and Conditions (Appendix I)

Alterations of Terms and Conditions for Our Services
Clause 5.2., item b to the Terms and Conditions is altered and shall read as follows:

5.2.b: Except in cases where disclosure is required by law, such as due to Creditors meeting of the CLIENT and/or to potential capital increase transaction in the
context of the Eneva S.A. and Eneva Participaes S.A. Judicial Recovery, the CLIENT shall not disclose to any third party or allow any third party to access any
part of the Result(s) of the Services or the Work Product(s) without the prior written consent of KPMG. Notwithstanding the foregoing, it is hereby agreed that
the CLIENT may give access to the Work Product(s) to its shareholders in an non-public context, to the extent that such shareholders have the need to know it,
provided that they declare in writing their agreement that the work was not performed for them and agree to preserve confidentiality. In this case, the CLIENT
shall remain fully responsible for any damage or injury resulting or arising from the access of the Work Product(s) by its shareholders, which may be suffered by
Eneva, KPMG, including representatives of KPMG, or any third party, as provided to in the applicable law. In relation to an access to the Work Product(s) on a
public context, as referred above, the CLIENT may give such access only to the extent required by law.

Clause 2.2., item b to the Terms and Conditions is altered and shall read as follows:

b. In performing the activities under its responsibility, CLIENT must observe that: (i) the Data to be made available should express, exhaustively, the
transactions, procedures or operations to which they refer and they should be presented on a timely basis; (ii) the responsibility for the preparation of Data to be
provided to KPMG is the exclusive responsibility of CLIENTs management, E.ON SE and Banco BTG Pactual S.A.; and (iii) as part of the Services, KPMG will
have the right to ask CLIENT for confirmation in writing of the declarations and verbal information that is given to KPMG by CLIENTs management. Within this
context, CLIENT (or third party(ies) that should provide Data to KPMG) will be solely responsible for the performance of its employees and agents and for the
accuracy and integrity of all Data provided to KPMG for the purposes of rendering the Services. KPMG will not be held responsible, under any circumstances, or
endure damages or losses resulting or arising from the untimely presentation of Data on the part of CLIENT or third party(ies) that should present such Data
according to the nature of the Services, which may adversely affect the normal course of the Services or the Results of the Services, nor for the quality or
sufficiency of the Data, which is provided to KPMG.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

14

Acceptance

The offer contained in this Proposal is valid for 30 days from the date of its
issuance.

The document referred to as Terms and Conditions is hereby incorporated by

reference and attached hereto as Appendix I. In the event of any discrepancies
between the contents of this Proposal and the Appendix I, the terms and
conditions of the Appendix I shall prevail over this Proposal, except if this Proposal
expressly makes reference to a specific provision of this Proposal which will
prevail over a provision of Appendix I.

If you are in agreement with the terms of this Proposal, and wish to engage the
services of KPMG, please have this document signed by the duly authorized
representatives of the Client in the space provided aside, having such
representatives initial all pages.
If the Client does not express its acceptance in the aforementioned manner, but
authorizes the rendering of the services that are the subject of this Proposal,
verbally or in writing and without expressly registering any restriction to the Terms
and Conditions of this Proposal, this act shall represent the tacit acceptance by the
Client of all the Terms and Conditions herein established and, in this manner, the
contractual relationship that will be established between the parties will be
governed, in any case, by this document.
Eneva S.A., with address at Praia do Flamengo, n 66, 6th floor, Flamengo, Rio de
Janeiro/RJ, Brazil, herein represented in the terms of its By-laws, agree with the
terms of this Proposal and its attachments and engages KPMG Corporate Finance
Ltda. to perform the services described herein, in accordance with the conditions
hereby presented.

Eneva S.A.
___________________________________________________
Signature
___________________________________________________
Name / Position

Witnesses:
1. ___________________________________________________
Name:
CPF/MF:

2. ___________________________________________________
Name:
CPF/MF:

Rio de Janeiro, April 9th, 2015

______________________________
KPMG Corporate Finance Ltda.
Paulo Guilherme Coimbra
2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

15

Appendix I Terms and Conditions

Appendix II Thomson rankings and KPMG credentials
Appendix III Curricula Vitae
Appendix IV Example of Hold Harmless Letter & Authorization Letter
Appendix V Example of a Representation Letter
Appendix VI Disclaimers

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

16

Appendix I
Terms and Conditions

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

17

APPENDIX I
Terms and Conditions
This document is incorporated by reference to the Proposal to which it is attached. In the event of any discrepancy between the content of this document
and the content of the Proposal, the terms and conditions of this document shall prevail over the Proposal, except if the Proposal expressly makes reference
to a specific provision of the Proposal which will prevail over a provision of this document.
1 Definitions
The meanings of the following words and phrases shall apply wherever used in these Terms and Conditions:
CLIENT: the addressee (or addressees) of the Proposal, which might also be identified by the shortened form of the respective addressees (or
addressees) name.
Data: data, documents, materials or other kind of tangible or intangible information related to the Services.
KPMG: the KPMG member firm contracting party as identified by the letterhead in the Proposal. A Brazilian member firm of the KPMG global network
of independent member firms affiliated with KPMG International, a Swiss cooperative that provides no services to clients.
Proposal: the engagement letter for the rendering of professional services by KPMG to which these Terms and Conditions must be attached.
Representatives: KPMGs partners, employees, consultants, subcontractors and agents.
Result(s) of the Service(s) and/or Work Product(s): any material developed by KPMG to CLIENT in connection with or as a result of the performance
of the Services.
Services: the services to be executed by KPMG as described in the Proposal.
2- Services and Responsibilities of the Parties
2.1 Services
The events and circumstances listed below are inherent to the Services and may not, under any circumstances, be considered as an insufficiency or
deficiency of any nature in the performance of the Services:
a. The Services do not constitute an audit of financial statements. Therefore, the Services and the Result(s) of the Services shall not be interpreted as or
used for the same purpose as that of an audit.
Verso dos ST&Cs 01 de Outubro de 2012

b. The scope of the Services does not include specific obligation of KPMG of detecting fraud in the operations, processes, records and documents to which
KPMG has access in connection with or as a result of the execution of the Services.
c. The Services may be based on legal and regulatory norms. In this regard, KPMG notes that the Brazilian legislation is complex and very often the same
provision can be interpreted in more than one way. KPMG seeks always to be up-to-date in relation to the various interpretative tendencies, in order to
permit an ample evaluation of the alternatives. Nevertheless, there may be some interpretations that differ from KPMGs. Under these circumstances,
KPMG cannot assure CLIENT that CLIENT will not be questioned by third parties, including authorities.
d. Subsequent to the completion of the Services, KPMG will not update the Work Product(s) in light of subsequent events including, without limitation,
changes or modifications to the norms, or to the judicial or administrative interpretations thereof.
e. The scope of the Services does not include the obligation of performing any independent investigation or verification of the Data provided to KPMG by
CLIENT or by any third party(ies) indicated by CLIENT, as well as of Data which is obtained by KPMG from public sources. In this regard, KPMG will
rely upon the accuracy, integrity and completeness of such Data, and such reliance will not by any means, be considered as a deficiency in the performance
of the Services.
2.2 CLIENTs Responsibilities
a. The participation of CLIENT, through its professionals, will be essential for adequate and timely Result(s) of the Services. Thus, CLIENT will be
responsible for contributing to the performance of the Services, permitting access to Data and personnel, either its own or that of third parties, and
providing, on a non-exclusive basis, all Data which may be requested by KPMG in accordance with the Services, and, when necessary, the compilation and
the preparation of analysis, schedules, reconciliations and statements.
b. In performing the activities under its responsibility, CLIENT must observe that: (i) the Data to be made available should express, exhaustively, the
transactions, procedures or operations to which they refer and they should be presented on a timely basis; (ii) the responsibility for the preparation of Data
to be provided to KPMG is the exclusive responsibility of CLIENTs management; and (iii) as part of the Services, KPMG will have the right to ask
CLIENT for confirmation in writing of the declarations and verbal information that is given to KPMG by CLIENTs management. Within this context,
CLIENT (or third party(ies) that should provide Data to KPMG) will be solely responsible for the performance of its employees and agents and for the
accuracy and integrity of all Data provided to KPMG for the purposes of rendering the Services. KPMG will not be held responsible, under any
circumstances, or endure damages or losses resulting or arising from the untimely presentation of Data on the part of CLIENT or third party(ies) that
should present such Data according to the nature of the Services, which may adversely affect the normal course of the Services or the Results of the
Services, nor for the quality or sufficiency of the Data, which is provided to KPMG.
c. The Result(s) of the Services may include advice and recommendations, but all decisions in connection with the implementation of the Result(s) of the
Services shall be the exclusive responsibility of, and made by, CLIENT. KPMG will not perform management functions or make management decisions
for CLIENT. Thus, as a service provider, KPMG will not be answerable for any act of management that CLIENT may adopt or practice based on the Work
Product(s), nor for any inadequate or unauthorized use that CLIENT or third parties may make of it/them directly or indirectly.
Verso dos ST&Cs 01 de Outubro de 2012

2.3 KPMGs Responsibilities

a. The labor and social security obligations related to the professionals that may represent KPMG before the CLIENT, by means of the performance of the
Services, are the exclusive responsibility of KPMG, which undertakes to hold CLIENT always harmless against all claims and litigation resulting from the
relationship between CLIENT and KPMGs Representatives. KPMG commits to assume, at its own expense, the defense of CLIENT in lawsuits that may
result from such claims and litigation, notwithstanding its duty to indemnify the CLIENT if such defense, under these terms, is impossible, ineffective or
insufficient.
b. KPMGs obligation to meet deadlines established in the Proposal, under any circumstances, is subject to CLIENTs compliance with KPMGs requests
in a timely and adequate manner. In the event of any facts which may have an impact on KPMGs ability to meet deadlines, KPMG shall inform the
management of CLIENT for the adoption of necessary measures.
c. Notwithstanding KPMGs commitment to applying its best efforts in complying with its contractual obligations, due to the very nature of the Services,
KPMG does not assure CLIENT the success of the implementation of the Result(s) of the Services or the closing of any deal, nor does KPMG assure that
such implementation can be completed within any deadline. KPMG will not be responsible for any opportunities not identified, presented or explored,
regardless of the motives or reasons for such.
3 Engagement Team
KPMG may, at its sole discretion and at anytime, replace the professionals indicated in the Proposal for others with similar experience.
4 Fee Arrangements
4.1 The fees described in the Proposal do not include:
a. inflation expectations, since fees are determined without taking inflation into consideration. The fees will be adjusted annually, based on the General
Market Price Index of the Getlio Vargas Foundation (IGP-M/FGV) and, if this index is discontinued, it will be replaced with an inflation adjustment index
established by law, with similar composition and scope, in order to preserve the economic value in question and avoid its deterioration as the result of
inflation. However, KPMG reserves the right to automatically apply any subsequent legal provision that authorizes the adjustment of contracts within a
period of less than one year.
b. any unusual situations that arise during the contractual relationship, such as, but not limited to, the unavailability of Data necessary to perform the
Services, the need to redo the work caused by CLIENT or its employees, or other situations that create the need for additional or extra-ordinary effort by
KPMG. If this type of situation occurs, KPMG will inform CLIENT and the parties will agree to an adjustment, such that KPMG will not need to suffer the
consequences of such unforeseen circumstances unilaterally.

Verso dos ST&Cs 01 de Outubro de 2012

c. additional services requested by CLIENT, such as consultations that involve research or specific matters not included in the Proposal, which will be
charged separately, based on the time effectively spent, as mutually agreed in an amendment to the Proposal signed by the parties.
4.2 Any delays in payment of any installment due will automatically result in an increase in CLIENTs outstanding balance by: (i) a fine of 2% (two
percent) on the full amount of the invoice; (ii) late payment interest equal to the interest rate in force for the late payment of taxes due to the National
Treasury (Selic Special Custody and Clearance System); and (iii) if the interest rate in force for the late payment of taxes due to the National Treasury
does not include an inflation adjustment, such an adjustment shall be added to the interest rate in force for the late payment of taxes due to the National
Treasury, in accordance with the General Market Price Index of Getlio Vargas Foundation (IGP-M/FGV). If this index is discontinued, it will be replaced
with an inflation adjustment index established by law, with similar composition and scope, in order to preserve the economic value in question and avoid
its deterioration as the result of inflation.
4.3 In the event of a relevant impact on the economic equilibrium established among the parties under the Proposal, the parties shall agree upon the
adjustment necessary to reestablish said equilibrium. A deadlock shall constitute just cause for rescission of the contract established under the Proposal and
its appendices, without prejudice to any penalty applicable.
4.4 In light of the nature of the Services, amounts payable to KPMG (except for any success fee agreed upon among the parties to the Proposal) are not
contingent upon proof of specific consideration. The allegation of the existence of the contractual relationship established under the Proposal is sufficient
to support any claim for fees, without prejudice to the right of CLIENT to demand, through proper means, the complete fulfillment of specific obligations
of KPMG, through specific performance, upon the occurrence of any default.
5 Result(s) of the Services
5.1 Acceptance of the Result(s) of the Services
When the Result(s) of the Services, as set forth in the Proposal, are to be delivered as a report, the content(s) of the report(s) will be discussed with the
management of CLIENT before the final report is issued. In the absence of any response from CLIENT within ten (10) days as of the date of delivery of
the report(s), or other period expressly stated in the Proposal, the lapse of the mentioned term, without an express response from CLIENT, will be deemed
as the acceptance of the Result(s) of the Services and the non-acceptance without just cause will be considered as the automatic assumption by CLIENT of
total and unrestricted responsibility for the consequences arising from the non-receipt of the report(s) that may be prejudicial to CLIENT, to KPMG or to
third parties.

5.2 Use of the Result(s) of the Services

a. CLIENT agrees that any part of the Work Product(s) is confidential and for the sole use of CLIENT.
b. Except in cases where disclosure is required by law, the CLIENT shall not disclose or allow access to any part of the Result(s) of the Services by third
parties. CLIENT will also not reveal or refer to the Work Product(s), in full or in part, or the content of documents that form the basis for hiring KPMG
including the Proposal and its appendices, unless upon prior express consent from KPMG.
Verso dos ST&Cs 01 de Outubro de 2012

c. CLIENT agrees to previously consult KPMG in writing about CLIENTs intention of revealing/disclosing any part of the Result(s) of the Services, as
well as provide KPMG with all pertinent information together with the information requested in order to enable KPMG to evaluate and opine, exclusively,
according to the legal and ethical principles to which KPMG is subject in light of internal policies and legal or regulatory requirements.
d. Notwithstanding KPMGs eventual approval of any disclosure of the Result(s) of the Services, CLIENT agrees that the use or disclosure by CLIENT of
any part of the Work Product(s), in any case and for any purpose, will be based on the evaluation of the convenience and opportunity of such use or release
to be performed by CLIENT through its executives, consultants or advisors and therefore under CLIENTs exclusive risk and responsibility.
e. Consequently, it is agreed between KPMG and CLIENT that should CLIENT use or reveal any part of the Result(s) of the Services, CLIENT will
automatically be responsible for any consequence, damage or loss resulting or arising from such use or revelation, which may be experienced by CLIENT,
KPMG, including KPMGs Representatives or third parties.
5.3 KPMG Property
a. In order to be able to provide better services, KPMG creates, acquires or uses various concepts, methodologies and techniques, models, standards,
software, operator interfaces or screen designs, as well as general advisory and software tools and systems operation methods, coherence and logic
(collectively KPMG Property). KPMG retains all the rights to ownership of the KPMG Property.
b. In this regard, CLIENT shall not acquire any interest in or right to the KPMG Property, even when included in the Result(s) of the Services. KPMG
Property will not include any part of CLIENTs confidential information nor CLIENTs tangible or intangible property and KPMG shall have no right to
such property.
6 - Work Papers
a. According to applicable legal and regulatory norms and/or KPMG policy, during the performance of the Services and after their conclusion, for the
purposes of documenting significant aspects, if necessary, KPMG may retain and keep copies and notes of all Data that is provided to KPMG as a result of
or arising from the performance of the Services.
b. Nevertheless, the CLIENT shall be responsible for keeping, for the period legally required, all documents or information useful or necessary to support
its operations and resulting obligations, or for other purposes of interest of CLIENT.

7 - Confidentiality
a. KPMG, on its own behalf as well as on behalf of the professionals involved in the performance of the Services, agrees to keep confidential information
and documents of the CLIENT to which it may have access (Confidential Information), and shall not use or reproduce the Confidential Information
without prior and express authorization of the CLIENT, except (i) in the cases expressly foreseen herein; (ii) for the purpose of execution of the Services
and (iii) for the purpose of compliance with legislation, professional rules or judicial or administrative order.
Verso dos ST&Cs 01 de Outubro de 2012

b. The obligation of confidentiality does not apply to information that:

(i) is or becomes available to the public in general without breach of this document;
(ii) is already known by KPMG without an obligation of confidentiality at the time of disclosure by CLIENT;
(iii) is independently developed by KPMG without using the Confidential Information;
(iv) is required to be disclosed in accordance with the law, or needs to be disclosed in order for KPMG to defend itself in administrative, arbitration or
judicial proceedings;
(v) is disclosed by CLIENT to third parties without similar restrictions;
(vi) is received from a third party without a restriction on disclosure;
(vii) the parties agree to disclose from time to time.
c. KPMG may share Confidential Information with other KPMG International Cooperative member firms, provided that the confidentiality obligation
foreseen in this clause is preserved.
d. The confidentiality obligation will continue in force after termination of the contractual relationship based on the Proposal and its appendices, regardless
of the motive for rescission or termination, for the period of 1 (one) year and, exceptionally, for the period foreseen in the law that expressly regulates the
information to which KPMG may have access as a result of or arising from the performance of the Services.
e. If one of the parties receives a court order or other administrative or judicial order, requiring the disclosure of Confidential Information or of the
Result(s) of the Services, that party shall notify the other party in writing of such order, provided that such notification does not infringe any applicable
laws. As soon as the party receiving the order to reveal Confidential Information sends the notice, as provided in the preceding sentence, the party
receiving the order will be entitled to comply with such order to the extent permitted by law or determined in such order, and will be subject to any
protective or similar valid and effective court order that the party interested in the maintenance of the confidentiality of the information may happen to
obtain. The mere refusal to authorize the release of the Confidential Information or of the Result(s) of the Services, unaccompanied by judicial order, will
not be sufficient to impede compliance with the authoritys order.
f. KPMG may, without requesting the CLIENTs consent, disclose Confidential Information to relevant authorities if KPMG identifies possible evidence of
money laundering, as foreseen in applicable law.
8 - Limitation of Liability

a. In any case, the indemnification due by KPMG and its Representatives to CLIENT or to third parties related to CLIENT, as a result of or arising from
the rendering of the Services, will be limited to the maximum, sole and total amount that corresponds to the amount of the fees actually paid by the
CLIENT to KPMG. This liability limit will apply to all claims against KPMG or its Representative(s), including those brought by third parties, such that
once the limit is reached by one or several actions against KPMG or its Representative(s) brought either by CLIENT or third parties, CLIENT and its
related third parties may not claim any further indemnity against KPMG or its Representative(s).

Verso dos ST&Cs 01 de Outubro de 2012

b. The limitation above shall not apply in the event of bad faith of KPMG or its Representatives, nor in relation to the labor or tax obligations of exclusive
responsibility of KPMG, under the terms of this document.
c. With respect to the action of third parties, the CLIENT agrees to indemnify KPMG for any damages, losses and expenses that KPMG may happen to
incur as a result of actions, claims, litigation or questionings by third parties, related directly or indirectly to the Services, except when these actions,
claims, litigation or questionings arise from bad faith of KPMG or its Representatives.
9 - Use of Electronic Means
KPMG Information Security Policy is consistent with the market (except cryptography); however, KPMG will not be responsible for any damages
resulting from electronic communication. During the contractual relationship based on the Proposal and its appendices, KPMG may communicate with
CLIENT by electronic mail or transmit documents electronically. CLIENT accepts the risks inherent to these forms of communication (including the risk
of interception or unauthorized access, the risk of corruption of communications, viruses and other prejudicial artifacts, which may occur irrespective of
KPMGs Information Security Policy) and agrees that only final versions of documents and information transmitted by KPMG will be considered by
CLIENT. KPMG shall be responsible only for the original content of its records. The unauthorized use of such information by third parties shall not be the
responsibility of KPMG.
10 - Corporate Logotype
a. CLIENT hereby authorizes KPMG to use CLIENTs name and logotype as well as similar trademarks in the reports and presentations relating to
projects developed for CLIENT.
b. For the purpose of marketing, publication or the negotiation of services (and/or for the purpose of presentation to a client or internal use) KPMG and the
member firms of the KPMG global network may reveal the fact that they have rendered or are rendering services to CLIENT, identifying CLIENT by its
name (and/or logo) and indicating only the general nature or category of these services and any details that legally enter the public domain.
11 - Rescission
a. In addition to the circumstances established by law, the following shall be considered just cause for rescission of the contractual relationship established
herein:
(i) without any penalty, the filing of a bankruptcy, receivership, recuperao judicial or extra-judicial petition or dissolution of the parties;
(ii) without any penalty, amendment to the Articles of Association or Bylaws or a change in the purpose or corporate structure of any of the parties that
impairs the performance of the Services;
(iii) without prejudice to applicable penalties, the transfer or assignment of the rights and/or obligations pertaining to the Proposal and its appendices,
without prior express authorization by the other party;
(iv) without prejudice to the applicable penalties, the breach of any obligation established in the Proposal or its appendices, by any of the parties, if the
breach is not cured by the infringing party within a period of ten (10) days from its receipt of notice of breach from the innocent party;
Verso dos ST&Cs 01 de Outubro de 2012

(v) without any penalty, in the interest of the parties, upon 15 (fifteen) days prior notice in writing;
(vi) without any penalty, should the work or contractual relationship become barred by Brazilian or international rules; or
(vii) without penalty, in the event of force majeure in accordance with Article 393 of the Brazilian Civil Code, which impedes the performance of the
Services for more than 30 (thirty) days.
b. Irrespective of the reason and origin of the rescission, without prejudice to the applicable penalties, the CLIENT is obliged to reimburse all reimbursable
expenses as provided in the Proposal and which were incurred by KPMG until the effective date of rescission, as well as to pay for the Services performed
until rescission date.
12 Other Terms, Duration and Venue
12.1 Notices
a. Notices concerning the contractual relationship established among the parties will be deemed delivered when addressed as follows:
(i) in the case of the CLIENT, to the address identified in the Proposal and to the individual to which the Proposal is addressed;
(ii) in the case of KPMG to the address in the letterhead of the Proposal and to the individual that signed the Proposal.
b. Notices will be valid upon proof of delivery to the correct address, even though they may not be received for any reason.
If any of the parties changes address for the purpose of notice, it must send a prior notice in writing to the other party concerning the new address,
informing the date of effectiveness of the change. Until this is done, notices sent to the last address informed by a party will be deemed valid and effective
for all purposes.
12.2 Joint and Several Liability
Where there is more than one addressee of the Proposal, all of the addressees shall each be fully liable separately for the fulfillment of all terms and
conditions of the Proposal and this document, as well as being so liable together as a group, in accordance with Article 264 of the Brazilian Civil Code, for
the complete fulfillment of the contractual obligations established in the Proposal and in this document.
12.3 Independent Parties
None of the terms or conditions of the Proposal or this document - nor their acceptance - shall be interpreted by the parties or third parties, as establishing a
partnership, joint venture, alliance or any kind of agency between the parties, nor an employment relationship between the Representatives of KPMG and
CLIENT.

Verso dos ST&Cs 01 de Outubro de 2012

12.4 No Exclusivity
Regardless of the acceptance of the Proposal and its appendices by CLIENT, KPMG shall be free to offer the same services as well as other services of any
type to any other party, as KPMG considers appropriate, and it may use the KPMG Property for such.
12.5 Force Majeure
A party shall not be in breach of its contractual obligations nor shall it incur any liability if it is unable to comply with the obligations pertaining to the
Proposal and its appendices as a result of any cause beyond its control according to article 393 of the Brazilian Civil Code. In the event of any such
occurrence affecting one of the parties, that party shall be obliged as soon as reasonably practicable to notify the other party(ies).
12.6 Severability
Each clause or term of this document constitutes a separate and independent provision. If any of the provisions of this document is judged by any court or
authority of competent jurisdiction to be void or unenforceable, the remaining provisions shall continue in full force and effect. In this case, the parties are
no longer required to comply with the obligations resulting from the provision that is void, however, they must engage their best efforts to replace the void
or unenforceable provision with another which, not having the vices of the original provision, enables, as close as possible, the results originally intended
by the parties.
12.7 Duration
a. The contractual relationship established under the Proposal and its appendices shall be in force as of the date of express or tacit acceptance of the
Proposal by CLIENT and shall remain in force for the period necessary for the completion of the Services and the fulfillment of all obligations assumed by
the parties, except for the circumstances which authorize the rescission of the contract, under the terms of this document.
b. If the Proposal is tacitly accepted, the contractual relationship among the parties will be deemed to begin on the date the performance of the Services
commences even though the CLIENT may sign the Proposal indicating a later date.
12.8 Governing Law and Venue
The contract established by the tacit or express acceptance of the Proposal and its appendices shall be governed and interpreted in accordance with the laws
of the Federative Republic of Brazil and any questions that may arise in the interpretation and execution of this document or any other matters arising
between KPMG and CLIENT, shall be decided by the courts of the city of So Paulo, in the State of So Paulo, Brazil.

Verso dos ST&Cs 01 de Outubro de 2012

Appendix II
KPMG credentials

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

27

Appendix III
Curricula Vitae Corporate Finance Brazil
Background
Paulo has strong experience in advising clients on M&A transactions and performing valuation services. Paulo has 15 years of
experience in financial advisory to clients in mergers and acquisitions, privatizations and offerings .He has provided deal
management and valuation services on numerous cross-border transactions for both domestic/international and financial/strategic
buyers in large and complex deals.
Before joining the KPMG in Brazil he worked at Acar Guarani (one of the largest Sugar and Ethanol Company in Brazil) and was
the CFO at Cimentos Liz (one the largest cement group in Brazil).
Professional and Industry Experience

Paulo Guilherme Coimbra

Partner

Paulo has experience in a variety of industries, including energy and natural resources, retail, agriculture, financial services,
consumer goods and sugar & ethanol. At KPMG, his projects largely focus on deal management process, assisting investors or
sellers, and on valuation services, such as:
Broad experience in valuation services within the energy sector, including valuation services to State Grid, Enel and Equatorial
Energia;

KPMG Corporate Finance

Av. Almirante Barroso 52
Rio de Janeiro, RJ 20031-000
Brazil
Tel +55 21 3515-9219
Fax +55 21 3515-9000
Cell +55 21 9314-4398
pgcoimbra@kpmg.com.br

Function and Specialization

Provided assistance to BPMB, Petra Energia, PGN and Eneva in a gas tariff review;
Advised Mitsui & Co. in its acquisition of VLI Logstica a major Brazilian player in the logistics sector - by providing a buy-side
valuation report, as well as elaborating a Purchase Price Allocation analysis after the acquisition was successfully completed;
Within the context of Mizha Energias (Mitsui & Co.s Brazilian energy generation subsidiary) acquisition of a 20% stake in Energia
Sustentvel do Brasil, advised Mitsui in the Purchase Price Allocation process;
Advised BTG Pactual in its acquisition of retail company Leader Magazine a major Brazilian player in the sector - by providing a
fair value analysis;

Paulo is Partner in the Corporate Finance

responsible for several deal management process
and valuation projects

Advised a major Oil & Gas company in several deals related to the acquisition of targets in Energy and Natural Resources sector,
including the full valuation of several targets, analysis of strategic options, analysis of the largest players in the sector and advisory in
the negotiations with targets;

Education, Licenses & Certifications

Assisted one of the largest Spanish Oil & Gas company on the divesture of its retail distribution gas in Brazil, by helping the client
indentify investors, negotiate and, successfully, close the deal;

MBA - IBMEC Business School, Rio de Janeiro

BS - Production Engineering - Universidade
Federal do Rio de Janeiro - RJ

Lead several valuation projects for TAESA/CEMIG in Brazil, including Valuations, Purchase Price Allocation (PPA) and Impairment
Tests
Representative Clients

Mitsui Group, BTG Pactual, Vinci Partners, Petrobras, State Grid, Vale, TAESA, Anglo, Bunge, Bio Sev, Oi and others.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

28

Appendix III (cont.)

Curricula Vitae Corporate Finance Brazil

Name

Rben Palminha

Position

Senior Manager, KPMG Corporate Finance, Brazil (Rio de Janeiro)

Qualifications

Postgraduate degree in Finance, with specialization in Corporate Finance INDEG-IUL, (Lisbon, Portugal)
Specialization in Finance INDEG-IUL (Lisbon, Portugal)
Graduate in Finance ISCTE-IUL (Lisbon, Portugal)

Experience

He joined KPMG Corporate Finance in 2006. Since then, Rben has participated in Energy and
Infrastructure projects in various countries, assisting Public and Private entities, accumulating skills in
Project Finance, PPP Projects, M&A and Valuations.
Since December 2014, Rben is based in Rio de Janeiro office.

Sector of experience

Energy and Infrastructure

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

29

Appendix III (cont.)

Curricula Vitae Corporate Finance Brazil

Name

Fabiano Goulart Delgado

Position

Manager, Corporate Finance, KPMG Curitiba - Brazil

Qualifications

Undergraduate in controllership at UFPR-PR

Graduated in Economy at UFMS-MS

Experience

Works as a consultant more than 7 years. As a consultant has performed services in mergers and
acquisitions, preparation of business plan and business valuation. Fabiano has experience in the
financial modeling and intangible assets valuation for purchase price allocation purposes.

Sector of experience

Banking, real estate, power, agribusiness, foods and beverages, retail and logistic.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

30

Appendix IV
Example of Hold Harmless Letter
PRIVATE AND CONFIDENTIAL
The Directors
[Full Name of Third Party that will have access to the Report, as authorized by Client]
[Address]
[Month] [XX], 20[ ]

Dear Sirs,
1 In connection with your interest in [identify context example: your interest in the proposed acquisition of [Full Name of Target] (the Target) by [Full Name of
Purchaser] (the Activity), at your request our client, [Clients f ull name] (the Company) has requested this Firm to provide you with a copy of our conf idential report
dated [date] (the Report). The Company has also authorised this Firm at this Firms discretion to give inf ormation or explanations in relation to the Report or in
connection with your reading of the Report where we consider it appropriate to do so.
2 You should note that signif icant events may well have occurred since the date of the Report. It is not this Firms f unction or responsibility to provide to you any
inf ormation that may have come to this Firms attention, whether or not disclosed to or discussed with or reported to the Company, at any point af ter that date.
3
This Firm does not accept or assume responsibility to anyone other than the Company, for its work, for the Report or f or any judgments, f indings, conclusions,
recommendations or opinions that this Firm has formed or made. The work was undertaken and the Report was issued, on agreed terms of engagement, in order that
this Firm might state to the Company those matters on which it agreed to report and f or no other purpose.
4

This Firms work and the Report were not planned or prepared in contemplation, or f or the purpose, of your interests or needs.

5 Theref ore, items of possible interest to you may not have been specif ically addressed for the purposes of the Report. The use of our prof essional judgement, and
the assessment of issues or their relevance (as appropriate) for the purpose of this Firms work and the Report, mean that matters may have existed that would have
been assessed diff erently by you for your purposes. This Firm does not warrant or represent that the inf ormation in the Report, or that information or explanations (if
any) that may be given by this Firm in relation to the Report, are appropriate f or your purposes. The Report was not prepared f or, and should not be treated as suitable
f or, any purpose other than that set out in the Report itself and/or in the terms of engagement.
6
For the foregoing reasons, neither the Report nor information or explanations (if any) that may be given by this Firm in relation to the Report or in connection with
your reading of the Report can in any way serve as a substitute for other enquiries and procedures that you must otherwise undertake and judgements you must make
for satisfying yourself regarding any matters of interest to you regarding the Report or f or any other purpose in connection with the Activity. Apart f rom the Company, noone else may use the Report or any inf ormation or explanations (if any) that this Firm may give f or any purpose whatsoever.
2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

31

Appendix IV (cont.)
Example of Hold Harmless Letter

7 This Firm is prepared to provide the Report to you and, at this Firms discretion, will give inf ormation and explanations in relation to the Report or in connection with
your reading of the Report, on condition that you acknowledge and accept the foregoing paragraphs including that the position in respect of this Firms work and the
Report will remain as stated at paragraph 3 above following the provision to you of the Report and the giving of information and explanations (if any) in relation to the
Report and agree to the f ollowing conditions upon which the Report is provided to you and the explanations and inf ormation ref erred to are given:
(1)
You accept, agree and acknowledge that:
(a)
f or the purposes of this letter, the expression the Inf ormation shall mean the Report and any inf ormation and
explanations that may be given by this Firm in relation to the Report or in connection with your reading of the Report.
(b)
in respect of the Inf ormation (and any part of it) the onus shall be upon you to obtain verif ication direct with the
Company and/or the Target rather than seek to rely on this Firm.
(c)
this Firm owes no duty to you, in contract or under statute or otherwise with respect to or in connection with the
Inf ormation or its provision or in relation to the Report.
(d)
if , notwithstanding the terms of this letter, you use any of the Inf ormation or the Report f or any purpose, you will do so
entirely at your own risk.
(e)
you will not bring any actions, proceedings or claims against this Firm where the action, proceeding or claim in any way
relates to or concerns or is connected with the use of the Inf ormation or the Report.
(f )
to the f ullest extent permitted by law, this Firm has no liability to you f or any loss or damage suf f ered or costs incurred
by you, arising out of or in connection with the Inf ormation or its use or the Report, however such loss or damage is
caused.
(g)
You will not ref er to the Inf ormation nor allow access to it or any report derived theref rom to any person or entity without
this Firms prior written consent. However, you will not need to obtain such consent in order to disclose and discuss the
same (i) with the Company f or the purpose of discussions concerning the Activity; (ii) with your legal advisers but then
only on the basis that this Firm will have no duty or liability to them and that they assume responsibility f or preserving
the conf identiality; or (iii) otherwise as required by a Court or by statute or by a competent regulator. Where this Firm is
willing to give written consent, this Firm will require as a condition of such consent that the other person or entity agrees
in writing to be bound by and to observe the terms set out in this letter.
(2)
You agree to compensate and reimburse this Firm f or and protect this Firm against all actions, proceedings and claims brought or
threatened against this Firm, and all loss, damage and expense (including legal expenses) relating thereto where such action, proceeding or claim has
arisen out of or results f rom or is connected with the use of the Inf ormation or any part thereof by any person or entity receiving it where such actions,
proceedings or claims would not have arisen, but f or the f ailure by you to comply with the terms of this letter. If any payment is made by you under this
paragraph, you will not seek recovery of that payment f rom this Firm at any time.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

32

Appendix IV (cont.)
Example of Hold Harmless Letter

8
The work resulting in the Report was undertaken by, and the Report was issued by and is the sole responsibility of, this Firm, that is KPMG [full name].
In paragraph 7(1)(c) to (g) and 7(2) of this letter all references to this Firm (except for the first and the last two references in the paragraph 7(1)(g)) shall have an
extended meaning so that they include, in addition to KPMG, the partners, directors, employees and agents of this Firm and any person or organisation associated with
this Firm through membership of the Swiss co-operative of professional service firms to which this Firm belongs and their partners, directors, employees and agents.
This letter is for the benefit of all of those third parties referred to in the previous sentence and each of them may enforce in their own right all of the terms of this letter.
9
This letter sets out the entire agreement as between you and this Firm in relation to the conditions upon which the Report is provided to you by this Firm
and upon which information or explanations (if any) in relation to the Report or in connection with your review of the Report are given by this Firm to you. This letter
replaces all prior agreements or understandings (if any) between or amongst you and this Firm in that regard.
10
The terms of the agreement shall be governed solely by Brazilian law, and the Courts of So Paulo, Brazil, shall have exclusive jurisdiction in respect of
any dispute arising out of it or in connection with it. You and this Firm irrevocably waive any right to bring proceedings in any other jurisdiction, to object to proceedings
being brought in those Courts, to claim that the proceedings have been brought in an inappropriate forum, or to claim that those Courts do not have jurisdiction.
11 Please confirm your agreement to and acceptance of the provisions of this letter by signing, dating and returning to us a copy of this letter. We will then provide the
Report to you.
Yours faithfully,
[Partners name]
Partner
[KPMGs Full Name]

ACKNOWLEDGMENT
[Full Name of Third Party] hereby acknowledges that it agrees to and accepts the provisions of this letter.
Signature:
Name:
Position:
Date:
2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

33

Appendix IV (cont.)
Example of Authorization Letter

PRIVATE AND CONFIDENTIAL

[Clients name]
[Clients Address]
[The Directors name]

[Month] [XX], 20[XX]

Dear Sirs,

Report on [description]
You have asked us to provide a copy of this Firms conf idential report dated [insert
date] (the Report) to [Third Partys f ull name] (Third Partys shortened f orm
name). This request has been made in the context of [state context example:
the proposed acquisition of] [Targets f ull name] (Target) by [Companys f ull
name] (the Activity).
As you are aware, signif icant events may well have occurred since the date of the
Report. It is not this Firms f unction or responsibility to provide to [Third Partys
name] any inf ormation that may have come to this Firms attention, whether or not
disclosed to or discussed with or reported to you, at any point af ter that date.
This Firms general policy is not to agree to provide to third parties conf idential
reports issued by this Firm. However, this Firm agrees to provide the Report to
[Third Partys name] but only on the basis of this letter and the enclosed letter.
Theref ore, the purpose of this letter is to conf irm your agreement to the terms set
out herein and to secure your authorisation to provide the Report to [Third Partys
name].
As a condition of providing the Report to [Third Partys name] as well as
responding to any requests f or inf ormation and explanations in relation to the
Report in the course of or in connection with [Third Party name]s review of the
Report, this Firm requires that [Third Partys name] agrees to the terms of the
letter enclosed (Hold Harmless Letter).

This Firm does not accept or assume responsibility to anyone other than you as
the addressee of the Report, f or the Report or f or any judgments, f indings,
conclusions, recommendations or opinions that this Firm has f ormed or made.
As you will appreciate, our work was undertaken and the Report was issued, on
agreed terms of engagement, in order that this Firm might state to those
matters on which this Firm agreed to report and f or no other purpose. This
Firms work and the Report were not planned or prepared in contemplation, or
f or the purpose, of [Third Partys name]s interests or needs. Theref ore, items
of possible interest to [Third Partys name] may not have been specif ically
addressed f or the purposes of the Report. Consequently, the Report was not
prepared f or, and should not be treated as suitable f or, any purpose other than
that set out in the Report itself and/or in the terms of engagement.
Accordingly, this Firm requires that you and [Third Partys name] agree to the
f ollowing conditions:
(a) You accept the risk, and do not and will not hold this Firm
responsible, if [Third Partys name]s review of the Report or any inf ormation or
explanations (if any) that this Firm gives to them in relation to the Report or in
connection with their review of the Report:
(i) results in or contributes to the termination or
reduction of the interest of [Third Partys name] in, or to the alteration to the
proposed terms of , the Activity, or otherwise af f ects the Activity or the prospects
of its maturing into a binding transaction; or
(ii) causes an action or proceeding to be
brought at any time against you or your prof essionals; or
(iii) results in [Third Partys name] or any other
person or entity using or misusing any conf idential inf ormation obtained f rom a
review of the Report or f rom any inf ormation or explanations given by this Firm.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

34

Appendix IV (cont.)
Example of Authorization Letter

(b) You accept that, this Firm owes you no duty of care or other
obligation and has no liability to [Third Partys name], in relation to or in connection
with the Activity as a result of providing the Report to [Third Partys name] or any
inf ormation or explanations (if any) that this Firm gives in relation to the Report or
in connection with the review by [Third Partys name] of the Report.
(c) You conf irm that you have all necessary permissions f rom
relevant parties, to authorise provision of the Report, and that there are no duties
of conf identiality owed to any party which would prevent the Report being provided
to [Third Partys name].
If you are in agreement, please have the legal representative of [Clients name]
sign in the space provided below and return one counterpart to me.
Yours f aithf ully,

[Partners name]
Partner
KPMG [name of the member firm]

ACKNOWLEDGEMENT
Acknowledged, confirmed and agreed, f or and on behalf of [Clients name]:
Signature
Name
Position:
Date

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

35

Appendix V
Representation Letter Template
To
KPMG Corporate Finance Ltda. (KPMG)
Av. Almirante Barroso, 52 - 4th floor
Rio de Janeiro, RJ Brazil, Zip Code 20031-000
Attn.: Paulo Guilherme Coimbra
(DATE)
Dear Mr. Coimbra
Background
On February 12th, 2015, Eneva S.A. (Eneva or the Company) and Eneva Participaes S.A. (Eneva Participaes) filed a Plan for Judicial Recovery (JRP), in
accordance with Article 53 of the Brazilian Judicial Recovery Law. In light of such context, Eneva seeks to initiate a capital increase. The aforesaid capital increase
operation envisages a change in Enevas shareholding structure (Potential Operation), and, in case the JRP obtains full approval for execution, such mutations in
shareholding structure are planned to be made through the following contributions: (i) cash; (ii) credit capitalization; (iii) and asset subscription.
Within this context, E.ON SE (E.ON), as Enevas main shareholder, plans to subscribe assets in the Potential Ooperation, willing to contribute its 50% stake in Eneva
Participaes and its 9.09% stake in Parnaba Gs Natural, S.A. (the PGN). Banco Pactual S.A. (BTG), as Enevas main lender as at December 2014, plans to
participate in the capital increase through the subscription of the shares it holds in BPMB Parnaba S.A. (BPMB).
This Letter confirms our understanding regarding certain aspects of KPMGs engagement to provide services to Eneva in respect of the valuation of Eneva
Participaes, PGN and BPMB (jointly, the Targets) related to the interest of BTG and E.ON (jointly, the Asset Subscribers) in the Potential Operation. The valuation
of the Targets was performed as of December 31st, 2014 (the Valuation Date).
We have reviewed KPMGs reports and the related data and information used in these reports. In connection with KPMGs valuation study, we have provided KPMG with
all significant and relevant data and information of which we are aware of.
We understand KPMG has relied on the aforementioned data and/or information and upon discussions held with management in the course of KPMGs engagement and
that KPMG has not undertaken any procedures or investigation to verify the reasonableness, completeness, accuracy, integrity and timeliness of such data and/or
information. We understand that KPMG expresses no opinion as to the fairness of the presentation of the aforementioned data and/or information and that any
alterations or modifications to such data and/or information could materially affect KPMGs findings.
We understand that valuations in general present significant degrees of subjectivity. Furthermore, the projections and assumptions used in valuations are based on
future expectations, which could be confirmed or not, in view of the fact that projected events may not occur, due to a number of exogenous economic and operating
factors. Thus, there are no guarantees that any assumptions, estimates, projections, results or conclusions presented in KPMGs reports will be effectively observed
and/or verified, entirely or partially. The figures observed in the future may be different and the differences may be significant. These possibilities are not a bias or a
defect of the valuation process and are recognized as part of its nature. Hence, KPMG is not responsible and cannot be held responsible for any differences between the
valuation results and the results observed a posteriori.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

36

Appendix V (cont.)
Representation Letter Template
We understand that the work will consider/has considered the assets and liabilities as presented in the financial statements. Therefore it will not include/has not included
the analysis of potential contingencies not accounted for in the respective financial statements.
Furthermore, we have no reason to dispute the underlying financial information upon which KPMG have relied in their analysis and therefore we will hold KPMG
harmless against any and all action, proceeding or claim in any way whatsoever related to the reasonableness, completeness, accuracy, integrity and timeliness of the
data and/or information provided by us to KPMG. We understand that KPMGs findings are to be relied upon solely in connection with the circumstances and to the
extent set forth in the Proposal signed by KPMG and the Company.
Sincerely,
Representing Eneva S.A.
(Name of Professional authorized to sign on behalf of the entity)
Title

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

37

Appendix VI
Disclaimers

(1) The work described in these reports was performed in accordance with the
objectives, assumptions and other terms and conditions included in these
reports as well as in our proposal dated dd/mm/yyyy (Proposal), prepared to
provide information for the internal and exclusive use of the CLIENT. KPMG is
not responsible for the use of these reports by third parties for any purposes. If
the CLIENT discloses any information included in these reports, KPMG will
assume no responsibility directly or indirectly as a result of such disclosure.
(2) The objective of the work described in these reports, in accordance with the
Proposal, was the valuation based on [ ] of the Company as of [Date] by KPMG.
(3) The CLIENT, through its designated professionals, provided information
related to data, projections, assumptions and estimates related to the Company
(as described in the Proposal), used in these reports.
(4) The services rendered by KPMG were based on information provided by
the CLIENT as well as on discussions with the CLIENTs professionals or
advisors, and KPMG did not verify independently any public information or any
information provided to it, in the course of the work. KPMG does not express its
opinion as to the accuracy of the information abovementioned, and notes that
any mistake, change or modification of such information could impact
significantly its analysis. According to the Proposal, the compilation of data and
information does not mean acceptance or attestation of their truthfulness by
KPMG.

(5) During the course of our work, we carried out analysis procedures whenever
necessary. However, we emphasize that our work did not constitute an audit of
the financial statements or of any other information provided by the CLIENT and
should not be interpreted as such. Our work took into consideration the
relevance of each item, therefore, relevant assets and liabilities were not
analyzed in detail. KPMG has not verified independently the information
provided by the CLIENT, so, it cannot confirm the precision, accuracy and
sufficiency of such information and, therefore, the CLIENT assumes all
responsibility for the information provided to KPMG.
(6) The preparation of these reports was based on our reliance, with the
express approval of the CLIENT, on the accuracy, content, veracity,
completeness, sufficiency and integrity of the data provided to or discussed with
KPMG. Thus, KPMG has not inspected any asset, or prepared or obtained an
independent valuation of the CLIENTs assets, liabilities, or its solvency.
Therefore, the CLIENT, including its Management, takes responsibility for all
information provided to or discussed with KPMG.
(7) Except when otherwise stated, in footnotes or specific references, all data,
historic or market information, estimates, projections and assumptions,
included, considered, used or presented in these reports were provided by the
CLIENT to KPMG.
(8) Any changes in the information provided by the CLIENT to KPMG may
impact the results of these reports. KPMG assumes no responsibility for
updating, reviewing or amending these reports, as a result of the disclosure of
any information subsequent to the date of the issuance of these reports.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

38

EXHIBIT II - B
INFORMATION ABOUT G5
(information required by Article 21 of ICVM No. 481/09)
1. List the appraisers recommended by the management
Answer: G5 Consultoria e Assessoria Ltda. (G5 Evercore), enrolled with the CNPJ under No.
08.695.920/0001-83, located at Avenida Brigadeiro Faria Lima, 3311, 10th floor, in the City of So
Paulo, State of So Paulo, was engaged to valuate Parnaba III and the Petra Assets to be
contributed to the Private Capital Increase, for purposes of article 8 of the Corporation Law, as
established in the Judicial Recovery Plan.
2. Describe the qualification of the recommended appraisers
Answer: G5 Evercore has offices in Rio de Janeiro and So Paulo, in addition to global partnerships,
which enables it to operate in the Brazilian and international markets providing advisory services
in transactions of Merger & Acquisition (M&A), Reorganizations, Capital Market, Private Equity
and Wealth Management.
Corrado Varoli
Founder Partner and CEO

Corrado Varoli in the Founder Partner, Chief Executive Officer (CEO) and member of the
Executive Committee of G5 Evercore. From 1999 to 2006 he was the CEO of Goldman Sachs for
Latin America. From 1987 to 1999 Varoli was the Chief Executive Officer of Morgan Stanley.
Among his responsibilities, he was the M&A Officer for Latin America, Officer of the
Telecommunications group (USA) and M&A Officer of the Oil and Gas group (USA) of Morgan
Stanley. Varoli holds an MBA from Georgetown University and a bachelors degree of engineering
from McMaster University in Hamilton, Canada.

Corrado took part in the following important transactions: he provided advisory services
to the Marinho family in the sale of So Marcos, to American Express in the sale of its assets in
Brazil to Bradesco, to Interbrew in its merger into Ambev, to Telmex in the acquisition of Embratel,
to Ripasa in the sale to Suzano and Votorantim, to CP Cimentos in the sale to Votorantim, to
Camargo Corra in the acquisition of Loma Negra, to Caemi in its sale to Vale, to Confab in the sale
to Tenaris, in addition to being engaged in the privatization of Vale and Telebrs.
Marcelo Andr Lajchter
Founder Partner and member of the Executive Committee of G5 Evercore

From 1995 to 2007, Marcelo Lajchter was a Senior Partner of Barbosa, Mssnich & Arago
Advogados, one of the most important law firms in Corporation Law, Mergers & Acquisitions and
Restructuring in Brazil. Lajchter is a bachelor of Law from Universidade Estadual do Rio de Janeiro
(1994).
29


Marcelo took part in the following important transactions: he provided advisory to
Richards in the sale to Inbrands, to Control in the sale to CCR (Camargo Corra) and Brisa, to
Odebrecht in the corporate restructuring of Copene and in all subsequent events that led to the
foundation of Braskem, to Caemi in its sale to Vale do Rio Doce; in addition, he took part in the
Corporate restructuring and Project Finance of Brasil PCH, an energy company composed of
Petrobrs and Suarez Participaes.
Graciema Bertoletti

Graciema Bertoletti is a Senior Partner of G5 Evercore. Before she joined G5 Evercore,

Graciema Bertoletti worked from 2002 to 2012 for Credit Agricole, where she was the Head of the
Investment Bank for Brazil. Before that, Graciema Bertoletti worked in investment banking groups
of Morgan Stanley and ABN ANRO Bank in New York and in the Corporate Banking Group of
BankBoston in So Paulo, State of So Paulo.

Graciema holds an MBA from Harvard Business School and a bachelors degree in
economics from Universidade Federal do Rio de Janeiro.
Manuela Albuquerque Silveira

Manuela Silveira is an analyst of G5 Evercore.

3. Provide copy of the work and remuneration proposals of the recommended appraisers
Answer: A copy of the appraisers work and remuneration proposal was made available to the
Companys shareholders by means of the CVM System and may be consulted by means of the
CVM website (www.cvm.gov.br).
4. Describe any relevant relationship that has existed over the last three (3) years among the
recommended appraisers and any companys related parties, such as defined by the accounting
rules that address this matter.
Answer: There has been no relevant relationship among the appraisers and related parties in the
reference period, as provided for by the accounting rules.

30

EXHIBIT II - BA
G5 SERVICE PROPOSAL

31

EXHIBIT III - A
VALUATION REPORT BPMB

32

CORPORATE FINANCE

Eneva S.A. in Judicial Recovery

Economic and Financial Valuation Report of
BPMB Parnaba S.A.

April 13, 2015

2015 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity.
All rights reserved. Printed in Brazil.

ABCD

KPMG Corporate Finance Ltda.

Av. Almirante Barroso, 52 4th
20031-000 - Rio de Janeiro, RJ - Brazil
P.O. Box 2888
20001-970 - Rio de Janeiro, RJ Brazil

Phone
Fax
Internet

55 (21) 3515-9400
55 (21) 3515-9000
www.kpmg.com.br

To the Board of Directors of

Eneva S.A. in Judicial Recovery
Rio de Janeiro - RJ

April 13, 2015

Economic and financial valuation report of: BPMB Parnaba S.A.

Dear Sirs,
Under the terms of our proposal, dated April 9, 2015, for professional services and subsequent understandings, KPMG Corporate Finance Ltda. (KPMG) has
performed the economic and financial valuation of BPMB Parnaba S.A. (BPMB), at the base date of December 31st, 2014.
It is imperative to point out that this version of the valuation report is a free translation from Portuguese to English; therefore, in case of discrepancies between
the report in Portuguese sent on April 13, 2015 and the free translation report, the former shall prevail in all matters.

Yours Sincerely,

Augusto Sales
Partner

Paulo Guilherme Coimbra

Partner

2015 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity.
All rights reserved. Printed in Brazil.

Important Notes

For the benefit of this report, BPMB will be referred to as Company.

On February 12th, 2015, Eneva and Eneva Participaes filed a Plan for
Judicial Recovery (JRP), in accordance with Article 53 of the Brazilian
Judicial Recovery Law. Within this context, Eneva JR seeks to initiate a
capital increase. Such potential capital increase envisages a change in Eneva
JRs shareholding structure, and, in case the JRP obtains full approval for
execution, such mutations in shareholding structure are planned to be made
through the following contributions: (i) cash; (ii) credit capitalization; (iii) and
asset subscription.

Within such context, and in addition to possible credit capitalizations (item ii of

the capital increase in the JRP), KPMG has been informed by Eneva JR that,
in case the JRP is approved for execution, Banco BTG Pactual (BTG)
intends to participate in the capital increase of Eneva JR through a possible
subscription of the shares BTG holds in BPMB (item iii of the JRP).
This report has been elaborated by KPMG, as per Eneva JRs Board of
Directors requisition, as a support for the Transaction. The report, according
to the JRP, will be presented to Eneva JRs Creditor Committee. In case of
approval, the report will be presented to the Extraordinary General
Shareholders meeting.
This report may not be circulated, copied, published or, by any matters,
utilized, nor may it be archived, partly or integrally, without KPMGs previous
consent. As this report will be used in the analysis of a potential capital
increase transaction (Transaction) involving Eneva JR, which is a Brazilian
company listed with the So Paulo Stock Exchange (Bovespa), as well as
subject to the reporting requirements of the Brazilian Stock Exchange
Commission (CVM), the Client may give access to the report to CVM only to
the extent required by law and shall remain fully responsible for any damage
or injury resulting or arising from such access, which may be experienced by
Eneva, KPMG, including representatives of KPMG, or any third party.

The economic and financial valuation of BPMB was based on Discounted

Cash Flows (DCF). Both of them performed by KPMG, on the base date of
December 31st, 2014.

The Client and BTG, through its designated professionals, provided

information regarding the Company and their respective markets, which has
been used for this report. The Company will be referred to in this report
altogether as Information Providers.

The services rendered by KPMG were based on the following information

provided by BTG:

BPMB
Parnaiba_Info
Memo_v_09_01_2015.pdf,
BPMB
Parnaba_Model_KPMG_v5.xlsx, PGN-BPMB - Budget 2015 and Business Plan 2014-12-23.pdf Information related to the Gas Reserves under the Parnaba Basin,
Capex projection, Opex projection and SG&A for PGN and BPMB;
DFs BPMB Parnaiba 12-2014_6_04_2015.pdf BPMBs audited financial statement
FY2014;
PGN-BPMB - Budget 2015 and Business Plan - 2014-12-23.pdf Prospective
financial data related to BPMB, for which we have no reason to dispute the
underlying assumptions;
BPMB Parnaiba_Info Memo_v_09_01_2015.pdf, PGN-BPMB - Budget 2015 and
Business Plan - 2014-12-23.pdf Background information regarding BPMB valuation;
BPMB
Parnaiba_Info
Memo_v_09_01_2015.pdf,
BPMB
Parnaba_Model_KPMG_v5.xlsx, All internal presentations that describe the history,
nature of business, and outlook for BPMB; and
BPMB
Parnaiba_Info
Memo_v_09_01_2015.pdf,
BPMB
Parnaba_Model_KPMG_v5.xlsx, PGN-BPMB - Budget 2015 and Business Plan 2014-12-23.pdf Other pertinent information.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Important Notes

KPMG based its work on the information provided by the Information Providers
and/or other representatives of such Information Providers. Therefore, the
Client, including its Management, takes responsibility for all information
provided to or discussed with KPMG.

All estimates and projections herein presented have been provided by the
Information Providers; when necessary, such estimates and projections have
been adjusted by KPMG, according to its own judgment on their reasonability,
and are assumed to be underpinned by the Information Providers
managements best evaluation of the Companies and respective markets
best perspectives.

Any changes in the information provided by the Client and BTG to KPMG may
impact the results of this report. KPMG assumes no responsibility for updating,
reviewing or amending this report, as a result of the disclosure of any
information subsequent to the date of the issuance of this report.

Except when otherwise stated, in footnotes or specific references, all data,

historic or market information, estimates, projections and assumptions,
included, considered, used or presented in this report were provided by the
Client to KPMG.

The information herein presented, related to the Companies financial and

accounting conditions, and related to the Companies respective markets, is
based on the available data as at December 31, 2014. Any changes in the
information provided by the Information Providers may impact the results of
this report. KPMG assumes no responsibility for updating, reviewing or
amending this report, as a result of the disclosure of any information
subsequent to December 31, 2014, or any other subsequent event

The shareholder structure and participation percentages of related/controlled

companies presented in this report have been provided to KPMG by the
Information Providers, and have not been subject to KPMGs independent
verification.

We emphasize that the determination of the economic value of possible

contingencies, and other adjustments to the financial statements (if applicable)
were not part of the scope of this report. Thus, with respect to such items, our
work was based on information and analysis made available by the Client
and/or their auditors, lawyers and/or other advisors.

This report has been elaborated according to the economic and market
conditions, among others, available as at the elaboration time period. The
conclusions herein presented, therefore, are subject to exogenous variations of
which KPMG does not have any control.

It is imperative to point out that this version of the valuation report is a free
translation from Portuguese to English; therefore, in case of discrepancies
between the report in Portuguese sent on April 13, 2015 and the free
translation report, the former shall prevail in all matters.

During the course of our work, we carried out analysis procedures whenever
necessary. However, we emphasize that our work did not constitute an audit of
the financial statements or of any other information provided by the Client or
BTG and should not be interpreted as such. Our work took into consideration
the relevance of each item, therefore, less relevant assets and liabilities were
not analyzed in detail. KPMG has not verified independently the information
provided by the Client, so, it cannot confirm the precision, accuracy and
sufficiency of such information and, therefore, the Client assumes all
responsibility for the information provided to KPMG.
The preparation of this report was based on our reliance, with the express
approval of the Client, on the accuracy, content, veracity, completeness,
sufficiency and integrity of the data provided to or discussed with KPMG. Thus,
KPMG has not inspected any asset, or prepared or obtained an independent
valuation of the Clients assets, liabilities, or its solvency. Therefore, the Client,
including its Management, takes responsibility for all information provided to or
discussed with KPMG.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Important Notes

The sum of the individual values herein presented may diverge from the
sums presented in this report, due to rounding issues.

Although the work on which this report is based was performed

independently by KPMG under technical supervision, the analyses of the
different factors that characterize the valuation report is subjective in nature.
Therefore, when performed by other professionals, such analyses may
express points of view different from those presented by KPMG.

Our valuation was made on the basis of events which can be reasonably
expected, and therefore does not take into account extraordinary and
unforeseeable events (new industry regulations, changes in tax laws, natural
catastrophes, major social and political events, nationalization etc.), which
may cause adverse effects on the Companies.
This report is not to be used as a sole basis for the evaluation of the
Company, for the report does not contain all necessary information for such
use. Therefore, this report is not to be interpreted as a proposal, solicitation,
suggestion, nor recommendation by KPMG for the Transaction. Any decision
taken by the Company shareholders shall be assumed integrally by the
same shareholders. KPMG will not take any responsibility as to the
Company shareholders decisions.
We emphasize that a valuation establishes a theoretical estimate within an
interaction involving a buyer and a seller, where both are intended to close a
deal, with the necessary access to all relevant information, and assuming that
neither parties have the immediate necessity to buy or sell. An effective
negotiation does not necessarily reflect such conditions, and may include
other elements; consequently, the estimated value need not be used in the
effective transaction.

This report does not envisage the satisfaction of any personal nor specific
interests. Thus, results from other evaluations, elaborated by third parties,
may diverge from our results. Notwithstanding, such divergence should not
be regarded as an inherent deficiency of the realized work.

The Company shareholders have to perform their own analyses regarding the
Transaction, through the consultation of their own financial, tax and legal
advisors, in order to define their own opinion as to the Transaction. This report
is to be read and interpreted with full consciousness of our already mentioned
restrictions. In addition, the reader must be aware of the restrictions and
characteristics of inherent to the Information Providers.

This report is to be solely used within the Transaction context, as herein

described. We cannot guarantee that this report may be used in other contexts.
Furthermore, we emphasize that KPMG will not perform additional services,
and will not adapt this report for other objectives.

The scope of our engagement did not include the detection of fraud in the
Company operations, processes, records or documents.

Valuations, in general, present significant degrees of subjectivity. Thus, there

are no guarantees that any assumptions, estimates, projections, results, or the
preliminary results presented in the work document will be effectively noted
and/or verified, in their entirety, or partially. Hence, KPMG is not responsible,
and cannot be held responsible for any differences between the valuation
results, and the results noted a posteriori.

The services performed herein may have been based on legal and
administrative rules. In this regard, we note that our legislation is complex and
often the same provision can be interpreted in multiple ways. KPMG always
seeks to be up-to-date on the various interpretative tendencies, in order to
permit a broad assessment of the alternatives and risks involved. Even so,
there may be some interpretations of the law that differ from ours. Under these
circumstances, neither KPMG, nor any other firm, can provide total assurance
that the Company will not be questioned by third parties or government
authorities.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

11

III. Information about the companies

14

IV. Market information overview

17

V. Valuation Methodology

21

VI. Assumptions

26

IX. Valuation

35

Appendix I Curricula vitae

40

Appendix II Balance Sheet

44

Appendix III Discount Rates

46

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Contents
ACL

Energy Free Market

ACR

Energy Regulated Market

ANEEL

Brazilian Electricity Regulator

ANP

Brazilian Petroleum National Agency

BACEN or BCB

Central Bank of Brazil

BCM

Billion Cubic Meters

BMI

Business Monitor International

BM&F

Commodities and Futures Stock Exchange

BOVESPA

Brazilian Stock Exchange

CAGR

Compounded Annual Growth Rate

CAPM

Capital Asset Pricing Model

CCEAL

Energy Trading Contracts in the Free Market

CCEAR

Energy Sales in the regulated market

CCEE

Energy Commercialization Chamber of Commerce

COFINS

Contribution for Social Security Financing (Federal Tax Over Revenues)

CoGS

Cost of Goods Sold

CRP

Country Risk Premium

CVM

Securities and Exchange Commission

CVU

Unitary Variable Cost

D&A

Depreciation and Amortization

DCF

Discounted Cash Flow

EBIT

Earning Before Interest and Tax

EBITDA

Earnings Before Interest, Tax, Depreciation and Amortization

EBT

Earning Before Tax

EIA

Energy Information Administration

EIU

Economist Intelligence Unit

EMBI

Emerging Market Bond Index

EPE

Brazilian Energy Research Entity

ERP

Equity Risk Premium

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Contents
E&P

Exploration & Production

GDP

Gross Domestic Product

GVB

Gavio Branco Gasfield

GVR

Gavio Real Gasfield

GW

Giga Watt

IBGE

Brazilian institute of Geography and Statistics

IFRS

International Financial Reporting Standards

INEA

Enviroment State Institute

IPCA

Brazilian Consumer Price Index

IRPJ

Brazilian Corporate Income Tax

ITS

Quarterly Financial Statement

JRP

Judicial Recovery Plan

KPMG

KPMG Corporate Finance Ltda.

LNG

Liquified Natural Gas

MBA

Masters in Business Administration

MMBtu

One Million British Thermal Unit

MW

Mega Watt

MWh

Mega Watt Hour

M&A

Mergers & Aquisitions

NOPAT

Net Operating Profit After Tax

NPV

Net Present Value

ONS

Brazilian Interconnected Grid Operator

Opex

Operational Expenses

O&M

Operation & Maintenance

PE

Private Equity

PIS

Brazilian Social Integration Program

PLD

Energy Spot Price

PPA

Power Purchase Agreement

PPP

Public-Private Partnership

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Contents
RGR

Eletrobras R&D Fund

R$

Brazilian Real

R&D

Research and Development

RF

Risk Free

SE

Shareholders Equity

SELIC

Brazilian Interest Rate

SG&A

Sales, General and Administrative Expenses

SPE

Special Purpose Vehicle

SUDENE

Superintendency for the Development of the Brazilian Northeastern Region

TPP or UTE

Thermal Power Plant

TCF

Trillion Cubic Feet

WACC

Weighted Average Cost of Capital

WC

Working Capital

BNDESPAR

Brazilian National Bank of Social and Economic Development Investment Vehicle

BPMB

BPMB Parnaba S.A.

BTG

Banco BTG Pactual S.A.

Cambuhy

Cambuhy Investimentos

Eneva JR

Eneva S.A. in Judicial Recovery

Eneva Participaes JR

Eneva Participaes S.A. - in Judicial Recovery

E.ON

E.ON S.E.

PGN

Parnaba Gs Natural S.A.

OGX

An Oil & Gas Company from the EBX Group

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

11

III. Information about the companies

14

IV. Market information overview

17

V. Valuation Methodology

21

VI. Assumptions

26

IX. Valuation

35

Appendix I Curricula vitae

40

Appendix II Balance Sheet

44

Appendix III Discount Rates

46

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

I. Executive Summary
Introduction

Eneva JR is a publicly-listed company and Eneva Participaes JR is a

joint venture owned by Eneva JR (50%) and E.ON (50%).

On February 12th, 2015, Eneva JR and Eneva Participaes JR filed a

Plan for Judicial Recovery (JRP), in accordance with Article 53 of the
Brazilian Judicial Recovery Law. Within this context, Eneva JR seeks to
initiate a capital increase transaction. Such transaction envisages a
change in Eneva JRs shareholder structure, and, should the JRP obtain
full approval for execution, such mutations in shareholder structure are
planned to be made through the following contributions: (i) cash; (ii) credits
capitalization; (iii) and assets subscription.

Within such context, BTG, as main shareholder of BPMB, is interested in

subscribing assets in the possible operation (item iii of the capital increase
in the JRP), in case the JRP is approved for execution, to participate in the
capital increase through a possible subscription of the shares BTG holds in
BPMB.

Given the above mentioned context and background, the objective of our
work, in accordance with Clients request was to perform a valuation report
regarding to BPMB, in order to underpin the possible asset subscription.

BPMB
Parnaiba_Info
Memo_v_09_01_2015.pdf,
BPMB
Parnaba_Model_KPMG_v5.xlsx, PGN-BPMB - Budget 2015 and
Business Plan - 2014-12-23.pdf Information related to the Gas
Reserves under the Parnaba Basin, Capex projection, Opex
projection and SG&A for PGN and BPMB;

BPMB Parnaiba_Info Memo_v_09_01_2015.pdf, BPMB

Parnaba_Model_KPMG_v5.xlsx, All internal presentations
that describe the history, nature of business, and outlook for
BPMB; and

BPMB Parnaiba_Info Memo_v_09_01_2015.pdf, BPMB

Parnaba_Model_KPMG_v5.xlsx, PGN-BPMB - Budget 2015
and Business Plan - 2014-12-23.pdf Other pertinent
information.

The valuation was based substantially on information and

assumptions, provided by BTG, which was discussed with and
analyzed by KPMG.

Our work used as basis the equity position and information obtained
prior to the date of issuance of this report.

We emphasize that any relevant facts that may have occurred

between December, 2014 and the date of issuance of this report, and
that were not brought to KPMGs knowledge could affect the analysis
of the Company.

It is important to point out that KPMG will not update this report after
the date of issuance.

The main basis of information used are listed below:

BPMB Parnaiba_Info Memo_v_09_01_2015.pdf, PGNBPMB - Budget 2015 and Business Plan - 2014-12-23.pdf
Background information regarding BPMB valuation;

Subsequent events

Basis of information

DFs BPMB Parnaiba 12-2014_6_04_2015.pdf BPMBs audited

financial statement FY2014;

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

10

I. Executive Summary

Summary of Results

Based on the scope of our report, and subject to the assumptions, restrictions, and limitations described herein, we have estimated the fair value of BPMB as at
December 31, 2014, as presented below.

Equity
Value per
share (R$)
Equity
Value 100%
(R$ MM)

1.80

655.48
-

1.88

688.17

1.97

720.86
+

* Range considered in accordance with CVM instruction n 436.

The valuation of BTGs stake in BPMB (100%) as at December 31, 2014 ranges from R$ 655.5 million to R$ 720.9 million.
The valuation methodology applied in order to determined the value of BPMB was the discounted cash flow method (presented on pages 37to 39).

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

11

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

11

III. Information about the companies

14

IV. Market information overview

17

V. Valuation Methodology

21

VI. Assumptions

26

IX. Valuation

35

Appendix I Curricula vitae

40

Appendix II Balance Sheet

44

Appendix III Discount Rates

46

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

12

II. Information about the appraiser

The KPMG Network

Internal process of approval of the report

KPMG Corporate Finance Ltda. is part of a global network of independent

The economic and financial valuation of the Companies was performed by

firms that provide Audit, Tax and Advisory services. KPMG International
provides no services. However, its member firms perform Audit, Tax and
Advisory practices (through the Audit departments, Tax and Advisory,
respectively). Together, KPMG International's member firms have more than
155 thousand employees across the world, and is present in 155 countries.

a team of qualified consultants, monitored and reviewed by the

engagement partner and quality partner, Claudio Ramos. In addition, the
team was also composed of a partner-reviewer, a senior manager and a
manager.

KPMG brand was created in 1987 from the merge of Peat Marwick

International (PMI) and Klynveld Main Goerdeler (KMG).

KPMG

Internationals member firms in Brazil, through its various

autonomous offices, account for 156 partners and more than 3,282
employees in 22 cities: So Paulo (headquarters), Belo Horizonte, Belm,
Braslia , Campinas, Curitiba, Cuiab, Florianpolis, Fortaleza, Goinia,
Joinville, Londrina, Manaus, Osasco, Porto Alegre, Recife, Ribeiro Preto,
Rio de Janeiro, Salvador, So Carlos, So Jos dos Campos and
Uberlndia.

The approval of the report occurred only after it was reviewed by the

engagement partner and the partner-reviewer.

Identification and qualification of the involved professionals
Augusto Sales, Paulo Guilherme Coimbra (project leader), Rben Palminha

and Fabiano Delgado coordinated and participated in the development of

the assessment presented in this report. For more information, please refer
to Appendix I.
Appraiser declarations
KPMG Corporate Finance declares, in March 15th, 2015, that:

The Corporate Finance segment of KPMG International member firms sum

up to approximately 2,100 professionals, in more than 100 offices across 82

countries.

It does not entitle any shares of Eneva or BPMB, nor do its partners,
directors, officers, directors, controllers or persons related to them;

KPMG Corporate Finance Ltda., a Brazilian company incorporated in the

1990s, leads and manages negotiations within corporate transactions,

including mergers and acquisitions, dispositions, structured finance, project
finance, debt advisory, privatization and economic and financial appraisals
services.

There are no commercial and credit relations that could impact the
Report;

There is no conflict of interest that impairs the necessary

independence required for the performance of this work..

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

13

II. Information about the appraiser (cont.)

Presented below are some of KPMGs experiences in the energy & natural resources:sector:

Petra Energia and

Parnaba Gs Natural

Enel

State Grid

Mitsui & Co

TAESA (Cemig Group)

KPMG Corporate Finance

KPMG Corporate Finance

KPMG Corporate Finance

KPMG Corporate Finance

KPMG Corporate Finance

KPMG Corporate Finance

Sell-side financial advisor in

Vicels sale to Soenergy

Acted as financial advisor for

LNG tariff review

Valuation advisory related to the

acquisition of several wind power
projects from Sowitec

Valuation related to the

acquisition of 5 electricity
transmission companies

Valuation related to a 20% stake

acquisition of Jirau HPP (3,750
MW)

Valuation related to the

acquisition of Unisa

2014

2014
2014

2014

2014

Dresser Rend

Equatorial Energia

TAESA (Cemig Group)

Iberdrola

KPMG Corporate Finance

KPMG Corporate Finance

KPMG Corporate Finance

Valuation related to the

acquisition of CELPA
(distribution)

Valuation related to the

acquisition of TBE Group
(transmission)

2013

2013

Vicel

KPMG Structured Finance

S.A.

2014

2014

SN Power

Brasympe

KPMG Corporate Finance

KPMG Corporate Finance

Valuation related to the

acquisition of Desenvix

2013

Valuation of Brasympe for

company restructuring purposes

2013

KPMG Corporate Finance

Valuation related to the
acquisition of Grupo Guascor

KPMG Structured Finance

S.A.

2013

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Valuation related to the

acquisition of Elektro

2013

14

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

11

III. Information about the companies

14

IV. Market information overview

17

V. Valuation Methodology

21

VI. Assumptions

26

IX. Valuation

35

Appendix I - Curricula vitae

40

Appendix II Balance Sheet

44

Appendix III Discount Rates

46

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

15

III. Information about the companies (cont.)

BPMB

Consortiums information
The upstream consortium in the Parnaba Basin (Consortium) currently

operates 3 gas fields and 7 exploration blocks with a total approximate area
of 21 thousand square kilometers in the Maranho State.
Below is presented a simplified diagram of the Consortiums current

operation.

BPMB owns a 30% stake in the Consortium that holds the concessions of
7 blocks in the Parnaba Basin (21,000 km).
Current production from GVR field: c. 5.6 million m3/day.
The Consortium estimates reserves of more than 1 TCF (around 32.3

BCM only considering 7 fields nearby GVR and GVB infrastructure

hub). When considering a longer projection period, the recuperable gas
may reach over 70 BCM, though currently, no certified third party study
has been developed.
The company plans to commercially launch 4 fields during 2015. Third

party geological studies were hired and results are expected for the 2nd
half of 2015.
The blocks operated by Parnaba Gs Natural (former OGX Maranho)

were acquired by the PE fund Cambuhy Investimentos and E.ON.

E.ON

Eneva JR

Cambuhy
Investimentos

BTG Patcual

18%
9%

73%

BPMB

PGN
Integrated project concept Gas to wire

Long term contracts with thermal plants (UTEs) controlled by Eneva JR

and Eneva Participaes JR;

TPPs have long term PPA contracts (15-20 years);

Close to 1GW total capacity already in operation;

UTE I (675MW), UTE III (178 MW) and UTE IV (56MW) are already in
operation. UTE II (517 MW) will be concluded in 2018; however, the PPA
will start only in 2016 because of the waiver granted by ANEEL.

Source: BTG

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

100%

70%

30%
Consortium

16

III. Information about the companies (cont.)

BPMB
In 2015, the company will conduct an onshore drilling campaign in Brazil.

Discovered wells and new production wells will be drilled, which could allow
BPMB to increase production capacity by 70%, by July, 2016, to 8.4 million
cubic meters per day.

Incom e statem ent

R$ MM
Sales net revenue
Costs
Gross profit
Operational expenses
Exploration expenses
Dry w ell losses
SG&A
Depreciation/Amortization
Other operational revenues/expenses
Operational expenses
EBIT
Financial result
Financial revenues
Financial expenses
Financial result
EBT
Income tax and social contribution
Deferred taxes
Net profit

31/12/2013

31/12/2014

139.13
(68.51)
70.63

249.64
(119.66)
129.98

(15.49)
(13.86)
(0.32)
(1.54)
0.30
(30.92)
39.71

(29.76)
(3.66)
(7.03)
(0.15)
(40.59)
89.39

0.31
(2.81)
(2.50)
37.21
(9.62)
4.99
32.59

4.29
(5.64)
(1.35)
88.04
(25.69)
1.95
64.29

Source: BPMB 2013 and 2014 audited financial statements.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

17

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

11

III. Information about the companies

14

IV. Market information overview

17

V. Valuation Methodology

21

VI. Assumptions

26

IX. Valuation

35

Appendix I - Curricula vitae

40

Appendix II Balance Sheet

44

Appendix III Discount Rates

46

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

18

IV. Information about the Market

Brazilian Macroeconomic trends

Macroeconomic trends

Exchange Rate (USD/BRL) annual variation (%)

GDP expanded meagerly in 2014 and more recent data suggest that

prospects have worsened.

In 2014, consumers suffered with the government's failed attempt to curb

2,76

2,71

inflation and foster GDP growth. In March 2013 annual interest rate was
7.25%, the lowest in Brazil's history. From then on, there have been nine
consecutive hikes, and annual interest rate has reached 12.75%.

2,79

2,86

2,96

3,06

2,36
2,14
1,94
1,76

According to the Brazilian Central Bank, the forecasted GDP variation for

1,67

2015 and 2016 are 0.5% and 1.8% respectively.

Projected
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: BCB (31/12/2014)

IPCA annual variation(%)

Henry Hub (USD$/MMBtu)

6,56

6,5
6,38

4,5

4,21

4,7

4,79

4,13

3,66
5,91

5,84

3,1
5,8

5,7

2,5
5,5

5,5

5,5

2,5

2,5

2,55

5,5

Projected

Projected
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: BCB (31/12/2014)

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Bloomberg (31/12/2014)

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

19

IV. Information about the Market

Brazilian Energy sector overview: Electricity

Main agents within the electricity sector

Sources of energy
77% of the electricity in Brazil comes from hydraulic plants, which are

responsible for 76.9% of energy installed capacity. Behind hydro plants,

thermal energy is responsible for 12.8% of the installed capacity.
Given the importance of hydraulic resources to the Brazilian electricity

sector, the level of reservoirs are of great relevance to the optimization of

energy generation, as they represent a form of energy storage.
The illustration below depicts the sources of Brazilian electricity.

responsible for energy distribution services to

distributor consumers, with determined tariffs fixed by ANEEL. Such
agents are strictly regulated, and all energy distribution conditions
and requirements are under high scrutiny by regulators.

Traders: these agents are allowed to acquire energy through

bilateral contracts in the ACL environment, which will then be sold to

free consumers, or to distribution companies in tendering process.
Consumers:

Others
Nuclear6%
2%
Biomass
7%
Natural gas
8%

Distributors:

Electricity
generation
matrix
Hydraulic
77%

a)

Free: consumers that fit the necessary legislative requirements

and that have the right to choose the energy producer through
free bilateral negotiations. (i.e. an industrial player with energy
demand above 3 MWh).

b)

Distributor consumers: consumers who are not allowed to

choose their energy source and are strictly obligated to acquire
energy from their local energy distribution company (i.e.
residential consumers).

c)

Energy importers: agents who possess specific permissions

to import energy from a foreign country, in order to supply
electricity within the domestic market.

d)

Energy exporters: agents who possess specific permission to

export electricity to neighboring countries.

Source: EPE

Main agents within the electricity sector

Producers: responsible for the energy generation that is negotiated in the

ACR, ACL market or spot market.

Transmission: responsible for the operation of transmission grids, which are

available for all producers, as long as the grids are interconnected and as
long as the producers pay transmission fees.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

20

IV. Information about the Market

Brazilian Energy sector overview: Oil and Gas

Production

Reserves

In the next years, oil production in Brazil was expected to grow, thanks to

Brazilian proven oil reserves, as reported by EIA, are 13.15 billion

the massive deposit of offshore oil, underneath a thick layer of salt,

discovered in 2007. Petrobras, a Brazilian major oil company, projected
that oil output may hit 5 million barrels per day by 2020. However,
according to the Energy Information Administration (EIA), this production
projection is not precise due to an array of factors, such as significant
engineering and financing challenges for example, such as the recent
reduction of the brent oil price in late 2014 that can reduce the estimate
to 4 million barrels per day by 2020 at best (or less, depending on
Petrobrasbusiness plan).

barrels, while gas reserves are estimated at 396 billion cubic

meters. Additionally, due to new discoveries, oil reserves are
projected to reach 19.2 billion barrels and gas reserves to reach 461
billion cubic meters by 2023.
Proven Oil Reserves

Million barrels per day

4.5
4,5
4.0
4,0
3.5
3,5
3.0
3,0
2.5
2,5
2.0
2,0
1.5
1,5
1.0
1,0
0.5
0,5
0.0
0,0
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

4
3
2

Dry Natural Gas Production

15
12
9
6
3
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Projected

Natural Gas Proven Reserves

years, reaching 35.9 billion cubic meters by 2023. Production is expected

to come mainly from the offshore Campos and Santos basins.
Million cubic meters
per day

0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Projected

Gas production, similarly, is expected to grow vigorously in the next

Source: EIA, BMI

Projected

Million cubic meters per day

MM Barrels per day

Crude oil and Other liquids production

180
160
140
120
100
80
60
40
20
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Projected

21

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

11

III. Information about the companies

14

IV. Market information overview

17

V. Valuation Methodology

21

VI. Assumptions

26

IX. Valuation

35

Appendix I - Curricula vitae

40

Appendix II Balance Sheet

44

Appendix III Discount Rates

46

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

22

V. Valuation Methodology

DCF
Discounted Cash Flow

Free Cash Flow to Firm

This methodology estimates the economic value (or the market value) of a
company by calculating the present value of projected cash flows, i.e. the
income and expenses (including investments needed for maintaining and
expanding the companys activities) that are predictable from the perspective
of perpetuity of the entity. These projections should take into consideration
the business plan established by the companys management, the prospects
of the sector in which the company operates and macroeconomic aspects.

The Discounted Cash Flow Methodology can be used to value any type of
company provided it has a business plan that is consistent and feasible. This
methodology is recommended for companies that have reasonable prospects
for significant expansion of their activities and whose business plan may be
considered appropriate for achieving this growth, since the methodology is
based on future cash flows.

This methodology reflects the value of the intangible assets, such as brand
name, client portfolio, product portfolio, among others, as all these assets
have an effect on the companys capacity to generate results.

This is the commonly used methodology in estimating the market value of

companies that are considered going concerns, except when the resulting
value is less than the liquidating value of the company (adjusted net worth).

The Free Cash Flow to the Firm aims to evaluate the company as a
whole, that includes, beyond the stockholding, the participation of others
holders of rights in the company (holders of bonds, shareholders, etc).
The Free Cash Flow to the Firm can be represented by the following
formula:

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Free Cash Flow to the Firm

=
Net Profit
+
Depreciation and Amortization
+/Working Capital
Investments (Capex)

23

V. Valuation Methodology

DCF
Discounted Cash Flows Method (DCF)

Historical Balance Sheet

Historical
Income Statement

Assumptions

Projections by Business Units

Projected Balance Sheet

Projected Income Statement

Projected Capex, R&D, Working

Capital

Free Cash Flow To Firm

Discount Rate
Discounted Free Cash Flow

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

24

V. Valuation Methodology

Discount rate

Establishing the discount rate is a fundamental stage of the economic valuation. This single factor reflects aspects of a subjective nature, varying from one
investor to another, such as opportunity cost and individual perception of investment risk.
WACC (Weighted Average Cost of Capital)

The cost of capital for the Company was calculated using the WACC
methodology. WACC takes into consideration various financing components,
including debt, cost of equity and hybrid bonds used by companies to finance
its cash needs. It is calculated according to the following formula:

D
E
t
Kd
Ke

=
=
=
=
=

CAPM (Capital Asset Pricing Model)

The cost of equity for the Company was calculated using the CAPM
methodology. Using the CAPM methodology, the cost of equity is
calculated according to the following formula:

D/(D+E)

Rf (1+Ia) x (1+Ibr)

Kd * (1-t)

* (E[Rm] - Rf)

E/(D+E)

CRP

Ke

Rs

=
E/(D+E)*Ke+(D/(D+E)*Kd = WACC
Weighted Average Cost of Capital

Total debt
Total equity
Tax rate
Cost of debt
Cost of equity

[(1+Rf)/(1+Ia)*(1+Ibr)-1] +(*Rm)+CRP+Rs = Ke
Cost of Equity

Rf

E[Rm]
E[Rm] - Rf
CRP
Rs
Ia
Ibr

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

=
=
=
=
=
=
=
=

Average risk-free return

Beta - specific risk coefficient
Average long-term return obtained on the stock market
Market premium
Country risk
Size premium
Long-term inflation in the United States
Long-term inflation in Brazil

25

V. Valuation Methodology

Discount rate (cont.)

Risk free rate

The risk-free rate is derived with reference to the 2 year average bond yield
on the United States 30 year treasury bond (T-Bond) rate between January
1st, 2013 and December 31st, 2014 or approximately 3.4%. (Source:
Bloomberg, historical data)

Country risk premium (CRP)

The build up of the cost of equity to this point has been based on
the United States equity and bond markets. As such a CRP is
considered a necessary component in the cost of equity to
incorporate additional risk associated with investing in the country,
which is typically not reflected in the cash flows.

We have assumed a CRP of 2.18% for Brazil in our calculation, this

is based on the historical 2 year average (between January 1st,
2013 and December 31st, 2014) of the EMBI+. (Source: JP
Morgan).

Equity risk premium (ERP)

To estimate the long term stock market risk premium (E[Rm] Rf), we relied
upon the average return above the Treasury Bond rate provided by investing
in the U.S. stock market, which was 4.6% (source: Aswath Damodaran
website).

Beta

Beta is a statistical measure of how closely the value of a stock correlates

with the overall stock market. Beta is a measure of non diversifiable risk and
is reflective of the variability of a particular share relative to the market. The
average beta of a company is therefore calculated as the average correlation
of the daily return of the share relative to the market.
To calculate a meaningful beta for an unlisted entity, the beta of a listed
company with comparable business and operational risk is unlevered to
remove the effects of the capital structure (i.e. remove the financial risk). The
unlevered Beta is then relevered using the capital structure of the company or
asset being valued to reintroduce the effects of their own financial risk.

To calculate the industry average Beta we have considered an

unlevered beta of 0.98. To calculate the average Betas of the
sectors we considered the comparables companies.

Size premium

The size premium (Rs) represents the additional return required

by investors to incur a higher level of risk to be investing in
companies with different levels of size.

To account for BPMBs size, we have added 1.98% to the cost of

equity, this is the risk associated with Low Capitalization
companies, through studies done by Duff & Phelps (2014).

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

26

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

11

III. Information about the companies

14

IV. Market information overview

17

V. Valuation Methodology

21

VI. Assumptions

26

IX. Valuation

35

Appendix I - Curricula vitae

40

Appendix II Balance Sheet

44

Appendix III Discount Rates

46

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

27

Assumptions
Introduction

Overview of Parnaba Complex

Overview of the Parnaba Complex

The Parnaba Complex is an energy park that, given the proximity between
the gas fields (upstream) and TPPs (downstream), is founded on an
integrated model.

Downstream

MA

The Parnaba Thermal Electric Complex is formed by four TPPs (Parnaba I,

Parnaba II, Parnaba III and Parnaba IV) that are expected to reach a full
installed capacity of 1,425MW. It is located in the state of Maranho, Brazil.

Upstream

According to Enevas management, the upstream segment is expected to

deliver 32.3 BCM of gas throughout current projection assumptions.

Currently, the Parnaba Complex operates 3 gas fields and 7 exploration

blocks with a total approximate area of 21 thousand square kilometers.

Overview of Downstream

Parnaba Com plex - Dow nstream com position

TPP

Installed capacity (MW)

Parnaba I

675

Parnaba II

517

Parnaba III

178

Parnaba IV

56

Total

1426

Source: Eneva JRs website

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

28

Assumptions
Introduction (cont.)

Integration Downstream and Upstream

In order to fulfill electricity generation obligations, the TPPs must have a trustworthy source of fuel.

The initial source of gas, which is contractually guaranteed until 2027 for Parnaba III, and 2028 for Parnaba IV, will be provided by the Consortium.

The proximity between the gas fields, gas treatment units, and thermal power plants integrate the Downstream and Upstream businesses, as presented bellow:

Source: Eneva website

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

29

Assumptions
Introduction (cont.)

Proven and estimated reserves

80

37.7

70

The present proven reserves add up to 8.4 BCM. It consists

on current wells from the gas fields GVR, GVB and GVA.
The gas fields, however, can encompass additional wells.

The Management has already conducted extensive

research on other wells located in GVR, GVB, SE Bom
Jesus, Fazenda Isabel, Fazenda Chicote, Fazenda Alencar,
Fazenda So Raimundo, Fazenda Sossgo and Fazenda
Santa Vitria.

The company plans to launch 4 fields (Fazenda Santa

Isabel, SE Bom Jesus, Santa Vitria and Chicote) as
commercial during 2015. Third party geological studies
were hired and results are expected for the 2nd half of 2015.

These estimates point towards an additional 23.9 BCM,

totalling 32.3 BCM of natural gas reserves.

As it was mentioned before, the Consortium operates in 7

blocks, which also present other gas fields with a potential
upside to be considered. The Consortium has made studies
on these gas fields: albeit they are in more distant blocks,
they represent a potential additional reserve of nearly 37.7
BCM.

Since the current third parties studies related to the

certification of internal research are at preliminary stages,
the production considered in this report comes from the first
contracts cycle reserves, which is 32.3 BCM.

70.0

Morada Nova

BCM

Tianguar

60
Esperantinpolis
Baslios

50

Havana
Axixa

40
23.9

32.3

Angical

GVR

30

GVB
SE BJ
Isabel

20

Chicote
Alencar
Raimundo

10

6.1

1.9

0.4

8.4

Sossgo
Vitria

Source: BTG
2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

30

Assumptions
BPMB

Revenues
The results presented below represent 30% of the total revenues that the Consortium generates.

Gas contracts revenues: Based on the gas demand from the 4 TPPs, these revenues match the fuel purchase costs of the downstream business.

Fixed revenues: The TPP has an agreement with the gas producers to pay a fixed-lease, which is contractually determined by the parties.

Variable revenues: The variable-lease revenues, which derive exclusively from Parnaba I and III, were calculated based on the difference between: (i) total
revenues and; (ii) fixed revenues; (iii) variable costs; and (iv) taxes, regulatory fees and insurance.

Condensate gas: It is a low-density liquid present in gas fields. This revenue line was projected by multiplying volume in million Boe (barrel of oil equivalent) and
the condensate price in million reais. It represents an average of 0.5% of the total revenue up until the end of the contracts with the TPPs.
BPMB Gross revenue projection
600
511
484

500

462

R$ MM

440

422

417
395

400
339
316

300

261
76

200

64
64
1

301
74

57
68
2

60
2

100

60

47
75
71
2

187
123

270

319

196
149

167

80
2

177

336
64

84
2

187

83

67

89
2

197

67

79
71

93
2

208

71

75

99
2

219

104
2

231

110
2

244

116
1

258

83
79

75

88

374
355

459
435

104
2

248

110
1

253

116
1

267

122
1

282

129
1

297

134
0
1

142
0
1

148
0

133

140

148

52
0
52

0
0

0
0

0
0

0
0

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Source: BTG

Gas contract

Condensate

Fixed rental

Variable rental

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

31

Assumptions
BPMB

Deductions
The results presented below represent 30% of the Consortiums deductions.

Deduction taxes: Deductions on gross revenues comprise PIS and Cofins at rates of 1.65% and 7.60% respectively, and ICMS (which is exclusively on gas
sales) at a 4.6% rate. Additionally, it was considered PIS and Cofins credit of 1.65% + 7.60% on 50% over Opex, abandonment costs, exploration expenses and
depreciation.

Special participations: A progressive tax applied on the gas production exceeding 450 thousand cubic meters of BOE from each well.

ANEEL fees: Calculated according to current contract assumptions, annually adjusted by the Brazilian inflation-index IPCA.

Royalties: It was projected as 10.0% of the total gross revenues throughout the entire projection period.

Costs
The results presented below represent 30% of the Consortiums Opex and other costs

Opex: Based on the 2015 budget and production projection adjusted by the Brazilian inflation-index IPCA. It is worth noticing the depletion of the wells from 2032
up to 2036.

Landowner share: According to Brazilian law, the landowner must receive 1.0% of the total revenue.

Easement Agreement: Pipelines have several kilometers of length, and pass over farms and lands owne d by third parties. In this contract, the owners of such
lands grant a right of access and easement to the construction, maintenance and removal of the pipeline. In exchange for such services, the Consortium must pay
an insurance and an indexed amount, which is paid periodically.

Abandonment costs: As per regulation requirements, once the gas well is depleted, the company must remove the equipment, plug the well and remediate the
surface so as to prevent the leakage of hydrocarbons and any damage to the environment in the surrounding area. BTGs management considered an
assumption of R$ 1.5 million per well. The abandonment costs were more substantial in 2040, given that the wells will be closed at the same year.

R$ MM

BPMB Costs projection

80
70
60
50
40
30
20
10
0

68

35
20

2015
Source: BTG

22

31

33

37

43

38

40

42

44

51

52

49

54

57

60

30

24

29

30
11

2016

2017

2018

Opex

2019

2020

2021

2022

2023

Landowner share

2024

2025

2026

2027

2028

2029

2030

Easement agreement

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

Total abandonment cost

32

Assumptions
BPMB

Expenses
The results presented below represent 30% of the Consortiums expenses.

Rental to ANP: Calculated according to current contract assumptions, adjusted by the Brazilian inflation-index IPCA.

R&D: Calculated as 1% of the net revenues.

SG&A Consortium: Composed by three factors: production, development & infrastructure and exploration. It is important to mention that, in 2019, the end of
exploration of new gas fields causes a reduction in SG&A.

SG&A BPMB: According to the Client Management, it comprises expenses with Back Office, accounting among others. Also according to BPMB, it decreases
with the improving integration between the plants.

Exploration expenses: Projected as a combination of expenses from exploration, drilling and other finding expenditures (Seismic, injection wells, among others).

BPMB Expenses projection

45

82
77

40
35

R$ MM

19
16

30

25
20

58

46
0
1

39
0
1
30
0
1

15
10

19

20
21

22

28
0
1

27
0
1

29
0
1

30
0
1

32
0
1

11

12

12

17
12

11

10

34
0
1

13

35
0
1

14

37
0
1

32
0
1
23
0
1

14

Source: BTG

2015

2016

2017

2018

2019

2020

2021

Rental to ANP

2022

2023

2024

2025

2026

2027

P&D

25
0
1

15

SG&A Consortium

2028

19
0
1

11

11

12

2029

2030

2031

2032

2033

5
1
0

25
0
1

SG&A BPMB

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

15
0

13
0

11
0

0
0

0
0

0
0

0
0

2034

2035

2036

2037

2038

2039

2040

Exploration expenses

33

Assumptions
BPMB

Depreciation
The results presented below represent 30% of the Consortiums depreciation

Total depreciation of the infrastructure was projected at 20 years (at a 5% p.a. rate).

The depreciation rate of property, plant and equipment was projected based on the yearly production and proved developed reserves.

Capex
The results presented below represent 30% of the Consortiums Capex

Major capital expenditures has been projected as investments in development, and in the infrastructure that is built in order to connect the pipeline.

BPMB Capex projection

250

R$ MM

203

200

150

97

100

143
0

84

95
0
63

80

50

80
0
51

43
0
18

39
0
18

29
0

26
0

22
0

0
0

0
0

0
0

2018

2019

2020

2021

2022

2023

42
14
21

0
2015

Source: BTG

17

18

2016

2017

Drilling

Development

37
0
14

39
0
14

37
0
14

38
0
14

0
0

24
0

25
0

23
0

25
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

0
0

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

Infrastructure

Other development capex

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

34

Assumptions
BPMB

Income taxes

BPMB is taxed with income taxes and social contribution rates at 25% and 9% respectively. It is worth mentioning, however, that BPMB has the following fiscal
benefit :

Lucro da Explorao Exploration Profit, granted by SUDENE, from 2014 to 2023.

Working capital

The table presents the average of days and drivers for each account.

BPMB
Current assets
Accounts receivable
Taxes receivable

Days
45
3

Driver
Days of revenues
Days of revenues

Current liabilities
Tax payables
Accounts payable
Other accounts payable

Days
30
30
2

Driver
Days of costs and capex
Days of deductions
Days of costs

Source: BTG
2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

35

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

11

III. Information about the companies

14

IV. Market information overview

17

V. Valuation Methodology

21

VI. Assumptions

26

IX. Valuation

35

Appendix I - Curricula vitae

40

Appendix II Balance Sheet

44

Appendix III Discount Rates

46

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

36

Valuation
BPMB
Income Statement

We present, below, BPMBs projected income statement:

Projected incom e statem ent - BPMB
R$ M
Gross revenues
Deductions
Net revenues
Costs
Gross profit
Expenses
EBITDA
EBITDA margin
Depreciation/Amortization
EBT
Income tax and social contribution
% EBT
Net incom e

2015
261.09
(36.60)
224.50
(19.88)
204.62
(41.69)
162.93
72.58%
(64.37)
98.56
(25.04)
-25.41%
73.52

2016
316.39
(58.68)
257.72
(22.47)
235.24
(38.45)
196.79
76.36%
(61.81)
134.98
(31.25)
-23.15%
103.73

2017
339.03
(60.09)
278.94
(23.91)
255.03
(29.17)
225.86
80.97%
(57.94)
167.92
(39.32)
-23.42%
128.60

2018
269.58
(45.97)
223.61
(35.05)
188.56
(22.82)
165.73
74.12%
(48.59)
117.14
(27.97)
-23.88%
89.17

2019
301.41
(52.41)
249.00
(31.22)
217.78
(19.73)
198.05
79.54%
(46.45)
151.60
(36.12)
-23.83%
115.48

2020
318.51
(56.18)
262.33
(32.74)
229.59
(14.99)
214.60
81.80%
(44.82)
169.78
(40.47)
-23.84%
129.31

2032
510.52
(101.41)
409.11
(60.21)
348.90
(12.95)
335.96
82.12%
(35.21)
300.75
(102.25)
-34.00%
198.49

2033
134.07
(41.91)
92.16
(29.88)
62.28
(9.48)
52.79
57.29%
(15.37)
37.42
(12.72)
-34.00%
24.70

2021
336.10
(59.65)
276.45
(36.91)
239.54
(14.17)
225.37
81.52%
(41.10)
184.26
(43.92)
-23.84%
140.34

2022
354.67
(70.17)
284.50
(43.08)
241.42
(13.55)
227.87
80.09%
(41.14)
186.73
(44.50)
-23.83%
142.22

2023
374.24
(77.65)
296.59
(38.02)
258.58
(14.30)
244.28
82.36%
(41.18)
203.10
(48.40)
-23.83%
154.70

2024
394.89
(83.23)
311.67
(40.05)
271.61
(15.09)
256.53
82.31%
(41.21)
215.32
(73.21)
-34.00%
142.11

2025
416.68
(87.76)
328.91
(42.20)
286.71
(15.92)
270.80
82.33%
(45.39)
225.40
(76.64)
-34.00%
148.77

2026
439.56
(91.74)
347.82
(44.47)
303.36
(16.79)
286.57
82.39%
(44.10)
242.47
(82.44)
-34.00%
160.03

2027
462.05
(92.87)
369.18
(51.42)
317.75
(17.71)
300.04
81.27%
(42.86)
257.18
(87.44)
-34.00%
169.74

Projected incom e statem ent - BPMB

R$ M
Gross revenues
Deductions
Net revenues
Costs
Gross profit
Expenses
EBITDA
EBITDA margin
Depreciation/Amortization
EBT
Income tax and social contribution
% EBT
Net incom e

2028
421.73
(85.07)
336.66
(49.09)
287.57
(18.40)
269.17
79.95%
(39.69)
229.48
(78.02)
-34.00%
151.45

2029
434.67
(86.08)
348.59
(51.57)
297.02
(16.26)
280.76
80.54%
(35.19)
245.58
(83.50)
-34.00%
162.08

2030
458.54
(90.91)
367.63
(54.35)
313.28
(11.63)
301.65
82.05%
(35.19)
266.45
(90.59)
-34.00%
175.86

2031
483.82
(96.02)
387.80
(57.29)
330.51
(12.27)
318.24
82.06%
(35.20)
283.04
(96.23)
-34.00%
186.81

2034
141.55
(44.46)
97.09
(28.84)
68.24
(7.50)
60.74
62.56%
(14.16)
46.58
(15.84)
-34.00%
30.74

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

2035
148.23
(46.88)
101.35
(30.39)
70.96
(6.41)
64.55
63.69%
(13.40)
51.15
(17.39)
-34.00%
33.76

2036
52.16
(23.80)
28.36
(11.20)
17.16
(5.86)
11.30
39.84%
(4.47)
6.83
(2.32)
-34.00%
4.51

2037
N.a.
N.a.
-

2038
N.a.
N.a.
-

2039
2040
3.14
3.14
(67.79)
(64.65)
(64.65)
N.a. -2062.16%
(64.65)
N.a.
0.00%
(64.65)

37

Valuation
BPMB
Cash Flow

We present, below, BPMBs projected cash flow:

Projected cash flow - BPMB
R$ M
Net income
Depreciation/Amortization
Changes in WC
Capex
Free cash flow to firm
Discount factor
Discount rate
Discount period
Discounted cash flow

2015
73.52
64.37
11.38
(203.03)
(53.76)

2016
103.73
61.81
(2.31)
(142.74)
20.49

2017
128.60
57.94
(3.17)
(94.64)
88.73

2018
89.17
48.59
5.39
(80.05)
63.10

2019
115.48
46.45
(2.88)
(43.48)
115.57

2020
129.31
44.82
(1.42)
(39.50)
133.21

2021
140.34
41.10
(1.02)
180.43

2022
142.22
41.14
1.00
184.36

2023
154.70
41.18
(0.80)
195.08

2024
142.11
41.21
(0.87)
182.45

2025
148.77
45.39
(1.29)
(37.33)
155.53

2026
160.03
44.10
(1.58)
(38.63)
163.92

2027
169.74
42.86
(1.92)
(37.16)
173.52

0.15
0.50
(50.10)

0.15
1.50
16.58

0.15
2.50
62.37

0.15
3.50
38.52

0.15
4.50
61.27

0.15
5.50
61.34

0.15
6.50
72.15

0.15
7.50
64.03

0.15
8.50
58.84

0.15
9.50
50.05

0.15
10.50
37.24

0.15
11.50
34.25

0.15
12.50
31.64

2028
151.45
39.69
2.87
(38.45)
155.57

2029
162.08
35.19
(1.36)
195.91

2030
175.86
35.19
(1.88)
209.17

2031
186.81
35.20
(1.53)
220.47

2032
198.49
35.21
(1.64)
232.07

2033
24.70
15.37
29.04
69.11

2034
30.74
14.16
(0.48)
44.42

2035
33.76
13.40
(0.13)
47.02

2036
4.51
4.47
4.29
13.27

2037
(1.32)
(1.32)

0.15
13.50
24.76

0.15
14.50
27.21

0.15
15.50
25.35

0.15
16.50
23.32

0.15
17.50
21.42

0.15
18.50
5.57

0.15
19.50
3.12

0.15
20.50
2.89

0.15
21.50
0.71

0.15
22.50
(0.06)

Projected cash flow - BPMB

R$ M
Net income
Depreciation/Amortization
Changes in WC
Capex
Free cash flow to firm
Discount factor
Discount rate
Discount period
Discounted cash flow

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

2038
-

0.15
23.50
-

2039
-

0.15
24.50
-

2040
(64.65)
4.78
(59.87)

0.15
25.50
(1.86)

38

Valuation
BPMB
Valuation

We present, below, BPMBs Valuation:

BPMB's Equity value

R$ MM
Sum of discounted cash flow
Adjustm ents

670.59
17.58

Cash and cash equivalent

21.23

Dividends before merger

(6.71)

Deferred taxes
Equity value

3.06
688.17

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

39

Valuation
Conclusion
Conclusion
Based on the scope of our report, and subject to the assumptions, restrictions, and limitations described herein, we have estimated the fair value of BPMB as
at December 31, 2014, as presented below.
BPMB
688.17
17.58
R$ MM

BPMB Valuation interval

670.59

Bottom (-5%)
Equity value
655.48

Central
688.17

Upper (+5%)
720.86

* Range considered in accordance with CVM instruction n 436.

BPMB
Enterprise
value

Adjustments

BPMB Equity
value

The valuation of BTGs stake in BPMBs valuation (100%) as at December 31, 2014 ranges from R$ 655.5 million to R$ 720.9 million.
The valuation methodology applied in order to determined the value of BPMB was the discounted cash flow method (presented on pages 37 to 39).

In providing its services, KPMG relied on information provided by the Clients and BTGs Management and discussions with your employees or other
representatives, and KPMG is not responsible for independently verifying any information publicly available or supplied to it in the preparation of this report.
KPMG does not express an opinion on the reliability of the information presented above, and determines that any errors, changes or modifications of such
information could significantly affect the findings of KPMG. Based on the terms of our proposal, data processing and information does not imply acceptance or
certification of these as true by KPMG.

During the course of our work, KPMG performed testing procedures as needed. However, we emphasize that our evaluation work did not constitute an audit of
financial statements or other information submitted to us by the Clients and BTGs Management and should not be treated as such.

Neither KPMG nor the Clients or BTGs Management can ensure that future results will meet projected results, due to unforeseen external or internal factors.

We emphasize that a full understanding of this report and its conclusion is only possible through its complete reading. Thus, one should not draw conclusions by
reading just part of it.

It is imperative to point out that this version of the valuation report is a free translation from Portuguese to English; therefore, in case of discrepancies between the report in
Portuguese sent on April 13, 2015 and the free translation report, the former shall prevail in all matters.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

40

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

11

III. Information about the companies

14

IV. Market information overview

17

V. Valuation Methodology

21

VI. Assumptions

26

IX. Valuation

35

Appendix I - Curricula vitae

40

Appendix II Balance Sheet

44

Appendix III Discount Rates

46

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

41

Appendix I
Curricula vitae
Name
Position

Claudio Roberto de Leoni Ramos

Sector of expertise

Partner, Advisory - Corporate Finance

BS degree in Mechanical Engineering from the School of Technology at the University of Braslia, Brazil.
MBA degree in Finance, Economics and International Business from New York Universitys Leonard N. Stern School of Business
and Universit Commerciale Luigi Bocconi, Milan.
Claudio has been a professor for Corporate Finance classes in the Executive MBA of FAAP University in So Paulo.
Passed CFA Level 1 exam in 2009.
Claudio is a board member of Enactus Brazil (http://enactus.org/country/brazil/).
Head of Transactions & Restructuring (T&R) for KPMG Brazil and South America and the leader for High Growth Markets for the
KPMG Global T&R Leadership Team. Cludio has worked in corporate finance/investment banking since 1993. His experience
encompasses equity research, cross-border private placements, company valuations and merger and acquisitions advisory work.
He has been advising clients on mergers and acquisitions and valuations since 1994. His industry experience encompasses
industrial companies, financial institutions, food and beverage, mining and automotive. He is the representative for Latin America in
KPMGs Global Valuations Committee and one of the seven members of the Global Valuations Leadership Team. Hes the lead
partner of the Valuations Group in KPMG Brazil.
Financial institutions, mining, services, insurance, foods and beverages

Name

Paulo Guilherme de Menezes Coimbra

Position

Partner, Corporate Finance (M&A), Rio de Janeiro Brazil.

Qualifications

Graduated in Production Engineering in Universidade Federal do Rio de Janeiro - UFRJ (1996)

Specialization in Corporate Finance in the Brazilian Institute of Capital Markets (IBMEC - 1997)
Executive Program on Business Management Fundao Dom Cabral, Rio de Janeiro 2012

Experience

Throughout 15 years of experience, he has participated in a wide range of activities, including: financial advisory to clients in
mergers and acquisitions, privatizations and offerings.
Before joining KPMG Brazil he worked at Acar Guarani (one of the largest Sugar and Ethanol Company in Brazil) and was the
CFO at Cimentos Liz (one the largest cement group in Brazil).

Sector of experience

Electricity, Oil and Gas, Sugar and Alcohol. Agriculture, Financial Sevices and Consumer Goods

Qualifications

Experience

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

42

Appendix I (cont.)
Curricula vitae
Name
Position

Augusto Sales

Sector of expertise

Partner, Advisory Global Strategy Group

Brazil CPA
MBA, IBMEC Business School, Rio de Janeiro
BA, Accounting, Universidade Federal Fluminense (UFF), Rio de Janeiro
Augusto is responsible for leading the KPMGs Strategy Group in Brazil. He has over 20 years of experience in strategy and
financial advisory to clients in strategy and business development exercises, mergers and acquisitions, privatizations and offerings.
On the transaction space, he has provided strategy advice, market entry, target identification, strategic, financial and business due
diligence on numerous cross-border transactions for both domestic/international and financial/strategic buyers in large and complex
deals.
Before joining the Transaction Services group in Brazil he worked in New York advising companies going public in the US market
(NYSE) and served the Brazilian Desk advising clients with interest in Brazil.
Power Generation, Transmission and Distribution, Mining and Metals, Oil & Gas spaces.

Name

Rben Palminha

Position

Senior Manager, KPMG Corporate Finance, Rio de Janeiro Brazil.

Qualifications

Postgraduate degree in Finance, with specialization in Corporate Finance INDEG-IUL, (Lisbon, Portugal)
Specialization in Finance INDEG-IUL (Lisbon, Portugal)
Graduate in Finance ISCTE-IUL (Lisbon, Portugal)

Experience

He joined KPMG Corporate Finance in 2006. Since then, Rben has participated in Energy and Infrastructure projects in various
countries, assisting Public and Private entities, accumulating skills in Project Finance, PPP Projects, M&A and Valuations.

Qualifications

Experience

Since December 2014, Rben is based in the Rio de Janeiro office.

Sector of experience

Energy and Infrastructure

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

43

Appendix I (cont.)
Curricula vitae

Name

Fabiano Goulart Delgado

Position

Manager, Corporate Finance, KPMG Curitiba - Brazil

Qualifications

Specialization in Controllership at UFPR-PR

Graduated in Economics at UFMS-MS

Experience

Has more than 7 years of experience in KPMG, ample experience in M&A services, and preparation of business plans and
valuations. In addition, Fabiano has developed several financial models and evaluated various intangible assets within Purchase
Price Allocation exercises.

Sector of experience

Banking, real estate, power, agribusiness, foods and beverages, retail and logistic.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

44

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

11

III. Information about the companies

14

IV. Market information overview

17

V. Valuation Methodology

21

VI. Assumptions

26

IX. Valuation

35

Appendix I - Curricula vitae

40

Appendix II Balance Sheet

44

Appendix III Discount Rates

46

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

45

Appendix II
Balance Sheet | BPMB

Balance sheet - BPMB

Balance sheet - BPMB

R$ MM
Assets
Current
Cash and cash equivalent
Accounts receivable
Other receivables and prepaid expenses
Taxes receivable
Non-current
Mutual w ith related party
Deferred taxes
Fixed assets
Intangibles
Total assets

31/12/2013

31/12/2014

1.53
35.41
0.04

21.23
47.25
0.91
2.62

11.27
4.99
369.22
7.44
429.91

3.06
386.53
6.25
467.85

R$ MM
Liabilities
Current
Accounts payable
Tax payables
Dividends payable
Other accounts payable
Non-current
Provision for abandonment of installation
Shareholders' equity
Equity
Capital reserve
Legal reserve
Profit reserve
Accumulated profits
Total liabilities and shareholders' equity

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

31/12/2013

31/12/2014

70.49
17.04
2.15
0.01

11.80
8.05
6.71
1.65

18.20

25.04

315.12
0.45
6.44
429.91

315.62
49.50
3.67
45.81
467.85

46

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

11

III. Information about the companies

14

IV. Market information overview

17

V. Valuation Methodology

21

VI. Assumptions

26

IX. Valuation

35

Appendix I - Curricula vitae

40

Appendix II Balance Sheet

44

Appendix III Discount Rates

46

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

47

Appendix IV
Discount rate

BPMB

Discount rate

Source:
(a) Risk free rate Bloomberg

During Sudene

After Sudene

(a)

3.4%

3.4%

(b) USA CPI Economist Intelligence Unit

American inflation ("CPI")

(b)

2.0%

2.0%

Long Term Brazilian inflation ("IPCA")

(c)

5.5%

5.5%

(c) Long term Brazilian inflation Central Bank of Brazil

(d) = (1 + a) / (1 + b) * (1 + c) -1

6.9%

6.9%

Equity risk premium (ERP)

(e)

4.6%

4.6%

(f) Unleverage beta (sector) Bloomberg

Unleverage beta - setorial

(f)

0.98

0.98

(g) Debt to Equity (sector) Bloomberg

D/E

(g)

42.9%

42.9%

Effective tax rate

(h)

23.9%

34.0%

(i) = f * {1 + [g * (1 - h)]}

1.31

1.26

(j) Country risk premium J.P Morgan

RF - T-Bond 30 years - 2 years

RF Adjusted

Releverage beta

(e) Equity risk premium Damodaran

(h) Effective tax rate Tax effective rate applicable to the

company

Country risk premium - EMBI+ (CRP) - 2 y

(j)

2.18%

2.18%

(k) Size premium Ibbotson research

Size premium

(k)

1.98%

1.98%

(L) % Equity (sector) Bloomberg

Re = d + (e * i) + j + k

17.1%

16.9%

% Equity

(L)

70.0%

70.0%

(m) % Debt (sector) Bloomberg

% Debt

(m)

30.0%

30.0%

CAPM nom inal R$

Cost of debt before tax

Tax rate
Cost of debt after tax
WACC nom inal R$

(n)

13.9%

13.9%

(h)

23.9%

34.0%

(o) = n * (1 - h)

10.6%

9.2%

= Re * L + o * m

15.14%

14.58%

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

(n) Cost of Debt CDI x 120%

48

 2015 KPMG Corporate Finance Ltda., a Brazilian limited liability company

operating in Brazil and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative ("KPMG
International"), a Swiss entity. All rights reserved. Printed in Brazil.
The KPMG name, logo and cutting through complexity are registered
trademarks or trademarks of KPMG International Cooperative (KPMG
International).

EXHIBIT III - B
VALUATION REPORT E.ON ASSETS

33

CORPORATE FINANCE

Eneva S.A. in Judicial Recovery

Economic and Financial Valuation Report of
Eneva Participaes S.A. in Judicial Recovery and
Parnaba Gs Natural S.A.

April 13, 2015

2015 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity.
All rights reserved. Printed in Brazil.

ABCD

KPMG Corporate Finance Ltda.

Av. Almirante Barroso, 52 4th
20031-000 - Rio de Janeiro, RJ - Brazil
P.O. Box 2888
20001-970 - Rio de Janeiro, RJ Brazil

Phone
Fax
Internet

55 (21) 3515-9400
55 (21) 3515-9000
www.kpmg.com.br

To the Board of Directors of

Eneva S.A. in Judicial Recovery
Rio de Janeiro - RJ

April 13, 2015

Economic and financial valuation report of: Eneva Participaes S.A. in Judicial Recovery and Parnaba Gs Natural S.A.
Dear Sirs,
Under the terms of our proposal, dated April 9, 2015, for professional services and subsequent understandings, KPMG Corporate Finance Ltda. (KPMG) has
performed the economic and financial valuation of Eneva Participaes S.A. in Judicial Recovery (Eneva Participaes JR) and Parnaba Gs Natural S.A.
(PGN), at the base date of December 31st, 2014.
It is imperative to point out that this version of the valuation report is a free translation from Portuguese to English; therefore, in case of discrepancies between
the report in Portuguese sent on April 13, 2015 and the free translation report, the former shall prevail in all matters.

Yours Sincerely,

Augusto Sales
Partner

Paulo Gulherme Coimbra

Partner

Important Notes

For the benefit of this report, Eneva S.A. in Judicial Recovery (Eneva JR or
Client), Eneva Participaes S.A. in Judicial Recovery (Eneva
Participaes JR) and Parnaba Gs Natural S.A. (PGN), altogether will be
referred to as Companies.

On February 12th, 2015, Eneva and Eneva Participaes filed a Plan for
Judicial Recovery (JRP), in accordance with Article 53 of the Brazilian
Judicial Recovery Law. Within this context, Eneva JR seeks to initiate a
capital increase. Such potential capital increase envisages a change in Eneva
JRs shareholding structure, and, in case the JRP obtains full approval for
execution, such mutations in shareholding structure are planned to be made
through the following contributions: (i) cash; (ii) credit capitalization; (iii) and
asset subscription.

Within such context, E.ON SE (E.ON), through its subsidiary DD BRAZIL

Holdings S..R.L (the main shareholder of Eneva JR and of Eneva
Participaes JR), is interested in subscribing assets in the intended
transaction (item iii of the capital increase in the JRP).
In effect, E.ON is
willing to contribute its 50% stake in Eneva Participaes JR and 9.09% stake
in PGN (Transaction).

The economic and financial valuation of Eneva Participaes JR was based on

(i) Discounted Cash Flows (DCF) for Parnaba III Gerao de Energia S.A.,
Parnaba IV Gerao de Energia S.A. and PGN, and on (ii) Adjusted Book
Value methodology for the other companies presented on page 71, and
performed by KPMG, on the base date of December 31st, 2014.

The Client and E.ON, through its designated professionals, provided

information regarding the Companies and their respective markets, which has
been used for this report. The Companies will be referred to in this report
altogether as Information Providers.

The services rendered by KPMG were based on the following information

provided by Eneva JR:

This report has been elaborated by KPMG, as per Eneva JRs Board of
Directors requisition, as a support for the Transaction. The report, according
to the JRP, will be presented to Eneva JRs Creditor Committee. In case of
approval, the report will be presented to the Extraordinary General
Shareholders meeting.

This report may not be circulated, copied, published or, by any matters,
utilized, nor may it be archived, partly or integrally, without KPMGs previous
consent. As this report will be used in the analysis of a potential capital
increase transaction (Transaction) involving Eneva JR, which is a Brazilian
company listed with the So Paulo Stock Exchange (Bovespa), as well as
subject to the reporting requirements of the Brazilian Stock Exchange
Commission (CVM), the Client may give access to the report to CVM only to
the extent required by law and shall remain fully responsible for any damage
or injury resulting or arising from such access, which may be experienced by
Eneva, KPMG, including representatives of KPMG, or any third party.

BAL ENEVA PARTIC_DEZ_2014.xls, Bdados_dez 2014.xlsx, MPX EON

Consolidado MPX Dez-14 (EQ).xlsx, unaudited financial data related to Eneva
Participaes JR and its subsidiaries as of 31/12/2014, based on cost approach;
20.1.7 ENEVAValuationComplete_v306_KPMG.xlsx, related to downstream
business and Eneva Participaes JRs valuation;
Availability MTP v5_completo.xlsx, Despacho_v6.xlsx, related to the estimated
dispatch projections of the thermal power plants involved in the downstream
business;
Fixed O&M breakdown.xlsx, related to the fixed O&M costs of UTE Parnaba III e
IV;
Hour dispatching Overhaul.xlsx, related to the overhauling costs of UTE Parnaba
III and IV;
APLICE DE RISCOS OPERACIONAIS.msg, related to the insurance costs of
UTE Parnaba III and IV;
mutuos_Dez14.pdf, related to the intercompany loans within Eneva Participaes
JR; and
WK breakdown.xlsx, related to the working capital breakdown for UTE Parnaba III
and IV.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Important Notes

The preparation of this report was based on our reliance, with the express
approval of the Client, on the accuracy, content, veracity, completeness,
sufficiency and integrity of the data provided to or discussed with KPMG. Thus,
KPMG has not inspected any asset, or prepared or obtained an independent
valuation of the Clients assets, liabilities, or its solvency. Therefore, the Client,
including its Management, takes responsibility for all information provided to or
discussed with KPMG.

It is imperative to point out that this version of the valuation report is a free
translation from Portuguese to English; therefore, in case of discrepancies
between the report in Portuguese sent on April 13, 2015 and the free
translation report, the former shall prevail in all matters.

All estimates and projections herein presented have been provided by the
Information Providers; when necessary, such estimates and projections have
been adjusted by KPMG, according to its own judgment on their reasonability,
and are assumed to be underpinned by the Information Providers
managements best evaluation of the Companies and respective markets
best perspectives.

KPMG based its work on the information provided by the Information Providers
and/or other representatives of such Information Providers. Therefore, the
Client, including its Management, takes responsibility for all information
provided to or discussed with KPMG.

Except when otherwise stated, in footnotes or specific references, all data,

historic or market information, estimates, projections and assumptions,
included, considered, used or presented in this report were provided by the
Client to KPMG.

The information herein presented, related to the Companies financial and

accounting conditions, and related to the Companies respective markets, is
based on the available data as at December 31, 2014. Any changes in the
information provided by the Information Providers may impact the results of
this report. KPMG assumes no responsibility for updating, reviewing or
amending this report, as a result of the disclosure of any information
subsequent to December 31, 2014, or any other subsequent event

The shareholder structure and participation percentages of related/controlled

companies presented in this report have been provided to KPMG by the
Information Providers, and have not been subject to KPMGs independent
verification.

EON proposal dispatch 2015.03.18.xlsx capex and opex projection, related to

upstream business;
Overview of E&P assumptions 2015.03.13.pdf summary of E.ONs view on PGN
production modeling;
EON proposal dispatch 2015.03.18.xlsx Other pertinent information;
1. Untitled_23032015_112117.pdf Apresentao ANEEL, PGNs business
presentation;
FS_Eneva_2014_eng.pdf, Enevas Historical financial statement data of
31/12/2014, which is unaudited;
Final Report Pecm II_extract for KPMG.pdf, MPX_FS YE 2012_page 81.pdf, to
support the PPA renewal assumption for UTE Parnaba III and IV; and
PGN profile EON vs BTG 20150318.pptx analysis comparing main assumptions
between EON and BTG regarding the information related to the Gas Reserves under
the Parnaba Basin, Capex projection, Opex projection for PGN and BPMB

KPMG has not verified independently the information provided by the Client,
so, it cannot confirm the precision, accuracy and sufficiency of such
information and, therefore, the Client assumes all responsibility for the
information provided to KPMG.

The services rendered by KPMG were based on the following information

provided by E.ON:

Any changes in the information provided by the Client and E.ON to KPMG may
impact the results of this report. KPMG assumes no responsibility for updating,
reviewing or amending this report, as a result of the disclosure of any
information subsequent to the date of the issuance of this report.

During the course of our work, we carried out analysis procedures whenever
necessary. However, we emphasize that our work did not constitute an audit of
the financial statements or of any other information provided by the Client or
E.ON and should not be interpreted as such. Our work took into consideration
the relevance of each item, therefore, less relevant assets and liabilities were
not analyzed in detail.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Important Notes

We emphasize that the determination of the economic value of possible

contingencies, and other adjustments to the financial statements (if
applicable) were not part of the scope of this report. Thus, with respect to
such items, our work was based on information and analysis made available
by the Client and/or their auditors, lawyers and/or other advisors.
This report has been elaborated according to the economic and market
conditions, among others, available as at the elaboration time period. The
conclusions herein presented, therefore, are subject to exogenous variations
of which KPMG does not have any control.

The sum of the individual values herein presented may diverge from the
sums presented in this report, due to rounding issues.

Although the work on which this report is based was performed

independently by KPMG under technical supervision, the analyses of the
different factors that characterize the valuation report is subjective in nature.
Therefore, when performed by other professionals, such analyses may
express points of view different from those presented by KPMG.

Our valuation was made on the basis of events which can be reasonably
expected, and therefore does not take into account extraordinary and
unforeseeable events (new industry regulations, changes in tax laws, natural
catastrophes, major social and political events, nationalization etc.), which
may cause adverse effects on the Companies.

This report is not to be used as a sole basis for the evaluation of the
Companies, for the report does not contain all necessary information for such
use. Therefore, this report is not to be interpreted as a proposal, solicitation,
suggestion, nor recommendation by KPMG for the Transaction. Any decision
taken by the Companies shareholders shall be assumed integrally by the
same shareholders. KPMG will not take any responsibility as to the
Companies shareholders decisions.
We emphasize that a valuation establishes a theoretical estimate within an
interaction involving a buyer and a seller, where both are intended to close a
deal, with the necessary access to all relevant information, and assuming that
neither parties have the immediate necessity to buy or sell. An effective
negotiation does not necessarily reflect such conditions, and may include

other elements; consequently, the estimated value need not be used in the
effective transaction.

This report does not envisage the satisfaction of any personal nor specific
interests. Thus, results from other evaluations, elaborated by third parties, may
diverge from our results. Notwithstanding, such divergence should not be
regarded as an inherent deficiency of the realized work.

The Companies shareholders have to perform their own analyses regarding

the Transaction, through the consultation of their own financial, tax and legal
advisors, in order to define their own opinion as to the Transaction. This report
is to be read and interpreted with full consciousness of our already mentioned
restrictions. In addition, the reader must be aware of the restrictions and
characteristics of inherent to the Information Providers.

This report is to be solely used within the Transaction context, as herein

described. We cannot guarantee that this report may be used in other contexts.
Furthermore, we emphasize that KPMG will not perform additional services,
and will not adapt this report for other objectives.

The scope of our engagement did not include the detection of fraud in the
Companies operations, processes, records or documents.

Valuations, in general, present significant degrees of subjectivity. Thus, there

are no guarantees that any assumptions, estimates, projections, results, or the
preliminary results presented in the work document will be effectively noted
and/or verified, in their entirety, or partially. Hence, KPMG is not responsible,
and cannot be held responsible for any differences between the valuation
results, and the results noted a posteriori.

The services performed herein may have been based on legal and
administrative rules. In this regard, we note that our legislation is complex and
often the same provision can be interpreted in multiple ways. KPMG always
seeks to be up-to-date on the various interpretative tendencies, in order to
permit a broad assessment of the alternatives and risks involved. Even so,
there may be some interpretations of the law that differ from ours. Under these
circumstances, neither KPMG, nor any other firm, can provide total assurance
that the Company will not be questioned by third parties or government
authorities.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

13

III. Information about the companies

16

IV. Market information overview

23

V. Valuation Methodology

27

VI. Assumptions

32

IX. Valuation

49

Appendix I Curricula vitae

63

Appendix II Balance Sheet

67

Appendix III Book Value

70

Appendix IV Discount Rates

72

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Contents
ACL

Energy Free Market

ACR

Energy Regulated Market

ANEEL

Brazilian Electricity Regulator

ANP

Brazilian Petroleum National Agency

BACEN or BCB

Central Bank of Brazil

BCM

Billion Cubic Meters

BMI

Business Monitor International

BM&F

Commodities and Futures Stock Exchange

BOVESPA

Brazilian Stock Exchange

CAGR

Compounded Annual Growth Rate

CAPM

Capital Asset Pricing Model

CCEAL

Energy Trading Contracts in the Free Market

CCEAR

Energy Sales in the regulated market

CCEE

Energy Commercialization Chamber of Commerce

COFINS

Contribution for Social Security Financing (Federal Tax Over Revenues)

CoGS

Cost of Goods Sold

CRP

Country Risk Premium

CVM

Securities and Exchange Commission

CVU

Unitary Variable Cost

D&A

Depreciation and Amortization

DCF

Discounted Cash Flow

EBIT

Earning Before Interest and Tax

EBITDA

Earnings Before Interest, Tax, Depreciation and Amortization

EBT

Earning Before Tax

EIA

Energy Information Administration

EIU

Economist Intelligence Unit

EMBI

Emerging Market Bond Index

EPE

Brazilian Energy Research Entity

ERP

Equity Risk Premium

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Contents
E&P

Exploration & Production

GDP

Gross Domestic Product

GVB

Gavio Branco Gasfield

GVR

Gavio Real Gasfield

GW

Giga Watt

IBGE

Brazilian institute of Geography and Statistics

IFRS

International Financial Reporting Standards

INEA

Enviroment State Institute

IPCA

Brazilian Consumer Price Index

IRPJ

Brazilian Corporate Income Tax

ITS

Quarterly Financial Statement

JRP

Judicial Recovery Plan

KPMG

KPMG Corporate Finance Ltda.

LNG

Liquified Natural Gas

MBA

Masters in Business Administration

MMBtu

One Million British Thermal Unit

MW

Mega Watt

MWh

Mega Watt Hour

M&A

Mergers & Aquisitions

NOPAT

Net Operating Profit After Tax

NPV

Net Present Value

ONS

Brazilian Interconnected Grid Operator

Opex

Operational Expenses

O&M

Operation & Maintenance

PE

Private Equity

PIS

Brazilian Social Integration Program

PLD

Energy Spot Price

PPA

Power Purchase Agreement

PPP

Public-Private Partnership

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Contents
RGR

Eletrobras R&D Fund

R$

Brazilian Real

R&D

Research and Development

RF

Risk Free

SE

Shareholders Equity

SELIC

Brazilian Interest Rate

SG&A

Sales, General and Administrative Expenses

SPE

Special Purpose Vehicle

SUDENE

Superintendency for the Development of the Brazilian Northeastern Region

TPP or UTE

Thermal Power Plant

TCF

Trillion Cubic Feet

WACC

Weighted Average Cost of Capital

WC

Working Capital

BNDESPAR

Brazilian National Bank of Social and Economic Development Investment Vehicle

BPMB

BPMB Parnaba S.A.

BTG

Banco BTG Pactual S.A.

Cambuhy

Cambuhy Investimentos

Eneva JR

Eneva S.A. in Judicial Recovery

Eneva Participaes JR

Eneva Participaes S.A. - in Judicial Recovery

E.ON

E.ON S.E.

PGN

Parnaba Gs Natural S.A.

OGX

An Oil & Gas Company from the EBX Group

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

13

III. Information about the companies

16

IV. Market information overview

23

V. Valuation Methodology

27

VI. Assumptions

32

IX. Valuation

49

Appendix I Curricula vitae

63

Appendix II Balance Sheet

67

Appendix III Book Value

70

Appendix IV Discount Rates

72

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

I. Executive Summary
Introduction

Eneva JR is a publicly-listed company and Eneva Participaes JR is a

joint venture owned by Eneva JR (50%) and E.ON (50%).

On February 12th, 2015, Eneva and Eneva Participaes filed a Plan for
Judicial Recovery (JRP), in accordance with Article 53 of the Brazilian
Judicial Recovery Law. Within this context, Eneva JR seeks to initiate a
capital increase transaction. Such transaction envisages a change in
Eneva JRs shareholder structure, and, should the JRP obtain full approval
for execution, such mutations in shareholder structure are planned to be
made through the following contributions: (i) cash; (ii) credits capitalization;
(iii) and assets subscription.

Given the above mentioned context and background, the objective of our
work, in accordance with the Clients request was to perform a valuation of
PGN and Eneva Participaes, in order to underpin the possible asset
subscription.

Basis of information

The main basis of information used from Eneva RJ is listed below:

BAL ENEVA PARTIC_DEZ_2014.xls, Bdados_dez 2014.xlsx, MPX EON

Consolidado MPX Dez-14 (EQ).xlsx, unaudited financial data related to Eneva
Participaes JR and its subsidiaries as of 31/12/2014, based on cost approach;
20.1.7 ENEVAValuationComplete_v306_KPMG.xlsx, related to downstream
business and Eneva Participaes JRs valuation;
Availability MTP v5_completo.xlsx, Despacho_v6.xlsx, related to the
estimated dispatch projections of the thermal power plants involved in the
downstream business;

The main basis of information used from E.ON is listed below:

Within such context, E.ON, as main shareholder of Eneva JR and Eneva

Participaes JR, is interested in subscribing assets in the intended
transaction (item iii of the capital increase in the JRP). In effect, E.ON is
willing to contribute with its 50% stake in Eneva Participaes
(downstream) and a 9.09% stake PGN (upstream).

Fixed O&M breakdown.xlsx, related to the fixed O&M costs of UTE

Parnaba III e IV;
Hour dispatching Overhaul.xlsx, related to the overhauling costs of
UTE Parnaba III and IV;
APLICE DE RISCOS OPERACIONAIS.msg, related to the insurance
costs of UTE Parnaba III and IV;
mutuos_Dez14.pdf, related to the intercompany loans within Eneva
Participaes JR; and
WK breakdown.xlsx, related to the working capital breakdown for UTE
Parnaba III and IV.

EON proposal dispatch 2015.03.18.xlsx capex and opex projection,

related to upstream business;
Overview of E&P assumptions 2015.03.13.pdf summary of E.ONs view
on PGN production modeling;
EON proposal dispatch 2015.03.18.xlsx Other pertinent information;
1. Untitled_23032015_112117.pdf Apresentao ANEEL, PGNs
business presentation;
FS_Eneva_2014_eng.pdf, Enevas Historical financial statement data of
31/12/2014, which is unaudited;
Final Report Pecm II_extract for KPMG.pdf, MPX_FS YE 2012_page
81.pdf, to support the PPA renewal assumption for UTE Parnaba III and
IV; and
PGN profile EON vs BTG 20150318.pptx analysis comparing main
assumptions between EON and BTG regarding the information related to
the Gas Reserves under the Parnaba Basin, Capex projection, Opex
projection for PGN and BPMB.

The valuation was based substantially on information and

assumptions provided by the Clients Management and E.ON, which
were discussed with and analyzed by KPMG.

It is imperative to point out that this version of the valuation report is

a free translation from Portuguese to English; therefore, in case of
discrepancies between the report in Portuguese sent on April 13,
2015 and the free translation report, the former shall prevail in all
matters.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

10

I. Executive Summary (cont.)

Subsequent events

Our work was based on the equity position and information obtained
prior to the date of issuance of this report.

We emphasize that any relevant facts that may have occurred

between December, 2014 and the date of issuance of this report, and
that were not brought to KPMGs knowledge could affect the analysis
of the Company.

It is important to point out that KPMG will not update this report after
the date of issuance.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

11

I. Executive Summary

Summary of Results

Based on the scope of our report, and subject to the assumptions, restrictions, and limitations described herein, we have estimated the fair value of Eneva
Participaes JR and PGN as at December 31, 2014, as presented below.
Eneva Participaes S.A. in Judicial Recovery
Equity Value
per share
(R$)

1.13

Equity Value
100%
(R$ MM)

302.15

E.ONs stake
(50.0%)
(R$MM)

151.07
-

PGN

1.25

Equity Value
per share
(R$)

1.46

317.26

332.36

Equity Value
100%
(R$ MM)

984.96

158.63

166.18
+

E.ONs stake
(9.09%)
(R$MM)

1.19

89.53
-

1.53

1.60

1,034.08

1,083.20

94.00

98.46
+

* Range considered in accordance with CVM

instruction n 436.

Eneva Participaes in Judicial Recovery valuation, as at December

31, 2014, ranges from R$ 302.1 million to R$ 332.4 million. The valuation
of E.ONs stake in Eneva Participaes in JR (50,0%) ranges from R$
151.1 million to R$ 166.2 million.
The valuation methodology applied for the operational subsidiaries was
the discounted cash flow approach (presented on pages 51 to 57). As
for the non-operational and pre-operational subsidiaries, the applied
methodology has been the cost approach, which considers the book value
of shareholders equity (presented on page 71).

PGNs valuation, as at December 31, 2014, ranges from R$ 985.0 million

to R$ 1,083.2 million. The valuation of E.ONs stake in PGN (9,09%)
ranges from R$ 89.5 million to R$ 98.5 million.
The valuation methodology applied, in order to determined the value of
PGN, was the discounted cash flow method (presented on pages 58 to
60) .

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

12

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

13

III. Information about the companies

16

IV. Market information overview

23

V. Valuation Methodology

27

VI. Assumptions

32

IX. Valuation

49

Appendix I Curricula vitae

63

Appendix II Balance Sheet

67

Appendix III Book Value

70

Appendix IV Discount Rates

72

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

13

II. Information about the appraiser

The KPMG Network

Internal process of approval of the report

KPMG Corporate Finance Ltda. is part of a global network of independent

The economic and financial valuation of the Companies was performed by

firms that provide Audit, Tax and Advisory services. KPMG International
provides no services. However, its member firms perform Audit, Tax and
Advisory practices (through the Audit departments, Tax and Advisory,
respectively). Together, KPMG International's member firms have more than
155 thousand employees across the world, and is present in 155 countries.

a team of qualified consultants, monitored and reviewed by the

engagement partner. In addition, the team was also composed of a partnerreviewer, a senior manager and a manager.

KPMG brand was created in 1987 from the merge of Peat Marwick

International (PMI) and Klynveld Main Goerdeler (KMG).

KPMG

Internationals member firms in Brazil, through its various

autonomous offices, account for 156 partners and more than 3,282
employees in 22 cities: So Paulo (headquarters), Belo Horizonte, Belm,
Braslia , Campinas, Curitiba, Cuiab, Florianpolis, Fortaleza, Goinia,
Joinville, Londrina, Manaus, Osasco, Porto Alegre, Recife, Ribeiro Preto,
Rio de Janeiro, Salvador, So Carlos, So Jos dos Campos and
Uberlndia.

The approval of the report occurred only after it was reviewed by the

engagement partner and the partner-reviewer.

Identification and qualification of the involved professionals
Augusto Sales, Paulo Guilherme Coimbra (project leader), Cludio Ramos,

Rben Palminha and Fabiano Delgado coordinated and participated in the

development of the assessment presented in this report. For more
information, please refer to Appendix I.
Appraiser declarations
KPMG Corporate Finance declares, in March 15th, 2015, that:

It does not entitle any shares of PGN, Eneva JR or Eneva

Participaes JR, nor do its partners, directors, officers, directors,
controllers or persons related to them;

KPMG Corporate Finance Ltda., a Brazilian company incorporated in the

1990s, leads and manages negotiations within corporate transactions,

including mergers and acquisitions, dispositions, structured finance, project
finance, debt advisory, privatization and economic and financial appraisals
services.

There are no commercial and credit relations that could impact the
Report;

There is no conflict of interest that impairs the necessary

independence required for the performance of this work..

The Corporate Finance segment of KPMG International member firms sum

up to approximately 2,100 professionals, in more than 100 offices across 82

countries.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

14

II. Information about the appraiser (cont.)

Presented below are some of KPMGs experiences in the energy & natural resources:sector:

Petra Energia and

Parnaba Gs Natural

Enel

State Grid

Mitsui & Co

TAESA (Cemig Group)

KPMG Corporate Finance

KPMG Corporate Finance

KPMG Corporate Finance

KPMG Corporate Finance

KPMG Corporate Finance

KPMG Corporate Finance

Sell-side financial advisor in

Vicels sale to Soenergy

Acted as financial advisor for

LNG tariff review

Valuation advisory related to the

acquisition of several wind power
projects from Sowitec

Valuation related to the

acquisition of 5 electricity
transmission companies

Valuation related to a 20% stake

acquisition of Jirau HPP (3,750
MW)

Valuation related to the

acquisition of Unisa

2014

2014
2014

2014

2014

Dresser Rend

Equatorial Energia

TAESA (Cemig Group)

Iberdrola

KPMG Corporate Finance

KPMG Corporate Finance

KPMG Corporate Finance

Valuation related to the

acquisition of CELPA
(distribution)

Valuation related to the

acquisition of TBE Group
(transmission)

2013

2013

Vicel

KPMG Structured Finance

S.A.

2014

2014

SN Power

Brasympe

KPMG Corporate Finance

KPMG Corporate Finance

Valuation related to the

acquisition of Desenvix

2013

Valuation of Brasympe for

company restructuring purposes

2013

KPMG Corporate Finance

Valuation related to the
acquisition of Grupo Guascor

KPMG Structured Finance

S.A.

2013

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Valuation related to the

acquisition of Elektro

2013

15

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

13

III. Information about the companies

16

IV. Market information overview

23

V. Valuation Methodology

27

VI. Assumptions

32

IX. Valuation

49

Appendix I Curricula vitae

63

Appendix II Balance Sheet

67

Appendix III Book Value

70

Appendix IV Discount Rates

72

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

16

III. Information about the companies

Eneva Participaes Judicial Recovery

A Brief History of Eneva JR and Eneva Participaes JR
Eneva and OGX start the
drilling of 1-0GX-16MA
well, located in the PN-T68 bloc in the Parnaba
Basin, State of Maranho,
and identify hydrocarbons.

Eneva enters the Market

with the energy sale from
UTE Itaqui and Energia
Pecm on the A-5 auction
promoted by ANEEL, with
supply contract for 15
years.

2007

2008
Lauching of the fundamental
stone marks the inicial phase
of construction and mounting
of one of the leading projects
of Eneva's portfolio.

2010

Announcement of increased shareholding

agreement between E.ON and Eneva. From
that moment, E.ON holds 37.9% of the
company's capital, and Eike Batista 23.9%.
Parnaba I reaches total installed capacity in
commercial operation, with 676 MW.

2012

2013

Eneva and E.ON form strategic

partnership to invest in the energy
markets of Brazil and Chile.

2014

2015

The Parnaba Natural Gas capital increase is

completed. The control shall be exercised by
Cambuhy, Eneva and E.ON. Eneva announces
capital increase of up to R$ 1.5 billion and debt
restructuring in their holding.

Operational Information
Eneva JR has a portfolio of gas fueled power plants, and has an array of

possible greenfield coal and wind power projects.

Eneva JR has long term PPAs, which are indexed by inflation rates.
Integrated assets of gas exploration and production meet the demands of

the plants owned by Eneva JR.

Eneva initiates its judicial recovery process on December 9th, 2014. The judicial recovery
process is a consequence, among other factors, of (i) not renewing the agreement to
suspend the amortization and payment of interest of financial transactions contracted by
Eneva and certain subsidiaries with its financial creditors, expired on November 21st, 2014;
and (ii) not having reached an agreement with the financial institutions involved in the
implementation of Enevas stabilization plan aimed at strengthening the capital structure
and measures for the re-profiling of Enevas financial debt.

Eneva and Eneva Participaes, on February 12th,

2015, filed a Plan for Judicial Recovery (JRP), in
accordance with Article 53 of the Brazilian Judicial
Recovery Law. Within this context, Eneva seeks to
initiate a capital increase (among other things) after
the complete judicial approval.

Incom e statem ent -*Eneva Participaes JR *

R$ MM
Net revenues
Cost of goods sold
Gross profit
SG&A
EBIT
Financial expenses
EBT
Deferred tax
Lucro
lquido/prejuzo
Net incom
e/losses
* non-audited

31/12/2014
499.14
(553.21)
(54.07)
(10.31)
(64.38)
(19.28)
(83.66)
21.24
(62.42)
(146.07)

Source: Eneva JR
2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

17

III. Information about the companies (cont.)

Eneva Participaes Judicial Recovery

ENEVA
PARTICIPAES
S.A.

50%

50%

4
Seival
Participaes
S.A.

6
Au II Gerao
de Energia S.A.

7
UTE Porto
do Au
Energia S.A.

50%

50%

50%

8
MPX Chile
Holding
Ltda.

9
Parnaba
Participaes
S.A.

100%

100%

50%

10
Sul Gerao de
Energia Ltda..

11

ENEVA
Comerc. de
Combustveis
Ltda.

100%

12
ENEVA Solar
Empreendimentos Ltda.

13
Au III Gerao
de Energia
Ltda.

100%
Seival
Gerao de
Energia
Ltda.

70%

70%

70%

Parnaba III
Gerao de
Energia S.A.

Parnaba IV
Gerao de
Energia S.A.

Parnaba
Gerao e
Comerc. de
Energia S.A.

100%

14

Tau Gerao
De Energia
Ltda.

Source: Eneva JR
2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

100%

100%

15
ENEVA
Comerc. de
Energia Ltda..

16
SPEs Ventos*

* Central Elica Algaroba Ltda.

Central Elica Asa Branca Ltda.
Central Elica Boa Vista I Ltda.
Central Elica Boa Vista II Ltda.
Central Elica Boa Vista III Ltda.
Central Elica Bonsucesso Ltda.
Central Elica Bonsucesso II Ltda.
Central Elica Milagres Ltda.
Central Elica Morada Nova Ltda.
Central Elica Ouro Negro Ltda.
Central Elica Pau Branco Ltda.
Central Elica Pau DArco
Central Elica Pedra Branca Ltda.
Central Elica Pedra Rosada Ltda.
Central Elica Pedra Vermelha I Ltda.
Central Elica Pedra Vermelha II Ltda.
Central Elica Santa Benvinda I Ltda.
Central Elica Santa Benvinda II Ltda.
Central Elica Santa Luzia Ltda.
Central Elica Santo Expedito Ltda.
Central Elica So Francisco Ltda.
Central Elica Ubaeira I Ltda.
Central Elica Ubaeira II Ltda.

18

III. Information about the companies (cont.)

Eneva Participaes Judicial Recovery

Parnaba Participaes S.A.

Parnaba III & IV 1

Parnaba Gerao e Comercializadora de Energia 3

Originally denominated as UTE MC2 Nova Vencia, UTE Parnaba III

was owned by the Bertin Group. The project took off after the 2008 A-5
energy auction, with a 15 year concession agreement due in 2027, and
was supposed to be constructed in the Esprito Santo state, Brazil.
In 2011, ANEEL authorized the transfer of ownership and contractual
modifications including location change - that led to the creation of UTE
Parnaba III.

Parnaba Gerao e Comercializadora de Energia is an energy

trading company, whose provider of electricity is Parnaba IV. In
effect, the CCEAL agreement between the TPP and the trading
company stipulates that the latter agrees to acquire 5% of the
formers gross energy.

Parnaba
Comercializadora

Kinross Mining

Parnaba IV obtained an authorization in 2013 to operate and sell its

energy within the ACL, and its concession agreement is due in 2028.

95%

5%

Overview of Parnaba III & Parnaba IV

Operational highlights

Parnaba III

Parnaba IV

Concession agreement

CCEAR N
7179/08

N/A ( 1)

176

56

101.8

52

98

49

Full installed capacity (MW)

Physical guarantee (MW)
Net physical guarantee (MW)

2028 (1)
(1) - Parnaba IV is a "Free Market" power plant, which operates under an
authorization agreement. It obtained a license/authorization to operate and sell
energy in bilateral agreements.

Concession/authorization expiry

2027

CCEAL
Agreements
100%

Parnaba IVs

generated energy
Parnaba Comercializadora is a break-even company, therefore does
not generate material profits nor losses.

Source: Eneva JR
2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

19

III. Information about the companies (cont.)

Eneva Participaes Judicial Recovery

Overview of the non-operational and pre-operational companies

It is worth noting that even though some of the below mentioned companies have ambitious projects, their book value is, for the time being, not material.
Company

Description

Equity Value at
100% (R$ MM)

Company

Holding company, which detains the control of Seival

Participaes Gerao Ltda.

5
Seival Gerao de Energia Ltda.

6
Au II Gerao de Energia S.A.

7
UTE Porto do Au Energia S.A.

8
MPX Chile Holding Ltda.

10
Sul Gerao de Energia Ltda.

ENEVA Comercializadora de
Combustveis Ltda.

ENEVA Solar Empreendimentos

Ltda.

Equity Value at
100% (R$ MM)

13

4
Seival Participaes S.A.

Description

39.49

Special Purpose Vehicle that was incorporated in order

to detain information and technology softwares.

Au III Gerao de Energia S.A.

2.52

14

Located in Candiota, Rio Grande do Sul, the company

envisages a possible development of a coal-fueled
thermal power plant (600MW installed capacity). The
project, for the time being does not have any PPA, nor
concession agreement or source of financing.

Tau Gerao de Energia Ltda.

Located in the northeastern region of the Rio de

Janeiro state, the company was set up in order to
install a gas fueled power plant in the Au Complex.
However, the project is currently in standby.

4.67

ENEVA Comercializadora de
Energia S.A.

Located in the northeastern region of the Rio de

Janeiro state, the company was set up in order to
install a coal fueled power plant in the Au Complex.
However, the project is currently in standby.

44.00

SPE Ventos

Holding company which controlled the Companies

business in Chile that were sold in December, 2014.

0.22

Located in Candiota, Rio Grande do Sul, the company

envisages a possible development of a coal-fueled
thermal power plant (727MW installed capacity). The
project does not presently have any PPA, nor
concession agreement.

13.15

It is a non-operational fuel trading company.

(0.04)

Is a holding company, which detains control of Tau

Gerao de Energia Ltda.

8.42

Located in Tau, Cear, the company operates a

1MW solar powerplant.

It is an electricity trading company, located in Rio de

Janeiro. Its level of activity is not relevant.

19.54

15

16 Agglutinates 23 special purpose vehicles, which detain

preliminar licenses for the development of wind power
plants. None of them, however, have PPAs, nor
concession agreements.

1.47

11

12

Source: Eneva JR
2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

20

III. Information about the companies (cont.)

PGN

Consortiums information
The upstream consortium in the Parnaba Basin (Consortium) currently

operates 3 gas fields and 7 exploration blocks with a total approximate area
of 21 thousand square kilometers in the Maranho State.
Below is presented a simplified diagram of the Consortiums current

operation.

PGN owns a 70% stake in the Consortium that holds the concessions of 7
blocks in the Parnaba Basin (21,000 km).
Current production from GVR field: c. 5.6 million m3/day.
The Consortium estimates reserves of more than 1 TCF (around 32.3

BCM only considering 7 fields nearby GVR and GVB infrastructure

hub). When considering a longer projection period, the recuperable gas
may reach over 70 BCM, though currently, no certified third party study
has been developed.
The company plans to commercially launch 4 fields during 2015. Third

party geological studies were hired and results are expected for the 2nd
half of 2015.
The blocks operated by Parnaba Gs Natural (former OGX Maranho)

were acquired by the PE fund Cambuhy Investimentos and E.ON.

E.ON

Eneva JR

Cambuhy
Investimentos

BTG Patcual

18%
9%

73%

BPMB

PGN
Integrated project concept Gas to wire

Long term contracts with thermal plants (UTEs) controlled by Eneva JR

and Eneva Participaes JR;

TPPs have long term PPA contracts (15-20 years);

Close to 1GW total capacity already in operation;

UTE I (675MW), UTE III (178 MW) and UTE IV (56MW) are already in
operation. UTE II (517 MW) will be concluded in 2018; however, the PPA
will start only in 2016 because of the waiver granted by ANEEL.

Source: E.ON

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

100%

70%

30%
Consortium

21

III. Information about the companies (cont.)

PGN
In 2015, the company will conduct an onshore drilling campaign in Brazil.

Discovered wells and new production wells will be drilled, which could allow
PGN to increase production capacity by 70%, by July, 2016, to 8.4 million
cubic meters per day.

Incom e Statem ent

R$ MM
Sales net revenue
Costs
Gross profit
Operational expenses
Exploration expenses
SG&A
Other operational revenues/expenses
Operational expenses
EBIT
Financial results
Financial revenues
Financial expenses
Exchange rate net variation
Financial result
EBT
Income tax and social contribution
Deferred taxes
Net profit

31/12/2013
323.71
(118.84)
204.88

31/12/2014
581.98
(274.49)
307.49

(76.06)
(25.57)
(0.56)
(102.19)
102.69

(43.77)
(30.88)
(8.35)
(83.01)
224.48

24.83
(73.11)
(33.65)
(81.93)
20.76
(7.65)
(0.48)
12.64

55.73
(92.15)
(9.99)
(46.41)
178.07
(23.97)
(32.36)
121.74

Source: PGNs annual report 2014

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

22

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

13

III. Information about the companies

16

IV. Market information overview

23

V. Valuation Methodology

27

VI. Assumptions

32

IX. Valuation

49

Appendix I Curricula vitae

63

Appendix II Balance Sheet

67

Appendix III Book Value

70

Appendix IV Discount Rates

72

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

23

IV. Information about the Market

Brazilian Macroeconomic trends

Macroeconomic trends

Exchange Rate (USD/BRL) annual variation (%)

GDP expanded meagerly in 2014 and more recent data suggest that

prospects have worsened.

In 2014, consumers suffered with the government's failed attempt to curb

inflation and foster GDP growth. In March 2013 annual interest rate was
7.25%, the lowest in Brazil's history. From then on, there have been nine
consecutive hikes, and annual interest rate has reached 12.75%.

2,71

2,76

2,79

2,86

2,96

3,06

2,36
1,76

According to the Brazilian Central Bank, the forecasted GDP variation for

1,94

2,14

1,67

2015 and 2016 are 0.5% and 1.8% respectively.

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Projected

Source: BCB (31/12/2014)

IPCA annual variation(%)

6,56

6,50
5,91

Henry Hub (USD$/MMBtu)

6,38

4,21
5,84 5,80

4,13

3,66

5,70

4,50

4,70

4,79

2018

2019

2020

3,10

5,50 5,50 5,50 5,50

2,50

2,50

2,50

2,55

2010

2011

2012

2013

Projected

Projected

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: BCB (31/12/2014)

Source: Bloomberg (31/12/2014)

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International, a Swiss entity. All rights reserved.

2014

2015

2016

2017

24

IV. Information about the Market

Brazilian Energy sector overview: Electricity

Main agents within the electricity sector

Sources of energy
77% of the electricity in Brazil comes from hydraulic plants, which are

responsible for 76.9% of energy installed capacity. Behind hydro plants,

thermal energy is responsible for 12.8% of the installed capacity.
Given the importance of hydraulic resources to the Brazilian electricity

sector, the level of reservoirs are of great relevance to the optimization of

energy generation, as they represent a form of energy storage.
The illustration below depicts the sources of Brazilian electricity

responsible for energy distribution services to

distributor consumers, with determined tariffs fixed by ANEEL. Such
agents are strictly regulated, and all energy distribution conditions
and requirements are under high scrutiny by regulators.

Traders: these agents are allowed to acquire energy through

bilateral contracts in the ACL environment, which will then be sold to

free consumers, or to distribution companies in tendering process.
Consumers:

Others
Nuclear6%
2%
Biomass
7%
Natural gas
8%

Distributors:

Electricity
generation
matrix
Hydraulic
77%

a)

Free: consumers that fit the necessary legislative requirements

and that have the right to choose the energy producer through
free bilateral negotiations. (i.e. an industrial player with energy
demand above 3 MWh).

b)

Distributor consumers: consumers who are not allowed to

choose their energy source and are strictly obligated to acquire
energy from their local energy distribution company (i.e.
residential consumers).

c)

Energy importers: agents who possess specific permissions

to import energy from a foreign country, in order to supply
electricity within the domestic market.

d)

Energy exporters: agents who possess specific permission to

export electricity to neighboring countries.

Source: EPE

Main agents within the electricity sector

Producers: responsible for the energy generation that is negotiated in the

ACR, ACL market or spot market.

Transmission: responsible for the operation of transmission grids, which are

available for all producers, as long as the grids are interconnected and as
long as the producers pay transmission fees.

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25

IV. Information about the Market

Brazilian Energy sector overview: Oil and Gas

Production

Reserves

In the next years, oil production in Brazil was expected to grow, thanks to

Brazilian proven oil reserves, as reported by EIA, are 13.15 billion

the massive deposit of offshore oil, underneath a thick layer of salt,

discovered in 2007. Petrobras, a Brazilian major oil company, projected
that oil output may hit 5 million barrels per day by 2020. However,
according to the Energy Information Administration (EIA), this production
projection is not precise due to an array of factors, such as significant
engineering and financing challenges for example, such as the recent
reduction of the brent oil price in late 2014 that can reduce the estimate
to 4 million barrels per day by 2020 at best (or less, depending on
Petrobrasbusiness plan).

barrels, while gas reserves are estimated at 396 billion cubic

meters. Additionally, due to new discoveries, oil reserves are
projected to reach 19.2 billion barrels and gas reserves to reach 461
billion cubic meters by 2023.
Proven Oil Reserves

Million barrels per day

4.5
4,5
4.0
4,0
3.5
3,5
3.0
3,0
2.5
2,5
2.0
2,0
1.5
1,5
1.0
1,0
0.5
0,5
0.0
0,0
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

4
3
2

years, reaching 35.9 billion cubic meters by 2023. Production is expected

to come mainly from the offshore Campos and Santos basins.
Dry Natural Gas Production
15
12
9
6
3
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Projected

Natural Gas Proven Reserves

Gas production, similarly, is expected to grow vigorously in the next

Million cubic meters

per day

0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Projected

2012

Source: EIA, BMI

Projected

Million cubic meters per day

MM Barrels per day

Crude oil and Other liquids production

180
160
140
120
100
80
60
40
20
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

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Projected

26

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

13

III. Information about the companies

16

IV. Market information overview

23

V. Valuation Methodology

27

VI. Assumptions

32

IX. Valuation

49

Appendix I Curricula vitae

63

Appendix II Balance Sheet

67

Appendix III Book Value

70

Appendix IV Discount Rates

72

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27

V. Valuation Methodology

DCF
Discounted Cash Flow

Free Cash Flow to Firm

This methodology estimates the economic value (or the market value) of a
company by calculating the present value of projected cash flows, i.e. the
income and expenses (including investments needed for maintaining and
expanding the companys activities) that are predictable from the perspective
of perpetuity of the entity. These projections should take into consideration
the business plan established by the companys management, the prospects
of the sector in which the company operates and macroeconomic aspects.

The Discounted Cash Flow Methodology can be used to value any type of
company provided it has a business plan that is consistent and feasible. This
methodology is recommended for companies that have reasonable prospects
for significant expansion of their activities and whose business plan may be
considered appropriate for achieving this growth, since the methodology is
based on future cash flows.

This methodology reflects the value of the intangible assets, such as brand
name, client portfolio, product portfolio, among others, as all these assets
have an effect on the companys capacity to generate results.

This is the commonly used methodology in estimating the market value of

companies that are considered going concerns, except when the resulting
value is less than the liquidating value of the company (adjusted net worth).

The Free Cash Flow to the Firm aims to evaluate the company as a
whole, that includes, beyond the stockholding, the participation of others
holders of rights in the company (holders of bonds, shareholders, etc).
The Free Cash Flow to the Firm can be represented by the following
formula:

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Free Cash Flow to the Firm

=
Net Profit
+
Depreciation and Amortization
+/Working Capital
Investments (Capex)

28

V. Valuation Methodology

DCF and Book value

Discounted Cash Flows Method (DCF)

Historical Balance Sheet

Historical
Income Statement

Assumptions

Projections by Business Units

Book value approach

The cost approach estimates the value of an asset based on its current
cost. This approach reflects the idea that the fair value of an asset should
not exceed the cost to obtain a replacement with comparable features and
functionality. Within this context, book values, with the applicable
adjustments, are a consistent manner to estimate the current cost of
replacement of an asset.

Current Balance Sheet

Projected Balance Sheet

Projected Income Statement

Shareholders equity

Projected Capex, R&D, Working

Capital

Adjustments

Free Cash Flow To Firm

Book value
Discount Rate
Discounted Free Cash Flow

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29

V. Valuation Methodology

Discount rate

Establishing the discount rate is a fundamental stage of the economic valuation. This single factor reflects aspects of a subjective nature, varying from one
investor to another, such as opportunity cost and individual perception of investment risk.
WACC (Weighted Average Cost of Capital)

The cost of capital for the Companies was calculated using the WACC
methodology. WACC takes into consideration various financing components,
including debt, cost of equity and hybrid bonds used by companies to finance
its cash needs. It is calculated according to the following formula:

CAPM (Capital Asset Pricing Model)

The cost of equity for the Companies was calculated using the CAPM
methodology. Using the CAPM methodology, the cost of equity is
calculated according to the following formula:
Rf (1+Ia) x (1+Ibr)
+

D/(D+E)

* (E[Rm] - Rf)

Kd * (1-t)

CRP

E/(D+E)

Rs
+

D
E
t
Kd
Ke

=
=
=
=
=

Ke

=
E/(D+E)*Ke+(D/(D+E)*Kd = WACC
Weighted Average Cost of Capital

Total debt
Total equity
Tax rate
Cost of debt
Cost of equity

[(1+Rf)/(1+Ia)*(1+Ibr)-1] +(*Rm)+CRP+Rs+ = Ke
Cost of Equity
Rf

E[Rm]
E[Rm] - Rf
CRP
Rs

Ia
Ibr

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=
=
=
=
=
=
=
=
=

Average risk-free return

Beta - specific risk coefficient
Average long-term return obtained on the stock market
Market premium
Country risk
Size premium
Alpha factor
Long-term inflation in the United States
Long-term inflation in Brazil

30

V. Valuation Methodology

Discount rate (cont.)

Risk free rate

The risk-free rate is derived with reference to the 2 year average bond yield
on the United States 30 year treasury bond (T-Bond) rate between January
1st, 2013 and December 31st, 2014 or approximately 3.4%. (Source:
Bloomberg, historical data)

Country risk premium (CRP)

The build up of the cost of equity to this point has been based on
the United States equity and bond markets. As such a CRP is
considered a necessary component in the cost of equity to
incorporate additional risk associated with investing in the country,
which is typically not reflected in the cash flows.

We have assumed a CRP of 2.18% for Brazil in our calculation, this

is based on the historical 2 year average (between January 1st,
2013 and December 31st, 2014) of the EMBI+. (Source: JP
Morgan).

Equity risk premium (ERP)

To estimate the long term stock market risk premium (E[Rm] Rf), we relied
upon the average return above the Treasury Bond rate provided by investing
in the U.S. stock market, which was 4.6% (source: Aswath Damodaran
website).

Beta

Beta is a statistical measure of how closely the value of a stock correlates

with the overall stock market. Beta is a measure of non diversifiable risk and
is reflective of the variability of a particular share relative to the market. The
average beta of a company is therefore calculated as the average correlation
of the daily return of the share relative to the market.
To calculate a meaningful beta for an unlisted entity, the beta of a listed
company with comparable business and operational risk is unlevered to
remove the effects of the capital structure (i.e. remove the financial risk). The
unlevered Beta is then relevered using the capital structure of the company or
asset being valued to reintroduce the effects of their own financial risk.

To calculate the industry average Beta we have considered for the

downstream, an unlevered Beta of 0.57 and for the upstream, an
unlevered beta of 0.98. To calculate the average Betas of the
sectors we considered the comparable companies.

Size premium

The size premium (Rs) represents the additional return required

by investors to incur a higher level of risk to be investing in
companies with different levels of size.

To account for PGN and Enevas size, we have added 1.98% to the
cost of equity, this is the risk associated with Low Capitalization
companies, through studies done by Duff & Phelps (2014).

Alpha factor

The alpha factor () represents the additional risk associated with

a more uncertain cash flows (only applied to Parnaba III and
Parnaba IV, as referred on page 73).

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31

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

13

III. Information about the companies

16

IV. Market information overview

23

V. Valuation Methodology

27

VI. Assumptions

32

IX. Valuation

49

Appendix I Curricula vitae

63

Appendix II Balance Sheet

67

Appendix III Book Value

70

Appendix IV Discount Rates

72

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32

Assumptions
Introduction

Overview of Parnaba Complex

Overview of the Parnaba Complex

The Parnaba Complex is an energy park that, given the proximity between
the gas fields (upstream) and TPPs (downstream), is founded on an
integrated model.

Downstream

MA

The Parnaba Thermal Electric Complex is formed by four TPPs (Parnaba I,

Parnaba II, Parnaba III and Parnaba IV) that are expected to reach a full
installed capacity of 1.425MW. It is located in the state of Maranho, Brazil.

Upstream

According to Enevas management, the upstream segment is expected to

deliver 32.3 BCM of gas throughout current projection assumptions.

Currently, the Parnaba Complex operates 3 gas fields and 7 exploration

blocks with a total approximate area of 21 thousand square kilometers.

Overview of Downstream

Parnaba Com plex - Dow nstream com position

TPP

Installed capacity (MW)

Parnaba I

675

Parnaba II

517

Parnaba III

178

Parnaba IV

56

Total

1426

Source: Eneva JRs website

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33

Assumptions
Introduction (cont.)

Integration Downstream and Upstream

In order to fulfill electricity generation obligations, the TPPs must have a

trustworthy source of fuel.

The initial source of gas, which is contractually guaranteed until 2027 for
Parnaba III, and 2028 for Parnaba IV, will be provided by the Consortium.

The proximity between the gas fields, gas treatment units, and thermal power
plants integrate the Downstream and Upstream businesses, as presented
bellow:

The rationale behind such assumption, according to Eneva JRs

management, is that the TPPs are not restricted to the Consortiums gas
supply. In fact, should the Consortium not be able to deliver further gas,
the TPPs may contract other gas suppliers.

In addition, Eneva JRs management assumption is based on markets

perspectives, and on the Managements perception of latest MMEs
(Brazilian Ministry of Mines and Energy) reports; therefore, the
Management understands that the same approach used in other
appraisal reports for similar projects would be valid for Parnaba III and
IV.

For valuation purposes, it was considered an Alpha factor on the

discount rate applied to the cash flows after the PPA/Concession
renewal.

Source: Eneva JR

Extention of Downstreams projection period

Albeit the fact that the gas supply agreements for Parnaba III and IV are
bound to expire in 2027 and 2028 respectively, Eneva JRs management
strongly supports the assumption that the TPPs will be able to extend the
concession period until 2042 and 2043 respectively.

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34

Assumptions
Introduction (cont.)

Proven and estimated reserves

80

37.7

70

The present proven reserves add up to 8.4 BCM. It consists

on current wells from the gas fields GVR, GVB and GVA.
The gas fields, however, can encompass additional wells.

The consortium has already conducted extensive research

on other wells located in GVR, GVB, SE Bom Jesus,
Fazenda Isabel, Fazenda Chicote, Fazenda Alencar,
Fazenda So Raimundo, Fazenda Sossgo and Fazenda
Santa Vitria.

The company plans to launch 4 fields (Fazenda Santa

Isabel, SE Bom Jesus, Santa Vitria and Chicote) as
commercial during 2015. Third party geological studies
were hired and results are expected for the 2nd half of 2015.

These estimates point towards an additional 23.9 BCM,

totalling 32.3 BCM of natural gas reserves.

As it was mentioned before, PGN operates in 7 blocks,

which also present other gas fields with a potential upside
to be considered. The Clients Management has made
studies on these gas fields: albeit they are in more distant
blocks, they represent a potential additional reserve of
nearly 37.7 BCM.

Since the current third parties studies related to the

certification of internal research are at preliminary stages,
the production considered in this report comes from the first
contracts cycle reserves, which is 32.3 BCM.

70.0

Morada Nova

BCM

Tianguar

60
Esperantinpolis
Baslios

50

Havana
Axixa

40
23.9

32.3

Angical

GVR

30

GVB
SE BJ
Isabel

20

Chicote
Alencar
Raimundo

10

6.1

1.9

0.4

8.4

Sossgo
Vitria

Source: E.ON
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35

Assumptions
Eneva Participaes Judicial Recovery: Parnaba III

Revenues

Fixed revenues (CCEAR Contract): Revenues from the energy generation capacity availability, as agreed in the CCEAR contracts signed in the 2008 A-5
Auction. The volumes were estimated based on the 98 Average MW capacity, as per the CCEAR contract, and the total number of hours of each year. The price
was projected based on the agreed prices in the A-5 Auction, and have been annually adjusted by the Brazilian Inflation-index IPCA.
It is important to point out that current CCEAR contracts are bound to expire in 2027, and that from 2028 onwards the applied assumption assumes a PPA
renewal under the same conditions as the one currently in place, with the rationale presented in page 34. In order to contemplate the risk associated to such
renovation, an alpha factor was included in the discount rate from 2027 onwards, as in page 73).

Variable revenues (CCEAR CVU): O&M reimbursements were calculated based on the expected net energy dispatch, provided by Eneva JRs management,
and the O&M agreed payment per dispatched megawatt-hour, which is specified in the CCEAR contract.

Please find below the revenue projection that has been used for Parnaba III

Volume and revenue projection

1.400

1,322 1,323

900

CCEAR Renewal

800

1.200

700
600
802

800

500

600

504

504

504

504

504

504

504

504

504

504

504

504

504

504

504

504

504

504

504

504

504

504

504

504

R$MM

GW/h

1.000

400

454

300
400
200
200

100

0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042

Source: Eneva JR

CCEAR Revenues

CCEAR CVU

Net energy dispatch

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36

Assumptions
Eneva Participaes Judicial Recovery: Parnaba III
Deductions

Deduction taxes: Deductions on gross revenues comprise PIS and Cofins at rates of 1.65% and 7.60% respectively. Given that the TPP uses production factors
in order to deliver energy, the TPP has the right to claim PIS and Cofins credits.

Fixed costs

O&M fixed costs: Calculated according to current contract assumptions, and have been annually adjusted by Brazilian inflation-index IPCA.

ANEEL fees: Contractually agreed, within the CCEAR agreement, and is a fixed fee on the total installed capacity of the TPP, and was annually adjusted by
Brazilian inflation-index IPCA.

TUST: Contractually agreed, within the CCEAR agreement, and is a fixed tariff on the total installed capacity of the TPP, net of transmission losses, and was
annually adjusted by Brazilian inflation-index IPCA.

CCEE contribution: Fixed contribution on the total installed capacity of the TPP. It was annually adjusted by Brazilian inflation-index IPCA.

RGR over fixed revenues: As per regulation requirements, Parnaba III contributes 1.0% of its fixed revenues, net of deductions, to Eletrobras R&D fund, RGR.

Fixed-lease payment: The TPP has an agreement with the Consortium to pay a fixed-lease, which is contractually determined by the parties.

Overhauling: Projected according to the TPPs contract with its service provider, which was calculated according to the amount of energy dispatch throughout
the projection.

Insurance: Parnaba III is entirely insured on its fixed and variable revenues. The insurance premium payment was annually adjusted by Brazilian inflation-index
IPCA.
Fixed costs breakdown
350

306

300
250

R$ MM

203

200

156

150

122

100
47

57

54

57

62

66

69

73

77

86

86

90

96

101

112

119

125

132

139

154

155

164

173

182

50
0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042

Source: Eneva JR

Free market expense

O&M

ANEEL fee

TUST

CCEE contribution

RGR - over fixed revenue

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Fuel costs - fixed payments

Overhauling

Insurance

37

Assumptions
Eneva Participaes Judicial Recovery: Parnaba III

Variable costs

Variable O&M costs: Projected according to the expected gross energy dispatch. A unit O&M cost (R$/MWh) annually adjusted by Brazilian inflation-index
IPCA was then applied on the dispatched energy.

RGR over variable revenues: As per regulation requirements, Parnaba III contributes 1.0% of its variable revenues, net of deductions, to Eletrobras R&D fund,
RGR.

Fuel purchase: Variable fuel purchase has been projected according to expected gross energy dispatch. Fuel price is contractually determined by Parnaba III
and the gas producers, and was annually adjusted by Brazilian inflation-index IPCA.

Variable-lease agreement: Calculated as the difference between: (i) total revenues and; (ii) fixed TPPs revenues; (iii) variable TPPs costs; and (iv) taxes,
regulatory fees and insurance.

Total costs
Please find below the cost projection that has been used for Parnaba III:
Total costs projection
700,0
641
296

600,0
500

R$ MM

500,0
410

400,0
300,0

342
273
47

200,0
100,0

226

308

295
54

224

204
241
50

143

153

53

118

171
59

90

106

112

180
62
118

190

201

212

66

69

73

125

131

139

228
82
146

236
81
154

249
86
163

263
91
172

277

151
107

325
112

343
119

362
125

382
146

181

202

213

225

237

147

155

192

474
173
164

132

96
191

425

449

250

264

278

294

556

310

327

345

364

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042
Source: Eneva JR
Variable costs
Fixed costs
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38

Assumptions
Eneva Participaes Judicial Recovery: Parnaba III

Depreciation

Total fiscal depreciation of property, plant & equipment is done in 10 years (at a 10% p.y. rate).

Total accounting depreciation of property, plant & equipment is done in 25 years (at a 4% p.y. rate).

Capex

Major capital expenditures were done during the construction period (2011-2015). Throughout the projection period, with exceptions to 2015, maintenance Capex
is included within the O&M costs (Overhauling).

Income taxes

The TPP is taxed within the real regime, with income taxes and social contribution rates at 25% and 9% respectively. It is worth mentioning, however, that
Parnaba III owns the following fiscal benefits:

Lucro da Explorao Exploration Profit, granted by SUDENE, from 2014 to 2023; and

Accelerated depreciation which allows the TPP to depreciate its items with a 10% annual depreciation rate.

Working capital

The projection considers an average of 45 days for account receivables on revenues and 50 days for accounts payable on costs and expenses.

Source: Eneva JR
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39

Assumptions
Eneva Participaes Judicial Recovery: Parnaba IV

Revenues

ACL revenues: Calculated based on the expected net energy dispatch, estimated by Eneva JRs management, and the agreed payment per dispatched
megawatt-hour, which is specified in the PPA agreement with Kinross Mining and Parnaba Comercializadora S.A..

It is worth mentioning that, albeit the current ACL expires in 2019, the projection assumes that such contract will be renovated until 2028.

Please find below the revenue projection that has been used for Parnaba IV.

Volume and revenue projection

500,0
450,0
400,0

350
430

430

PPA Renewal

300

380

250

350,0
306

250,0

200
221

221

221

221

221

221

221

221

221

221

221

221

221

221

221

221

221

221

221

221

221

221

221

221

221

R$MM

GW/h

300,0

150

200,0
150,0

100

100,0
50
50,0
-

0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043

CCEAL Revenues

Other revenues

Net energy dispatch

Source: Eneva JR
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Assumptions
Eneva Participaes Judicial Recovery: Parnaba IV

Deductions

Deduction taxes: Deductions on gross revenues comprise PIS and Cofins at rates of 1.65% and 7.60% respectively. Given that the TPP uses production factors
in order to deliver energy, the TPP has the right to claim PIS and Cofins credits.

Fixed costs

O&M fixed costs: Calculated according to current contract assumptions, and have been annually adjusted by Brazilian inflation-index IPCA.

ANEEL fees: Contractually agreed; it is a fixed fee on the total installed capacity of the TPP, and was annually adjusted by Brazilian inflation-index IPCA.

TUST: Contractually agreed; it is a fixed tariff on the total installed capacity of the TPP, net of transmission losses, and was annually adjusted by Brazilian
inflation-index IPCA.

CCEE contribution: Fixed contribution on the total installed capacity of the TPP. It was annually adjusted by Brazilian inflation-index IPCA.

Overhauling: Projected according to the TPPs contract with its service provider, which was calculated according to the amount of energy dispatch throughout
the projection.

Insurance: Parnaba IV is entirely insured on its revenues. The insurance premium payment was annually adjusted by Brazilian inflation-index IPCA.

Fixed costs breakdown

60
52
49

R$ MM

50

47

40
30
20

17

17

15

14

14

15

16

17

18

19

20

21

22

23

25

26

27

29

30

32

34

36

38

40

42

44

10
0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043

Source: Eneva JR

O&M

ANEEL fee

TUST

CCEE contribution

RGR - over fixed revenue

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

Overhauling

Insurance

41

Assumptions
Eneva Participaes Judicial Recovery: Parnaba IV

Variable costs

Variable O&M costs: Projected according to the expected gross energy dispatch. A unit O&M cost (R$/MWh) annually adjusted by Brazilian inflation-index
IPCA was then applied on the dispatched energy.

RGR over variable revenues: As per regulation requirements, Parnaba IV contributes 1.0% of its variable revenues, net of deductions, to Eletrobras R&D fund,
RGR.

Fuel purchase: Variable fuel purchase has been projected according to expected gross energy dispatch. Fuel price is contractually determined by Parnaba IV
and the gas producers, and was annually adjusted by Brazilian inflation-index IPCA.

Total costs

Please find below the cost projection that has been used for Parnaba III:

Total costs projection

200
174

180
161
153

R$ MM

160

145
137

140

130

120
100
80
49

48

48

50

53

55

47

40

17

15

14

14

15

16

17

33

34

35

39

30

32

37

20

60

59
17
42

65

69

62

20

18

19

44

46

49

73
21
51

77
22
54

81
23
57

85
25
60

90
26

64

95

100

27

67

29

71

105
30

75

111
32

79

117
34

83

123

47

165
47
44

44
42

40
38

36

88

92

98

103

109

115

121

128

0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043

Source: Eneva JR

Variable costs

Fixed costs

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42

Assumptions
Eneva Participaes Judicial Recovery: Parnaba IV

Depreciation

Total fiscal depreciation of property, plant & equipment is done in 10 years (at a 10% p.y. rate).

Total accounting depreciation of property, plant & equipment is done in 25 years (at a 4% p.y. rate).

Capex

Major capital expenditures were done during the construction period (2011-2014). Throughout the projection period, maintenance Capex is included within the
O&M costs (overhauling).

Income taxes

The TPP is taxed within the real regime, with income taxes and social contribution rates at 25% and 9% respectively. It is worth mentioning, however, that
Parnaba IV owns the following fiscal benefits:

Lucro da Explorao Exploration Profit, granted by SUDENE, from 2014 to 2023; and

Accelerated depreciation which allows the TPP to depreciate its items with a 10% annual depreciation rate.

Working capital

The projection considers an average of 45 days for account receivables on revenues and 50 days for accounts payable on costs and expenses.

Source: Eneva JR
2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

43

Assumptions
PGN

Revenues
The results presented below represent 70% of the total revenues that the Consortium generates.

Gas contracts revenues: Based on the gas demand from the 4 TPPs, these revenues match the fuel purchase costs of the downstream business.

Fixed revenues: The TPP has an agreement with the gas producers to pay a fixed-lease, which is contractually determined by the parties.

Variable revenues: The variable-lease revenues, which derive exclusively from Parnaba I and III, were calculated based on the difference between: (i) total
revenues and; (ii) fixed revenues; (iii) variable costs; and (iv) taxes, regulatory fees and insurance.

Condensate gas: It is a low-density liquid present in gas fields. This revenue line was projected by multiplying volume in million Boe (barrel of oil equivalent) and
the condensate price in million reais. It represents an average of 0.5% of the total revenue up until the end of the contracts with the TPPs.

PGN Gross revenue projection

1400,0
1.191

R$ MM

1200,0
1000,0
738

800,0
609

600,0
400,0
200,0

178
4
140

150
3
149

437
287

791
703
173
4
158

457

629
111
4
167

348

133
4
176

391

743
141
4
186

412

784
149
5
196

435

828
157
5
207

459

873
165
5
218

485

921
175
5
230

512

1.026

972
184
6
243

540

194
6
256

570

1.129

1.078
984
205
2
270

601

1.014

157
6

165
2

243

256

579

591

1.070
174
2
270

623

184
2
285

658

194
2
301

694

313
0
2

330
0
2

346
0

310

328

346

122
0
122

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Source: E.ON

Gas contract

Fixed rental

Condensate

Variable rental

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International, a Swiss entity. All rights reserved.

44

Assumptions
PGN

Deductions
The results presented below represent 70% of the Consortiums deductions.

Deduction taxes: Deductions on gross revenues comprise PIS and Cofins at rates of 1.65% and 7.60% respectively, and ICMS (which is exclusively on gas
sales) at a 4.6% rate. Additionally, it was considered PIS and Cofins credit of 1.65% + 7.60% on 50% over Opex, abandonment costs, exploration expenses and
depreciation.

Special participations: A progressive tax applied on the gas production exceeding 450 thousand cubic meters of BOE from each well.

ANEEL fees: Calculated according to current contract assumptions, annually adjusted by the Brazilian inflation-index IPCA.

Royalties: It was projected as 10.0% of the total gross revenues throughout the entire projection period.

Costs
The results presented below represent 70% of the Consortiums Opex and other costs

Opex: Based on the 2015 budget and production projection, adjusted by the Brazilian inflation-index IPCA. It is worth noticing the depletion of the wells from 2032
up to 2036.

Landowner share: According to Brazilian law, the landowner must receive 1.0% of the total revenue.

Easement Agreement: Pipelines have several kilometers of length, and pass over farms and lands owned by third parties. In this contract, the owners of such
lands grant a right of access and easement to the construction, maintenance and removal of the pipeline. In exchange for such services, the Consortium must pay
an insurance and an indexed amount, which is paid periodically.

Abandonment costs: As per regulation requirements, once the gas well is depleted, the company must remove the equipment, plug the well and remediate the
surface so as to prevent the leakage of hydrocarbons and any damage to the environment in the surrounding area. E.ONs management considered an
assumption of R$ 1.5 million per well. The abandonment costs were more substantial in 2040, given that the wells will be closed at the same year.

R$ MM

PGN Costs projection

180
150
120
90
60
30
0

158

82
46

56

73

86

101

93

89

98

104

115

120

127

134

140

70

67

71
26

2015

Source: E.ON

52

76

120

2016

2017

2018

2019
Opex

2020

2021

2022

2023

2024

Landowner share

2025

2026

2027

2028

2029

2030

Easement agreement

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

Total abandonment cost

45

Assumptions
PGN

Expenses
The results presented below represent 70% of the Consortiums expenses.

Rental to ANP: Calculated according to current contract assumptions, adjusted by the Brazilian inflation-index IPCA.

R&D: Calculated as 1% of the net revenues.

SG&A: Composed by three factors: production, development & infrastructure and exploration. It is important to mention that, in 2019, the end of exploration of
new gas fields causes a reduction in SG&A.

Exploration expenses: Projected as a combination of expenses from exploration, drilling and other finding expenditures (Seismic, injection wells, among others).
PGN Expenses projection
100
91
89

90

R$ MM

80
70

44

37

60

67

18

50

52
45
-

40

34
-

30

47
44

49

52

32
-

30
-

26

24

32
-

33
-

35
-

40

20

29

26

27

29

37
-

30

39
-

32

41
-

36
25
-

34

10
-

5
0

5
0-

0-

5
0

5
0

6
0

6
0

6
0

27
-

36
25

3
0

26
-

7
0

7
0

7
0

26

20
-

27
20

7
0

0-

0-

0-

0-

0-

17
-

14
-

13
-

16

14

13

0-

0-

0-

0
0-

0
0-

0
0-

0
0-

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Source: E.ON

Rental to ANP

R&D

SG&A

Exploration expenses

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

46

Assumptions
PGN

Depreciation
The results presented below represent 70% of the Consortiums depreciation

Total depreciation of the infrastructure was projected at 20 years (at a 5% p.a. rate).

The depreciation rate of property, plant and equipment was projected based on the yearly production and proved developed reserves.

Capex
The results presented below represent 70% of the Consortiums Capex

Major capital expenditures has been projected as investments in development, and in the infrastructure that is built in order to connect the pipeline.
PGN Capex projection
500
450

474

13

R$ MM

400
350

225

333

300
250

195

221

200
150

148

186

100

118

101

42

97
32

50
50

187

41

41

69

60

92

87

90

87

90

42

32

32

32

32

50
-

55

58

55

58

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Source: E.ON

Drilling

Development

Infrastructure

Other development capex

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

47

Assumptions
PGN

Income taxes

PGN is taxed with income taxes and social contribution rates at 25% and 9% respectively. It is worth mentioning, however, that PGN has the following fiscal
benefit:

Lucro da Explorao Exploration Profit, granted by SUDENE, from 2014 to 2023.

Working capital

The table presents the average of days and drivers for each account.
PGN
Current assets
Accounts receivable
Taxes receivable
Inventory
Other receivables

Days
67
20
55
10

Driver
Days of revenues
Days of revenues
Days of revenues
Days of costs and capex

Current liabilities
Suppliers
Tax payables
Accounts payable
Short term debts
Other accounts payable

Days
51
27
17
0
7

Driver
Days of costs and capex
Days of revenues
Days of costs
Days of costs
Days of costs

Source: E.ON
2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

48

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

13

III. Information about the companies

16

IV. Market information overview

23

V. Valuation Methodology

27

VI. Assumptions

32

IX. Valuation

49

Appendix I Curricula vitae

63

Appendix II Balance Sheet

67

Appendix III Book Value

70

Appendix IV Discount Rates

72

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

49

V. Valuation Methodology

Valuation method
Company

Valuation criteria

The valuation criteria is ultimately a sum of the parts, as presented below.

The assets that are considered to have future cash flows and expected
growth have been evaluated by the DCF methodology. The other assets,
which are non-operational, pre-operational, or materially irrelevant, have been
evaluated by book value practice.

Company

Valuation method
Sum of the parts

Eneva Participaes S.A.

Parnaba Participaes S.A.

Parnaba III Gerao de
Energia S.A.

Parnaba IV Gerao de
Energia S.A.

2
3

Parnaba Gerao e Comerc.

de Energia S.A.

Seival Participaes S.A.

Seival Gerao de
Energia Ltda.

Au II Gerao de
Energia S.A.

Sum of the parts

DCF

DCF

Valuation method

UTE Porto do Au S.A.

(A)
MPX Chile Holding Ltda.
Sul Gerao de Energia
Ltda.

8
10

ENEVA Comercializadora 11

= (A)1 + (C) 1
(C) =

de Combustveis Ltda.
ENEVA Solar
Empreendimentos Ltda.

12

Au III Gerao de
Energia Ltda.

13

Tau Gerao de Energia

Ltda.

14

ENEVA Comercializadora
de Energia Ltda.

15

(B) 2

(B)
(B)

Parnaba
Comercializadoras
income
statement and cash flow projections have
been incorporated into Parnaba IV.
(B)
Book value

(A)

Book value

(A)

Book value

(A)

Book value

SPE Ventos

Parnaba Gs Natural
S.A.

1 Adjusted
2 Adjusted
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International, a Swiss entity. All rights reserved.

16

Book value
Book value
Book value
Book value

Book value
Book value
Book value
Book value

(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)

DCF

according to Eneva Participaes JR stake

according to Parnaba Participaes stake
50

Valuation
Eneva Participaes Judicial Recovery: Parnaba III
Income statement

We present, below, Parnaba IIIs projected income statement:

Parnaba III - Incom e Statem ent
R$ MM
Gross Revenues
Deductions
Net revenues

2015
334.42
(6.65)
327.77

2016
401.27
(11.07)
390.20

2017
274.86
(7.55)
267.32

2018
218.14
(7.70)
210.45

2019
241.13
(2.39)
238.74

2020
254.40
(8.43)
245.97

2021
268.39
(8.89)
259.49

2022
283.15
(9.38)
273.77

2023
298.72
(9.90)
288.82

2024
315.15
(10.45)
304.71

2025
332.49
(10.60)
321.89

2026
350.77
(11.63)
339.14

2027
370.07
(12.28)
357.78

2028
390.42
(13.33)
377.09

(273.4)

(298.83)

(207.42)

(147.33)

(228.28)

(174.21)

(183.78)

(193.88)

(204.54)

(215.78)

(232.21)

(240.15)

(253.22)

(267.57)

EBITDA

54.33

91.37

59.90

63.11

10.46

71.76

75.71

79.88

84.28

88.93

89.68

99.00

104.57

109.52

EBITDA Margin
Depreciation/Amortization
EBT
IR & CS
EBT %
Net Incom e

0.17
(8.03)
46.30
(2.57)
-0.06
43.73

0.23
(8.44)
82.93
(6.33)
-0.08
76.60

0.22
(8.44)
51.45
(3.49)
-0.07
47.97

0.30
(8.44)
54.67
(3.81)
-0.07
50.86

0.04
(8.44)
2.02
0.00
2.02

0.29
(8.44)
63.32
(4.32)
-0.07
58.99

0.29
(8.44)
67.27
(4.87)
-0.07
62.40

0.29
(8.44)
71.44
(5.31)
-0.07
66.13

0.29
(8.44)
75.84
(5.80)
-0.08
70.04

0.29
(8.44)
80.48
(27.16)
-0.34
53.33

0.28
(8.44)
81.24
(27.42)
-0.34
53.82

0.29
(8.44)
90.55
(30.79)
-0.34
59.77

0.29
(8.44)
96.13
(32.68)
-0.34
63.44

0.29
(8.44)
101.08
(34.37)
-0.34
66.71

2029
411.89
(14.47)
397.42

2030
434.55
(11.10)
423.45

2031
458.45
(16.95)
441.50

2032
483.66
(18.29)
465.37

2033
510.26
(19.71)
490.56

2034
538.33
(21.20)
517.13

2035
567.93
(22.77)
545.16

2036
599.17
(23.83)
575.34

2037
632.13
(26.19)
605.94

2038
666.89
(28.04)
638.86

2039
703.57
(29.99)
673.58

2040
742.27
(32.04)
710.22

2041
783.09
(23.71)
759.38

2042
826.16
(36.50)
789.66

(282.30)

(347.35)

(314.25)

(331.55)

(349.80)

(369.06)

(389.38)

(417.39)

(433.45)

(457.31)

(482.49)

(509.06)

(650.68)

(566.66)

EBITDA

115.12

76.10

127.25

133.82

140.75

148.06

155.78

157.96

172.49

181.55

191.09

201.17

108.70

223.00

EBITDA Margin
Depreciation/Amortization
EBT
IR & CS
EBT %
Net Incom e

0.29
(8.44)
106.67
(36.27)
-0.34
70.41

0.18
(8.03)
68.07
(23.15)
-0.34
44.93

0.29
(8.03)
119.22
(40.54)
-0.34
78.69

0.29
(8.03)
125.79
(42.77)
-0.34
83.02

0.29
(8.03)
132.73
(45.13)
-0.34
87.60

0.29
(8.03)
140.04
(47.61)
-0.34
92.42

0.29
(8.03)
147.75
(50.23)
-0.34
97.51

0.27
(8.03)
149.93
(50.98)
-0.34
98.95

0.28
(8.03)
164.47
(55.92)
-0.34
108.55

0.28
(8.03)
173.52
(59.00)
-0.34
114.52

0.28
191.09
(64.97)
-0.34
126.12

0.28
201.17
(68.40)
-0.34
132.77

0.14
108.70
(36.96)
-0.34
71.75

0.28
223.00
(75.82)
-0.34
147.18

Total costs

Parnaba III - Incom e Statem ent

R$ MM
Gross Revenues
Deductions
Net revenues
Total costs

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

51

Valuation
Eneva Participaes Judicial Recovery: Parnaba III
Cash flow

We present, below, Parnaba IIIs projected cash flow:

Parnaba III - Free Cash Flow to Firm
R$ MM
Net incom e
Depreciation
Capex
Changes in WC
Free Cash Flow to Firm
Discount Factor
Discount rate
Discount period
Discounted cash flow

2015
43.73
8.03
(5.81)
13.72
59.66

2016
76.60
8.44
(0.40)
(4.22)
80.42

2017
47.97
8.44
(0.00)
2.63
59.04

2018
50.86
8.44
(1.22)
58.09

2019
2.02
8.44
7.60
18.06

2020
58.99
8.44
(8.30)
59.14

2021
62.40
8.44
(0.36)
70.48

2022
66.13
8.44
(0.38)
74.20

2023
70.04
8.44
(0.40)
78.08

2024
53.33
8.44
(0.42)
61.35

2025
53.82
8.44
0.13
62.39

2026
59.77
8.44
(1.04)
67.17

2027
63.44
8.44
(0.51)
71.38

2028
66.71
8.44
(0.41)
74.74

13.83%
0.50
55.92

13.83%
1.50
66.22

13.83%
2.50
42.70

13.83%
3.50
36.91

13.83%
4.50
10.08

13.83%
5.50
29.00

13.83%
6.50
30.36

13.83%
7.50
28.08

13.83%
8.50
25.96

12.48%
9.50
20.08

12.48%
10.50
18.15

12.48%
11.50
17.37

12.48%
12.50
16.41

13.60%
13.50
13.36

Parnaba III - Free Cash Flow to Firm

R$ MM
Net incom e
Depreciation
Capex
Changes in WC
Free Cash Flow to Firm

2029
70.41
8.44
(0.49)
78.36

2030
44.93
8.03
5.70
58.66

2031
78.69
8.03
(6.76)
79.96

2032
83.02
8.03
(0.57)
90.48

2033
87.60
8.03
(0.60)
95.02

2034
92.42
8.03
(0.64)
99.81

2035
97.51
8.03
(0.67)
104.87

2036
98.95
8.03
0.11
107.10

2037
108.55
8.03
(1.57)
115.00

2038
114.52
8.03
(0.79)
121.76

2039
126.12
(0.83)
125.29

2040
132.77
(0.88)
131.89

2041
71.75
13.34
85.08

2042
147.18
(15.24)
131.94

Discount Factor
Discount rate
Discount period
Discounted cash flow

0.14
14.50
12.33

0.14
15.50
8.13

0.14
16.50
9.75

0.14
17.50
9.71

0.14
18.50
8.98

0.14
19.50
8.30

0.14
20.50
7.68

0.14
21.50
6.90

0.14
22.50
6.52

0.14
23.50
6.08

0.14
24.50
5.51

0.14
25.50
5.10

0.14
26.50
2.90

0.14
27.50
3.96

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

52

Valuation
Eneva Participaes: Parnaba III
Valuation

We present, below, Parnaba IIIs Valuation:

Parnaba III - Equity Value
R$ MM
Sum of discounted cash flow
Balance sheet adjustm ents
Cash and equivalents
Inventory
Intercompany loan to Parnaba
Debt and financing
Energy acquisition
Intercompany debt
Fiscal contingency
Equity Value
Equity Value @70%

512.43
(78.82)
14.10
3.85
68.15
(120.00)
(6.92)
(34.75)
(3.25)
433.62
303.53

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

53

Valuation
Eneva Participaes Judicial Recovery: Parnaba IV
Income statement

We present, below, Parnaba IVs projected income statement:

Parnaba IV - Incom e Statem ent
R$ MM
Gross Revenues
Deductions
Net revenues

2015
63.56
(2.37)
61.19

2016
67.73
(2.58)
65.15

2017
75.35
(3.71)
71.64

2018
79.50
(4.66)
74.84

2019
83.87
(5.56)
78.31

2020
88.49
(5.87)
82.62

2021
93.35
(6.19)
87.17

2022
98.49
(6.52)
91.96

2023
103.90
(6.88)
97.02

2024
109.62
(7.26)
102.36

2025
115.65
(7.65)
107.99

2026
122.01
(8.07)
113.94

2027
128.72
(8.51)
120.21

2028
135.80
(9.00)
126.80

2029
143.27
(9.49)
133.78

(46.84)

(49.12)

(48.36)

(47.98)

(49.75)

(52.51)

(55.43)

(58.50)

(61.75)

(65.18)

(68.77)

(72.59)

(76.62)

(80.59)

(85.10)

EBITDA

14.35

16.03

23.29

26.86

28.56

30.11

31.74

33.46

35.27

37.19

39.22

41.35

43.59

46.20

48.67

EBITDA Margin
Depreciation/Amortization
EBT
IR & CS
EBT %
Net Incom e

0.23
(6.45)
7.90
0.00
7.90

0.25
(6.61)
9.42
0.00
9.42

0.33
(6.61)
16.68
(0.60)
-0.04
16.08

0.36
(6.61)
20.25
(0.95)
-0.05
19.30

0.36
(6.61)
21.95
(1.10)
-0.05
20.85

0.36
(6.61)
23.50
(1.24)
-0.05
22.26

0.36
(6.61)
25.13
(1.39)
-0.06
23.75

0.36
(6.61)
26.85
(1.54)
-0.06
25.31

0.36
(6.61)
28.66
(1.70)
-0.06
26.96

0.36
(6.61)
30.58
(4.84)
-0.16
25.74

0.36
(6.61)
32.61
(11.01)
-0.34
21.60

0.36
(6.61)
34.74
(11.81)
-0.34
22.93

0.36
(6.61)
36.98
(12.57)
-0.34
24.40

0.36
(6.61)
39.59
(13.46)
-0.34
26.13

0.36
(6.61)
42.06
(14.30)
-0.34
27.76

2030
151.15
(10.01)
141.14

2031
159.46
(10.56)
148.90

2032
168.23
(11.14)
157.09

2033
177.48
(11.75)
165.73

2034
187.25
(12.44)
174.80

2035
197.54
(13.12)
184.42

2036
208.41
(13.84)
194.57

2037
219.87
(14.60)
205.27

2038
231.96
(15.41)
216.56

2039
244.72
(16.25)
228.47

2040
258.18
(17.14)
241.04

2041
272.38
(18.08)
254.30

2042
287.36
(19.07)
268.29

2043
303.17
(20.12)
283.05

(89.80)

(94.74)

(99.97)

(105.49)

(110.82)

(116.94)

(123.39)

(130.20)

(137.36)

(144.94)

(152.93)

(161.37)

(170.27)

(179.66)

51.34

54.16

57.12

60.25

63.98

67.48

71.18

75.07

79.20

83.53

88.11

92.93

98.02

103.39

0.36
(6.45)
44.89
(15.21)
-0.34
29.68

0.36
(6.45)
47.71
(16.17)
-0.34
31.54

0.36
(6.45)
50.67
(17.17)
-0.34
33.50

0.36
(6.45)
53.80
(18.24)
-0.34
35.56

0.37
(6.45)
57.53
(19.51)
-0.34
38.03

0.37
(6.45)
61.03
(20.70)
-0.34
40.34

0.37
(6.45)
64.73
(21.95)
-0.34
42.77

0.37
(6.45)
68.62
(23.28)
-0.34
45.34

0.37
(6.45)
72.75
(24.68)
-0.34
48.07

0.37
(6.45)
77.09
(26.15)
-0.34
50.93

0.37
88.11
(27.71)
-0.31
60.40

0.37
92.93
(29.35)
-0.32
63.58

0.37
98.02
(31.08)
-0.32
66.94

0.37
103.39
(32.90)
-0.32
70.48

Total costs

Parnaba IV - Incom e Statem ent

R$ MM
Gross Revenues
Deductions
Net revenues
Total costs
EBITDA
EBITDA Margin
Depreciation/Amortization
EBT
IR & CS
EBT %
Net Incom e

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

54

Valuation
Eneva Participaes Judicial Recovery: Parnaba IV
Cash flow

We present, below, Parnaba IVs projected cash flow:

Parnaba IV - Free Cash Flow to Firm
R$ MM
Net incom e
Depreciation
Capex
Changes in WC
Free Cash Flow to Firm

2015
7.90
6.45
(2.25)
6.21
18.32

2016
9.42
6.61
(0.00)
(0.18)
15.86

2017
16.08
6.61
(0.00)
(0.90)
21.78

2018
19.30
6.61
(0.45)
25.47

Discount Factor
Discount rate
Discount period
Discounted cash flow

13.83%
0.50
17.17

13.83%
1.50
13.05

13.83%
2.50
15.75

13.83%
3.50
16.18

2019
20.85
6.61
(0.19)
27.28

2020
22.26
6.61
(0.15)
28.72

2021
23.75
6.61
(0.16)
30.19

2022
25.31
6.61
(0.17)
31.75

2023
26.96
6.61
(0.18)
33.39

2024
25.74
6.61
(0.19)
32.16

2025
21.60
6.61
(0.20)
28.01

2026
22.93
6.61
(0.21)
29.33

2027
24.40
6.61
(0.22)
30.79

2028
26.13
6.61
(0.27)
32.47

2029
27.76
6.61
(0.24)
34.13

13.83% 13.83%
4.50
5.50
15.23
14.08

13.83%
6.50
13.01

13.83%
7.50
12.01

13.83%
8.50
11.10

12.48%
9.50
10.52

12.48%
10.50
8.15

12.48%
11.50
7.59

12.48%
12.50
7.08

12.48%
13.50
6.64

13.60%
14.50
5.37

Parnaba IV - Free Cash Flow to Firm

R$ MM
Net incom e
Depreciation
Capex
Changes in WC
Free Cash Flow to Firm

2030
29.68
6.45
(0.26)
35.87

2031
31.54
6.45
(0.28)
37.71

2032
33.50
6.45
(0.29)
39.65

2033
35.56
6.45
(0.31)
41.70

2034
38.03
6.45
(0.39)
44.09

2035
40.34
6.45
(0.35)
46.44

2036
42.77
6.45
(0.37)
48.86

2037
45.34
6.45
(0.39)
51.41

2038
48.07
6.45
(0.41)
54.11

2039
50.93
6.45
(0.43)
56.95

2040
60.40
(0.45)
59.94

2041
63.58
(0.48)
63.10

2042
66.94
(0.51)
66.43

2043
70.48
(0.53)
69.95

Discount Factor
Discount rate
Discount period
Discounted cash flow

13.60%
15.50
4.97

13.60%
16.50
4.60

13.60%
17.50
4.26

13.60%
18.50
3.94

13.60%
19.50
3.67

13.60%
20.50
3.40

13.60%
21.50
3.15

13.60%
22.50
2.92

13.60%
23.50
2.70

13.60%
24.50
2.50

13.60%
25.50
2.32

13.60%
26.50
2.15

13.60%
27.50
1.99

13.60%
28.50
1.85

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

55

Valuation
Eneva Participaes Judicial Recovery: Parnaba IV
Valuation

We present, below, Parnaba IVs Valuation:

Parnaba IV ( 1) - Equity Value
R$ MM
Sum of discounted cash flow s
Balance sheet adjustm ents
Cash and equivalents
Inventory
Intercompany loan
Intercompany debt
Tradings cash and equivalents
Tradings account receivables
Tradings taxes recoverable
Tradings energy acquisition
Tradings Intercompany debt
Equity Value
Equity Value @70%

217.34
(166.60)
0.33
0.22
18.88
(173.30)
4.58
10.43
5.61
(6.05)
(27.32)
50.73
35.51

( 1) The valuation considers Parnaba

Comercializadora w ithin its projection

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

56

Valuation
Eneva Participaes Judicial Recovery: Parnaba Participaes
Parnaba Participaes sum of the parts

We present, below, Parnaba Participaes sum of the parts:

Parnaba Participaes - Equity Value
R$ MM
Parnaba III Equity Value @70%
Parnaba IV and Trading Equity Value @70%
Parnaba Holding Adjustm ents

303.53
35.51
37.29

Cash and equivalents

0.25

Taxes recoverable

1.51

Intercompany loan

29.85

Afac
Taxes payable
Account payable
Equity Value
Equity Value @ 50%

7.20
(1.35)
(0.17)
376.34
188.17

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

57

Valuation
PGN
Income Statement

We present, below, PGNs projected income statement:

PGN - Incom e Statem ent
R$ MM
Gross revenues
Deductions
Net revenues
Costs
Gross profit
Expenses
EBITDA
EBITDA margin
Depreciation/Amortization
EBT
Income tax and social contribution
% EBT
Net incom e

2015
609.22
(97.46)
511.76
(46.38)
465.39
(92.01)
373.38
72.96%
(150.20)
223.18
(56.70)
-25.41%
166.48

2016
738.25
(136.92)
601.34
(52.44)
548.90
(88.56)
460.34
76.55%
(144.21)
316.13
(73.18)
-23.15%
242.94

2017
791.07
(140.21)
650.87
(55.79)
595.08
(66.83)
528.25
81.16%
(135.20)
393.05
(92.04)
-23.42%
301.01

2018
629.02
(107.27)
521.75
(81.79)
439.97
(51.96)
388.01
74.37%
(113.39)
274.63
(65.58)
-23.88%
209.04

2019
703.28
(122.28)
581.00
(72.85)
508.15
(44.66)
463.49
79.77%
(108.38)
355.11
(84.61)
-23.83%
270.50

2020
743.19
(131.08)
612.11
(76.40)
535.71
(33.54)
502.18
82.04%
(104.57)
397.61
(94.78)
-23.84%
302.82

2021
784.24
(139.18)
645.05
(86.12)
558.93
(31.55)
527.39
81.76%
(95.91)
431.48
(102.85)
-23.84%
328.63

2022
827.56
(163.73)
663.84
(100.51)
563.32
(30.02)
533.30
80.34%
(96.00)
437.31
(104.23)
-23.83%
333.08

2023
873.23
(181.18)
692.05
(88.71)
603.34
(31.67)
571.67
82.61%
(96.08)
475.59
(113.34)
-23.83%
362.25

2024
921.42
(194.19)
727.22
(93.46)
633.77
(33.41)
600.35
82.55%
(96.15)
504.20
(171.43)
-34.00%
332.77

2025
972.25
(204.78)
767.46
(98.47)
668.99
(35.25)
633.75
82.58%
(105.92)
527.83
(179.46)
-34.00%
348.37

2028
984.04
(198.51)
785.53
(114.54)
670.99
(40.71)
630.28
80.24%
(92.62)
537.66
(182.81)
-34.00%
354.86

2029
1,014.24
(200.85)
813.39
(120.33)
693.06
(35.60)
657.46
80.83%
(82.10)
575.36
(195.62)
-34.00%
379.73

2030
1,069.94
(212.13)
857.81
(126.83)
730.98
(24.68)
706.31
82.34%
(82.12)
624.19
(212.22)
-34.00%
411.96

2031
1,128.91
(224.04)
904.88
(133.68)
771.19
(26.03)
745.17
82.35%
(82.13)
663.03
(225.43)
-34.00%
437.60

2032
1,191.22
(236.62)
954.60
(140.49)
814.11
(27.46)
786.65
82.41%
(82.16)
704.49
(239.53)
-34.00%
464.97

2033
312.82
(97.78)
215.03
(69.72)
145.32
(20.48)
124.84
58.05%
(35.86)
88.97
(30.25)
-34.00%
58.72

2034
330.27
(103.73)
226.54
(67.30)
159.23
(16.51)
142.72
63.00%
(33.05)
109.67
(37.29)
-34.00%
72.38

2035
345.87
(109.38)
236.49
(70.92)
165.57
(14.36)
151.21
63.94%
(31.27)
119.93
(40.78)
-34.00%
79.16

2036
121.70
(55.53)
66.17
(26.13)
40.04
(13.32)
26.72
40.38%
(10.43)
16.29
(5.54)
-34.00%
10.75

2037
N.a.
N.a.
-

2038
N.a.
N.a.
-

2026
1,025.65
(214.06)
811.59
(103.75)
707.83
(37.18)
670.65
82.63%
(102.90)
567.75
(193.04)
-34.00%
374.72

2027
1,078.12
(216.71)
861.42
(119.99)
741.43
(39.23)
702.20
81.52%
(100.01)
602.19
(204.74)
-34.00%
397.44

PGN - Incom e Statem ent

R$ MM
Gross revenues
Deductions
Net revenues
Costs
Gross profit
Expenses
EBITDA
EBITDA margin
Depreciation/Amortization
EBT
Income tax and social contribution
% EBT
Net incom e

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

2039
2040
7.32
7.32
(158.17)
(150.85)
(150.85)
N.a. -2062.16%
(150.85)
N.a.
0.00%
(150.85)

58

Valuation
PGN
Cash Flow

We present, below, PGNs projected cash flow:

PGN - Cash flow
R$ MM
Net income
Depreciation/Amortization
Changes in WC
Capex
Free cash flow to firm

2015
166.48
150.20
(8.77)
(473.74)
(165.83)

2016
242.94
144.21
(18.81)
(333.06)
35.29

2017
301.01
135.20
(20.65)
(220.83)
194.73

2018
209.04
113.39
40.22
(186.79)
175.86

2019
270.50
108.38
(24.41)
(101.44)
253.03

2020
302.82
104.57
(11.55)
(92.16)
303.69

2021
328.63
95.91
(11.65)
412.89

2022
333.08
96.00
(7.79)
421.29

2023
362.25
96.08
(13.14)
445.19

2024
332.77
96.15
(10.29)
418.64

2025
348.37
105.92
(7.69)
(87.11)
359.48

2026
374.72
102.90
(11.29)
(90.15)
376.18

2027
397.44
100.01
(9.00)
(86.70)
401.75

Discount factor
Discount rate
Discount period
Discounted cash flow

0.15
0.50
(154.54)

0.15
1.50
28.56

0.15
2.50
136.88

0.15
3.50
107.35

0.15
4.50
134.15

0.15
5.50
139.83

0.15
6.50
165.11

0.15
7.50
146.31

0.15
8.50
134.28

0.15
9.50
114.84

0.15
10.50
86.06

0.15
11.50
78.60

0.15
12.50
73.25

2028
354.86
92.62
22.01
(89.72)
379.77

2029
379.73
82.10
(10.41)
451.43

2030
411.96
82.12
(14.37)
479.71

2031
437.60
82.13
(12.54)
507.20

2032
464.97
82.16
(13.34)
533.79

2033
58.72
35.86
196.01
290.59

2034
72.38
33.05
(5.54)
99.89

2035
79.16
31.27
(3.46)
106.97

2036
10.75
10.43
44.62
65.80

2037
21.20
21.20

0.15
13.50
60.43

0.15
14.50
62.69

0.15
15.50
58.14

0.15
16.50
53.65

0.15
17.50
49.27

0.15
18.50
23.41

0.15
19.50
7.02

0.15
20.50
6.56

0.15
21.50
3.52

0.15
22.50
0.99

PGN - Cash flow

R$ MM
Net income
Depreciation/Amortization
Changes in WC
Capex
Free cash flow to firm
Discount factor
Discount rate
Discount period
Discounted cash flow

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

2038
-

0.15
23.50
-

2039
-

0.15
24.50
-

2040
(150.85)
32.87
(117.98)

0.15
25.50
(3.66)

59

Valuation
PGN
Valuation

We present, below, PGNs Valuation:

PGN - Equity value
R$ MM
Sum of discounted cash flow s
Adjustm ents
Cash and cash equivalent
Restricted cash
Loans
Partners accounts receivable
Deferred taxes
Equity value

1,512.70
(478.63)
130.53
9.83
(721.85)
18.15
84.71
1,034.08

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

60

Valuation
Conclusion

Summary of Results

Based on the scope of our report, and subject to the assumptions, restrictions, and limitations described herein, we have estimated the fair value of Eneva
Participaes and PGN as of December, 2014 as presented below.

Eneva Participaes S.A. in Judicial Recovery

PGN

17.76

1,512.70
317.26

82.68

18.65

(478,63)

1,034.08

R$ MM

R$ mm

46.41

188.17
151.77
Parnaba III Parnaba IV

* Detailed on appendix III

Parnaba
Eneva
Parnaba
Sum of the
Eneva
ParticipaesParticipaes Book Values ParticipaesParticipaes
adjsutments
Holding
in Judicial
Adjustments Recovery

Eneva Participaes in Judicial Recovey| Valuation interval

Equity Value

Bottom
(-5%)

Central

Up p er
(-5%)

302.15

317.26

332.36

Eneva Participaes in Judicial Recovery valuation, as at December

31, 2014, ranges from R$ 302.1 million to R$ 332.4 million. The valuation
of E.ONs stake in Eneva Participaes in JR (50,0%) ranges from R$
151.1 million to R$ 166.2 million.
The valuation methodology applied for the operational subsidiaries was
the discounted cash flow approach (presented on pages 51 to 57). As
for the non-operational and pre-operational subsidiaries, the applied
methodology has been the cost approach, which considers the book value
of shareholders equity (presented on page 71).

PGN
Enterprise
value

Adjustments

PGN Equity
value

PGN | Valuation interval

Equity Value

Bottom
(-5%)

Central

Up p er
(-5%)

984.96

1,034.08

1,083.20

PGNs valuation, as at December 31, 2014, ranges from R$ 985.0 million

to R$ 1,083.2 million. The valuation of E.ONs stake in PGN (9,09%)
ranges from R$ 89.5 million to R$ 98.5 million.
The valuation methodology applied, in order to determined the value of
PGN, was the discounted cash flow method (presented on pages 58 to
60) .

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

61

Valuation
Conclusion (cont.)

In providing its services, KPMG relied on information provided by Eneva RJs and E.ONs Management and discussions with your employees or other
representatives, and KPMG is not responsible for independently verifying any information publicly available or supplied to it in the preparation of this report.
KPMG does not express an opinion on the reliability of the information presented above, and determines that any errors, changes or modifications of such
information could significantly affect the findings of KPMG. Based on the terms of our proposal, data processing and information does not imply acceptance or
certification of these as true by KPMG.

During the course of our work, KPMG performed testing procedures as needed. However, we emphasize that our evaluation work did not constitute an audit of
financial statements or other information submitted to us by the Eneva RJs and E.ONs Management and should not be treated as such.

Neither KPMG nor the Eneva RJs or E.ONs Management can ensure that future results will meet projected results, due to unforeseen external or internal
factors.

We emphasize that a full understanding of this report and its conclusion is only possible through its complete reading. Thus, one should not draw conclusions by
reading just part of it.

It is imperative to point out that this version of the valuation report is a free translation from Portuguese to English; therefore, in case of discrepancies between
the report in Portuguese sent on April 13, 2015 and the free translation report, the former shall prevail in all matters.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

62

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

13

III. Information about the companies

16

IV. Market information overview

23

V. Valuation Methodology

27

VI. Assumptions

32

IX. Valuation

49

Appendix I Curricula vitae

63

Appendix II Balance Sheet

67

Appendix III Book Value

70

Appendix IV Discount Rates

72

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

63

Appendix I
Curricula vitae
Name
Position

Claudio Roberto de Leoni Ramos

Sector of expertise

Partner, Advisory - Corporate Finance

BS degree in Mechanical Engineering from the School of Technology at the University of Braslia, Brazil.
MBA degree in Finance, Economics and International Business from New York Universitys Leonard N. Stern School of Business
and Universit Commerciale Luigi Bocconi, Milan.
Claudio has been a professor for Corporate Finance classes in the Executive MBA of FAAP University in So Paulo.
Passed CFA Level 1 exam in 2009.
Claudio is a board member of Enactus Brazil (http://enactus.org/country/brazil/).
Head of Transactions & Restructuring (T&R) for KPMG Brazil and South America and the leader for High Growth Markets for the
KPMG Global T&R Leadership Team. Cludio has worked in corporate finance/investment banking since 1993. His experience
encompasses equity research, cross-border private placements, company valuations and merger and acquisitions advisory work.
He has been advising clients on mergers and acquisitions and valuations since 1994. His industry experience encompasses
industrial companies, financial institutions, food and beverage, mining and automotive. He is the representative for Latin America in
KPMGs Global Valuations Committee and one of the seven members of the Global Valuations Leadership Team. Hes the lead
partner of the Valuations Group in KPMG Brazil.
Financial institutions, mining, services, insurance, foods and beverages

Name

Paulo Guilherme de Menezes Coimbra

Position

Partner, Corporate Finance (M&A), Rio de Janeiro Brazil.

Qualifications

Graduated in Production Engineering in Universidade Federal do Rio de Janeiro - UFRJ (1996)

Specialization in Corporate Finance in the Brazilian Institute of Capital Markets (IBMEC - 1997)
Executive Program on Business Management Fundao Dom Cabral, Rio de Janeiro 2012

Experience

Throughout 15 years of experience, he has participated in a wide range of activities, including: financial advisory to clients in
mergers and acquisitions, privatizations and offerings.
Before joining KPMG Brazil he worked at Acar Guarani (one of the largest Sugar and Ethanol Company in Brazil) and was the
CFO at Cimentos Liz (one the largest cement group in Brazil).

Sector of experience

Electricity, Oil and Gas, Sugar and Alcohol. Agriculture, Financial Sevices and Consumer Goods

Qualifications

Experience

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

64

Appendix I (cont.)
Curricula vitae
Name
Position

Augusto Sales

Sector of expertise

Partner, Advisory Global Strategy Group

Brazil CPA
MBA, IBMEC Business School, Rio de Janeiro
BA, Accounting, Universidade Federal Fluminense (UFF), Rio de Janeiro
Augusto is responsible for leading the KPMGs Strategy Group in Brazil. He has over 20 years of experience in strategy and
financial advisory to clients in strategy and business development exercises, mergers and acquisitions, privatizations and offerings.
On the transaction space, he has provided strategy advice, market entry, target identification, strategic, financial and business due
diligence on numerous cross-border transactions for both domestic/international and financial/strategic buyers in large and complex
deals.
Before joining the Transaction Services group in Brazil he worked in New York advising companies going public in the US market
(NYSE) and served the Brazilian Desk advising clients with interest in Brazil.
Power Generation, Transmission and Distribution, Mining and Metals, Oil & Gas spaces.

Name

Rben Palminha

Position

Senior Manager, KPMG Corporate Finance, Rio de Janeiro Brazil.

Qualifications

Postgraduate degree in Finance, with specialization in Corporate Finance INDEG-IUL, (Lisbon, Portugal)
Specialization in Finance INDEG-IUL (Lisbon, Portugal)
Graduate in Finance ISCTE-IUL (Lisbon, Portugal)

Experience

He joined KPMG Corporate Finance in 2006. Since then, Rben has participated in Energy and Infrastructure projects in various
countries, assisting Public and Private entities, accumulating skills in Project Finance, PPP Projects, M&A and Valuations.

Qualifications

Experience

Since December 2014, Rben is based in the Rio de Janeiro office.

Sector of experience

Energy and Infrastructure

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

65

Appendix I (cont.)
Curricula vitae

Name

Fabiano Goulart Delgado

Position

Manager, Corporate Finance, KPMG Curitiba - Brazil

Qualifications

Specialization in Controllership at UFPR-PR

Graduated in Economics at UFMS-MS

Experience

Has more than 7 years of experience in KPMG, ample experience in M&A services, and preparation of business plans and
valuations. In addition, Fabiano has developed several financial models and evaluated various intangible assets within Purchase
Price Allocation exercises.

Sector of experience

Banking, real estate, power, agribusiness, foods and beverages, retail and logistic.

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

66

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

13

III. Information about the companies

16

IV. Market information overview

23

V. Valuation Methodology

27

VI. Assumptions

32

IX. Valuation

49

Appendix I Curricula vitae

63

Appendix II Balance Sheet

67

Appendix III Book Value

70

Appendix IV Discount Rates

72

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

67

Appendix II
Balance Sheet | PGN

Balance Sheet - PGN

R$ MM
Assets
Current
Cash and cash equivalents
Account receivables
Restricted Deposits
Tax and contribuition receivables
Loans and financing from related parties
Related parties account receivables
Other credits and prepaid expenses
Non Current
Supplies and consumables
Restricted Deposits
Tax and contribuition receivables
Deferred tax and contribuition
Fixed Assets
Intangible
Total assets

Balance Sheet - PGN

31/12/2013 31/12/2014

5.01
112.49
14.39
102.57
5.00

130.53
108.55
6.03
63.36
42.21
18.15
15.85

39.79
7.15
117.07
942.32
12.81
1,358.59

32.47
3.80
84.71
978.31
19.06
1,503.03

R$ MM
Liabilities
Current
Suppliers
Income tax
Payroll
Loans and financing
Account payables w ith related parties
Other account payables
Non Current
Loans and financing
Provisions for retirement obligations
Shareholders Equity
Social Capital
Retained investments
Retained earnings
Total liabilities and shareholder equity

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

31/12/2013 31/12/2014

292.77
17.94
4.04
628.59
183.92
7.06
68.57
368.59
(212.89)
1,358.59

80.32
43.28
17.02
33.46
7.01
6.53
730.60
57.37
618.59
8.88
(100.03)
1,503.03

68

Appendix II
Balance Sheet | Eneva Participaes Judicial Recovery

Balance Sheet - Eneva Participaes RJ *

Balance Sheet - Eneva Participaes RJ *

R$ MM
Assets
Current
Cash
Diverse Credits
Inventory
Restricted Deposits
Prepaid Expenses
Non Current
Long term asset
AFAC
Investments
Fixed assets
Intagible
Total assets
* Non audited

31/12/2014

11.27
95.55
24.37
0.00
0.00
107.19
1.00
137.28
19.01
25.83
421.50

R$ MM
Passivo
Current
Suppliers
Payroll
Tax, rates and contribuitions
Others
Non-current
Long term liabilities
Shareholders' equity
Social Capital
Capital reserve
Patrimonial adjustment reserve
AFCI
Retained earnings or loss
Year profit
Total liabilities and shareholders' equity
* Non audited

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

31/12/2014

55.31
1.40
10.65
5.42
126.76
266.76
62.00
1.00
25.75
(62.42)
(71.14)
421.50

69

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

13

III. Information about the companies

16

IV. Market information overview

23

V. Valuation Methodology

27

VI. Assumptions

32

IX. Valuation

49

Appendix I Curricula vitae

63

Appendix II Balance Sheet

67

Appendix III Book Value

70

Appendix IV Discount Rates

72

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

70

Appendix III
Book value

Book value of the non-operational and pre-operational companies

Equity Value at 100%
Company
(R$ MM)
4
Seival Participaes S.A
39.49
Seival Gerao de Energia Ltda. (1)
Au II Gerao de Energia S.A.
UTE Porto do Au S.A.
MPX Chile Holding Ltda.
Sul Gerao de Energia Ltda.
Eneva Comercializadora de Comb. Ltda.
Eneva Solar Empreendimentos Ltda.
Au III Gerao de Energia Ltda.
Tau Gerao de Energia Ltda. (2)
Eneva Comercializadora de Energia S.A.
SPE Ventos

5
6
7
8
10
11
12
13
14
15
16

Eneva Participaes
Stake (%)

Adjusted Equity Value

(R$ MM)

50%

19.75

50%

4.67

50%

2.34

44.00

50%

22.00

0.22

50%

0.11

13.15

50%

6.57

(0.04)

100%

(0.04)

8.42

100%

8.42

2.52

100%

2.52

100%

19.54

100%

19.54

1.47

100%

1.47

(1) - Equity value is included within consolidation of Seival Participaes S.A.

(2) - Equity value is included within consolidation of Eneva Solar Empreendimentos Ltda.
2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

71

Contents

Glossary

I. Executive Summary

II. Information about the appraiser

13

III. Information about the companies

16

IV. Market information overview

23

V. Valuation Methodology

27

VI. Assumptions

32

IX. Valuation

49

Appendix I Curricula vitae

63

Appendix II Balance Sheet

67

Appendix III Book Value

70

Appendix IV Discount Rates

72

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

72

Appendix IV
Discount rate

Parnaba III and Parnaba IV

Discount rate

Source:
During Sudene

After Sudene

After PPA renew al

(a)

3.4%

3.4%

3.4%

American inflation ("CPI")

(b)

2.0%

2.0%

2.0%

Long Term Brazilian inflation ("IPCA")

(c)

5.5%

5.5%

5.5%

(c) Long term Brazilian inflation Central Bank of Brazil

(d) = [1 + a] / [1 + b] * [1 + c] -1

6.9%

6.9%

6.9%

Equity risk premium (ERP)

(e)

4.6%

4.6%

4.6%

Unleverage beta - setorial

(f)

0.57

0.57

0.57

D/E

(g)

78.0%

78.0%

78.0%

(g) Debt to Equity (sector) Bloomberg

Effective tax rate

(h)

15.3%

34.0%

34.0%

0.95

0.86

0.86

(h) Effective tax rate Tax effective rate applicable to the

company

RF - T-Bond 30 years - 2 years

RF Adjusted

Releverage beta

(i) = f * [1 + [g * [1 - h]]]

(a) Risk free rate Bloomberg

(b) USA CPI Economist Intelligence Unit

(e) Equity risk premium Damodaran

(f) Unleverage beta (sector) Bloomberg

Country risk premium - EMBI+ (CRP) - 2 y

(j)

2.18%

2.18%

2.18%

Size premium

(k)

1.98%

1.98%

1.98%

(j) Country risk premium J.P Morgan

(k) Size premium Ibbotson research

Alpha factor

(L)

0.00%

0.00%

2.00%

Re= d + [e * i] + j + k

15.4%

15.06%

17.06%

(m)

56.2%

56.2%

56.2%

(Re)

15.4%

15.1%

17.1%

(m) % Equity (sector) Bloomberg

(n)

43.8%

43.8%

43.8%

(n) % Debt (sector) Bloomberg

Effective tax rate

(h)

15.3%

34.0%

34.0%

(p) Cost of Debt CDI x 120%

Cost of debt after tax

(p)

11.8%

9.2%

9.2%

13.83%

12.48%

13.60%

CAPM nom inal R$

% Equity
CAPM nominal R$
% Debt

WACC nom inal R$

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

(L) Alpha factor Risk associated to PPA renewal

73

Appendix IV
Discount rate

PGN

Discount rate

Source:
(a) Risk free rate Bloomberg

During Sudene

After Sudene

(a)

3.4%

3.4%

(b) USA CPI Economist Intelligence Unit

American inflation ("CPI")

(b)

2.0%

2.0%

Long Term Brazilian inflation ("IPCA")

(c)

5.5%

5.5%

(c) Long term Brazilian inflation Central Bank of Brazil

(d) = (1 + a) / (1 + b) * (1 + c) -1

6.9%

6.9%

Equity risk premium (ERP)

(e)

4.6%

4.6%

(f) Unleverage beta (sector) Bloomberg

Unleverage beta - setorial

(f)

0.98

0.98

(g) Debt to Equity (sector) Bloomberg

D/E

(g)

42.9%

42.9%

Effective tax rate

(h)

23.9%

34.0%

(i) = f * {1 + [g * (1 - h)]}

1.31

1.26

(j) Country risk premium J.P Morgan

RF - T-Bond 30 years - 2 years

RF Adjusted

Releverage beta

(e) Equity risk premium Damodaran

(h) Effective tax rate Tax effective rate applicable to the

company

Country risk premium - EMBI+ (CRP) - 2 y

(j)

2.18%

2.18%

(k) Size premium Ibbotson research

Size premium

(k)

1.98%

1.98%

(L) % Equity (sector) Bloomberg

Re = d + (e * i) + j + k

17.1%

16.9%

% Equity

(L)

70.0%

70.0%

(m) % Debt (sector) Bloomberg

% Debt

(m)

30.0%

30.0%

CAPM nom inal R$

Cost of debt before tax

Tax rate
Cost of debt after tax
WACC nom inal R$

(n)

13.9%

13.9%

(h)

23.9%

34.0%

(o) = n * (1 - h)

10.6%

9.2%

= Re * L + o * m

15.14%

14.58%

2015 KPMG Corporate Finance Ltda. is a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss entity. All rights reserved.

(n) Cost of Debt CDI x 120%

74

 2015 KPMG Corporate Finance Ltda., a Brazilian limited liability company

operating in Brazil and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative ("KPMG
International"), a Swiss entity. All rights reserved. Printed in Brazil.
The KPMG name, logo and cutting through complexity are registered
trademarks or trademarks of KPMG International Cooperative (KPMG
International).

EXHIBIT III - C
VALUATION REPORT PARNABA III

34

STRICTLY PRIVATE AND CONFIDENTIAL

Eneva
Valuation
Analysis MEMORANDUM
PROJECT
36 INFORMATION
PREPARED
[INVESTOR]
March
31,TO:
2015
DATE: [X]

STRICTLY PRIVATE AND CONFIDENTIAL

Table of Contents
Section I.

Executive Summary

Section II.

Valuation - Parnaba I, III and IV

Appendix I.

Multiple Database

Appendix II.

Parnaba I, III and IV Overview

Contacts

I
Executive Summary

STRICTLY PRIVATE AND CONFIDENTIAL

Executive Summary
Introduction (1/2)

March 27, 2015

Eneva S.A
Praia do Flamengo, 66 9th floor
22210030 Rio de Janeiro RJ Brazil
Dear Sirs,

We understand that Eneva S.A. (Company or Eneva) is entertaining the possibility of acquiring the stake currently owned directly and/or indirectly
by Petra Energia S.A. (Petra) in UTE Parnaba I, UTE Parnaba III and UTE Parnaba IV1 (collectively referred to herein as UTEs), equivalent to
30% of the capital stock in each of such UTEs (Petra UTE Shares).
For the purposes of the foregoing, Eneva have asked G5 Consultoria e Assessoria Ltda. (G5 Evercore) to provide the Company with a valuation of
Petra UTE Shares.
In connection with the required analysis by G5 Evercore, please be advised that we have based our work on the information provided by or on
behalf of the Company and also endeavored the following specific reviews and discussions:
I.

Reviewed certain non-public internal financial statements, other non-public financial and operating data relating to Parnaba I, III and IV,
that were prepared and provided to us by the management of the Company;

II.

Reviewed certain financial projections relating to Parnaba I, III and IV, that were provided to us by the management of the Company;

III.

Discussed the past and current operations, financial projections, current financial condition and prospects of Parnaba I, III and IV with
certain members of senior management of the Company;

IV. Reviewed existing agreement between Petra and Eneva related to Parnaba I, III and IV, including existing shareholders agreements
and capital increase operations that occurred in the past;
V.

Reviewed the financial terms of certain publicly available transactions that we deemed to be relevant; and

VI. Discussed with management of the Company, but have not discussed with legal advisors of the Company, the potential impact of
certain ongoing litigations.
With respect to the financial projections of Parnaba I, III and IV which were provided to us, we have assumed that such financial projections have
been reasonably prepared by the Company on bases reflecting the best currently available estimates and good faith judgments of the future
competitive, operating and regulatory environments and related financial performance of Parnaba I, III and IV.
Furthermore, we were informed by the Company that Petra failed to contribute its share on capital increases of UTE Parnaba I, UTE Parnaba III
and UTE Parnaba IV duly approved in the past years. The amount due by Petra, sums R$ 70,9 MM, however, with penalties and interests applied,
the current total amount outstanding is R$ 93,0 MM.

Note [1]: UTE Parnaba IV refers to UTE Parnaba IV and Parnaba Gerao e Comercializao

STRICTLY PRIVATE AND CONFIDENTIAL

Executive Summary
Introduction (2/2)
Notwithstanding our review of certain set of information provided by or on behalf of the Company, we have not made, nor assumed any
responsibility for making, any technical audit of the Companys operation nor carried out any independent valuation or appraisal of specific assets or
liabilities (contingent or otherwise) of the UTEs, nor have we been provided with any such appraisals, nor have we evaluated the solvency or fair
value of each of the UTEs under any state or federal laws relating to bankruptcy, insolvency or similar matters. Our valuation analysis is necessarily
based on economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. It is understood
that subsequent developments may affect this analysis and that we do not have any obligation to update, revise or reaffirm this assessment.
Likewise, we have not been asked to pass upon, nor express opinion with respect to any matter other than the valuation of the UTEs as of the date
hereof, to the holders of the Company. Our valuation analysis does not address the relative merits of the acquisition of Petra UTE Shares as
compared to other business or financial strategies that might be available to the Company, nor does it address the underlying business decision of
the Company to engage in such a transaction. We are not legal, regulatory, accounting or tax experts and have assumed the accuracy and
completeness of assessments by the Company and its advisors with respect to legal, regulatory, accounting and tax matters.
Furthermore, no representation or warranty, express or implied, is hereby made by G5 Evercore and/or its affiliates, managers, employees,
consultants, agents or representatives, as to the accuracy or completeness of the information provided to G5 Evercore and nothing contained herein
is, or shall be relied upon as, a representation, whether as to the past, the present or the future.
Finally, please be also advised that we have been engaged as financial advisor to the Company solely for the purpose of performing this valuation
analysis and will receive a fee in connection with the delivery of this analysis. In addition, the Company has agreed to reimburse certain of our
expenses and to indemnify us against certain liabilities arising out of our engagement. In addition, we and our affiliates may have in the past
provided, may be currently providing and in the future may provide, financial advisory services to the Company, or their respective affiliates, for
which we have received, and would expect to receive, compensation.
Based upon and subject to the foregoing, as of the date hereof, we present in this presentation a summary of the valuation analysis of Petra UTE
Shares.

Very truly yours,

G5 Consultoria e Assessoria Ltda (G5 EVERCORE)
By:
Corrado Varoli
Co-Founder & CEO
5

STRICTLY PRIVATE AND CONFIDENTIAL

Executive Summary
Parnaba I, Parnaba III e Parnaba IV Valuation Summary
Petras stake in Parnaba I, Parnaba III and Parnaba IV equity were valued by G5 Evercore according to different methodologies, detailed
below.
Valuation Methodologies

Methodology

Range

Discounted Cash Flow methodology

Discounted Cash Flow to Equity

-15% / +15%

Valuation based on cash flow

projections for Parnaba I, III and IV.
G5 valued Petras stake in Parnaiba
I, III and IV to R$ 425 MM (Parnaba
I R$ 352MM, Parnaba III
R$
165MM and Parnaba IV R$ 1MM)1

Petra Stake Equity Value (R$ MM)

489

Cost of Capital:
Parnaba I

13,08%

Parnaba III

11,61%

Parnaba IV

28,10%

361

Market Comparable Multiples:

485
Trading EV/EBITDA Multiples
2015

396

8,0x 9,0x

Valuation based on trading multiples

of energy generation companies in
Brazil estimates provided by
Capital IQ on March 23, 2015

Valuation based on transaction

multiples of fossil fuel electricity
generation assets and companies in
the world numbers provided by
Capital IQ on March 23, 2015

326

Trading EV/EBITDA Multiples

2016

6,5x 7,5x

Transaction EV/EBITDA
Multiples

8,0x 10,0x

Note [1]: Discounted by R$ 93 MM owed by Petra under the shareholders agreement regulation, due
to failure in contribution its share in capital increases occurred in the past

240

574
396

II
Valuation - Parnaba I, III and IV

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Main Working Assumptions
Assets Description

Main Asset Features

The Company provided G5 Evercore with financial projections

for the following assets individually :

E.ON

Petra
42,9%

Parnaba I

Parnaba III

Parnaba IV

The projections can be separated in 2 stages: for years 2015

to 2016 the numbers are based on the updated 2 years
business plan of Eneva, for years 2017 to 2050 they are
based on project fundamentals and long term pricing curves,
both provided by Eneva and/or provided by sector consultants

50,0%

ENEVA / E.ON
Joint Venture (JV)

The assets were evaluated individually, and no synergies,

gains, or other post-transaction adjustments were considered
in the assessment of value

Parnaba I

70% Eneva
30% Petra

35% Eneva

Parnaba III

35% JV

30% Petra

Macroeconomic assumptions were based on projections

available in the Brazilian Central Bank website and in the
International Monetary Fund (IMF) website

35% Eneva

Parnaba IV

35% JV
30% Petra

Base Date

The Discounted Cash Flow methodologys considers all cash

flows after December 31st, 2015, as a hypothetical closing
date.

Long term PLD forecasts were provided by specialty

consultant PSR

The multiple analysis considers 2015 and 2016 EBITDA. Net

debt considered is as of December 31st, 2015

Long term Henry Hub price curves were provided by E.on

The companies currently benefit from an income tax break
equivalent to 75% of income taxes

Source: Eneva

50,0%

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Eneva
Cost of Equity Calculation Methodology

CAPM Model
Cost of Equity
(Nominal R$)

Cost of Equity
Cost of Equity
Risk Free Rate

Inflation
Differential

(Nominal USD)

Levered Beta
Market Risk Premium
Country Risk

Risk Free Rate

(Nominal USD)

Unlevered Beta

Levered Beta

Marginal Tax Rate

Risk Premium

Debt to Equity
Ratio

Country Risk

Long-Term

Long-Term

US Inflation

Brazil Inflation

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba I
Main Operating Assumptions

Overview

Parnaba I plant is a the largest UTE in the Parnaba complex,

and comprises of four thermo generation turbines

Energy Source

Gas

Power Plant Capacity

The asset has a 15 year PPA to supply energy for the

regulated market in the A-5/2008 auctions

675,2 MW

Commercial Operation Date

Parnaba I derives fixed revenues from the regulated market

and variable revenues, established in the auctions according
to their yearly dispatch orders from the government
Parnaba I has a long term supply contract with PGN to supply
gas to the thermo plants which entails three distinct costs:

feb-13

Capacity Declared

660,0 MW

Capacity Sold in ACR

450 MWm

PPA Length

15 years

Inflexibility

0%

Base Fixed Revenue

Gas (raw material) Price established at the contract

signature and adjusted according to Brazilian official
inflation index (IPCA)

112,50 R$/MWh

Fuel Consumption

10,89 MMBtu/MWh

Fuel Costs

Fixed Lease Payments Adjusted yearly according to

past results and future projected cash flow to adjust
the UTEs returns to 15%

Yes same conditions

PPA Renovation
Economic Life

Variable Lease Payments calculated as the

difference between net variable revenues and variable
costs

30 years

Financing Assumptions
Debt Amount (as of December, 2014)

Other costs of the UTE are O&M, overhauling, R&D,

regulatory fees, and costs related to energy unavailability

Interest
Amortization Period
Amortization Start Year

Source: Eneva

6,10 R$/MMBtu

10

R$720MM
69% of Debt: TJLP + 2%
31% of Debt : IPCA + 5%
13 years
2015

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba I
Operating Metrics

Spot Market Price

ANEEL Fee
CCEE Contrivution
TUST
Fixed O&M
Variable O&M
Overhauling
ACR - Fixed Revenues
ACR - Ccomb (Fuel Index)
ACR - Co&m
ACL - Free Market Price
Fuel - CIF Plant Costs
Fuel - Fixed Lease Payments
Fuel - Variable Lease Payments
Insurance Cost
PLD Dispatching

Unit
R$/MWh
R$/KW - year
R$/KW - year
R$/KW - month
R$ MM
R$/MWh
R$ MM
R$/MWh
US$/MMBtu
R$/MWh
R$/MWh
R$/MMBtu
R$ MM
R$ MM
R$ MM
R$/MWh

2015
44,39
1,95
0,11
3,31
48,82
5,55
12,47
121,13
3,93
10,97
20,00
6,49
169,86
220,41
9,89
333,39

2016
47,47
2,09
0,12
3,54
47,72
5,99
12,91
130,06
4,41
11,77
21,58
7,01
183,31
233,95
10,52
305,51

2017
50,36
2,21
0,12
3,75
50,41
6,32
183,50
137,71
4,76
12,47
22,80
7,40
193,63
220,59
11,11
285,89

2018
53,01
2,33
0,13
3,95
53,03
6,65
13,74
144,92
5,27
13,12
23,98
7,79
203,70
176,91
11,69
258,05

2019
55,71
2,45
0,14
4,15
55,72
6,99
14,45
152,30
5,19
13,79
25,20
8,18
214,03
100,99
12,28
258,60

2020
58,54
2,57
0,14
4,36
58,55
7,35
15,19
160,02
4,96
14,49
26,48
8,60
224,88
91,87
12,91
274,07

2021
61,51
2,70
0,15
4,58
61,51
7,72
15,96
168,13
5,37
15,22
27,82
9,03
236,28
161,63
13,56
260,22

2022
64,63
2,84
0,16
4,81
64,63
8,11
16,76
176,65
5,64
15,99
29,23
9,49
248,26
217,91
14,25
299,96

2023
67,90
2,98
0,17
5,06
67,91
8,52
17,61
185,61
5,90
16,80
30,71
9,97
260,85
238,04
14,97
319,89

2024
71,34
3,13
0,17
5,31
71,35
8,95
39,92
195,02
6,20
17,65
32,27
10,48
274,07
239,58
15,73
343,79

2025
74,96
3,29
0,18
5,58
74,97
9,41
19,45
204,91
6,45
18,55
33,91
11,01
287,97
303,29
16,53
339,32

2026
78,76
3,46
0,19
5,87
78,77
9,88
20,43
215,30
6,72
19,49
35,63
11,57
302,57
339,06
17,36
352,93

2027
82,76
3,64
0,20
6,16
82,77
10,38
21,47
226,21
7,00
20,48
37,43
12,16
317,91
339,10
18,25
410,62

2028
86,95
3,82
0,21
6,48
86,96
10,91
22,56
237,68
7,26
21,52
39,33
12,77
334,03
343,18
19,17
425,90

2029
91,36
4,01
0,22
6,81
91,37
11,46
23,70
249,73
7,63
22,61
41,32
13,42
350,96
404,50
20,14
455,78

2030
95,99
4,22
0,23
7,15
96,00
12,04
24,90
262,39
8,12
23,75
43,42
14,10
368,76
446,75
21,16
472,56

Energy Generation Metrics

Months in Operation
Avg. Installed Capacity
Availability
Real Internal Consumption
Grid Losses
Average Internal Consumption
Average Availability
Expected Dispatch
Physical Guarantee
Net Physical Guarantee
Net FID
Energy Traded in ACR
Energy Traded in ACL
Spot energy sold in ACR
Total Energy Dispatch
Energy Demanded in ACR
Energy sold/(bought) in ACL
ADOMP

Unit
2015
months
12
MWm
675,20
%
88%
%
1%
%
3%
% - 60 months
1%
% - 60 months
97%
%
100%
MWm
466,60
MWm
451,67
MWm
0,00
MWm
450,00
MWm
1,67
%
100%
MWh
5.231.601
MWh
5.024.485
MWh
14.661
MWh
5.387.239

Source: Eneva and third party consultants

2016
12
675,20
90%
1%
3%
1%
92%
100%
466,60
451,28
21,48
450,00
-20,21
100%
5.316.456
5.110.490
(177.497)
5.406.770

2017
12
675,20
95%
1%
3%
1%
91%
69%
466,60
450,94
28,84
450,00
-27,90
100%
3.863.196
3.716.285
(244.373)
3.711.995

2018
12
675,20
95%
1%
3%
1%
91%
46%
466,60
450,37
29,26
450,00
-28,89
100%
2.585.286
2.490.137
(253.115)
2.489.819

2019
12
675,20
95%
1%
3%
1%
91%
28%
466,60
449,79
26,71
450,00
-26,92
100%
1.591.026
1.533.721
(235.807)
1.534.314

2020
12
675,20
91%
1%
3%
1%
94%
30%
466,60
449,79
13,32
450,00
-13,53
100%
1.629.928
1.571.222
(118.504)
1.635.701

2021
12
675,20
95%
1%
3%
1%
95%
40%
466,60
449,79
7,56
450,00
-7,77
100%
2.260.623
2.179.201
(68.051)
2.183.187

11

2022
12
675,20
95%
1%
3%
1%
97%
48%
466,60
449,79
-0,05
450,00
-0,16
100%
2.676.014
2.579.630
(1.399)
2.586.480

2023
12
675,20
94%
1%
3%
1%
97%
47%
466,60
449,79
-0,87
450,00
0,66
100%
2.635.725
2.540.793
5.804
2.550.431

2024
12
675,20
89%
1%
3%
1%
97%
45%
466,60
449,79
-0,65
450,00
0,45
100%
2.385.555
2.299.633
3.931
2.451.298

2025
12
675,20
94%
1%
3%
1%
96%
49%
466,60
449,79
5,53
450,00
-5,74
100%
2.738.302
2.639.675
(50.250)
2.654.071

2026
12
675,20
95%
1%
3%
1%
96%
50%
466,60
449,79
3,14
450,00
-3,34
100%
2.783.776
2.683.512
(29.284)
2.687.866

2027
12
675,20
95%
1%
3%
1%
96%
46%
466,60
449,79
3,59
450,00
-3,80
100%
2.553.484
2.461.514
(33.252)
2.469.322

2028
12
675,20
91%
1%
3%
1%
96%
44%
466,60
449,79
3,50
450,00
-3,71
100%
2.387.363
2.301.376
(32.479)
2.403.984

2029
12
675,20
94%
1%
3%
1%
96%
45%
466,60
449,79
6,86
450,00
-7,07
100%
2.519.274
2.428.536
(61.891)
2.442.286

2030
12
675,20
94%
1%
3%
1%
97%
44%
466,60
449,79
1,69
450,00
-1,90
100%
2.449.088
2.360.878
(16.628)
2.376.948

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba I
Net Revenues (R$ MM)

1.479
1.095

2015

1.221

2016

1.126

2017

989

2018

1.065
849

881

2019

2020

2021

1.219

1.286

1.311

2022

2023

2024

2025

1.582

1.610

1.652

2026

2027

2028

1.806

2029

1.910

2030

EBITDA (R$ MM)

356

211

236

245

261

2018

2019

2020

283

305

322

317

2022

2023

2024

377

394

413

436

463

199

62

2015
Source: Eneva

2016

2017

2021

12

2025

2026

2027

2028

2029

2030

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba I
Cash Flows (R$ MM)

EBT
Income Tax Paid
Depreciation and Amortization
Changes in Working Capital
Other Non-Cash Items
Capex
Debt Raised
Debt Paid
Total

2015
99
(2)
46
(4)
0
(13)
0
(57)
70

2016
97
(2)
46
3
0
(2)
0
(57)
86

Discount Rate
Cost of Equity
Risk Free Rate
Unlevered Beta
Levered Beta
Risk Premium
Country Risk
Debt (Target)
Equity / (Debt + Equity)
Debt / (Debt + Equity)
Inflation
Brazil
USA
Cost of Capital
Ke - US$
Ke - R$ Nominal

Source: Eneva

2017
(34)
0
46
17
0
(1)
0
(57)
-28

2018
145
(5)
46
(26)
0
(0)
0
(57)
103

2019
158
(6)
47
(3)
0
(0)
0
(57)
138

2020
179
(7)
47
(2)
0
0
0
(57)
159

2021
206
(9)
47
(1)
0
0
0
(57)
186

2022
232
(14)
47
(1)
0
0
0
(57)
207

2023
254
(17)
47
(1)
0
0
0
(57)
225

2024
254
(102)
47
1
0
0
0
(57)
143

2025
297
(117)
47
(3)
0
0
0
(57)
167

Source
9,76%
2,37%
0,33x
0,72x
6,96%
2,38%

US Treasury - 10 Years, Avg. Last Twelve Months

Comparables 2 Year Unlevered Beta
Ibbotson Yearbook 2014
EMBI + Brazil, Last Twelve Months

2026
323
(126)
47
(2)
0
0
0
(57)
185

2027
345
(133)
47
(2)
0
0
0
(33)
223

2028
366
(140)
47
(2)
0
0
0
0
270

Date
12/03/2015
15/03/2015
15/03/2015

04/03/2015

41,78% Estimate Year End 2015

58,22% Estimate Year End 2015
3,02%
5,07% Brazilian Central Bank Estimate
1,99% IMF Estimate

9,76%
13,08%

13

16/03/2015
16/03/2015

2029
389
(148)
47
(1)
0
0
0
0
286

2030
417
(158)
47
(2)
0
0
0
0
303

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba III
Main Operating Assumptions

Sources

Parnaba III plant comprises of 2 thermo generation turbines

Energy Source

The asset has a 15 year PPA to supply energy for the

regulated market in the A-5/2008 auctions

Power Plant Capacity

Gas

176,0 MW

Commercial Operation Date

Parnaba III derives fixed revenues from the regulated market

and variable revenues, established in the auctions according
to their yearly dispatch orders from the government
Parnaba III has a long term supply contract with PGN to
supply gas to the thermo plants which entails three distinct
costs:

out-13

Capacity Declared

176,0 MW

Capacity Sold in ACR

98 MWm

PPA Length

15 years

Inflexibility

0%

Base Fixed Revenue

Gas (raw material) Price established at the contract

signature and adjusted according to Brazilian official
inflation index (IPCA)

114,71 R$/MWh

Fuel Consumption

8,84 MMBtu/MWh

Fuel Costs

Fixed Lease Payments Adjusted yearly according to

past results and future projected cash flow to adjust
the UTEs returns to 15%

Economic Life

Debt Amount (as of December, 2014)1

R$122MM

Interest

CDI + 3%

Amortization Period

10 years

Amortization Start Year

Net Intercompany Credit, as of December 2014, of R$ 34MM is not considered in the total
debt amount

30 years

Financing Assumptions

Other costs of the UTE are O&M, overhauling, R&D,

regulatory fees, and costs related to energy unavailability

Yes same conditions

PPA Renovation

Variable Lease Payments calculated as the

difference between net variable revenues and variable
costs

Source: Eneva

6,10 R$/MMBtu

14

2015

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba III
Operating Metrics

Spot Market Price

ANEEL Fee
CCEE Contrivution
TUST
Fixed O&M
Variable O&M
Overhauling
ACR - Fixed Revenues
ACR - Ccomb (Fuel Index)
ACR - Co&m
ACL - Free Market Price
Fuel - CIF Plant Costs
Fuel - Fixed Lease Payments
Fuel - Variable Lease Payments
Insurance Cost
PLD Dispatching

Unit
R$/MWh
R$/KW - year
R$/KW - year
R$/KW - month
R$ MM
R$/MWh
R$ MM
R$/MWh
US$/MMBtu
R$/MWh
R$/MWh
R$/MMBtu
R$ MM
R$ MM
R$ MM
R$/MWh

2015
63,06
1,95
0,11
4,60
2,88
5,38
3,45
123,50
3,93
172,96
20,00
6,48
20,91
123,18
2,45
346,32

2016
67,45
2,09
0,12
4,92
3,05
5,81
3,57
132,61
4,41
185,71
21,58
6,87
22,57
137,80
2,61
325,59

2017
71,54
2,21
0,12
5,21
3,22
6,14
3,64
140,40
4,76
196,63
22,80
7,40
23,84
73,71
2,76
315,02

2018
75,31
2,33
0,13
5,49
3,39
6,46
3,80
147,76
5,27
206,94
23,98
7,79
25,08
45,37
2,90
297,91

2019
79,15
2,45
0,14
5,77
3,56
6,78
3,99
155,28
5,19
217,47
25,20
8,18
26,35
26,05
3,05
305,16

2020
83,17
2,57
0,14
6,06
3,75
7,13
4,20
163,15
4,96
228,49
26,48
8,60
27,69
27,02
3,20
340,09

2021
87,38
2,70
0,15
6,37
3,93
7,49
16,78
171,42
5,37
240,08
27,82
9,03
29,09
36,91
3,37
307,78

2022
91,81
2,84
0,16
6,69
4,13
7,87
4,63
180,11
5,64
252,25
29,23
9,49
30,57
56,91
3,54
340,61

2023
96,47
2,98
0,17
7,03
4,34
8,27
4,87
189,24
5,90
265,04
30,71
9,97
32,12
54,94
3,72
373,10

2024
101,36
3,13
0,17
7,39
4,56
8,69
5,12
198,84
6,20
278,47
32,27
10,48
33,74
55,41
3,90
396,20

2025
106,50
3,29
0,18
7,76
4,80
9,13
5,37
208,92
6,45
292,59
33,91
11,01
35,46
53,54
4,10
410,84

2026
111,90
3,46
0,19
8,16
5,04
9,59
5,65
219,51
6,72
307,43
35,63
11,57
37,25
63,74
4,31
408,40

2027
117,57
3,64
0,20
8,57
5,29
10,08
5,93
230,64
7,00
323,01
37,43
12,16
39,14
70,90
4,53
463,75

2028
123,53
3,82
0,21
9,00
5,56
10,59
6,23
242,34
7,26
339,39
39,33
12,77
41,13
69,65
4,76
492,84

2029
129,80
4,01
0,22
9,46
5,84
11,13
6,55
254,62
7,63
356,60
41,32
13,42
43,21
77,15
5,00
522,52

2030
136,38
4,22
0,23
9,94
6,14
11,69
6,88
267,53
8,12
374,68
43,42
14,10
45,40
67,74
5,25
551,63

Energy Generation Metrics

Months in Operation
Avg. Installed Capacity
Availability
Real Internal Consumption
Grid Losses
Average Internal Consumption
Average Availability
Expected Dispatch
Physical Guarantee
Net Physical Guarantee
Net FID
Energy Traded in ACR
Energy Traded in ACL
Spot energy sold in ACR
Total Energy Dispatch
Energy Demanded in ACR
Energy sold/(bought) in ACL
ADOMP

Unit
2015
months
12
MWm
176,00
%
92%
%
1%
%
3%
% - 60 months
1%
% - 60 months
96%
%
100%
MWm
101,80
MWm
98,70
MWm
1,53
MWm
98,00
MWm
-0,83
%
99%
MWh
1.414.045
MWh
1.355.167
MWh
(7.236)
MWh
1.433.533

Source: Eneva and third party consultants

2016
12
176,00
95%
1%
3%
1%
91%
100%
101,80
98,46
6,47
98,00
-6,02
100%
1.470.405
1.412.728
(52.854)
1.441.079

2017
12
176,00
90%
1%
3%
1%
90%
56%
101,80
98,26
7,21
98,00
-6,94
100%
767.882
739.218
(60.821)
800.989

2018
12
176,00
95%
1%
3%
1%
89%
32%
101,80
98,26
8,30
98,00
-8,04
100%
461.012
443.804
(70.390)
453.594

2019
12
176,00
95%
1%
3%
1%
89%
18%
101,80
98,26
8,12
98,00
-7,86
100%
264.519
254.645
(68.820)
260.396

2020
12
176,00
95%
1%
3%
1%
95%
18%
101,80
98,26
1,86
98,00
-1,59
100%
261.391
251.634
(13.972)
257.396

2021
12
176,00
95%
1%
3%
1%
97%
23%
101,80
98,26
0,37
98,00
-0,10
100%
331.900
319.511
(907)
326.995

15

2022
12
176,00
95%
1%
3%
1%
97%
32%
101,80
98,26
-0,39
98,00
0,65
100%
474.062
456.366
5.672
467.393

2023
12
176,00
95%
1%
3%
1%
99%
30%
101,80
98,26
-1,73
98,00
2,00
100%
437.842
421.498
17.494
431.994

2024
12
176,00
91%
1%
3%
1%
99%
30%
101,80
98,26
-1,73
98,00
2,00
100%
421.459
405.727
17.489
432.594

2025
12
176,00
95%
1%
3%
1%
98%
27%
101,80
98,26
-0,83
98,00
1,09
100%
389.967
375.410
9.571
385.195

2026
12
176,00
95%
1%
3%
1%
98%
30%
101,80
98,26
-0,72
98,00
0,98
100%
438.380
422.016
8.620
433.194

2027
12
176,00
94%
1%
3%
1%
98%
32%
101,80
98,26
-0,63
98,00
0,89
100%
462.380
445.120
7.789
457.194

2028
12
176,00
94%
1%
3%
1%
98%
30%
101,80
98,26
-0,62
98,00
0,88
100%
434.198
417.991
7.701
429.594

2029
12
176,00
94%
1%
3%
1%
98%
31%
101,80
98,26
-0,60
98,00
0,87
100%
456.353
439.318
7.578
451.794

2030
12
176,00
89%
1%
3%
1%
98%
28%
101,80
98,26
-1,33
98,00
1,60
100%
385.957
371.550
13.989
405.594

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba III
Net Revenues (R$ MM)
360
327
301
253

2016

2017

2018

260

2022

2023

2024

274

2025

331

2027

2028

356

349

2029

2030

213

207

2015

256

269

324

178

186

2019

2020

2021

2026

EBITDA (R$ MM)

71

70

71

74

77

2015

2016

2017

2018

2019

Source: Eneva

83

2020

95

100

105

109

2022

2023

2024

2025

115

122

127

134

140

78

2021

16

2026

2027

2028

2029

2030

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba III
Projected Cash Flows (R$ MM)

EBT
Income Tax Paid
Depreciation and Amortization
Changes in Working Capital
Other Non-Cash Items
Capex
Debt Raised
Debt Paid
Total

2015
50
(3)
6
8
0
(6)
0
(3)
53

2016
51
(3)
6
1
0
(0)
0
(14)
41

Discount Rate
Cost of Equity
Risk Free Rate
Unlevered Beta
Levered Beta
Risk Premium
Country Risk
Debt (Target)
Equity / (Debt + Equity)
Debt / (Debt + Equity)
Inflation
Brazil
USA
Cost of Capital
Ke - US$
Ke - R$ Nominal

Source: Eneva

2017
55
(3)
6
(2)
0
(0)
0
(14)
43

2018
60
(4)
6
(1)
0
0
0
4
65

2019
62
(6)
6
(1)
0
0
0
3
64

2020
69
(7)
6
(1)
0
0
0
(14)
53

2021
65
(7)
6
1
0
0
0
(14)
52

2022
84
(10)
6
(2)
0
0
0
(14)
65

2023
91
(11)
6
(1)
0
0
0
(14)
72

2024
97
(35)
6
(1)
0
0
0
(10)
58

2025
103
(37)
6
(1)
0
0
0
0
72

Source
8,34%
2,37%
0,33x
0,51x
6,96%
2,38%

US Treasury - 10 Years, Avg. Last Twelve Months

Comparables 2 Year Unlevered Beta
Ibbotson Yearbook 2014
EMBI + Brazil, Last Twelve Months

2026
109
(39)
6
(0)
0
0
0
0
76

2027
116
(41)
6
(1)
0
0
0
0
80

2028
121
(43)
6
(1)
0
0
0
0
83

Date
12/03/2015
15/03/2015
15/03/2015

04/03/2015

60,19% Estimate Year End 2015

39,81% Estimate Year End 2015
3,02%
5,07% Brazilian Central Bank Estimate
1,99% IMF Estimate

8,34%
11,61%

17

16/03/2015
16/03/2015

2029
128
(46)
6
(1)
0
0
0
0
88

2030
134
(48)
6
(1)
0
0
0
0
92

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba IV2
Main Operating Assumptions

Sources
Energy Source

Parnaba IV plant comprises of 3 thermo generation turbines

Gas

Power Plant Capacity

Parnaba IV sells energy in the free market, and currently sells

all of its energy for private company Kinross

56,3 MW

Commercial Operation Date

Parnaba IV has a long term supply contract with PGN to

supply gas to the thermo plants which entails the following
cost:
Gas (raw material) Price established at the contract
signature and adjusted according to Brazilian official
inflation index (IPCA)

jan-14

Capacity Declared

53,4 MW

Capacity Sold in ACR

0 MWm

PPA Length

NA

Inflexibility

NA

Base Fixed Revenue

NA

Fuel Consumption

Other costs of the UTE are O&M, overhauling, R&D,

regulatory fees, and costs related to energy unavailability

7,57 MMBtu/MWh

Fuel Costs

7,52 R$/MMBtu
Yes same conditions

PPA Renovation
Economic Life

30 years

Financing Assumptions
Debt Amount (as of December, 2014)

R$153MM

Interest

104% CDI

Amortization Period
Amortization Start Year
Source: Eneva
Note[1]: Intercompany Debt ; Note [2]: Parnaba IV refers to UTE Parnaba IV and Parnaba Gerao e
Comercializao

18

8 years
2018

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba IV
Operating Metrics
Unit
Spot Market Price
R$/MWh
ANEEL Fee
R$/KW - year
CCEE Contrivution
R$/KW - year
TUST
R$/KW - month
Fixed O&M
R$ MM
Variable O&M
R$/MWh
Overhauling
R$ MM
ACR - Fixed Revenues
R$/MWh
ACR - Ccomb (Fuel Index)
US$/MMBtu
ACR - Co&m
R$/MWh
ACL - Free Market Price
R$/MWh
Fuel - CIF Plant Costs
R$/MMBtu
Fuel - Fixed Lease Payments R$ MM
Fuel - Variable Lease PaymentsR$ MM
Insurance Cost
R$ MM
PLD Dispatching
R$/MWh

2015
38,95
2,24
0,12
4,94
4,10
4,39
7,71
0,00
3,93
10,27
148,06
8,61
0,00
0,00
1,32
314,07

2016
42,03
2,42
0,13
5,33
4,30
4,71
7,72
0,00
4,41
11,08
159,79
9,23
0,00
0,00
1,40
275,47

2017
44,40
2,56
0,14
5,63
4,55
4,99
4,95
0,00
4,76
11,70
168,79
9,78
0,00
0,00
1,48
260,43

2018
46,71
2,69
0,15
5,92
4,79
5,25
5,49
0,00
5,27
12,31
177,56
10,30
0,00
0,00
1,56
218,07

2019
49,07
2,83
0,16
6,22
5,03
5,52
5,08
0,00
5,19
12,94
186,57
10,82
0,00
0,00
1,64
201,63

2020
51,56
2,97
0,16
6,54
5,29
5,80
5,36
0,00
4,96
13,59
196,02
11,37
0,00
0,00
1,72
217,72

2021
54,18
3,12
0,17
6,87
5,56
6,09
6,05
0,00
5,37
14,28
205,96
11,95
0,00
0,00
1,81
223,05

2022
56,92
3,28
0,18
7,22
5,84
6,40
6,67
0,00
5,64
15,01
216,41
12,55
0,00
0,00
1,90
257,22

2023
59,81
3,44
0,19
7,58
6,14
6,72
6,95
0,00
5,90
15,77
227,38
13,19
0,00
0,00
2,00
275,91

2024
62,84
3,62
0,20
7,97
6,45
7,07
7,34
0,00
6,20
16,57
238,90
13,86
0,00
0,00
2,10
291,03

2025
66,03
3,80
0,21
8,37
6,77
7,42
7,72
0,00
6,45
17,41
251,02
14,56
0,00
0,00
2,21
296,68

2026
69,37
4,00
0,22
8,80
7,12
7,80
8,17
0,00
6,72
18,29
263,74
15,30
0,00
0,00
2,32
312,73

2027
72,89
4,20
0,23
9,24
7,48
8,20
8,63
0,00
7,00
19,22
277,12
16,07
0,00
0,00
2,44
340,10

2028
76,59
4,41
0,24
9,71
7,86
8,61
8,97
0,00
7,26
20,19
291,17
16,89
0,00
0,00
2,56
354,20

2029
80,47
4,63
0,26
10,20
8,26
9,05
9,35
0,00
7,63
21,22
305,93
17,75
0,00
0,00
2,69
381,83

2030
84,55
4,87
0,27
10,72
8,67
9,51
9,68
0,00
8,12
22,29
321,44
18,65
0,00
0,00
2,83
398,29

2023
12
56,28
87%
3%
3%
3%
88%
66%
51,78
45,48
-0,52
46,00
-1%
280.447
(4.545)
402.960
(3.080)

2024
12
56,28
89%
3%
3%
3%
87%
65%
51,78
45,21
-0,79
46,00
-2%
283.629
(6.940)
402.960
(4.644)

2025
12
56,28
85%
3%
3%
3%
87%
68%
51,78
45,16
-0,84
46,00
-2%
283.546
(7.329)
402.960
(5.108)

2026
12
56,28
87%
3%
3%
3%
86%
67%
51,78
44,87
-1,13
46,00
-2%
287.834
(9.895)
402.960
(6.850)

2027
12
56,28
87%
3%
3%
3%
87%
68%
51,78
44,90
-1,10
46,00
-2%
291.284
(9.666)
402.960
(6.778)

2028
12
56,28
87%
3%
3%
3%
87%
67%
51,78
45,05
-0,95
46,00
-2%
285.097
(8.312)
402.960
(5.707)

2029
12
56,28
87%
3%
3%
3%
87%
66%
51,78
45,08
-0,92
46,00
-2%
280.259
(8.058)
402.960
(5.447)

2030
12
56,28
87%
3%
3%
3%
87%
64%
51,78
44,88
-1,12
46,00
-2%
271.368
(9.826)
402.960
(6.439)

Energy Generation Metrics

Months in Operation
Avg. Installed Capacity
Availability
Real Internal Consumption
Grid Losses
Average Internal Consumption
Average Availability
Expected Dispatch
Physical Guarantee
Net Physical Guarantee
Net FID
Energy Traded in ACL
Spot energy sold in ACR
Total Energy Dispatch
Energy Demanded in ACR
Energy sold/(bought) in ACL
ADOMP

Unit
months
MWm
%
%
%
% - 60 months
% - 60 months
%
MWm
MWm
MWm
MWm
%
MWh
MWh
MWh
MWh

2015
12
56,28
87%
3%
3%
3%
91%
100%
51,78
47,07
1,07
46,00
2%
428.489
9.345
402.960
9.637

Source: Eneva and third party consultants

2016
12
56,28
88%
3%
3%
3%
90%
100%
51,78
46,57
0,57
46,00
1%
432.762
5.011
402.960
5.168

2017
12
56,28
89%
3%
3%
3%
89%
81%
51,78
46,37
0,37
46,00
1%
355.301
3.198
402.960
2.676

2018
12
56,28
89%
3%
3%
3%
88%
65%
51,78
45,74
-0,26
46,00
-1%
287.336
(2.296)
402.960
(1.547)

2019
12
56,28
89%
3%
3%
3%
87%
49%
51,78
45,15
-0,85
46,00
-2%
216.722
(7.453)
402.960
(3.792)

2020
12
56,28
88%
3%
3%
3%
88%
50%
51,78
45,84
-0,16
46,00
0%
218.179
(1.378)
402.960
(715)

2021
12
56,28
87%
3%
3%
3%
89%
60%
51,78
45,95
-0,05
46,00
0%
257.247
(460)
402.960
(285)

19

2022
12
56,28
85%
3%
3%
3%
88%
68%
51,78
45,84
-0,16
46,00
0%
285.412
(1.419)
402.960
(992)

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba IV
Net Revenues (R$ MM)

63

2015

72

74

77

68

2016

2017

2018

2019

91

95

99

82

87

2020

2021

2022

2023

2024

104

2025

109

2026

115

2027

121

2028

127

2029

133

2030

EBITDA (R$ MM)

15

2015
Source: Eneva

23

24

2017

2018

27

29

29

30

31

32

2020

2021

2022

2023

2024

34

35

37

2025

2026

2027

39

41

44

17

2016

2019

20

2028

2029

2030

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba IV
Projected Cash Flows (R$ MM)

EBT
Income Tax Paid
Depreciation and Amortization
Changes in Working Capital
Other Non-Cash Items
Capex
Debt Raised
Debt Paid
Total

2015
(12)
0
7
6
0
(2)
0
0
-1

2017
(1)
0
7
(1)
0
(0)
0
(0)
5

2018
2
0
7
(0)
0
0
0
(18)
-10

2019
6
0
7
(0)
0
0
0
(18)
-6

2020
10
(0)
7
(0)
0
0
0
(16)
0

2021
12
(0)
7
(0)
0
0
0
(19)
0

2022
15
(0)
7
(0)
0
0
0
(21)
0

Discount Rate
Cost of Equity
Risk Free Rate
Unlevered Beta
Levered Beta
Risk Premium
Country Risk

24,34%
2,37%
0,33x
2,81x
6,96%
2,38%

Debt (Target)
Equity / (Debt + Equity)
Debt / (Debt + Equity)

10,12% Estimate Year End 2015

89,88% Estimate Year End 2015

Inflation
Brazil
USA
Cost of Capital
Ke - US$
Ke - R$ Nominal

Source: Eneva

2016
(7)
0
7
(0)
0
(0)
0
0
-1

2023
18
(1)
7
(0)
0
0
0
(24)
0

2024
22
(3)
7
(0)
0
0
0
(25)
0

2025
26
(8)
7
(0)
0
0
0
(12)
13

Source
US Treasury - 10 Years, Avg. Last Twelve Months
Comparables 2 Year Unlevered Beta
Ibbotson Yearbook 2014
EMBI + Brazil, Last Twelve Months

3,02%
5,07% Brazilian Central Bank Estimate
1,99% IMF Estimate

24,34%
28,10%

21

2026
29
(8)
7
(0)
0
0
0
(0)
27

2027
30
(9)
7
(0)
0
0
0
(0)
28

2028
33
(9)
7
(0)
0
0
0
(0)
30

Date
12/03/2015
15/03/2015
15/03/2015
04/03/2015

16/03/2015
16/03/2015

2029
35
(12)
7
(0)
0
0
0
0
29

2030
37
(15)
7
(0)
0
0
0
0
29

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Valuation Summary
Discounted Cash Flow

(93)

165

489

High range

425

Mid range

361

Low range

352

Parnaba I

Parnaba III

Parnaba IV

Non Contributed Capital

Increase

Total

Market Comparable Multiples

Parnaiba I, III and IV

Multiple Range

EV

Equity Value

Equity Value Adjusted by Capital

Increase

2015 EBITDA (Trading Multiple)

8,00x

9,00x

713

803

489

578

396

485

2016 EBITDA (Trading Multiple)

6,50x

7,50x

558

643

333

419

240

326

2015 EBITDA (Transaction Multiple)

8,00x

10,00x

713

892

489

667

396

574

Source: Eneva
Note [1]: Parnaba IV Projected Cash Flows discounted by Parnaba I Cost of Equity (13.08%) result in
an equity value of Petra stake of R$16,23 MM

22

Annex I
Multiples Database

STRICTLY PRIVATE AND CONFIDENTIAL

Multiples Database
Comparable Trading Statistics

Company
March, 23rd/ 2015

# Total Shares Share Price Market Cap

Net Debt Enterprise Value
Debt/Equity
(MM)
(US$)
(US$ MM)
(US$ MM)
(US$ MM)

EBITDA
2015

AES Tiet S.A.

EV/EBITDA
2016

2015

2016

381

4,7

1.798,3

118,9

573,1

2.371,4

411,1

341,9

5,8x

6,9x

1.258

3,9

4.893,6

74,8

3.867,9

8.761,5

1.155,6

1.092,0

7,6x

8,0x

CPFL Energia S.A.

962

6,0

5.800,9

189,4

5.279,0

11.079,9

1.243,7

1.386,6

8,9x

8,0x

CPFL Energias Renovveis S.A.

503

3,8

1.921,5

133,2

1.649,1

3.570,6

315,8

357,6

11,3x

10,0x

EDP - Energias do Brasil S.A.

476

3,2

1.513,7

51,1

952,4

2.466,1

499,0

574,6

4,9x

4,3x

Equatorial Energia S.A.

198

9,4

1.851,3

127,0

907,2

2.758,5

294,0

372,5

9,4x

7,4x

Renova Energia S.A.

106

8,4

889,3

113,4

846,5

1.735,9

117,7

159,7

14,8x

10,9x

Tractebel Energia S.A.

653

11,0

7.202,6

65,2

1.116,5

8.319,1

938,7

1.176,5

8,9x

7,1x

Eneva S.A.

840

0,1

50,4

241,6

1.973,4

2.023,8

326,6

0,0

6,2x

0,0x

Copel

274

10,8

2.961,9

35,1

1.826,6

4.471,0

892,6

1.057,4

Cemig S.A.

5,4x

5,3x

Average Local GenCo's

115,0

8,3x

6,8x

Medium Local GenCo's

116,2

8,2x

7,2x

Source: Capital IQ

24

STRICTLY PRIVATE AND CONFIDENTIAL

Multiples Database
Comparable Transaction Statistics
All Transactions
Announced Date

Buyers/Investors

Target/Issuer

Total Transaction Value (US$

MM, Historical rate)

Percent Sought

Im plied Enterprise
Value/EBITDA

Country of Target

6.611,0

54%

9,0x

Chile

413,0

39%

6,0x

Peru

12,0x

Chile

1.317,1

50%

Berkshire Hathaway Energy

Compaa General de
Electricidad S.A. (SNSE:CGE)
Generandes Peru SA
Empresa Electrica Guacolda
S.A.
NV Energy, Inc.

10.688,8

100%

8,9x

United States

Toplofikatzia Pleven EAD

Toplofikatsia Rousse EAD

69,4

100%

12,5x

Bulgaria

out-14

Gas Natural SDG SA (CATS:GAS)

abr-14

Enersis S.A. (SNSE:ENERSIS)

mar-14

AES Gener S.A.

mai-13
dez-12
abr-11

The AES Corporation

DPL Inc.

4.798,7

100%

7,7x

United States

jan-11

Duke Energy Corporation

Capstone Infrastructure
Corporation; Macquarie
Infrastructure and Real Assets
(Europe) Limited

Progress Energy Inc.

26.627,3

100%

8,3x

United States

Heat Operations and Heat

Production Facilities

308,9

100%

7,4x

Sweeden

91,9

42%

5,0x

Barbados

9.291,0

100%

7,5x

United States

736,6

80%

7,2x

Australia

1.226,8

64%

7,5x

Colombia

Senoko Energy Pte Ltd

2.769,0

100%

16,2x

Singapore

Unin Fenosa, S.A.

11.810,5

45%

11,0x

Spain

Average

5.482,8

77%

9,0x

Median

2.043,0

90%

8,0x

dez-10

nov-10

Emera Incorporated

fev-10

FirstEnergy Corp.

nov-09

Pacific Equity Partners

out-09

Grupo Argos S.A. ; Celsia SA ESP

set-08

jul-08

Source: Capital IQ

The Kansai Electric Power

Company, Incorporated ;
Marubeni Corporation; Kyushu
Electric Power Company,
Incorporated; GDF SUEZ S.A.;
Japan Bank For International
Cooperation, Investment Arm
Gas Natural SDG AS

Light & Power Holdings

Limited
Allegheny Energy, Inc.
Energy Developments Ltd.
Empresa de Energia del
Pacifico S.A.

25

Annex II
Parnaba I, III and IV Overview

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba Complex Overview

The Parnaba Complex, located in Santo Antnio dos Lopes, Maranho, is one of the largest thermal energy generation complexes in Brazil
The Complex is formed by the thermal power plants Parnaba I, Parnaba II, Parnaba III and Parnaba IV
Currently in operation, Parnaba I (676 MW), Parnaba III (178 MW) and Parnaba IV (56 MW) are the energy suppliers to the National Grid (SIN)
Using gas produced by Parnaba Gs Natural, ENEVA is able to generate energy at low costs due to privileged logistics, to the enterprises large scale
and easy access to mains
The Parnaba Complex is certified to reach up to 3,722 MW

Parnaba I

Parnaba III

Capacity: 676 MW

Capacity: 178 MW

Efficiency: 37%

Efficiency: 38%

Fixed Revenues: R$443 MM/year

Fixed Revenues: R$98 MM/year

Unitary Variable Cost: R$114/MWH

Unitary Variable Cost: R$160/MWH

Auction: A-5/2008

Auction: A-5/2008

Parnaba II

Parnaba IV

Capacity: 517 MW

Capacity: 56 MW

Efficiency: 51%

Efficiency: 46%

Fixed Revenues: R$374MM/year

Fixed Revenues: R$54 MM/year

Unitary Variable Cost: R$59/MWH

Unitary Variable Cost: R$69/MWH

Auction: A-3/2011

Free Market

Source: Eneva

27

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba I Income Statement

R$ thousand

2012

2013

2014

682.815

960.759

(594.048)

(824.570)

88.767

136.190

(15.736)

(11.997)

(18.770)

(14.807)

(10.320)

(5.844)

(929)

(1.677)

(12.926)

(15.736)

76.771

117.420

(984)

(71.334)

(75.854)

Financial revenues

3.100

6.010

Financial expenses

(985)

(74.434)

(81.864)

(16.720)

5.436

41.566

5.716

(5.284)

(5.604)

(11.004)

152

35.962

Net Revenues
Costs
Gross profit
Operating Expenses
SG&A
Other expenses
EBIT
Net financial revenues (expenses)

EBT
Taxes
Net income (loss)

Source: Eneva

28

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba I Balance Sheet
R$ thousand

2012

2013

2014

85.229

158.288

206.355

83.250

32.034

38.121

Suppliers

Accounts receivable

110.113

141.072

Loans and financing

Inventory

4.236

7.480

Taxes recoverable

7.455

14.722

Prepaid expenses

1.706

4.086

4.960

272

364

1.084.889

1.264.731

1.179.035

5.141

520

1.323

Current Assets
Cash and cash equivalents

Other credits

R$ thousand

2012

2013

2014

162.381

265.826

199.312

3.020

85.787

30.028

150.759

149.663

142.438

413

9.431

6.603

5.157

2.328

2.252

Energy reimbursement

15.739

Other accounts payable

3.032

2.878

17.991

677.593

910.569

715.373

677.593

657.588

577.981

Deferred taxes and social

contribution

4.187

7.117

Accounts payable to related

parties

107.223

130.275

Advances for future capital

increase

141.571

330.144

246.624

470.705

Current Liabilities

Taxes and contributions payable

Wages and vacations payable

Non current liabilities

Non Current Assets

Loans and financing

Taxes recoverable
Deferred taxes and social
contribution

11.359

Prepaid expenses

1.844

257

1.356

Linked deposit

34.044

24.648

Related parties

1.906

1.344

Fixed assets

882.788

1.035.111

971.709

Capital

354.465

263.619

263.619

Intangible

183.758

178.887

166.647

Accumulated losses

(24.321)

(16.995)

207.087

Total Assets

1.170.118

1.423.019

1.385.390

1.170.118

1.423.019

1.385.390

Source: Eneva

14.006

12.009

Equity

Total Liabilitites + Equity

29

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba III Income Statement

R$ thousand

2012

2013

2014

198.299

244.861

(221.912)

(239.403)

(23.613)

5.458

(294)

(483)

(10.070)

(294)

(483)

(10.070)

(294)

(24.096)

(4.612)

(4.790)

(10.660)

Financial revenues

3.811

9.021

Financial expenses

(8.601)

(19.681)

(294)

(28.886)

(15.272)

9.821

5.109

(294)

(19.065)

(10.163)

Net Revenues
Costs
Gross profit
Operating Expenses
Administrative
EBIT
Net financial revenues (expenses)

EBT
Taxes
Net income (loss)

Source: Eneva

30

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba III Balance Sheet
R$ thousand

2012

2013

2014

67

162.075

71.320

Cash and cash equivalents

62.796

14.104

Suppliers

Accounts receivable

83.494

42.230

Taxes recoverable

10.528

Prepaid expenses

67

Derivative transactions
Other credits

2012

2013

2014

13

149.710

164.106

13

28.253

33.716

Loans and financing

120.636

121.568

9.873

Taxes and contributions

payable

39

1.269

1.157

Research & Development

549

1.380

Other accounts payable

233

8.822

2.609

3.956

38.591

38.001

Non Current Assets

166.267

267.864

38.591

38.001

Taxes recoverable

249

111

47

140.040

137.077

Deferred taxes and social

contribution

9.821

86.218

Capital

1.213

160.271

160.271

Fixed assets

156.197

181.535

Accumulated losses

(1.166)

(20.231)

(23.194)

67

328.341

339.184

67

328.341

339.184

Current Assets

Total Assets

Source: Eneva

R$ thousand
Current Liabilities

Non current liabilities

Related parties
Equity

Total Liabilitites + Equity

31

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba IV

R$ thousand

2012

2013

2014

5.825

50.022

(3.244)

(32.549)

2.581

17.473

(632)

(1.311)

(632)

(1.311)

1.949

16.162

12

3.416

(21.280)

Financial revenues

19

8.928

325

Financial expenses

(7)

(5.512)

(21.605)

(12)

5.365

(5.118)

(1.800)

2.783

(12)

3.565

(2.335)

Net Revenues
Costs
Gross profit
Operating Expenses
Administrative
EBIT
Net financial revenues (expenses)

EBT
Taxes
Net income (loss)

Source: Eneva

32

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba IV Balance Sheet
R$ thousand

2012

2013

2014

Current Assets

1.596

29.035

14.270

Cash and cash equivalents

Accounts receivable

1.596

5.074

331

8.999

2.412

R$ thousand

2012

2013

2014

Current Liabilities

1.532

83.602

5.658

Suppliers

7.888

1.797

Labour obligations

129

73

23

437

3.718

75.131

1.509

17

70

44.271

174.877

Deferred taxes and social

contributions

1.048

1.580

Transactions with related

parties

43.223

173.297

15.228

19.514

17.178

15.216

15.936

15.936

12

3.578

1.242

16.760

147.387

197.713

Tax obligations
Loans and financing

Taxes recoverable

11.755

10.698

Derivative transactions

3.105

Other credits

102

829

Transactions with related

parties
Other liabilities
Non current liabilities

Non Current Assets

Taxes recoverable

Fixed assets

15.164

118.352

183.443

74

22.200

15.161

118.278

161.243

Equity
Capital
Earnings reserve

Total Assets

Source: Eneva

16.760

147.387

197.713

Total Liabilitites + Equity

33

STRICTLY PRIVATE AND CONFIDENTIAL

Contacts

Corrado Varoli
cvaroli@g5evercore.com
+55 11 3014 6868

Marcelo Lajchter
malajchter@g5evercore.com
+55 21 3205 9180
Arthur Horta
ahorta@g5evercore.com
+55 11 3165 4600

Graciema Bertoletti
graciema.bertoletti@g5evercore.com
+55 11 3014 6846

Manuela Albuquerque Silveira

msilveira@g5evercore.com
+55 11 3165 7005

Sao Paulo

Rio de Janeiro

Av. Brigadeiro Faria Lima, 3311 10th Floor

Av. Borges de Medeiros, 633 Room 202

04538 133 - Itaim Bibi

22430 042 - Leblon

+55 11 3014 6868

+55 21 3205 9180

www.g5evercore.com

34

EXHIBIT III - D
VALUATION REPORT PETRA ASSETS

35

STRICTLY PRIVATE AND CONFIDENTIAL

Eneva
Valuation
Analysis MEMORANDUM
PROJECT
36 INFORMATION
PREPARED
[INVESTOR]
March
31,TO:
2015
DATE: [X]

STRICTLY PRIVATE AND CONFIDENTIAL

Table of Contents
Section I.

Executive Summary

Section II.

Valuation - Parnaba I, III and IV

Appendix I.

Multiple Database

Appendix II.

Parnaba I, III and IV Overview

Contacts

I
Executive Summary

STRICTLY PRIVATE AND CONFIDENTIAL

Executive Summary
Introduction (1/2)

March 27, 2015

Eneva S.A
Praia do Flamengo, 66 9th floor
22210030 Rio de Janeiro RJ Brazil
Dear Sirs,

We understand that Eneva S.A. (Company or Eneva) is entertaining the possibility of acquiring the stake currently owned directly and/or indirectly
by Petra Energia S.A. (Petra) in UTE Parnaba I, UTE Parnaba III and UTE Parnaba IV1 (collectively referred to herein as UTEs), equivalent to
30% of the capital stock in each of such UTEs (Petra UTE Shares).
For the purposes of the foregoing, Eneva have asked G5 Consultoria e Assessoria Ltda. (G5 Evercore) to provide the Company with a valuation of
Petra UTE Shares.
In connection with the required analysis by G5 Evercore, please be advised that we have based our work on the information provided by or on
behalf of the Company and also endeavored the following specific reviews and discussions:
I.

Reviewed certain non-public internal financial statements, other non-public financial and operating data relating to Parnaba I, III and IV,
that were prepared and provided to us by the management of the Company;

II.

Reviewed certain financial projections relating to Parnaba I, III and IV, that were provided to us by the management of the Company;

III.

Discussed the past and current operations, financial projections, current financial condition and prospects of Parnaba I, III and IV with
certain members of senior management of the Company;

IV. Reviewed existing agreement between Petra and Eneva related to Parnaba I, III and IV, including existing shareholders agreements
and capital increase operations that occurred in the past;
V.

Reviewed the financial terms of certain publicly available transactions that we deemed to be relevant; and

VI. Discussed with management of the Company, but have not discussed with legal advisors of the Company, the potential impact of
certain ongoing litigations.
With respect to the financial projections of Parnaba I, III and IV which were provided to us, we have assumed that such financial projections have
been reasonably prepared by the Company on bases reflecting the best currently available estimates and good faith judgments of the future
competitive, operating and regulatory environments and related financial performance of Parnaba I, III and IV.
Furthermore, we were informed by the Company that Petra failed to contribute its share on capital increases of UTE Parnaba I, UTE Parnaba III
and UTE Parnaba IV duly approved in the past years. The amount due by Petra, sums R$ 70,9 MM, however, with penalties and interests applied,
the current total amount outstanding is R$ 93,0 MM.

Note [1]: UTE Parnaba IV refers to UTE Parnaba IV and Parnaba Gerao e Comercializao

STRICTLY PRIVATE AND CONFIDENTIAL

Executive Summary
Introduction (2/2)
Notwithstanding our review of certain set of information provided by or on behalf of the Company, we have not made, nor assumed any
responsibility for making, any technical audit of the Companys operation nor carried out any independent valuation or appraisal of specific assets or
liabilities (contingent or otherwise) of the UTEs, nor have we been provided with any such appraisals, nor have we evaluated the solvency or fair
value of each of the UTEs under any state or federal laws relating to bankruptcy, insolvency or similar matters. Our valuation analysis is necessarily
based on economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. It is understood
that subsequent developments may affect this analysis and that we do not have any obligation to update, revise or reaffirm this assessment.
Likewise, we have not been asked to pass upon, nor express opinion with respect to any matter other than the valuation of the UTEs as of the date
hereof, to the holders of the Company. Our valuation analysis does not address the relative merits of the acquisition of Petra UTE Shares as
compared to other business or financial strategies that might be available to the Company, nor does it address the underlying business decision of
the Company to engage in such a transaction. We are not legal, regulatory, accounting or tax experts and have assumed the accuracy and
completeness of assessments by the Company and its advisors with respect to legal, regulatory, accounting and tax matters.
Furthermore, no representation or warranty, express or implied, is hereby made by G5 Evercore and/or its affiliates, managers, employees,
consultants, agents or representatives, as to the accuracy or completeness of the information provided to G5 Evercore and nothing contained herein
is, or shall be relied upon as, a representation, whether as to the past, the present or the future.
Finally, please be also advised that we have been engaged as financial advisor to the Company solely for the purpose of performing this valuation
analysis and will receive a fee in connection with the delivery of this analysis. In addition, the Company has agreed to reimburse certain of our
expenses and to indemnify us against certain liabilities arising out of our engagement. In addition, we and our affiliates may have in the past
provided, may be currently providing and in the future may provide, financial advisory services to the Company, or their respective affiliates, for
which we have received, and would expect to receive, compensation.
Based upon and subject to the foregoing, as of the date hereof, we present in this presentation a summary of the valuation analysis of Petra UTE
Shares.

Very truly yours,

G5 Consultoria e Assessoria Ltda (G5 EVERCORE)
By:
Corrado Varoli
Co-Founder & CEO
5

STRICTLY PRIVATE AND CONFIDENTIAL

Executive Summary
Parnaba I, Parnaba III e Parnaba IV Valuation Summary
Petras stake in Parnaba I, Parnaba III and Parnaba IV equity were valued by G5 Evercore according to different methodologies, detailed
below.
Valuation Methodologies

Methodology

Range

Discounted Cash Flow methodology

Discounted Cash Flow to Equity

-15% / +15%

Valuation based on cash flow

projections for Parnaba I, III and IV.
G5 valued Petras stake in Parnaiba
I, III and IV to R$ 425 MM (Parnaba
I R$ 352MM, Parnaba III
R$
165MM and Parnaba IV R$ 1MM)1

Petra Stake Equity Value (R$ MM)

489

Cost of Capital:
Parnaba I

13,08%

Parnaba III

11,61%

Parnaba IV

28,10%

361

Market Comparable Multiples:

485
Trading EV/EBITDA Multiples
2015

396

8,0x 9,0x

Valuation based on trading multiples

of energy generation companies in
Brazil estimates provided by
Capital IQ on March 23, 2015

Valuation based on transaction

multiples of fossil fuel electricity
generation assets and companies in
the world numbers provided by
Capital IQ on March 23, 2015

326

Trading EV/EBITDA Multiples

2016

6,5x 7,5x

Transaction EV/EBITDA
Multiples

8,0x 10,0x

Note [1]: Discounted by R$ 93 MM owed by Petra under the shareholders agreement regulation, due
to failure in contribution its share in capital increases occurred in the past

240

574
396

II
Valuation - Parnaba I, III and IV

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Main Working Assumptions
Assets Description

Main Asset Features

The Company provided G5 Evercore with financial projections

for the following assets individually :

E.ON

Petra
42,9%

Parnaba I

Parnaba III

Parnaba IV

The projections can be separated in 2 stages: for years 2015

to 2016 the numbers are based on the updated 2 years
business plan of Eneva, for years 2017 to 2050 they are
based on project fundamentals and long term pricing curves,
both provided by Eneva and/or provided by sector consultants

50,0%

ENEVA / E.ON
Joint Venture (JV)

The assets were evaluated individually, and no synergies,

gains, or other post-transaction adjustments were considered
in the assessment of value

Parnaba I

70% Eneva
30% Petra

35% Eneva

Parnaba III

35% JV

30% Petra

Macroeconomic assumptions were based on projections

available in the Brazilian Central Bank website and in the
International Monetary Fund (IMF) website

35% Eneva

Parnaba IV

35% JV
30% Petra

Base Date

The Discounted Cash Flow methodologys considers all cash

flows after December 31st, 2015, as a hypothetical closing
date.

Long term PLD forecasts were provided by specialty

consultant PSR

The multiple analysis considers 2015 and 2016 EBITDA. Net

debt considered is as of December 31st, 2015

Long term Henry Hub price curves were provided by E.on

The companies currently benefit from an income tax break
equivalent to 75% of income taxes

Source: Eneva

50,0%

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Eneva
Cost of Equity Calculation Methodology

CAPM Model
Cost of Equity
(Nominal R$)

Cost of Equity
Cost of Equity
Risk Free Rate

Inflation
Differential

(Nominal USD)

Levered Beta
Market Risk Premium
Country Risk

Risk Free Rate

(Nominal USD)

Unlevered Beta

Levered Beta

Marginal Tax Rate

Risk Premium

Debt to Equity
Ratio

Country Risk

Long-Term

Long-Term

US Inflation

Brazil Inflation

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba I
Main Operating Assumptions

Overview

Parnaba I plant is a the largest UTE in the Parnaba complex,

and comprises of four thermo generation turbines

Energy Source

Gas

Power Plant Capacity

The asset has a 15 year PPA to supply energy for the

regulated market in the A-5/2008 auctions

675,2 MW

Commercial Operation Date

Parnaba I derives fixed revenues from the regulated market

and variable revenues, established in the auctions according
to their yearly dispatch orders from the government
Parnaba I has a long term supply contract with PGN to supply
gas to the thermo plants which entails three distinct costs:

feb-13

Capacity Declared

660,0 MW

Capacity Sold in ACR

450 MWm

PPA Length

15 years

Inflexibility

0%

Base Fixed Revenue

Gas (raw material) Price established at the contract

signature and adjusted according to Brazilian official
inflation index (IPCA)

112,50 R$/MWh

Fuel Consumption

10,89 MMBtu/MWh

Fuel Costs

Fixed Lease Payments Adjusted yearly according to

past results and future projected cash flow to adjust
the UTEs returns to 15%

Yes same conditions

PPA Renovation
Economic Life

Variable Lease Payments calculated as the

difference between net variable revenues and variable
costs

30 years

Financing Assumptions
Debt Amount (as of December, 2014)

Other costs of the UTE are O&M, overhauling, R&D,

regulatory fees, and costs related to energy unavailability

Interest
Amortization Period
Amortization Start Year

Source: Eneva

6,10 R$/MMBtu

10

R$720MM
69% of Debt: TJLP + 2%
31% of Debt : IPCA + 5%
13 years
2015

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba I
Operating Metrics

Spot Market Price

ANEEL Fee
CCEE Contrivution
TUST
Fixed O&M
Variable O&M
Overhauling
ACR - Fixed Revenues
ACR - Ccomb (Fuel Index)
ACR - Co&m
ACL - Free Market Price
Fuel - CIF Plant Costs
Fuel - Fixed Lease Payments
Fuel - Variable Lease Payments
Insurance Cost
PLD Dispatching

Unit
R$/MWh
R$/KW - year
R$/KW - year
R$/KW - month
R$ MM
R$/MWh
R$ MM
R$/MWh
US$/MMBtu
R$/MWh
R$/MWh
R$/MMBtu
R$ MM
R$ MM
R$ MM
R$/MWh

2015
44,39
1,95
0,11
3,31
48,82
5,55
12,47
121,13
3,93
10,97
20,00
6,49
169,86
220,41
9,89
333,39

2016
47,47
2,09
0,12
3,54
47,72
5,99
12,91
130,06
4,41
11,77
21,58
7,01
183,31
233,95
10,52
305,51

2017
50,36
2,21
0,12
3,75
50,41
6,32
183,50
137,71
4,76
12,47
22,80
7,40
193,63
220,59
11,11
285,89

2018
53,01
2,33
0,13
3,95
53,03
6,65
13,74
144,92
5,27
13,12
23,98
7,79
203,70
176,91
11,69
258,05

2019
55,71
2,45
0,14
4,15
55,72
6,99
14,45
152,30
5,19
13,79
25,20
8,18
214,03
100,99
12,28
258,60

2020
58,54
2,57
0,14
4,36
58,55
7,35
15,19
160,02
4,96
14,49
26,48
8,60
224,88
91,87
12,91
274,07

2021
61,51
2,70
0,15
4,58
61,51
7,72
15,96
168,13
5,37
15,22
27,82
9,03
236,28
161,63
13,56
260,22

2022
64,63
2,84
0,16
4,81
64,63
8,11
16,76
176,65
5,64
15,99
29,23
9,49
248,26
217,91
14,25
299,96

2023
67,90
2,98
0,17
5,06
67,91
8,52
17,61
185,61
5,90
16,80
30,71
9,97
260,85
238,04
14,97
319,89

2024
71,34
3,13
0,17
5,31
71,35
8,95
39,92
195,02
6,20
17,65
32,27
10,48
274,07
239,58
15,73
343,79

2025
74,96
3,29
0,18
5,58
74,97
9,41
19,45
204,91
6,45
18,55
33,91
11,01
287,97
303,29
16,53
339,32

2026
78,76
3,46
0,19
5,87
78,77
9,88
20,43
215,30
6,72
19,49
35,63
11,57
302,57
339,06
17,36
352,93

2027
82,76
3,64
0,20
6,16
82,77
10,38
21,47
226,21
7,00
20,48
37,43
12,16
317,91
339,10
18,25
410,62

2028
86,95
3,82
0,21
6,48
86,96
10,91
22,56
237,68
7,26
21,52
39,33
12,77
334,03
343,18
19,17
425,90

2029
91,36
4,01
0,22
6,81
91,37
11,46
23,70
249,73
7,63
22,61
41,32
13,42
350,96
404,50
20,14
455,78

2030
95,99
4,22
0,23
7,15
96,00
12,04
24,90
262,39
8,12
23,75
43,42
14,10
368,76
446,75
21,16
472,56

Energy Generation Metrics

Months in Operation
Avg. Installed Capacity
Availability
Real Internal Consumption
Grid Losses
Average Internal Consumption
Average Availability
Expected Dispatch
Physical Guarantee
Net Physical Guarantee
Net FID
Energy Traded in ACR
Energy Traded in ACL
Spot energy sold in ACR
Total Energy Dispatch
Energy Demanded in ACR
Energy sold/(bought) in ACL
ADOMP

Unit
2015
months
12
MWm
675,20
%
88%
%
1%
%
3%
% - 60 months
1%
% - 60 months
97%
%
100%
MWm
466,60
MWm
451,67
MWm
0,00
MWm
450,00
MWm
1,67
%
100%
MWh
5.231.601
MWh
5.024.485
MWh
14.661
MWh
5.387.239

Source: Eneva and third party consultants

2016
12
675,20
90%
1%
3%
1%
92%
100%
466,60
451,28
21,48
450,00
-20,21
100%
5.316.456
5.110.490
(177.497)
5.406.770

2017
12
675,20
95%
1%
3%
1%
91%
69%
466,60
450,94
28,84
450,00
-27,90
100%
3.863.196
3.716.285
(244.373)
3.711.995

2018
12
675,20
95%
1%
3%
1%
91%
46%
466,60
450,37
29,26
450,00
-28,89
100%
2.585.286
2.490.137
(253.115)
2.489.819

2019
12
675,20
95%
1%
3%
1%
91%
28%
466,60
449,79
26,71
450,00
-26,92
100%
1.591.026
1.533.721
(235.807)
1.534.314

2020
12
675,20
91%
1%
3%
1%
94%
30%
466,60
449,79
13,32
450,00
-13,53
100%
1.629.928
1.571.222
(118.504)
1.635.701

2021
12
675,20
95%
1%
3%
1%
95%
40%
466,60
449,79
7,56
450,00
-7,77
100%
2.260.623
2.179.201
(68.051)
2.183.187

11

2022
12
675,20
95%
1%
3%
1%
97%
48%
466,60
449,79
-0,05
450,00
-0,16
100%
2.676.014
2.579.630
(1.399)
2.586.480

2023
12
675,20
94%
1%
3%
1%
97%
47%
466,60
449,79
-0,87
450,00
0,66
100%
2.635.725
2.540.793
5.804
2.550.431

2024
12
675,20
89%
1%
3%
1%
97%
45%
466,60
449,79
-0,65
450,00
0,45
100%
2.385.555
2.299.633
3.931
2.451.298

2025
12
675,20
94%
1%
3%
1%
96%
49%
466,60
449,79
5,53
450,00
-5,74
100%
2.738.302
2.639.675
(50.250)
2.654.071

2026
12
675,20
95%
1%
3%
1%
96%
50%
466,60
449,79
3,14
450,00
-3,34
100%
2.783.776
2.683.512
(29.284)
2.687.866

2027
12
675,20
95%
1%
3%
1%
96%
46%
466,60
449,79
3,59
450,00
-3,80
100%
2.553.484
2.461.514
(33.252)
2.469.322

2028
12
675,20
91%
1%
3%
1%
96%
44%
466,60
449,79
3,50
450,00
-3,71
100%
2.387.363
2.301.376
(32.479)
2.403.984

2029
12
675,20
94%
1%
3%
1%
96%
45%
466,60
449,79
6,86
450,00
-7,07
100%
2.519.274
2.428.536
(61.891)
2.442.286

2030
12
675,20
94%
1%
3%
1%
97%
44%
466,60
449,79
1,69
450,00
-1,90
100%
2.449.088
2.360.878
(16.628)
2.376.948

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba I
Net Revenues (R$ MM)

1.479
1.095

2015

1.221

2016

1.126

2017

989

2018

1.065
849

881

2019

2020

2021

1.219

1.286

1.311

2022

2023

2024

2025

1.582

1.610

1.652

2026

2027

2028

1.806

2029

1.910

2030

EBITDA (R$ MM)

356

211

236

245

261

2018

2019

2020

283

305

322

317

2022

2023

2024

377

394

413

436

463

199

62

2015
Source: Eneva

2016

2017

2021

12

2025

2026

2027

2028

2029

2030

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba I
Cash Flows (R$ MM)

EBT
Income Tax Paid
Depreciation and Amortization
Changes in Working Capital
Other Non-Cash Items
Capex
Debt Raised
Debt Paid
Total

2015
99
(2)
46
(4)
0
(13)
0
(57)
70

2016
97
(2)
46
3
0
(2)
0
(57)
86

Discount Rate
Cost of Equity
Risk Free Rate
Unlevered Beta
Levered Beta
Risk Premium
Country Risk
Debt (Target)
Equity / (Debt + Equity)
Debt / (Debt + Equity)
Inflation
Brazil
USA
Cost of Capital
Ke - US$
Ke - R$ Nominal

Source: Eneva

2017
(34)
0
46
17
0
(1)
0
(57)
-28

2018
145
(5)
46
(26)
0
(0)
0
(57)
103

2019
158
(6)
47
(3)
0
(0)
0
(57)
138

2020
179
(7)
47
(2)
0
0
0
(57)
159

2021
206
(9)
47
(1)
0
0
0
(57)
186

2022
232
(14)
47
(1)
0
0
0
(57)
207

2023
254
(17)
47
(1)
0
0
0
(57)
225

2024
254
(102)
47
1
0
0
0
(57)
143

2025
297
(117)
47
(3)
0
0
0
(57)
167

Source
9,76%
2,37%
0,33x
0,72x
6,96%
2,38%

US Treasury - 10 Years, Avg. Last Twelve Months

Comparables 2 Year Unlevered Beta
Ibbotson Yearbook 2014
EMBI + Brazil, Last Twelve Months

2026
323
(126)
47
(2)
0
0
0
(57)
185

2027
345
(133)
47
(2)
0
0
0
(33)
223

2028
366
(140)
47
(2)
0
0
0
0
270

Date
12/03/2015
15/03/2015
15/03/2015

04/03/2015

41,78% Estimate Year End 2015

58,22% Estimate Year End 2015
3,02%
5,07% Brazilian Central Bank Estimate
1,99% IMF Estimate

9,76%
13,08%

13

16/03/2015
16/03/2015

2029
389
(148)
47
(1)
0
0
0
0
286

2030
417
(158)
47
(2)
0
0
0
0
303

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba III
Main Operating Assumptions

Sources

Parnaba III plant comprises of 2 thermo generation turbines

Energy Source

The asset has a 15 year PPA to supply energy for the

regulated market in the A-5/2008 auctions

Power Plant Capacity

Gas

176,0 MW

Commercial Operation Date

Parnaba III derives fixed revenues from the regulated market

and variable revenues, established in the auctions according
to their yearly dispatch orders from the government
Parnaba III has a long term supply contract with PGN to
supply gas to the thermo plants which entails three distinct
costs:

out-13

Capacity Declared

176,0 MW

Capacity Sold in ACR

98 MWm

PPA Length

15 years

Inflexibility

0%

Base Fixed Revenue

Gas (raw material) Price established at the contract

signature and adjusted according to Brazilian official
inflation index (IPCA)

114,71 R$/MWh

Fuel Consumption

8,84 MMBtu/MWh

Fuel Costs

Fixed Lease Payments Adjusted yearly according to

past results and future projected cash flow to adjust
the UTEs returns to 15%

Economic Life

Debt Amount (as of December, 2014)1

R$122MM

Interest

CDI + 3%

Amortization Period

10 years

Amortization Start Year

Net Intercompany Credit, as of December 2014, of R$ 34MM is not considered in the total
debt amount

30 years

Financing Assumptions

Other costs of the UTE are O&M, overhauling, R&D,

regulatory fees, and costs related to energy unavailability

Yes same conditions

PPA Renovation

Variable Lease Payments calculated as the

difference between net variable revenues and variable
costs

Source: Eneva

6,10 R$/MMBtu

14

2015

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba III
Operating Metrics

Spot Market Price

ANEEL Fee
CCEE Contrivution
TUST
Fixed O&M
Variable O&M
Overhauling
ACR - Fixed Revenues
ACR - Ccomb (Fuel Index)
ACR - Co&m
ACL - Free Market Price
Fuel - CIF Plant Costs
Fuel - Fixed Lease Payments
Fuel - Variable Lease Payments
Insurance Cost
PLD Dispatching

Unit
R$/MWh
R$/KW - year
R$/KW - year
R$/KW - month
R$ MM
R$/MWh
R$ MM
R$/MWh
US$/MMBtu
R$/MWh
R$/MWh
R$/MMBtu
R$ MM
R$ MM
R$ MM
R$/MWh

2015
63,06
1,95
0,11
4,60
2,88
5,38
3,45
123,50
3,93
172,96
20,00
6,48
20,91
123,18
2,45
346,32

2016
67,45
2,09
0,12
4,92
3,05
5,81
3,57
132,61
4,41
185,71
21,58
6,87
22,57
137,80
2,61
325,59

2017
71,54
2,21
0,12
5,21
3,22
6,14
3,64
140,40
4,76
196,63
22,80
7,40
23,84
73,71
2,76
315,02

2018
75,31
2,33
0,13
5,49
3,39
6,46
3,80
147,76
5,27
206,94
23,98
7,79
25,08
45,37
2,90
297,91

2019
79,15
2,45
0,14
5,77
3,56
6,78
3,99
155,28
5,19
217,47
25,20
8,18
26,35
26,05
3,05
305,16

2020
83,17
2,57
0,14
6,06
3,75
7,13
4,20
163,15
4,96
228,49
26,48
8,60
27,69
27,02
3,20
340,09

2021
87,38
2,70
0,15
6,37
3,93
7,49
16,78
171,42
5,37
240,08
27,82
9,03
29,09
36,91
3,37
307,78

2022
91,81
2,84
0,16
6,69
4,13
7,87
4,63
180,11
5,64
252,25
29,23
9,49
30,57
56,91
3,54
340,61

2023
96,47
2,98
0,17
7,03
4,34
8,27
4,87
189,24
5,90
265,04
30,71
9,97
32,12
54,94
3,72
373,10

2024
101,36
3,13
0,17
7,39
4,56
8,69
5,12
198,84
6,20
278,47
32,27
10,48
33,74
55,41
3,90
396,20

2025
106,50
3,29
0,18
7,76
4,80
9,13
5,37
208,92
6,45
292,59
33,91
11,01
35,46
53,54
4,10
410,84

2026
111,90
3,46
0,19
8,16
5,04
9,59
5,65
219,51
6,72
307,43
35,63
11,57
37,25
63,74
4,31
408,40

2027
117,57
3,64
0,20
8,57
5,29
10,08
5,93
230,64
7,00
323,01
37,43
12,16
39,14
70,90
4,53
463,75

2028
123,53
3,82
0,21
9,00
5,56
10,59
6,23
242,34
7,26
339,39
39,33
12,77
41,13
69,65
4,76
492,84

2029
129,80
4,01
0,22
9,46
5,84
11,13
6,55
254,62
7,63
356,60
41,32
13,42
43,21
77,15
5,00
522,52

2030
136,38
4,22
0,23
9,94
6,14
11,69
6,88
267,53
8,12
374,68
43,42
14,10
45,40
67,74
5,25
551,63

Energy Generation Metrics

Months in Operation
Avg. Installed Capacity
Availability
Real Internal Consumption
Grid Losses
Average Internal Consumption
Average Availability
Expected Dispatch
Physical Guarantee
Net Physical Guarantee
Net FID
Energy Traded in ACR
Energy Traded in ACL
Spot energy sold in ACR
Total Energy Dispatch
Energy Demanded in ACR
Energy sold/(bought) in ACL
ADOMP

Unit
2015
months
12
MWm
176,00
%
92%
%
1%
%
3%
% - 60 months
1%
% - 60 months
96%
%
100%
MWm
101,80
MWm
98,70
MWm
1,53
MWm
98,00
MWm
-0,83
%
99%
MWh
1.414.045
MWh
1.355.167
MWh
(7.236)
MWh
1.433.533

Source: Eneva and third party consultants

2016
12
176,00
95%
1%
3%
1%
91%
100%
101,80
98,46
6,47
98,00
-6,02
100%
1.470.405
1.412.728
(52.854)
1.441.079

2017
12
176,00
90%
1%
3%
1%
90%
56%
101,80
98,26
7,21
98,00
-6,94
100%
767.882
739.218
(60.821)
800.989

2018
12
176,00
95%
1%
3%
1%
89%
32%
101,80
98,26
8,30
98,00
-8,04
100%
461.012
443.804
(70.390)
453.594

2019
12
176,00
95%
1%
3%
1%
89%
18%
101,80
98,26
8,12
98,00
-7,86
100%
264.519
254.645
(68.820)
260.396

2020
12
176,00
95%
1%
3%
1%
95%
18%
101,80
98,26
1,86
98,00
-1,59
100%
261.391
251.634
(13.972)
257.396

2021
12
176,00
95%
1%
3%
1%
97%
23%
101,80
98,26
0,37
98,00
-0,10
100%
331.900
319.511
(907)
326.995

15

2022
12
176,00
95%
1%
3%
1%
97%
32%
101,80
98,26
-0,39
98,00
0,65
100%
474.062
456.366
5.672
467.393

2023
12
176,00
95%
1%
3%
1%
99%
30%
101,80
98,26
-1,73
98,00
2,00
100%
437.842
421.498
17.494
431.994

2024
12
176,00
91%
1%
3%
1%
99%
30%
101,80
98,26
-1,73
98,00
2,00
100%
421.459
405.727
17.489
432.594

2025
12
176,00
95%
1%
3%
1%
98%
27%
101,80
98,26
-0,83
98,00
1,09
100%
389.967
375.410
9.571
385.195

2026
12
176,00
95%
1%
3%
1%
98%
30%
101,80
98,26
-0,72
98,00
0,98
100%
438.380
422.016
8.620
433.194

2027
12
176,00
94%
1%
3%
1%
98%
32%
101,80
98,26
-0,63
98,00
0,89
100%
462.380
445.120
7.789
457.194

2028
12
176,00
94%
1%
3%
1%
98%
30%
101,80
98,26
-0,62
98,00
0,88
100%
434.198
417.991
7.701
429.594

2029
12
176,00
94%
1%
3%
1%
98%
31%
101,80
98,26
-0,60
98,00
0,87
100%
456.353
439.318
7.578
451.794

2030
12
176,00
89%
1%
3%
1%
98%
28%
101,80
98,26
-1,33
98,00
1,60
100%
385.957
371.550
13.989
405.594

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba III
Net Revenues (R$ MM)
360
327
301
253

2016

2017

2018

260

2022

2023

2024

274

2025

331

2027

2028

356

349

2029

2030

213

207

2015

256

269

324

178

186

2019

2020

2021

2026

EBITDA (R$ MM)

71

70

71

74

77

2015

2016

2017

2018

2019

Source: Eneva

83

2020

95

100

105

109

2022

2023

2024

2025

115

122

127

134

140

78

2021

16

2026

2027

2028

2029

2030

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba III
Projected Cash Flows (R$ MM)

EBT
Income Tax Paid
Depreciation and Amortization
Changes in Working Capital
Other Non-Cash Items
Capex
Debt Raised
Debt Paid
Total

2015
50
(3)
6
8
0
(6)
0
(3)
53

2016
51
(3)
6
1
0
(0)
0
(14)
41

Discount Rate
Cost of Equity
Risk Free Rate
Unlevered Beta
Levered Beta
Risk Premium
Country Risk
Debt (Target)
Equity / (Debt + Equity)
Debt / (Debt + Equity)
Inflation
Brazil
USA
Cost of Capital
Ke - US$
Ke - R$ Nominal

Source: Eneva

2017
55
(3)
6
(2)
0
(0)
0
(14)
43

2018
60
(4)
6
(1)
0
0
0
4
65

2019
62
(6)
6
(1)
0
0
0
3
64

2020
69
(7)
6
(1)
0
0
0
(14)
53

2021
65
(7)
6
1
0
0
0
(14)
52

2022
84
(10)
6
(2)
0
0
0
(14)
65

2023
91
(11)
6
(1)
0
0
0
(14)
72

2024
97
(35)
6
(1)
0
0
0
(10)
58

2025
103
(37)
6
(1)
0
0
0
0
72

Source
8,34%
2,37%
0,33x
0,51x
6,96%
2,38%

US Treasury - 10 Years, Avg. Last Twelve Months

Comparables 2 Year Unlevered Beta
Ibbotson Yearbook 2014
EMBI + Brazil, Last Twelve Months

2026
109
(39)
6
(0)
0
0
0
0
76

2027
116
(41)
6
(1)
0
0
0
0
80

2028
121
(43)
6
(1)
0
0
0
0
83

Date
12/03/2015
15/03/2015
15/03/2015

04/03/2015

60,19% Estimate Year End 2015

39,81% Estimate Year End 2015
3,02%
5,07% Brazilian Central Bank Estimate
1,99% IMF Estimate

8,34%
11,61%

17

16/03/2015
16/03/2015

2029
128
(46)
6
(1)
0
0
0
0
88

2030
134
(48)
6
(1)
0
0
0
0
92

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba IV2
Main Operating Assumptions

Sources
Energy Source

Parnaba IV plant comprises of 3 thermo generation turbines

Gas

Power Plant Capacity

Parnaba IV sells energy in the free market, and currently sells

all of its energy for private company Kinross

56,3 MW

Commercial Operation Date

Parnaba IV has a long term supply contract with PGN to

supply gas to the thermo plants which entails the following
cost:
Gas (raw material) Price established at the contract
signature and adjusted according to Brazilian official
inflation index (IPCA)

jan-14

Capacity Declared

53,4 MW

Capacity Sold in ACR

0 MWm

PPA Length

NA

Inflexibility

NA

Base Fixed Revenue

NA

Fuel Consumption

Other costs of the UTE are O&M, overhauling, R&D,

regulatory fees, and costs related to energy unavailability

7,57 MMBtu/MWh

Fuel Costs

7,52 R$/MMBtu
Yes same conditions

PPA Renovation
Economic Life

30 years

Financing Assumptions
Debt Amount (as of December, 2014)

R$153MM

Interest

104% CDI

Amortization Period
Amortization Start Year
Source: Eneva
Note[1]: Intercompany Debt ; Note [2]: Parnaba IV refers to UTE Parnaba IV and Parnaba Gerao e
Comercializao

18

8 years
2018

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba IV
Operating Metrics
Unit
Spot Market Price
R$/MWh
ANEEL Fee
R$/KW - year
CCEE Contrivution
R$/KW - year
TUST
R$/KW - month
Fixed O&M
R$ MM
Variable O&M
R$/MWh
Overhauling
R$ MM
ACR - Fixed Revenues
R$/MWh
ACR - Ccomb (Fuel Index)
US$/MMBtu
ACR - Co&m
R$/MWh
ACL - Free Market Price
R$/MWh
Fuel - CIF Plant Costs
R$/MMBtu
Fuel - Fixed Lease Payments R$ MM
Fuel - Variable Lease PaymentsR$ MM
Insurance Cost
R$ MM
PLD Dispatching
R$/MWh

2015
38,95
2,24
0,12
4,94
4,10
4,39
7,71
0,00
3,93
10,27
148,06
8,61
0,00
0,00
1,32
314,07

2016
42,03
2,42
0,13
5,33
4,30
4,71
7,72
0,00
4,41
11,08
159,79
9,23
0,00
0,00
1,40
275,47

2017
44,40
2,56
0,14
5,63
4,55
4,99
4,95
0,00
4,76
11,70
168,79
9,78
0,00
0,00
1,48
260,43

2018
46,71
2,69
0,15
5,92
4,79
5,25
5,49
0,00
5,27
12,31
177,56
10,30
0,00
0,00
1,56
218,07

2019
49,07
2,83
0,16
6,22
5,03
5,52
5,08
0,00
5,19
12,94
186,57
10,82
0,00
0,00
1,64
201,63

2020
51,56
2,97
0,16
6,54
5,29
5,80
5,36
0,00
4,96
13,59
196,02
11,37
0,00
0,00
1,72
217,72

2021
54,18
3,12
0,17
6,87
5,56
6,09
6,05
0,00
5,37
14,28
205,96
11,95
0,00
0,00
1,81
223,05

2022
56,92
3,28
0,18
7,22
5,84
6,40
6,67
0,00
5,64
15,01
216,41
12,55
0,00
0,00
1,90
257,22

2023
59,81
3,44
0,19
7,58
6,14
6,72
6,95
0,00
5,90
15,77
227,38
13,19
0,00
0,00
2,00
275,91

2024
62,84
3,62
0,20
7,97
6,45
7,07
7,34
0,00
6,20
16,57
238,90
13,86
0,00
0,00
2,10
291,03

2025
66,03
3,80
0,21
8,37
6,77
7,42
7,72
0,00
6,45
17,41
251,02
14,56
0,00
0,00
2,21
296,68

2026
69,37
4,00
0,22
8,80
7,12
7,80
8,17
0,00
6,72
18,29
263,74
15,30
0,00
0,00
2,32
312,73

2027
72,89
4,20
0,23
9,24
7,48
8,20
8,63
0,00
7,00
19,22
277,12
16,07
0,00
0,00
2,44
340,10

2028
76,59
4,41
0,24
9,71
7,86
8,61
8,97
0,00
7,26
20,19
291,17
16,89
0,00
0,00
2,56
354,20

2029
80,47
4,63
0,26
10,20
8,26
9,05
9,35
0,00
7,63
21,22
305,93
17,75
0,00
0,00
2,69
381,83

2030
84,55
4,87
0,27
10,72
8,67
9,51
9,68
0,00
8,12
22,29
321,44
18,65
0,00
0,00
2,83
398,29

2023
12
56,28
87%
3%
3%
3%
88%
66%
51,78
45,48
-0,52
46,00
-1%
280.447
(4.545)
402.960
(3.080)

2024
12
56,28
89%
3%
3%
3%
87%
65%
51,78
45,21
-0,79
46,00
-2%
283.629
(6.940)
402.960
(4.644)

2025
12
56,28
85%
3%
3%
3%
87%
68%
51,78
45,16
-0,84
46,00
-2%
283.546
(7.329)
402.960
(5.108)

2026
12
56,28
87%
3%
3%
3%
86%
67%
51,78
44,87
-1,13
46,00
-2%
287.834
(9.895)
402.960
(6.850)

2027
12
56,28
87%
3%
3%
3%
87%
68%
51,78
44,90
-1,10
46,00
-2%
291.284
(9.666)
402.960
(6.778)

2028
12
56,28
87%
3%
3%
3%
87%
67%
51,78
45,05
-0,95
46,00
-2%
285.097
(8.312)
402.960
(5.707)

2029
12
56,28
87%
3%
3%
3%
87%
66%
51,78
45,08
-0,92
46,00
-2%
280.259
(8.058)
402.960
(5.447)

2030
12
56,28
87%
3%
3%
3%
87%
64%
51,78
44,88
-1,12
46,00
-2%
271.368
(9.826)
402.960
(6.439)

Energy Generation Metrics

Months in Operation
Avg. Installed Capacity
Availability
Real Internal Consumption
Grid Losses
Average Internal Consumption
Average Availability
Expected Dispatch
Physical Guarantee
Net Physical Guarantee
Net FID
Energy Traded in ACL
Spot energy sold in ACR
Total Energy Dispatch
Energy Demanded in ACR
Energy sold/(bought) in ACL
ADOMP

Unit
months
MWm
%
%
%
% - 60 months
% - 60 months
%
MWm
MWm
MWm
MWm
%
MWh
MWh
MWh
MWh

2015
12
56,28
87%
3%
3%
3%
91%
100%
51,78
47,07
1,07
46,00
2%
428.489
9.345
402.960
9.637

Source: Eneva and third party consultants

2016
12
56,28
88%
3%
3%
3%
90%
100%
51,78
46,57
0,57
46,00
1%
432.762
5.011
402.960
5.168

2017
12
56,28
89%
3%
3%
3%
89%
81%
51,78
46,37
0,37
46,00
1%
355.301
3.198
402.960
2.676

2018
12
56,28
89%
3%
3%
3%
88%
65%
51,78
45,74
-0,26
46,00
-1%
287.336
(2.296)
402.960
(1.547)

2019
12
56,28
89%
3%
3%
3%
87%
49%
51,78
45,15
-0,85
46,00
-2%
216.722
(7.453)
402.960
(3.792)

2020
12
56,28
88%
3%
3%
3%
88%
50%
51,78
45,84
-0,16
46,00
0%
218.179
(1.378)
402.960
(715)

2021
12
56,28
87%
3%
3%
3%
89%
60%
51,78
45,95
-0,05
46,00
0%
257.247
(460)
402.960
(285)

19

2022
12
56,28
85%
3%
3%
3%
88%
68%
51,78
45,84
-0,16
46,00
0%
285.412
(1.419)
402.960
(992)

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba IV
Net Revenues (R$ MM)

63

2015

72

74

77

68

2016

2017

2018

2019

91

95

99

82

87

2020

2021

2022

2023

2024

104

2025

109

2026

115

2027

121

2028

127

2029

133

2030

EBITDA (R$ MM)

15

2015
Source: Eneva

23

24

2017

2018

27

29

29

30

31

32

2020

2021

2022

2023

2024

34

35

37

2025

2026

2027

39

41

44

17

2016

2019

20

2028

2029

2030

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Parnaba IV
Projected Cash Flows (R$ MM)

EBT
Income Tax Paid
Depreciation and Amortization
Changes in Working Capital
Other Non-Cash Items
Capex
Debt Raised
Debt Paid
Total

2015
(12)
0
7
6
0
(2)
0
0
-1

2017
(1)
0
7
(1)
0
(0)
0
(0)
5

2018
2
0
7
(0)
0
0
0
(18)
-10

2019
6
0
7
(0)
0
0
0
(18)
-6

2020
10
(0)
7
(0)
0
0
0
(16)
0

2021
12
(0)
7
(0)
0
0
0
(19)
0

2022
15
(0)
7
(0)
0
0
0
(21)
0

Discount Rate
Cost of Equity
Risk Free Rate
Unlevered Beta
Levered Beta
Risk Premium
Country Risk

24,34%
2,37%
0,33x
2,81x
6,96%
2,38%

Debt (Target)
Equity / (Debt + Equity)
Debt / (Debt + Equity)

10,12% Estimate Year End 2015

89,88% Estimate Year End 2015

Inflation
Brazil
USA
Cost of Capital
Ke - US$
Ke - R$ Nominal

Source: Eneva

2016
(7)
0
7
(0)
0
(0)
0
0
-1

2023
18
(1)
7
(0)
0
0
0
(24)
0

2024
22
(3)
7
(0)
0
0
0
(25)
0

2025
26
(8)
7
(0)
0
0
0
(12)
13

Source
US Treasury - 10 Years, Avg. Last Twelve Months
Comparables 2 Year Unlevered Beta
Ibbotson Yearbook 2014
EMBI + Brazil, Last Twelve Months

3,02%
5,07% Brazilian Central Bank Estimate
1,99% IMF Estimate

24,34%
28,10%

21

2026
29
(8)
7
(0)
0
0
0
(0)
27

2027
30
(9)
7
(0)
0
0
0
(0)
28

2028
33
(9)
7
(0)
0
0
0
(0)
30

Date
12/03/2015
15/03/2015
15/03/2015
04/03/2015

16/03/2015
16/03/2015

2029
35
(12)
7
(0)
0
0
0
0
29

2030
37
(15)
7
(0)
0
0
0
0
29

STRICTLY PRIVATE AND CONFIDENTIAL

Valuation - Parnaba I, III and IV

Valuation Summary
Discounted Cash Flow

(93)

165

489

High range

425

Mid range

361

Low range

352

Parnaba I

Parnaba III

Parnaba IV

Non Contributed Capital

Increase

Total

Market Comparable Multiples

Parnaiba I, III and IV

Multiple Range

EV

Equity Value

Equity Value Adjusted by Capital

Increase

2015 EBITDA (Trading Multiple)

8,00x

9,00x

713

803

489

578

396

485

2016 EBITDA (Trading Multiple)

6,50x

7,50x

558

643

333

419

240

326

2015 EBITDA (Transaction Multiple)

8,00x

10,00x

713

892

489

667

396

574

Source: Eneva
Note [1]: Parnaba IV Projected Cash Flows discounted by Parnaba I Cost of Equity (13.08%) result in
an equity value of Petra stake of R$16,23 MM

22

Annex I
Multiples Database

STRICTLY PRIVATE AND CONFIDENTIAL

Multiples Database
Comparable Trading Statistics

Company
March, 23rd/ 2015

# Total Shares Share Price Market Cap

Net Debt Enterprise Value
Debt/Equity
(MM)
(US$)
(US$ MM)
(US$ MM)
(US$ MM)

EBITDA
2015

AES Tiet S.A.

EV/EBITDA
2016

2015

2016

381

4,7

1.798,3

118,9

573,1

2.371,4

411,1

341,9

5,8x

6,9x

1.258

3,9

4.893,6

74,8

3.867,9

8.761,5

1.155,6

1.092,0

7,6x

8,0x

CPFL Energia S.A.

962

6,0

5.800,9

189,4

5.279,0

11.079,9

1.243,7

1.386,6

8,9x

8,0x

CPFL Energias Renovveis S.A.

503

3,8

1.921,5

133,2

1.649,1

3.570,6

315,8

357,6

11,3x

10,0x

EDP - Energias do Brasil S.A.

476

3,2

1.513,7

51,1

952,4

2.466,1

499,0

574,6

4,9x

4,3x

Equatorial Energia S.A.

198

9,4

1.851,3

127,0

907,2

2.758,5

294,0

372,5

9,4x

7,4x

Renova Energia S.A.

106

8,4

889,3

113,4

846,5

1.735,9

117,7

159,7

14,8x

10,9x

Tractebel Energia S.A.

653

11,0

7.202,6

65,2

1.116,5

8.319,1

938,7

1.176,5

8,9x

7,1x

Eneva S.A.

840

0,1

50,4

241,6

1.973,4

2.023,8

326,6

0,0

6,2x

0,0x

Copel

274

10,8

2.961,9

35,1

1.826,6

4.471,0

892,6

1.057,4

Cemig S.A.

5,4x

5,3x

Average Local GenCo's

115,0

8,3x

6,8x

Medium Local GenCo's

116,2

8,2x

7,2x

Source: Capital IQ

24

STRICTLY PRIVATE AND CONFIDENTIAL

Multiples Database
Comparable Transaction Statistics
All Transactions
Announced Date

Buyers/Investors

Target/Issuer

Total Transaction Value (US$

MM, Historical rate)

Percent Sought

Im plied Enterprise
Value/EBITDA

Country of Target

6.611,0

54%

9,0x

Chile

413,0

39%

6,0x

Peru

12,0x

Chile

1.317,1

50%

Berkshire Hathaway Energy

Compaa General de
Electricidad S.A. (SNSE:CGE)
Generandes Peru SA
Empresa Electrica Guacolda
S.A.
NV Energy, Inc.

10.688,8

100%

8,9x

United States

Toplofikatzia Pleven EAD

Toplofikatsia Rousse EAD

69,4

100%

12,5x

Bulgaria

out-14

Gas Natural SDG SA (CATS:GAS)

abr-14

Enersis S.A. (SNSE:ENERSIS)

mar-14

AES Gener S.A.

mai-13
dez-12
abr-11

The AES Corporation

DPL Inc.

4.798,7

100%

7,7x

United States

jan-11

Duke Energy Corporation

Capstone Infrastructure
Corporation; Macquarie
Infrastructure and Real Assets
(Europe) Limited

Progress Energy Inc.

26.627,3

100%

8,3x

United States

Heat Operations and Heat

Production Facilities

308,9

100%

7,4x

Sweeden

91,9

42%

5,0x

Barbados

9.291,0

100%

7,5x

United States

736,6

80%

7,2x

Australia

1.226,8

64%

7,5x

Colombia

Senoko Energy Pte Ltd

2.769,0

100%

16,2x

Singapore

Unin Fenosa, S.A.

11.810,5

45%

11,0x

Spain

Average

5.482,8

77%

9,0x

Median

2.043,0

90%

8,0x

dez-10

nov-10

Emera Incorporated

fev-10

FirstEnergy Corp.

nov-09

Pacific Equity Partners

out-09

Grupo Argos S.A. ; Celsia SA ESP

set-08

jul-08

Source: Capital IQ

The Kansai Electric Power

Company, Incorporated ;
Marubeni Corporation; Kyushu
Electric Power Company,
Incorporated; GDF SUEZ S.A.;
Japan Bank For International
Cooperation, Investment Arm
Gas Natural SDG AS

Light & Power Holdings

Limited
Allegheny Energy, Inc.
Energy Developments Ltd.
Empresa de Energia del
Pacifico S.A.

25

Annex II
Parnaba I, III and IV Overview

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba Complex Overview

The Parnaba Complex, located in Santo Antnio dos Lopes, Maranho, is one of the largest thermal energy generation complexes in Brazil
The Complex is formed by the thermal power plants Parnaba I, Parnaba II, Parnaba III and Parnaba IV
Currently in operation, Parnaba I (676 MW), Parnaba III (178 MW) and Parnaba IV (56 MW) are the energy suppliers to the National Grid (SIN)
Using gas produced by Parnaba Gs Natural, ENEVA is able to generate energy at low costs due to privileged logistics, to the enterprises large scale
and easy access to mains
The Parnaba Complex is certified to reach up to 3,722 MW

Parnaba I

Parnaba III

Capacity: 676 MW

Capacity: 178 MW

Efficiency: 37%

Efficiency: 38%

Fixed Revenues: R$443 MM/year

Fixed Revenues: R$98 MM/year

Unitary Variable Cost: R$114/MWH

Unitary Variable Cost: R$160/MWH

Auction: A-5/2008

Auction: A-5/2008

Parnaba II

Parnaba IV

Capacity: 517 MW

Capacity: 56 MW

Efficiency: 51%

Efficiency: 46%

Fixed Revenues: R$374MM/year

Fixed Revenues: R$54 MM/year

Unitary Variable Cost: R$59/MWH

Unitary Variable Cost: R$69/MWH

Auction: A-3/2011

Free Market

Source: Eneva

27

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba I Income Statement

R$ thousand

2012

2013

2014

682.815

960.759

(594.048)

(824.570)

88.767

136.190

(15.736)

(11.997)

(18.770)

(14.807)

(10.320)

(5.844)

(929)

(1.677)

(12.926)

(15.736)

76.771

117.420

(984)

(71.334)

(75.854)

Financial revenues

3.100

6.010

Financial expenses

(985)

(74.434)

(81.864)

(16.720)

5.436

41.566

5.716

(5.284)

(5.604)

(11.004)

152

35.962

Net Revenues
Costs
Gross profit
Operating Expenses
SG&A
Other expenses
EBIT
Net financial revenues (expenses)

EBT
Taxes
Net income (loss)

Source: Eneva

28

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba I Balance Sheet
R$ thousand

2012

2013

2014

85.229

158.288

206.355

83.250

32.034

38.121

Suppliers

Accounts receivable

110.113

141.072

Loans and financing

Inventory

4.236

7.480

Taxes recoverable

7.455

14.722

Prepaid expenses

1.706

4.086

4.960

272

364

1.084.889

1.264.731

1.179.035

5.141

520

1.323

Current Assets
Cash and cash equivalents

Other credits

R$ thousand

2012

2013

2014

162.381

265.826

199.312

3.020

85.787

30.028

150.759

149.663

142.438

413

9.431

6.603

5.157

2.328

2.252

Energy reimbursement

15.739

Other accounts payable

3.032

2.878

17.991

677.593

910.569

715.373

677.593

657.588

577.981

Deferred taxes and social

contribution

4.187

7.117

Accounts payable to related

parties

107.223

130.275

Advances for future capital

increase

141.571

330.144

246.624

470.705

Current Liabilities

Taxes and contributions payable

Wages and vacations payable

Non current liabilities

Non Current Assets

Loans and financing

Taxes recoverable
Deferred taxes and social
contribution

11.359

Prepaid expenses

1.844

257

1.356

Linked deposit

34.044

24.648

Related parties

1.906

1.344

Fixed assets

882.788

1.035.111

971.709

Capital

354.465

263.619

263.619

Intangible

183.758

178.887

166.647

Accumulated losses

(24.321)

(16.995)

207.087

Total Assets

1.170.118

1.423.019

1.385.390

1.170.118

1.423.019

1.385.390

Source: Eneva

14.006

12.009

Equity

Total Liabilitites + Equity

29

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba III Income Statement

R$ thousand

2012

2013

2014

198.299

244.861

(221.912)

(239.403)

(23.613)

5.458

(294)

(483)

(10.070)

(294)

(483)

(10.070)

(294)

(24.096)

(4.612)

(4.790)

(10.660)

Financial revenues

3.811

9.021

Financial expenses

(8.601)

(19.681)

(294)

(28.886)

(15.272)

9.821

5.109

(294)

(19.065)

(10.163)

Net Revenues
Costs
Gross profit
Operating Expenses
Administrative
EBIT
Net financial revenues (expenses)

EBT
Taxes
Net income (loss)

Source: Eneva

30

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba III Balance Sheet
R$ thousand

2012

2013

2014

67

162.075

71.320

Cash and cash equivalents

62.796

14.104

Suppliers

Accounts receivable

83.494

42.230

Taxes recoverable

10.528

Prepaid expenses

67

Derivative transactions
Other credits

2012

2013

2014

13

149.710

164.106

13

28.253

33.716

Loans and financing

120.636

121.568

9.873

Taxes and contributions

payable

39

1.269

1.157

Research & Development

549

1.380

Other accounts payable

233

8.822

2.609

3.956

38.591

38.001

Non Current Assets

166.267

267.864

38.591

38.001

Taxes recoverable

249

111

47

140.040

137.077

Deferred taxes and social

contribution

9.821

86.218

Capital

1.213

160.271

160.271

Fixed assets

156.197

181.535

Accumulated losses

(1.166)

(20.231)

(23.194)

67

328.341

339.184

67

328.341

339.184

Current Assets

Total Assets

Source: Eneva

R$ thousand
Current Liabilities

Non current liabilities

Related parties
Equity

Total Liabilitites + Equity

31

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba IV

R$ thousand

2012

2013

2014

5.825

50.022

(3.244)

(32.549)

2.581

17.473

(632)

(1.311)

(632)

(1.311)

1.949

16.162

12

3.416

(21.280)

Financial revenues

19

8.928

325

Financial expenses

(7)

(5.512)

(21.605)

(12)

5.365

(5.118)

(1.800)

2.783

(12)

3.565

(2.335)

Net Revenues
Costs
Gross profit
Operating Expenses
Administrative
EBIT
Net financial revenues (expenses)

EBT
Taxes
Net income (loss)

Source: Eneva

32

STRICTLY PRIVATE AND CONFIDENTIAL

Parnaba I, III and IV Overview

Parnaba IV Balance Sheet
R$ thousand

2012

2013

2014

Current Assets

1.596

29.035

14.270

Cash and cash equivalents

Accounts receivable

1.596

5.074

331

8.999

2.412

R$ thousand

2012

2013

2014

Current Liabilities

1.532

83.602

5.658

Suppliers

7.888

1.797

Labour obligations

129

73

23

437

3.718

75.131

1.509

17

70

44.271

174.877

Deferred taxes and social

contributions

1.048

1.580

Transactions with related

parties

43.223

173.297

15.228

19.514

17.178

15.216

15.936

15.936

12

3.578

1.242

16.760

147.387

197.713

Tax obligations
Loans and financing

Taxes recoverable

11.755

10.698

Derivative transactions

3.105

Other credits

102

829

Transactions with related

parties
Other liabilities
Non current liabilities

Non Current Assets

Taxes recoverable

Fixed assets

15.164

118.352

183.443

74

22.200

15.161

118.278

161.243

Equity
Capital
Earnings reserve

Total Assets

Source: Eneva

16.760

147.387

197.713

Total Liabilitites + Equity

33

STRICTLY PRIVATE AND CONFIDENTIAL

Contacts

Corrado Varoli
cvaroli@g5evercore.com
+55 11 3014 6868

Marcelo Lajchter
malajchter@g5evercore.com
+55 21 3205 9180
Arthur Horta
ahorta@g5evercore.com
+55 11 3165 4600

Graciema Bertoletti
graciema.bertoletti@g5evercore.com
+55 11 3014 6846

Manuela Albuquerque Silveira

msilveira@g5evercore.com
+55 11 3165 7005

Sao Paulo

Rio de Janeiro

Av. Brigadeiro Faria Lima, 3311 10th Floor

Av. Borges de Medeiros, 633 Room 202

04538 133 - Itaim Bibi

22430 042 - Leblon

+55 11 3014 6868

+55 21 3205 9180

www.g5evercore.com

34

EXHIBIT IV
INFORMATION OF ARTICLE 8 OF ICVM 481
I Name and identification of the interested related party.
Answer: DD Brazil Holdings S..R.L (E.ON).
II Nature of the relationship between the interested related party and the Company.
Answer: E.ON holds shares representing forty-two point ninety-four percent (42.94%) of the
Companys voting shares and forms part of the Companys control block.
III Quantity of shares and other securities issued by the Company and directly or indirectly
held by the interested related party.
Answer: On the date hereof, E.ON directly or indirectly holds 360,725,664 common shares issued
by the Company, representing 42.94% of the voting shares.
IV Any balances payable or receivable between the parties involved.
Answer: As detailed in the Judicial Recovery Plan, E.ON holds a total credit of nine million, fifty-six
thousand, five hundred and ninety-seven Reais and sixty-four cents (R$9,056,597.64), which shall
receive the treatment provided for in the Judicial Recovery Plan as referred to in item 3.2 above.
V Detailed description of the nature and extension of the concerned interest.
Answer: The Shareholders Meeting shall resolve, among other matters, on the Valuation Report of
the E.ON Assets, for purposes of payment in the Private Capital Increase, as provided for by article
8 of the Corporation Law.
Due to the provisions in article 115, paragraph 1 of the Corporation Law, E.ON shall not vote in the
resolutions on the ratification of the engagement of KPMG as the institution in charge of
preparation of the valuation report of the E.ON Assets or in the resolution on the approval of said
valuation report at the special shareholders meeting which shall resolve on the Private Capital
Increase.
VI Management recommendation about the proposal, highlighting the advantages and
disadvantages of the transaction to the company.
Answer: As highlighted in Exhibit I above, the Private Capital Increase consists of one of the
decisive steps to enable the Company to implement the Judicial Recovery Plan and overcome the
economic-financial crisis that is being faced by it, by strengthening its capital structure and

36

balance, reducing its indebtedness and receiving assets that are capable of contributing to its cash
generation.
For further information about the E.ON Assets, please see item 5 s of Exhibit I.
VII In case the matter submitted to approval of the shareholders meeting is an agreement
subject to the rules of article 245 of Law No. 6404 of 1976.
Answer: Not applicable.
a) Detailed demonstration, represented by the managers, that the agreement meets
commutative conditions or provides for proper compensatory payment.
Answer: Not applicable.
b) Analysis of the provisions and conditions of the agreement in the light of the provisions and
conditions that prevail in the market.
Answer: Not applicable.

37