CONFIDENTIAL

Poznań Waste-to-Energy projectThe Investor’s point of view

Conference on combining PPP and EU Funds

Zagreb, 25 October 2013

CONFIDENTIAL

Agenda

2

1. Introduction to Marguerite Fund

2. Municipal waste management in Poland

3. Project description

4. Project location

5. Tender process

6. Contractual structure

7. PPP Agreement

8. Payment mechanism

9. Financing structure

10. Channelling EU Grant to the Project

CONFIDENTIAL

Core

Sponsors

Other

Investors

Mandate & Investors

European Commission

Mandate� The Marguerite Fund is a long term equity fund targeting primarily greenfield transport & energy

infrastructure in EU 27.� The Fund targets 10-14% net return for investors.� Advised by independent Luxembourg-based Marguerite Adviser.

Investors� The Marguerite Fund has total commitments of EUR 710m, with EUR 100m from each Core Sponsor,

EUR 80m from the European Commission, and EUR 30m from other investors.

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CONFIDENTIAL 4

Long-Term Strategy Focused on Greenfield Projects in EU-27

GREENFIELD

INVESTOR

� Ability to invest pre-construction or during construction

� Ability to acquire operating assets with significant new capex requirements or pipeline

� No immediate cash yield requirements

� Ability to invest in quasi-equity (mezzanine, sub debt, etc.)

LONG TERM

INVESTOR� 10 year plus investment horizon

INVESTMENT

PARTNER

� No requirement to take Control

� Preference of 50% or less shareholding: significant minority

ACTIVE

INVESTOR

� Assistance in deal structuring / debt raising

� Active role post investment (board representation)

The Marguerite Fund targets Equity tickets of EUR 25-100m

Marguerite is an attractive partner for industrial / strategic players and other long-term investors

CONFIDENTIAL 5

Diversified portfolio with balanced allocation of committed capital between sectors

Core Sectors of Investment

CONFIDENTIAL

Project Country Sub-sectorTotal Project Investment

(EURm est.)

C-Power Belgium Offshore wind 1,300

Toul & Massangis France Solar PV 641

Autovia Arlanzon (A1) Spain Road 227

Aeolus Poland Onshore wind 193

Chirnogeni Romania Onshore wind 130

Butendiek Germany Offshore wind 1,300

Poznan PPP Poland Energy from Waste 217

TOTAL PORTFOLIO 4,008

Portfolio Summary

More than EUR 300m committed to 8 projects in 6 countries amounting to a combined total

project investment amount of EUR 4bn

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CONFIDENTIAL

Municipal waste management in Poland (1/2)

7

• Poland generates 10 million tons of

Municipal Solid Waste (”MSW”) per

year. Almost 80% of it is landfilled.

• The 99/31/EC Directive on waste

storage requires member states to

limit the amount of biodegradable

municipal waste directed to landfills.

Targets for Poland:

1. Reduction of biowaste in

landfills to 35% of the 1995’s

level by 2020;

2. Recycling targets for package

waste, bulky waste, demolition

waste;

3. Closing of non-compliant

landfills. Reduction in number

of landfills in operation from

1,321 in 2004 to 200 in 2014.

Municipal waste treated in 2009 by country and treatment category, sorted by percentage of landfilling (as a percentage of municipal waste treated)Source: Eurostat, Statistics in focus, 31/2011, “Generation and treatment of municipal waste”.

Poland: >75% of MSW landfilled → Target: 35% in 2020.

As of today, Poland does not comply with the EU waste recycling targets and could potentially face penalties

CONFIDENTIAL

Municipal waste management in Poland (2/2)

8

Targets for Poland

• Reduction of biowaste in landfills to 35% of the 1995’s level by 2020;

• Recycling targets for package waste, bulky waste, demolition waste;

• Closing of non-compliant landfills: reduction in number of landfills in operation from 1,321 in 2004 to 200

in 2014.

New waste law

• Entered into force in 2012;

• Transfer of ownership over municipal waste to municipal authorities;

• Municipalities to levy municipal waste taxes in order to cover the cost of waste disposal;

• Municipal waste management to be organized in ”waste management regions” (under the regional waste

management plans);

• Mixed municipal waste and residues from sorting mixed municipal waste will be directed to regional waste

processing facilities;

• Prohibition of storage of municipal waste outside the waste management region.

Opportunity for Greenfield Waste to Energy (”WtE”) project and collection contracts

Major municipalities in Poland procuring WtE projects under design and build or PPP model:

• Poznań published on 04/04/11, a tender for a WtE PPP project which was signed on 08/04/2013;

• Upcoming other WtE PPP projects in Poland: Łódź (200 kt p.a., 2013) and Gdańsk (250 kt p.a.).

CONFIDENTIAL

Project description

9

• First municipal waste incineration project procured under a PPP scheme in Poland.

• Project’s waste processing capacity of 210,000 tons per annum based on proven technology.

• Waste collection services and waste pre-treatment excluded from the scope of the project.

CONFIDENTIAL

Project location

10

Underground

heat piping

330mWtE

plant

Power connection

Central heat

connection

Elevated ground

piping 460m

POZNAŃWarsaw

Łódź

Gdańsk

Szczecin

Kraków

• Site selected by the Contracting Authority;

• Adjacent to the Karolin CHP plant owned by Dalkia

in an industrial area of Poznań;

• Total area of the land plot: 3.14 ha.

CONFIDENTIAL

Tender process (1/2)

11

4 April 2011 - Tender announcement and request for EoI

Pre

-

qu

alifi

cati

on

Co

mp

eti

tiv

e

dia

log

ue

• Due date: 3 June 2011;

• 11 consortia submitted EoI;

• 5 consortia shortlisted (13 September 2011):• Sita Polska and Marguerite (Sita Zielona Energia sp. z o.o.);

• Veolia, Dalkia, CNIM and PBG (DALVEO Poznań sp. z o.o.);

• Remondis (Remondis Waste to Energy Sp. z o.o.);

• EON (ITPOK sp. z o.o. sp. k.);

• Wheelabrator Technologies Inc. (Articulus sp. z o.o.).

4 October 2011 - Invitation to Competitive Dialogue (“CD”) phase

• Five rounds of CD meetings held between November

2011 and May 2012.

• All aspects of the project including technical

specification of the plant, payment mechanism, draft

PPP Agreement and bid evaluation discussed.

• Substantial input from SITA to structuring of the project

– many comments by SITA taken on board by the City.

• Comments and requests for clarifications regarding

advanced drafts of tender documents can be sent to the

City after CD phase.

• The City amends and modifies tender documents.

• Final set of draft tender documents to be accepted by

the bidders, no negotiation post BAFO submission.

Tender documents

(common for all bidders):

InfoMemo

PPP Agreement outline

1st drafts:

• PPP Agreement

• Payment Mechanism

Advanced drafts:

• PPP Agreement

• Payment Mechanism

• Other appendices

Final drafts:

Full set of tender

documents including PPP

Agreement, Payment

Mechanism, KPIs, etc.

with

invitation to

CD phase

before 4th

CD meeting

with RfP

Co

mm

en

ts

an

d

cla

rifi

cati

on

s

before

BAFO

submission

30 July 2012 – Request for Proposals

CONFIDENTIAL

Tender process (1/2)

12

Bid

pre

para

tio

nB

id e

valu

ati

on

BAFO deliverables

• PayMech variables;

• Financial model, Assumptions Book;

• Equity Commitment Letter;

• Bid bond;

• Scope of works to be subcontracted;

• Construction time schedule;

• Lenders’ Support Letter (fully documented loan facility).

Equity

EPC

Lenders

15 November 2012 – BAFO submission deadline & opening of the proposals

Bid evaluation criteria

25 December 2012 – Project award by City

8 April 2013 – Signing of the PPP Agreement

In order to secure the

financing and limit

execution risk for the City,

SITA ZE bid strategy has

been to fully document the

financing (both debt and

equity) prior to BAFO

The City has been very good at managing such

a complex process and delivered on time:

24 months procedure start-to-finish

CONFIDENTIAL

Waste collection contracts

Contractual structure

13

SHA

Shareholders

Polska

OpCo

50%

50%

O&M Contract

Project ManagementContract EPC

Contract

Su

ez E

nvir

on

ne

me

nt g

rou

p

Heat

offtaker

Power

offtaker

GC

offtaker

Scrap

metal

market

Bottom

ash

offtakers(construction)

or

landfill

ACPR

storage

Senior Lenders

Senior FacilityAgreement

European Union

PPPAgreement

EU Grant contract

EU Grantflow

Households

Municipal Waste Tax

Waste

flow

Waste

flow

100% PCG

Customary contractual structure for a project of this nature

CONFIDENTIAL

PPP Agreement

14

Risk City SPV

Update of EIA Report and building permit application ����

Design documentation ����

Construction delay and cost overruns ����

Waste volume and calorific value risk ����

Waste throughput, heat and power output performance ����

Heat, power and green certificates prices ����

Assumptions on recyclable metals and bottom ashes ����

O&M costs overruns ����

Financing (senior debt, subordinated debt, equity) ����

EU Grant availability (cap) ���� ����

Exchange rate (EUR/PLN) variation between BAFO submission and start of construction ����

Interest rate variation between BAFO submission and hedging transaction entered at start of construction ����

Change in Law (cap) ���� ����

Force Majeure & Fait du Prince ����

The City managed to negotiate a balanced risk allocation allowing for project finance

CONFIDENTIAL

Shareholders

PolskaScrap

metal

market

Bottom

ash

landfill

costs

Senior Lenders

SITA

ZE

Distributions

Fix

ed

fee

Base fee

O&

M V

ari

ab

le f

ee

Lo

ca

l ta

xe

s

Po

wer

reven

ues

GC

reven

ues

Heat

reven

ues

He

at o

ffta

ke

r

GC

off

take

r

Po

wer

reven

ues

(co

ntr

actu

al)

GC

reven

ues

(co

ntr

actu

al)

Heat

reven

ues

(co

ntr

actu

al)

Po

we

r o

ffta

ke

r

Debt service

Tra

ns

mis

sio

n e

as

em

en

t c

os

ts

Po

wer

up

sid

e s

hari

ng

Others

Inte

rco

nn

ec

tio

n c

os

ts

Payment mechanism (2/2)

15

Contracting Authority

O&

M c

osts

O&M

operator

IBA

la

nd

fill c

ost va

ria

tio

n

as c

om

pa

red

to

the

BA

FO

ba

se

ca

se

SITA ZE will be remunerated by the City of Poznań solely under the terms of the PPP Agreement.

The PPP payment mechanism is based on availability fees for the services rendered by SITA ZE

under the PPP Agreement with a pass-through of the revenues from sales of heat, electricity and green certificates

generated by the WtE plant and deductions for underperformance.

CONFIDENTIAL

Financing structure

16

Equity

Debt

• A club of 3 Polish banks providing non-recourse, long term, senior debt facilities to the Project:

• Pekao S.A. (Unicredit group);

• PKO BP;

• BGK (a state owned bank supporting the Government’s and regions’ economic programs and projects).

• Debt facilities:

a. Term Loan Facility A (TLF-A);

b. Term Loan Facility B (TLF-B);

c. Change of Law Facility A (CoLF-A);

d. Change of Law Facility B (CoLF-B);

e. EU Refund Facility (EURF);

f. Working Capital Facility (WCF);

g. VAT Facility (VATF);

h. Equity Bridge Facility (EBF).

• Gearing ratio 80:20.

• Equity split: Marguerite 50% and SITA Polska 50%;

• Contingent equity available in case of a compensation event.

The SITA ZE consortium has submitted a fully financed BAFO

with all documentation agreed and initialled by the different parties

CONFIDENTIAL

According to the new waste law all costs of the waste

management system (including capex) have to be covered

by proceeds from the local waste tax.

� Precise date for EU Grant calculation (“funding gap

method”) not available prior to bid submission and

PPP Agreement award.

� Bidders need to fix the financing structure prior to bid

submission.

� In a PPP, it is challenging for the City to set aside the

grant amount regardless of the EU Grant availability.

EU grant important for the City to ensure affordability

(lowest tax) of the Project to local tax-payers.

Channelling EU Grant to the Project

� Bids to be prepared assuming no EU Grant for the

Project.

� EU Grant to be calculated after PPP Agreement award.

� EU Grant to replace a portion of the Senior Debt.

� Private partner’s remuneration to be recalculated based

on BAFO assumptions under a no better/no worse

principle and using the BAFO financial model.

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Senior

Debt

Equity

Senior

Debt

Equity

EU

Grant

Senior

Debt

Senior

Debt

Equity

EU

Grant

Bid base case

funding structure EU Grant sizing

EU Grant contribution

during construction and

partial debt repayment

Final

funding structure

EU

Grant?

PPP

Agreement

award

BAFO revenue

and cost elements

BAFO financial

modelBAFO financial

model adjustments

CONFIDENTIAL 18

Disclaimer and Contact Information

Marguerite Adviser S.A.

41, Boulevard du Prince Henri – L-1724 Luxembourg

phone: + 33 1 53 85 95 00

info@margueritefund.eu

www.margueritefund.eu

The purpose of this presentation is to provide selected information about 2020 European Fund for Energy, Climate Change and Infrastructure

(the “Marguerite Fund”), an investment company with variable capital – specialized investment fund (société d'investissement à capital variable –

fonds d'investissement spécialisé) formed as a public limited liability company (société anonyme) under the laws of the Grand Duchy of

Luxembourg, with registered office at 5, Allée Scheffer, L-2520 Luxembourg, registered with the Luxembourg Trade and Companies Register under

number B. 149221, and Marguerite Adviser S.A., a public limited liability company under the laws of Luxembourg with registered office at 1-3,

boulevard de la Foire, L-1528 Luxembourg, registered with the Luxembourg Trade and Companies Register under number B. 149028 (“Marguerite

Adviser”) and information about a portfolio company.

The information in this Presentation does not purport to be complete nor does it necessarily contain all the information which the recipient may

consider material. Any information contained herein is subject to change, correction and/or adjustment. This document is confidential and may

be neither communicated to any third party nor copied in whole or in part without the prior written consent of the Marguerite Fund or Marguerite

Adviser.