State of Wyoming Pipeline Authority Discussion of Capital

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State of Wyoming Pipeline Authority Discussion of Capital Market Financing August 26, 2003

State of Wyoming Pipeline Authority Discussion of Capital Market Financing August 26, 2003

Introduction to UBS 1

Introduction to UBS 1

Corporate Organization ¨ Named 2002 “Bank of the Year” by Investment Dealer’s Digest ¨

Corporate Organization ¨ Named 2002 “Bank of the Year” by Investment Dealer’s Digest ¨ Named “World’s Best Investment Bank” in Euro. Money’s Awards for Excellence 2002 L: CVDDENWPA 001. ppt 2 12/3/2020 8: 22: 47 AM

UBS’s US Utility Sector Advisory Experience ¨ During this past cycle of utility transactions,

UBS’s US Utility Sector Advisory Experience ¨ During this past cycle of utility transactions, UBS has advised on over $70 billion of US electric and gas advisory assignments (1) Dates represent transaction announcements and figures represent enterprise values; UBS client in bold, since 1994 L: CVDDENWPA 001. ppt 3 12/3/2020 8: 22: 47 AM

A Dominant Force in the US Power Industry ¨ UBS Investment Bank has been

A Dominant Force in the US Power Industry ¨ UBS Investment Bank has been an advisor in five of the last ten utility deals in the United States L: CVDDENWPA 001. ppt 4 12/3/2020 8: 22: 50 AM

Dominant Force in the US Utility Capital Markets L: CVDDENWPA 001. ppt 5 12/3/2020

Dominant Force in the US Utility Capital Markets L: CVDDENWPA 001. ppt 5 12/3/2020 8: 22: 55 AM

UBS Financial Services Inc. ¨ UBS Financial Services’ Domestic Offices Full-service national securities firm

UBS Financial Services Inc. ¨ UBS Financial Services’ Domestic Offices Full-service national securities firm CENTRAL Seattle Bellevue Spokane WA ¨ ¨ In June 2003, UBS Paine. Webber became UBS Financial Services, a division of UBS AG, the largest private bank in the world $1. 5 trillion in assets under management in the combined firm Portland Kennewick OR ID Medford Sun Valley Tehama Bank Chico Ogden Sonoma Grass Valley. Incline Village Santa Rosa. Roseville Salt Lake City Reno NV Napa Walnut Creek, Alameda San Francisco (2) Sacramento UT Stockton Palo Alto Merced San Jose Fresno San Mateo Las Vegas Menlo Park CA Carmel Santa Barbara Ventura. Bakersfield Beverly Hills Sedona Brea Century City Peak Carlsbad Sun Encino Pinnacle Mission Viejo Long Beach Village Scottsdale Orange Phoenix Los Angeles (3) AZ Redlands Newport Beach Riverside Pasadena Tucson Woodland Hills Palm Desert La Jolla Rancho Bernardo San Diego WESTERN Honolulu AK Anchorage MICHIGAN ME Birmingham MASS. Detroit Bangor Burlington Boston (7) Farmington Hills Hingham Flint Hyannis VT Livonia Billings MN Portland Plattsburgh. NH Peabody Rochester Concord Springfield Rochester. Troy Minneapolis Glens Falls Wayzata Traverse WI Bedford Wellesley NY City Plymouth St. Paul Syracuse SD Minnetonka Worcester Albany Muskegon Rochester Wauwatosa MA Williamsville White Plains MI Sioux Falls CT Tarrytown Madison Lansing WY Buffalo RI RHODE IS. Grand Milwaukee Providence CONN. Northbrook Rapids Cleveland IA PA Beachwood Chicago (3) Darien Toledo Akron Des Moines Naperville NEW YORK NE Omaha Youngstown Greenwich Schaumburg Canton Melville Fishkill Atlantic Marysville Oak Brook Fort Wayne Hartford (2) Troy OH Mt. Kisco MD Flushing Hinsdale Fort Collins Lincoln Columbus Greeley Middlebury DE New York (13) S. Hampton Dayton (2) Boulder IN New Haven Albany Mc. Lean Denver (2) Garden City (3) Pear River Cincinnati (2) Aspen Highlands New London Topeka Kansas City (2) IL Ranch WV Charlottesville Port Jefferson Huntington Indianapolis Overland Pk Chesterfield Norwich Colorado Springs Richmond (3) Lexington Smithtown Manhasset Indian Hills Ridgefield KS CO Norfolk Roanoke (2) St. Charles Va. Beach Louisville (2) Stamford (2) VA Wichita MD MO St. Louis Paducah KY Durham Greensboro (2) Westport Bristol Raleigh Baltimore Bowling. Winston-Salem(2) Green (2) Kingsport Oak Ridge High Point Greenville Hendersonville Knoxville PENN. Tulsa Nashville (2) Ashville. Hickory. Smithfield Hunt Valley Cookeville Santa Fe Brentwood NEW JERSEY Charlotte (2) Maryville (2) Altoona NC Bethesda Muskogee Albuquerque Jackson Hendersonville TN Murfreesboro Spartanburg Bedminster OK Edmond Bethlehem Memphis(2) Wilmington Rockville Franklin. Chattanooga. Greenville (2) Cherry Hl. Erie Prince Georges Cty Oklahoma City Little Rock Columbia. Sumter AL Hackensack Atlanta (5) SC Mt. Pleasant Greensburg Birmingham(2) Augusta Manalapan Charleston (2) NM AR New Kensington Columbus Hurst Macon Metro Ctr. (2) Plano Lubbock Tuscaloosa Columbus MS WASHINGTON, D. C. Newton Morristown Grapevine Philadelphia (3) Meridian Midland Ft. Dallas (4) Savannah Worth (2) Longview Montgomery Northfield Pittsburgh (3) LA Tyler Jackson (2) Paramus San Angelo Mexia Radnor GA Mobile Waco Bryan College Sta. Ponte Verde Princeton Rydal Gulfport Pensacola Jacksonville Red Bank FL Destin Wilkes-Barre (2) Beaumont. Baton Rouge Daytona Beach Westfield TX Austin (2) Kingwood Gainesville Lafayette New Ocala Melbourne Orleans Wailuku Sugar Beach San Antonio (2) Land (2) Orlando Vero Stuart Clearwater Venice. Palm Beach (2) St. Tampa Petersburg Houston (10) Ft. Lauderdale Corpus Christi Sarasota Meyers Boca Raton (3) Naples Hilo Miami Mc. Allen Aventura Coral Gables/Int’l HI San Juan MT Bend NORTHEAST ND Grand Forks Virginia Duluth SOUTHERN PR ¨ UBS Financial Services' Core Businesses: — — — — Private Client Investment Services Asset Management Research Investment Banking Global Fixed Income Global Equity Sales and Trading Municipal Securities Group L: CVDDENWPA 001. ppt 6 12/3/2020 8: 22: 59 AM

UBS Financial Services is a National Municipal Powerhouse 2003 YTD Negotiated Rankings 2002 Negotiated

UBS Financial Services is a National Municipal Powerhouse 2003 YTD Negotiated Rankings 2002 Negotiated Rankings 2001 Negotiated Rankings Source: Securities Data Corporation; Includes Senior Managed Negotiated transactions. National Distribution UBS Offices Municipal Committing Center L: CVDDENWPA 001. ppt 7 12/3/2020 8: 23: 04 AM

UBS Taxable Municipal Bond Firm Rankings ¨ UBS has consistently been ranked #1 in

UBS Taxable Municipal Bond Firm Rankings ¨ UBS has consistently been ranked #1 in the taxable municipal market with over $21. 94 billion of issuance since 1993 and resources from UBS Securities sales and trading available as well Senior Managed Taxable Experience January 1, 1993 to June 2003 (# of issues/$ in millions) Number of Issues 420 305 253 199 171 149 178 93 321 8 L: CVDDENWPA 001. ppt 8 12/3/2020 8: 23: 07 AM

UBS Financial Services Credentials Senior Managed Public Power Financing Expertise ¨ UBS works with

UBS Financial Services Credentials Senior Managed Public Power Financing Expertise ¨ UBS works with many power agencies to develop finance plans and issue municipal debt L: CVDDENWPA 001. ppt 9 12/3/2020 8: 23: 08 AM

Wyoming Natural Gas Pipeline Authority Capital Financing Issues 10

Wyoming Natural Gas Pipeline Authority Capital Financing Issues 10

Transaction Environment ¨ Authority can’t own pipeline, but can own pipeline capacity ¨ Authority

Transaction Environment ¨ Authority can’t own pipeline, but can own pipeline capacity ¨ Authority can initiate a project, but needs owner/partner ¨ Difficulty securing long-term contracts with pipeline users ¨ Regulatory lead time ¨ Preference/requirement to ship Wyoming origin gas ¨ Gaining access/control over RIK gas L: CVDDENWPA 001. ppt 11 12/3/2020 8: 23: 14 AM

Transaction Relationships Pipeline Owner Banks (Foreign & Domestic) Producers Business Partnership Pension Funds Debt

Transaction Relationships Pipeline Owner Banks (Foreign & Domestic) Producers Business Partnership Pension Funds Debt Structure Insurance Companies Individual/ Institutional Investors LMD Natural Gas Pipeline Authority Utilities Credit Support State of Wyoming RIK Gas L: CVDDENWPA 001. ppt 12 12/3/2020 8: 23: 14 AM

Transaction Structure – Critical Issues ¨ Quantify economic value from promotion of gas development

Transaction Structure – Critical Issues ¨ Quantify economic value from promotion of gas development in Wyoming ¨ Analyze the most efficient means of creating this economic value, e. g. credit support, pipeline capacity ownership ¨ Determine what influence or input into a project is desired ¨ Several implementation alternatives are available choose a partner and jointly develop a project — choose a preferred project — solicit interest from several parties and move forward with one or more — ¨ Negotiate outline of agreement with preferred company(ies) ¨ Organize financing and prepare contracts and agreements with pipeline company ¨ Offer bonds or execute alternative financing agreement ¨ Close on financing and pipeline agreement L: CVDDENWPA 001. ppt 13 12/3/2020 8: 23: 14 AM

Establishing a Term for the Borrowing ¨ Length and structure of transportation agreements are

Establishing a Term for the Borrowing ¨ Length and structure of transportation agreements are the critical issues ¨ 30 years is generally the longest maturity date ¨ 10 year debt has been used for some pipeline projects ¨ Debt is most often non-callable (no pre-payment) or includes “make-whole” features, creating financial impediments to pre-payment L: CVDDENWPA 001. ppt 14 12/3/2020 8: 23: 15 AM

Debt Structure Options ¨ Senior lien debt – all bondholders enjoy a shared first

Debt Structure Options ¨ Senior lien debt – all bondholders enjoy a shared first lien on pipeline revenues ¨ Subordinate lien debt - position of subordinate bondholders is below holders of senior debt; return on investment is higher ¨ Fixed rate – Viewed as attractive in light of current low interest rates and its resulting known, fixed annual cost ¨ Adjustable rate – Creates lowest cost of capital, greatest debt management flexibility but is not congruent with FERC process that seeks to establish fixed costs (can be fixed synthetically) L: CVDDENWPA 001. ppt 15 12/3/2020 8: 23: 15 AM

Forms of Credit Support External ¨ Bond Insurance – a “AAA” rated guaranty that

Forms of Credit Support External ¨ Bond Insurance – a “AAA” rated guaranty that assures payment of principal and interest ¨ Letters of Credit – guaranty from a bank securing principal and interest; often used in variable rate financings State Sponsored ¨ Moral Obligation Pledge – statement by one governmental entity, e. g. a state, that it will support the debt of another public entity ¨ State Investment in Authority Bonds – this could involve the Sate purchasing bonds with terms or conditions not available from other investors (as senior or subordinate bondholder). Such terms could reflect a form of credit enhancement ¨ Pledge of assets, potentially in conjunction with other State entities. This would be organized as a standby bond purchase agreement L: CVDDENWPA 001. ppt 16 12/3/2020 8: 23: 15 AM

Solving for the Most Advantageous Financing ¨ The Authority can analyze several options by

Solving for the Most Advantageous Financing ¨ The Authority can analyze several options by grading each option or casting it one of several categories ¨ The matrix below illustrates how this would work ¨ There are probably more combinations that can be added to those shown L: CVDDENWPA 001. ppt 17 12/3/2020 8: 23: 16 AM

Conclusions 18

Conclusions 18

Conclusions ¨ The revised statutory powers granted to the Authority by SF 85 (Enrolled

Conclusions ¨ The revised statutory powers granted to the Authority by SF 85 (Enrolled Act 55) will enable the Authority to access the debt markets ¨ At least one financing option can achieve a rating for the Authority, without external credit enhancement of “AA” and possibly “AAA” ¨ The debt structure could be as short as 10 years or out to 30 years ¨ Interest rates on the Authority’s debt would be a spread to US Treasury rates ¨ The Authority can realize additional financial benefits from its nontaxpaying status ¨ The Authority can finance its project share with 100% debt – no equity requirement L: CVDDENWPA 001. ppt 19 12/3/2020 8: 23: 19 AM

The Taxable Bond Market 20

The Taxable Bond Market 20

Targeted Investors – U. S. , Europe and Asia Composition of Taxable Demand Domestic

Targeted Investors – U. S. , Europe and Asia Composition of Taxable Demand Domestic and International L: CVDDENWPA 001. ppt 21 12/3/2020 8: 23: 19 AM

Targeted Investors – U. S. , Europe and Asia Potential US Roadshow – Major

Targeted Investors – U. S. , Europe and Asia Potential US Roadshow – Major Investor Centers Roadshow Destinations Location Recommendation Type 1 -3 6 8 10 11 4 5 7 9 One-on-One/Conference call Group/One-on-One/Group One-on-One West Coast Chicago Boston New York D. C. Minneapolis Iowa Milwaukee Hartford Recommended Recommended Possible Seattle GNA/GE Financial Microsoft Safeco State of Washington San Francisco/Sacramento Barclays CALPERS CALSTERS Franklin Wells Capital Los Angeles Area Cap Re PIMCO Transamerica TCW Wamco Minneapolis ELCA Pension IDS Lutheran Brotherhood Reliastar Iowa Principal Financial Aegon 10 9 8 6 7 4 2 1 3 5 9 8 1 4 6 7 10 2 3 5 11 11 Chicago Allstate Corporation Aon Continental Assurance Harris IM Lincoln Capital PPM America Scudder Zurich Stein Roe Farnham UBS Brinson Van Kampen Milwaukee NISA Northwest Mutual Life Strong Boston Allmerica Back Bay Fidelity Fleet John Hancock Liberty Mutual Loomis Sayles Mass Fi Mass Mutual Putnam State Street Global State Street Research Standish Wellington Hartford Aeltus Aetna Cigna Hartford Life District of Columbia/Virginia New York City/NJ Aegon AIG GE Ohio Pers Fiduciary FNMA FHCMC Vanguard (PA) Alliance Capital American Express/IDS Blackrock Chase AM Continental Guardian JPMIM Met. Life MLAM Miller Anderson Mutual of NY NYLife Prudential State Farm State of New Jersey Teachers Insurance Travelers Weiss Peck Fannie Mae Freddie Mac L: CVDDENWPA 001. ppt 22 12/3/2020 8: 23: 20 AM

Targeted Investors – U. S. , Europe and Asia European Roadshow – Potential Locations

Targeted Investors – U. S. , Europe and Asia European Roadshow – Potential Locations London Paris Amsterdam / Benelux Frankfurt / Munich Zurich / Geneva Dublin Milan Madrid London Paris Amsterdam / Benelux Barclays Barings Fidelity Green T GSAM JP Morgan Investment Management Julius Baer MAM Prudential (M&G) Rogge Rothschild Asset Management Saudi International Investment Management Scudder/Threadneedle AGF–Allianz AXA CDC Groupama HSBC (CCF) Indocam Soc Gen Asset Management Sogeposte ABP Aegon Achmea Dexia ING Investment Management Philips Pension Fund Rabobank Robeco Germany Dublin Allfonds Allianz De. Pfa DEKA De. AM DWS GZ Bank Union Invest Bank of Ireland Rheim Hyp European Hypo Dublin BW Bank Eagle Star Intesa L: CVDDENWPA 001. ppt 23 12/3/2020 8: 23: 22 AM

BIS Risk Weighting ¨ Extremely important to taxable buyers, particularly international investors — Direct

BIS Risk Weighting ¨ Extremely important to taxable buyers, particularly international investors — Direct impact on banks ¨ Indirect impact on secondary market liquidity ¨ Important to achieving lowest taxable interest cost — Estimated interest cost impact: 20%-50% ¨ BIS rules clearly state that bonds subject to appropriation may be treated as general obligations, eligible for 20% risk weighting ¨ “Obligation supported exclusively by excise taxes…. is not a general obligation… [unless] the obligation is also supported by the general revenues of the State or a political subdivision possessing general powers of taxation” ¨ Investors must assess probability of achieving a particular risk weighting if ruling has not been made L: CVDDENWPA 001. ppt 24 12/3/2020 8: 23: 26 AM

Marketing Plan – Listing on Luxembourg Exchange ¨ Listing on Luxembourg Exchange creates liquidity

Marketing Plan – Listing on Luxembourg Exchange ¨ Listing on Luxembourg Exchange creates liquidity in the European markets ¨ Requires the use of a listing agent (e. g. , Dexia) who will assist the Issuer with the application process ¨ A local Luxembourg counsel will also need to be retained Global Book-Entry System ¨ Global Book-Entry System will allow the Issuer’s Bonds to be traded in “real time” ¨ DTC, Clearstream and Euroclear comprise the Global Book-Entry System L: CVDDENWPA 001. ppt 25 12/3/2020 8: 23: 27 AM