ITC Holdings Corp.

Investor Presentation

January 2012

ITC Holdings Corp.

ITC Holdings Corp.

Investor Presentation

Investor Presentation

January 2012

January 2012

Filed by ITC Holdings Corp.

Pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934

Subject Company: ITC Holdings Corp.

Commission File No.

001-32576

Safe Harbor Language & Legal Disclosure

2

This

presentation

contain

certain

statements

that

describe

ITC

Holdings

Corp.

(“ITC”)

management’s

beliefs

concerning

future

business conditions and prospects, growth opportunities and the outlook for ITC’s business, including ITC’s business and the

electric

transmission

industry

based

upon

information

currently

available.

Such

statements

are

“forward-looking”

statements

within

the meaning of the Private Securities Litigation Reform Act of 1995. Wherever possible, ITC has identified these forward-looking

statements

by

words

such

as

“anticipates”,

“believes”,

“intends”,

“estimates”,

“expects”,

“projects”

and

similar

phrases.

These

forward-looking statements are based upon assumptions ITC management believes are reasonable. Such forward-looking

statements are subject to risks and uncertainties which could cause ITC’s actual results, performance and achievements to differ

materially from those expressed in, or implied by, these statements, including, among other things, (a) the risks and uncertainties

disclosed in ITC’s annual report on Form 10-K and ITC’s quarterly reports on Form 10-Q filed with the Securities and Exchange

Commission

(the

“SEC”)

from

time

to

time

and

(b)

the

following

transactional

factors

(in

addition

to

others

described

elsewhere

in

this

document

and

in

subsequent

filings

with

the

SEC):

(i)

risks

inherent

in

the

contemplated

transaction,

including:

(A)

failure

to

obtain approval by the Company’s shareholders; (B) failure to obtain regulatory approvals necessary to consummate the transaction

or to obtain regulatory approvals on favorable terms; (C) the ability to obtain the required financings; (D) delays in consummating

the transaction or the failure to consummate the transactions; and (E) exceeding the expected costs of the

transactions;

(ii)

legislative

and

regulatory

actions,

and

(iii)

conditions

of

the

capital

markets

during

the

periods

covered

by

the

forward-looking statements.

Because ITC’s forward-looking statements are based on estimates and assumptions that are subject to significant business,

economic

and

competitive

uncertainties,

many

of

which

are

beyond

ITC’s

control

or

are

subject

to

change,

actual

results

could

be 

materially

different

and

any

or

all

of

ITC’s

forward-looking

statements

may

turn

out

to

be

wrong.

They

speak

only

as

of

the

date

made and can be affected by assumptions ITC might make or by known or unknown risks and uncertainties. Many factors

mentioned in this document and the exhibits hereto and in ITC’s annual and quarterly reports will be important in determining future

results. Consequently, ITC cannot assure you that ITC’s expectations or forecasts expressed in such forward-looking statements

will be achieved. Actual future results may vary materially. Except as required by law, ITC undertakes no obligation to publicly

update any of ITC’s forward-looking or other statements, whether as a result of new information, future events, or otherwise.

The transaction is subject to certain conditions precedent, including regulatory approvals, approval of ITC’s shareholders and the

availability

of

financing.

ITC

cannot

provide

any

assurance

that

the

proposed

transactions

related

thereto

will

be

completed,

nor can

it give assurances as to the terms on which such transactions will be consummated.

Safe Harbor Language & Legal Disclosure

3

ITC

and

Mid

South

TransCo

LLC

(“TransCo”)

will

file

registration

statements

with

the

SEC

registering

shares

of

ITC

common

stock

and

TransCo

common

units

to

be

issued

to

Entergy

Corporation

(“Entergy”)

shareholders

in

connection

with

the

proposed

transactions. ITC will also file a proxy statement with the SEC that will be sent to the shareholders of ITC. Entergy shareholders

are urged to read the prospectus and/or information statement that will be included in the registration statements and any other

relevant

documents,

because

they

contain

important

information

about

ITC,

TransCo

and

the

proposed

transactions.

ITC’s

shareholders

are

urged

to

read

the

proxy

statement

and

any

other

relevant

documents

because

they

contain

important

information

about

ITC,

TransCo

and

the

proposed

transactions.

The

proxy

statement,

prospectus

and/or

information

statement,

and

other

documents relating to the proposed transactions (when they are available) can be obtained free of charge from the SEC’s website

at

www.sec.gov.

The

documents,

when

available,

can

also

be

obtained

free

of

charge

from

Entergy

upon

written

request

to

Entergy

Corporation,

Investor

Relations,

P.O.

Box

61000

New

Orleans,

LA

70161

or

by

calling

Entergy’s

Investor

Relations

information line at 1-888-ENTERGY (368-3749), or from ITC upon written request to ITC Holdings Corp., Investor Relations,

27175 Energy Way, Novi, MI 48377 or by calling 248-946-3000

This presentation is not a solicitation of a proxy from any security holder of ITC. However, Entergy, ITC and certain of their

respective directors and executive officers and certain other members of management and employees may be deemed to be

participants

in

the

solicitation

of

proxies

from

shareholders

of

ITC

in

connection

with

the

proposed

transaction

under

the

rules

of

the SEC. Information about the directors and executive officers of Entergy may be found in its 2010 Annual Report on Form 10-K

filed with the SEC on February 28, 2011, and its definitive proxy statement relating to its 2011 Annual Meeting of Shareholders

filed with the SEC on March 24, 2011. Information about the directors and executive officers of ITC may be found in its 2010

Annual Report on Form 10-K filed with the SEC on February 23, 2011, and its definitive proxy statement relating to its 2011

Annual Meeting of Shareholders filed with the SEC on April 21, 2011.

ITC Overview

ITC Overview

Overview of Current ITC

•

ITC’s pure play, fully regulated independent

transmission model creates a unique,

structurally advantaged infrastructure

portfolio

•

Attractive FERC rate structures and

regulatory features support investment and

timely return of and on capital

–

Forward looking rates combined with

attractive ROE’s and capital structures

allow for superior cash generation

–

Consolidated capital structure further

enhances incremental shareholder returns

to low 20% range

•

Actively developing transmission

infrastructure required for reliability needs

and emerging long-term energy policy

–

Portfolio of currently actionable investment

opportunities drives growth and value

creation

5

•

Multi-faceted strategy leverages our sole

focus on transmission infrastructure

investment

•

Achieve and maintain best-in-class in core

operations

–

Includes reliability, security and safety

–

Improvements over the years reflective of

our investments and business practices

–

Non-discriminatory access to all generating

resources

–

Fundamental core strategy serves as an

important building block for development

efforts

•

Leader in the development of a 21

st

century

grid

–

Transmission outlook provides for

significant investment opportunities

–

Thought leader in advocating and

facilitating transmission development

–

Proven capabilities and strategically

advantaged

Overview of ITC

STRATEGY

Transmission Investment  

REGULATORY REFORM

•

FERC Order 1000

–

Issued in July 2011, provides key principals on

transmission planning and regional cost

allocation

–

ITC has long advocated for planning and cost

allocation policy reforms within Order 1000;

should serve to promote regional transmission

projects

•

SPP implemented new cost allocation policy and

planning process

–

Highway / Byway cost allocation provides for

regional cost allocation for projects 300kV+

–

Integrated Transmission Planning (ITP) process

is a comprehensive, longer-term process

•

MISO implemented new cost allocation policy and

has undertaken regional planning process

–

In December 2010, FERC approved regional cost

allocation for multi-value projects (MVPs) which

are projects with a regional impact and are

intended to facilitate policy mandates

–

Regional Generation Outlet Study (RGOS)

undertaken

to

identify

regional

transmission

needs

–

First basket of RGOS projects / MVPs approved

in December 2011

Financial Highlights  

•

Predictable and visible financial results driven by FERC formulaic ratemaking model

–

FERC rate-setting mechanism ensures timely recovery of return on and of investments as well

as operating and administrative expenses

–

Annual forward looking rate setting process with true-up for actual differences

•

Significant regulated earnings growth driven by capital investment plan coupled with

attractive incentive ROE’s and capital structures at regulated subsidiaries

•

Existing and development operating companies are capitalized with 60% equity

•

Committed

to

maintaining

strong

investment

grade

ratings

at

both

operating

company

and holding company levels

(1)

Reflects FERC approved ROE for ITC Great Plains.

(2)

Reflects FERC approved ROE for Green Power Express.

8

Stand Alone Five-Year Capital Plan

Projected Year-End Rate Base  

10

*Based on stand alone capital plan

•

Total cash requirements to execute five-

year plan total approximately $5.0 billion

–

Cash inflows support funding of capital

expenditures, dividends and

retirements of existing debt

–

Internally generated operating cash

flow expected to fund approximately

48% of the overall cash requirement

•

Remain committed to investment grade

credit ratings

–

Five-year capital plan positions

company well to maintain investment

grade ratings

•

New equity issuances are not anticipated

to fund current five-year capital plan

Amounts in $MM

Funding of Capital Requirements   

11

*Based on stand alone capital plan

Transaction Overview

Transaction Overview

Transaction Overview

13

Transaction Structure

•

Reverse

Morris

Trust

-

Entergy’s

transmission

business

merges

into

ITC

•

Prior to merger, Entergy to pursue a levered tax free spin-off of its transmission

business and ITC plans to effectuate a recapitalization, anticipated to be debt-

financed special dividend of $700 million

•

100% stock consideration

ITC Shareholders

Post-Merge

•

50.1% Entergy shareholders

•

49.9% ITC shareholders

ITC Senior

Mgmt & Board

•

Two new independent directors who have transmission industry knowledge and

familiarity with Entergy’s region

•

ITC’s management team will remain intact for combined business, supplemented

with key Entergy leadership personnel from Entergy’s transmission business

Headquarters

•

Regional headquarters in Jackson, MS

•

Corporate headquarters in Novi, MI

Expected Closing

•

In 2013, subject to timing of approvals

Approval Process

•

Entergy retail regulatory approvals

•

Federal Energy Regulatory Commission approvals

•

ITC shareholder approval

•

Certain other regulatory approvals

Compelling Strategic Fit

14

•

Provides long-term sustainable benefits for all

stakeholders including customers, regulators,

employees, and investors

•

Transformational to ITC size, scale and financial

strength

•

Enhances credit quality

•

Adds sizeable new markets to ITC’s operating and

development portfolio; diversifies and enhances

growth prospects through expanded footprint

–

Largest electric transmission company in the U.S.

based on net PP&E and load served

–

Second largest transmission company in the U.S.

based on transmission circuit miles

–

Significantly expands geographic footprint

–

Increased geographic and market diversification

–

Transition of Entergy transmission business to

FERC construct reduces overall business risk

profile

–

De-risks and diversifies development growth

portfolio

–

Provides additional avenue of sustainable long-

term growth through needed upgrades of existing

Entergy system

Leading Transmission Platform

15

•

Further establishes ITC as the leading transmission platform in the U.S.

–

Largest electric utility based on total transmission net PP&E & peak load served

Transmission Business

Network System Peak Load

26,100 MW

28,000 MW

Service Area

Seven states –

including

footprint in Michigan, Iowa,

Minnesota, Illinois,

Missouri, Kansas &

Oklahoma

Four states –

including

footprint in Arkansas, Texas,

Louisiana and Mississippi

Total Transmission Miles

Approximately 15,100

miles

Approximately 15,700 miles

9/30/2011 Net PP&E

$3.2 billion

$3.1 billion

RTO Membership

MISO & SPP

Currently Independent

Coordinator of Transmission 

with anticipated full transition

to MISO by December 2013

Full Time Equivalent

Employees

Approximately 450*

Approximately 750*

* Excludes contract work force

** ITC, ETR & Pro forma ITC net PP&E as of 9/30/2011 based on GAAP, all other amounts per June 30, 2011 FERC Form 1

16

Transparency

Independent Model

Benefits of ITC independent

transmission model

Transparency

Improved

Reliability

Aligned with

Public Policy

Operational

Excellence

Improved Credit

Quality

Competitive

Markets

Reduced System

Congestion

Enhanced Generator

Interconnections

Transaction will be Credit Quality

Accretive…

•

Transaction premised on transitioning Entergy transmission business to FERC formulaic ratemaking

construct, consistent with existing ITC operating companies

Generates predictable revenues based on actual capital investment and expenses

Additional protections to existing strict credit policies at MISO and SPP

•

Significantly enhanced balance sheet strength, increasing ITC’s net PP&E by over $3.1bn*

•

Addition of the Entergy transmission business will significantly

broaden and de-risk ITC’s investment pipeline

•

Experienced management team with credibility and proven track record focused on preserving credit quality

as an integral component of the business plan

17

*Entergy transmission business net PP&E as of 9/30/2011

–

Adoption of annual forward looking rate setting process with true-up mechanism ensures timely recovery of and

return on investments, as well as operating and administrative expenses

–

FERC approved regulatory construct will support credit quality going forward

–

The addition of Entergy’s operations in four states will afford ITC greater geographic  and counterparty

diversification

–

Perpetuates ITC’s existing supportive regulatory model

–

Maintenance of strong pro forma credit metrics in addition to increased scale

–

Improved capital markets access and liquidity post-transaction

–

System upgrades and in-footprint development opportunities will create a meaningful new

avenue for capital

investment

–

Committed to maintaining strong investment grade ratings at both

operating company

and holding company levels

•

ITC expects to maintain its current solid investment grade credit ratings and achieve similar

investment grade credit ratings for the merged entities

–

ITC Holdings and subsidiaries were upgraded by S&P upon announcement of the transaction

–

Moody’s re-affirmed its ratings upon transaction announcement

•

Transaction expected to be credit metric neutral for ITC

–

Reaffirms strong investment grade credit metrics

–

Enhanced credit quality due to diversified growth platform and improved balance

sheet size / increased scale

…While Maintaining Credit Metrics

18

ITC Holdings              Baa2       Stable            BBB     

Stable

ITCTransmission

A1

Stable                A          Stable

METC

A1

Stable                A          Stable

ITC Midwest

A1

Stable                A          Stable

ITC Great Plains        Baa1

Stable

BBB+      Stable

Approvals & Timeline

•

The

transaction

is

targeted

to

close

in

2013,

subject

to

receipt

of

the

following

approvals

and

closing conditions

•

Anticipated Approval Requirements*

* Approvals may be required in Missouri and Tennessee due to limited assets in those territories. Approval may be required in Oklahoma for ITC.

19

Entergy Retail Regulators

(APSC, LPSC, MPSC,

PUCT, CCNO)

•

Change of control of transmission assets

•

Authorization to incur debt in some jurisdictions

FERC

•

Change of control of transmission assets

•

Establish new regulatory construct for new ITC subsidiaries

•

Authorization for operating company financings

Hart-Scott-Rodino Act

(DOJ / FTC)

•

Pre-merger notification to review potential antitrust and competition issues

IRS Private Letter Ruling

•

Ruling regarding tax-free treatment of the distribution of Transco Holdco

ITC Shareholders

•

Merger

•

Amendment to ITC Articles of Incorporation to increase the number of authorized

shares

•

Authorization for issuance of greater than 20% of outstanding shares

Preliminary Financing Structure

20

ITC Holdings Corp.

ITCTransmission

Mid South TransCo HoldCo

METC

ITC Midwest

ITC Great Plains

Mid South OpCos

ITC Transmissio

$mm

First Mtge Bonds

$385

$100mm revolver

4

Total debt

$389

METC

$mm

Senior Sec. Notes

$275

$100mm revolver

17

Total debt

$292

ITC Midwest

$mm

First Mtge Bonds

$325

$150mm revolvers

72

Total debt

$397

ITC Great Plains

$mm

First Mtge Bonds

$-

$150mm revolver

41

Total debt

$41

Mid South OpCos

$mm

First Mtge Bonds

$1,200

Revolvers

-

Total debt

$1,200

Mid South TransCo HoldCo

$mm

Unsecured notes

$575

Revolver

-

Total debt

$575

Note: 9/30/2011 debt balances

~$700mm senior unsecured notes (anticipated to be funded pre-

closing with M&A unwind feature)

ITC Holdings

$mm

Unsecured notes

$1,462

Transaction notes

700

Total debt

$2,162

$1.2bn First Mortgage Bonds across OpCos

OpCo credit facility(s)

Up to $575mm senior unsecured notes

Executed at close of transaction

No change

Transaction adjustments

Anticipated

cross

guarantee

between

ITC

Holdings

and

Mid

South TransCo HoldCo

Financial Policy

•

Pro forma company will be capitalized to maintain strong, investment grade

credit metrics

–

Transaction financing will include a balanced mix of equity and debt

–

Overall capitalization and funding plans position ITC well to maintain strong

investment grade ratings

•

Balance sheet strength and financial flexibility remain a critical aspect of pro

forma strategy

–

Transaction

specifically

structured

to

maintain

pro

forma

credit

metrics

consistent

with stand alone plan

•

Pro forma company will maintain a strong and prudent liquidity profile

•

ITC to maintain current dividend policy with pro forma business

21

Summary and Conclusions

22

•

Pro forma ITC will continue to generate reliable, predictable and consistent cash flows

–

Forward-looking tariff will be in effect for all operating companies, including the Entergy operating

companies

Formulaic rate setting mechanism with annual adjustments and true-up mechanism

–

Generates predictable revenues based on projected capital investments and expenses

•

Transaction will be credit quality accretive and will allow for maintenance of strong investment grade

credit metrics

–

Balance sheet strength and flexibility remains critical aspect of pro forma strategy

–

Company will maintain strong and prudent liquidity

•

Supportive regulatory environment

–

FERC continues to promote transmission investment and the independent transmission model

–

ROE levels support strong credit quality

–

Operating company capital structures facilitate credit quality and access to capital

•

Resiliency of business model and ratemaking structure

–

Predictable annual rate setting mechanism provides certainty, stability, and recoverability

–

A similar rate construct will be put in place in the Entergy transmission jurisdictions

Appendix

Appendix

ITC Regulatory Structure

(1)

Source: EIA Annual Energy Outlook 2010.

24

Projected Formula Rate Mechanism  

25

•

Other important attributes of formula rate

–

Projected rates reset annually through posting with regional transmission operator without the need for

rate cases

–

Projected rate applied to actual monthly peak load

Annual true-up in place for any differences in projected load as well as difference in any other

projected inputs in formula (e.g., capital investments, operating expenses, etc.)

Ensures timely recovery of and on capital investment; largely eliminates lag

–

SPP

rate

setting

mechanism

does

not

include

a

“Network

Load”

component;

revenue          

requirements are collected on a load ratio share basis

(1) ITC Great Plains calculates a revenue requirement and does not calculate a rate.

$1.775b of newly-issued debt will

be raised at Entergy’s

transmission business, the

proceeds from which will be

distributed to Entergy

Entergy will create and

distribute new Transco (“Mid

South TransCo LLC “) to

Entergy shareholders

Prior to the merger, ITC will recapitalize,

currently anticipated to be a one-time 

$700mm special dividend to existing

shareholders, funded by newly-issued senior

unsecured notes at ITC Holdings

Mid South TransCo LLC will subsequently merge

with ITC Merger Sub; Entergy shareholders will

receive 50.1% ownership in the combined company

Transaction Key Steps

ITC Pro Forma Structure

METC

Acquired in 2006

FERC approval required; signaled

ongoing support of independent model

and resulting benefits

ITCTransmission

Acquired in 2003

FERC approval required;

foundation for company

Proven ITC Transaction Experience

27

IP&L

Acquired in 2007

FERC approval and four state

jurisdictional approvals required;

achieved all approvals in support of

independent business model and

much needed transmission investment

for acquired system

Transmission Investment

INVESTMENT OPPORTUNITY LANDSCAPE

28

Stand Alone Five-Year Capital Plan

29

Stand Alone Five-Year Capital Plan

KEY CAPITAL PROJECTS

30

140 mile, 345kV line; four

new substations

Approximately $510 million

Received siting approval  in

February 2011; pre-

construction activities / ROW

acquisition underway

Phase 1 in late 2013 and

Phase 2 in 2015

Generator Interconnections

18 mile, 345kV line and new

substations

Approximately $35 million

ROW acquisition is complete

and construction underway

Mid-2012

Development

225 mile, 345kV line; ITC’s

portion is ~174 miles

Approximately $175 million

ROW acquisition is complete

and construction is underway

for both Phases

Phase 1 in mid-2012 and

Phase 2 in mid-2013

Development

200 mile, 345kV line; ITC’s

portion is ~120 miles

Approximately $300 million

Late 2014

Development

Received siting approval in

July 2011; pre-construction

activities / ROW acquisition

underway