Proxy Statement - Merger or Acquistion (definitive) (defm14a)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

Information Required in Proxy Statement

Schedule 14A Information

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐

Check the appropriate box:

☐	Preliminary Proxy Statement

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☒	Definitive Proxy Statement

☐	Definitive Additional Materials

☐	Soliciting Material under Rule 14a-12

PNM Resources, Inc.

(Name of registrant as specified in its charter)

(Name of person(s) filing proxy statement, if other than the registrant)

Payment of Filing Fee (Check the appropriate box):

	☐ No fee required.

	☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

	(1)	Title of each class of securities to which transaction applies: Common Stock, no par value

	(2)	Aggregate number of securities to which transaction applies:

	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

	(4)	Proposed maximum aggregate value of transaction:

	(5)	Total fee paid:

	☒ Fee paid previously with preliminary materials.

	☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	(1)	Amount Previously Paid:

	(2)	Form, Schedule or Registration Statement No.:

	(3)	Filing Party:

	(4)	Date Filed:

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MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Shareholders:

The Board of Directors of PNM Resources, Inc. cordially invites you to attend a special meeting of shareholders of PNM Resources, Inc., a New Mexico corporation, or PNMR, to be held on February 12, 2021, at 9:00 a.m. Mountain time, through a remote communication in a virtual meeting format, or the special meeting. Due to the public health impact of the ongoing coronavirus (COVID-19) pandemic and in accordance with Executive Order 2020-081 issued by the Governor of the State of New Mexico and to support the health and well-being of our shareholders, the special meeting will be held only through a remote communication in a virtual meeting format and will not be held at a physical location. Therefore, you will not be able to attend the special meeting in-person. As previously announced, on October 20, 2020, we entered into a merger agreement providing for the combination of PNMR and Avangrid, Inc., or Avangrid, a New York corporation and majority-owned subsidiary of Iberdrola S.A., or Iberdrola. At the special meeting, you will be asked to consider and vote upon a proposal to approve the merger agreement.

If the merger contemplated by the merger agreement is completed, you will be entitled to receive $50.30 in cash for each share of PNMR common stock you own. At the completion of the merger, NM Green Holdings, Inc., a New Mexico corporation and wholly-owned subsidiary of Avangrid, or merger sub, will merge with and into PNMR with PNMR surviving the merger as a wholly-owned subsidiary of Avangrid.

Your vote is very important, regardless of the number of shares you own. The merger cannot be completed unless the owners of at least a majority of the shares of PNMR common stock outstanding as of the close of business on December 31, 2020, the record date for the special meeting, vote to approve the merger agreement. A failure to vote or an abstention will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement.

Whether or not you plan to participate electronically in the special meeting, I urge you to vote your shares before the meeting over the Internet or via the toll-free telephone number, as described in the accompanying materials. You may also vote by mail by completing, signing and dating the enclosed proxy card and returning it in the pre-addressed, postage-prepaid envelope accompanying the proxy card. YOUR PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF PNMR. AFTER CAREFUL CONSIDERATION, OUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE MERGER CONSIDERATION IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO PNMR’S SHAREHOLDERS, DECLARED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE MERGER, FAIR TO, ADVISABLE, CONSISTENT WITH AND IN THE BEST INTERESTS OF PNMR AND ITS SHAREHOLDERS AND RESOLVED TO SUBMIT THE MERGER AGREEMENT FOR CONSIDERATION AND APPROVAL BY PNMR SHAREHOLDERS AND RECOMMEND THE APPROVAL OF THE MERGER AGREEMENT BY PNMR SHAREHOLDERS. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSAL TO APPROVE THE MERGER AGREEMENT AND “FOR” THE OTHER MATTERS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. THE BOARD OF DIRECTORS MADE ITS DETERMINATION AFTER CONSULTATION WITH ITS LEGAL AND FINANCIAL ADVISORS AND AFTER CONSIDERING A NUMBER OF FACTORS. In considering the recommendation of our board of directors, you should be aware that certain of our directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of PNMR shareholders generally. See the section entitled “Interests of PNMR’s Directors and Executive Officers in the Merger” beginning on page 66 of the accompanying proxy statement.

If you have any questions regarding the accompanying proxy statement, you may call Georgeson, Inc., our proxy solicitor, by calling toll-free at 877-507-1756.

I urge you to read carefully, and in its entirety, the accompanying proxy statement, including the annexes and the documents incorporated by reference.

Patricia K. Collawn

Chairman, President and Chief Executive Officer

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER OR OTHER TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT NOR HAVE THEY DETERMINED IF THE ACCOMPANYING PROXY STATEMENT IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This proxy statement is dated January 5, 2021 and is first being mailed or otherwise delivered to PNMR shareholders on or about January 5, 2021.

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PNM Resources, Inc.

414 Silver Ave. SW

Albuquerque, NM 87102-3289

www.pnmresources.com

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 12, 2021

To Our Shareholders: The special meeting of shareholders of PNM Resources, Inc. will be held as follows:

DATE AND TIME:	Friday, February 12, 2021 at 9:00 a.m. Mountain Time
PLACE:	Due to the public health impact of the ongoing coronavirus (COVID-19) pandemic and in accordance with Executive Order 2020-081 issued by the Governor of the State of New Mexico and to support the health and well-being of our shareholders, the special meeting will be held only through a remote communication in a virtual meeting format and will not be held at a physical location. Therefore, you will not be able to attend the special meeting in-person. To be admitted electronically to the special meeting, you must go to the meeting website at www.virtualshareholdermeeting.com/PNM2021 and enter the 16-digit control number found on your proxy card or your voting instruction form. We encourage you to access the special meeting prior to its start time.
WHO CAN VOTE:	You may vote if you were a shareholder of record as of the close of business on December 31, 2020.
ITEMS OF BUSINESS:	(1)	Approve the Agreement and Plan of Merger, dated as of October 20, 2020, or the merger agreement, by and among PNMR, Avangrid and NM Green Holdings, Inc. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement;
	(2)	Approve, by non-binding, advisory vote, certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger contemplated by the merger agreement; and
	(3)	Approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.
VOTING:	On January 5, 2021, we began mailing to our shareholders our proxy materials.
	After reading the proxy statement, please promptly vote by telephone or Internet or by signing and returning the proxy card so that we can be assured of having a quorum present at the meeting and your shares may be voted in accordance with your wishes. See the questions and answers beginning on page 14 of this proxy statement about the meeting (including how to participate in the meeting by webcast as described in Question 3), voting your shares, how to revoke a proxy and how to vote shares via the Internet.

Your vote is very important, regardless of the number of shares of PNMR common stock that you own. The merger cannot be completed unless the merger agreement is approved by the affirmative vote of the owners of at least a majority of the shares of PNMR common stock outstanding as of the close of business on the record date. Whether or not you plan to attend the special meeting via the PNMR special meeting website, we urge you to vote your shares before the meeting over the Internet or via the toll-free telephone number, as described in the accompanying materials. If you fail to submit a proxy or to attend the special meeting via the PNMR special meeting website or do not provide your bank, brokerage firm or other nominee with instructions as to how to vote your shares, as applicable, your shares of PNMR common stock will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement.

Your proxy is being solicited by the board of directors of PNMR. After careful consideration, our board of directors has unanimously (i) determined that the merger consideration is fair, from a financial point of view, to PNMR’s shareholders, (ii) declared the merger agreement and the transactions contemplated by the merger agreement, including the merger, fair to, advisable, consistent with and in the best interests of PNMR and its

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shareholders and (iii) resolved to submit the merger agreement for consideration and approval by PNMR shareholders and recommend the approval of the merger agreement by PNMR shareholders. Our board of directors unanimously recommends that you vote “FOR” the proposal to approve the merger agreement and “FOR” the other matters described in the accompanying proxy statement. The board of directors made its determination after consultation with its legal and financial advisors and after considering a number of factors. In considering the recommendation of our board, you should be aware that certain of our directors and executive officers may have interests in the merger that are different from or in addition to the interests of PNMR shareholders generally. See the section entitled “Interests of PNMR’s Directors and Executive Officers in the Merger” beginning on page 66 of the accompanying proxy statement.

PNMR shareholders have dissenter’s rights and may elect to dissent from the merger and obtain payment for their shares of PNMR common stock by following the procedures set forth in Section 53-15-3 (Right of Shareholders to Dissent and Obtain Payment for Shares) and Section 53-15-4 (Rights of Dissenting Shareholders) of Chapter 53 of the New Mexico Business Corporation Act, or the NMBCA, copies of which are attached as Annex C to the accompanying proxy statement. Failure to follow any of the statutory procedures set forth in Section 53-15-3 and Section 53-15-4 of the NMBCA may result in the loss or waiver of dissenter’s rights under New Mexico law. For more information regarding the right of holders of PNMR common stock to dissent from the merger and exercise the right to obtain payments for shares of PNMR common stock, see “Questions and Answers” on page 14 and the section entitled, “The Merger —Dissenter’s Rights” beginning at page 62 of the accompanying proxy statement.

IT IS IMPORTANT THAT YOU VOTE YOUR SHARES OF PNMR COMMON STOCK PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING VIA THE PNMR SPECIAL MEETING WEBSITE, PLEASE VOTE YOUR SHARES BEFORE THE MEETING OVER THE INTERNET OR VIA THE TOLL-FREE TELEPHONE NUMBER OR BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE PRE-ADDRESSED, POSTAGE-PREPAID ENVELOPE ACCOMPANYING THE PROXY CARD. IF YOU ATTEND THE SPECIAL MEETING ONLINE AND VOTE DURING THE SPECIAL MEETING VIA THE INTERNET, YOUR VOTE BY BALLOT WILL REVOKE ANY PROXY PREVIOUSLY SUBMITTED.

			By Order of the Board of Directors,
			Patricia K. Collawn
			Chairman, President and Chief Executive Officer

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SUMMARY			1
Information About The Companies (Page 26)			1
Recommendation of the PNMR Board (Page 51)			9
The PNMR Special Meeting (Page 27)			9
Opinion of PNMR’s Financial Advisor (Page 53)			11
Interests of PNMR’s Directors and Executive Officers in the Merger (Page 66)			12
Dissenter’s Rights of PNMR Shareholders (Page 62)			12
Delisting and Deregistration of PNMR Common Stock (Page 65)			12
Regulatory Approvals Required for the Merger (Page 60)			12
Material U.S. Federal Income Tax Consequences (Page 72)			13
QUESTIONS AND ANSWERS			14
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			25
INFORMATION ABOUT THE COMPANIES			26
THE PNMR SPECIAL MEETING			27
Time, Place and Means of Remote Communication			27
Purpose of the Special Meeting			27
Record Date and Quorum			27
Attendance			27
Vote Required			28
Proxies and Revocations			29
Technical Difficulties or Issues Accessing the Virtual Meeting Website			30
Adjournments and Postponements			30
Anticipated Date of Completion of the Merger			31
Solicitation of Proxies; Payment of Solicitation Expenses			31
Questions and Additional Information			31
ADVISORY VOTE ON MERGER-RELATED COMPENSATION FOR PNMR’S NAMED EXECUTIVE OFFICERS			32
ADJOURNMENT OF THE SPECIAL MEETING TO SOLICIT ADDITIONAL PROXIES			33
THE MERGER			34
Background of the Merger			34
PNMR’s Reasons for the Merger			49
Recommendation of the PNMR Board			51
Certain Unaudited Financial Forecasts Prepared by the Management of PNMR			51
Opinion of PNMR’s Financial Advisor			53
Regulatory Approvals Required for the Merger			60
Dissenter’s Rights			62
Financing of the Merger			64
Litigation Relating to the Merger			65
Delisting and Deregistration of PNMR Common Stock			65
INTERESTS OF PNMR’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER			66
Equity Compensation Awards			66
Payments Upon Termination Upon or Following the Closing of the Merger			68
Golden Parachute Compensation			70
Retention			71
Executive Officer Positions with PNMR Following the Merger			71
Director Positions with Avangrid Following the Merger			71
Indemnification; Directors’ and Officers’ Insurance			71
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES			72
THE MERGER AGREEMENT			77
The Merger			77

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Effects of the Merger			77
Merger Consideration			78
Dissenting Shares			78
Surrender of PNMR Shares			78
Other Covenants and Agreements			80
Treatment of PNMR Restricted Stock Rights, Performance Shares, Direct Plan, and Directors Deferred Plan			81
Representations and Warranties			82
Material Adverse Effect			84
Covenants Regarding Conduct of Business by PNMR Pending the Merger			85
Covenants Regarding Conduct of Business by Avangrid and Merger Sub Pending the Merger			89
No Solicitation by PNMR			90
No Solicitation by Avangrid			92
PNMR Board Recommendation			93
Efforts to Obtain PNMR Shareholder Approval			94
Employee Benefits and Service Credit			94
PNMR Indebtedness			96
Regulatory Approvals and Other Consents			97
Conditions That Must Be Satisfied or Waived for the Merger to Occur			98
Termination of the Merger Agreement			100
Expenses			103
Modification, Amendment or Waiver			103
Governing Law			103
Specific Performance			103
MARKET PRICES AND DIVIDEND DATA			104
Dividends			104
BENEFICIAL OWNERSHIP OF SECURITIES			105
Security Ownership of Certain Beneficial Owners and Management of PNMR			105
FUTURE SHAREHOLDER PROPOSALS			107
WHERE YOU CAN FIND ADDITIONAL INFORMATION			107
OTHER MATTERS			108
GLOSSARY OF TERMS AND ABBREVIATIONS			109

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SUMMARY

This summary highlights information contained elsewhere in this proxy statement. We urge you to read carefully the remainder of this proxy statement, including the attached annexes, the documents incorporated by reference into this proxy statement and the other documents to which we have referred you because this section does not provide all the information that might be important to you with respect to the merger and the related matters being considered at the special meeting. See also the section entitled “Where You Can Find Additional Information” on page 107. We have included page references to direct you to a more complete description of the topics presented in this summary.

Information About The Companies (Page 26)

PNM Resources, Inc.

414 Silver Ave. SW

Albuquerque, New Mexico 87102-3289

PNMR is a holding company with two regulated utilities serving approximately 796,000 residential, commercial, and industrial customers and end-users of electricity in New Mexico and Texas. PNMR’s electric utilities are Public Service Company of New Mexico, or PNM, and Texas-New Mexico Power Company, or TNMP. PNMR strives to create a clean and bright energy future for customers, communities, and shareholders. PNMR’s strategy and decision-making are focused on safely providing reliable, affordable, and environmentally responsible power built on a foundation of Environmental, Social and Governance, or ESG, principles.

PNMR common stock is listed on the NYSE under the symbol “PNMR.”

Avangrid, Inc.

180 Marsh Hill Road

Orange, Connecticut 06477

Avangrid, Inc., or Avangrid, is an energy services holding company engaged in the regulated energy transmission and distribution business through its principal subsidiary, Avangrid Networks, Inc., and in the renewable energy generation business through its principal subsidiary, Avangrid Renewables Holdings, Inc. Avangrid Renewables Holdings, Inc. in turn holds subsidiaries including Avangrid Renewables, LLC. Iberdrola, S.A., a corporation organized under the laws of the Kingdom of Spain, owns 81.5% of the outstanding common stock of Avangrid.

Avangrid common stock is listed on the NYSE under the symbol “AGR.”

Merger Sub

180 Marsh Hill Road

Orange, Connecticut 06477

NM Green Holdings, Inc., or merger sub, is a New Mexico corporation and a direct, wholly-owned subsidiary of Avangrid that was formed solely in contemplation of the merger. Merger sub has not engaged in any business except for activities incidental to its formation and as contemplated by the merger agreement and the related transactions. Upon the completion of the merger, merger sub will cease to exist and PNMR will continue as the surviving corporation.

The Merger and the Merger Agreement (Page 77)

The terms and conditions of the merger are contained in the merger agreement, a copy of which is attached as Annex A to this proxy statement. You are encouraged to read the merger agreement carefully and in its entirety, as it is the legal document that governs the merger.

Pursuant to the merger agreement, merger sub will merge with and into PNMR. Upon completion of the merger, PNMR will continue as the surviving corporation and a wholly-owned subsidiary of Avangrid. Avangrid is a publicly traded company with its common stock listed on the NYSE and registered under the Exchange Act. Following the merger, PNMR common stock will be delisted from the NYSE and deregistered under the Exchange Act. The PNMR board recommends that you vote “FOR” the proposal to approve the merger agreement and “FOR” the other matters described in this proxy statement.

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Merger Consideration (Page 78)

As of the effective time, each issued share of PNMR common stock that is owned by Avangrid, PNMR, merger sub or any other direct or indirect wholly-owned subsidiary of Avangrid or PNMR, will be cancelled and cease to exist, and no consideration will be delivered in exchange for those shares. Upon the terms and subject to the conditions set forth in the merger agreement, at the effective time of the merger, each issued and outstanding share of PNMR common stock (other than (i) shares of PNMR common stock owned by Avangrid, PNMR, merger sub or any other direct or indirect wholly-owned subsidiary of Avangrid or PNMR and (ii) dissenting shares) will be converted into the right to receive $50.30 in cash, without interest, referred to as the merger consideration. While it is not part of the merger consideration, if the closing date of the merger occurs (i) after the record date for a regular quarterly cash dividend payable to holders of PNMR common stock and (ii) prior to the payment date of such dividend, then PNMR will cause such dividend to be paid on the payment date for such dividend.

Treatment of PNMR Restricted Stock Rights, Performance Shares, Direct Plan, and Directors Deferred Plan (Page 81)

At the effective time of the merger, each outstanding award of PNMR restricted stock rights granted to a member of the PNMR board under the PNMR Stock Plan or otherwise will cease to relate to or represent any right to receive PNMR common stock and will be converted into a right to receive an amount of cash per share equal to the merger consideration.

At the effective time of the merger, all other outstanding PNMR restricted stock rights (other than any restricted stock rights granted to a member of the PNMR board) will cease to relate to or represent any right to receive PNMR common stock and will be converted into an equivalent award of cash-settled restricted stock rights relating to Avangrid common stock on the same terms and conditions as were applicable to the corresponding PNMR restricted stock rights, including any applicable vesting acceleration provisions and payment timing provisions, except as expressly adjusted by the merger agreement. The number of shares of Avangrid common stock covered by each such right will be determined pursuant to an equity conversion factor.

The performance determination with respect to any performance shares under the PNMR Stock Plan will be based on the higher of the target level of performance and the actual level of performance determined on a goal-by-goal basis as of the last day of the last month ending before the effective time of the merger. As of the effective time of the merger, the number of performance shares so determined will cease to relate to or represent a right to receive PNMR common stock and will be converted into a right to receive a cash-settled time-vesting Avangrid restricted stock right, which will, provided the applicable service-based vesting conditions are satisfied, vest at the same time as the service-based vesting conditions of the corresponding PNMR performance shares would have been satisfied, and subject to the same vesting acceleration and payment timing provisions and other terms and conditions as applied to the corresponding PNMR performance shares, as applicable, except as expressly adjusted by the merger agreement. The number of shares of Avangrid common stock covered by each Avangrid restricted stock right will equal the product of the number of PNMR performance shares subject to the corresponding PNMR restricted stock right multiplied by an equity conversion factor.

The right to purchase shares of PNMR common stock under the Third Amended and Restated PNM Resources, Inc. Direct Plan, which we refer to as the Direct Plan, a dividend reinvestment and stock purchase plan, terminated on November 17, 2020.

Dividends (Page 104)

Dividends on PNMR’s common stock are declared by the PNMR board, typically quarterly. During the twelve months ended December 31, 2020, PNMR has paid quarterly dividends of $0.3075 per share, or a total of approximately $98 million in cash. On December 4, 2020, the PNMR board declared a dividend on common stock of $0.3275 per share payable in February 2021.

Under the terms of the merger agreement, PNMR has agreed not to declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its equity securities, or make any other actual, constructive or deemed distribution in respect of any equity securities (except (i) PNMR may continue the declaration and payment of planned regular quarterly cash dividends on PNMR common stock for each quarterly period ended after the date of the merger agreement, in an amount not

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to exceed $0.3275 for any fiscal quarters in 2021 and 2022, with usual record and payment dates in accordance with past dividend practice, and (ii) for any cash dividend or cash distribution by a wholly-owned subsidiary of PNMR to PNMR or another wholly-owned subsidiary of PNMR).

If the closing date of the merger occurs (i) after the record date for a regular quarterly cash dividend payable to holders of PNMR common stock and (ii) prior to the payment date of such dividend, then PNMR will cause such dividend to be paid on the payment date for such dividend.

No Solicitation by PNMR (Page 90)

Subject to certain exceptions described below, PNMR has agreed not to, and to cause each of its subsidiaries and their respective directors, officers and employees not to, and to use its reasonable best efforts to cause their respective representatives not to:

•	initiate, solicit, knowingly encourage or knowingly facilitate any inquiries with respect to or that could reasonably be expected to lead to, or the making, submission or announcement of, any acquisition proposal;

•

participate or engage in any negotiations or discussions concerning, or furnish or provide access to its properties, books and records or any confidential information or data to, any person relating to an acquisition proposal, or any inquiry or proposal that could reasonably be expected to lead to any acquisition proposal;

•	approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any acquisition proposal; or

•	execute or enter into any letter of intent, agreement in principle, merger agreement, acquisition agreement or other similar agreement for any acquisition proposal.

In addition, PNMR has agreed to, and to cause its subsidiaries and their respective directors, officers and employees to, and to use its reasonable best efforts to cause their respective representatives to immediately cease and cause to be terminated any solicitations, discussions or negotiations with any person (other than Avangrid and its affiliates) in connection with an acquisition proposal that exists as of the date of the merger agreement.

However, before PNMR obtains the approval of its shareholders for the merger, subject to all other terms of the merger agreement, PNMR is not prohibited from:

•

granting a waiver, amendment or release under any confidentiality or standstill agreement to the extent necessary to allow for a confidential acquisition proposal to be made to PNMR or the PNMR board or to allow for the engagement in discussions regarding an acquisition proposal or a proposal that would reasonably be expected to lead to an acquisition proposal so long as neither PNMR nor any of its subsidiaries nor any of their respective representatives has violated the merger agreement and certain other requirements are met;

•

providing access to PNMR’s properties, books and records and providing information or data in response to a request therefor by a person or group who has made a bona fide written acquisition proposal after the date of the merger agreement that, in each case, did not result from a breach of PNMR’s non-solicitation obligations under the merger agreement, so long as certain requirements are met; or

•

participating and engaging in any negotiations or discussions with any person or group and their respective representatives who has made a bona fide written acquisition proposal after the date of the merger agreement that, in each case, did not result from a breach of PNMR’s non-solicitation obligations under the merger agreement and certain requirements are met.

PNMR Board Recommendation (Page 93)

Except as provided in the succeeding paragraphs below, neither the PNMR board nor any committee thereof may:

•	withhold, withdraw, qualify or modify, or resolve to or propose to withhold, withdraw, qualify or modify, its recommendation that the PNMR shareholders vote in favor of approving the merger and the merger agreement in a manner adverse to Avangrid;

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•	make any public statement inconsistent with such recommendation;

•	approve, adopt or recommend any acquisition proposal, or any inquiry or proposal that could reasonably be expected to lead to any acquisition proposal;

•

fail to reaffirm or re-publish such recommendation within ten business days of being requested by Avangrid to do so, provided that Avangrid will not be entitled to request such a reaffirmation or re-publishing more than one time with respect to any single acquisition proposal other than in connection with an amendment to any financial terms of such acquisition proposal or any other material amendment to such acquisition proposal;

•	fail to include such recommendation in this proxy statement;

•	fail to announce publicly, within five business days after a tender offer or exchange offer relating to any PNMR securities has been commenced that would constitute an acquisition proposal, that the PNMR board recommends rejection of such tender or exchange offer;

•	resolve, publicly propose or agree to do any of the foregoing;

•

authorize, cause or permit PNMR or any of its subsidiaries to enter into a merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar contract (other than an acceptable confidentiality agreement) or recommend any tender offer providing for, with respect to, or in connection with any acquisition proposal or requiring PNMR to abandon, terminate, delay or fail to consummate the merger or any other transaction contemplated by the merger agreement; or

•	take any action pursuant to which any person (other than Avangrid, merger sub or their respective affiliates) or acquisition proposal would become exempt from or not otherwise subject to any take-over statute or articles of incorporation provision relating to an acquisition proposal.

However, at any time prior to obtaining the approval of the PNMR shareholders to the merger, the PNMR board may (subject to certain restrictions and obligations provided for in the merger agreement):

•	change its recommendation in response to the occurrence of a specified intervening event (as defined in the merger agreement); or

•

if the PNMR board determines in good faith, after consultation with its financial advisor and outside legal counsel, in response to an acquisition proposal from a third party that did not otherwise result from a breach of PNMR’s non-solicitation obligations under the merger agreement, that such acquisition proposal constitutes a superior proposal, and such acquisition proposal is not withdrawn, PNMR or the PNMR board may (A) change its recommendation and/or (B) terminate the merger agreement to enter into a definitive agreement with respect to such superior proposal, in each case, if (1) after consultation with its financial advisor and outside legal counsel, the PNMR board determines that the failure to change its recommendation or to terminate the merger agreement would be reasonably expected to result in a breach of its fiduciary duties under applicable laws and (2) the merger agreement is terminated, PNMR pays Avangrid the required PNMR termination fee.

Conditions That Must Be Satisfied or Waived for the Merger to Occur (Page 98)

Conditions to the Obligations of Avangrid, Merger Sub and PNMR

The respective obligations of Avangrid, merger sub and PNMR to consummate the merger are subject to the satisfaction or waiver of the following mutual conditions:

•	approval of the merger agreement by an affirmative vote of the holders of at least a majority of the outstanding shares of PNMR common stock entitled to vote at the special meeting to consider and vote upon a proposal to approve the merger agreement, which we refer to as the special meeting;

•	absence of any law (whether temporary, preliminary or permanent) which prohibits, restrains or enjoins the consummation of the merger;

•

all required consents and filings by or with any governmental authorities having been obtained, made or given and being in full force and effect and not subject to appeal, and all applicable waiting periods imposed by any government entity (including under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or the HSR Act) having been terminated or expired; and

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•	the CFIUS approval (as defined in the merger agreement) having been obtained.

Conditions to Obligations of Avangrid and Merger Sub

The obligations of Avangrid and merger sub to consummate the merger are also subject to the satisfaction or waiver of the following conditions:

•

the representations and warranties of PNMR with respect to the organization and qualification of PNMR and with respect to the authority, absence of conflicts with organizational documents, and ownership of subsidiaries of PNMR and its subsidiaries being true and correct in all material respects as of the date of the merger agreement and as of the effective time of the merger (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case as of such earlier date);

•

the representations and warranties of PNMR with respect to PNMR and its subsidiaries related to capitalization being true and correct in all but de minimis respects as of the date of the merger agreement and as of the effective time of the merger (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case as of such earlier date);

•	the representation and warranty of PNMR with respect to the absence of any material adverse effect being true and correct in all respects as of the date of the merger agreement;

•

all other representations and warranties of PNMR being true and correct in all respects, without giving effect to materiality qualifiers, as of the effective time of the merger (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case such representation and warranty being true and correct as of such earlier date), except where the failures of any such representations and warranties to be so true and correct, in the aggregate, do not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on PNMR;

•	PNMR’s performance in all material respects of all obligations, and compliance in all material respects with all agreements and covenants, required to be performed or complied with by it under the merger agreement;

•	receipt by Avangrid of a certificate of an executive officer of PNMR certifying that the five preceding conditions have been satisfied;

•	there not having occurred since the date of the merger agreement any event, development, change, effect or occurrence that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on PNMR;

•

the absence of any final order of the New Mexico Public Regulation Commission, or NMPRC, the Public Utility Commission of Texas, or PUCT, or the Committee on Foreign Investment in the United States, or CFIUS, imposing terms or conditions that, individually or in the aggregate (when taken together with the other final orders of the NMPRC, the PUCT or CFIUS), could reasonably be expected to have a burdensome effect;

•	not more than 15% of the issued and outstanding shares of PNMR common stock as of immediately prior to the effective time of the merger will constitute dissenting shares; and

•

each of the definitive agreements related to the divestiture of the Four Corners Power Plant, or Four Corners, having been duly executed and delivered by each of the parties thereto and remaining in full force and effect as of the effective time of the merger, and PNM having made all applicable regulatory filings to obtain required approvals from applicable governmental entities, including for abandonment authority and securitization from the NMPRC.

On November 2, 2020, PNMR announced the signing of an agreement to exit Four Corners by 2024.

Conditions to Obligations of PNMR

The obligation of PNMR to consummate the merger is also subject to the satisfaction or waiver of the following conditions:

•	the representations and warranties of Avangrid and merger sub being true and correct in all respects, without giving effect to materiality qualifiers, as of the effective time of the merger (except to the

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extent that any such representation or warranty expressly speaks as of an earlier date, in which case such representation and warranty being true and correct as of such earlier date), except where the failures of any such representations and warranties to be so true and correct, in the aggregate, do not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Avangrid;

•	Avangrid’s and merger sub’s performance in all material respects of all obligations, and compliance in all material respects with all agreements and covenants, required to be performed or complied with by them under the merger agreement; and

•	receipt by PNMR of a certificate of an executive officer of Avangrid certifying that the preceding conditions have been satisfied.

Termination of the Merger Agreement (Page 100)

The merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time of the merger by mutual written consent of Avangrid and PNMR. In addition, the merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time of the merger in the following manner:

•	By either Avangrid or PNMR:

○

if any court of competent jurisdiction or other governmental entity has issued an order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the merger and such order, decree, ruling or other action is or has become final and nonappealable and the party seeking to terminate the merger agreement has complied with its obligations under the merger agreement related to obtaining or making the required consents and filings (provided a party cannot exercise this termination right if the order, decree or ruling issued, or other action taken, was primarily due to the material breach of the merger agreement by such party);

○

if the merger has not been completed on or before 5:00 p.m. New York City time on January 20, 2022 (the “End date”) and the failure of the effective time to occur on or before the End date was not primarily caused by the breach of the obligations under the merger agreement of the party seeking to terminate the merger agreement (the End date is subject to a three-month extension if the only closing conditions outstanding are the conditions relating to required regulatory approvals, including CFIUS); or

○	PNMR shareholder approval of the merger agreement is not obtained at the special meeting;

•	Unilaterally by Avangrid:

○

if PNMR has breached or failed to perform its representations, warranties, covenants or agreements contained in the merger agreement, which breach or failure to perform (i) would cause certain of the conditions to Avangrid’s and merger sub’s obligation to consummate the merger to not be satisfied, and (ii) cannot be cured by PNMR through the exercise of its reasonable best efforts or has not been cured by the earlier of 30 days after written notice thereof has been given by Avangrid to PNMR or three business days prior to the End date, but Avangrid will not have such a termination right if it or merger sub is then in breach of any of its representations, warranties, covenants or agreements in the merger agreement and such breach would result in a failure of certain of the conditions to PNMR’s obligation to consummate the merger to not be satisfied; or

○	if the PNMR board changes its recommendation to PNMR shareholders to approve the merger agreement.

•	Unilaterally by PNMR:

○

if Avangrid or merger sub has breached or failed to perform its representations, warranties, covenants or agreements contained in the merger agreement, which breach or failure to perform (i) would cause certain of the conditions to PNMR’s obligation to consummate the merger to not be satisfied and (ii) cannot be cured by Avangrid or merger sub through the exercise of its reasonable best efforts or has not been cured by the earlier of 30 days after written notice thereof has been given by PNMR to Avangrid or three business days prior to the End date, but PNMR

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will not have such a termination right if it is then in breach of any of its representations, warranties, covenants or agreements in the merger agreement and such breach would result in a failure of certain of the conditions to Avangrid’s or merger sub’s obligation to consummate the merger to not be satisfied;

○

in order to enter into a definitive agreement with respect to a superior proposal, if such termination occurs before PNMR shareholders approve the merger agreement and so long as PNMR complies with its obligations with respect to a superior proposal, if prior to or concurrently with such termination, PNMR pays the PNMR termination fee to Avangrid (as described below); or

○

if (i) all conditions to the obligation of the parties to consummate the merger have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the effective time, each of which is capable of being satisfied at the effective time), (ii) PNMR has given written notice to Avangrid and merger sub that it is prepared, willing and able to consummate the merger and (iii) Avangrid and merger sub fail to consummate the transactions contemplated by the merger agreement on the date specified for such consummation in the merger agreement and fail to consummate such transactions by the close of business on the fifth business day following receipt of such notice from PNMR.

Effect of Termination (Page 101)

If the merger agreement is terminated as described above, there will be no liability on the part of any party thereto, except certain provisions of the merger agreement will survive such termination, including those relating to confidentiality, publicity, fees and expenses, and except in the case of willful breach of a covenant or agreement.

Termination Fee (Page 101)

PNMR has agreed to pay a termination fee of $130 million, which we refer to as the PNMR termination fee, to Avangrid if:

•	the merger agreement is terminated by PNMR as permitted by the merger agreement in order to enter into a definitive agreement with respect to a superior proposal, if such termination occurs before PNMR shareholders approve the merger agreement;

•

the merger agreement is terminated by Avangrid because the PNMR board (i) changes its recommendation to the PNMR shareholders for approval of the merger agreement, (ii) withholds, withdraws, qualifies or modifies (or resolves to do so) such recommendation in a manner adverse to Avangrid, (iii) makes any public statement inconsistent with such recommendation, (iv) approves, adopts or recommends any acquisition proposal, or any inquiry or proposal that could reasonably be expected to lead to any acquisition proposal, (v) fails to reaffirm or re-publish such recommendation within ten business days of being requested by Avangrid to do so, (vi) fails to include such recommendation in this proxy statement, (vii) fails to announce publicly, within five business days after a tender offer or exchange offer relating to any securities of PNMR has been commenced that would constitute an acquisition proposal, that the PNMR board recommends rejection of such tender or exchange offer or (viii) resolves, publicly proposes or agrees to do any of the foregoing;

•

the merger agreement is terminated (i) by either Avangrid or PNMR (A) prior to the convening of the special meeting of the PNMR shareholders to approve the merger agreement and due to the occurrence of the End date where the primary cause of the failure of closing to occur on or before the End date was not the breach of the obligations under the merger agreement of the party seeking to terminate the merger agreement or (B) because of a failure to obtain PNMR shareholder approval of the merger agreement at the special meeting, or (ii) by Avangrid as a result of PNMR having breached its representations or warranties or failed to perform its covenants or agreements contained in the merger agreement, which breach or failure to perform (I) would cause the conditions to Avangrid’s and merger sub’s obligation to consummate the merger related to the accuracy of the Company’s representations and warranties and the performance of its covenants and agreements, in each case, as of the effective time, to not be satisfied, and (II) cannot be cured by PNMR through the exercise of its reasonable best efforts or has not been cured by the earlier of (x) 30 days after written notice thereof has been given by

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Avangrid to PNMR and (y) three business days prior to the End date, and in either such case of (x) and (y) above, only so long as PNMR continues to use its reasonable best efforts to cure such breach; provided that Avangrid shall not have the right to terminate the merger agreement under (ii) above if it or merger sub is then in breach of any of its representations, warranties, covenants or other agreements in the merger agreement and such breach would cause the conditions to PNMR’s obligation to consummate the merger related to the accuracy of Avangrid and merger sub’s representations and warranties and the performance of their covenants and agreements, in each case, as of the effective time, to not be satisfied; and in either such case of (i) or (ii) above:

○

at any time after the date of the merger agreement and prior to such termination an acquisition proposal has been made to PNMR, or to the PNMR board or shareholders, or an acquisition proposal has otherwise become publicly known, and within 12 months after such termination, PNMR has entered into a definitive agreement with respect to an acquisition proposal or has consummated an acquisition proposal.

Avangrid has agreed to pay a termination fee of $184 million, which we refer to as the Avangrid termination fee, to PNMR if:

•

the merger agreement is terminated by PNMR when (i) all conditions to the obligation of the parties to consummate the merger have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the effective time, each of which is capable of being satisfied at the effective time), (ii) PNMR has given written notice to Avangrid and merger sub that PNMR is prepared, willing and able to consummate the merger and (iii) Avangrid and merger sub fail to consummate the transactions contemplated by the merger agreement on the date specified for such consummation in the merger agreement and fail to consummate such transactions by the close of business on the fifth business day following receipt of such notice from PNMR;

•

(i) the merger agreement is terminated by (A) Avangrid or PNMR (x) because a court of competent jurisdiction or other governmental entity has issued an order, decree or ruling or taken any other final action, in each case, arising in connection with obtaining the required regulatory approvals, and which restrains, enjoins or otherwise prohibits the merger and such order, decree, ruling or other action is or has become final and nonappealable and the party seeking to terminate the merger agreement has complied with its obligations under the merger agreement related to obtaining or making the required consents and filings, and the order, decree or ruling issued, or other action taken, was not primarily due to the material breach of the merger agreement by such party, or (y) due to the occurrence of the End date where the primary cause of the failure of closing to occur on or before the End date was not the breach of the obligations under the merger agreement of the party seeking to terminate the merger; or (B) by PNMR due to Avangrid or merger sub breaching or failing to perform its covenants or agreements contained in the merger agreement with respect to obtaining or making required consents and filings, which breach or failure causes certain of the conditions to PNMR’s obligation to consummate the merger to not be satisfied, and which cannot be cured by Avangrid or merger sub through the exercise of its reasonable best efforts or has not been cured in accordance with the terms of the merger agreement; and, (ii) in each case above:

○

at the time of such termination, (i) any of the required regulatory approvals have not been obtained, made or given or applicable waiting periods imposed by any government entity have not terminated or expired or (ii) any law (whether temporary, preliminary or permanent) solely in connection with the required regulatory approvals is in effect which prohibits, restrains or enjoins the consummation of the merger;

○

Avangrid is in breach of its obligations under the merger agreement with respect to obtaining or making required consents or filings from or with any regulatory authorities, and PNMR has notified Avangrid promptly (and in any event no later than five business days) after becoming aware of any such breach;

○	each of the conditions to Avangrid’s and merger sub’s obligations (other than with respect to obtaining or making required consents or filings from or with any regulatory authorities) to

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consummate the merger have been and continue to be satisfied (other than those conditions that by their nature are to be satisfied at the closing of the merger, but which condition would be satisfied or would be capable of being satisfied if the closing of the merger were then to occur);

○	either (i) a required regulatory approval or the CFIUS approval (as defined in the merger agreement) has not been obtained or (ii) a final order granting the required regulatory approvals or the CFIUS approval imposes a burdensome effect; and

○	Avangrid’s breach of its covenants relating to obtaining the required regulatory approvals has materially contributed to the failure of to obtain such approvals.

Expenses (Page 103)

If the merger agreement is terminated by PNMR or Avangrid in accordance with the terms of the merger agreement as a result of the breach by the other party of the other party’s representations, warranties, covenants and agreements, then the breaching party will promptly, but in no event later than two business days after the date of such termination and a written demand by the other party, pay to the party making such demand all reasonable actual out-of-pocket fees and expenses incurred by the party making such demand and its affiliates in connection with the merger agreement and the transactions contemplated by the merger agreement (including with respect to obtaining financing), in an amount not to exceed $10 million (which amount will be credited toward, and offset against, the payment of any applicable termination fee).

In all other cases, each of PNMR and Avangrid will bear its own expenses in connection with the merger agreement and the transactions contemplated by it. Expenses incurred in connection with the filing, printing and mailing of this proxy statement will be shared equally by PNMR and Avangrid. PNMR and Avangrid have also agreed to share equally the expenses incurred in connection with the submission of the voluntary notice to CFIUS.

Recommendation of the PNMR Board (Page 51)

After careful consideration of various factors described in the section entitled “The Merger—PNMR’s Reasons for the Merger” beginning on page 49 of this proxy statement, at a meeting held on October 20, 2020, the PNMR board unanimously (i) determined that the merger consideration is fair, from a financial point of view, to PNMR’s shareholders, (ii) declared the merger agreement and the transactions contemplated by the merger agreement, including the merger, fair to, advisable, consistent with and in the best interests of PNMR and its shareholders and (iii) resolved to submit the merger agreement for consideration and approval by PNMR shareholders and recommend the approval of the merger agreement by PNMR shareholders.

The PNMR Special Meeting (Page 27)

Time, Place and Means of Remote Communication

The special meeting will be held on February 12, 2021, at 9:00 a.m. Mountain time, solely through a remote communication in a virtual meeting format. Due to the public health impact of the ongoing coronavirus (COVID-19) pandemic and in accordance with Executive Order 2020-081 issued by the Governor of the State of New Mexico and to support the health and well-being of our shareholders, the special meeting will be held only through a remote communication in a virtual meeting format and will not be held at a physical location. Therefore, you will not be able to attend the special meeting in-person. To be admitted electronically to the special meeting, you must go to the meeting website at www.virtualshareholdermeeting.com/PNM2021, and enter the 16-digit control number found on your proxy card or your voting instruction form. We encourage you to access the special meeting prior to its start time.

Purpose of the Special Meeting

At the special meeting, PNMR shareholders will be asked to (i) consider and vote upon a proposal to approve the merger agreement, (ii) consider and vote upon a proposal to approve, by non-binding, advisory vote, certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger and (iii) consider and vote upon a proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

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Record Date and Quorum

You are entitled to receive notice of, and to vote at, the special meeting if you are an owner of record of shares of PNMR common stock as of the close of business on December 31, 2020, the record date. On the record date, there were 85,834,874 shares of PNMR common stock outstanding and entitled to vote. You will have one vote on all matters properly coming before the special meeting for each share of PNMR common stock that you owned on the record date.

A quorum of shareholders is necessary to conduct business at the special meeting. The presence at the special meeting, in person via the Internet or represented by proxy (as defined below) to vote on your behalf, of owners of a majority of the shares of PNMR common stock entitled to vote outstanding as of the close of business on the record date constitutes a quorum for the purposes of the special meeting. Abstentions will be counted as present for quorum purposes. Because all of the proposals for consideration at the special meeting are considered “non-routine” matters under the NYSE rules (as described below), shares held in “street name” will not be counted as present for the purpose of determining the existence of a quorum unless a shareholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals before the special meeting. Once a share of PNMR common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. However, if a new record date is set for the adjourned special meeting, then a new quorum will be determined.

Vote Required

The approval of the merger agreement requires the affirmative vote of the owners of a majority of the shares of PNMR common stock outstanding as of the close of business on the record date. Abstentions will not be counted as votes cast in favor of the proposal to approve the merger agreement, but will count for the purpose of determining whether a quorum is present. If you fail to submit a proxy or to vote via the Internet during the special meeting or if you abstain, each will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement.

The proposal to approve, by non-binding, advisory vote, certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger requires the affirmative vote of the owners of a majority of the shares of PNMR common stock present in person via the Internet or represented by proxy and entitled to vote thereon; however, such vote is non-binding and advisory only. For purposes of this proposal, if your shares of PNMR common stock are present at the special meeting but are not voted on this proposal, it will have the same effect of a vote against the proposal. In addition, for purposes of this proposal, abstentions will have the same effect of a vote against the proposal. If you fail to submit a proxy or to vote via the Internet during the special meeting, as applicable, the shares of PNMR common stock held by you or your bank, broker or other nominee will not be counted in respect of, and will not have an effect on, the proposal to approve, by non-binding, advisory vote, the merger-related executive compensation.

If no quorum is present, authorization for proxy holders to vote in favor of one or more adjournments of the special meeting, if necessary or appropriate to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement, requires the affirmative vote of the owners of a majority of the shares of PNMR common stock present in person via the Internet or represented by proxy and entitled to vote thereon. If a quorum is present, authorization for proxy holders to vote in favor of one or more adjournments of the special meeting would require the approval of a majority of the shares present, in person or by proxy, and entitled to vote on the matter. Whether or not a quorum is present, if your shares of PNMR common stock are present at the special meeting but are not voted on this proposal, or if you abstain on this proposal, this will have the effect of a vote “AGAINST” the proposal to approve one or more adjournments of the special meeting. Whether or not a quorum is present, if you fail to submit a proxy or to attend the special meeting via the PNMR special meeting website or if your shares of PNMR common stock are held through a bank, broker or other nominee and you do not instruct your bank, broker or other nominee to vote your shares of PNMR common stock, as applicable, your shares of PNMR common stock will not be voted, but this will not have an effect on the vote to approve one or more adjournments of the special meeting.

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such shares of PNMR common stock “FOR” the proposal to approve the merger agreement, “FOR” the proposal to approve, by non-binding, advisory vote, certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger and “FOR” the proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement, although proxy holders are not obligated to vote in favor of adjournment.

Proxies and Revocations

Any shareholder of record entitled to vote at the special meeting may submit a proxy over the Internet or via the toll-free telephone number or by completing, signing and dating the enclosed proxy card and returning it in the pre-addressed, postage-prepaid envelope accompanying the proxy card, or may vote during the special meeting via the Internet by appearing at the special meeting online. If your shares of PNMR common stock are held in “street name” through a bank, broker or other nominee, you should instruct your bank, broker or other nominee on how to vote your shares of PNMR common stock using the instructions provided by your bank, broker or other nominee. If you fail to submit a proxy or to vote via the Internet during the special meeting, or do not provide your bank, broker or other nominee with instructions as to how to vote your shares, as applicable, your shares of PNMR common stock will not be voted on the proposal to approve the merger agreement, which will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement, and your shares of PNMR common stock will not have an effect on the proposal to approve, by non-binding, advisory vote, the merger-related executive compensation or to approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting again at a later date through any of the methods available to you or by attending the special meeting online and voting via the Internet during the special meeting.

Opinion of PNMR’s Financial Advisor (Page 53)

Evercore Group L.L.C.

Pursuant to an engagement letter dated as of March 9, 2020, PNMR engaged Evercore Group L.L.C., or Evercore, to act as its financial advisor in connection with a possible sale of PNMR. As part of this engagement, PNMR requested that Evercore evaluate the fairness of the merger consideration, from a financial point of view, to the holders of the shares of PNMR common stock.

At a meeting of the PNMR board held on October 20, 2020, Evercore rendered to the PNMR board its oral opinion, subsequently confirmed in writing, that, as of October 20, 2020 and based upon and subject to the assumptions, limitations, qualifications and conditions described in Evercore’s written opinion, the merger consideration was fair, from a financial point of view, to the holders of PNMR common stock entitled to receive such merger consideration.

The full text of the written opinion of Evercore, dated as of October 20, 2020, which sets forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken in rendering its opinion, is attached as Annex B to this proxy statement and is incorporated by reference in its entirety into this proxy statement. You are urged to read this opinion carefully and in its entirety. Evercore’s opinion was addressed to, and provided for the information and benefit of, the PNMR board in connection with their evaluation of the proposed transaction. The opinion does not constitute a recommendation to the PNMR board or to any other persons in respect of the proposed transaction, including as to how any holder of shares of PNMR common stock should vote or act in respect of the proposed transaction. Evercore’s opinion does not address the relative merits of the proposed transaction as compared to other business or financial strategies that might be available to PNMR, nor does it address the underlying business decision of PNMR to engage in the proposed transaction.

For further information, see the section of this proxy statement entitled “The Merger—Opinion of PNMR’s Financial Advisor” beginning on page 53 and the full text of the written opinion of Evercore attached as Annex B to this proxy statement.

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Interests of PNMR’s Directors and Executive Officers in the Merger (Page 66)

Certain of the directors and executive officers of PNMR may have interests in the merger that are different from or in addition to those of PNMR shareholders generally. These interests include the treatment in the merger of PNMR equity compensation awards, severance plans and other rights that may be held by PNMR’s directors and executive officers; the expectation that some of the directors and executive officers of PNMR will serve as directors and executive officers of Avangrid or its subsidiaries following completion of the merger; and the indemnification of current and former PNMR directors and officers by Avangrid. The PNMR board was aware of and considered these interests when it unanimously (i) determined that the merger consideration is fair, from a financial point of view, to PNMR’s shareholders, (ii) declared the merger agreement and the transactions contemplated by the merger agreement, including the merger, fair to, advisable, consistent with and in the best interests of PNMR and its shareholders and (iii) resolved to submit the merger agreement for consideration and approval by PNMR shareholders and recommend the approval of the merger agreement by PNMR shareholders. For a full description of the stock ownership of PNMR directors and executive officers and the financial interests of PNMR officers and directors in the merger, see the sections entitled “Interests of PNMR’s Directors and Executive Officers in the Merger” beginning on page 66 of this proxy statement.

Dissenter’s Rights of PNMR Shareholders (Page 62)

Holders of PNMR common stock may elect to dissent from the merger and obtain payment for their shares of PNMR common stock by following the procedures set forth in Section 53-15-3 (Right of Shareholders to Dissent and Obtain Payment for Shares) and Section 53-15-4 (Rights of Dissenting Shareholders) of Chapter 53 of the New Mexico Business Corporation Act, or the NMBCA. Failure to follow any of the statutory procedures set forth in Section 53-15-3 and Section 53-15-4 of the NMBCA may result in the loss or waiver of dissenter’s rights under New Mexico law. A person having a beneficial interest in shares of PNMR’s common stock held of record in the name of another person, such as a bank, broker or other nominee, must act promptly to cause the record holder to follow the steps summarized in this proxy statement and in a timely manner to perfect dissenter’s rights. In view of the complexity of Section 53-15-3 and Section 53-15-4 of the NMBCA, PNMR shareholders who may wish to pursue dissenter’s rights should consult their own legal and financial advisors. For more information regarding the right of holders of PNMR common stock to dissent from the merger and exercise the right to obtain payments for shares of PNMR common stock, see the section entitled, “The Merger —Dissenter’s Rights” beginning at page 62 of this proxy statement. We have also attached a copy of Section 53-15-3 and Section 53-15-4 of the NMBCA as Annex C to this proxy statement.

Delisting and Deregistration of PNMR Common Stock (Page 65)

If the merger is completed, PNMR common stock will be delisted from the NYSE and deregistered under the Exchange Act and PNMR will no longer file periodic reports with the SEC on account of its common stock.

Regulatory Approvals Required for the Merger (Page 60)

To complete the merger, Avangrid and PNMR must obtain approvals or consents from, or make filings with, a number of U.S. federal and state regulatory authorities. The material regulatory approvals, consents and filings include the following:

•	the expiration of the waiting period under the HSR Act and the rules and regulations thereunder;

•

notices to and filings under, and compliance with all requirements of CFIUS, pursuant to Section 721 of the Defense Production Act of 1950 as amended (section 721), and as implemented by Executive Order 11858, as amended, and the regulations at chapter VIII of title 31 of the Code of Federal Regulations;

•	approval by the NMPRC pursuant to New Mexico Public Utility Act and NMPRC Rule 450;

•	approval by the PUCT pursuant to the Public Utility Regulatory Act;

•	approval from the Federal Energy Regulatory Commission, or FERC, pursuant to Section 203 of the Federal Power Act, or FPA;

•	approval from the Federal Communications Commission, or FCC, under the Communications Act of 1934 for the transfer of control over wireless and microwave licenses held by certain PNMR subsidiaries; and

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•	approval from the United States Nuclear Regulatory Commission, or NRC.

Avangrid and PNMR have made or intend to make various filings and submissions for the above-mentioned authorizations and approvals and, under the terms of the merger agreement, each company must use its reasonable best efforts to obtain these authorizations and approvals, subject to certain conditions.

The merger agreement also requires approval of the merger agreement and related transactions by PNMR’s shareholders (as of the close of business on the record date set by PNMR).

Pursuant to the HSR Act requirements, Avangrid and PNMR filed the required Notification and Report Forms with the Department of Justice, or DOJ, and the Federal Trade Commission, or FTC, on December 21, 2020 and will file transfer of control applications with the FCC. The HSR waiting period is scheduled to expire at 11:59 p.m. on January 20, 2021, unless the waiting period is terminated earlier, or extended by a request for additional information before that time. Avangrid and PNMR submitted a voluntary notice to CFIUS on December 11, 2020 in connection with the proposed merger and filed their joint application with FERC on November 23, 2020 and filed applications with NMPRC and with PUCT on November 23, 2020. An application for approval of the NRC was filed on December 2, 2020.

Material U.S. Federal Income Tax Consequences (Page 72)

The exchange of shares of PNMR common stock for cash pursuant to the merger will be a taxable transaction to U.S. holders (as defined in the section entitled “Material United States Federal Income Tax Consequences” beginning on page 72 of this proxy statement) for U.S. federal income tax purposes. In general, a U.S. holder whose shares of PNMR common stock are converted into the right to receive cash in the merger will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received with respect to such shares of PNMR common stock and such U.S. holder’s adjusted tax basis in such shares. Backup withholding may also apply to the cash payments made pursuant to the merger unless the U.S. holder or other payee provides a valid taxpayer identification number and complies with certain certification procedures (generally, by providing a properly completed and executed IRS Form W-9) or otherwise establishes an exemption from backup withholding. Payments made to a non-U.S. holder (as defined in the section entitled “Material United States Federal Income Tax Consequences” beginning on page 72 of this proxy statement) with respect to shares of PNMR common stock exchanged for cash pursuant to the merger generally will not be subject to U.S. federal income tax, subject to certain exceptions (as discussed in the section entitled “Material United States Federal Income Tax Consequences” beginning on page 72 of this proxy statement). A non-U.S. holder may, however, be subject to backup withholding with respect to the cash payments made pursuant to the merger, unless the non-U.S. holder certifies on an appropriate IRS Form W-8 that such non-U.S. holder is not a United States person or otherwise establishes an exemption from backup withholding. You should read the section entitled “Material United States Federal Income Tax Consequences” beginning on page 72 of this proxy statement for a more detailed discussion of the United States federal income tax consequences of the merger. You should also consult your tax advisor with respect to the specific tax consequences to you in connection with the merger in light of your own particular circumstances, including U.S. federal estate, gift and other non-income tax consequences, and tax consequences under state, local or non-U.S. tax laws or any applicable income tax treaties.

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QUESTIONS AND ANSWERS

The following questions and answers are intended to briefly address some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that may be important to you as a holder of PNMR common stock. Please see the section entitled “Summary” beginning on page 1 of this proxy statement and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference into this proxy statement, which you should read carefully and in their entirety.

You may obtain the information incorporated by reference into this proxy statement without charge by following the instructions under the section entitled “Where You Can Find Additional Information” beginning on page 107 of this proxy statement.

Q1:	Why am I receiving this proxy statement and proxy card?

A1:

PNMR has agreed to combine with Avangrid under the terms of the merger agreement, as further described in this proxy statement. If the merger agreement is approved by PNMR shareholders and the other conditions to closing under the merger agreement are satisfied or waived, merger sub will merge with and into PNMR and PNMR will continue as a wholly-owned subsidiary of Avangrid upon completion of the merger.

We are holding the special meeting to ask our shareholders to consider and vote upon a proposal to approve the merger agreement. PNMR shareholders are also being asked to (i) consider and vote upon a proposal to approve, by non-binding, advisory vote, certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger and (ii) consider and vote upon a proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

You are receiving these materials because you owned shares of PNMR common stock as of December 31, 2020, and are therefore eligible to vote at the special meeting.

This proxy statement contains important information about the merger, the merger agreement, a copy of which is attached as Annex A to this proxy statement, the special meeting and the proposals to be voted on at the special meeting. You should read this information carefully and in its entirety.

Q2:	When and where is the special meeting?

A2:	The special meeting will be held on February 12, 2021, at 9:00 a.m. Mountain time, solely through a remote communication in a virtual meeting format.

For additional information about the special meeting, see the section entitled “The PNMR Special Meeting” beginning on page 27 of this proxy statement.

Q3:	Will the special meeting be held virtually due to concerns about the COVID-19 pandemic?

A3:

Yes. Due to the public health impact of the ongoing coronavirus (COVID-19) pandemic and in accordance with Executive Order 2020-081 issued by the Governor of the State of New Mexico and to support the health and well-being of our shareholders, the special meeting will be held only through a remote communication in a virtual meeting format and will not be held at a physical location. Therefore, you will not be able to attend the special meeting in-person. To be admitted electronically to the special meeting, you must go to the meeting website at www.virtualshareholdermeeting.com/PNM2021, and enter the 16-digit control number found on your proxy card or your voting instruction form. Attendance at the virtual special meeting is limited to shareholders of record or their legal proxy holder and beneficial owners as of December 31, 2020, and invited guests of PNMR. We encourage you to access the special meeting prior to its start time.

Q4:	Who may vote at the special meeting?

A4:	You may vote all of the shares of PNMR common stock that you own at the close of business on the record date of December 31, 2020. Each PNMR shareholder is entitled to one vote for each share of

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PNMR common stock held of record as of the close of business on the record date. On the record date, PNMR had 85,834,874 shares of common stock outstanding that are entitled to be voted at the special meeting. You may cast one vote for each share of PNMR common stock held by you on all matters presented at the special meeting.

You will have the opportunity to vote your shares during the special meeting by following the instructions available on the meeting website during the meeting. You may participate electronically in the special meeting if your shares are registered in your name. If you are a beneficial owner and your shares are held in “street name”, and you wish to participate electronically in the special meeting and vote via the Internet, you must follow the instructions provided by your bank, broker or other nominee.

Q5:	What am I being asked to vote on at the special meeting and how does the PNMR board recommend that I vote?

A5:	The following three proposals will be considered and voted on at the special meeting:

	Description of Proposal	Proposal discussed on following pages:	Board Recommendation
PROPOSAL 1	Approval of the merger agreement	77	FOR

			See the section entitled “The Merger—PNMR’s Reasons for the Merger” beginning on page 49 of this proxy statement.

PROPOSAL 2	Approval, by non-binding, advisory vote, of certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger	32	FOR

PROPOSAL 3	Approval of one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement	33	FOR

Q6:	Does my vote matter?

A6:

Yes. Your vote is important. You are encouraged to submit your proxy as promptly as possible. The merger cannot be completed unless the merger agreement is approved by the PNMR shareholders. If you fail to submit a proxy or vote via the Internet at the special meeting, or abstain, or you do not provide your bank, broker or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement. Our board of directors, or the PNMR board, unanimously recommends that shareholders vote “FOR” the proposal to approve the merger agreement and the related matters.

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Q7:	How do I vote my shares?

A7:	For your convenience, we have established three easy methods for voting shares held in your name:

By Internet:

Access www.proxyvote.com and follow the instructions. (You will need the control number on your proxy card or voting instruction form to vote your shares.) Shareholders voting through the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies that must be paid by the shareholder.

By Telephone:

For automated telephone voting, call 1-800-690-6903 (toll free) from any touch-tone telephone and follow the instructions. (You will need the control number on your proxy card or voting instruction form to vote your shares.)

By Mail:

Simply return your executed proxy card in the enclosed postage-paid envelope.

If you send the proxy by mail, there may be unexpected delays in mail processing times as a result of the COVID-19 pandemic. You should allow a sufficient number of days to ensure delivery.

Your shares will be voted in the manner you indicate. The telephone and Internet voting systems are available 24 hours a day. They will close at 11:59 p.m. Eastern Standard Time on February 11, 2021. Please note that the voting deadline is earlier for voting shares held in PNMR’s RSP, as described below under Question 14.

If you are a shareholder of record as of the close of business on the record date, or have received instructions on how to vote from your bank, broker, or nominee, you may also vote via the Internet during the special meeting by following the instructions available on the meeting website during the meeting. To be admitted electronically to the special meeting, you must go to the meeting website at www.virtualshareholdermeeting.com/PNM2021, and enter the 16-digit control number found on your proxy card or your voting instruction form. We encourage you to access the special meeting prior to its start time.

Q8:	What is a proxy?

A8:

A proxy is your legal designation of another person (the “proxy”) to vote on your behalf. By voting by telephone or the Internet, or by completing and mailing a printed proxy card, you are giving the proxy committee appointed by the PNMR board (consisting of Patricia K. Collawn and Norman P. Becker) the authority to vote your shares in the manner you indicate. If you are a shareholder of record and sign and return your proxy card without indicating how you want your shares to be voted, or if you vote by telephone or Internet in accordance with the PNMR board’s voting recommendations, the proxy committee will vote your shares as follows:

•	FOR approval of the merger agreement;

•	FOR approval of certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger; and

•	FOR approval of one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

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considered “non-routine” matters under NYSE rules, and banks, brokers or other nominees will not have discretionary authority to vote on any matter before the meeting. As a result, if you hold your shares of PNMR common stock in “street name,” your shares will not be represented and will not be voted on any matter unless you affirmatively instruct your bank, broker or other nominee how to vote your shares of PNMR common stock in accordance with the voting instructions provided by your bank, broker or other nominee. The effect of not instructing your bank, broker or other nominee how you wish your shares to be voted will be the same as a vote “AGAINST” the proposal to approve the merger agreement, and will not have an effect on the proposal to approve, by non-binding, advisory vote, the merger-related executive compensation or on the proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement. It is therefore critical that you cast your vote by instructing your bank, broker or other nominee on how to vote. Banks, brokers and other nominees will not be able to vote on any of the proposals before the special meeting unless they have received voting instructions from the beneficial owners.

Q9:	Can I change my vote or revoke my proxy?

A9:	Yes. Any subsequent vote by any means will change your prior vote. The last vote actually received before the special meeting will be the one counted. You may also revoke your proxy by voting via the Internet at the special meeting.

Q10:	What constitutes a quorum and why is a quorum required?

A10:

A quorum of shareholders is necessary to conduct business at the special meeting. If at least a majority of all of the PNMR common stock outstanding on the record date is represented at the special meeting, in person via the Internet or by proxy (by voting by telephone or on the Internet or by properly submitting a proxy card or voting instruction form by mail), a quorum will exist. Abstentions and withheld votes will be counted as present for quorum purposes.

Q11:	What is the vote required to approve each proposal at the special meeting?

A11:	Except for the adjournment proposal, the vote required to approve each of the proposals listed below assumes the presence of a quorum at the special meeting.

Proposal	Affirmative Vote Requirement	Effect of Abstentions
PROPOSAL 1 - Approve the merger agreement	Majority of shares of PNMR common stock outstanding as of December 31, 2020, the record date for the special meeting.	Because the affirmative vote required to approve the merger agreement is based upon the total number of outstanding shares of PNMR common stock, if you fail to submit a proxy or vote via the Internet during the special meeting, or abstain, or if your shares of PNMR common stock are held through a bank, broker or other nominee and you do not provide your bank, broker or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement.

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Proposal	Affirmative Vote Requirement	Effect of Abstentions
PROPOSAL 2 - Approve, by non-binding, advisory vote, certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger	The approval of the merger-related executive compensation requires the affirmative vote of the owners of a majority of the shares of PNMR common stock present in person via the Internet or represented by proxy and entitled to vote thereon; however, such vote is non-binding and advisory only.	Any shares not present at the special meeting, including due to the failure of any shareholder holding their shares in “street name” to provide any voting instructions to their bank, broker or other nominee with respect to the special meeting, will have no effect on the outcome of the merger-related compensation proposal. However, an abstention will have the same effect as a vote “AGAINST” the merger-related compensation proposal. If any shareholder who holds their shares in “street name” through a bank, broker or other nominee gives voting instructions to such bank, broker or other nominee with respect to one or more proposals at the special meeting but not with respect to the merger-related compensation proposal such shares will have the same effect as a vote “AGAINST” the merger-related compensation proposal.

PROPOSAL 3 - Approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement	If no quorum is present, authorization for proxy holders to vote in favor of one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement requires the affirmative vote of the owners of a majority of shares of PNMR common stock present in person via the Internet or represented by proxy and entitled to vote thereon. If a quorum is present, authorization for proxy holders to vote in favor of one or more adjournments of the special meeting would require the affirmative vote of the owners of a majority of the shares of PNMR common stock present in person via the Internet or represented by proxy and entitled to vote thereon.	Whether or not a quorum is present, if your shares of PNMR common stock are present at the special meeting but are not voted on the proposal, or if you abstain on the proposal, each will have the effect of a vote “AGAINST” the proposal to approve one or more adjournments of the special meeting. Whether or not a quorum is present, if you fail to submit a proxy or attend the special meeting via the PNMR special meeting website or if your shares of PNMR common stock are held through a bank, broker or other nominee and you do not instruct your bank, broker or other nominee to vote your shares of PNMR common stock, as applicable, your shares of PNMR common stock will not be voted, but this will not have an effect on the vote to approve one or more adjournments of the special meeting.

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See the section entitled, “The PNMR Special Meeting—Record Date and Quorum” beginning on page 27 of this proxy statement.

Q12:	What is the difference between a “shareholder of record” and a “street name” holder?

A12:	These terms describe how your shares are held. If your shares are registered directly in your name with Computershare, our transfer agent, you are a “shareholder of record” with respect to those shares and the proxy materials were sent directly to you by PNMR.

If your shares are held in the name of a bank, broker or other nominee as a custodian, you are a “street name” holder and the proxy materials would have been forwarded to you by that organization. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account.

Q13:	Why did I receive more than one set of proxy materials?

A13:

You will receive multiple sets of proxy materials if you hold your shares in different ways (e.g., joint tenancy, trusts, custodial accounts) or in multiple accounts. Each set of proxy materials that you receive will contain a specific “control number” with the relevant information to vote the specific shares at issue. Note that the proxy materials for shares registered in your name will include any shares you may hold in the Direct Plan. If your shares are held by a broker (i.e., in “street name”), you will receive proxy materials on how to obtain your proxy materials and vote from your broker. You should vote according to the instructions on each set of proxy materials you receive and vote on, sign and return each proxy card you receive.

Q14:	How do I vote my RSP shares?

A14:	If you participate in the RSP, PNMR’s 401(k) plan for its employees, and shares have been allocated to your account under the PNMR Stock Fund investment option, you will receive the following materials by mail:

•	the proxy materials; and

•	a separate vote authorization form and voting instructions for these RSP shares from the PNMR Corporate Investment Committee.

Please use the RSP vote authorization form to vote your RSP shares by telephone, Internet or mail. To allow sufficient time for the record holder of the RSP shares, The Vanguard Fiduciary Trust Company, to vote these shares, your voting instructions must be received by 9:00 a.m. Eastern Standard Time on Thursday, February 11, 2021.

Q15:	If my shares of PNMR common stock are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote those shares for me?

A15:

Your bank, broker or other nominee will only be permitted to vote your shares of PNMR common stock if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee regarding the voting of your shares of PNMR common stock. Under the NYSE rules, banks, brokers or other nominees who hold shares of PNMR common stock in “street name” on behalf of the beneficial owner of such shares have the authority to vote such shares in their discretion on certain “routine” proposals when they have not received voting instructions from the beneficial owners. Banks, brokers or other nominees, however, are not allowed to exercise their voting discretion with respect to matters that under the NYSE rules are “non-routine.” This can result in a “broker non-vote,” which occurs on an item when (i) a bank, broker or other nominee has discretionary authority to vote on one or more “routine” proposals to be voted on at a meeting of shareholders, but is not permitted to vote on other “non-routine” proposals without instructions from the beneficial owner of the shares and (ii) the beneficial owner fails to provide the bank, broker or other nominee with voting instructions on a “non-routine” matter. All of the proposals before the special meeting are considered “non-routine” matters under NYSE rules, and banks, brokers or other nominees will not have discretionary authority to vote on any matter before the meeting. As a result, if you hold your shares of PNMR common stock in “street name,” your shares will not be

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represented and will not be voted on any matter unless you affirmatively instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instructions provided by your bank, broker or other nominee. The effect of not instructing your bank, broker or other nominee how you wish your shares to be voted will be the same as a vote “AGAINST” the proposal to approve the merger agreement, and will not have an effect on the proposal to approve, by non-binding, advisory vote, of the merger-related executive compensation or on the proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement. It is therefore critical that you cast your vote by instructing your bank, broker or other nominee on how to vote. Banks, brokers and other nominees will not be able to vote on any of the proposals before the special meeting unless they have received voting instructions from the beneficial owners.

Q16:	What is the proposed merger and what effect will it have on PNMR?

A16:

The proposed merger is the merger of merger sub, a direct, wholly-owned subsidiary of Avangrid, with and into PNMR, with PNMR continuing as the surviving company and a direct, wholly-owned subsidiary of Avangrid. As a result of the merger, PNMR will no longer be a publicly held company and you will no longer have any interest in PNMR, including its future earnings. Following the merger, PNMR common stock will be delisted from the NYSE and deregistered under the Exchange Act.

Q17:	Did the PNMR board adopt the merger agreement?

A17:

Yes. At a meeting on October 20, 2020, the PNMR board unanimously adopted the merger agreement and approved and determined that it is in the best interests of PNMR and its shareholders for PNMR to execute and deliver the merger agreement and consummate the merger and the other transactions contemplated by the merger agreement.

Q18:	What will I receive if the merger is completed?

A18:

If the merger is completed, each share of PNMR common stock issued and outstanding immediately prior to the completion of the merger (other than (i) shares of PNMR common stock owned by Avangrid, PNMR, merger sub or any other direct or indirect wholly-owned subsidiary of Avangrid or PNMR and (ii) shares held by shareholders who have not voted in favor of the Merger and who are entitled to and have properly demanded dissenter’s rights under New Mexico law) will be converted into the right to receive $50.30 in cash, without interest and less any applicable withholding taxes, or the merger consideration.

Q19:	How does the merger consideration compare to the market price per share of PNMR common stock prior to the announcement of the merger?

A19:

The merger consideration represented a premium to PNMR’s recent and historic share trading price (a 10.0% premium to the October 20, 2020 closing share price of PNMR common stock and approximately a 19.3% premium to the 30-day volume weighted average price of PNMR’s common stock as of October 20, 2020).

Q20:	What will holders under PNMR’s stock-based plans receive in the merger?

A20:

At the effective time of the merger, each outstanding award of PNMR restricted stock rights granted to a member of the PNMR board under the PNMR Stock Plan or otherwise (other than any restricted stock rights granted to a member of the PNMR board with respect to which such board member has made a deferral election under the restricted stock rights program in which the such board member participates) will be converted into a right to receive an amount of cash per share equal to the merger consideration. At the effective time of the merger, all other outstanding PNMR restricted stock rights (other than any restricted stock rights granted to a member of the PNMR board) will be converted into an equivalent award of cash-settled restricted stock rights relating to Avangrid common stock on the same terms and conditions as were applicable to the corresponding PNMR restricted stock rights, including any applicable vesting acceleration provisions and payment timing provisions, except as

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expressly adjusted by the merger agreement. The number of shares of Avangrid common stock covered by each such Avangrid restricted stock right will equal the number (rounded up to the nearest whole number) of shares of PNMR common stock subject to the corresponding PNMR restricted stock right multiplied by the equity conversion factor. The “equity conversion factor” is equal to the merger consideration payable on a share of PNMR common stock divided by the average of the volume weighted averages of the trading prices of Avangrid common stock on the NYSE (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by the parties to the merger agreement) on each of the ten consecutive trading days ending on (and including) the trading day that immediately precedes the closing date of the merger. The cash amount to be paid on settlement of the Avangrid restricted stock rights will be determined based on the average of the volume weighted averages of the trading prices of Avangrid common stock on the NYSE (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source selected by Avangrid in good faith following consultation with officers of PNMR) on each of the ten consecutive trading days ending on (and including) the trading day that immediately precedes the date the Avangrid restricted stock rights become vested and payable.

See the section “Merger Agreement – Treatment of PNMR Restricted Stock Rights, Performance Shares, Direct Plan and Directors Deferred Plan” beginning on page 81 of this proxy statement for further information.

Q21:	Why am I being asked to consider and vote on the proposal to approve, by non-binding, advisory vote, certain existing compensation arrangements for named executive officers of PNMR in connection with the merger?

A21:	Under SEC rules, we are required to seek a non-binding, advisory vote with respect to the compensation that may be paid or become payable to our named executive officers that is based on, or otherwise relates to, the merger.

Q22:	What will happen if PNMR shareholders do not approve this merger-related executive compensation?

A22:

PNMR shareholder approval of the compensation that may be paid or become payable to PNMR’s named executive officers that is based on, or otherwise relates to, the merger is not a condition to completion of the merger. The vote is an advisory vote and will not be binding on PNMR or Avangrid in the merger. If the merger is completed, the merger-related compensation may be paid to PNMR’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements even if PNMR shareholders do not approve, by non-binding, advisory vote, the merger-related executive compensation.

Q23:	Do any of PNMR’s directors or executive officers have interests in the merger that differ from or are in addition to my interests as a shareholder of PNMR common stock?

A23:	In considering the recommendation of the PNMR board with respect to the proposal to approve the merger agreement and the other matters described in this proxy statement, you should be aware that certain directors and executive officers of PNMR may have interests in the merger that are different

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from, or in addition to, the interests of PNMR shareholders generally. The PNMR board was aware of and has considered these interests, among other matters, in evaluating and negotiating the merger agreement and approving the merger, and in recommending that the merger agreement be approved by PNMR shareholders. See the sections entitled “Interests of PNMR’s Directors and Executive Officers in the Merger” beginning on page 66 of this proxy statement and “Advisory Vote on Merger-Related Compensation for PNMR’s Named Executive Officers” beginning on page 32 of this proxy statement.

Q24:	When do you expect the merger to be completed?

A24:

Subject to the satisfaction or waiver of the closing conditions described under the section entitled “The Merger Agreement—Conditions That Must Be Satisfied or Waived for the Merger to Occur” beginning on page 98 of this proxy statement, including the approval of the merger agreement by PNMR shareholders at the special meeting and certain regulatory approvals, the merger will close as soon as reasonably practicable. PNMR and Avangrid expect that the merger will close in the fourth quarter of 2021. However, it is possible that factors outside the control of both companies could result in the merger being completed at a different time or not at all.

Q25:	What are the material United States federal income tax consequences of the merger to PNMR shareholders?

A25:

The exchange of shares of PNMR common stock for cash pursuant to the merger will be a taxable transaction to U.S. holders (as defined in the section entitled “Material United States Federal Income Tax Consequences” beginning on page 72 of this proxy statement) for U.S. federal income tax purposes. In general, a U.S. holder whose shares of PNMR common stock are converted into the right to receive cash in the merger will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received with respect to such shares of PNMR common stock and such U.S. holder’s adjusted tax basis in such shares. Backup withholding may also apply to the cash payments made pursuant to the merger unless the U.S. holder or other payee provides a valid taxpayer identification number and complies with certain certification procedures (generally, by providing a properly completed and executed IRS Form W-9) or otherwise establishes an exemption from backup withholding. Payments made to a non-U.S. holder (as defined in the section entitled “Material United States Federal Income Tax Consequences” beginning on page 72 of this proxy statement) with respect to shares of PNMR common stock exchanged for cash pursuant to the merger generally will not be subject U.S. federal income tax, subject to certain exceptions (as discussed in the section entitled “Material United States Federal Income Tax Consequences” beginning on page 72 of this proxy statement). A non-U.S. holder may, however, be subject to backup withholding with respect to the cash payments made pursuant to the merger, unless the non-U.S. holder certifies on an appropriate IRS Form W-8 that such non-U.S. holder is not a United States person or otherwise establishes an exemption from backup withholding. You should read the section entitled “Material United States Federal Income Tax Consequences” beginning on page 72 of this proxy statement for a more detailed discussion of the U.S. federal income tax consequences of the merger. You should also consult your tax advisor with respect to the specific tax consequences to you in connection with the merger in light of your own particular circumstances, including U.S. federal estate, gift and other non-income tax consequences, and tax consequences under state, local or non-U.S. tax laws or any applicable income tax treaties.

Q26:	How will I receive the merger consideration to which I am entitled?

A26:

After receiving the proper documentation from you, following the completion of the merger, the exchange agent will forward to you the cash to which you are entitled. If you own PNMR common stock in book-entry form or through a bank, broker, bank or other nominee, you will not need to obtain share certificates to submit for exchange to the exchange agent. However, you or your bank, broker or other nominee will need to follow the instructions provided by the exchange agent in order to properly surrender your PNMR common stock. More information on the documentation you are required to deliver to the exchange agent may be found in the section entitled “The Merger Agreement—Surrender of PNMR Shares” beginning on page 78 of this proxy statement.

Q27:	What happens if I sell my shares of PNMR common stock before the special meeting?

A27:	The record date is earlier than both the date of the special meeting and the completion of the merger. If

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you transfer your shares of PNMR common stock after the record date but before the special meeting, you will, unless the transferee requests a proxy from you, retain your right to vote at the special meeting but will transfer the right to receive the merger consideration to the person to whom you transfer your shares. In order to receive the merger consideration, you must hold your shares at the effective time of the merger.

Q28:	What happens if I sell or otherwise transfer my shares of PNMR common stock after the special meeting but before the completion of the merger?

A28:

If you sell or otherwise transfer your shares after the special meeting but before the completion of the merger, you will have transferred the right to receive the merger consideration to the person to whom you transfer your shares. In order to receive the merger consideration upon completion of the merger, you must hold your shares at the effective time of the merger.

Q29:	Should I send in my share certificate(s) now?

A29:

No, please do NOT return your share certificate(s) with your proxy. If the merger agreement is approved by PNMR shareholders and the merger is completed, and you hold physical share certificate(s), you will be sent a letter of transmittal as promptly as reasonably practicable after the completion of the merger describing how you may exchange your shares of PNMR common stock for the merger consideration. If your shares of PNMR common stock are held in “street name” through a bank, broker or other nominee, you will receive instructions from your bank, broker or other nominee as to how to effect the surrender of your “street name” shares of PNMR common stock in exchange for the merger consideration.

Q30:	Am I entitled to exercise dissenter’s rights instead of receiving the merger consideration for my shares of PNMR common stock?

A30:

Yes, PNMR shareholders of record have the right under New Mexico law to demand appraisal of their shares of PNMR common stock in connection with the merger and to receive, in lieu of the merger consideration, payment in cash for the fair value of their shares of PNMR common stock. Any PNMR shareholder electing to exercise dissenters’ rights must not have voted his, her or its shares of PNMR common stock “FOR” the proposal to approve the merger agreement and must specifically comply with the applicable provisions of the NMBCA in order to perfect the rights of dissent and appraisal. See the section entitled, “The Merger —Dissenter’s Rights” beginning at page 62 of this proxy statement.

Q31:	What are the conditions to completion of the merger?

A31:

In addition to the approval of the merger agreement by PNMR shareholders as described above, completion of the merger is subject to the satisfaction of a number of other conditions, including the absence of any material adverse effect on PNMR, the receipt of required regulatory approvals and entry into agreements regarding the Four Corners divesture (as described in the merger agreement), as well as holders of no more than 15% of the outstanding shares of PNMR common stock validly exercising their dissenters’ rights. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see the section entitled “The Merger Agreement—Conditions That Must Be Satisfied or Waived for the Merger to Occur” beginning on page 98 of this proxy statement.

Q32:	What happens if the merger is not completed?

A32:

If the merger agreement is not approved by PNMR shareholders or if the merger is not completed for any other reason, PNMR shareholders will not receive any consideration for their shares of PNMR common stock. Instead, PNMR will remain an independent public company, PNMR common stock will continue to be listed and traded on the NYSE and registered under the Exchange Act and PNMR will continue to file periodic reports with the SEC. Under certain circumstances, PNMR may be required to pay Avangrid a termination fee of $130 million and Avangrid may be required to pay PNMR a termination fee of $184 million and the parties may be required to reimburse each party’s expenses in connection with the merger up to $10 million, with any reimbursement of expenses being credited

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toward, and offset against, the payment of the applicable termination fee. See the section entitled “The Merger Agreement—Termination of the Merger Agreement” and “The Merger Agreement—Expenses” beginning on pages 100 and 103, respectively, of this proxy statement.

Q33:	Who will solicit and pay the cost of soliciting proxies?

A33:

The enclosed proxy is being solicited on behalf of the PNMR board. This solicitation is being made by mail, but also may be made by telephone or via the Internet. We have hired Georgeson to assist in the solicitation for an estimated fee of $25,000 plus any out-of-pocket expenses. We will pay all costs related to solicitation. Broadridge is tabulating the vote and providing the hosting services for the special meeting in a virtual format.

Q34:	Is this proxy statement the only way that proxies are being solicited?

A34:

No. As stated above, we have retained Georgeson to aid in the solicitation of proxies. In addition to mailing these proxy materials, certain directors, officers, or employees of PNMR may solicit proxies by telephone, facsimile, e-mail, or personal contact. They will not be specifically compensated for doing so.

Q35:	Will shareholders be given the opportunity to ask questions at the special meeting?

A35:

Yes. The Chairman will answer questions asked by shareholders during a designated portion of the special meeting. You will be provided an opportunity to ask questions of the Chairman by following the instructions available on the meeting website during the special meeting. Shareholders must direct questions and comments to the Chairman and limit their remarks to matters that relate directly to the business of the special meeting. For other rules of conduct, please refer to materials that will be provided to you during the special meeting.

Q36:	What if during the check-in time or during the special meeting I have technical difficulties or trouble accessing the virtual meeting website?

A36:

If we experience technical difficulties during the virtual special meeting (e.g., a temporary or prolonged power outage), we will determine whether the virtual special meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the virtual special meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged). In any such situation, we will promptly notify shareholders of the decision via www.virtualshareholdermeeting.com/PNM2021.

Broadridge will have technicians ready to assist you with any individual technical difficulties you may have accessing the virtual meeting website. If you encounter any difficulties accessing the virtual meeting website during the check-in or meeting time for the special meeting, please call the technical support number that will be posted on the virtual meeting website log-in page at www.virtualshareholdermeeting.com/PNM2021.

Q37:	Where can I find the voting results of the special meeting?

A37:

Preliminary voting results will be announced at the special meeting. The final voting results will be tallied by the inspectors of election and published in our Current Report on Form 8-K filed with the SEC within four business days after the date of the special meeting. Such results will also be published on our website at www.pnmresources.com.

Q38:	Who can help answer any other questions I have?

A38:	If you have additional questions about the merger, need assistance in submitting your proxy or voting your shares of PNMR common stock, or need additional copies of this proxy statement or the enclosed proxy card, please contact Georgeson, our proxy solicitor, by calling toll-free at 877-507-1756.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement and other documents incorporated by reference into this proxy statement contain or may contain forward-looking statements. Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “should,” “can,” “expects,” “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “assumes,” “guides,” “targets,” “forecasts,” “is confident that” and “seeks” or the negative of such terms or other variations on such terms or comparable terminology. These forward-looking statements generally include statements regarding the potential transaction between PNMR and Avangrid, including any statements regarding the expected timetable for completing the potential merger and the ability to complete the potential merger. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates. We assume no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, we caution readers not to place undue reliance on these statements. Our business, financial condition, cash flow, and operating results are influenced by many factors, which are often beyond our control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. For a discussion of risk factors and other important factors affecting forward-looking statements, please see our Form 10-K and Form 10-Q filings and the information filed on our Forms 8-K with the SEC, which factors are specifically incorporated by reference herein, along with the risks and uncertainties related to the proposed merger, including, but not limited to:

•	the expected timing and likelihood of completion of the pending merger, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the pending merger that could reduce anticipated benefits or cause the parties to abandon the transaction,

•	the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement,

•	the possibility that PNMR’s shareholders may not approve the merger agreement,

•	the risk that the parties may not be able to satisfy the conditions to the proposed merger in a timely manner or at all,

•	risks related to disruption of management time from ongoing business operations due to the proposed merger,

•	the outcome of any legal proceedings related to the merger,

•	the failure by Avangrid to obtain the necessary financing set forth in commitment letters received in connection with the merger,

•	the risk that any announcements relating to the proposed merger could have adverse effects on the market price of our common stock, and

•	the risk that the proposed transaction and its announcement could have an adverse effect on our ability to retain and hire key personnel and maintain relationships with our customers and suppliers, and on our operating results and businesses generally.

Other unpredictable or unknown factors not discussed in this proxy statement could also have material adverse effects on forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

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INFORMATION ABOUT THE COMPANIES

PNMR

414 Silver Ave. SW

Albuquerque, New Mexico 87102-3289

PNMR is a holding company with two regulated utilities serving approximately 796,000 residential, commercial, and industrial customers and end-users of electricity in New Mexico and Texas. PNMR’s electric utilities are PNM and TNMP. PNMR strives to create a clean and bright energy future for customers, communities, and shareholders. PNMR’s strategy and decision-making are focused on safely providing reliable, affordable, and environmentally responsible power built on a foundation of ESG principles.

PNMR common stock is listed on the NYSE under the symbol “PNMR.”

For more information about PNMR, please visit the Internet website of PNMR at www.pnmresources.com. The Internet website address of PNMR is provided as an inactive textual reference only. The information contained on the Internet website of PNMR is not incorporated into, and does not form a part of, this proxy statement or any other report or document on file with or furnished to the SEC. Additional information about PNMR is included in the documents incorporated by reference into this proxy statement. See the section entitled “Where You Can Find Additional Information” beginning on page 107 of this proxy statement.

Avangrid

180 Marsh Hill Road

Orange, Connecticut 06477

Avangrid is an energy services holding company engaged in the regulated energy transmission and distribution business through its principal subsidiary, Avangrid Networks, Inc., and in the renewable energy generation business through its principal subsidiary, Avangrid Renewables Holdings, Inc. Avangrid Renewables Holdings, Inc. in turn holds subsidiaries including Avangrid Renewables, LLC. Iberdrola, S.A., a corporation organized under the laws of the Kingdom of Spain, owns 81.5% of the outstanding common stock of Avangrid.

Avangrid common stock is listed on the NYSE under the symbol “AGR.”

Merger Sub

180 Marsh Hill Road

Orange, Connecticut 06477

Merger sub is a New Mexico corporation and a direct, wholly-owned subsidiary of Avangrid that was formed solely in contemplation of the merger. Merger sub has not engaged in any business except for activities incidental to its formation and as contemplated by the merger agreement and the related transactions. Upon the completion of the merger, merger sub will cease to exist and PNMR will continue as the surviving corporation.

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THE PNMR SPECIAL MEETING

Time, Place and Means of Remote Communication

This proxy statement is being furnished to PNMR shareholders as part of the solicitation of proxies by the PNMR board for use at the special meeting to be held on February 12, 2021, at 9:00 a.m. Mountain time, or at any postponement or adjournment thereof. Due to the public health impact of the ongoing coronavirus (COVID-19) pandemic and in accordance with Executive Order 2020-081 issued by the Governor of the State of New Mexico and to support the health and well-being of our shareholders, the special meeting will be held only through a remote communication in a virtual meeting format and will not be held at a physical location. Therefore, you will not be able to attend the special meeting in-person. To be admitted electronically to the special meeting, you must go to the meeting website at www.virtualshareholdermeeting.com/PNM2021, and enter the 16-digit control number found on your proxy card or your voting instruction form. We encourage you to access the special meeting prior to its start time.

Purpose of the Special Meeting

PNMR shareholders must approve the merger agreement in order for the merger to occur. If PNMR shareholders fail to approve the merger agreement, the merger will not occur. A copy of the merger agreement is attached as Annex A to this proxy statement, and you are encouraged to read the merger agreement carefully and in its entirety.

Record Date and Quorum

PNMR has set the close of business on December 31, 2020 as the record date for the special meeting, and only holders of record of shares of PNMR common stock on the record date are entitled to vote at the special meeting. You are entitled to receive notice of, and to vote at, the special meeting if you owned shares of PNMR common stock as of the close of business on the record date. On the record date, there were 85,834,874 shares of PNMR common stock outstanding and entitled to vote and, accordingly, 42,917,438 shares of PNMR common stock must vote to approve the merger agreement for the merger to occur. You may cast one vote for each share of PNMR common stock held by you on the record date on all matters properly coming before the special meeting.

A quorum of shareholders is necessary to conduct business at the special meeting. The presence at the special meeting, in person via the Internet or represented by proxy (by voting by telephone or on the Internet or by properly submitting a proxy card or voting instruction form by mail) to vote on their behalf, of owners of a majority of the shares of PNMR common stock entitled to vote outstanding as of the close of business on the record date constitutes a quorum for the purposes of the special meeting. Abstentions will be counted as present for quorum purposes. Because all of the proposals for consideration at the special meeting are considered “non-routine” matters under the NYSE rules (as described below), shares held in “street name” will not be counted as present for the purpose of determining the existence of a quorum unless a shareholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals before the special meeting. Once a share of PNMR common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. However, if a new record date is set for an adjourned special meeting, then a new quorum will be determined.

Attendance

Only PNMR shareholders of record as of the close of business on the record date, their legal proxy holders, beneficial owners and invited guests of PNMR may participate in the special meeting electronically. An authorized proxy must present proof that he or she is an authorized proxy of a shareholder. The special meeting will be held only through a remote communication in a virtual meeting format and will not be held at a physical location. Therefore, you will not be able to attend the special meeting in-person.

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Vote Required

The approval of the merger agreement requires the affirmative vote of the owners of a majority of the shares of PNMR common stock outstanding as of the close of business on the record date. For the proposal to approve the merger agreement, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions will not be counted as votes cast in favor of the proposal to approve the merger agreement, but will be counted as present for quorum purposes. If you fail to submit a proxy or to vote via the Internet during the special meeting or if you abstain, it will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement.

If your shares of PNMR common stock are registered directly in your name with Computershare, our transfer agent, you are a “shareholder of record” with respect to those shares of PNMR common stock and this proxy statement and the enclosed proxy card have been sent directly to you by PNMR.

If your shares of PNMR common stock are held in the name of a bank, broker or other nominee as a custodian, you are a “street name” holder of PNMR common stock and this proxy statement has been forwarded to you by that organization. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account.

Under the NYSE rules, banks, brokers or other nominees who hold shares in “street name” on behalf of the beneficial owner of such shares have the authority to vote such shares in their discretion on certain “routine” proposals when they have not received voting instructions from the beneficial owners. Banks, brokers or other nominees, however, are not allowed to exercise their voting discretion with respect to matters that under the NYSE rules are “non-routine.” This can result in a “broker non-vote,” which occurs on an item when (i) a bank, broker or other nominee has discretionary authority to vote on one or more “routine” proposals to be voted on at a meeting of shareholders, but is not permitted to vote on other “non-routine” proposals without instructions from the beneficial owner of the shares and (ii) the beneficial owner fails to provide the bank, broker or other nominee with voting instructions on a “non-routine” matter. All of the proposals before the special meeting are considered “non-routine” matters under NYSE rules, and banks, brokers or other nominees will not have discretionary authority to vote on any matter before the meeting. As a result, if you hold your shares of PNMR common stock in “street name,” your shares will not be represented and will not be voted on any matter unless you affirmatively instruct your bank, broker or other nominee how to vote your shares of PNMR common stock in accordance with the voting instructions provided by your bank, broker or other nominee. The effect of not instructing your broker how you wish your shares to be voted will be the same as a vote “AGAINST” the proposal to approve the merger agreement, and will not have an effect on the proposal to approve, by non-binding, advisory vote, the merger-related executive compensation or on the proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement. It is therefore critical that you cast your vote by instructing your bank, broker or other nominee on how to vote. Brokers will not be able to vote on any of the proposals before the special meeting unless they have received voting instructions from the beneficial owners.

The proposal to approve, by non-binding, advisory vote, certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger requires the affirmative vote of the owners of a majority of the shares of PNMR common stock present in person via the Internet or represented by proxy and entitled to vote thereon; however, such vote is non-binding and advisory only. For purposes of the proposal, if your shares of PNMR common stock are present at the special meeting but are not voted on this proposal, or if you have given a proxy and abstained on this proposal, each will have the effect of a vote against the proposal. If you fail to submit a proxy or to vote via the Internet during the special meeting, as applicable, the shares of PNMR common stock held by you or your bank, broker or other nominee will not be counted in respect of, and will not have an effect on, the proposal to approve, by non-binding, advisory vote, the merger-related executive compensation.

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of PNMR common stock present in person via the Internet or represented by proxy and entitled to vote thereon. Whether or not a quorum is present, if your shares of PNMR common stock are present at the special meeting but are not voted on this proposal, or if you abstain on this proposal, this will have the effect of a vote “AGAINST” the proposal to approve one or more adjournments of the special meeting. Whether or not a quorum is present, if you fail to submit a proxy or to attend the special meeting via the PNMR special meeting website or if your shares of PNMR common stock are held through a bank, broker or other nominee and you do not instruct your bank, broker or other nominee to vote your shares of PNMR common stock, as applicable, your shares of PNMR common stock will not be voted, but this will not have an effect on the vote to approve one or more adjournments of the special meeting.

As of the close of business on the record date, the directors and executive officers of PNMR beneficially owned and were entitled to vote, in the aggregate, 1,107,766 shares of PNMR common stock, representing approximately 1.29% of the outstanding shares of PNMR common stock as of the close of business on the record date. The directors and executive officers of PNMR have informed us that they currently intend to vote all such shares of PNMR common stock “FOR” the proposal to approve the merger agreement, “FOR” the proposal to approve, by non-binding, advisory vote, certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger and “FOR” the proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement, although proxy holders are not obligated to vote in favor of adjournment.

Proxies and Revocations

If you are a shareholder of record, you may vote your shares of PNMR common stock on matters presented at the special meeting in any of the following ways:

•

By Internet: Access www.proxyvote.com and follow the instructions. (You will need the control number on your proxy card or voting instruction form to vote your shares.) Shareholders voting through the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies that must be paid by the shareholder.

•	By Telephone: For automated telephone voting, call 1-800-690-6903 (toll free) from any touch-tone telephone and follow the instructions. (You will need the control number on your proxy card or voting instruction form to vote your shares.)

•	By Mail: Simply return your executed proxy card in the enclosed postage-paid envelope.

If you send the proxy by mail, there may be unexpected delays in mail processing times as a result of the COVID-19 pandemic. You should allow a sufficient number of days to ensure delivery.

Your shares will be voted in the manner you indicate. The telephone and Internet voting systems are available 24 hours a day. They will close at 11:59 p.m. Eastern Standard Time on Thursday, February 11, 2021. Please note that the voting deadline is earlier for voting shares held in PNMR’s RSP, as described below.

If you are a beneficial owner, you will receive instructions from your bank, broker or other nominee that you must follow in order to have your shares of PNMR common stock voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted.

Please refer to the instructions on your proxy to determine the deadlines for voting over the Internet or by telephone. If you choose to submit a proxy by mailing a proxy card, your proxy card should be mailed in the

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pre-addressed, postage-prepaid envelope accompanying the proxy card, and your proxy card must be received by the time the special meeting begins. Please do not send in your share certificates with your proxy card. When the merger is completed, a separate letter of transmittal will be mailed to you that will enable you to receive the merger consideration in exchange for your share certificates.

If you vote by proxy, regardless of the method you choose to vote, the individuals named on the enclosed proxy card, and each of them, with full power of substitution, will vote your shares of PNMR common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of PNMR common stock should be voted “FOR” or “AGAINST” or to “ABSTAIN” from voting on all, some or none of the specific items of business to come before the special meeting.

If you properly sign your proxy card but do not mark the boxes showing how your shares of PNMR common stock should be voted on a matter, the shares of PNMR common stock represented by your properly signed proxy will be voted “FOR” the proposal to approve the merger agreement, “FOR” the proposal to approve, by non-binding advisory vote, certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger and “FOR” the proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

If you have any questions or need assistance voting your shares, please contact Georgeson, our proxy solicitor, by calling toll-free at 877-507-1756.

IT IS IMPORTANT THAT YOU VOTE YOUR SHARES OF PNMR COMMON STOCK PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING VIA THE PNMR SPECIAL MEETING WEBSITE, PLEASE VOTE YOUR SHARES BEFORE THE SPECIAL MEETING OVER THE INTERNET OR VIA THE TOLL-FREE TELEPHONE NUMBER OR BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE PRE-ADDRESSED, POSTAGE-PREPAID ENVELOPE ACCOMPANYING THE PROXY CARD. IF YOU ATTEND THE SPECIAL MEETING ONLINE AND VOTE DURING THE SPECIAL MEETING VIA THE INTERNET, YOUR VOTE BY BALLOT WILL REVOKE ANY PROXY PREVIOUSLY SUBMITTED.

Technical Difficulties or Issues Accessing the Virtual Meeting Website

Adjournments and Postponements

Although it is not currently expected, the special meeting may be adjourned on one or more occasions for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement or if a quorum is not present at the special meeting. Whether or not a quorum is present, an adjournment generally may be made with the affirmative vote of the owners of a majority of the shares of PNMR common stock present in person via the Internet or represented by proxy and entitled to vote thereon. Any adjournment of the special meeting for the purpose of soliciting additional proxies will allow PNMR shareholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned.

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Anticipated Date of Completion of the Merger

Subject to the satisfaction or waiver of the closing conditions described under the section entitled “The Merger Agreement—Conditions That Must Be Satisfied or Waived for the Merger to Occur” beginning on page 98 of this proxy statement, including the approval of the merger agreement by PNMR shareholders at the special meeting, PNMR and Avangrid expect that the merger will be completed during the fourth quarter of 2021. However, it is possible that factors outside the control of both companies could result in the merger being completed at a different time or not at all.

Solicitation of Proxies; Payment of Solicitation Expenses

We are making this solicitation and will bear the expense of printing and mailing proxy materials to PNMR’s shareholders. We will ask banks, brokers and other custodians, nominees and fiduciaries to send proxy materials to beneficial owners of shares and to secure their voting instructions, if necessary, and we will reimburse them for their reasonable expenses in so doing. Our directors, officers and employees may also solicit proxies personally or by telephone, but they will not be specifically compensated for soliciting proxies. We have retained Georgeson, for a fee of up to $25,000 plus any out-of-pocket expenses, to aid in the solicitation of proxies by similar methods.

Questions and Additional Information

If you have additional questions about the merger, need assistance in submitting your proxy or voting your shares of PNMR common stock or need additional copies of this proxy statement or the enclosed proxy card, please contact:

1290 Avenue of the Americas, 9^th Floor

New York, NY 10104

Shareholders, Banks and Brokers

Call Toll Free: 877-507-1756

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ADVISORY VOTE ON MERGER-RELATED COMPENSATION FOR PNMR’S NAMED EXECUTIVE OFFICERS

As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, we are requesting the PNMR shareholders’ approval, on an advisory (non-binding) basis, of specified compensation that may be payable to PNMR’s named executive officers in connection with the merger and therefore are asking shareholders to adopt the following resolution:

“RESOLVED, that the compensation that may be paid or become payable to PNMR’s named executive officers in connection with the merger, as disclosed in the table in the section of the proxy statement entitled “Interests of PNMR’s Directors and Executive Officers in the Merger – Golden Parachute Compensation,” including the associated narrative discussion, and the agreements pursuant to which such compensation may be paid or become payable, are hereby APPROVED on an advisory basis.”

The advisory vote on executive compensation payable in connection with the merger is a vote separate and apart from the vote to approve the merger agreement, and approval of such executive compensation is not a condition to completion of the merger. Accordingly, you may vote to approve the advisory executive compensation and vote not to approve the merger agreement or vice versa. Because the vote is advisory in nature only, it will not be binding on either PNMR or Avangrid. Accordingly, to the extent that PNMR or Avangrid is contractually obligated to pay the compensation, the compensation will be payable to the named executive officers, subject only to the conditions applicable thereto, if the merger agreement is approved and the merger completed, regardless of the outcome of the advisory vote. The PNMR board unanimously recommends that shareholders vote “FOR” the approval of this resolution.

This section of this proxy “Interests of PNMR’s Directors and Executive Officers in the Merger – Golden Parachute Compensation” sets forth the information required by Item 402(t) of the SEC’s Regulation S-K regarding compensation that is based on, or otherwise relates to, the merger for each “named executive officer” of PNMR. The following individuals are referred to collectively as the named executive officers of PNMR:

•	Patricia K. Collawn—Chairman, President and Chief Executive Officer;

•	Charles N. Eldred—Executive Vice President, Corporate Development and Finance (served as Chief Financial Officer through January 21, 2020);

•	Joseph D. Tarry—Senior Vice President and Chief Financial Officer;

•	Patrick V. Apodaca—Senior Vice President, General Counsel and Secretary;

•	Ronald N. Darnell—Senior Vice President, Public Policy; and

•	Chris M. Olson,—Senior Vice President, Utility Operations.

The PNMR board unanimously recommends that you vote “FOR” the approval of the resolution above approving certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger contemplated by the merger agreement.

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ADJOURNMENT OF THE SPECIAL MEETING TO SOLICIT ADDITIONAL PROXIES

PNMR shareholders are being asked to approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement. If this proposal is approved, the special meeting could be successively adjourned to any date. In accordance with the PNMR bylaws, a vote on adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement may be taken in the absence of a quorum. We do not intend to call a vote on adjournments of the special meeting to solicit additional proxies if the merger agreement is approved at the special meeting.

If the special meeting is adjourned to solicit additional proxies, PNMR shareholders who have already submitted their proxies will be able to revoke them at any time prior to their use. Whether or not a quorum is present, approval of one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement will require the affirmative vote of the owners of a majority of the outstanding shares of PNMR common stock present in person via the Internet or represented by proxy at the special meeting and entitled to vote at the special meeting. Accordingly, whether or not a quorum is present, if your shares of PNMR common stock are present at the special meeting but are not voted on the proposal, or if you abstain on the proposal, this will have the effect of a vote “AGAINST” the proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement. Whether or not a quorum is present, if you fail to submit a proxy or to attend the special meeting via the PNMR special meeting website or if your shares of PNMR common stock are held through a bank, broker or other nominee and you do not instruct your bank, broker or other nominee to vote your shares of PNMR common stock, as applicable, your shares of PNMR common stock will not be voted, but this will not have an effect on the vote to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

The PNMR board unanimously recommends that you vote “FOR” the proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

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THE MERGER

This discussion of the merger is qualified in its entirety by reference to the merger agreement, which is attached to this proxy statement as Annex A. You should read the entire merger agreement carefully as it is the legal document that governs the merger.

The merger agreement provides that, upon satisfaction or waiver of the conditions to the merger, merger sub will merge with and into PNMR. PNMR will be the surviving corporation in the merger as a wholly-owned subsidiary of Avangrid. As a result of the merger, PNMR will cease to be a publicly traded company.

Background of the Merger

The PNMR board regularly evaluates PNMR’s performance, risks and strategies for growth. In addition, the PNMR board and management, together with their legal and financial advisors, routinely review potential opportunities available to PNMR as part of its consideration of ways in which to enhance earnings and increase value for shareholders. As part of this review, the PNMR board has periodically evaluated the public utility M&A landscape in general and pursued M&A growth opportunities for PNMR.

On December 6, 2018, the PNMR board met at a regularly scheduled meeting, and, in executive session, Patricia K. Collawn and Charles N. Eldred gave a presentation on the landscape, challenges, and future of the utility industry. The presentation included discussion regarding utility industry composition trends, strategic issues faced by PNMR and the industry as a whole, strategic and financial challenges for PNMR as a relatively small capitalization company, and planning for the future in the industry. The PNMR board expressed its concern with PNMR’s ability to address these challenges in light of PNMR’s inability to date to grow through acquisition, despite efforts to do so. The PNMR board also expressed its concern with the risk of the erosion of the limited capital base PNMR had due to industry and regulatory constraints. Following this discussion, the PNMR board asked management to provide information about potential PNMR strategic alternatives at its upcoming February 2019 meeting.

Later in December 2018, PNMR management asked Evercore to provide financial advisory services in connection with the preliminary evaluation of strategic alternatives that had been requested by the PNMR board. Troutman Pepper Hamilton Sanders LLP, or Troutman Pepper, was also asked to provide legal advice in connection with this preliminary evaluation.

On February 22, 2019, the PNMR board met at a regularly scheduled meeting and in executive session with Mr. Eldred participating, reviewed preliminary financial analysis and discussion materials prepared by Evercore and provided in advance of the meeting. The PNMR board discussed how, while PNMR has delivered consistent growth and strong shareholder returns which were reflected in PNMR’s relatively high share trading price, this shareholder value could be challenged by regulatory and market factors outside of PNMR’s control, especially in light of PNMR’s relatively small financial capacity. The PNMR board again discussed how growth opportunities pursued by PNMR had not materialized largely as a result of this lack of financial capacity. Following discussion, the PNMR board directed Ms. Collawn and Mr. Eldred to work with Evercore to begin contacting several possible strategic merger partners identified by PNMR management and Evercore during the meeting regarding their interest in considering preliminary discussions about a possible strategic transaction with PNMR. Key considerations in selecting these companies were strategic focus/presence in the region, financial capability and ability to pay the merger consideration, and the likelihood of being able to receive regulatory approval and consummate a transaction. The PNMR board also emphasized the importance of maintaining the confidentiality of this outreach.

Thereafter, representatives of Evercore initially contacted representatives of four potential strategic merger partners identified during the February 2019 PNMR board meeting about whether there might be an interest in holding discussions with PNMR. Included in these contacts was Iberdrola as the controlling shareholder of Avangrid.

In early April 2019, Mr. Eldred and a representative of Evercore met with Pedro Azagra Blazquez, Chief Development Officer of Iberdrola and a member of Avangrid’s board of directors, in Boston. They discussed whether there might be an interest in holding discussions with PNMR about a possible strategic merger with Avangrid.

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In late April 2019, Ms. Collawn and Mr. Eldred and a representative of Evercore met with Mr. Azagra Blazquez in San Diego, California. Mr. Azagra Blazquez expressed interest in engaging in discussions with PNMR about a possible strategic merger with Avangrid.

On May 21, 2019, the PNMR board met at a regularly scheduled meeting and, in executive session with Mr. Eldred and PNMR’s General Counsel participating, reviewed materials prepared by Evercore and provided in advance of the meeting. The materials described the high level conversations that had been held since the February 2019 PNMR board meeting with Mr. Azagra Blazquez and his team, and the three other possible strategic partners which had been contacted (which are referred to as Company A, Company B and Company C). The materials provided information about each of these companies and their possible rationale for considering a transaction with PNMR. The General Counsel reviewed the PNMR board’s fiduciary duties when considering significant strategic matters. Following discussion, the PNMR board authorized management to work with Evercore and outside counsel to seek to execute non-disclosure agreements (NDA) with the contacted companies and then provide them with non-public information. The terms of all of the NDAs permitted the counterparty to make non-public proposals to the PNMR board following public announcement that PNMR had entered into a merger agreement. The PNMR board directed that the contacted companies should be invited to provide indications of interest for a transaction, which would be reviewed by the PNMR board to determine whether it desired to continue with the process. In this discussion, the PNMR board focused on its desire to obtain a fair value for shareholders, while also emphasizing the importance of a strategic merger partner’s ability to enhance the company’s pursuit of its strategic direction. The PNMR board also discussed the importance of employee considerations.

In late May 2019, Company A informed representatives of Evercore that it was not interested in pursuing a transaction with PNMR due to leverage and balance sheet considerations as well as timing not being conducive for Company A to consider a transaction.

On June 3, 2019, El Paso Electric entered into an agreement to be acquired by Infrastructure Investments Fund, an investment vehicle advised by J.P. Morgan Investment Inc. Between May 31 and June 20, 2019, the trading price of PNMR common stock increased by 10.0% from $47.11 to $51.83.

On June 5, 2019, PNMR and Iberdrola entered into an NDA.

In early June 2019, Mr. Eldred met with Company B during an industry conference in Philadelphia, Pennsylvania. Additionally during this industry conference, Ms. Collawn and Mr. Eldred met with Mr. Azagra Blazquez.

Also in early June, PNMR and Company C entered into an NDA, and in mid-June, PNMR and Company B entered into an NDA.

In late June 2019, Company C informed representatives of Evercore that it was not interested in pursuing a transaction at that time. Company C explained that its reasons for not pursuing a transaction included PNMR’s high stock market valuation and concerns about Company C’s leverage level and ability to fund a transaction.

In late June 2019, Company B provided Evercore with a list of certain preliminary due diligence questions on the PNMR financial information. Evercore thereafter provided Company B with PNMR’s responses to these questions.

On July 2, 2019, at the direction of PNMR, Evercore sent an initial bid instruction letter to Company B and Iberdrola which required that preliminary indications of interest be submitted by July 18, 2019.

On July 16, 2019, Company B informed Evercore that it was not interested in pursuing a transaction with PNMR at that time. Company B explained that its reasons for not pursuing a transaction included PNMR’s high stock market valuation, PNMR’s leverage level, the New Mexico regulatory climate and PNMR’s small size.

On July 17, 2019, Evercore was provided with materials related to a potential strategic merger transaction of PNMR and Avangrid.

On July 22, 2019, the PNMR board met at a regularly scheduled meeting and in executive session, with Mr. Eldred and PNMR’s General Counsel participating, reviewed the status of discussions with the possible strategic partners and reviewed information about Iberdrola and Avangrid. On July 23, 2019, the PNMR board

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continued its meeting and in executive session, with Mr. Eldred, PNMR’s General Counsel, and representatives of Evercore and Troutman Pepper participating, reviewed materials provided by Evercore and Troutman Pepper in advance of the meeting. The PNMR board reviewed the status of discussions with the possible strategic partners. The PNMR board reviewed the reasons why potential merger partners, other than Iberdrola/Avangrid, had declined to pursue a merger with PNMR. Representatives of Evercore reviewed with the PNMR board preliminary financial analysis discussion materials. The PNMR board reviewed the rationale for continuing discussions in connection with a strategic transaction with Avangrid. The PNMR board again expressed its concern with the financial and regulatory challenges faced by PNMR and recognized the potential in a merger transaction of realizing for PNMR shareholders the high valuation reflected in PNMR’s current share trading price. The PNMR board also considered the strategic benefits of being part of a larger entity that is better capitalized and more diversified, particularly one with substantial renewable energy operations. Troutman Pepper reviewed materials relating to the PNMR board’s fiduciary duties under New Mexico law when considering significant strategic matters, including a possible merger transaction. The PNMR board also considered other possible merger partners that could be contacted.

Continuing in executive session but with the representatives of Troutman Pepper and Evercore having departed the meeting, the PNMR board determined to pursue a strategic transaction if one would become available on favorable terms. In this regard the PNMR board appointed a Transaction Review Committee consisting of Bruce W. Wilkinson (the PNMR board’s Lead Director), Norman P. Becker and Alan J. Fohrer that would periodically review next steps and make recommendations to the PNMR board. Following review of information provided in advance of the meeting relating to their qualifications and experience including in the public utility industry, the PNMR board also formally approved the engagement of Evercore as financial adviser and Troutman Pepper as legal counsel to assist in this pursuit of a strategic transaction.

Following discussion, the PNMR board authorized management to continue discussions with Iberdrola/Avangrid in order to seek to receive an indication of interest that contained a proposed merger consideration that could be reviewed with the Transaction Review Committee and the PNMR board. The PNMR board also determined to contact two of the other possible merger partners considered during the meeting, Company D and Company E. The PNMR board decided not to contact additional parties in light of the board’s concerns about confidentiality, leverage levels that would result from transactions with other potential partners, ability to obtain state regulatory approvals and employee considerations.

On August 5, 2019, Mr. Eldred and a representative of Evercore met with Mr. Azagra Blazquez in Miami, Florida. They discussed the next steps necessary in order for Iberdrola/Avangrid to be able to present a proposed transaction structure for a PNMR strategic merger with Avangrid, together with a proposed valuation of PNMR that would be in the best interests of shareholders. They discussed considerations relating to New Mexico and Texas regulatory matters and to strategic growth opportunities for the combined company that PNMR had not been able to realize on its own. They discussed reciprocal due diligence expectations. At the conclusion of the meeting, they discussed the possibility of meeting again later in the month to discuss transaction structure and valuation.

In early August 2019, a representative of Evercore contacted Company D about its interest in considering a potential strategic transaction with PNMR. Shortly thereafter, Evercore sent a draft NDA to Company D.

Also in early August 2019, a representative of Evercore contacted Company E about its interest in considering a potential strategic transaction with PNMR. This company responded that it would review publicly available information about PNMR and then inform Evercore as to whether it was so interested.

On August 16, 2019, Mr. Eldred, a representative of Evercore and a representative of Troutman Pepper met in New York City with Mr. Azagra Blazquez, a representative of BNP Paribas and representatives of Latham & Watkins LLP, or Latham & Watkins, financial advisor and legal counsel, respectively, to Iberdrola and Avangrid. They discussed valuation and transaction structure and regulatory considerations. In that meeting, Mr. Azagra Blazquez proposed a consideration split of 80% stock / 20% cash.

On August 21, 2019, the Transaction Review Committee met telephonically, with Ms. Collawn, Mr. Eldred and PNMR’s General Counsel and representatives of Evercore and Troutman Pepper participating. Ms. Collawn and Mr. Eldred provided an update about events that had occurred since the July 23, 2019 PNMR board meeting,

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including the August 16 meeting with Mr. Azagra Blazquez and the contacts with Company D and Company E. Following discussion, the Transaction Review Committee directed management and the advisors to continue with the PNMR/Avangrid valuation analysis and present it to the Transaction Review Committee.

In late August 2019, Company D informed Mr. Eldred that it was considering entering into an arrangement with a private equity infrastructure fund transaction partner to make an all cash offer for PNMR in which Company D’s subsidiary would end up owning PNMR’s Texas-based operations and the private equity partner would own the New Mexico-based operations.

Also in late August 2019, Company E informed Evercore that it was not interested in pursuing a transaction at that time. Company E explained that its reasons for not pursuing a transaction included PNMR’s small size.

On August 29, 2019, Company D provided materials to PNMR about it and its objectives in considering a merger with PNMR that would include a private equity infrastructure fund transaction partner that would acquire PNMR’s New Mexico operations due to Company D’s not being interested in owning generation assets in New Mexico. Company D did not identify the name of the transaction partner.

On August 30, 2019, the Transaction Review Committee met telephonically, with Ms. Collawn and Mr. Eldred and representatives of Evercore and Troutman Pepper participating. Evercore reviewed preliminary financial analysis and discussion materials provided in advance of the meeting with respect to Avangrid and PNMR. Following discussion, the Transaction Review Committee authorized management to continue valuation discussions with Iberdrola/Avangrid based on the parameters reviewed in the meeting. Mr. Eldred reviewed the status of discussions with other potential strategic partners. Following discussion, the Transaction Review Committee also authorized management to enter into an NDA with Company D and to hold discussions with it about its proposal.

On September 5, 2019, Mr. Eldred and a representative of Evercore met in New York City with Mr. Azagra Blazquez and a representative of BNP Paribas. They discussed valuation and transaction structure and PNMR regulatory considerations. With representatives of Troutman Pepper and Latham & Watkins joining the meeting, the parties discussed PNMR New Mexico regulatory considerations. The parties discussed meeting again to further review valuation and due diligence matters.

On September 5, 2019, PNMR and Company D entered into an NDA.

On September 10, 2019, the Transaction Review Committee met telephonically, with Ms. Collawn, Mr. Eldred and PNMR’s General Counsel and representatives of Evercore and Troutman Pepper participating, and reviewed the status of discussions with Avangrid and Company D.

On September 12, 2019, the PNMR board met telephonically in executive session, with Mr. Eldred and PNMR’s General Counsel and representatives of Evercore and Troutman Pepper participating, and reviewed the status of discussions with Avangrid and Company D. Evercore reviewed updated preliminary financial analysis and discussion materials relating to PNMR and Avangrid provided in advance of the meeting.

On September 18, 2019, Mr. Eldred and a representative of Evercore met in New York City with Mr. Azagra Blazquez and a representative of BNP Paribas. Mr. Azagra Blazquez proposed a consideration split of up to 40% cash, with an exchange ratio for the stock consideration that, together with the cash consideration, would provide for a total value per PNMR share of $50.90 based on the current trading value of the Avangrid common stock. The 30-day average trading price of PNMR common stock was $50.52 per share at this time. Mr. Eldred stated that he would review these matters with the PNMR board and respond thereafter.

On September 23 - 24, 2019, the PNMR board met at a regularly scheduled meeting and, in executive session with Mr. Eldred and PNMR’s General Counsel and Troutman Pepper and representatives of Evercore participating, reviewed the status of discussions with Iberdrola/Avangrid and Company D. PNMR management and representatives of Evercore discussed with the PNMR board that following further investigation of the complexity, dis-synergies, adverse tax consequences and regulatory challenges of the three-party transaction proposed by Company D, management was recommending that discussions with Company D be terminated. The PNMR board expressed its agreement with this recommendation. Also during the September 23 - 24, 2019 PNMR board meeting, representatives of Evercore reviewed an updated preliminary financial analysis and discussion materials relating to PNMR and Avangrid provided in advance of the meeting. The PNMR board again expressed its concern with potential risks to the current high PNMR stock trading value relating to New

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Mexico regulatory matters as well as capital spending requirements. Troutman Pepper reviewed proposed merger agreement terms, including terms relating to regulatory, PNMR board fiduciary and post-closing governance matters. In executive session without management, the independent directors continued the discussion of the possible transaction. The independent directors determined that PNMR should continue discussions with representatives of Iberdrola/Avangrid, with the Transaction Review Committee being authorized to review specific merger agreement terms with Evercore and Troutman Pepper.

On October 3, 2019, Mr. Eldred and a representative of Evercore met in New York City with Mr. Azagra Blazquez and a representative of BNP Paribas. They discussed the transaction terms presented by Mr. Azagra Blazquez on September 18, 2019, with Mr. Eldred emphasizing the need to conduct due diligence on Avangrid in order to be able to understand the valuation of Avangrid common stock for purposes of the exchange ratio. Thereafter on October 3, 2019, the Transaction Review Committee met telephonically, with Ms. Collawn, Mr. Eldred and the General Counsel and representatives of Evercore and Troutman Pepper participating. PNMR management updated the Transaction Review Committee as to the meeting with Mr. Azagra Blazquez and a representative of BNP Paribas earlier in the day.

On October 7, 2019, Troutman Pepper sent the first draft of the merger agreement to Latham & Watkins. This draft contained terms that were consistent with those discussed with the PNMR board on September 23, 2019. These terms included: a proposed PNMR “fiduciary out” termination fee of 2.5% of transaction equity value payable in the event the PNMR board approved a “superior proposal” for a competing transaction with another company; a threshold of regulatory commitments required of Avangrid and PNMR before Avangrid would have the ability to terminate the merger agreement being a level of commitments that would have a material adverse effect on a business that is 150% of the size of PNMR; a proposed regulatory termination fee of 5% of transaction equity value payable by Avangrid if regulatory approvals are not obtained; and the requirement to maintain PNMR employee compensation and benefits at the same level for three years following closing. Also on October 7, 2019, Latham & Watkins sent a draft term sheet for an amended Iberdrola-Avangrid Shareholder Agreement to Troutman Pepper.

On October 10, 2019, representatives of Troutman Pepper and Latham & Watkins held a conference call in which Latham & Watkins reviewed a number of key concerns with the merger agreement draft that had been prepared by Troutman Pepper. These concerns included: the lack of a closing condition that an agreed upon percentage of PNMR shareholders not have exercised dissenter’s rights; the amount of the proposed PNMR “fiduciary out” termination fee; the lack of an expense reimbursement mechanism for Avangrid in the event of a PNMR shareholder vote against the merger; the proposed threshold of regulatory commitments required of Avangrid and PNMR before Avangrid would have the ability to terminate the merger agreement; the proposed restrictions on Avangrid’s ability to engage in other transactions between signing and closing of the merger agreement; the proposed regulatory termination fee of 5% of transaction equity value; and the proposed requirement to maintain PNMR employee compensation and benefits at the same level for three years following closing.

On October 11, 2019, Troutman Pepper and Latham & Watkins again held a conference call for Troutman Pepper to provide initial feedback on the issues identified in the prior day’s call. The attorneys agreed that Latham & Watkins would provide a comprehensive list of its material concerns with the draft merger agreement.

On October 15, 2019, while Ms. Collawn was in Europe for an industry conference, she and Mr. Eldred met with Mr. Azagra Blazquez in London to discuss potential transaction matters. During this meeting, Mr. Azagra Blazquez again expressed interest in establishing a U.S. southwest platform to grow Avangrid’s renewables and utility businesses.

On October 18, 2019, Latham & Watkins provided Troutman Pepper with a written list of its concerns with the merger agreement draft.

On October 22, 2019, representatives of Troutman Pepper and Latham & Watkins held a conference call to discuss key merger agreement issues. Subject to PNMR board approval, Troutman Pepper proposed for consideration the following: the merger agreement would not contain a dissenter’s rights closing condition; PNMR would not pay Avangrid’s expenses if PNMR shareholders were to vote against the merger in a situation where there was not a competing bidder (a “naked no vote”), although either Avangrid or PNMR would pay the other’s expenses up to $10 million in the event of a breach leading to termination of the merger agreement; PNMR’s termination fee upon exercise of “fiduciary out” rights under the merger agreement would be

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maintained at 2.5% of transaction equity value; the threshold proposed for measuring whether regulatory commitments would permit Avangrid to be able to terminate the merger agreement as a result of imposing a material adverse effect (the “regulatory burdensome effect threshold”) would be maintained at 150% of PNMR; and Avangrid would not be liable for a regulatory termination fee due to the failure to obtain regulatory approval other than in the event of a breach of its obligations under the merger agreement to seek regulatory approval, in which event the termination fee would remain at 5% of transaction equity value.

On October 23, 2019, PNMR’s Transaction Review Committee met telephonically, with Ms. Collawn, Mr. Eldred, PNMR’s General Counsel and representatives of Troutman Pepper and Evercore participating. PNMR management updated the Transaction Review Committee as to discussions that had occurred with Avangrid and its advisors since the last Transaction Review Committee meeting, including as to merger agreement terms. The Transaction Review Committee provided its instructions to management and Troutman Pepper as to these matters. PNMR management reviewed regulatory matters related to the merger. The Transaction Review Committee provided its guidance on these matters. In executive session without members of management but with representatives of Troutman Pepper participating, the Transaction Review Committee further discussed the transaction. Both the Transaction Review Committee and the PNMR board held such executive sessions at subsequent meetings in 2019 and 2020 in which the Avangrid transaction was discussed.

On October 29, 2019, Ms. Collawn and Mr. Eldred met with Mr. Azagra Blazquez in New York City and discussed transaction and regulatory matters. Representatives of Evercore and BNP Paribas participated in a portion of the meeting and then had a separate meeting. Iberdrola and BNP Paribas provided initial feedback on Troutman Pepper’s proposal from October 22, 2019 for addressing outstanding key merger agreement issues.

On October 30, 2019, PNMR’s Transaction Review Committee met telephonically, with Ms. Collawn, Mr. Eldred, PNMR’s General Counsel and representatives of Troutman Pepper and Evercore participating. PNMR management updated the Transaction Committee as to the discussions that were held with Iberdrola on October 29, 2019.

On October 31, 2019, PNMR’s Transaction Review Committee met telephonically, with Ms. Collawn, Mr. Eldred, PNMR’s General Counsel and representatives of Troutman Pepper and Evercore participating. Representatives of Evercore reviewed updated preliminary financial analysis and discussion materials relating to PNMR and Avangrid provided in advance of the meeting. Troutman Pepper provided an update on merger agreement discussions.

On November 1, 2019, the PNMR board met telephonically in executive session, with Mr. Eldred, PNMR’s General Counsel and representatives of Troutman Pepper and Evercore participating. Evercore reviewed an updated financial analysis and discussion materials relating to PNMR and Avangrid provided in advance of the meeting. Troutman Pepper provided an update on merger agreement discussions. Management provided an update on discussions with Iberdrola regarding the regulatory approval process.

In early November 2019, Mr. Azagra Blazquez inquired of Mr. Eldred as to the amount of electric power generation PNMR owns that is based on coal usage and indicated that this could be a significant transaction concern for Iberdrola and Avangrid.

On November 8, 2019, the PNMR board met telephonically in executive session, with Mr. Eldred, representatives of Troutman Pepper and Evercore participating. PNMR management updated the PNMR board on recent discussions with Mr. Azagra Blazquez, including its request for information about PNMR’s coal usage. The PNMR board reviewed possible benefits of a combination with Avangrid for PNMR’s shareholders and other PNMR constituencies but expressed concern about Mr. Azagra Blazquez’s raising a new issue concerning PNMR’s coal-fired generation at this point in the negotiations. The PNMR board also expressed its concern with the delay in discussing merger agreement terms since terms were last discussed on October 22, 2019.

On November 20, 2019, Mr. Eldred and a representative of Evercore met in New York City with Mr. Azagra Blazquez and a representative of BNP Paribas. They discussed questions about PNMR’s coal-fired generation and transaction valuation matters.

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On December 2, 2019, Mr. Eldred and PNMR’s General Counsel and a representative of Evercore participated in a conference call with Mr. Azagra Blazquez and representatives of BNP Paribas and Latham & Watkins in which they discussed PNMR’s coal-fired generation. Following the call, PNMR provided Iberdrola with additional information regarding ongoing activities related to its existing strategy for exiting from Four Corners and transitioning to clean energy.

On December 4, 2019, Mr. Eldred and a representative of Evercore had a follow-up call with Mr. Azagra Blazquez and representatives of BNP Paribas. They discussed the additional information PNMR provided regarding its clean energy strategy. Mr. Azagra Blazquez stated that he would review these matters internally and then arrange for a follow-up discussion with PNMR but did not commit to a time frame for resolving outstanding transaction matters.

On December 5-6, 2019, the PNMR board met at a regularly scheduled meeting. Following review of management’s recent discussions with Mr. Azagra Blazquez, the PNMR board discussed terminating discussions with Iberdrola and Avangrid. The PNMR board expressed its belief that Avangrid’s continued delay in making progress in negotiations by raising new concerns with PNMR’s coal-fired generation and by not providing a new draft of the merger agreement responding to Troutman Pepper’s October 7, 2019 draft made the transaction highly uncertain and that PNMR should instead focus on pursuing its business plan, which included funding investment growth and maintaining credit metrics. The PNMR board also discussed the possibility of approaching other possible merger partners. However, the PNMR board considered the lack of interest exhibited by strategic partners earlier in the year. The PNMR board also expressed its belief that if it were to consider a merger partner in the future, it should be a partner with a strong balance sheet that would offer both fair value for PNMR shareholders and a high likelihood of being able to obtain regulatory approvals.

On December 10, 2019, Ms. Collawn informed Mr. Azagra Blazquez that PNMR was terminating discussions.

On January 17, 2020, the PNMR board met telephonically in executive session, with Mr. Eldred and PNMR’s General Counsel and representatives of Troutman Pepper participating. The PNMR board received a report on PNMR’s recent equity issuance at $48.50 per share, New Mexico regulatory matters and 2019 financial results. The PNMR board discussed next steps for the company and expressed its belief that, even taking into account these recent positive developments, the rationale for considering a strategic merger transaction had not changed materially in the last 12 months. This rationale included the company’s small financial capacity relative to its potential capital needs, the regulatory and other risks to achieving its business plan, and the opportunity to realize for PNMR shareholders the current high trading value of PNMR stock (PNMR’s stock price was $51.38 on January 17, 2020). The PNMR board reviewed the potential financial and strategic benefits of an Avangrid merger that had led the PNMR board to engage in discussions with Iberdrola and Avangrid in the summer and fall of 2019. The PNMR board also noted that no other potential merger partner previously contacted had shown an interest in holding discussions with PNMR about a strategic merger. While acknowledging that Iberdrola’s and Avangrid’s focus on clean energy may preclude them from considering a transaction with PNMR on an acceptable timeline, the PNMR board discussed whether Avangrid would be interested in starting new discussions in light of the many possible benefits that would be offered by a PNMR-Avangrid merger.

Following the PNMR board meeting, Mr. Eldred updated Mr. Azagra Blazquez on recent PNMR events. They discussed whether the parties should meet to review whether there could be an acceptable basis on which they could initiate new discussions about a possible PNMR-Avangrid transaction. They agreed to meet in person to continue this conversation.

On January 30, 2020, Mr. Eldred and a representative of Evercore met in Phoenix, Arizona with Mr. Azagra Blazquez and a representative of BNP Paribas. Mr. Azagra Blazquez confirmed Iberdrola/Avangrid’s interest in again pursuing a transaction, but indicated that PNMR’s exposure to coal remained an issue for Iberdrola and Avangrid. They discussed how the issue could be resolved in light of PNMR’s ongoing initiative to pursue a strategy to exit from its interest in Four Corners early, by 2024. Mr. Eldred presented a schedule of major milestones that could lead to a transaction on a timeline that could be acceptable to the PNMR board. There was no discussion of valuation. The parties recognized that valuation would have to be revisited in light of recent developments and stock prices. The parties agreed to sign a new NDA in substantially the same form as the prior NDA.

On February 12, 2020, Mr. Eldred, PNMR’s General Counsel and a representative of Evercore met in New York City with Mr. Azagra Blazquez and a representative of BNP Paribas. Representatives of Troutman Pepper

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and Latham & Watkins participated in a portion of the meeting. Matters discussed included PNMR’s ongoing strategy to exit from Four Corners early, PNMR and Avangrid regulatory developments since late fall 2019, the process for updating financial projections, and PNMR and Avangrid valuation. They also discussed a potential timeline for a transaction if these matters could be resolved. With Troutman Pepper and Latham & Watkins participating, the parties discussed high level merger agreement open items from when discussions terminated in December 2019.

On February 13, 2020, PNMR’s Transaction Review Committee met telephonically, with Ms. Collawn, Mr. Eldred and PNMR’s General Counsel and representatives of Evercore and Troutman Pepper participating. The Transaction Review Committee received an update on the discussions with Iberdrola since the January 17, 2020 PNMR board meeting. PNMR management reviewed the ongoing strategy to exit Four Corners and related discussions with a possible counterparty. Management emphasized the benefits to PNMR of a Four Corners exit irrespective of an Avangrid transaction. Evercore reviewed an updated preliminary financial analysis and discussion materials relating to PNMR and Avangrid. The Transaction Review Committee discussed open merger agreement items pending receipt of a mark-up from Latham & Watkins.

On February 17, 2020, Latham & Watkins provided a mark-up of the draft merger agreement Troutman Pepper had distributed in October 2019. In addition to providing new comments, the mark-up agreed with Troutman Pepper’s position that expenses (subject to a maximum of $10 million) only be payable upon a “naked no vote” by PNMR shareholders. The mark-up further proposed a 3.5% of transaction equity value termination fee to be payable by PNMR upon exercise of the PNMR board’s “fiduciary out” rights; a 3.5% of transaction equity value termination fee to be payable by Avangrid upon breach of its covenant to seek regulatory approval; and a closing condition that not more than 10% of PNMR shareholders have exercised dissenter’s rights. The mark-up left open for discussion the regulatory burdensome effect threshold.

On February 20, 2020, the PNMR board met at a regularly scheduled meeting and in executive session, with Mr. Eldred and PNMR’s General Counsel and representatives of Evercore and Troutman Pepper participating, received an update on the discussions with Iberdrola since the January 17, 2020 board meeting. PNMR management reviewed the status of the process for exiting Four Corners and related discussions with possible counterparties. Management reviewed the benefits of a Four Corners exit for the company irrespective of an Avangrid transaction. Evercore reviewed updated preliminary financial analysis and discussion materials relating to PNMR and Avangrid provided in advance of the meeting. The PNMR board discussed the financial benefits for PNMR shareholders of realizing a high valuation for their PNMR stock in light of the downside risk of PNMR’s achieving its business plan. (PNMR’s stock price was $54.83 on February 20, 2020.) The PNMR board further discussed the possible strategic benefits of an Avangrid merger for PNMR. These benefits included that the scale, scope and diversity of the combined companies would better position PNMR to make rate base investments, invest in new technologies and strengthen PNMR’s balance sheet. This also would have the potential to create job opportunities in New Mexico that would help in community and regulatory relationships as well as serve customers through ongoing investments. Troutman Pepper reviewed open high-level merger agreement items based on the mark-up from Latham & Watkins. In executive session, the independent directors discussed the importance of resolving the Four Corners and valuation matters expeditiously. They also discussed the importance of understanding the post-closing management structure of the combined company if there were to be a significant Avangrid stock component of the merger consideration. They discussed the strategic review process that had occurred to date and emphasized the importance of having a strategic merger partner, like Iberdrola/Avangrid, with substantial financial capacity.

On February 21, 2020, the PNMR board met in executive session, with Mr. Eldred and PNMR’s General Counsel participating. The PNMR board continued its discussion of a possible Avangrid transaction from the prior day’s meeting.

On February 24, 2020, stock markets fell generally due to COVID-19 concerns (although the PNMR and Avangrid stock trading prices generally maintained their current levels for a while longer).

On March 5, 2020, Mr. Eldred and a representative of Evercore met in Boston, Massachusetts with Mr. Azagra Blazquez and a representative of BNP Paribas. Mr. Eldred indicated that the PNMR board’s

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objectives for valuation included receiving a premium to its trading price at the time of transaction announcement. The parties acknowledged that valuation would need to continue to be revisited in light of recent COVID-19-related events and resulting market volatility. The parties discussed key merger agreement issues and a potential timeline for a transaction and next steps.

On March 7, 2020, Troutman Pepper provided a mark-up of the merger agreement Latham & Watkins had distributed on February 17, 2020. In this mark-up Troutman Pepper maintained its prior position on the amounts of PNMR’s “fiduciary out” termination fee (2.5% of transaction equity value) and Avangrid’s regulatory breach termination fee (5% of transaction equity value) and on there not being a dissenter’s rights - related closing condition.

On March 10, 2020, the Transaction Review Committee met telephonically, with Ms. Collawn, Mr. Eldred and representatives of Evercore and Troutman Pepper participating. The Transaction Review Committee was provided an update on the discussions that had occurred about the transaction since the PNMR board meetings on February 20-21, 2020. The Transaction Review Committee expressed its support for the current status of the transaction discussions, while also being concerned about the impact on the transaction of the stock market declines and volatility.

On March 12, 2020, the PNMR board met telephonically in executive session, with Mr. Eldred and representatives of Evercore and Troutman Pepper participating. The PNMR board was provided an update on the discussions that had occurred about the transaction since the PNMR board meetings on February 20-21, 2020. The PNMR board expressed its support for the current status of the valuation and merger agreement discussions, although it expressed concern about the impact on the transaction of the increasing stock market declines and volatility.

On March 16, 2020, Latham & Watkins provided a high-level issues list with respect to Troutman Pepper’s prior draft of the merger agreement. In this issues list, Latham & Watkins proposed a PNMR “fiduciary out” termination fee of 3.5% of transaction equity value, an Avangrid termination fee of 4.5% of transaction equity value, and a closing condition that dissenter’s rights have not been exercised for more than 15% of PNMR’s shares. The issues list also proposed that the regulatory burdensome effect threshold be based on a hypothetical company that is either 25% of the size of PNMR or 50% of the size of PNM’s retail distribution business. The list also proposed that current PNMR employee compensation and benefit levels would be maintained for one year following closing.

On March 19, 2020, Avangrid announced that its CEO would retire on June 23, 2020 and that the company was conducting an internal and external search for its successor.

On March 20, 2020, PNMR’s common stock price fell to $29.93, the lowest price it had been since 2015.

On March 21, 2020, Troutman Pepper sent a response to the high-level merger agreement issues Latham & Watkins had identified in its issues list on March 16, 2020. In its response Troutman Pepper proposed a 2.75% of transaction equity value PNMR “fiduciary out” termination fee and a 5% of transaction equity value Avangrid termination fee and stated that PNMR remained concerned about there being a dissenter’s rights-related closing condition.

On March 26, 2020, Mr. Eldred and a representative of Evercore held a conference call with Mr. Azagra Blazquez and a representative of BNP Paribas to review the status of transaction discussions since they last met on March 5, 2020, recent stock price performance, and next steps in the discussions.

On April 10, 2020, Latham & Watkins provided a mark-up of the merger agreement draft Troutman Pepper had provided on March 7. In this mark-up, Latham & Watkins proposed a 3% of transaction equity value PNMR “fiduciary out” termination fee, a 4% of transaction equity value Avangrid termination fee and a 15% dissenter’s rights closing condition. The mark-up also continued to propose that the regulatory burdensome effect threshold would be based on a company 25% of the size of PNMR but also agreed that only terms related to rate or governance/management issues would be taken into account in this measurement with respect to New Mexico and Texas regulatory approvals.

On April 14, 2020, PNMR’s Transaction Review Committee met telephonically, with Ms. Collawn, Mr. Eldred and PNMR’s General Counsel and representatives of Evercore and Troutman Pepper participating. The Transaction Review Committee was provided an update on discussions that had occurred with

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Iberdrola/Avangrid since the PNMR board meeting on March 12, 2020. The Transaction Review Committee considered whether moving forward with the transaction as an all stock or nearly all stock transaction could be in the best interests of PNM and its shareholders, even if the valuation would be relatively lower than at earlier times, by permitting PNMR shareholders to participate more in the potential growth of the combined company. The Transaction Review Committee discussed the preliminary financial analysis presented by Evercore in advance of the meeting with respect to an all-stock transaction. Troutman Pepper reviewed the status of the merger agreement discussions and presented a proposal for responding to the most recent Latham & Watkins draft of the merger agreement. The Transaction Review Committee discussed the importance for an all stock or nearly all stock transaction of understanding the post-closing management team in light of the pending retirement of Avangrid’s CEO. The Transaction Review Committee expressed its support for continuing discussions with Iberdrola/Avangrid about the transaction but expressed concerns about valuation.

On April 15, 2020, Troutman Pepper sent a revised draft of the merger agreement to Latham & Watkins. In this draft, Troutman Pepper agreed with the 3% of transaction equity value PNMR “fiduciary out” termination fee and proposed a 4.5% of transaction equity value Avangrid termination fee, a 20% dissenter’s rights closing condition, and a regulatory burdensome effect threshold based on a company 50% of the size of PNMR with only rate credits to customers being taken into account in determining whether a burdensome effect has occurred. The draft further proposed a two-year period of protection of PNMR employee compensation and benefits, as well as amendments to the Avangrid Shareholder Agreement relating to adding PNMR directors to Avangrid’s board of directors due to the all-stock nature of the transaction.

On April 23, 2020, Latham & Watkins sent a revised draft of the merger agreement to Troutman Pepper. In this draft Latham & Watkins proposed a 4% of transaction equity value Avangrid termination fee, a 15% dissenter’s rights closing condition and a regulatory burdensome effect threshold based on a company 25% of the size of PNMR. The draft proposed changes to Troutman Pepper’s draft post-closing governance items that would be included in an amended Iberdrola-Avangrid Shareholder Agreement.

On April 27, 2020, the PNMR board met telephonically, with Mr. Eldred and PNMR’s General Counsel and representatives of Evercore and Troutman Pepper participating. The PNMR board was provided an update on discussions that have occurred with Iberdrola/Avangrid since the PNMR board meeting on March 12, 2020. The PNMR board considered whether moving forward with the transaction as an all stock or nearly all stock transaction at a time when PNMR stock was trading at approximately $41 per share could be in the best interests of shareholders. The PNMR board also discussed the preliminary financial analysis presented by Evercore in advance of the meeting with respect to an all-stock transaction. Troutman Pepper reviewed the status of the merger agreement discussions. PNMR management reviewed the outstanding matters that would need to be resolved before a transaction could be entered into. The PNMR board discussed the importance for PNMR shareholders of the post-closing management team of the combined company in an all stock or nearly all stock transaction. The PNMR board expressed its support for continuing discussions with Iberdrola/Avangrid about the transaction but expressed reservations about valuation.

On April 30, 2020, PNMR’s Transaction Review Committee met telephonically, with Ms. Collawn, Mr. Eldred and PNMR’s General Counsel participating. Management provided the Transaction Review Committee with an update on Four Corners exit alternatives and activities.

On May 1, 2020, Troutman Pepper sent a new draft of the merger agreement to Latham & Watkins. In this draft Troutman Pepper again proposed a 4.5% of transaction equity value Avangrid termination fee, a 20% dissenters rights closing condition, and a regulatory burdensome effect threshold based on a company 75% of the size of PNM’s retail distribution business. The draft further commented on regulatory, employee benefits and post-closing governance items.

On May 12, 2020, the PNMR board met telephonically at a regularly scheduled meeting and in executive session, with Mr. Eldred, PNMR’s General Counsel and a representative of Troutman Pepper participating, management provided the PNMR board with an update on discussions with third parties relating to an exit from Four Corners. Management further provided an update on discussions with Iberdrola/Avangrid about transaction matters, including post-closing management, PNMR representation on the post-closing board of directors and, assuming all open transaction issues could be resolved, regulatory considerations around transaction timing in light of the COVID-19 pandemic and related governmental restrictions on group meetings and travel.

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On June 5, 2020, the PNMR board met telephonically in executive session, with Mr. Eldred and PNMR’s General Counsel and representatives of Troutman Pepper participating. Management provided the PNMR board with an update on New Mexico operational matters, including plans to exit Four Corners. Management further provided an update on discussions with Iberdrola/Avangrid about transaction matters, including valuation and exchange ratio considerations.

On June 10, 2020, Ms. Collawn and Mr. Azagra Blazquez discussed transaction matters. He informed her that Avangrid would soon be announcing the appointment of a new CEO.

On June 15, 2020, Avangrid announced the appointment of Dennis Arriola as its new CEO.

On June 15, 2020, the PNMR board met telephonically in executive session, together with Mr. Eldred and PNMR’s General Counsel and representatives of Troutman Pepper. Ms. Collawn provided an update on her conversations with Mr. Azagra Blazquez during the prior week. The PNMR board expressed its concern about entering into an all-stock transaction with Avangrid in which PNMR shareholders would receive little or no premium at a time when the PNMR common stock was trading at under $40 per share and when Avangrid had a new CEO. The PNMR board expressed its skepticism as to whether a new transaction with different terms could be entered into with Avangrid at that time. However, the PNMR board determined to meet again to discuss next steps, if any, with Iberdrola/Avangrid.

On June 24, 2020, the PNMR board met telephonically in executive session, together with Mr. Eldred and PNMR’s General Counsel and representatives of Troutman Pepper. The PNMR board reviewed its rationale for beginning the strategic review process in 2019, including the challenges faced by PNMR with its relatively small capitalization and regulatory and industry constraints on its ability to grow. However, in light of the concern about an all-stock transaction at a time when PNMR’s trading price was depressed and when Avangrid would have a new CEO, the uncertainty about being able to negotiate a different type of transaction, and PNMR’s need to focus on executing its business plan, the PNMR board determined that discussions with Iberdrola/Avangrid should be terminated at that time.

Following the meeting, Mr. Eldred informed Mr. Azagra Blazquez that the PNMR board was terminating discussions.

On July 27-28, 2020, the PNMR board met telephonically at a regularly scheduled meeting. During the meeting management provided the PNMR board with an update on activities since the June 24, 2020 board meeting, including the status of the discussions for exiting Four Corners. Upon receiving financial and other updates from management, the PNMR board again expressed concern with the company’s ability to achieve its business plan due to the continuation of general economic trends and regulatory constraints.

On August 3, 2020, a representative of BNP Paribas contacted a representative of Evercore and Mr. Eldred. They discussed whether PNMR would be interested in re-engaging in discussions with Iberdrola and Avangrid about a possible transaction. Thereafter, Mr. Azagra Blazquez followed up with Mr. Eldred as to this question.

On August 4, 2020, at the direction of PNMR management, Evercore provided BNP Paribas with updated financial projections that had been prepared by PNMR management based on an updated long-range business plan that took into account the financial and other updates that had been reviewed with the PNMR board on July 27-28, 2020.

On August 11, 2020, Mr. Azagra Blazquez, a representative of BNP Paribas and Mr. Eldred and a representative of Evercore held a conference call in which Mr. Eldred outlined key transaction matters that would need to be addressed by Iberdrola and Avangrid in writing before PNMR management could consider discussing with the PNMR board whether PNMR should re-engage in discussions with Iberdrola/Avangrid. These matters included the need for: having a significant cash component in the merger consideration; readdressing valuation in light of current stock prices (the PNMR common stock price was approximately $44.30 on August 7, 2020) and PNMR’s having issued common stock at $48.50 per share in January 2020; and Iberdrola/Avangrid acknowledging that a comprehensive set of state regulatory commitments should be proposed in order to provide comfort that there would be a smooth regulatory approval process. The parties determined to schedule calls among their respective representatives to review next steps.

On August 12, 2020, representatives of Evercore and BNP Paribas discussed the updated PNMR financial projections. Also, on August 12, representatives of Troutman Pepper and Latham & Watkins discussed key

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merger agreement terms that remained outstanding from prior discussions that would need to be addressed if the parties were to re-engage in discussions. On August 13, 2020, representatives of PNMR, Troutman Pepper and Latham & Watkins discussed the status of PNMR’s process for exiting Four Corners. On August 20, 2020, representatives of Troutman Pepper and Latham & Watkins discussed key regulatory-related terms for a possible transaction.

On August 22, 2020, PNMR management was provided with a draft of a letter proposing an indicative offer for a transaction between PNMR and Avangrid. The draft proposed consideration for each PNMR outstanding share of (i) $25.00 cash and (ii) 0.5100 shares of Avangrid stock (which had closed at $49.47 on August 21, 2020). The draft stated that Iberdrola and Avangrid senior management were fully supportive of the transaction and willing to propose a comprehensive set of regulatory commitments in connection with seeking regulatory approvals. The draft further proposed a termination fee of 4.25% of transaction equity value if Avangrid were to breach its regulatory covenants in the merger agreement and a regulatory burdensome effect threshold based on a company 50% of the size of PNM’s retail distribution business but only taking into account for New Mexico and Texas regulatory purposes matters relating to rate credits to customers and any requirement to impose independent director obligations that would impact Avangrid control over PNMR. The draft also committed to generally maintain the employee compensation and benefits for PNMR employees for two years post-closing. The draft letter stressed the importance to Iberdrola and Avangrid of having definitive documentation in place for PNMR’s exit from Four Corners.

On August 23, 2020, PNMR’s General Counsel and representatives of Troutman Pepper held a conference call with representatives of Latham & Watkins to ask clarifying questions with respect to the draft indicative offer letter.

On August 25, 2020, Iberdrola/Avangrid provided an executed indicative offer letter. The letter contained the same terms as in the draft letter provided on August 22, 2020, as clarified on August 23, 2020. The merger consideration offered in the letter represented a value to the PNMR shareholders of $50.23 per share, representing a 13.8 % premium to PNMR’s common stock price of $44.14 on August 25, 2020.

On August 26, 2020, Latham & Watkins provided a new draft of the merger agreement. This draft contained terms that were consistent with the indicative offer letter plus a 15% dissenter’s rights closing condition.

On August 28, 2020, PNMR’s Transaction Review Committee met telephonically, with Ms. Collawn, Mr. Eldred, PNMR’s General Counsel and representatives of Troutman Pepper participating. The Transaction Review Committee discussed the indicative offer letter, which had been provided in advance of the meeting. The Transaction Review Committee expressed its belief that the letter was responsive to issues raised by the PNMR board, management and PNMR’s advisers about the prior discussions with Iberdrola and Avangrid, including the need for PNMR shareholders to receive a meaningful premium for their shares and for there to be a significant cash component in the transaction. The Transaction Review Committee expressed support for re-engaging in discussions with Iberdrola/Avangrid about a merger with Avangrid and unanimously determined to recommend this to the PNMR board.

On August 31, 2020, PNMR’s General Counsel and representatives of Evercore and Troutman Pepper had a conference call with representatives of BNP Paribas and Latham & Watkins. They discussed a timeline for resolving open issues that could be discussed with the PNMR board should the PNMR board approve re-engaging in discussions with Iberdrola/Avangrid. On September 1, 2020, a follow-up call was held which included Mr. Eldred and Mr. Azagra Blazquez.

On September 2, 2020, the PNMR board met telephonically, with Mr. Eldred and PNMR’s General Counsel and representatives of Evercore and Troutman Pepper participating. The PNMR board discussed the indicative offer letter about a transaction with Avangrid, which had been provided in advance of the meeting. The PNMR board referred to the higher valuation being offered in a transaction with a significant premium and cash component, Avangrid’s commitment to obtain regulatory approval and the overall financial benefits of a transaction for PNMR’s shareholders as well as the strategic benefits for PNMR’s customers, communities and employees. The PNMR board unanimously determined that PNMR should re-engage in discussions with Iberdrola and Avangrid.

On September 2, 2020, Ms. Collawn notified Mr. Azagra Blazquez that the PNMR board had determined that PNMR should re-engage in discussions with Iberdrola.

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On September 2, 2020, representatives of PNMR and Evercore held a conference call with representatives of Iberdrola/Avangrid and BNP Paribas to review the strategy for engaging in discussions with rating agencies about the proposed merger transaction. On September 3, 2020, representatives of Troutman Pepper, Evercore and PNMR held a conference call with representatives of Latham & Watkins, Evercore and Iberdrola and Avangrid to schedule document deliverables and conference calls for the upcoming weeks. On September 4, 2020, Troutman Pepper sent new drafts of the merger agreement and PNMR disclosure schedules to Latham & Watkins. The draft merger agreement was generally consistent with the terms proposed in the August 25, 2020 indicative offer letter. On September 4, 2020, Latham & Watkins provided Troutman Pepper with a list of categories of due diligence questions. Thereafter Iberdrola and its representatives provided lists of due diligence questions and PNMR commenced responding to the questions.

On September 8, 2020, representatives of Iberdrola/Avangrid, Latham & Watkins and BNP Paribas held a conference call with representatives of PNMR, Troutman Pepper and Evercore. During this call, the PNMR representatives reviewed the next steps in the Four Corners exit process. On September 10, 2020, representatives of PNMR and Troutman Pepper held a conference call with representatives of Iberdrola/Avangrid and Latham & Watkins to review regulatory approvals required in connection with a PNMR-Avangrid merger transaction.

On September 14, 2020, representatives of PNMR, Evercore and Troutman Pepper held a conference call with representatives of Iberdrola/Avangrid, BNP Paribas and Latham & Watkins to review PNMR’s updated business plan and related capital investment requirements.

Also on September 14, 2020, Latham & Watkins sent a new draft of the merger agreement and a draft of the Avangrid Shareholder Agreement to Troutman Pepper. The merger agreement contained a revised covenant and a closing condition providing for PNMR’s entering into definitive agreements providing for the exit from Four Corners. The Avangrid Shareholder Agreement provided for two PNMR independent directors to serve on the Avangrid board of directors. Additionally, one former PNMR director would serve on the board of directors of Avangrid’s Networks subsidiary.

On September 15, 2020, representatives of PNMR and Evercore held a conference call with representatives of Iberdrola/Avangrid and BNP Paribas to review the process for approaching the rating agencies to discuss the proposed transaction.

Also on September 15, 2020, Mr. Eldred discussed with Mr. Azagra Blazquez post-closing management of PNMR and its regulated subsidiaries at the local level and provided biographies and descriptions of current management. Mr. Eldred emphasized the importance for achieving regulatory approval of having a post-closing management plan in place for these companies at the local level.

During this period, Avangrid’s and PNMR’s stock prices diverged, with Avangrid’s maintaining or increasing in price and PNMR’s decreasing in price to a low of approximately $41 per share. On September 19, 2020, Mr. Azagra Blazquez discussed with Mr. Eldred how he was concerned that the divergence in stock prices might cause Avangrid to reconsider the proposed exchange ratio. He also referred to the importance of PNMR’s having agreements in place to exit from Four Corners. Mr. Eldred updated Mr. Azagra Blazquez on the already ongoing initiatives by PNMR to exit Four Corners.

On September 21-22, 2020, the PNMR board met at a regularly scheduled meeting and in executive session, with Mr. Eldred and PNMR’s General Counsel and representatives of Evercore and Troutman Pepper participating, received an update on the Avangrid transaction. Troutman Pepper reviewed materials provided in advance of the meeting, including summaries of the merger agreement and shareholders agreement, interests of officers and directors in the merger, the director’s fiduciary duties and transaction considerations in connection with the proposed transaction. Evercore reviewed discussion materials provided in advance of the meeting with respect to the history of the PNMR board’s strategic review of alternatives that began in December 2018 and resulted in a transaction process, including the prior approach to potential strategic merger partners and the lack of interest in PNMR shown by those companies. The PNMR board discussed the rationale for an Avangrid merger, including the risks and challenges inherent in PNMR’s standalone business plan, financial highlights for PNMR shareholders in light of the significant stock price premium being offered by Avangrid, and strategic benefits for PNMR, customers, employees and local communities. Evercore reviewed an updated preliminary financial analysis relating to PNMR and Avangrid.

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On September 25, 2020, Mr. Eldred and a representative of Evercore held a conference call with Mr. Azagra Blazquez and a representative of BNP Paribas. They discussed pro forma company capitalization and credit ratings matters, and how Avangrid would fund the transaction, including whether Iberdrola would make a capital contribution to Avangrid. During the following days, representatives of PNMR, Evercore, Iberdrola and Avangrid and BNP Paribas continued their analysis of these matters to prepare for meetings with the rating agencies in order to be assured that the agencies would view the transaction favorably. PNMR conveyed to Iberdrola and Avangrid that maintaining and strengthening the credit ratings of PNM and TNMP were important considerations for a transaction in order to obtain regulatory approvals.

On September 30, 2020, Mr. Eldred and a representative of Evercore held a conference call with Mr. Azagra Blazquez and a representative of BNP Paribas to discuss transaction status, including preparing for the meetings with rating agencies. During this call and thereafter in preparation for the meeting with the rating agencies, the parties discussed how Avangrid would fund the transaction, including the possibility of Iberdrola making a capital contribution to Avangrid. The parties also discussed whether such a capital contribution would impact the cash/stock mix of the merger consideration.

On October 2, 2020, representatives of PNMR and Troutman Pepper held a conference call with representatives of Latham & Watkins and Avangrid’s New Mexico and Texas regulatory counsel to review due diligence matters. Also on October 2, 2020, representatives of PNMR, Troutman Pepper and PNMR’s New Mexico and Texas regulatory counsel held a conference call with representatives of Iberdrola/Avangrid and Latham & Watkins to discuss the process for filing regulatory applications for approval of the proposed transaction.

On October 6, 2020, Mr. Eldred and a representative of Evercore held a conference call with Mr. Azagra Blazquez and a representative of BNP Paribas. During this call, Mr. Azagra Blazquez stated that, in order for Iberdrola to maintain its more than 80% ownership position in Avangrid, Iberdrola was proposing to change its offer to be for an all cash transaction and that Iberdrola would be willing to put in place a backstop commitment to eliminate any question about Avangrid’s ability to fund payment of the merger consideration. He stated that, while the Iberdrola-Avangrid Shareholder Agreement would not be amended, Avangrid would consider stating in the announcement of the transaction that it intends for PNMR to have two Avangrid board of directors seats and one Avangrid Networks board of directors seat as of the closing of the Avangrid merger. He also asked if PNMR would accept a price of below $50 per share. Mr. Eldred responded that while the PNMR board would not agree to a lower consideration, Ms. Collawn and he would discuss with the PNMR board whether it would be interested in moving to an all cash transaction.

Valuation discussions continued on October 7, 2020 with PNMR continuing to emphasize to Iberdrola/Avangrid the importance to the PNMR board of the valuation of $50.30 per PNMR share, based on the implied offer value of $50.23 proposed in the August 25, 2020 indicative offer letter.

On October 7, 2020, Troutman Pepper communicated to Latham & Watkins that the revised merger agreement for an all cash transaction should include provisions relating to Iberdrola’s providing a financing commitment to Avangrid. On October 7, 2020, Latham & Watkins sent a new draft of the merger agreement to reflect an all cash transaction in which Iberdrola would be providing a financing commitment to Avangrid. On October 8, 2020, representatives of Iberdrola/Avangrid and Latham & Watkins and PNMR and Troutman Pepper discussed changes that had been made in the new draft of the merger agreement.

On October 8, 2020, PNMR’s Transaction Review Committee met telephonically, with Ms. Collawn, Mr. Eldred and PNMR’s General Counsel and representatives of Evercore and Troutman Pepper participating. Evercore reviewed an updated preliminary financial analysis taking into account the proposed valuation of $50.30 per share in an all cash transaction. PNMR management reviewed the benefits for PNMR shareholders of Iberdrola’s agreeing to support Avangrid’s payment of the purchase price by providing a commitment letter. They further reviewed the expected positive credit rating impact for PNM and TNMP of Iberdrola’s funding the purchase price, which would be beneficial to regulatory approval efforts as well as for customers and communities served by PNM and TNMP. Troutman Pepper reviewed the proposed changes to the merger agreement. The Transaction Review Committee discussed how the benefits of valuation certainty in an all cash transaction could outweigh the consideration of PNMR shareholders not participating in potential growth of the

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combined company. The Transaction Review Committee further discussed the strategic benefits of the proposed transaction for PNMR’s customers and communities. The Transaction Review Committee unanimously determined that it supported the proposed all cash transaction at the proposed merger consideration of $50.30 per share and would recommend it to the PNMR board.

On October 9, 2020, the PNMR board met telephonically, with Mr. Eldred and PNMR’s General Counsel and representatives of Evercore and Troutman Pepper participating. Evercore reviewed updated preliminary financial analysis and discussion materials provided in advance of the meeting taking into account the proposed valuation of $50.30 per share in an all cash transaction. The PNMR board discussed with its advisors Iberdrola’s commitment to support the funding of the purchase price and the expected positive credit ratings impact. The PNMR board reviewed the financial benefits of such an all cash transaction for PNMR shareholders in terms of providing certainty of valuation, with the transaction also providing strategic benefits for other constituencies including customers, employees and communities served by PNMR. The PNMR board also discussed the fact that an all cash transaction eliminated any potential uncertainty associated with the business plan update to be presented by Avangrid to the investment community on its upcoming Analyst Day. The PNMR board further discussed how the all-cash transaction would be taxable to shareholders and preclude them from automatically participating in the potential future growth of the combined company in a tax efficient manner. Troutman Pepper reviewed the proposed changes to the merger agreement. The PNMR board unanimously agreed that it supported moving forward in negotiations of the proposed all cash transaction at $50.30 per share.

During this time period, the parties communicated with the rating agencies about the PNM, TNMP, PNMR and Avangrid capitalization structures post-merger due to the importance for obtaining regulatory approval of receiving positive credit rating indications from these agencies.

On October 12, 2020, PNMR received an indication of interest from a purchasing party relating to the exit from Four Corners and provided a notice of right of first refusal to the Four Corners counterparties. Troutman Pepper provided copies of these documents to Latham & Watkins.

On October 14, 2020, Lathan & Watkins provided a draft of the Iberdrola financing commitment letter. Also on October 14, 2020, Iberdrola’s Chairman held a conference call with Ms. Collawn and Mr. Eldred. During this call they discussed the financial and strategic benefits of the proposed merger. Also on October 14, 2020, representatives of PNMR, Troutman Pepper and PNMR’s New Mexico and Texas regulatory counsel held a follow-up call with representatives of Iberdrola and Avangrid and Latham & Watkins to discuss the regulatory filings to be made in New Mexico and Texas in connection with the transaction; PNMR updated Latham & Watkins and Iberdrola/Avangrid about discussions being held with co-owners of Four Corners about its proposed exit; and Troutman Pepper sent comments to Latham & Watkins on the Iberdrola financing commitment letter.

From October 16-October 19, 2020, Troutman Pepper and Latham & Watkins exchanged drafts of the merger agreement, Iberdrola financing commitment letter and disclosure schedules and resolved final outstanding items. During this period PNMR negotiated for the ability to increase its quarterly dividend in 2021 from the $0.3075 per share paid in 2020 to $0.3275 per share in order to provide value to PNMR shareholders.

On October 20, 2020, the PNMR board met telephonically, with Mr. Eldred and PNMR’s General Counsel and representatives of Evercore and Troutman Pepper participating. Mr. Eldred reviewed materials provided in advance of the meeting. He described the premium to recent PNMR trading prices represented by an offer of $50.30 per share. He provided an update on discussions with the rating agencies in which they stated that they viewed the proposed merger as being positive from a credit perspective, which would be important for obtaining regulatory approvals. The PNMR board discussed how an all cash transaction provides certainty of value for shareholders, eliminates shareholder risk inherent in PNMR’s business plan and removes current credit ratings pressure. Ms. Collawn described the strategic benefits for PNM and TNMP of being affiliated with a larger company with significant financial strength and a renewable energy commitment. The representatives of Troutman Pepper reviewed materials provided in advance of the meeting, including the latest version of the merger agreement. They reminded the PNMR board of the prior discussions regarding the duties of directors and further reviewed the duties of directors applicable to the review of a transaction like that under consideration. They reviewed the interests of directors in the possible transaction that were in addition to or different from the interests of shareholders generally, as described in the section entitled “—Interests of PNMR’s Directors and Executive Officers in the Merger” beginning on page 66 of this proxy statement. The PNMR board considered the timeline of the strategic review process it had engaged in and which included a targeted auction strategic

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merger process. Representatives of Evercore reviewed its financial analysis and discussion materials relating to PNMR and Avangrid provided in advance of the meeting. They then rendered to the PNMR board Evercore’s oral opinion, subsequently confirmed in Evercore’s written opinion dated as of October 20, 2020, that as of October 20, 2020 and based upon and subject to the assumptions, limitations, qualifications and conditions described in Evercore’s written opinion, the merger consideration was fair, from a financial point of view, to the holders of PNMR common stock entitled to receive such merger consideration. At this meeting the PNMR board unanimously adopted resolutions approving the merger substantially in the form contemplated by the merger agreement and the other transactions and agreements contemplated by the merger agreement.

Later on October 20, 2020, PNMR, Avangrid and merger sub executed the merger agreement and related documents. Iberdrola also delivered an executed copy of the financing commitment letter on the same day.

On October 21, 2020, PNMR and Avangrid issued press releases announcing the execution of the transaction documents.

PNMR’s Reasons for the Merger

The PNMR board regularly receives and discusses advice and opinions from management, consultants and financial advisors regarding trends in the utility industry as part of its consideration of ways in which to grow the company and enhance its earnings and value. As part of this effort, the PNMR board has focused on the company’s operations as well as possible strategic initiatives, including a strategic merger of PNMR as described in “—Background of the Merger” above. In particular, the PNMR board was focused on realizing a premium to the current value in PNMR’s stock trading price due to the PNMR board’s concern with PNMR’s ability to achieve its business plan as a result of its relatively small financial capacity and industry and regulatory constraints.

The PNMR board concluded, based on consideration over the course of a nearly two-year period which included numerous meetings at which PNMR’s strategic alternatives were discussed, that the Avangrid merger was in the best interests of PNMR’s shareholders and that the merger consideration likely represented the highest value that could be obtained for PNMR shareholders. After careful consideration, at a meeting held on October 20, 2020, the PNMR board unanimously (i) determined that the merger consideration is fair, from a financial point of view, to PNMR’s shareholders, (ii) declared the merger agreement and the transactions contemplated by the merger agreement, including the merger, fair to, advisable, consistent with and in the best interests of PNMR and its shareholders and (iii) resolved to submit the merger agreement for consideration and approval by PNMR shareholders and recommend the approval of the merger agreement by PNMR shareholders.

In addition to the factors mentioned above, the material factors considered by the PNMR board in making these determinations included the following (which are not listed in any relative order of importance):

•

The belief of the PNMR board, after a thorough review of our business, market trends, operations, competitive landscape, execution risks and financial condition, and discussions with our management and advisors, that the value offered to shareholders pursuant to the merger is more favorable to our shareholders than the potential long-term and sustainable value that might have resulted from remaining an independent public company, considering:

○	the outlook of our industry and markets, including consolidation in the utility industry and the regulatory risks;

○	the execution and other risks and uncertainties relating to future execution of our strategic plan;

○	costs and risks of other strategic alternatives;

○	the challenging regulatory environment in the utility industry, including in New Mexico;

○	credit ratings pressure; and

○	trading and liquidity challenges for small and mid-cap utilities.

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•

The fact that the merger consideration of $50.30 will be paid in all cash, and provides liquidity, certainty of value, eliminates shareholder risk inherent in our business plan and removes potential future dilution from required equity issuance by PNMR, and also provides for an ability for PNMR to increase dividends prior to the closing.

•	The other alternatives evaluated and considered by the PNMR board, in consultation with its advisors, including (i) continuing to run the company in the ordinary course and (ii) selling certain businesses or subsidiaries of PNMR.

•	The responses from other possible strategic merger partners as discussed above under “—Background of the Merger”.

•	The course of negotiations between PNMR and Iberdrola/Avangrid, in which PNMR was advised by independent legal and financial advisors.

•

The belief of the PNMR board based upon arm’s-length negotiations with Iberdrola/Avangrid that the price to be paid by Avangrid was the highest price per share that Avangrid was willing to pay for PNMR and the fact that all other possible strategic merger partners that were contacted declined to make an offer to merge with or acquire PNMR.

•

The oral opinion of Evercore, subsequently confirmed in Evercore’s written opinion dated as of October 20, 2020, that as of October 20, 2020 and based upon and subject to the assumptions, limitations, qualifications and conditions described in Evercore’s written opinion, the merger consideration was fair, from a financial point of view, to the holders of PNMR common stock entitled to receive such merger consideration, as more fully described below in the section entitled “—Opinion of PNMR’s Financial Advisor” beginning on page 53.

•

The likelihood that the merger will be consummated, based on, among other things, the likelihood of receiving the PNMR shareholder approval necessary to complete the merger in a timely manner, the limited number of conditions to the merger, the fact that Avangrid has received a financing commitment letter that will be sufficient for Avangrid to fund payment of the merger consideration, and the relative likelihood of obtaining required regulatory approvals.

•	The fact that Iberdrola and Avangrid have experience in and a successful history of consummating electric utility transactions in the U.S.

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The terms and conditions of the merger agreement that permit PNMR, prior to the time that PNMR shareholders approve the merger agreement and the transactions contemplated thereby, under certain circumstances, to discuss and negotiate an acquisition proposal should one be made and, if the PNMR board determines in good faith, after consultation with its legal and financial advisors, that the unsolicited acquisition proposal constitutes a superior proposal within the meaning of the merger agreement, the PNMR board is permitted, after giving Avangrid an opportunity to match that proposal, to terminate the merger agreement in order to enter into a definitive agreement for such superior proposal, subject to payment of a termination fee of $130 million.

•	The other terms and conditions of the merger agreement, including, among other things, the representations, warranties, covenants and agreements of the parties, and the conditions to completion of the merger, including the absence of a financing condition.

•	The benefits to customers and local communities that can be provided by a larger company, with a focus on creating jobs in New Mexico, sustainability and reliable and efficient services.

•	The protections provided for PNMR employees in the merger agreement and growth opportunities for employees at a larger company.

The PNMR board also considered a variety of risks and potentially negative factors concerning the merger and the merger agreement, including the following (which are not listed in any relative order of importance):

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The risk that the merger will be delayed or will not be completed, including the risk that required regulatory approvals may not be obtained, as well as the potential loss of value to PNMR shareholders and the potential negative impact on the financial position, operations and prospects of PNMR if the merger is delayed or is not completed for any reason.

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•	That PNMR will be required to bear the costs associated with negotiating the merger agreement and attempting to close the merger even if the merger is not ultimately completed, as well as in connection with potential litigation that may arise in relation to the merger agreement.

•

That the ability of the PNMR board to withdraw or change its recommendation in favor of the merger in connection with a superior proposal or certain material changes related to PNMR is subject to payment of a termination fee of $130 million in the event Avangrid terminates the merger agreement following such withdrawal or recommendation change.

•	That substantial management time and effort will be required to effectuate the merger and the related disruption to PNMR’s day-to-day operations during the pendency of the merger.

•	The risk, if the merger is not completed, that the pendency of the merger could adversely affect the relationship of PNMR and its subsidiaries with their respective regulators, customers, employees, suppliers, agents and others with whom they have business dealings.

•	That the terms of the merger agreement place restrictions on the conduct of PNMR’s business prior to completion of the merger, which may prevent PNMR from undertaking business opportunities that may arise prior to completion of the merger, and the resultant risk if the merger is not completed.

•	The fact that PNMR shareholders will not participate in any potential future earnings or growth of PNMR and will not benefit from any potential appreciation in the value of PNMR as a subsidiary of Avangrid.

•	The fact that the gain recognized by PNMR shareholders as a result of the merger generally will be taxable to the shareholders for U.S. income tax purposes.

•	That PNMR’s executive officers and directors may have interests in the merger that are different from, or in addition to, the interests of PNMR shareholders.

The foregoing discussion of factors considered by the PNMR board is not intended to be exhaustive. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the PNMR board did not attempt to quantify, rank or otherwise assign any relative or specific weights to the factors that it considered in reaching its determination to approve the merger and adopt the merger agreement.

In addition, individual members of the PNMR board may have given differing weights to different factors. The PNMR board conducted an overall review of the factors described above and other material factors, including through discussions with, and inquiry of, PNMR’s management, its inside and outside legal advisors, and its financial advisors regarding certain of the matters described above.

Recommendation of the PNMR Board

Certain Unaudited Financial Forecasts Prepared by the Management of PNMR

While we provide public earnings per share guidance each quarter for that fiscal year, we do not, as a matter of course, publicly disclose other financial forecasts as to future performance, earnings or other results, other than providing projected earnings growth targets, investment plans and expected dividend growth in our regular investor materials. We are especially cautious of making financial forecasts for periods longer than one fiscal year due to unpredictability of the underlying assumptions and estimates. However, in connection with the evaluation of a possible transaction involving PNMR, we provided Avangrid and the PNMR board with certain non-public, unaudited financial forecasts regarding PNMR, or the Forecasts, that were prepared by our management and not for public disclosure. We also provided the Forecasts to Evercore and approved the Forecasts for Evercore’s use in connection with rendering its opinion.

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A summary of the Forecasts considered by PNMR is not being included in this proxy statement to influence your decision whether to vote for or against the proposal to approve the merger agreement, but is being included because these financial forecasts were made available to Evercore, the PNMR board and Avangrid. The inclusion of this information should not be regarded as an indication that the PNMR board, its advisors or any other person considered, or now considers, such financial forecasts to be material or to be a reliable prediction of actual future results, and these financial forecasts should not be relied upon as such. Our management’s internal financial forecasts, upon which the Forecasts are based, are subjective in many respects. There can be no assurance that these financial forecasts will be realized or that actual results will not be significantly higher or lower than forecasted. The financial forecasts cover multiple years and become subject to greater uncertainty with each successive year. As a result, the inclusion of the financial forecasts in this proxy statement should not be relied on as necessarily predictive of actual future events.

In addition, the financial forecasts were not prepared with a view toward public disclosure or toward complying with generally accepted accounting principles, or GAAP, the published guidelines of the SEC regarding projections and the use of non-GAAP measures or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The financial forecasts contained herein have been prepared by, and are the responsibility of, our management. KPMG LLP has neither examined, compiled nor performed any procedures with respect to the accompanying financial forecasts and, accordingly, KPMG LLP does not express an opinion or any other form of assurance with respect thereto.

These financial forecasts were based on numerous variables and assumptions that were deemed by our management to be reasonable at the time of their preparation. These variables and assumptions are inherently uncertain and may be beyond our control. Important factors that may affect actual results and cause these financial forecasts not to be achieved include, but are not limited to, risks and uncertainties relating to our business, regulatory decisions and the regulatory environment generally, general business and economic conditions and other factors described or referenced in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 25 of this proxy statement. In addition, the financial forecasts also reflect assumptions that are subject to change and do not reflect revised prospects for our business, changes in general business or economic conditions or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the financial forecasts were prepared, including the announcement of the merger. Our forecasts depend, in large part, upon customer usage, weather, capital expenditures and regulatory impacts. We have not prepared and expressly disclaim any responsibility to prepare (except to the extent required by applicable federal securities laws) revised forecasts to take into account other variables that may have changed since the preparation of the Forecasts. Accordingly, there can be no assurance that these financial forecasts will be realized or that our future financial results will not materially vary from these financial forecasts.

Certain of the measures included in the Forecasts may be considered non-GAAP financial measures, including Operating Income Excluding Regulatory Disallowances, Ongoing Net Income, Ongoing EPS and If Converted Ongoing EPS. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by us may not be comparable to similarly titled amounts used by other companies.

In light of the foregoing factors and the uncertainties inherent in the Forecasts, shareholders should not unduly rely on the Forecasts included in this proxy statement.

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PNMR Forecasts

	2020E	2021E	2022E	2023E	2024E
	(in millions except per share data)
Operating Income Excluding Regulatory Disallowances⁽¹⁾	$286	$298	$346	$384	$408
Depreciation and Amortization	$276	$298	$324	$354	$380
Ongoing Net Income	$177	$198	$220	$240	$251
Ongoing EPS	$2.21⁽²⁾	$2.30	$2.56	$2.79	$2.90
If Converted Ongoing EPS⁽³⁾	$2.22	$2.30	$2.49	$2.71	$2.82
Capital Expenditures	$806	$976	$760	$753	$649

(1)	Regulatory disallowances of $83 million and $2 million in 2021 and 2022, respectively, are excluded.

(2)

On October 1, 2020, PNMR raised 2020 ongoing earnings guidance for Non-GAAP EPS from the range of $2.16-$2.26 with a midpoint of $2.21 (reflected above) to a range of $2.23-$2.31 with a midpoint of $2.27. As disclosed, this increase reflected higher residential loads resulting from COVID-19-related usage and warmer temperatures, along with interest savings from the refinancing of debt. Given that the COVID-19-related usage and warmer temperatures cannot be assumed to continue in the future, management determined that the forecasts above should be based on the prior Non-GAAP EPS guidance of $2.21.

(3)

If Converted Ongoing EPS was calculated by Evercore based on information provided by PNMR management and approved for Evercore’s use by PNMR. If Converted Ongoing EPS uses diluted shares reflecting the settlement of forward equity shares, retirement of eligible restricted stock dilutive shares and the issuance and conversion of mandatory convertible securities expected to be issued in December 2021 and converted in December 2024. Diluted shares for 2020E does not include any early settlement of the forward equity shares. If Converted Ongoing EPS calculation reflects an adjustment of $6 million in 2022E, 2023E and 2024E for convertible debt interest savings expected following issuance of mandatory convertible securities in December 2021.

Assumptions Regarding PNMR Forecasts

The forecasts set forth above assume:

•	normal weather consistent with historical usage and other assumptions affecting customer demand,

•	no significant changes in regulatory framework, including assumptions relating to rate cases in Texas and New Mexico,

•	decoupling revenues are in place,

•	each of PNM and TNMP earn a certain targeted return on equity,

•	the PNM securitization is implemented in 2022,

•	planned capital expenditures and their net customer impacts,

•	retirement of San Juan Generating Station as previously disclosed,

•	divestment of Four Corners as previously disclosed,

•	return of Palo Verde leases unit 1 in 2023 and unit 2 in 2024 as previously disclosed,

•	annual FERC transmission rate increases at PNM, and

•	issuance and conversion of mandatory convertible securities to be issued in December 2021 and converted in December 2024.

Opinion of PNMR’s Financial Advisor

Opinion of Evercore Group L.L.C.

At a meeting of the PNMR board held on October 20, 2020, Evercore rendered to the PNMR board its oral opinion, subsequently confirmed in writing, that as of October 20, 2020 and based upon and subject to the assumptions, limitations, qualifications and conditions described in Evercore’s written opinion, the merger consideration was fair, from a financial point of view, to the holders of PNMR common stock entitled to receive such merger consideration.

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proxy statement and is incorporated by reference in its entirety into this proxy statement. You are urged to read this opinion carefully and in its entirety. Evercore’s opinion was addressed to, and provided for the information and benefit of, the PNMR board in connection with their evaluation of the proposed transaction. The opinion does not constitute a recommendation to the PNMR board or to any other persons in respect of the proposed transaction, including as to how any holder of shares of PNMR common stock should vote or act in respect of the proposed transaction. Evercore’s opinion does not address the relative merits of the proposed transaction as compared to other business or financial strategies that might be available to PNMR, nor does it address the underlying business decision of PNMR to engage in the proposed transaction.

In connection with rendering its opinion, Evercore had, among other things:

•	reviewed certain publicly available business and financial information relating to PNMR that Evercore deemed to be relevant, including publicly available research analysts’ estimates;

•	reviewed the Forecasts, which are summarized in the section entitled “—Certain Unaudited Financial Forecasts Prepared by the Management of PNMR” of this proxy statement;

•	discussed with management of PNMR their assessment of the past and current operations of PNMR, the current financial condition and prospects of PNMR, and the Forecasts;

•	reviewed the reported prices and the historical trading activity of PNMR common stock;

•	compared the financial performance of PNMR and its stock market trading multiples with those of certain other publicly traded companies that Evercore deemed relevant;

•	compared the financial performance of PNMR and the valuation multiples relating to the merger with the financial terms, to the extent publicly available, of certain other transactions that Evercore deemed relevant;

•	reviewed the financial terms and conditions of the merger agreement; and

•	performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate.

For purposes of its analysis and opinion, Evercore assumed and relied upon the accuracy and completeness of the financial and other information publicly available, and all of the information supplied or otherwise made available to, discussed with, or reviewed by Evercore, without any independent verification of such information (and assumed no responsibility or liability for any independent verification of such information), and further relied upon the assurances of the management of PNMR that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the Forecasts, Evercore assumed with PNMR’s consent that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of management of PNMR as to the future financial performance of PNMR. Evercore expressed no view as to the Forecasts or the assumptions on which they were based.

For purposes of its analysis and opinion, Evercore assumed, in all respects material to its analysis, that the representations and warranties of each party contained in the merger agreement were true and correct, that each party would perform all of the covenants and agreements required to be performed by it under the merger agreement and that all conditions to the consummation of the merger would be satisfied without waiver or modification thereof. Evercore further assumed, in all respects material to its analysis, that all governmental, regulatory or other consents, approvals or releases necessary for the consummation of the merger would be obtained without any delay, limitation, restriction or condition that would have an adverse effect on PNMR or the consummation of the merger or reduce the contemplated benefits to the holders of PNMR common stock of the merger.

Evercore did not conduct a physical inspection of the properties or facilities of PNMR and did not make or assume any responsibility for making any independent valuation or appraisal of the assets or liabilities (including any contingent, derivative or other off-balance sheet assets and liabilities) of PNMR, nor was Evercore furnished with any such valuations or appraisals, nor did Evercore evaluate the solvency or fair value of PNMR under any state or federal laws relating to bankruptcy, insolvency or similar matters. Evercore’s opinion is

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necessarily based upon information made available to Evercore as of October 20, 2020 and financial, economic, market and other conditions as they existed and as could be evaluated as of that date. Subsequent developments may affect Evercore’s opinion and Evercore does not have any obligation to update, revise or reaffirm its opinion.

Evercore was not asked to pass upon, and expressed no opinion with respect to, any matter other than the fairness to the holders of PNMR common stock, from a financial point of view, of the merger consideration. Evercore did not express any view on, and its opinion does not address, the fairness of the proposed merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors or other constituencies of PNMR, nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of PNMR, or any class of such persons, whether relative to the merger consideration or otherwise. Evercore was not asked to, nor did it express any view on, and its opinion does not address, any other term or aspect of the merger agreement or the merger, including, without limitation, the structure or form of the merger, or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the merger agreement. Evercore’s opinion does not address the relative merits of the merger as compared to other business or financial strategies that might be available to PNMR, nor does it address the underlying business decision of PNMR to engage in the merger. Evercore’s opinion does not constitute a recommendation to the PNMR board or to any other persons in respect of the merger, including as to how any holder of shares of PNMR common stock should vote or act in respect of the merger. Evercore is not a legal, regulatory, accounting or tax expert and has assumed the accuracy and completeness of assessments by PNMR and its advisors with respect to legal, regulatory, accounting and tax matters. The credit, financial and stock markets have been experiencing unusual volatility and Evercore expressed no opinion or view as to any potential effects of such volatility on the parties or the merger.

Set forth below is a summary of the material financial analyses reviewed by Evercore with the PNMR board on October 20, 2020 in connection with rendering its opinion. The following summary, however, does not purport to be a complete description of the analyses performed by Evercore. The order of the analyses described and the results of these analyses do not represent relative importance or weight given to these analyses by Evercore. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data that existed on or before October 20, 2020, and is not necessarily indicative of current market conditions.

The following summary of Evercore’s financial analyses includes information presented in tabular format. In order to fully understand the analyses, the tables must be read together with the full text of each summary. The tables are not intended to stand alone and alone do not constitute a complete description of Evercore’s financial analyses. Considering the tables below without considering the full narrative description of Evercore’s financial analyses, including the methodologies and assumptions underlying such analyses, could create a misleading or incomplete view of such analyses.

Summary of Evercore’s Financial Analysis of PNMR

Discounted Cash Flow Analysis

Evercore performed a discounted cash flow analysis to calculate ranges of implied present values per share of PNMR common stock, utilizing estimates of the standalone, unlevered, after-tax free cash flows PNMR was expected to generate over the period from October 20, 2020 through December 31, 2024 based on the Forecasts.

For purposes of its discounted cash flow analyses, unlevered free cash flow was defined as operating income plus income from Nuclear Decommissioning Trust (NDT) / other, less taxes, plus depreciation and amortization expenses, plus deferred income tax, less capital expenditures, less change in net working capital, plus/(less) other non-cash expenses/(gains), less non-cash gains from NDT.

Evercore calculated ranges of terminal values for PNMR using the following three alternative methods:

(i)	a perpetuity growth method -- under which Evercore calculated a range of terminal values for PNMR by applying perpetuity growth rates ranging from 1.50% to 2.00% to the estimate of terminal year unlevered free cash flow reflected in the Forecasts,

(ii)	a terminal multiple method (P/E Multiple) -- under which Evercore calculated a range of terminal values for PNMR by applying price to earnings-per-share (“P/E”) multiples ranging from 18.00x to 21.00x to the estimate of 2024 recurring net income reflected in the Forecasts, and

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(iii)

a terminal multiple method (EV/EBITDA Multiple) -- under which Evercore calculated a range of terminal values for PNMR by applying enterprise value (“EV”) to earnings before interest, tax, depreciation and amortization (taking into account regulatory disallowances and gas pension costs) (“EBITDA”) multiples ranging from 11.00x to 13.00x to the estimate of 2024 EBITDA reflected in the Forecasts.

Evercore discounted PNMR’s projected, unlevered free cash flows over the period from October 20, 2020 through 2024 and the ranges of terminal values for PNMR it calculated under each of the methods described above to present value as of October 20, 2020, using a discount rate of 5.5%, in the case of its analysis based on the perpetuity growth method and using discount rates ranging from 5.0% to 6.0%, in the case of its analyses using the other methods, in each case to derive ranges of implied enterprise values for PNMR. The discount rates were based on Evercore’s judgment of the estimated range of PNMR weighted average cost of capital. Evercore then deducted from the ranges of implied enterprise values PNMR management’s estimate of PNMR’s net debt as of September 30, 2020 (taking into account cash estimated to be received from expected settlement of forward equity issuances in 2021), and divided the results by the fully diluted outstanding shares of PNMR common stock as of September 30, 2020 (taking into account estimated dilution from expected settlement of forward equity issuances in 2021), calculated based on information provided to Evercore by PNMR management, to derive a range of implied equity values per share of PNMR common stock as follows:

Method			Implied Per Share Equity Value Reference Ranges
Perpetuity Growth Rate Method			$30.44 - $40.77
Terminal Multiple Method (P/E Multiple)			$39.85 - $50.26
Terminal Multiple Method (EV/EBITDA Multiple)			$36.38 - $54.53

Selected Public Company Trading Analysis

Evercore reviewed and compared certain financial information of PNMR to corresponding financial multiples and ratios for the following selected publicly traded companies in the utility industry (referred to in this section as the “PNMR selected companies”):

•	Alliant Energy Corporation

•	Pinnacle West Capital Corporation

•	IDACORP, Inc.

•	NorthWestern Corporation

•	ALLETE, Inc.

•	Avista Corporation

Although none of these companies is directly comparable to PNMR, Evercore selected these companies based on its professional judgment because they are utility companies with business characteristics that, for purposes of its analysis, Evercore considered similar to the business characteristics of PNMR.

For PNMR and each of the PNMR selected companies identified above, Evercore calculated (i) the closing share prices as of October 16, 2020 as a multiple of earnings-per-share (“EPS”) for calendar years 2021 and 2022 and (ii) enterprise value as a multiple of estimated EBITDA for calendar years 2021 and 2022. The financial multiples and ratios for the PNMR selected companies were based on closing share prices as of October 16, 2020, financial data as reflected in the most recent public filings made by such company and consensus estimates for 2021 and 2022 obtained from publicly available equity research analysts’ projections made available by FactSet as of October 16, 2020.

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The results of these calculations were as follows:

Alliant Energy Corporation

21.2x

20.1x

13.0x

12.7x

Pinnacle West Capital Corporation

16.2x

15.4x

10.0x

9.2x

IDACORP, Inc.

18.4x

17.2x

12.8x

12.4x

NorthWestern Corporation

14.4x

13.6x

10.1x

9.6x

ALLETE, Inc.

15.0x

13.6x

10.1x

9.4x

Avista Corporation

16.3x

15.2x

8.9x

8.6x

Mean

16.9x

15.9x

10.8x

10.3x

Median

16.2x

15.3x

10.1x

9.5x

Based on the multiples it derived for the PNMR selected companies and its professional judgment and experience, Evercore applied (i) a P/E multiple reference range of 15.75x to 18.75x to PNMR management’s estimate of 2021 EPS for PNMR (assuming conversion of all future convertible debt of PNMR and taking into account estimated dilution from expected settlement of forward equity issuances in 2021), as reflected in the Forecasts, and (ii) a P/E multiple reference range of 14.75x to 17.75x to PNMR management’s estimate of 2022 EPS for PNMR (assuming conversion of all future convertible debt of PNMR and taking into account estimated dilution from expected settlement of forward equity issuances in 2021), as reflected in the Forecasts, to derive implied per share equity value reference ranges for PNMR.

Based on the multiples it derived for the PNMR selected companies and its professional judgment and experience, Evercore also applied (i) an EV/EBITDA multiple reference range of 9.5x to 11.5x to PNMR management’s estimate of 2021 EBITDA for PNMR, as reflected in the Forecasts and (ii) an EV/EBITDA multiple reference range of 9.0x to 11.0x to PNMR management’s estimate of 2022 EBITDA for PNMR, as reflected in the Forecasts, to derive ranges of implied enterprise values for PNMR. Evercore then deducted from the ranges of implied enterprise values PNMR management’s estimate of PNMR’s net debt as of September 30, 2020 (taking into account cash estimated to be received from expected settlement of forward equity issuances in 2021), and divided the results by the fully diluted outstanding shares of PNMR common stock as of September 30, 2020 (taking into account estimated dilution from the forward equity issued in 2020 and expected to settle in 2021), calculated based on information provided to Evercore by PNMR management, to derive a range of implied equity values per share of PNMR common stock.

The implied per share equity value reference ranges derived by Evercore for the shares of PNMR common stock based on this analysis are set forth below:

Metric			Implied Equity Value Range Per Share
2021 P/E			$36.20 - $43.10
2022 P/E			$36.72 - $44.19
2021 EV/EBITDA			$29.86 - $43.80
2022 EV/EBITDA			$34.09 - $49.74

Precedent Transaction Analysis

Evercore reviewed publicly available information related to selected precedent acquisition transactions involving publicly traded companies in the utility industry announced since 2013. For each selected precedent transaction, Evercore calculated (i) the implied enterprise value (based on transaction consideration) as a multiple of EBITDA for the target company for each of the current fiscal year (“FY1”) and the following fiscal year (“FY2”) after the announcement of the applicable transaction based on estimates for FY1 and FY2 obtained from mean consensus estimates as provided by FactSet, publicly available company filings, press releases, and Wall Street research, and (ii) the P/E multiples for each of FY1 and FY2 after the announcement of the applicable transaction based on estimates for FY1 and FY2 obtained from mean consensus estimates as provided by FactSet, publicly available company filings, press releases, and Wall Street research. The selected precedent transactions reviewed by Evercore and the implied enterprise value to EBITDA multiples and P/E multiples calculated by Evercore with respect to those target companies were:

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Integrated Utilities

06-03-19

Infrastructure Investments Fund (IIF)

El Paso Electric Company

14.3x

13.1x

27.9x

25.1x

04-23-18

CenterPoint Energy, Inc.

Vectren Corporation

12.0x

11.6x

25.2x

23.5x

07-09-17

Hydro One Limited

Avista Corporation (not closed)

12.0x

11.2x

27.3x

25.8x

05-31-16

Great Plains Energy Incorporated

Westar Energy, Inc. (not closed)

11.5x

10.9x

24.7x

23.7x

02-09-16

Algonquin Power & Utilities Corp.

The Empire District Electric Company

10.0x

9.6x

22.8x

21.5x

09-04-15

Emera Incorporated

TECO Energy, Inc.

11.2x

10.7x

25.0x

23.4x

10-20-14

Macquarie Group Ltd.

Cleco Corporation

10.6x

10.4x

20.4x

20.2x

12-11-13

Fortis Inc.

UNS Energy Corporation

9.0x

8.2x

20.3x

18.1x

05-29-13

MidAmerican Energy Holdings Company

NV Energy, Inc.

8.9x

8.8x

18.3x

17.5x

75^th Percentile

12.0x

11.2x

25.2x

23.7x

Mean

11.1x

10.5x

23.5x

22.1x

Median

11.2x

10.7x

24.7x

23.4x

25th Percentile

10.0x

9.6x

20.4x

20.2x

T&D Utilities

02-09-16

Fortis Inc.

ITC Holdings Corp.

12.8x

11.7x

21.4x

20.0x

04-30-14

Exelon Corporation

Pepco Holdings Inc.

9.9x

8.8x

22.3x

20.7x

75^th Percentile

12.0x

11.0x

22.1x

20.5x

Mean

11.3x

10.3x

21.9x

20.3x

Median

11.3x

10.3x

21.9x

20.3x

25th Percentile

10.6x

9.6x

21.6x

20.2x

All Utilities

75^th Percentile

12.0x

11.4x

25.1x

23.6x

Mean

11.1x

10.5x

23.2x

21.8x

Median

11.2x

10.7x

22.8x

21.5x

25th Percentile

9.9x

9.2x

20.9x

20.1x

Although none of the target companies above is directly comparable to PNMR and none of the precedent transactions is directly comparable to the transaction, Evercore selected these transactions based on its professional judgment because they involve target companies that are electric utility companies with business characteristics that, for purposes of its analysis, Evercore considered similar to the business characteristics of PNMR and the consideration for the transactions included a significant cash component.

Based on the multiples it derived from the selected precedent transactions and based on its professional judgment and experience, Evercore (i) selected a reference range of P/E multiples of 21.00x to 25.00x and applied this range of multiples to PNMR’s estimated EPS for 2020, (ii) selected a reference range of P/E multiples of 20.00x to 23.50x and applied this range of multiples to PNMR’s estimated EPS for 2021 (taking into account estimated dilution from expected settlement of forward equity issuances in 2021), as reflected in the Forecasts, in each case, to derive a range of implied equity values per share of PNMR common stock.

Based on the multiples it derived from the selected precedent transactions and based on its professional judgment and experience, Evercore also (i) selected a reference range of enterprise value to EBITDA multiples of 10.00x to 12.00x and applied this range of multiples to PNMR’s estimated EBITDA for 2020, as reflected in the Forecasts, and (ii) selected a reference range of enterprise value to EBITDA multiples of 9.00x to 11.50x and applied this range of multiples to PNMR’s estimated EBITDA for 2021, as reflected in the Forecasts, in each case, to derive a range of implied enterprise values for PNMR. Evercore then deducted from the ranges of implied enterprise values PNMR management’s estimate of PNMR’s net debt as of September 30, 2020 as reflected in PNMR’s consolidated balance sheet as of that date, and divided the results by the fully diluted outstanding shares of PNMR common stock as of September 30, 2020, calculated based on information provided to Evercore by PNMR management (taking into account estimated dilution from expected settlement of forward equity issuances in 2021), to derive a range of implied equity values per share of PNMR common stock.

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The implied per share equity value reference ranges derived by Evercore for the shares of PNMR common stock based on this analysis are set forth below:

Metric			Implied Equity Value Range Per Share
FY1 Price / Earnings			$46.52 - $55.39
FY2 Price / Earnings			$45.97 - $54.02
FY1 Enterprise Value / EBITDA			$29.30 - $42.44
FY2 Enterprise Value / EBITDA			$26.37 - $43.80

Other Financial Analysis

The analysis and data described below were presented to the PNMR board for informational and reference purposes only and did not provide the basis for, and were not otherwise material to, the rendering of Evercore’s fairness opinion.

Analysts’ Price Targets

Evercore reviewed selected publicly available share price targets of research analysts’ estimates known to Evercore as of October 16, 2020, noting that the low and high share price targets ranged from $44.00 to $51.00 for PNMR common stock.

52-Week Trading Range Analysis

Evercore reviewed historical trading prices of PNMR common stock during the 52-week period ended October 16, 2020, noting that low and high closing prices during such period ranged from $29.93 to $55.79 per share of PNMR common stock.

Miscellaneous

The foregoing summary of certain financial analyses does not purport to be a complete description of the analyses or data presented by Evercore. In connection with the evaluation of the proposed transaction by the PNMR board, Evercore performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary described above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Evercore’s opinion. In arriving at its fairness determination, Evercore considered the results of all the analyses and did not draw, in isolation, conclusions from or with regard to any one analysis or factor considered by it for purposes of its opinion. Rather, Evercore made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all the analyses. In addition, Evercore may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above should not be taken to be the view of Evercore with respect to the actual value of the shares of PNMR common stock. Further, Evercore’s analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies used, including judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of PNMR or its advisors.

Evercore prepared these analyses for the purpose of providing an opinion to the PNMR board as to the fairness, from a financial point of view, of the merger consideration to the holders of PNMR common stock entitled to receive such merger consideration. These analyses do not purport to be appraisals or to necessarily reflect the prices at which the business or securities actually may be sold. Any estimates contained in these analyses are not necessarily indicative of actual future results, which may be significantly more or less favorable than those suggested by such estimates. Accordingly, estimates used in, and the results derived from, Evercore’s analyses are inherently subject to substantial uncertainty, and Evercore assumes no responsibility if future results are materially different from those forecasted in such estimates.

The issuance of Evercore’s fairness opinion was approved by an opinion committee of Evercore.

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Pursuant to the terms of Evercore’s engagement letter with PNMR, Evercore is entitled to receive a fee of approximately $36.5 million, $5.5 million of which will be paid if the merger is approved by PNMR shareholders and the remainder of which if the merger is consummated, against which a fee of $5.5 million that was payable upon delivery of Evercore’s fairness opinion and a fee of $2.0 million that is payable for services to be rendered between signing and closing are fully creditable. PNMR has also agreed to reimburse Evercore for its reasonable and documented out-of-pocket expenses (including legal fees of outside attorneys, expenses and disbursements) and to indemnify Evercore for certain liabilities arising out of its engagement.

During the two-year period prior to the date of its written opinion, Evercore and its affiliates provided financial advisory services to PNMR, for which Evercore received fees of $1.2 million. During the two-year period prior to the date of its written opinion, neither Evercore nor its affiliates had provided financial services to Avangrid or Iberdrola, its affiliate, and Evercore had not received any compensation from Avangrid or Iberdrola during such period. In the future, Evercore may provide financial or other services to PNMR, Avangrid and/or Iberdrola and in connection with any such services Evercore may receive compensation.

In the ordinary course of business, Evercore or its affiliates may actively trade the securities, or related derivative securities, or financial instruments of PNMR, Avangrid and/or Iberdrola, for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities or instruments.

PNMR engaged Evercore to act as a financial advisor based on Evercore’s qualifications, experience and reputation. Evercore is an internationally recognized investment banking firm and is regularly engaged in the valuation of businesses in connection with mergers and acquisitions, leveraged buyouts, competitive biddings, private placements and valuations for corporate and other purposes.

Regulatory Approvals Required for the Merger

General

•	the expiration of the waiting period under the HSR Act and the rules and regulations thereunder;

•	notices to and filings under, and compliance with all requirements of CFIUS;

•	approval by NMPRC, pursuant to the New Mexico Public Utility Act and NMPRC Rule 450;

•	approval by PUCT, pursuant to the Public Utility Regulatory Act;

•	approval from FERC, pursuant to Section 203 of the Federal Power Act;

•	approval from the FCC under the Communications Act of 1934 for the transfer of control over wireless and microwave licenses held by certain PNMR subsidiaries; and

•	approval from the NRC.

HSR Act and Antitrust

The merger is subject to the requirements of the HSR Act, which prevents Avangrid and PNMR from completing the merger until required information and materials are furnished to the Antitrust Division of the DOJ and the FTC and the HSR Act’s initial 30-day waiting period expires. Pursuant to the HSR Act requirements, Avangrid and PNMR filed the required Notification and Report Forms with the DOJ and the FTC on December 21, 2020. The HSR waiting period is scheduled to expire at 11:59 p.m. on January 20, 2021, unless the waiting period is terminated earlier, or extended by a request for additional information before that time.

CFIUS

CFIUS has the jurisdiction to review any transaction involving a foreign person that could result in foreign control of any “U.S. business”—i.e., an entity or business unit engaged in interstate commerce in the

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United States— (or, for certain U.S. businesses, investments by foreign persons that do not result in control of the U.S. business) for the impact of such a transaction on U.S. national security. CFIUS may clear a proposed transaction unconditionally or impose mitigation requirements as a condition of such clearance. CFIUS may also recommend that the President issue an executive order prohibiting a transaction or requiring a divestiture. Parties to transactions subject to CFIUS’s jurisdiction may voluntarily notify CFIUS of their proposed transactions in anticipation of receiving the certainty provided by CFIUS clearance. CFIUS may also initiate a review of any transaction within CFIUS’s jurisdiction, without any submission by the parties. Avangrid and PNMR submitted a voluntary notice to CFIUS on December 11, 2020 in connection with the proposed merger.

NMPRC Approval

Pursuant to the New Mexico Public Utility Act and NMPRC Rule 450, approval of the merger by the NMPRC is required for the consummation of the merger. The NMPRC’s approval standard is whether the merger is inconsistent with the public interest or unlawful. The NMPRC applies the following factors to its determination: (1) whether the merger provides benefits to customers, (2) whether the NMPRC’s jurisdiction will be preserved, (3) whether quality of service will diminish, (4) whether the merger will result in improper subsidization of non-utility activities, (5) verification of the qualifications and financial health of the new owner, and (6) adequate protections against harm to customers. NMPRC Rule 450 will also require certain commitments from the new owner to provide ongoing supervision in support of these standards.

Avangrid and PNMR filed an application with the NMPRC on November 23, 2020. There can be no guarantee that the NMPRC will approve the merger or that it will not impose conditions on its approval that have adverse effects on either Avangrid or PNMR.

PUCT Approval

Section 14.101, 39.262 and 39.915 of the Public Utility Regulatory Act, as codified in Title II of the Texas Utilities Code, requires approval of a merger by the PUCT. The PUCT is required by Section 39.262(m) of the Public Utility Regulatory Act to rule on the application within 180 days of the filing, although the PUCT is permitted to extend the 180-day deadline by 60 days if it determines that there is good cause to do so.

To approve the proposed transactions, Sections 39.262 and 39.915 of the Public Utility Regulatory Act require that the PUCT must find that the proposed transactions are in the public interest. In making this determination, the PUCT must consider whether the proposed transactions will adversely affect the reliability of service, availability of service or the cost of service currently provided by the company. Section 14.101 of the Public Utility Regulatory Act also instructs the PUCT to consider whether the proposed transactions are consistent with the public interest, taking into consideration whether the proposed transactions will result in the transfer of jobs to workers outside of Texas, adversely affect the health or safety of a utility’s customers or employees, or result in a decline in service to customers.

Avangrid and PNMR filed an application with the PUCT on November 23, 2020. There can be no guarantee that the PUCT will approve the merger or that it will not impose conditions on its approval that have adverse effects on either Avangrid or PNMR.

FERC Approval

Avangrid and PNMR each have public utility subsidiaries subject to the jurisdiction of FERC under Part II of the FPA. Section 203(a)(1) of the FPA provides that no public utility shall dispose of its jurisdictional facilities or merge or consolidate, either directly or indirectly, such facilities without securing an order from FERC authorizing it to do so. Section 203(a)(2) of the FPA further provides that no holding company in a holding company system that includes a transmitting utility or an electric utility may purchase, acquire, merge or consolidate with a transmitting utility, an electric utility company or a holding company in a holding company system that includes a transmitting utility or electric utility company without prior FERC authorization. Consequently, FERC’s approval of the merger under Section 203(a)(1) and (a)(2) of the FPA is required. FERC must authorize the merger if it finds that the merger is consistent with the public interest. In addition, in accordance with the EP Act 2005, FERC must also find that the merger will not result in the cross-subsidization by utilities of their non-utility affiliates or the improper encumbrance or pledge of utility assets.

Avangrid and PNMR filed an application with FERC on November 23, 2020.

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FCC Approval

Under FCC regulations implementing provisions of the Communications Act of 1934, as amended, an entity holding an FCC license generally must obtain the approval of the FCC before the direct or indirect transfer of control or assignment of those licenses. Certain PNMR subsidiaries hold FCC wireless and microwave licenses and, thus, must obtain prior FCC approval to assign or transfer direct or indirect control of those licenses. Avangrid and PNMR expect to file transfer of control applications with respect to these wireless and microwave licenses held by PNM and TNMP in early 2021.

NRC Approval

PNM is a participant in the three units of the Palo Verde Nuclear Generating Station, or PVNGS, and holds a license from the NRC with respect to its ownership interest. Under the Atomic Energy Act of 1954, as amended, and the regulations of the NRC, an NRC power plant licensee must seek and obtain prior NRC consent for the indirect transfer of its NRC licenses resulting from the transfer of control over the licensee in a merger. An application for approval of the NRC was filed on December 2, 2020.

In reviewing a license transfer application, the NRC must find that the transfer is not inimical to the common defense and security, does not result in foreign ownership, control, or domination, and will not result in or cause any undue risk to the public health and safety. In making these findings the NRC assesses, among other things, the transferee’s technical and financial qualifications to own and operate the nuclear facilities, whether there is assurance that adequate decommissioning funds will be available to safely decommission the facilities at the end of their useful lives, whether the transfer will result in foreign ownership, control or domination, and whether the transfer is otherwise consistent with the applicable provisions of laws, regulations and orders of the NRC. The NRC presumes financial qualifications for state rate-regulated electric utilities that are authorized to recover the costs and operating expenses of their nuclear facilities through state approved rates. The NRC also permits state rate-regulated entities to provide decommissioning funding assurance through the use of external sinking funds.

Typically, NRC approvals of license transfers take approximately six to nine months to complete. The timing of NRC approval may be extended in the event the application raises novel issues or intervenors raise issues as part of the license transfer proceeding. Given that PNMR expects no material changes with respect to nuclear management and the operation of the facilities in question, and given that PNM, the NRC licensee and an electric utility, expects to recover the funds necessary to safely operate each facility through their state approved rates and to continue to fund its future decommissioning liabilities using its existing external sinking funds, PNMR and Avangrid have no reason to believe that the NRC will not approve the license transfer. However, there is no guarantee that the NRC will approve the merger or that it will act within a six- to nine-month timeframe.

Dissenter’s Rights

General

If you are a shareholder of record as of the record date of the special meeting, you have a right to dissent from the merger and to obtain payment of the fair value of your shares in the event the merger is completed. The appraised fair value may be more or less than the value of the merger consideration being paid in the merger in exchange for shares of PNMR common stock.

If you are contemplating exercising your right to dissent, you should read carefully the provisions of Sections 53-15-3 and 53-15-4 of the NMBCA, a copy of which is attached to this proxy statement as Annex C, and which qualify in all respects the following discussion of those provisions, and consult with your legal counsel before electing or attempting to exercise these rights. The following discussion describes the steps you must take if you want to exercise your right to dissent. You should read this summary and the full text of the law carefully.

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How to Exercise and Perfect Your Right to Dissent

To be eligible to exercise your right to dissent from the merger:

•	you must file with PNMR, prior to or at the special meeting, a written objection to the merger;

•	you must not vote in favor of the merger;

•	you must, within ten days after the date of the special meeting, make a written demand on PNMR (as the surviving company of the merger) for payment of the fair value of your shares of PNMR common stock; and

•	if your shares of PNMR common stock are represented by a certificate, you must, within 20 days after you make your demand for payment to PNMR as described above, submit your certificate formerly representing your shares of PNMR common stock to PNMR for notation that such demand has been made.

If you intend to exercise your right to dissent from the merger, you must file with PNMR, prior to or at the special meeting, a written objection to the merger. If you fail to file the written objection to the merger at or prior to the special meeting, if you vote your shares of PNMR common stock in favor of the merger or if you fail to make your demand for payment on a timely basis, you will lose your right to dissent from the merger. If your shares of PNMR common stock are represented by a certificate and you fail to submit your certificate formerly representing shares of PNMR common stock to PNMR on a timely basis after you have submitted the demand for payment as described above, PNMR will have the option to terminate your right of dissent as to your shares of PNMR common stock unless a court of competent jurisdiction, for good and sufficient cause shown, otherwise directs. In any instance of a termination or loss of your right of dissent, you will instead receive the merger consideration as set forth in the merger agreement. If you comply with the first two items above and the merger is completed, PNMR will send you a written notice advising you that the merger has been completed. PNMR must give you this notice within ten days after the merger is completed.

Your Demand for Payment

If you have provided your written objection to the merger to PNMR in a timely manner and you have not voted in favor of the merger, and you desire to receive the fair value of your shares of PNMR common stock in cash, you must, within ten days after the date of the special meeting, give PNMR a written demand for payment of the fair value of your shares. The fair value of your shares of PNMR common stock will be the value of the shares on the day immediately preceding the special meeting.

If you do not make your written demand for payment within that ten-day period, you will be bound by the merger and you will not be entitled to receive a cash payment representing the fair value of your shares of PNMR common stock. Instead, you will receive the merger consideration as set forth in the merger agreement.

Delivery of Stock Certificates

Upon receiving a demand for payment from any dissenting shareholder, PNMR will make an appropriate notation thereof in its shareholder records. If your shares of PNMR common stock are represented by a certificate, you must, within 20 days after demanding payment for your shares, submit your certificate representing your shares of PNMR common stock to PNMR for notation thereon that such demand has been made. The failure to submit your certificates within such 20-day period will, at the option of PNMR, terminate your rights under the NMBCA unless a court of competent jurisdiction otherwise directs. If your shares of PNMR common stock for which you have demanded payment are uncertificated or if your shares are represented by a certificate on which such notation has been made is/are transferred, any new certificate issued for such shares will bear similar notation and your name, as the original dissenting holder of the shares, and a transferee of the shares acquired by such transfer will have no rights in PNMR other than those which you, as the original dissenting shareholder, had after making demand for payment of the fair value of such shares.

Payment of the Fair Value of Your Shares of PNMR Common Stock

Within ten days after the merger is completed, PNMR will give you written notice that the merger was completed and will make a written offer to you to pay for your shares of PNMR common stock at a specified price deemed by PNMR to be the fair value thereof.

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If, within 30 days after the date on which the merger was completed, you and PNMR agree upon the fair value of your shares of PNMR common stock, PNMR will make payment to you for your shares within 90 days after the date on which the merger was completed, and, if your shares are represented by a certificate, upon surrender of the certificate formerly representing your shares of PNMR common stock. Once PNMR makes payment to you of the agreed value, you will cease to have any interest your shares of PNMR common stock.

Commencement of a Legal Proceeding if a Demand for Payment Remains Unsettled

If a dissenting shareholder and PNMR do not agree on the fair value of such shareholder’s shares of PNMR common stock within such 30-day period, then PNMR, within 30 days after receipt of written demand from any dissenting shareholder, given within 60 days after the date on which the merger was completed, will, or at its election at any time within such 60-day period may, file a petition in any court of competent jurisdiction in Bernalillo County, New Mexico asking that the fair value of such shares be determined. If PNMR fails to institute the proceeding as provided in the NMBCA, any dissenting shareholder may do so in the name of PNMR. All dissenting shareholders, wherever residing, will be made parties to the proceeding as an action against their shares of PNMR common stock. A copy of the petition will be served on each dissenting shareholder who is a resident of New Mexico and will be served by registered or certified mail on each dissenting shareholder who is a nonresident. Service on nonresidents will also be made by publication as provided by law. All dissenting shareholders who are parties to the proceeding will be entitled to judgment against PNMR for the amount of the fair value of their shares of PNMR common stock. The court may, if it so elects, appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The judgment will be payable to the holders of uncertificated shares immediately, but to the holders of shares represented by certificates only upon the surrender to PNMR of certificates. Upon payment of the judgment, the dissenting shareholder will cease to have any interest in such shares.

The judgment will include an allowance for interest at such rate as the court may find to be fair and equitable, in all the circumstances, from the date of the special meeting to the date of payment.

The costs and expenses of any such proceeding will be determined by the court and will be assessed against PNMR, but all or any part of the costs and expenses may be apportioned and assessed as the court deems equitable against any or all of the dissenting shareholders who are parties to the proceeding to whom PNMR will have made an offer to pay for such dissenting shareholders’ shares of PNMR common stock if the court will find that the action of such dissenting shareholders in failing to accept such offer was arbitrary or vexatious or not in good faith. Such expenses will include reasonable compensation for and reasonable expenses of the appraisers, but exclude the fees and expenses of counsel for and experts employed by any party; but if the fair value of such dissenting shareholders’ shares as determined materially exceeds the amount which PNMR offered to pay for such shares, or if no offer was made, the court in its discretion may award to any dissenting shareholder who is a party to the proceeding such sum as the court determines to be reasonable compensation to any expert employed by the dissenting shareholder in the proceeding, together with reasonable fees of legal counsel.

Withdrawal of Demand

You may not withdraw your demand unless PNMR consents to such withdrawal. If, however, your demand is withdrawn upon consent, or if the merger is abandoned or rescinded or the PNMR shareholders revoke the authority to effect the merger, or if no demand or petition for the determination of fair value by a court has been made or filed within the time provided in the NMBCA, or if a court of competent jurisdiction determines that you are not entitled to the relief provided by the NMBCA, then your right to be paid the fair value of your shares of PNMR common stock will cease and your status as a PNMR shareholder will be restored.

Beneficial Owners

Persons who beneficially own shares of PNMR common stock that are held of record in the name of another person, such as a bank, broker or other nominee, and who desire to have the right of dissent exercised as to those shares must submit to PNMR at or prior to the special meeting a written consent of the record holder of such shares and must otherwise comply with all of the actions required under the NMBCA to exercise and perfect such dissenters’ rights.

Financing of the Merger

The consummation of the merger is not subject to a financing condition.

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Avangrid has received a funding commitment letter, which we refer to as the funding commitment, from Iberdrola pursuant to which Iberdrola has agreed, subject to the conditions of the funding commitment, to provide to Avangrid, or arrange the provision to Avangrid of, funds to the extent necessary for Avangrid to consummate the merger, including the payment of the aggregate merger consideration.

The funding commitment and Iberdrola’s obligation thereunder will terminate automatically and immediately on the earlier to occur of (i) the termination of the merger agreement in accordance with its terms or (ii) the closing of the merger and payment of the aggregate merger consideration. Upon the valid termination of the funding commitment, Iberdrola will not have any further obligations or liabilities under the funding commitment.

PNMR is an express third party beneficiary of the funding commitment for the purpose of, in accordance with the terms and conditions of the merger agreement, seeking specific performance of Iberdrola’s obligations under the funding commitment.

Litigation Relating to the Merger

As of January 5, 2021, two lawsuits have been filed by purported shareholders of PNMR in the United States District Court for the Southern District of New York against PNMR and the members of the PNMR board. The lawsuits were brought by the plaintiffs individually and are captioned Stein v. PNM Resources, Inc., et al., No. 1:20-cv-10874 (S.D.N.Y. filed December 23, 2020), and Baker v. PNM Resources, Inc., et al., No. 1:20-cv-10965 (S.D.N.Y. filed December 28, 2020).

The complaints allege that PNMR and the individual defendants violated Section 14(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder because the preliminary proxy statement filed by PNMR with the SEC on December 18, 2020 allegedly contained materially incomplete and misleading information. The complaints further allege that the individual defendants violated Section 20(a) of the Exchange Act because they are in positions of control over those who allegedly violated Section 14(a) of the Exchange Act and SEC Rule 14a-9. The actions seek, among other things, to enjoin the merger or, if the merger has been consummated, to rescind the merger or an award of damages, and an award of attorneys’ and experts’ fees and expenses.

Although it is not possible to predict the outcome of litigation matters with certainty, PNMR believes that the claims raised in the actions are without merit and intends to defend against them vigorously. If additional similar lawsuits or demands are filed or made, absent new or different allegations that are material, neither PNMR nor Avangrid will necessarily announce them.

Delisting and Deregistration of PNMR Common Stock

If the merger is completed, PNMR common stock will be delisted from the NYSE and deregistered under the Exchange Act.

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INTERESTS OF PNMR’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER

In considering the recommendation of the PNMR board that you vote to approve the merger agreement, you should be aware that certain directors and executive officers of PNMR may have interests in the merger that are different from, or in addition to, the interests of PNMR shareholders generally. The PNMR board was aware of and considered these interests when it unanimously (i) determined that the merger consideration is fair, from a financial point of view, to PNMR’s shareholders, (ii) declared the merger agreement and the transactions contemplated by the merger agreement, including the merger, fair to, advisable, consistent with and in the best interests of PNMR and its shareholders and (iii) resolved to submit the merger agreement for consideration and approval by PNMR shareholders and recommend the approval of the merger agreement by PNMR shareholders.

Equity Compensation Awards

Treatment of Restricted Stock Rights

At the effective time of the merger, each outstanding award of PNMR restricted stock rights granted to a member of the PNMR board under the PNMR Stock Plan or otherwise (other than any restricted stock rights granted to a member of the PNMR board with respect to which such board member has made a deferral election under the Directors Deferred Restricted Stock Rights Program in which such board member participates) will cease to relate to or represent any right to receive PNMR common stock and will be converted into a right to receive an amount of cash per share equal to the merger consideration. These restricted stock cash payouts will be payable to the holders of the cancelled PNMR restricted stock rights on the same terms and conditions as were applicable to the corresponding cancelled PNMR restricted stock rights, including any applicable vesting acceleration provisions and payment timing provisions.

As of the effective time of the merger, (i) the Directors Deferred Restricted Stock Rights Program in which the PNMR directors participate will terminate, (ii) no PNMR director will be eligible to participate in such plan thereafter (except with respect to any outstanding PNMR restricted stock rights granted to an eligible PNMR director with respect to which such director, prior to the effective time of the merger, has made a deferral election under such plan, which PNMR restricted stock rights will be deferred into the such plan in accordance with the applicable deferral election), (iii) each share of PNMR common stock distributable under such plan will be converted into the right to receive the merger consideration, and (iv) PNMR will distribute to each participant the amounts credited to his or her account in such plan as soon as administratively practicable (and no later than 30 days) after the effective time of the merger to the extent permitted by applicable tax laws.

The following table sets forth the number of PNMR restricted stock rights held by PNMR’s directors as of December 31, 2020 and the value of these restricted stock rights based on the merger consideration, assuming that such rights are fully vested.

Name	Restricted Stock Rights (not deferred) (#)	Restricted Stock Rights (deferred) (#)	Total Value of Restricted Stock Rights⁽¹⁾ ($)
Vicky A. Bailey	3,124	—	157,137.20
Norman P. Becker	—	7,686	386,605.80
Renae E. Conley	—	3,124	157,137.20
Alan J. Fohrer	—	7,686	386,605.80
Sidney M. Gutierrez	3,124	—	157,137.20
James A. Hughes	—	5,342	268,702.60
Maureen T. Mullarkey	—	7,686	386,605.80
Donald K. Schwantz	3,124	—	157,137.20
Bruce W. Wilkinson	3,124	—	157,137.20

(1)	Calculated by multiplying the $50.30 merger consideration by the number of shares.

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rights relating to Avangrid common stock on the same terms and conditions as were applicable to the corresponding PNMR restricted stock rights, including any applicable vesting acceleration provisions and payment timing provisions, except as expressly adjusted by the merger agreement. The number of shares of Avangrid common stock covered by each such Avangrid cash-settled restricted stock right will equal the number (rounded up to the nearest whole number) of shares of PNMR common stock subject to the corresponding PNMR restricted stock right multiplied by the “equity conversion factor.” The “equity conversion factor” is equal to the merger consideration payable on a share of PNMR common stock divided by the average of the volume weighted averages of the trading prices of Avangrid common stock on the NYSE (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by the parties to the merger agreement) on each of the ten consecutive trading days ending on (and including) the trading day that immediately precedes the closing date of the merger. The cash amount to be paid on settlement of the Avangrid restricted stock rights will be determined based on the average of the volume weighted averages of the trading prices of Avangrid common stock on the NYSE (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source selected by Avangrid in good faith following consultation with officers of PNMR) on each of the ten consecutive trading days ending on (and including) the trading day that immediately precedes the date the Avangrid restricted stock rights become vested and payable.

The following table sets forth the number of PNMR restricted stock rights held by executive officers as of December 31, 2020 that will be converted into equivalent awards of cash-settled restricted stock rights relating to Avangrid common stock.

Name			Restricted Stock Rights (#)
Patricia K. Collawn			26,521
Charles N. Eldred			7,321
Joseph D. Tarry			2,175
Patrick V. Apodaca			4,030
Chis M. Olson			3,107
Ronald N. Darnell			3,052

Treatment of Performance Shares

Prior to the effective time of the merger, the PNMR board (or its applicable committee) will determine the number of shares of PNMR common stock that are deemed to be earned under each outstanding award of performance shares under the PNMR Stock Plan. This determination with respect to each award of performance shares will be based on the higher of the target level of performance and the actual level of performance determined on a goal-by-goal basis as of the last day of the last month ending before the effective time of the merger. As of the effective time of the merger, the number of earned performance shares so determined will cease to relate to or represent a right to receive PNMR common stock and will be converted into a right to receive a cash-settled time-vesting Avangrid restricted stock right, which will, provided the applicable service-based vesting conditions are satisfied, vest at the same time as the service-based vesting conditions of the corresponding PNMR performance shares would have been satisfied, and subject to the same vesting acceleration and payment timing provisions and other terms and conditions as applied to the corresponding PNMR performance shares, as applicable, except as expressly adjusted by the merger agreement. The number of shares of Avangrid common stock covered by each cash-settled time-vesting Avangrid restricted stock right will equal the product (rounded up to the nearest whole number) of the number of PNMR performance shares subject to the corresponding PNMR restricted stock right multiplied by the equity conversion factor. The cash amount to be paid on settlement of the Avangrid restricted stock rights will be determined based on the average of the volume weighted averages of the trading prices of Avangrid common stock on the NYSE (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source selected by Avangrid in good faith following consultation with officers of PNMR) on each of the ten consecutive trading days ending on (and including) the trading day that immediately precedes the date the Avangrid restricted stock rights become vested and payable.

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The following table sets forth the number of performance shares held by PNMR’s executive officers as of December 31, 2020 that may be converted at target and maximum levels into a right to receive cash-settled time-vesting Avangrid restricted stock rights.

Executive Officer	Target Performance Shares (#)	Maximum Performance Shares (#)
Patricia K. Collawn	114,656	229,314
Charles N. Eldred	34,094	68,190
Joseph D. Tarry	11,161	22,326
Patrick V. Apodaca	14,797	29,594
Chis M. Olson	12,101	24,206
Ronald N. Darnell	11,891	23,785

Payments Upon Termination Upon or Following the Closing of the Merger

PNMR’s executive officers are not party to individual change in control agreements or employment agreements. PNMR’s officer retention plan, or the Officer Retention Plan, provides PNMR’s executive officers with benefits if their employment is terminated by PNMR without “cause” or by the executive under circumstances giving rise to a “constructive termination” within 24 months following a change in control of PNMR (such as the merger) (each of which is referred to as a covered termination for the purposes of this section). The severance benefits that the executive officers are eligible to receive pursuant to the Officer Retention Plan include the following: (i) a lump sum severance payment equal to two times current eligible compensation, which includes base salary, any cash award paid as a merit increase in lieu of base salary and the average of the PNM Resources, Inc. Officer Annual Incentive Plan, or the annual incentive plan, awards for the three calendar years immediately preceding, for each executive officer, (ii) a pro rata award of the officer’s annual incentive based on the target award available under the applicable plan for the relevant performance period (unless the officer received the annual incentive plan payment or a payment in lieu of the annual incentive plan payment), (iii) benefits under PNMR’s medical, dental, vision, life and accidental death and dismemberment insurance benefits that are substantially similar to those received by the officer immediately prior to termination of employment for a period of 24 months and (iv) reimbursement of reasonable legal fees and expenses incurred as a result of termination of employment. PNMR does not provide a gross up for excise taxes and utilizes the “best net” approach.

A participant’s receipt of payments and benefits in the event of covered termination after a change in control is conditioned upon a full and effective release of any liability by PNMR to the participant and the participant’s execution of a restrictive covenant agreement. Pursuant to these restrictive covenant agreements, all executive officers are bound by non-competition and non-solicitation covenants for a period of 12 months from termination following a change in control. If an executive officer signs a restrictive covenant agreement, the executive officer will be compensated for the period of time during which the restrictions are in effect. If the executive officer does not sign the agreement in a timely manner, then the executive officer(s) will not be entitled to any benefits under the Officer Retention Plan. In addition, a breach of any of the covenants set forth in these restrictive covenant agreements will result in the forfeiture of any termination or change-in-control payments or benefits then still owing to the executive officer.

Under the Officer Retention Plan, “cause” means the participant’s (i) willful and continued failure to substantially perform his or her duties with PNMR after written demand for substantial performance is delivered to the participant which specifically identifies the manner in which the participant has not substantially performed his or her duties, (ii) willful failure to report to work for more than 30 days, (iii) willful engagement in conduct which is demonstrably and materially injurious to PNMR, monetarily or otherwise, including acts of fraud, misappropriation, violence or embezzlement for personal gain at the expense of PNMR, conviction of a felony, or conviction of a misdemeanor involving immoral acts or (iv) violation of any provision of his or her restrictive covenant agreement.

Under the Officer Retention Plan, a “constructive termination” generally means a voluntary separation by the participant under any of the following circumstances without the express written consent of the participant: (i) a failure to elect or reelect or otherwise to maintain the officer in the office or the position, or a substantially equivalent or better office or position, of or with PNMR which the officer held immediately prior to a change in

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control, or the removal of the officer as a member of the PNMR board (or any successor thereto) if the officer was a director of PNMR immediately prior to the change in control, (ii) a significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the officer’s position with PNMR, (iii) a 15% or more reduction in the aggregate of the executive officer’s base salary, and officer annual incentive plan award opportunity (calculated at the target level of performance) received from PNMR, (iv) a requirement that the participant relocate his or her principal location of work by more than 35 miles from such location immediately prior to the change in control, or (v) any material breach of the terms of the Officer Retention Plan by PNMR or any successor thereto. The participant must provide a notice describing the condition giving rise to constructive termination and must provide PNMR with an opportunity to cure such condition.

The PNMR Stock Plan contains a double trigger vesting following a change in control. Pursuant to the PNMR Stock Plan and the merger agreement, upon a qualifying change in control termination (which requires a termination of employment by PNMR for any reason other than cause, death, or disability or a termination by an officer due to constructive termination), all outstanding, unvested performance share awards, and all time-vested restricted stock right awards will vest.

PNMR also sponsors certain other plans in which PNMR’s officers participate that contain provisions that are triggered by a change in control (such as the merger). These include the PNM Resources, Inc. Executive Savings Plan II, which will be amended to provide for PNMR’s payment of a full supplemental credit (rather than a pro-rata supplemental credit) to each eligible participant for the year in which a change in control occurs if the named executive officer’s employment is terminated without “cause” or for “good reason.” Only Ms. Collawn and Mr. Darnell are eligible to receive supplemental credits under the Executive Savings Plan II. The PNM Resources, Inc. 2019 and 2020 Long-Term Incentive Plans will also be amended to provide that each officer will receive an award for service during the performance period prior to the change in control event equal to 100% of the award that the officer otherwise would have received, subject, in the case of performance awards, to the attainment of the relevant performance goals.

PNMR also maintains a severance plan. If an officer receives benefits under the Officer Retention Plan, severance benefits are not available to such officer under the severance plan.

In December 2020, the compensation committee of the PNMR board and the PNMR board, as contemplated by the merger agreement, took certain actions intended to (i) reduce the impact of an excise tax under Section 280G of the Code and (ii) preserve certain tax deductions for PNMR. Performance results and related annual cash bonus awards for the 2020 performance period were reviewed and approved on a preliminary basis by the compensation committee of the PNMR board (and, for Ms. Collawn by the independent members of the PNMR board) at its meeting in December 2020. Based on the performance results known at that time, the compensation committee (and, for Ms. Collawn, the independent members of the PNMR board) approved initial 2020 annual cash bonus of up to 178% of target levels, subject to any reductions deemed appropriate prior to payment by a subcommittee of the compensation committee (and, for Ms. Collawn, a subcommittee of the PNMR board). In late December 2020, the subcommittee of the compensation committee (and, for Ms. Collawn, the subcommittee of the PNMR board) approved reductions to the initial 2020 annual cash bonus awards. After reduction, the named executive officers received initial 2020 annual cash bonus awards paid out at 95% of the projected 158% target levels in late December 2020. The compensation committee of the PNMR board will review and certify the final 2020 corporate performance results against the annual incentive plan targets at its meeting in March 2021, and the named executive officers may earn final 2020 annual bonus awards, less the amounts previously paid to the named executive officers in December 2020, subject to the approval of the compensation committee of the PNMR board (and, for Ms. Collawn, the independent members of the PNMR board). Any final 2020 cash awards under the 2020 annual incentive plan will be paid in the first quarter of 2021.

In addition, at a December meeting, the compensation committee of the PNMR board (and, for Ms. Collawn by the independent members of the PNMR board) approved the payment of a cash lump sum in 2020 for Ms. Collawn, Mr. Eldred and Mr. Apodaca in lieu of participating in the 2021 annual cash bonus plan. Further, the PNMR board approved an amendment to the 2020 performance shares granted under the 2020 Long-Term Incentive Plan to provide for immediate performance share award payments to Ms. Collawn, Mr. Eldred and Mr. Apodaca upon their termination of employment with PNMR following the successful closing of the merger.

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Golden Parachute Compensation

The information below sets forth the information required by Item 402(t) of the SEC’s Regulation S-K regarding compensation that is based on, or otherwise relates to, the merger for each “named executive officer” of PNMR. The plans or arrangements pursuant to which such payments would be made (other than the merger agreement), consist of the annual incentive plan, the Officer Retention Plan, the PNM Resources, Inc. Executive Savings Plan II, the PNM Resources, Inc. Long-Term Incentive Plan, the PNMR Stock Plan and the respective equity awards specifying the terms and conditions of each such award. With respect to PNMR’s named executive officers, no changes were made in the terms and conditions of such plans or the equity awards, other than as specified in the merger agreement and described in the section entitled “The Merger Agreement—Treatment of PNMR Restricted Stock Rights, Performance Shares, Direct Plan, and Directors Deferred Plan.” Throughout this discussion, the following individuals are referred to collectively as the named executive officers of PNMR:

•	Patricia K. Collawn—Chairman, President and Chief Executive Officer;

•	Charles N. Eldred—Executive Vice President, Corporate Development and Finance (served as Chief Financial Officer through January 21, 2020);

•	Joseph D. Tarry—Senior Vice President and Chief Financial Officer

•	Patrick V. Apodaca—Senior Vice President, General Counsel and Secretary;

•	Ronald N. Darnell—Senior Vice President, Public Policy; and

•	Chris M. Olson—Senior Vice President, Utility Operations.

The potential payments in the table below are based on the following assumptions:

•	the closing date of the merger is December 31, 2020, which is the estimated date of the completion of the merger solely for purposes of this golden parachute compensation disclosure; and

•	the named executive officers of PNMR are terminated without “cause” immediately following the assumed closing date of the merger on December 31, 2020.

The amounts shown are estimates of amounts that would be payable to the named executive officers based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement. Some of the assumptions are based on information not currently available and, as a result, the actual amounts received by a named executive officer may differ materially from the amounts shown in the following table. See “—Executive Officers Positions with PNMR Following the Merger” below for more information.

The following tables, footnotes and discussion describe double-trigger benefits for the named executive officers, except where noted. For purposes of this discussion, “double-trigger” refers to benefits that require two conditions, which are the completion of the merger as well as a covered termination within two years following the completion of the merger. The employment of each of Ms. Collawn, Mr. Eldred and Mr. Apodaca will be terminated as of the effective time of the merger.

Golden Parachute Compensation

Patricia K. Collawn

9,066,706

9,904,875<

PNM

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