AES Announces Agreement to Acquire 18.5% Interest in AES Tietê, Increasing Ownership to 43%

Rhea-AI Summary

The AES Corporation announced an agreement for its subsidiary AES Holdings Brazil to acquire an 18.5% economic interest in AES Tietê S.A. for BRL 1.27 billion ($246 million). This transaction, funded through secured non-recourse debt, is expected to be accretive to AES' annual earnings by $0.01 to $0.02 per share in 2020 and beyond. Post-acquisition, AES will own 42.85% of AES Tietê, enhancing its renewable portfolio and advancing its decarbonization goals. The company plans to migrate AES Tietê to the Novo Mercado for better liquidity and governance.

Positive

• Transaction valued at BRL 1.27 billion ($246 million) is expected to boost annual earnings by $0.01 to $0.02 per share.
• Increases AES' ownership in AES Tietê to 42.85%, reinforcing commitment to renewable energy and decarbonization.
• Transition to Novo Mercado expected to enhance governance, liquidity, and shareholder value.

Negative

• None.

ARLINGTON, Va., July 29, 2020 /PRNewswire/ -- The AES Corporation announced today that its wholly-owned subsidiary, AES Holdings Brazil Ltda's (AES Brasil) has agreed to acquire an 18.5% economic interest in AES Tietê S.A from BNDES Participações S.A.'s (BNDESPar).  Under the terms of the acquisition, AES Brasil will purchase for a total consideration of BRL $1.27 billion (equivalent to $246 million).  This transaction will be funded primarily with already secured non-recourse debt financing from a consortium of Brazilian banks.  This acquisition is expected to be $0.01 to $0.02 per share accretive to AES' annual earnings in 2020 and thereafter.

Once this transaction closes, AES will own 42.85% of the shares of AES Tietê.  This transaction will strengthen AES' renewable portfolio and reinforces the substantial progress the Company is making toward achieving its aggressive decarbonization targets.  Following closing, AES will propose the migration of AES Tietê to the Novo Mercado, the listing class with the highest governance level on the Brazilian stock market, in order to gain greater liquidity and value for the shares.

"By increasing our ownership in AES Tietê's 3.7 GW platform of renewables, we are reinforcing our commitment to reduce our total generation from coal to less than 30%," said Andrés Gluski, AES President and Chief Executive Officer.  "Following this transaction, we plan to move AES Tietê's listing to the Novo Mercado, the highest corporate governance segment of companies listed on the Brazilian stock exchange, which is expected to further unlock the value of AES Tietê for the benefit of all shareholders."

As a part of this transaction, AES Brazil will buy 73.8 million units (five shares per unit) of AES Tietê at BRL $17.15 per unit, for total of BRL $1.27 billion.  This transaction is subject to completion of final documentation and is expected to close in the third quarter of 2020. 

AES Tietê has 3.7 GW of renewable generation in operation or under construction, consisting of 2.7 GW of hydro, 708 MW of wind and 310 MW of solar.

About AES

The AES Corporation (NYSE: AES) is a Fortune 500 global power company.  We provide affordable, sustainable energy to 14 countries through our diverse portfolio of distribution businesses as well as thermal and renewable generation facilities.  Our workforce is committed to operational excellence and meeting the world's changing power needs.  Our 2019 revenues were $10 billion and we own and manage $34 billion in total assets.  To learn more, please visit www.aes.com.  Follow AES on Twitter @TheAESCorp.

Safe Harbor Disclosure

This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES' current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to, our expectations regarding the COVID-19 pandemic, accurate projections of future interest rates, commodity price and foreign currency pricing, continued normal levels of operating performance and electricity volume at our distribution companies and operational performance at our generation businesses consistent with historical levels, as well as the execution of PPAs, conversion of our backlog and growth investments at normalized investment levels and rates of return consistent with prior experience.

Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES' filings with the Securities and Exchange Commission (the "SEC"), including, but not limited to, the risks discussed under Item 1A: "Risk Factors" and Item 7: "Management's Discussion & Analysis" in AES' 2019 Annual Report on Form 10-K and in subsequent reports filed with the SEC. Readers are encouraged to read AES' filings to learn more about the risk factors associated with AES' business. AES undertakes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

Any Stockholder who desires a copy of the Company's 2019 Annual Report on Form 10-K filed February 27, 2020 with the SEC may obtain a copy (excluding Exhibits) without charge by addressing a request to the Office of the Corporate Secretary, The AES Corporation, 4300 Wilson Boulevard, Arlington, Virginia 22203. Exhibits also may be requested, but a charge equal to the reproduction cost thereof will be made. A copy of the Form 10-K may be obtained by visiting the Company's website at www.aes.com.

 

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SOURCE The AES Corporation

FAQ

What is the value of the AES acquisition of AES Tietê?

The acquisition is valued at BRL 1.27 billion, approximately $246 million.

When is the AES acquisition of AES Tietê expected to close?

The acquisition is expected to close in the third quarter of 2020.

How will the AES acquisition affect earnings?

The acquisition is anticipated to be accretive to annual earnings by $0.01 to $0.02 per share in 2020 and beyond.

What percentage of AES Tietê will AES own after the acquisition?

After the acquisition, AES will own 42.85% of AES Tietê.

What are AES's plans for AES Tietê post-acquisition?

AES plans to migrate AES Tietê to the Novo Mercado for improved liquidity and governance.