AEI sells operating assets for $4.8B; streamlines focus to smaller power generation business

Source: AEI

AEI announced that it has embarked upon a major restructuring and repositioning of the company. “After AEI withdrew its initial public offering in October 2009, the company and its shareholders began evaluating strategic alternatives for the business,” said Jim Hughes, CEO of AEI. “This was a clean sheet exercise that evaluated all available alternatives. We concluded that AEI should sell the vast majority of its regulated assets, return the capital to our shareholders, and plan to reorganize the company around a smaller business focused on power generation.” 

Accordingly, AEI is pleased to announce it has agreed to sell its interests in 10 operating companies to nine separate parties for USD $4.8 billion, representing 80% of AEI’s total assets. The initial funds received will be used to repay financial debt and PIK notes. The remaining cash is expected to be distributed following closing of the transactions, providing for the funding of equity capital needs of various greenfield generation projects, and after deducting taxes, transaction, and transition costs. AEI is planning to reorganize the company around its core power generation assets, subject to final shareholder approval. The resulting company will be a robust business with significant opportunities for creation of additional shareholder value. 

The transactions are expected to close in the coming months following required regulatory and third party consents. The transactions include: 

1. Sale of 99.68% of Elektro in Brazil to Iberdrola; 

2. Sale of 52.13% of Promigas in Colombia to Corporacion Financiera Colombiana S.A.(”Corficolombiana”), Fondo de Capital Privado Corredores Capital I, Fondo de Capital Privado por Compartimenos CP-Val, and Empresa de Energia de Bogota S.A. E.S.P. (“EEB”); 

3. Sale of 60% of Calidda in Peru to EEB; 

4. Sale of 50% of Chilquinta in Chile and 37.97% of Luz del Sur in Peru to Sempra Pipelines & Storage; 

5. Sale of 51% of ENSA in Panama and 86.41% of DelSur in El Salvador to Empresas Públicas de Medellin E.S.P. (“EPM”); 

6. Sale of 90% of EDEN, 77.1% of EMDERSA, and certain other assets, all in Argentina, to Pampa Energia S.A.; and, 

7. Sale of 100% of ENS in Poland to Kulczyk Group. 

“With these transactions and the value retained in the continuing business, the shareholders stand to realize total value for the company which is a significant increase over the proposed offering price for the unsuccessful initial public offering a year ago,” said Hughes. 

The company expects to reorganize around its remaining assets in Asia, Central America and the Caribbean, and South America, and will continue as planned with power plant development projects in Guatemala, Peru, Argentina, Chile, and China. This business will represent approximately 2,236 MW of operating facilities with approximately $190 mm of Proportional EBITDA and $400 mm of Proportional Net Debt as of December 31, 2010. In addition, the business will have compelling growth opportunities with over 1,000 MW in near term projects under development and over 2,000 MW of mid to long-term development opportunities. The operating assets are high quality businesses with demonstrated track records of operational and commercial success and an emphasis on clean energy. The new business will benefit from the inherited systems and process infrastructure of AEI, with a right-sized headquarters and experienced local management teams. 

Goldman, Sachs, & Co. and Banco Itau acted as financial advisors to AEI. 

AEI owns and operates essential energy infrastructure businesses in emerging markets diversified across four core business segments - Power Distribution, Power Generation, Natural Gas Transportation and Services, and Natural Gas Distribution - within five regions - Andean, Southern Cone, Central America/Caribbean, China, and Europe/Middle East/North Africa. AEI is currently in the process of divesting substantially all of its regulated assets.



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