AES Announces Steps to Eliminate Dependence On Capital Markets and Strengthen Balance Sheet; Also Unveils New Strategy to Reposition the Company.

Business Editors

ARLINGTON, Virg.--(BUSINESS WIRE)--Feb. 19, 2002

The AES Corporation (NYSE: AES) announced today that it has made additional, significant cuts in capital expenditures and other spending.

As a result, AES currently expects that it will not be necessary to access the capital markets in 2002 for additional parent capital. By taking these actions, AES is positioning itself to rely on its internally generated cash flows to fund operations, rather than being dependent on the currently uncertain capital markets. In addition, AES is in the process of selling certain assets that would provide approximately $1 - $1.5 billion of additional cash.

AES has reduced planned capital spending by $490 million in 2002. The bulk of these reductions come from the elimination or curtailment of spending on a number of AES's projects in construction. Additional actions include the planned sales of: (1) Cilcorp, an integrated utility in Illinois, for which agreements with a buyer are expected to be executed in April; (2) a minority interest in Ipalco, an integrated utility in Indiana; (3) AES's interest in Itabo, a coal-fired power facility in the Dominican Republic, for which agreements with a buyer are expected to be executed in March; and (4) certain other AES plants.

In addition, AES announced it intends to reposition itself in the electric business by fully contracting or divesting its merchant generation businesses, as well as reduce its concentration of businesses in Latin America through sales of all or part of its interests in certain businesses. This decision was made to reduce earnings volatility and strengthen the balance sheet.

Dennis W. Bakke, President and Chief Executive Officer, commented, "We are taking aggressive action to restructure and deleverage AES. Given today's market climate we are going to rely on the cash flows of our solid operating businesses. We have taken additional steps to provide a more substantial liquidity cushion. We believe the actions we have announced will provide for a more conservative business model."

Roger W. Sant, Chairman, stated, "The Board of Directors has unanimously approved this plan to deleverage AES and position us for the future. The cutbacks in construction capital expenditures, the accelerated sale of businesses and selective project financings leave us stronger from a cash perspective with expected results in the short term. All of these steps are being taken in parallel with the cost-cutting efforts of AES businesses around the world. We believe these steps will leave us with a better-capitalized and stronger company with less earnings volatility. AES in the future will be less concentrated in Latin America and have greater emphasis on contract generation."

As a consequence of the recent drop in the price of AES's common shares, margin calls in connection with personal loans of 3 officers of AES have led to common stock transactions to satisfy such loans. Most notably, Mr. Bakke has entered into a transaction for the sale of up to 7,000,000 shares to satisfy a loan of approximately $36 million. Other officer sales in the aggregate are expected to be less than 500,000 shares.

Investor Call

AES will address the details of the information provided in this release in a webcasted investor conference call that will be held at 9:00 a.m. (Eastern Time) on Tuesday, February 19, 2002 as previously announced. Contact information about that February 19 call was announced in a Friday, February 15, 2002 press release and is posted on our website. Also, please note that a powerpoint presentation, entitled "AES Investor Call", will also be posted on our website in the investor relations section under presentations.

The company's generating assets include interests in one hundred and eighty one facilities totaling over 63 gigawatts of capacity. AES's electricity distribution network has over 946,000 km of conductor and associated rights of way and sells over 135,000 gigawatt hours per year to over 19 million end-use customers. In addition, through its various retail electricity supply businesses, the company sells electricity to over 154,000 end-use customers.

AES is dedicated to providing electricity worldwide in a socially responsible way.

This news release may include forward-looking statements. Actual events and results may differ materially from those projected. Factors that could affect actual results are discussed in AES's filings with the Securities and Exchange Commission, and readers are encouraged to read those filings to learn more about the risk factors associated with AES's businesses.

For more general information visit our web site at www.aesc.com or contact investor relations at [e-mail].