Fitch: AES' Ratings Unaffected on Preliminary Agreement to Sell EDC.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- The AES Corporation (NYSE NYSE See: New York Stock Exchange :AES) announced a preliminary agreement to sell its 82.14% interest in La Electricidad de Caracas (EDC EDC See: Export Development Corp. ) to the government of Venezuela for $739.2 million. The announcement follows on the heels of the Chavez government's pronouncement to nationalize na·tion·al·ize tr.v. na·tion·al·ized, na·tion·al·iz·ing, na·tion·al·iz·es 1. To convert from private to governmental ownership and control: nationalize the steel industry. 2. key industries including electricity and telecommunications. EDC has been a key source of cash flow for AES, representing one of the ten largest sources of distributions to the parent company. At the same time, Venezuela has been a challenging environment in which to operate for some time. As such, EDC's contribution to AES's credit profile has been less than simply its pro rata [Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share. In a Bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. share of cash flows to the parent company. Given the diversity of cash flow sources for AES, Fitch does not believe the loss of even the 6% or 7% that EDC represented of total cash flows would, by itself, be sufficient to cause a material change in AES' credit profile. Finally, from a portfolio perspective, the sale of EDC will help to realign the company's portfolio to a more balanced mix of businesses. To date, AES has made no announcements as to anticipated use of proceeds. Fitch would expect that management will use the proceeds to retire parent company debt and/or redeploy in new investments. AES is one of the world's largest global power companies, with 2005 revenues of $11 billion. With operations in 26 countries on five continents, the company's 14 regulated utilities amassed 2005 annual sales of over 82,000 GWh and its 121 generation facilities have the capacity to generate approximately 44,000 megawatts. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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