Fitch Views AES Corp.'s IPALCO Purchase As Positive; Rtgs Affirmed.Business Editors NEW YORK--(BUSINESS WIRE)--July 17, 2000 Fitch views The AES Corp.'s (AES) announced agreement to acquire IPALCO IPALCO Indianapolis Power and Light Company Enterprises, Inc. (IPALCO) as having positive credit implications for AES bondholders. Existing AES ratings are affirmed reflecting an initial assessment by Fitch of the announced acquisition of IPALCO whose primary subsidiary is the regulated electric utility, Indianapolis Power & Light Co. (senior secured debt rated `AA+' by Fitch). The transaction is valued at approximately $3 billion and is expected to be completed in early 2001. The Rating Outlook is Stable. The purchase, accounted for as a pooling-of-interests, will consist of approximately $2.15 billion in AES stock and the assumption of $890 million of IPALCO debt and preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. by AES. IPALCO will be merged into a special purpose subsidiary, and then become a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of AES. The current capital structure of IPALCO is not expected to be altered, as no additional debt will be incurred in the transaction. The acquisition is subject to approval by IPALCO shareholders and various regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities . The acquisition of IPALCO will significantly increase and diversify total cash flow to AES. Moreover, the stable cash flows from this highly rated U.S. entity help to mitigate some concerns about the company's growth in lesser-developed countries. IPALCO's generating assets are largely coal- fired, baseload facilities that are environmentally compliant and extremely cost efficient to operate. In addition, this acquisition is funded with stock rather than debt at either the project or parent level, therefore dividends will be upstreamed to the parent company unencumbered Unencumbered Property that is not subject to any creditor claims or liens. Notes: For example, if a house is owned free and clear (meaning the owner owes no mortgage to anyone), it is unencumbered. by additional fixed charges and provide support to outstanding AES debt obligations. Furthermore, there is the potential for additional growth in generation related projects in the IPALCO geographic region. AES ratings are affirmed as follows: $850 million corporate revolving bank loan at `BB+', $950 million in senior unsecured notes at `BB+', $1.1 billion in senior subordinated notes at `BB', $150 million convertible junior subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before at `B+' and $1.4 billion in term convertible and trust convertible securities, issued by AES Trusts II, III and VII at `B+'. Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in 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 and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA IBCA International Braille Chess Association IBCA Institute of Burial and Cremation Administration IBCA Integrated Business Communications Alliance IBCA International Barbeque Cookers Association IBCA Department of Interior Board of Contract Appeals and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide. |
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