AES Eletropaulo, Uruguaiana, Tiete reach restructuring agreement

New York, Jan. 1 - AES Corp. said several of its Brazilian subsidiaries have reached agreements to restructure $2.3 billion of non-recourse debt.

The agreements, affecting AES Eletropaulo, AES Uruguaiana and AES Tiete, follow negotiations with Brazil's Banco Nacional de Desenvolvimento Economico e Social (BNDES) and with private creditors.

Under documentation signed with BNDES, AES and BNDES have created a new company called Brasiliana Energia, which will hold AES' direct and indirect interests in AES Eletropaulo, AES Uruguaiana and AES Tiete. AES Sul will be contributed upon the successful completion of its financial restructuring.

AES will own 50.1% of Brasiliana Energia's voting shares while BNDES will own 49.9% of the common shares plus non-voting preferred shares that will provide BNDES with 53% of the total capital of Brasiliana Energia.

AES' equity interests in AES Eletropaulo, AES Uruguaiana and AES Tiete together with $90 million contributed by AES and its Brazilian subsidiaries will be applied to reduce the debt owed to BNDES to $510 million from $1.2 billion.

The remaining $510 million, which is still non-recourse to AES, will be payable over 11 years.

Closing is subject to approval from Agencia Nacional de Energia Eletrica (ANEEL) and the Brazilian Central Bank, both of which are expected to be received by the end of January.

AES, an Arlington, Va., power company, also said that Eletropaulo had reached agreement with its private creditors to reschedule 2.3 billion reais ($787 million) of outstanding debt over the next five years.

The agreement resolves all outstanding defaults and accelerations with its operating company lenders.

Under the restructuring, 70% of the reprofiled debt will be denominated in Brazilian reais instead of 34%, bringing the total for all of Eletropaulo's debt to 75% in reais, up from 58%. Closing is subject to completion of definitive documentation by Feb. 16.

AES Tiete Holding Ltd., through its subsidiary AES IHB Cayman Ltd., has obtained the necessary consents from holders of its $300 million principal amount of 11.5% trust certificates due December 2015 for the transaction with BNDES and to restructure various payment terms of the obligations.

"With the completion of these transactions, we now have a sustainable capital structure for our Brazilian businesses," said Joseph C. Brandt, executive vice president and chief operating officer of AES, in a news release.

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