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Item 1.01
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Entry into a Material Definitive Agreement.
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On February 24, 2017, The
AES Corporation (the “Company” or “AES”) and Alberta Investment Management
Corporation (“AIMCo”), on behalf of certain of its clients, announced that certain of their subsidiaries and
affiliates, as applicable, had entered into a definitive merger agreement on February 19, 2017 (the “Agreement”)
pursuant to which the Company and AIMCo will acquire FTP Power LLC d/b/a sPower (“sPower”) for $853 million in
cash, subject to adjustment, plus the assumption of $724 million in sPower’s non-recourse debt. The majority member of
sPower, an affiliate of Fir Tree Partners (“the Majority Member”), is also party to the Agreement. In connection
with the transaction, each of the Company and AIMCo will directly and independently purchase and own slightly below 50% of
sPower. A portion of the acquisition will be funded with $90 million of subordinated debt to sPower, and the remaining amount
of $763 million will be funded with equity from AES and AIMCo in equal proportion. The sPower portfolio includes 1,274 MW of
solar and wind projects in operation or under construction and a development pipeline of more than 10,000 MW located in the
United States.
The Agreement includes
customary representations, warranties and covenants by the parties. Closing of the transaction is subject to conditions,
including expiration of any waiting period under the Hart-Scott-Rodino Act, approval of the Federal Energy Regulatory
Commission, approval of the Committee on Foreign Investment in the United States (CFIUS) under the Defense Production Act,
receipt of certain third party consents and the satisfaction of other customary conditions. Closing of the transaction is
expected by the third quarter of 2017.
The parties have agreed to indemnify each
other for breaches of representations, warranties and covenants and for certain other matters, subject to certain exceptions and
limitations. The Agreement contains certain termination rights for the parties, including if the closing does not occur by December
31, 2017, which date may be automatically extended under certain circumstances. Under certain circumstances, the Company may be required to incur a reverse termination fee as set forth in the Agreement.
The joint press release by the Company and
AIMCo announcing the transaction is attached as Exhibit 99.1 hereto and is incorporated herein by reference.
Safe Harbor Disclosure
This Current Report on Form 8-K (this “Form
8-K”) contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, and of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements include, but are not limited to, statements regarding the expected
timetable for completing the proposed transaction, sPower’s projects under development, the Company’s future cash flows,
improvement in the Company’s credit metrics and growth of the Company’s dividend. Forward-looking statements are not
intended to be a guarantee of future results, but instead constitute AES’ current expectations based on reasonable assumptions.
Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to, our
accurate projections of future interest rates, commodity price and foreign currency pricing, continued normal levels of operating
performance and electricity volume at our distribution companies and operational performance at our generation businesses consistent
with historical levels, as well as achievements of planned productivity improvements and incremental growth investments at normalized
investment levels and rates of return consistent with prior experience.
Actual results could differ materially from
those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect
actual results are discussed in AES’ filings with the Securities and Exchange Commission (the “SEC”), including,
but not limited to, the risks discussed under Item 1A “Risk Factors” and Item 7: Management’s Discussion &
Analysis in AES’ 2015 Annual Report on Form 10-K and in subsequent reports filed with the SEC. Readers are encouraged to
read AES’ filings to learn more about the risk factors associated with AES’ business. AES undertakes no obligation
to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Any Stockholder who desires a copy of the
Company’s 2015 Annual Report on Form 10-K dated on or about February 23, 2016 with the SEC may obtain a copy (excluding Exhibits)
without charge by addressing a request to the Office of the Corporate Secretary, The AES Corporation, 4300 Wilson Boulevard, Arlington,
Virginia, 22203. Exhibits also may be requested, but a charge equal to the reproduction cost thereof will be made. A copy of the
Form 10-K may also be obtained by visiting the Company’s website at www.aes.com.