SUBJECT TO COMPLETION, DATED JULY 20, 1998
PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(b)(3)
(To Prospectus Dated November 19, 1997) Registration No. 333-39857
6,500,000 SHARES
[GRAPHIC OMITTED]
THE AES CORPORATION
COMMON STOCK
($.01 PAR VALUE)
------------
All of the 6,500,000 shares of Common Stock, $.01 par value (the "Common
Stock"), of The AES Corporation ("AES" or the "Company"), offered hereby are
being sold by the Company. The Common Stock is listed on the New York Stock
Exchange ("NYSE") under the symbol "AES". On July 20, 1998, the closing price
for the Common Stock, as reported by the NYSE, was $50 per share. See "Common
Stock Price Ranges and Dividends".
The offering of the Common Stock (the "Offering") is being conducted
concurrently with an offering by the Company of $200.0 million aggregate
principal amount of % Convertible Junior Subordinated Debentures due 2005 (the
"Debenture Offering"). The consummation of the Offering is not contingent upon
the consummation of the Debenture Offering.
SEE "RISK FACTORS" ON PAGE 5 OF THE ACCOMPANYING PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS
IN THE COMMON STOCK OFFERED HEREBY.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- --------------------------------------------------------------------------------
Per Share $ $ $
- --------------------------------------------------------------------------------
Total(3) $ $ $
================================================================================
(1) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting".
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted the Underwriters an option, exercisable within 30
days after the date of this Prospectus Supplement, to purchase up to an
additional 975,000 shares of Common Stock, on the same terms as set forth
above, solely to cover over-allotments, if any. If the Underwriters
exercise such option in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting".
------------
The shares of Common Stock are being offered by the several Underwriters
named herein, subject to prior sale, when, as and if accepted by them and
subject to certain conditions. It is expected that certificates for the shares
of Common Stock offered hereby will be available for delivery on or about ,
1998, at the office of Smith Barney Inc., 333 West 34th Street, New York, New
York 10001.
------------
SALOMON SMITH BARNEY J.P. MORGAN & CO.
------------
DONALDSON, LUFKIN & JENRETTE
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
C.E. UNTERBERG, TOWBIN
, 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING OR THE CONCURRENT DEBENTURE
OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT
THE PRICE OF THE COMMON STOCK, INCLUDING STABILIZING AND SYNDICATE COVERING
TRANSACTIONS AND THE IMPOSITION OF A PENALTY BID. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING".
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements under the captions "The Company", "Risk Factors",
"Discussion and Analysis of Financial Condition and Results of Operations" and
"Business" included or incorporated by reference in the accompanying Prospectus
and elsewhere in this Prospectus Supplement and the accompanying Prospectus
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 ("Reform Act"). Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance and achievements of AES, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among other things, the following factors, as
well as those factors discussed in the section entitled "Risk Factors" in the
accompanying Prospectus and those discussed elsewhere in AES's filings with the
Securities and Exchange Commission (the "Commission"), including: changes in
company-wide operation and availability compared to AES's historical
performance; changes in AES's historical operating cost structure, including
changes in various costs and expenses; political and economic considerations in
certain non-U.S. countries where AES is conducting or is seeking to conduct
business; restrictions on foreign currency convertibility and remittance abroad,
exchange rate fluctuations and developing legal systems; regulation and
restrictions; legislation intended to promote competition in U.S. and non-U.S.
electricity markets; tariffs; governmental approval processes; environmental
matters; construction, operating and fuel risks; load growth, dispatch and
transmission constraints; conflict of interest of contracting parties; and
adherence to the AES principles; and other factors referenced in this Prospectus
Supplement and in the accompanying Prospectus. See "Risk Factors" in the
accompanying Prospectus.
S-2
<PAGE>
RECENT DEVELOPMENTS
In May, subsidiaries of AES completed the purchase of three electric
generating stations from Southern California Edison ("Edison") for approximately
$781 million. In connection with the acquisition, the Company obtained $713
million of non-recourse project financing. AES Alamitos (Long Beach), AES
Redondo Beach and AES Huntington Beach all fire natural gas with a combined
summer peak generating capacity of 3,956 megawatts ("MW"). AES has contracted to
provide fuel conversion services from the facilities to Williams Energy Services
Company ("Williams"). Under the long term agreement, Williams delivers gas to
the plants and owns and markets the electrical output. Project debt financing
for the acquisition was provided by a syndicate of banks led by Credit Suisse
First Boston. Pursuant to California's electricity restructuring law, Edison
will remain under contract to operate and maintain the facilities for two years,
after which AES will assume operations.
In June, a subsidiary of the Company raised $173 million of non-recourse
project financing for the $230 million AES M-rida III 484 MW gas-fired combined
cycle power plant currently under construction in the City of M-rida, Yucat-n,
Mexico. When constructed and in operation, the new facility will provide power
to the state utility in Mexico, Comisi-n Federal de Electricidad, under a 25
year power purchase agreement.
In June, a subsidiary of AES was selected by the Bangladesh Power
Development Board as the First-Ranked Sponsor to build, own and operate a 450 MW
(net) gas-fired combined cycle power plant at a site 12 miles southeast of
Dhaka, Bangladesh on the Meghna River (the "Meghnaghat Project"). The site is
about 3 miles from AES's Haripur project, a 360 MW gas-fired plant that is
currently under development. AES was awarded the Haripur project in January
1998. Electricity from the Meghnaghat Project is anticipated to be sold to the
Bangladesh Power Development Board under the terms of a 22 year power purchase
agreement, which is expected to be signed shortly. Commercial operations of the
Meghnaghat plant is expected to commence in the year 2000. Titus Gas
Transmission and Distribution Company, a subsidiary of Petrobangla, will supply
natural gas to the facility from a nearby pipeline for the term of the power
purchase agreement.
In June, a subsidiary of AES acquired 90% of Empresa Distribuidora de La
Plata S.A. ("EDELAP"), an electric distribution company in the province of
Buenos Aires, Argentina for approximately $350 million from a joint venture of
Houston Industries Energy, Inc. and a subsidiary of Techint S.A., an Argentine
industrial firm. EDELAP serves approximately 278,000 customers in and around the
city of La Plata, the capital of Buenos Aires Province. A $193 million
non-recourse loan was provided by Citibank for a portion of the purchase price.
The balance of the purchase price was financed through a $165 million bridge
loan to a subsidiary of AES provided by an affiliate of Salomon Brothers Holding
Company Inc. (the "EDELAP Bridge"). Salomon Brothers Holding Company Inc. is
also an affiliate of Salomon Smith Barney, a joint managing underwriter of the
Offering.
In July, two subsidiaries of AES, AES Lal Pir Limited ("AES Lal Pir") and
AES PakGen (Pvt) Company ("AES PakGen"), received "Notices of Intent to
Terminate" certain project agreements from the Government of Pakistan. AES Lal
Pir is a 351 MW (net) oil-fired thermal power plant located in the Punjab
Province of Pakistan. AES PakGen is a 344 MW (net) oil-fired thermal power plant
located adjacent to AES Lal Pir. The notices issued to these projects assert
that AES's subsidiaries made inaccurate anti-corruption representations to the
Government of Pakistan. AES believes that these notices are similar to notices
received by other independent power producers in Pakistan. AES strongly denies
the allegations made in the Notices of Intent to Terminate and intends to
vigorously pursue all available legal options to enforce and preserve its
contractual rights under the project agreements. Despite these notices, both
plants continue to operate normally and the customer, the Pakistan Water and
Power Development Authority, has continued to make its payments within the grace
period provided for in the contract.
S-3
<PAGE>
USE OF PROCEEDS
The net proceeds from this Offering are estimated to be approximately
$ million ($ million if the Underwriters' overallotment option
is exercised in full). The Company currently intends to use approximately $166
million of the net proceeds of the Offering and the concurrent Debenture
Offering to repay all amounts outstanding under the EDELAP Bridge, which was
incurred to finance the acquisition of EDELAP. The remaining net proceeds will
be used for general corporate purposes, including potential acquisitions, and to
repay amounts under the Company's $600 million corporate revolving credit
facility (the "Revolver").
The interest rate on the EDELAP Bridge is initially equal to LIBOR plus
2.5% and will increase by 1.0% each month beginning January 1, 1999. The EDELAP
Bridge is secured by a pledge of 8.4 million shares of Common Stock issued to
the borrower. The sale of a substantial number of such shares in the public
market upon any foreclosure or otherwise could have an adverse effect on the
market price of the Common Stock. The EDELAP Bridge matures on June 29, 1999 and
is required to be prepaid out of the proceeds of certain debt or equity
issuances by AES, including the Offering. AES may seek a waiver of such
prepayment requirement, and if granted, AES will use the net proceeds of the
Offering for general corporate purposes, including potential acquisitions, and
initially may temporarily invest such proceeds in short-term securities.
Amounts outstanding under the Revolver bear interest at either the Base
Rate (equal to the higher of Morgan Guaranty Trust Company of New York's prime
rate or the federal funds rate plus 0.50%) or LIBOR plus 1.50% and mature on
December 19, 2000. An affiliate of J.P. Morgan Securities Inc., a joint managing
underwriter of the Offering, is a lender under the Revolver.
S-4
<PAGE>
COMMON STOCK PRICE RANGES AND DIVIDENDS
The Common Stock began trading on the New York Stock Exchange ("NYSE") on
October 16, 1996 under the symbol "AES". Prior to that date, the Common Stock
had been quoted on the NASDAQ National Market System ("NASDAQ/NMS") under the
symbol "AESC". The following table sets forth for the periods indicated the high
and low sale prices for the Common Stock as reported on the NYSE Composite Tape
and by NASDAQ/NMS. In July 1997, AES announced a two-for-one stock split, in the
form of a stock dividend, for holders of record on July 28, 1997 of its Common
Stock, paid on August 28, 1997. The prices set forth below reflect adjustment
for such stock split.
HIGH LOW
---- ---
1996
- ----
First Quarter ............................................ $ 12.63 $ 10.50
Second Quarter .......................................... 14.81 11.13
Third Quarter ........................................... 20.25 13.94
Fourth Quarter .......................................... 25.06 19.63
1997
- ----
First Quarter ........................................... $ 34.13 $ 22.63
Second Quarter .......................................... 37.75 27.50
Third Quarter ........................................... 45.25 34.63
Fourth Quarter .......................................... 49.63 35.00
1998
- ----
First Quarter ........................................... $ 53.88 $ 39.88
Second Quarter .......................................... 57.69 46.25
Third Quarter (through July 20) ......................... 54.25 49.13
No cash dividends have been paid on the Common Stock since December 22,
1993 in order to provide capital for the Company's equity investments in
projects.
Under the terms of the Revolver, the Company is currently prohibited from
paying cash dividends. In addition, the Company is precluded from paying cash
dividends on its Common Stock under the terms of a guaranty to the utility
customer in connection with the AES Thames project in the event certain net
worth and liquidity tests of the Company are not met. The Company has met these
tests at all times since making the guaranty.
The ability of the Company's subsidiaries to declare and pay dividends and
otherwise distribute cash to the Company is subject to certain limitations in
the project loans and other documents entered into by such project subsidiaries.
Such limitations permit the payment of dividends out of current cash flow for
quarterly, semi-annual or annual periods only at the end of such periods and
only after payment of principal and interest on project loans due at the end of
such periods, and in certain cases after providing for debt service reserves.
The indentures relating to the Company's existing senior subordinated notes
preclude the payment of cash dividends if at the time of such payment or after
giving effect thereto an event of default (as defined), or an event that, after
the giving of notice or lapse of time or both, would become an event of default,
shall have occurred and be continuing, if certain fixed charge coverage ratios
are not met or if the payment of such dividends, together with other restricted
payments, would exceed certain limits.
Under the Amended and Restated Certificate of Incorporation of the Company,
the authorized capital stock of the Company consists of 500,000,000 shares of
Common Stock, par value $.01 per share, and 50,000,000 shares of Preferred
Stock, no par value.
S-5
<PAGE>
U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR
NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock by a
beneficial owner thereof that is a "Non-U.S. Holder". A "Non-U.S. Holder" is a
person or entity that, for U.S. federal income tax purposes, is a non-resident
alien individual, a foreign corporation, a foreign partnership or a foreign
estate or trust.
This discussion is based on the Internal Revenue Code of 1986, as amended
(the "Code"), and administrative interpretations as of the date hereof, all of
which are subject to change, including changes with retroactive effect. This
discussion does not address all aspects of U.S. federal income and estate
taxation that may be relevant to Non-U.S. Holders (including Non-U.S. Holders
who are pass-through entities) in light of their particular circumstances and
does not address any tax consequences arising under the laws of any state, local
or foreign jurisdiction. Prospective holders should consult their tax advisors
with respect to the particular tax consequences to them of owning and disposing
of Common Stock, including the consequences under the laws of any state, local
or foreign jurisdiction.
DIVIDENDS
Subject to the discussion below, dividends paid to a Non-U.S. Holder of
Common Stock generally will be subject to withholding tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. For purposes
of determining whether tax is to be withheld at a 30% rate or at a reduced rate
as specified by an income tax treaty, the Company ordinarily will presume that
dividends paid on or before December 31, 1999 to an address in a foreign country
are paid to a resident of such country absent knowledge that such presumption is
not warranted.
Under U.S. Treasury Regulations issued on October 6, 1997, which are
applicable to dividends paid after December 31, 1999 (the "New Regulations"), in
order to obtain a reduced rate of withholding under a treaty, a Non-U.S. Holder
would generally be required to provide an Internal Revenue Service Form W-8
certifying such Non-U.S. Holder's entitlement to benefits under a treaty. The
New Regulations also provide, among others, special rules to determine whether,
for purposes of determining the applicability of a tax treaty, dividends paid to
a Non-U.S. Holder that is an entity should be treated as paid to the entity or
those holding an interest in that entity.
There will be no withholding tax on dividends paid to a Non-U.S. Holder
that are effectively connected with the Non-U.S. Holder's conduct of a trade or
business within the U.S. if a Form 4224 stating that the dividends are so
connected is filed with the Company or its paying agent. Instead, the
effectively connected dividends will be subject to regular U.S. income tax in
the same manner as if the Non-U.S. Holder were a U.S. resident unless a specific
treaty exemption applies. A non-U.S. corporation receiving effectively connected
dividends may also be subject to an additional "branch profits tax" which is
imposed, under certain circumstances, at a rate of 30% (or such lower rate as
may be specified by an applicable treaty) of the non-U.S. corporation's
effectively connected earnings and profits, subject to certain adjustments.
Under the New Regulations, Form W-8 will replace Form 4224.
Generally, the Company must report to the U.S. Internal Revenue Service the
amount of dividends paid, the name and address of the recipient, and the amount,
if any, of tax withheld. A similar report is sent to the holder. Pursuant to tax
treaties or certain other agreements, the U.S. Internal Revenue Service may make
its reports available to tax authorities in the recipient's country of
residence.
Dividends paid to a Non-U.S. Holder at an address within the U.S. may be
subject to backup withholding imposed at a rate of 31% if the Non-U.S. Holder
fails to establish that it is entitled to an exemption or to provide a correct
taxpayer identification number and certain other information to the Company or
its paying agent. Under current United States federal income tax law, backup
withholding (imposed at a rate of 31%) generally will not apply to dividends
paid on or before December 31, 1999 to a Non-U.S. Holder at an address outside
the United States (unless the payer has knowledge that the payee is a U.S.
person). Under the New Regulations, however, a Non-U.S. Holder will be subject
to backup withholding unless applicable certification requirements are met.
S-6
<PAGE>
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder will generally not be subject to U.S. federal income tax
with respect to gain realized on a sale or other disposition of Common Stock
unless (i) the gain is effectively connected with a trade or business of such
holder in the U.S., (ii) in the case of certain Non-U.S. Holders who are
non-resident alien individuals and who hold the Common Stock as a capital asset,
such individuals are present in the United States for 183 or more days in the
taxable year of the disposition, (iii) the Non-U.S. Holder is subject to tax
pursuant to the provisions of the Code regarding the taxation of U.S.
expatriates, or (iv) the Company is or has been a "U.S. real property holding
corporation" within the meaning of Section 897(c)(2) of the Code at any time
within the shorter of the five-year period preceding such disposition or such
holder's holding period.
The Company believes that it is unlikely that it is, or will be treated as,
a "United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code. Even if the Company is treated as a United States
real property holding corporation, gain realized by a Non-U.S. Holder on a
disposition of the Common Stock will not be subject to a U.S. federal income tax
so long as (i) such Non-U.S. Holder is deemed to have beneficially owned less
than or equal to 5% of the Common Stock and (ii) the Common Stock is currently,
and will be at the time of disposition, "regularly traded" on an established
securities market (within the meaning of Section 897(c)(3) of the Code and the
temporary Treasury Regulations thereunder). There can be no assurance that the
Common Stock qualifies or will continue to qualify as "regularly traded" on an
established securities market.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING ON DISPOSITION OF
COMMON STOCK
Under current United States federal income tax law, information reporting
and backup withholding imposed at a rate of 31% will apply to the proceeds of a
disposition of Common Stock effected by or through a U.S. office of a broker
unless the disposing holder certifies as to its non-U.S. status or otherwise
establishes an exemption. Generally, U.S. information reporting and backup
withholding will not apply to a payment of disposition proceeds where the
transaction is effected outside the U.S. through a non-U.S. office of a non-U.S.
broker. However, U.S. information reporting requirements (but not backup
withholding) will apply to a payment of disposition proceeds where the
transaction is effected outside the U.S. by or through an office outside the
U.S. of a broker that is either (i) a U.S. person, (ii) a foreign person which
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the U.S., (iii) a "controlled foreign corporation" for
U.S. federal income tax purposes, or (iv) in the case of payments made after
December 31, 1999, a foreign partnership with certain connections to the United
States, in each case unless the broker has documentary evidence that the holder
is a Non-U.S. Holder and that certain conditions are met or that the holder
otherwise establishes an exemption.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the U.S.
Internal Revenue Service.
FEDERAL ESTATE TAX
An individual Non-U.S. Holder who is treated as the owner of, or has made
certain lifetime transfers of, an interest in the Common Stock will be required
to include the value thereof in his gross estate for U.S. federal estate tax
purposes, and may be subject to U.S. federal estate tax unless an applicable
estate tax treaty provides otherwise.
S-7
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), each Underwriter named below has severally
agreed to purchase, and the Company has agreed to sell each Underwriter, the
number of shares of Common Stock set forth opposite the name of such Underwriter
below:
<TABLE>
<CAPTION>
NUMBER OF SHARES
----------------
<S> <C>
Smith Barney Inc. ............................................
J.P. Morgan Securities Inc. ..................................
Donaldson, Lufkin & Jenrette Securities Corporation ..........
Morgan Stanley & Co. Incorporated ............................
PaineWebber Incorporated .....................................
C.E. Unterberg, Towbin .......................................
Total ....................................................... 6,500,000
=========
</TABLE>
The Underwriters are obligated to take and pay for all of the shares of
Common Stock (other than those covered by the overallotment option described
below) if any are taken.
The Underwriters have advised the Company that they propose initially to
offer such shares of Common Stock to the public at the price to public set forth
on the cover page of this Prospectus Supplement. After the initial public
offering, the public offering price may be changed.
Pursuant to the Underwriting Agreement, the Company has granted to the
Underwriters an option, exercisable for 30 days from the date hereof, to
purchase up to an additional 975,000 shares of Common Stock at the price to
public less the underwriting discount set forth on the cover page hereof. The
Underwriters may exercise such option to purchase solely for the purpose of
covering over-allotments, if any, made in connection with the Offering.
The Company and certain of the Company's directors and executive officers
are agreeing that, with certain exceptions (including issuances by the Company
as consideration for acquisitions), without the prior written consent of Smith
Barney Inc., they will not, directly or indirectly, offer to sell, contract to
sell, sell or otherwise dispose of, or announce the offering of any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
shares of Common Stock, for a period of 90 days after the date of the
Underwriting Agreement; provided that beginning 30 days after the date of the
Underwriting Agreement, such officers and directors may sell limited amounts of
shares per day up to a total of 500,000 shares (taken in the aggregate and as a
group).
The Company has agreed to indemnify the Underwriters against, or contribute
to payments that the Underwriters may be required to make in respect of, certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Underwriters may engage in stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Rule 104 under the Securities
Exchange Act of 1934, as amended, in connection with the Offering and the
concurrent Debenture Offering. Stabilizing transactions permit bids to purchase
the Common Stock so long as the stabilizing bids do not exceed a specified
maximum. Syndicate covering transactions involve purchases of the Common Stock
in the open market following completion of the Offering to cover all or a
portion of a syndicate short position created by the Underwriters selling more
shares of Common Stock in connection with the Offering than they are committed
to purchase from the Company. In addition, the Underwriters may impose "penalty
bids" under contractual arrangements between the Underwriters and dealers
participating in the Offering whereby they may reclaim from a dealer
participating in the Offering the selling concession with respect to shares of
Common Stock that are distributed in the Offering but subsequently purchased for
the account of the Underwriters in the open market. Such stabilizing
transactions, syndicate covering transactions and penalty bids may result in the
maintenance of the price of the Common Stock at a level above that which might
otherwise prevail in the open market. None of the transactions described in this
paragraph is required and, if any are undertaken, they may be discontinued at
any time.
S-8
<PAGE>
An affiliate of Smith Barney Inc. is the lender under the EDELAP Bridge,
and an affiliate of J.P. Morgan Securities Inc. is agent and a lender under the
Revolver, each of which may be repaid with proceeds of the Offering. The rules
of the National Association of Securities Dealers, Inc. (the "NASD") provide
that no NASD member shall participate in the offering of an issuer's securities
where more than 10% of the net proceeds are intended to be paid to members
participating in the distribution of the offering, or persons associated or
affiliated with such participating members, unless a "qualified independent
underwriter" shall have been engaged on the terms provided in such rules. In
accordance with this requirement, C.E. Unterberg, Towbin has performed due
diligence investigations and reviewed and participated in the preparation of
this Prospectus Supplement. C.E. Unterberg, Towbin will receive no compensation
in connection with its services as qualified independent underwriter.
The Underwriters in the Offering are acting as underwriters in the
Debenture Offering and from time to time, in the ordinary course of their
respective businesses, the Underwriters and their affiliates have engaged and
may engage in commercial and investment banking transactions with the Company
and its affiliates.
Frank Jungers, an Advisory Director for an affiliate of Donaldson, Lufkin &
Jenrette Securities Corporation, one of the Underwriters, is also a director and
stockholder of AES. Mr. Jungers beneficially owns 1,117,447 shares of the Common
Stock.
Thomas I. Unterberg, a Managing Director of C.E. Unterberg, Towbin, one of
the Underwriters, is also a member of AES's Board of Directors. Mr. Unterberg
currently beneficially owns 1,266,381 shares of the Common Stock.
LEGAL MATTERS
The validity of the Shares offered hereby and certain matters relating
thereto and certain U.S. federal income taxation matters will be passed upon by
Davis Polk & Wardwell, New York, New York. Certain legal matters will be passed
upon for the Underwriters by Cahill Gordon & Reindel (a partnership including a
professional corporation), New York, New York.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Prospectus Supplement by reference from the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
In addition, see "Experts" in the accompanying Prospectus.
S-9
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
===================================================== ====================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION
WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING 6,500,000 SHARES
BEEN AUTHORIZED BY THE COMPANY OR BY THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE THE AES CORPORATION
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT COMMON STOCK
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY ($.01 PAR VALUE)
STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
-----------
TABLE OF CONTENTS
<CAPTION>
[GRAPHIC OMITTED]
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Special Note Regarding Forward Looking
Statements ................................ S-2
Recent Developments ......................... S-3
Use of Proceeds ............................. S-4
Common Stock Price Ranges and Dividends. S-5
U.S. Federal Income Tax Considerations for
Non-U.S. Holders of Common Stock .......... S-6 ----------
Underwriting ................................ S-8
Legal Matters ............................... S-9 PROSPRCTUS SUPPLEMENT
Experts ..................................... S-9 , 1998
PROSPECTUS ----------
Available Information ....................... 1
Incorporation of Certain Documents by
Reference ................................. 1
Use of Proceeds ............................. 2
Ratio of Earnings to Fixed Charges .......... 2 SALOMON SMITH BARNEY
The Company ................................. 3
Risk Factors ................................ 5 J.P. MORGAN & CO.
Description of Capital Stock ................ 12
Description of Debt Securities .............. 16 DONALDSON, LUFKIN & JENRETTE
Description of Stock Purchase Contracts and
Stock Purchase Units ...................... 25 MORGAN STANLEY DEAN WITTER
Plan of Distribution ........................ 25
Legal Matters ............................... 26 PAINEWEBBER INCORPORATED
Experts ..................................... 26
C.E. UNTERBERG, TOWBIN
===================================================== ====================================================
</TABLE>
