SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filing under the Public Utility Holding Company Act of 1935
________, 2000
The AES Corporation (70-___)
The AES Corporation ("AES"), 1001 North 19th Street, Arlington, VA
22209, an exempt public utility holding company under Section 3(a)(5) of the
Public Utility Holding Company Act of 1935 ("Act"), has filed an application
seeking a Commission order (i) authorizing AES under Sections 9(a)(2) and 10 of
the Act to acquire all of the equity securities of IPALCO Enterprises, Inc.
("IPALCO"), an exempt public utility holding company under Section 3(a)(1) by
Rule 2 under the Act, and (ii) and finding that following its acquisition of
IPALCO, AES will be an exempt public utility holding company under Section
3(a)(5) of the Act. IPALCO has one public utility subsidiary, Indianapolis Power
& Light Company ("IPL"), which is principally engaged in the generation,
transmission, distribution and sale of electric energy in central Indiana and
the sale of steam in Indianapolis, Indiana. AES currently owns all of the common
stock of CILCORP Inc. ("CILCORP"), an Illinois public utility holding company
exempt under Section 3(a)(1) by Rule 2, and the parent of Central Illinois Light
Company ("CILCO"), an electric and gas utility company.
Under an Agreement and Plan of Share Exchange dated as of July 15,
2000, between AES and IPALCO ("Share Exchange Agreement"), IPALCO and AES will
effect a share exchange in which IPALCO will become a wholly-owned subsidiary of
AES ("Transaction"). Each outstanding share of IPALCO common stock will be
converted into the right to receive shares of AES common stock with a market
value of $25.00 (subject to adjustment as described in the Share Exchange
Agreement).
Following the Transaction, AES will own IPALCO as a first tier
subsidiary, and IPALCO's direct and indirect subsidiaries, including IPL, will
retain their current relationship with IPALCO. IPALCO will continue to claim an
exemp-tion under Section 3(a)(1) by Rule 2.
AES maintains that the Transaction offers important benefits to
IPALCO's utility customers and shareholders. It states that its international
and diversified experience in competitive power markets will supply IPL with
substantial additional resources needed to provide efficient and reliable
service in the increas-ingly competitive electric utility industry. It also
states that the Transaction will provide significant benefits to AES and its
current utility subsidiary, CILCO. These potential benefits include
strengthening AES's ability to compete in the changing electric utility industry
by expanding the scope of its operations and customer base; adding to its
operations some of the most efficient coal fired electric generating plants in
the Midwest; and gaining a highly respected brand name. AES states that both
IPALCO and CILCORP will benefit from resulting economies of scale in the
generation and retail segments of their business.
If required by the Commission as a condition to granting its
applica-tion, AES will commit to enter into an agreement with an unaffiliated
person within three years from completion of the Transaction to divest its
ownership of all utility assets of CILCO subject to the jurisdiction of the
Commission. Upon completing this divestiture, IPL would be the only public
utility subsidiary of AES.
AES states that following the Transaction it will not derive a
material part of its income, directly or indirectly, from one or more companies
whose princi-pal business within the United States is that of a public utility
company. It thus further states that following the Transaction it will qualify
for an exemption under Section 3(a)(5) of the Act.
