As filed with the Securities and Exchange Commission on September 15, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE AES CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 4911 54-1163725
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Code Number) Identification No.)
</TABLE>
1001 North 19th Street
Arlington, Virginia 22209
(703) 522-1315
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Barry J. Sharp
1001 North 19th Street
Arlington, Virginia 22209
(703) 522-1315
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Richard D. Truesdell, Jr.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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<TABLE>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class Amount to be Offering Price Per Aggregate Offering Amount of
of Securities to be Registered Registered(1) Unit(1) Price Registration Fee(1)
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value per
share ("Common Stock")............... 10,000,000 $60.66 $606,600,000 $160,143
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Preferred Stock ........................ - $250,000,000(3) $ 66,000
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Common Stock............................ - (4) -
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Debt Securities ........................ 100% $250,000,000(3) $ 66,000
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Common Stock............................ - (5) -
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</TABLE>
(1) Or, if any securities are issued with an original issue discount, such
greater amount as shall result in initial aggregate offering prices in the
amounts set forth next to the title of each class of securities to be
registered.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act
on the basis of the market value of the outstanding common stock on
September 8, 2000.
(3) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457 (a) under the Securities Act.
(4) Shares of Common Stock as may be issued upon conversion of Preferred Stock
registered hereby with a market price for such Common Stock of up to
$250,000,000 in the aggregate as of the date of issuance of such Preferred
Stock.
(5) Shares of Common Stock as may be issued upon conversion of Debt Securities
registered hereby with a market price for such Common Stock of up to
$250,000,000 in the aggregate as of the date of issuance of such Debt
Securities.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to Completion, September 15, 2000
PROSPECTUS
THE AES CORPORATION
Common Stock
Preferred Stock
Debt Securities
-----------------------
In connection with acquisitions of or investments in other businesses or
assets, we may issue and sell, from time to time:
o up to 10,000,000 shares of our common stock, $.01 par value per
share,
o up to $250,000,000 initial offering price of shares of our preferred
stock, par value $.01 per share, issuable in series, and
o up to $250,000,000 initial offering price of debt securities.
Specific terms of these securities will be provided in supplements to this
prospectus.
We anticipate that any acquisitions or investments will consist principally of
acquisitions of and investments in other businesses and assets. The
consideration for such acquisitions and investments may consist of shares of
equity securities, cash, indebtedness, assumption of liabilities or any
combination thereof.
-----------------------
This prospectus may be used by persons who receive shares of common stock,
shares of preferred stock or debt securities in connection with acquisitions
and investments by us and who wish to resell these securities. We have not
authorized any person to use this prospectus in connection with resales of
securities without our prior written consent.
Our common stock trades on the New York Stock Exchange under the symbol "AES."
-----------------------
Investing in these securities involves certain risks. See "Risk Factors"
beginning on page 3.
-----------------------
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 determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2000
-----------------------
<PAGE>
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information contained in or incorporated by reference in this prospectus is
accurate as of any date other than the date on the front of this prospectus.
-----------------------
TABLE OF CONTENTS
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Page
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About This Prospectus.........................................................2
Risk Factors..................................................................3
Where You Can Find More Information...........................................9
Incorporation of Documents by Reference......................................10
Special Note on Forward-Looking Statements...................................10
Use of Proceeds..............................................................10
Ratio of Earnings to Fixed Charges...........................................10
The Company..................................................................11
Description of Capital Stock.................................................11
Description of Debt Securities...............................................17
Offered Securities...........................................................26
Legal Matters................................................................27
Experts......................................................................27
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may issue and sell any combination of the
securities described in this prospectus in connection with one or more
acquisitions or investments. This prospectus provides you with a general
description of the securities we may offer. Each time we issue and sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may
also add, update or change information contained in this prospectus. This
prospectus has also been prepared for use by persons who receive securities in
connection with acquisitions or investments by us. In connection with resales,
a prospectus supplement, if required, will disclose the name of the selling
stockholder as well as the specific terms of the resale. You should read both
this prospectus and any prospectus supplement together with additional
information described under the heading "Where You Can Find More Information."
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RISK FACTORS
Purchasers of the Securities should read this entire Prospectus carefully.
Ownership of the Securities involves certain risks. The following factors
should be considered carefully in evaluating AES and its business before
purchasing the Securities offered by this Prospectus.
Our high degree of leverage could affect our ability to fulfill our
obligations under our securities. We had approximately $15,720 million of
outstanding indebtedness as of June 30, 2000. As a result, we might be
significantly limited in our ability to meet our debt service obligations, to
finance the acquisition, development or completion of additional projects, to
compete effectively or to operate successfully under adverse economic
conditions. As of June 30, 2000, we had a consolidated ratio of total debt to
total book capitalization (including current debt) of approximately 69%.
Holders of our Debt Securities will be subordinated to many of our other
creditors. The Senior Subordinated Debt Securities will be subordinated to all
Senior Debt, including, but not limited to, the amounts outstanding under our
current $850 million revolving credit facility. The Junior Subordinated Debt
Securities will be subordinated to all of our Senior and Senior Subordinated
Debt, including, but not limited to, the amounts outstanding under our current
$850 million revolving credit facility. As of June 30, 2000, we had
approximately $1,677 million in aggregate principal amount of Senior Debt
(which includes $277 million of letters of credit) and $2,744 million in
aggregate principal amount of Senior and Senior Subordinated Debt.
Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, receivership, reorganization, assignment
for the benefit of creditors, marshaling of assets and liabilities or any
bankruptcy, insolvency or similar proceedings, the holders of Senior Debt will
be entitled to receive payment in full of all amounts due under all Senior Debt
before the holders of the Senior Subordinated Debt Securities will be entitled
to receive any payment in respect of the Senior Subordinated Debt Securities;
holders of Senior and Senior Subordinated Debt will be entitled to receive
payment in full of all amounts due under all Senior and Senior Subordinated
Debt before the holders of the Junior Subordinated Debt Securities will be
entitled to receive any payment in respect of the Junior Subordinated Debt
Securities.
No payments in respect of the Senior Subordinated Debt Securities or
Junior Subordinated Debt Securities may be made
o if a default has occurred and is continuing in a payment under the
Senior Debt or Senior and Senior Subordinated Debt, respectively, or
o during certain periods when an event of default under certain Senior
Debt or Senior and Senior Subordinated Debt, respectively, permits
the respective lenders thereunder to accelerate the maturity thereof.
See "Description of Debt Securities-- Subordination of Senior Subordinated
Debt Securities" and "Description of Debt Securities-- Subordination of Junior
Subordinated Debt Securities."
The Debt Securities will be effectively subordinated to the indebtedness
and other obligations (including trade payables) of our subsidiaries. At June
30, 2000, the indebtedness and obligations of our subsidiaries aggregated
approximately $16,265 million. Our ability to pay principal of, premium, if any,
and interest on the Debt Securities will be dependent upon the receipt of funds
from our subsidiaries by way of dividends, fees, interest, loans or otherwise.
Most of our subsidiaries with interests in power generation facilities
currently are obligated, pursuant to loan agreements or indentures, to satisfy
certain restricted payment covenants before they may make distributions to us.
Moreover, unless otherwise provided in the prospectus supplement, the
Indentures for the Debt Securities will permit our subsidiaries to maintain or
add to such restrictions. Our subsidiaries are separate and distinct legal
entities and have no obligation, contingent or otherwise, to pay any amounts
due pursuant to the Debt Securities or to make any funds available therefor,
whether by dividends, loans or other payments, and do not guarantee the payment
of interest on or principal of the Debt Securities. Any right we have to
receive any assets of any of our
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subsidiaries upon any liquidation, dissolution, winding up, receivership,
reorganization, assignment for the benefit of creditors, marshaling of assets
and liabilities or any bankruptcy, insolvency or similar proceedings (and the
consequent right of the holders of the Debt Securities to participate in the
distribution of, or to realize proceeds from, those assets) will be effectively
subordinated to the claims of any such subsidiary's creditors (including trade
creditors and holders of debt issued by such subsidiary).
We do a significant amount of our business outside the United States which
presents significant risks. Our involvement in the development of new
businesses and the acquisition of existing plants in locations outside the
United States is increasing and a large portion of our current development and
acquisition activities are for projects and plants outside the United States.
The financing, development and operation of projects outside the United
States entail significant political and financial uncertainties (including,
without limitation, uncertainties associated with first-time privatization
efforts in the countries involved, currency exchange rate fluctuations,
currency repatriation restrictions, regulation of the electricity business,
currency inconvertibility, tax law, political instability, civil unrest, and
expropriation) and other credit quality, liquidity or structuring issues that
have the potential to cause substantial delays in respect of or material
impairment of the value of the project being developed or operated, which we
may not be capable of fully insuring or hedging against. The ability to obtain
financing on a commercially acceptable non-recourse basis in developing nations
has become more difficult. Even when such non-recourse financing is available,
lenders may require us to make higher equity investments than historically have
been the case. In addition, financing in countries with less than investment
grade sovereign credit ratings may also require substantial participation by
multilateral financing agencies. There can be no assurance that such financing
can be obtained when needed.
The uncertainty of the legal environment in certain countries in which we
are or in the future may be developing, constructing or operating could make it
more difficult for us to enforce our respective rights under agreements
relating to such businesses. In addition, the laws and regulations of certain
countries may limit our ability to hold a majority interest in some of the
businesses that we may develop or acquire. International businesses we own may,
in certain cases, be expropriated by applicable governments. Although we may
have legal recourse in enforcing our rights under agreements and recovering
damages for breaches thereof, there can be no assurance that any such legal
proceedings will be successful or resolved in a timely manner.
Global competition is increasing and could adversely affect us. The global
power production market is characterized by numerous strong and capable
competitors, many of whom may have extensive and diversified developmental or
operating experience (including both domestic and international experience) and
financial resources similar to or greater than ours. Further, in recent years,
the power production industry has been characterized by strong and increasing
competition with respect to both obtaining power sales agreements and acquiring
existing power generation assets. In certain markets, these factors have caused
reductions in prices contained in new power sales agreements and, in many
cases, have caused higher acquisition prices for existing assets through
competitive bidding practices. The evolution of competitive electricity markets
and the development of highly efficient gas-fired power plants have also
caused, or are anticipated to cause, price pressure in certain power markets
where we sell or intend to sell power. There can be no assurance that the
foregoing competitive factors will not have a material adverse effect on us.
Development uncertainties. The majority of the projects that we develop
are large and complex and the completion of any such project is subject to
substantial risks. Development can require us to expend significant sums for
preliminary engineering, permitting, legal and other expenses in preparation
for competitive bids which we may not win or before it can be determined
whether a project is feasible, economically attractive or capable of being
financed. Successful development and construction is contingent upon, among
other things, negotiation of satisfactory engineering, construction, fuel
supply and power sales contracts with other project participants, receipt of
required governmental permits and consents and timely implementation and
satisfactory completion of construction. There can be no assurance that we will
be able to obtain new power sales contracts, overcome local opposition, if any,
obtain the necessary site agreements, fuel supply and ash disposal agreements,
construction contracts,
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steam sales contracts, licenses and certifications, environmental and other
permits and financing commitments necessary for the successful development of
our projects. There can be no assurance that development efforts on any
particular project, or our efforts generally, will be successful. If these
development efforts are not successful, we may abandon a project under
development. At the time of abandonment, we would expense all capitalized
development costs incurred in connection therewith and could incur additional
losses associated with any related contingent liabilities. Our future growth is
dependent, in part, upon the demand for significant amounts of additional
electrical generating capacity and our ability to obtain contracts to supply
portions of this capacity. Any material unremedied delay in, or unsatisfactory
completion of, construction of our projects could, under certain circumstances,
have an adverse effect on our ability to meet our obligations, including the
payment of principal of, premium, if any, and interest on Debt Securities. We
may also be faced with certain development uncertainties arising out of doing
business outside of the United States. See "--We do a significant amount of our
business outside the United States which presents significant risks. "
Our acquisitions may not perform as expected. We have achieved a majority
of our growth through acquisitions and expect that we will continue to grow, in
part, through acquisitions. Although each of the acquired businesses had a
significant operating history at the time we acquired them, we have a limited
history of owning and operating many of these businesses. In addition, most of
these businesses were government owned and some were operated as part of a
larger integrated utility prior to their acquisition. There can be no
assurances that we will be successful in transitioning these to private
ownership, that such businesses will perform as expected or that the returns
from such businesses will support the indebtedness incurred to acquire them or
the capital expenditures needed to develop them.
We may not be able to raise sufficient capital to fund acquisitions and
greenfield projects or refinance existing debt. Each of our projects under
development and those independent power facilities we have committed to acquire
or may seek to acquire may require substantial capital investment. Continued
access to capital with acceptable terms is necessary to assure the success of
future projects and acquisitions, and may be necessary to refinance certain
existing debt. We have utilized project financing loans to fund the capital
expenditures associated with constructing and acquiring our electric power
plants and related assets to the extent possible. Project financing borrowings
have been substantially non-recourse to our other subsidiaries and affiliates
and to us as the parent company and are generally secured by the capital stock,
physical assets, contracts and cash flow of the related project subsidiary or
affiliate. We intend to continue to seek, where possible, such non-recourse
project financing. However, depending on market conditions and the unique
characteristics of individual projects, such financing may not be available or
our traditional providers of project financing, particularly multinational
commercial banks, may seek higher borrowing spreads and increased equity
contributions.
Furthermore, because of the reluctance of commercial lending institutions
to provide non-recourse project financing (including financial guarantees) in
certain less developed economies, we have sought and will continue to seek, in
such locations, direct or indirect (through credit support or guarantees)
project financing from a limited number of multilateral or bilateral
international financial institutions or agencies. As a precondition to making
such project financing available, these institutions may also require
governmental guarantees of certain project and sovereign related risks.
Depending on the policies of specific governments, such guarantees may not be
offered and as a result, we may determine that sufficient financing will
ultimately not be available to fund the related project. In addition, we are
frequently required to provide more sponsor equity for projects that sell their
electricity into the merchant market than for projects that sell their
electricity under long term contracts.
In addition to the project financing loans, if available, we provide a
portion, or in certain instances all, of the remaining long-term financing
required to fund development, construction, or acquisition. These investments
have generally taken the form of equity investments or loans, which are
subordinated to the project financing loans. The funds for these investments
have been provided by cash flows from operations and by the proceeds from
borrowings under our short-term credit facilities and issuances of senior
notes, senior subordinated notes, convertible debentures, convertible trust
preferred securities and common stock.
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Our ability to arrange for financing on either a fully recourse or a
substantially non-recourse basis and the costs of such capital are dependent on
numerous factors, including general economic and capital market conditions, the
availability of bank credit, rating agency ratings, investor confidence, the
continued success of current projects and provisions of tax and securities laws
which are conducive to raising capital in this manner. Should future access to
capital not be available, we may decide not to build new plants or acquire
existing facilities. While a decision not to build new plants or acquire
existing facilities would not affect the results of operations of our currently
operating facilities or facilities under construction, such a decision would
affect our future growth.
The performance of our generation business is dependent to a large degree
on certain of our larger projects and their customers. The nature of most of
our generation plants (based on revenues) is such that each facility generally
relies on one power sales contract with a single customer for the majority, if
not all, of its revenues over the life of the power sales contract. The
prolonged failure of any significant customer to fulfill its contractual
obligations could have a substantial negative impact on these revenues. We have
sought to reduce this risk in part by entering into power sales contracts with
utilities or other customers of strong credit quality and by locating its
plants in different geographic areas in order to mitigate the effects of
regional economic downturns.
Our revenues are becoming less predictable. Our business primarily
consists of businesses with long-term contracts or retail concessions, and we
expect the contract-based portfolio to be an effective hedge against future
energy and electricity market price risks. However, an increasing proportion of
our current and expected future revenues are derived from businesses without
significant long-term revenue contracts. Our increasing reliance on non-
contract businesses could cause our results of operations to become more
volatile.
Our distribution businesses are subject to greater regulatory scrutiny
than our generation business. Our distribution businesses face increased
regulatory and political scrutiny in the normal conduct of their operations.
This scrutiny may adversely impact our results of operations, to the extent
that such scrutiny or pressure prevents us from reducing losses as quickly as
we planned or denies us a rate increase called for by our concession
agreements. In general, these businesses have lower margins and are more
dependent on regulation to ensure expected annual rate increases for inflation
and increased power costs, among other things. There can be no assurance that
these rate reviews will be granted, or occur in a timely manner.
We are subject to significant government regulation. Our generation
business in the United States is subject to the provisions of various laws and
regulations, including the Public Utility Regulatory Policies Act of 1978, as
amended, commonly referred to as PURPA, and the Public Utility Holding Company
Act, as amended, commonly referred to as PUHCA. PURPA provides to qualifying
facilities, commonly referred to as QFs, certain exemptions from substantial
federal and state legislation, including regulation as public utilities. PUHCA
regulates public utility holding companies and their subsidiaries. It is
necessary for us to obtain approval under PUHCA in order to maintain majority
ownership in our domestic power plants that are QFs. Currently a material
portion of our domestic revenues are received from QFs. Moreover, all of our
domestic non-QF plants are Exempt Wholesale Generators, commonly referred to as
EWGs. An EWG is a facility that has been authorized by the U.S. Federal Energy
Regulatory Commission, commonly referred to as the FERC, to sell wholesale
power at market-based rates. We enjoy exemptions under PUHCA related to our
foreign utility acquisitions and holdings. We cannot ensure that we will be
able to maintain appropriate PUHCA exemptions for all of our businesses. If we
decide to acquire another U.S. utility or utility assets, we may be required to
divest either all or part of CILCORP or take other steps resulting in a loss of
control or as may be required by the Securities and Exchange Commission. We
believe that, upon the occurrence of an event that would threaten the QF status
of one of our domestic plants, we would be able to react in a manner that would
avoid the loss of QF status (such as by replacing the steam customer). In the
event we were unable to avoid the loss of such status for one of our plants, to
avoid public utility holding company status, we could apply to the FERC to
obtain status as an EWG, or could restructure the ownership of the project
subsidiary. EWGs, however, are subject to broader regulation by FERC and may be
subject to state public utility commissions regulation regarding non-rate
matters. In addition, any restructuring of a project subsidiary could result
in, among other things,
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a reduced financial interest in such subsidiary, which could result in a gain
or loss on the sale of the interest in such subsidiary, the removal of such
subsidiary from our consolidated income tax group or our consolidated financial
statements, or an increase or decrease in our results of operations.
Pending electric utility industry restructuring proposals could have an
adverse effect on us. Several states have passed legislation that allows
electricity customers to choose their electricity supplier in a competitive
electricity market (so-called "retail access" or "customer choice" laws), and
all but two of the remaining states are considering such legislation. In
addition to state restructuring legislation, some members of Congress have
proposed new Federal legislation to encourage customer choice and recovery of
stranded assets. Several bills have been submitted to Congress on electricity
restructuring. In anticipation of restructuring legislation, many U.S.
utilities are seeking ways to lower their costs in order to become more
competitive. These include the costs that utilities are required to pay under
QF contracts. Many utilities are therefore seeking ways to lower these contract
prices by renegotiating the contracts, or in some cases by litigation. In 1999,
we renegotiated contracts for two of our QFs--Thames (a partial prepayment) and
Placerita (a complete buyout). The Thames transaction has been approved by the
Connecticut Department of Public Utilities Commission.
The FERC and many state utility commissions are currently studying a
number of proposals to restructure the electric utility industry in the United
States. Such restructuring would permit utility customers to choose their
utility supplier in a competitive electric energy market. The FERC issued a
final rule in April 1996 which requires utilities to offer wholesale customers
and suppliers open access on utility transmission lines, on a comparable basis
to the utilities' own use of the lines. The final rule is subject to rehearing
and may become the subject of court litigation. Many utilities have already
filed "open access" tariffs. The utilities contend that they should recover
from departing customers their fixed costs that will be "stranded" by the
ability of their wholesale customers (and perhaps eventually, their retail
customers) to choose new electric power suppliers. The FERC final rule endorses
the recovery of legitimate and verifiable "stranded costs." These may include
the costs utilities are required to pay under many QF contracts which the
utilities view as excessive when compared with current market prices. Many
utilities are therefore seeking ways to lower these contract prices or rescind
the contracts altogether, out of concern that their shareholders will be
required to bear all or part of such "stranded" costs. Some utilities have
engaged in litigation against QFs to achieve these ends.
In addition, future United States electric rates may be deregulated in a
restructured United States electric utility industry and increased competition
may result in lower rates and less profit margin for United States electricity
sellers. Falling electricity prices, the introduction of commodity markets for
electricity and uncertainty as to the future structure of the industry has
rendered the long-term power purchase contracts obsolete. As a result, in the
generation business we are increasingly dependent upon prices for electricity
determined in electricity spot markets. Such prices can be very volatile and
the effect on us of this volatility cannot be predicted.
The United States Congress is considering proposed legislation which would
repeal PURPA entirely, or at least repeal the obligation of utilities to
purchase from QFs. There is strong support for grandfathering existing QF
contracts if such legislation is passed, and also support for requiring
utilities to conduct competitive bidding for new electric generation if the
PURPA purchase obligation is eliminated. Various bills have also proposed
repeal of PUHCA. Repeal of PUHCA would allow power generators and vertically
integrated utilities to acquire retail utilities in the United States that are
geographically widespread, as opposed to the current limitations of PUHCA which
require that retail electric systems be capable of physical interconnection. In
addition, registered holding companies would be free to acquire non-utility
businesses, which they may not do now, with certain limited exceptions. In the
event that PUHCA is repealed, competition would likely increase. Repeal of
PURPA and/or PUHCA may or may not be part of comprehensive legislation to
restructure the electric utility industry, allow retail competition, and
deregulate most electric rates. The effect of any such repeal cannot be
predicted, although any such repeal could have a material adverse effect on us.
From time to time we are subject to material litigation and regulatory
proceedings. From time to time, we and our affiliates are parties to litigation
and
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regulatory proceedings. Investors should review the descriptions of such
matters contained in our Annual, Quarterly and Current Reports filed with the
Securities and Exchange Commission and incorporated by reference herein. There
can be no assurances that the outcome of such matters will not have a material
adverse effect on our consolidated financial position.
Our business is subject to stringent environmental regulations. Our
activities are subject to stringent environmental regulation by federal, state,
local and foreign governmental authorities. These regulations generally involve
effluents into the water, emissions into the air, the use of water, wetlands
preservation, waste disposal, endangered species, and noise regulation, among
others. Congress and other foreign governmental authorities also may consider
proposals to restrict or tax certain emissions. These proposals, if adopted,
could impose additional costs on the operation of our power plants. There can
be no assurance that we would be able to recover all or any increased costs
from our customers or that our business, financial condition or results of
operations would not be materially and adversely affected by future changes in
domestic or foreign environmental laws and regulations. We have made and will
continue to make capital and other expenditures to comply with environmental
laws and regulations. There can be no assurance that such expenditures will not
have a material adverse effect on our financial condition or results of
operations.
Our directors and officers have significant ownership interests in us and
can exert significant influence or control over matters requiring stockholder
approval. As of February 4, 2000 our two founders, Roger W. Sant and Dennis W.
Bakke, and their immediate families together owned beneficially approximately
18.4% of our outstanding Common Stock. As a result of their ownership
interests, Messrs. Sant and Bakke may be able to significantly influence or
exert control over our affairs, including the election of our directors. As of
February 4, 2000, all of our officers and directors and their immediate
families together owned beneficially approximately 24.9% of our outstanding
Common Stock. To the extent that they decide to vote together, these
stockholders would be able to significantly influence or control the election
of our directors, our management and policies and any action requiring
stockholder approval, including significant corporate transactions.
Our adherence to our "shared principles" could have an adverse impact on
our results of operations. A core part of our corporate culture is a commitment
to "shared principles": to act with integrity, to be fair, to have fun and to
be socially responsible. We seek to adhere to these principles not as a means
to achieve economic success, but because adherence is a worthwhile goal in and
of itself. However, if we perceive a conflict between these principles and
profits, we will try to adhere to our principles -- even though doing so might
result in diminished or foregone opportunities or financial benefits.
Shares eligible for future sale. From time to time, our subsidiaries incur
indebtedness that is secured by a pledge of shares of our common stock held by
that subsidiary. 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 our common stock.
Risk of fraudulent transfer. Various fraudulent conveyance laws have been
enacted for the protection of creditors and may be applied by a court on behalf
of any unpaid creditor or a representative of our creditors in a lawsuit to
subordinate or avoid Debt Securities in favor of our other existing or future
creditors. Under applicable provisions of the U.S. Bankruptcy code or
comparable provisions of state fraudulent transfer or conveyance laws, if we at
the time of issuance of Debt Securities,
o incurred such indebtedness with intent to hinder, delay or defraud
any of our present or future creditors or contemplated insolvency
with a design to prefer one or more creditors to the exclusion in
whole or in part of others or
o received less than reasonably equivalent value or fair consideration
for issuing Debt Securities and we:
o were insolvent,
o were rendered insolvent by reason of
the issuance of the Debt Securities,
o were engaged or about to engage in business or a transaction for
which our remaining assets constitute unreasonably small capital
to carry on our business, or
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o intended to incur, or believed that we would incur, debts beyond
our ability to pay such debts as they mature,
then, in each case, a court of competent jurisdiction could void, in whole
or in part, the Debt Securities.
Among other things, a legal challenge of the Debt Securities on fraudulent
conveyance grounds may focus on the benefits, if any, realized by us as a
result of our issuance of the Debt Securities.
The measure of insolvency for purposes of the foregoing will vary
depending upon the law applied in such case. Generally, however, we would be
considered insolvent if the sum of our debts, including contingent liabilities,
were greater than all of our assets at fair valuation or if the present fair
market value of our assets were less than the amount that would be required to
pay the probable liability on our existing debts, including contingent
liabilities, as they become absolute and mature. There can be no assurance
that, after providing for all prior claims, there will be sufficient assets to
satisfy the claims of the holders of the Debt Securities.
Management believes that, for purposes of all such insolvency, bankruptcy
and fraudulent transfer or conveyance laws, the Debt Securities are being
incurred without the intent to hinder, delay or defraud creditors and for
proper purposes and in good faith, and that we, after the issuance of the Debt
Securities, will be solvent, will have sufficient capital for carrying on our
business and will be able to pay our debts as they mature. There can be no
assurance, however, that a court passing on such questions would agree with
management's view.
There is no prior public market for many of the securities that may be
offered pursuant to this prospectus -- as a result there could be significant
price volatility for such securities. Prior to the offering, there has been no
public market for many of the securities that may be offered pursuant to this
prospectus. There can be no assurance that an active trading market for any of
such securities will develop or be sustained. If such a market were to develop,
such securities could trade at prices that may be higher or lower than their
initial offering price depending upon many factors, including prevailing
interest rates, our operating results and the markets for similar securities.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission You may read and copy
any document that we file at the public reference rooms of the Securities and
Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
Suite 1300, New York, New York 10048. You may obtain information on the
operation of the public reference rooms by calling the Securities and Exchange
Commission at 1-800-SEC-0330. The Securities and Exchange Commission also
maintains an Internet site at http://www.sec.gov, from where you can access our
filings.
This prospectus constitutes part of a Registration Statement on Form S-4
filed with the Securities and Exchange Commission under the Securities Act of
1933 (the "Securities Act"). It omits some of the information contained in the
Registration Statement, and reference is made to the Registration Statement for
further information on AES and the securities offered hereby. Any statement
contained in this prospectus concerning the provisions of any document filed as
an exhibit to the Registration Statement or otherwise filed with the Securities
and Exchange Commission is not necessarily complete, and in each instance
reference is made to the copy of the document filed.
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INCORPORATION OF DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is an important part of this prospectus,
and information that we file later with the Securities and Exchange Commission
will automatically update and supersede this information. In particular, our
annual filing on Form 10-K will supersede all previously filed annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
We incorporate by reference the documents listed below and any future filings
made with the Securities and Exchange Commission under Sections 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934 until we issue and sell all
of the securities:
(a) Annual Report and Amended Annual Report on Form 10-K for the year
ended December 31, 1999;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000
and June 30, 2000;
(c) Current Reports on Form 8-K filed on February 11, 2000, May 8, 2000,
May 12, 2000, June 21, 2000, July 27, 2000, July 28, 2000, August 18,
2000 and September 1, 2000.
You may request a copy of these filings at no cost, by writing or
telephoning the office of William R. Luraschi, Vice President, General Counsel
and Secretary, The AES Corporation, 1001 North 19th Street, Arlington,
Virginia, telephone number (703) 522-1315.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward- looking statements are subject to risks,
uncertainties, and assumptions related to AES, including those set forth under
"Risk Factors" in this prospectus and those set forth under the caption
"Cautionary Statements and Risk Factors" in our annual report on Form 10-K,
which is incorporated by reference in this prospectus.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions,
the forward-looking events discussed in this prospectus might not occur.
USE OF PROCEEDS
This prospectus relates to shares of common stock, shares of preferred
stock and debt securities which may be offered and issued by AES from time to
time in connection with acquisitions of or investments in other businesses or
assets. Other than the businesses or assets acquired, there will be no proceeds
to AES from these offerings.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges is as follows:
Six
Months
Ended
Year Ended December 31, June 30,
---------------------------- --------
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- --------
Ratio of earnings to fixed charges...... 2.20 1.88 1.46 1.65 1.50 1.51
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For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income from continuing operations before income taxes and
minority interest, plus depreciation of previously capitalized interest, plus
fixed charges, less capitalized interest, less excess of earnings over
dividends of less-than-fifty-percent-owned companies, less minority interest in
pre-tax income of subsidiaries that have not incurred fixed charges, less
preference security dividend requirements of a consolidated subsidiary. Fixed
charges consist of interest (including capitalized interest) on all
indebtedness, amortization of debt discount and capitalized expenses,
preference security dividend requirements of a consolidated subsidiary, and
that portion of rental expense which we believe to be representative of an
interest factor.
During the period from January 1, 1995 until June 30, 2000, no shares of
preferred stock were issued or outstanding, and during that period we did not
pay any preferred stock dividends.
THE COMPANY
We are a global power company committed to serving the world's needs for
electricity in a socially responsible way. Our electricity "generation"
business consists of sales to wholesale customers (generally electric
utilities, regional electric companies or wholesale commodity markets known as
"power pools") for further resale to end-users. We also sell electricity
directly to end-users such as commercial, industrial, governmental and
residential customers through our "distribution" business.
Sales within our generation business are made under long-term contracts
from power plants owned by our subsidiaries and affiliates, as well as directly
into power pools. We own new plants constructed for such purposes ("greenfield"
plants) as well as older power plants acquired through competitively bid
privatization initiatives or negotiated acquisitions.
Electricity sales by our distribution businesses, including affiliates,
are generally made pursuant of the provisions of long-term electricity sale
concessions granted by the appropriate governmental authorities. In certain
cases, these distribution companies are "integrated", in that they also own
electric power plants for the purpose of generating a portion of the
electricity they sell.
DESCRIPTION OF CAPITAL STOCK
Under our certificate of incorporation (the "Certificate of
Incorporation"), we are authorized to issue 1,200,000,000 shares of common
stock, par value $.01 per share, and 50,000,000 shares of preferred stock, no
par value.
The following summary contains a description of certain general terms of
the common stock and the preferred stock to which any prospectus supplement may
relate. Certain terms of any series of preferred stock offered by a prospectus
supplement will be described in the prospectus supplement relating thereto. If
indicated in the prospectus supplement, the terms of any series may differ from
the terms set forth below. The description of certain provisions of the common
stock and the preferred stock is subject to and qualified by reference to the
provisions of our certificate of incorporation, and, in the case of the
preferred stock, to the certificate of designation (the "Certificate of
Designation") relating to each particular series of preferred stock which will
be filed or incorporated by reference as an exhibit to the registration
statement of which this prospectus is a part.
Common Stock
As of July 31, 2000, there were 456,774,338 shares of common stock
outstanding.
The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may
be applicable to any outstanding preferred stock, the holders of common stock
are entitled to receive ratably dividends as may be declared from time to time
by our board of directors out of funds legally available to pay dividends. If
we liquidate our business, the holders of common stock are entitled to share
ratably in all assets after we pay our liabilities and the liquidation
preference of any outstanding preferred stock. The common stock has no
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preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are fully paid and non-assessable, and any
shares of common stock in respect of which this prospectus is being delivered
will be fully paid and non-assessable.
The transfer agent for our common stock is EquiServe.
Price Range of AES Common Stock and Common Stock Dividends
Our common stock is traded on the New York Stock Exchange under the symbol
"AES." The following table sets forth for the periods indicated the intra-day
high and low sale prices for the common stock as reported on the Composite
Tape. In April 2000, we announced a two-for-one stock split, in the form of a
stock dividend, for holders of record on May 1, 2000 of our common stock, which
was paid on June 1, 2000. The prices set forth below are adjusted for such
stock split.
High Low
-------- --------
1998
First Quarter...........................................$ 27.16 $ 19.69
Second Quarter.......................................... 29.00 22.82
Third Quarter........................................... 27.69 11.50
Fourth Quarter.......................................... 23.69 16.00
1999
First Quarter...........................................$ 24.63 $ 16.41
Second Quarter.......................................... 29.88 18.38
Third Quarter........................................... 33.35 26.53
Fourth Quarter.......................................... 38.19 25.22
2000
First Quarter...........................................$ 44.72 $ 34.25
Second Quarter.......................................... 49.63 35.56
Third Quarter (through September 14, 2000) ............. 67.50 45.13
No cash dividends have been paid on common stock since December 22, 1993
in order to provide capital for our equity investments in projects.
Our ability to declare and pay dividends is dependent, among other things,
on
o the ability of our project subsidiaries to declare and pay dividends
and otherwise distribute cash to us;
o our ability to service our parent company debt and
o our ability to meet certain criteria for paying dividends under our
corporate credit facility and under existing indentures of our debt
securities.
The ability of our subsidiaries to declare and pay dividends and otherwise
distribute cash to us is subject to certain limitations in the project loans
and other documents entered into by our project subsidiaries. These limitations
permit the payment of dividends out of current cash flow for quarterly,
semi-annual or annual periods only at the end of these periods and only after
payment of principal and interest on project loans due at the end of these
periods.
Cash dividend payments on common stock are limited to a certain percentage
of cash flow under our corporate credit agreement. The indentures relating to
our existing senior subordinated notes preclude the payment of cash dividends
if:
o at the time of a payment of cash dividends or after giving effect
thereto an event of default occurred;
o an event that would become an event of default occurred and is
continuing;
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o certain fixed charge coverage ratios are not met or
o if the payment of dividends, together with other restricted payments,
would exceed certain limits.
Preferred Stock
As of July 31, 2000, there were no shares of Preferred Stock outstanding.
Our board of directors has the authority to issue preferred stock in one
or more classes or series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, exchange rights, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting any class or
series or the designation of such class or series, without any further action
by the stockholders. Preferred stock, if issued, will not be entitled to any
preemptive or similar rights. The prospectus supplement will describe the terms
of any preferred stock being offered, including:
o the specific designation, number of shares, seniority and purchase
price;
o any liquidation preference per share;
o any date of maturity;
o any redemption, repayment or sinking fund provisions;
o any dividend rate or rates and the dates on which any such dividends
will be payable (or the method by which such rates or dates will be
determined);
o any voting rights;
o if other than the currency of the United States, the currency or
currencies including composite currencies in which such preferred
stock is denominated and/or in which payments will or may be payable;
o the method by which amounts in respect of such preferred stock may be
calculated and any commodities, currencies or indices, or value, rate
or price, relevant to such calculation;
o whether such preferred stock is convertible or exchangeable and, if
so, the securities or rights into which such preferred stock is
convertible or exchangeable, and the terms and conditions upon which
such conversions or exchanges will be effected including conversion
or exchange prices or rates, the conversion or exchange period and
any other related provisions;
o the place or places where dividends and other payments on the
preferred stock will be payable; and
o any additional voting, dividend, liquidation, redemption and other
rights, preferences, privileges, limitations and restrictions.
All shares of preferred stock offered hereby, or issuable upon conversion,
exchange or exercise of securities, will, when issued, be fully paid and
non-assessable. Any shares of preferred stock that are issued would have
priority over the common stock with respect to dividend or liquidation rights
or both.
The transfer agent for each series of preferred stock will be described in
the applicable prospectus supplement.
Description of Certain Provisions of Our Certificate of Incorporation and
By-Laws
Our Certificate of Incorporation and By-Laws contain several provisions
that may make the acquisition of control of AES through a tender offer, open
market purchases, a proxy fight or otherwise more difficult. Below is a
description of certain of these provisions in the Certificate of Incorporation
and By-Laws.
Special Meetings of Stockholders. Our By-Laws provide that, unless
otherwise prescribed by law, special meetings of stockholders may be called by
a resolution adopted by a majority of the entire board of directors, by the
chairman of the board of directors or by the president. Only business as
specified in the notice of stockholders of the special meeting shall be
considered.
Stockholder Nomination of Directors. Our By-Laws contain a procedure for
stockholder
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nomination of directors. The By-Laws provide that any record owner of stock
entitled to be voted generally in the election of directors may nominate one or
more persons for election as a director at a stockholders meeting only if
written notice is given to our secretary of the intent to make a nomination.
The notice must be given, with respect to an annual meeting, not later than 90
days in advance of the annual meeting. With respect to a special meeting, the
notice must be given not later than the close of business on the seventh day
following the earlier of
o the date on which notice of such special meeting is first given to
stockholders and
o the date on which a public announcement of such meeting is first
made.
Each notice must include:
o the name and address of each stockholder who intends to appear in
person or by proxy to make the nomination and of the person or
persons to be nominated;
o a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming
them) pursuant to which the nomination is to be made by the
stockholder;
o other information regarding each nominee proposed as would have been
included in a proxy statement filed pursuant to Rule 14a-8 under the
Exchange Act and
o the consent of each nominee to serve if elected.
The presiding officer of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with this procedure.
The procedure for stockholder nomination of directors described above may
have the effect of precluding a nomination for election of directors at a
particular meeting if the required procedure is not followed.
Elimination of Liability; Indemnification. Except as described below, the
Certificate of Incorporation eliminates the liability of members of our board
of directors to us or our stockholders for monetary damages resulting from
breaches of their fiduciary duties as directors. Directors remain liable for
breaches of their duty of loyalty to us or our stockholders, as well as for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law and transactions from which a director derives
improper personal benefit. The Certificate of Incorporation also does not
release directors of liability under Section 174 of the Delaware General
Corporation Law (the "GCL"), which makes directors personally liable for
unlawful dividends or unlawful stock repurchases or redemptions if the unlawful
conduct is willful or results from negligence.
Under our By-Laws, and in accordance with Section 145 of the GCL, we shall
indemnify to the fullest extent permitted by the GCL any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding. These include civil, criminal,
administrative or investigative proceedings by reason of the fact that the
person is or was a director or officer of or employed by us, or is or was
serving in that capacity or as an agent at the request of us for another
entity. Our indemnification covers expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with the defense
or settlement of an action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to
our best interests and, with respect to any criminal action or proceeding, had
no reasonable cause to believe was unlawful. We will indemnify persons in a
derivative action under the same conditions, except that no indemnification is
permitted without judicial approval if the person is adjudged to be liable to
us in the performance of his or her duty. Derivative actions are actions by us
or in the right of us to procure a judgment in our favor. Agents of ours may be
similarly indemnified at the discretion of the board of directors.
Under Section 145 of the GCL, a similar duty of care is applicable in the
case of derivative actions, except that indemnification only extends to
expenses incurred in connection with the defense or settlement of a derivative
action and then, where the person is adjudged to be liable to us, only if and
to the extent that the Court of Chancery of the State of Delaware or the court
in which the action was brought determines that the person is fairly and
reasonably
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entitled to the indemnity and only for those expenses as the court deems proper.
Pursuant to our By-Laws, a person eligible for indemnification may have
the expenses incurred in connection with any matter described above paid in
advance of a final disposition by us. However, these advances will only be made
if the indemnified person undertakes to repay all advanced amounts if it is
determined that the person is not entitled to indemnification.
In addition, under our By-Laws, we may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of us
or of another corporation against any liability arising out of the person's
status as director, officer, employee or agent of us whether or not we would
have the power to indemnify such person against such liability under the
provisions of our By-Laws. We maintain directors' and officers' insurance.
Depositary Shares
General. We may, at our option, elect to offer fractional shares of
preferred stock, rather than full shares of preferred stock. If we exercise
this option, we will issue to the public receipts for depositary shares, and
each of these depositary shares will represent a fraction (to be set forth in
the application prospectus supplement) of a share of a particular series of
preferred stock.
The shares of any series of preferred stock underlying the depositary
shares will be deposited under a deposit agreement between us and a bank or
trust company selected by us. The depositary will have its principal office in
the United States and a combined capital and surplus of at least $50,000,000.
Subject to the terms of the deposit agreement, each owner of a depositary share
will be entitled, in proportion, to the applicable fraction of a share of
preferred stock underlying that depositary share, to all the rights and
preferences of the preferred stock underlying that depositary share. Those
rights include dividend, voting, redemption and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock underlying
the depositary shares, in accordance with the terms of the offering. Copies of
the forms of deposit agreement and depositary receipt will be filed as exhibits
to the registration statement. The following summary of the deposit agreement,
the depositary shares and the depositary receipts is not complete. You should
refer to the forms of the deposit agreement and depositary receipts that will
be filed with the Securities and Exchange Commission in connection with the
offering of the specific depositary shares.
Pending the preparation of definitive engraved depositary receipts, the
depositary may, upon our written order, issue temporary depositary receipts
substantially identical to the definitive depositary receipts but not in
definitive form. These temporary depositary receipts entitle their holders to
all the rights of definitive depositary receipts which are to be prepared
without unreasonable delay. Temporary depositary receipts will then be
exchangeable for definitive depositary receipts at our expense.
Dividends and Other Distributions. The depositary will distribute all cash
dividends or other cash distributions received with respect to the preferred
stock to the record holders of depositary shares relating to the preferred
stock in proportion to the number of depositary shares owned by those holders.
If there is a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
that are entitled to receive the distribution, unless the depositary determines
that it is not feasible to make the distribution. If this occurs, the
depositary may, with our approval, sell the property and distribute the net
proceeds from the sale to the applicable holders.
Redemption of Depositary Shares. If a series of preferred stock
represented by depositary shares is subject to redemption, the depositary
shares will be redeemed from the proceeds received by the depositary resulting
from the redemption, in whole or in part, of that series of preferred stock
held by the depositary. The redemption price per depositary share will be equal
to the applicable redemption fraction of the redemption price per share payable
with respect to that series of the preferred stock. Whenever we redeem shares
of preferred stock that are held by the depositary, the depositary will redeem,
as of the same redemption date, the number
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of depositary shares representing the shares of preferred stock so redeemed. If
fewer than all the depositary shares are to be redeemed, the depositary shares
to be redeemed will be selected by lot or pro rata as may be determined by the
depositary.
Voting the Preferred Stock. Upon receipt of notice of any meeting at which
the holders of the preferred stock are entitled to vote, the depositary will
mail the information contained in such notice to the record holders of the
depositary shares underlying the preferred stock. Each record holder of the
depositary shares on the record date (which will be the same date as the record
date for the preferred stock) will be entitled to instruct the depositary as to
the exercise of the voting rights pertaining to the amount of the preferred
stock represented by such holder's depositary shares. The depositary will then
try, as far as practicable, to vote the number of shares of preferred stock
underlying those depositary shares in accordance with such instructions, and we
will agree to take all actions which may be deemed necessary by the depositary
to enable the depositary to do so. The depositary will not vote the shares of
preferred stock to the extent it does not receive specific instructions from
the holders of depositary shares underlying the preferred stock.
Amendment and Termination of the Depositary Agreement. The form of
depositary receipt evidencing the depositary shares and any provision of the
deposit agreement may at any time be amended by agreement between us and the
depositary. However, any amendment which materially and adversely alters the
rights of the holders of depositary shares will not be effective unless the
amendment has been approved by the holders of at least a majority of the
depositary shares then outstanding. The deposit agreement may be terminated by
us or by the depositary only if (a) all outstanding depositary shares have been
redeemed or (b) there has been a final distribution of the underlying preferred
stock in connection with our liquidation, dissolution or winding up and the
preferred stock has been distributed to the holders of depositary receipts.
Charges of Depositary. We will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. We will also pay charges of the depositary in connection with the
initial deposit of the preferred stock and any redemption of the preferred
stock. Holders of depositary receipts will pay other transfer and other taxes
and governmental charges and those other charges, including a fee for the
withdrawal of shares of preferred stock upon surrender of depositary receipts,
as are expressly provided in the deposit agreement to be for their accounts.
Miscellaneous. The depositary will forward to holders of depositary
receipts all reports and communications from us that we deliver to the
depositary and that we are required to furnish to the holders of the preferred
stock.
Neither we nor the depositary will be liable if either of us is prevented
or delayed by law or any circumstance beyond our control in performing our
respective obligations under the deposit agreement. Our obligations and those
of the depositary will be limited to performance in good faith of our
respective duties under the deposit agreement. Neither we nor the depositary
will be obligated to prosecute or defend any legal proceeding in respect of any
depositary shares or preferred stock unless satisfactory indemnity is
furnished. We and the depositary may rely upon written advice of counsel or
accountants, or upon information provided by persons presenting preferred stock
for deposit, holders of depositary receipts or other persons believed to be
competent and on documents believed to be genuine.
Resignation and Removal of Depositary. The depositary may resign at any
time by delivering notice to us of its election to resign. We may remove the
depositary at any time. Any resignation or removal will take effect upon the
appointment of a successor depositary and its acceptance of the appointment.
The successor depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
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DESCRIPTION OF DEBT SECURITIES
The debt securities may consist of Senior Debt Securities, Subordinated
Debt Securities or Junior Subordinated Debt Securities. The Senior Debt
Securities will be issued under an indenture (the "Senior Debt Indenture")
between AES, as issuer, and either Bank One, National Association (formerly
known as The First National Bank of Chicago) or The Bank of New York, as
trustee. The Senior Subordinated Debt Securities will be issued under an
indenture (the "Senior Subordinated Debt Indenture") between AES, as issuer,
and either Bank One, National Association (formerly known as The First National
Bank of Chicago) or The Bank of New York, as trustee. The Junior Subordinated
Debt Securities will be issued under an indenture (the "Junior Subordinated
Debt Indenture") between AES, as issuer, and either Bank One, National
Association (formerly known as The First National Bank of Chicago) or The Bank
of New York, as trustee. The Senior Debt Indenture, the Senior Subordinated
Debt Indenture and the Junior Subordinated Debt Indenture are collectively
referred to herein as the "Indentures."
The Indentures have been incorporated by reference or included herein as
exhibits to the registration statement of which this Prospectus is a part and
are also available for inspection at the office of the trustee. The Indentures
are subject to and governed by the Trust Indenture Act of 1939 (the "Trust
Indenture Act"). Section references contained herein are applicable to each of
the Indentures. The following summaries of the Indentures are not complete.
Where reference is made to particular provisions of the Indentures, these
provisions, including definitions of certain terms, are incorporated by
reference. The Indentures are substantially identical except for provisions
relating to subordination.
General
None of the Indentures limits the amount of debt securities which may be
issued thereunder. Each Indenture provides that debt securities issuable
thereunder may be issued up to the aggregate principal amount which may be
authorized by us from time to time. The prospectus supplement will describe the
terms of any debt securities being offered (the "Offered Debt Securities")
including:
o the designation, aggregate principal amount and authorized
denominations of the Offered Debt Securities;
o the date or dates on which the Offered Debt Securities mature;
o the rate or rates per annum at which the Offered Debt Securities will
bear interest and the method of calculating interest rates, if any;
o the dates on which any interest will be payable and the record dates
for any interest payments;
o any mandatory or optional redemption terms or prepayment, conversion,
sinking fund or exchangeability provisions;
o the place where the principal of and interest on the Offered Debt
Securities will be payable;
o if other than denominations of $1,000 or multiples thereof, the
denominations in which the Offered Debt Securities will be issuable;
o whether the Offered Debt Securities will be issued in the form of
Global Securities (as defined below) or certificates;
o additional provisions, if any, relating to the defeasance of the
Offered Debt Securities;
o the currency or currencies, if other than the currency of the United
States, in which payment of the principal of and interest on the
Offered Debt Securities will be payable;
o whether the Offered Debt Securities will be issuable in registered
form or bearer form ("Bearer Securities") or both and, if Bearer
Securities are issuable, any restrictions applicable to the exchange
of one form for another and the offer, sale and delivery of Bearer
Securities;
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o any applicable United States federal income tax consequences,
including whether and under what circumstances we will pay additional
amounts on Offered Debt Securities held by a person who is not a U.S.
Person (as defined in each prospectus supplement relating to any
particular series of debt securities offered thereby) in respect of
any tax, assessment or governmental charge withheld or deducted and,
if so, whether we will have the option to redeem these Offered Debt
Securities rather than pay the additional amounts;
o the dates on which premium, if any, will be payable;
o our right, if any, to defer payment of interest and the maximum
length of any deferral period;
o any listing on a securities exchange;
o the initial public offering price and
o other specific terms, including any additional events of default or
covenants provided for with respect to the Offered Debt Securities.
As described in each prospectus supplement relating to any particular
series of debt securities offered thereby, the indenture may contain covenants
limiting:
o the incurrence of debt by us;
o the incurrence of debt by subsidiaries of us;
o the making of certain payments by us and our subsidiaries;
o subsidiary mergers;
o business activities of us and our subsidiaries;
o the issuance of preferred stock of subsidiaries;
o asset dispositions;
o transactions with affiliates;
o liens and
o mergers and consolidations involving AES.
Book-Entry Systems
If so specified in any prospectus supplement relating to debt securities,
debt securities of any series may be issued under a book-entry system in the
form of one or more global securities (each, a "Global Security"). Each Global
Security will be deposited with, or on behalf of, a depositary, which will be
The Depository Trust Company, New York, New York (the "Depositary"). The Global
Securities will be registered in the name of the Depositary or its nominee.
The Depositary has advised us that the Depositary is a limited purpose
trust company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York banking law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. The Depositary was created
to hold securities of its participants and to facilitate the clearance and
settlement of securities transactions among its participants through electronic
book-entry changes in accounts of the participants, thereby eliminating the
need for physical movement of securities certificates. The Depositary's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations, some of which (and/or
their representatives) own the Depositary. Access to the Depositary's
book-entry system is also available to others, such as banks, brokers, dealers,
and trust companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly.
When a Global Security is issued in registered form, the Depositary will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the debt securities represented by each Global Security to
the participants' accounts. The accounts to be credited will be designated by
the underwriters, dealers, or agents, if any. If debt securities are offered
and sold directly by us, we will designate the accounts to be credited.
Ownership of
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beneficial interests in the Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests by participants in the Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, the
participants' records. The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of the securities in definitive
form. These laws may impair the ability to transfer beneficial interests in a
Global Security.
So long as the Depositary or its nominee is the owner of record of a
Global Security, we consider the Depositary or its nominee the sole owner or
holder of the debt securities represented by the Global Security for all
purposes under the Indenture under which the debt securities are issued. Except
as set forth below, owners of beneficial interests in a Global Security will
not be entitled to have the debt security represented by the Global Security
registered in their names, and will not receive or be entitled to receive
physical delivery of the Debt Securities in definitive form and will not be
considered the owners or holders thereof under the Indenture under which these
debt securities are issued. Accordingly, each person owning a beneficial
interest in a Global Security must rely on the procedures of the Depositary.
Persons who are not participants must rely on the procedures of the participant
through which they own their interest. We understand that under existing
industry practices, if we request any action of holders or if any owner of a
beneficial interest in a Global Security desires to give or take any action
which a holder is entitled to give or take under the applicable Indenture, the
Depositary would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instruction of beneficial owners holding
through them.
Payments of principal, premium, if any, and interest on debt securities
represented by a Global Security registered in the name of the Depositary or
its nominee will be made to the Depositary or nominee, as the registered owner.
None of AES, the trustee or any other agent of us or agent of the trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Security or for maintaining, supervising, or reviewing any records relating to
such beneficial ownership interests.
We have been advised by the Depositary that the Depositary will credit
participants' accounts with payments of principal, premium, if any, or interest
on the payment date thereof in amounts proportionate to their respective
beneficial interests in the principal amount of the Global Security as shown on
the records of the Depositary. We expect that payments by participants to
owners of beneficial interests in the Global Security held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers
registered in "street name," and will be the responsibility of such
participants.
A Global Security may not be transferred except as a whole:
o by the Depositary to a nominee or successor of the Depositary or
o by a nominee of the Depositary to another nominee of the Depositary.
A Global Security representing all but not part of an offering of debt
securities hereby is exchangeable for debt securities in definitive form of
like tenor and terms if:
o The Depositary notifies us that it is unwilling or unable to continue
as depositary for the Global Security or if at any time the
Depositary is no longer eligible to be in good standing as a clearing
agency registered under the Exchange Act, and we do not appoint a
successor depositary within 90 days after we receive notice or become
aware of the ineligibility or
o We in our sole discretion at any time determine not to have all of
the debt securities represented in an offering of Offered Debt
Securities by a Global Security and notify the trustee thereof.
A Global Security exchangeable pursuant to the preceding sentence shall be
exchangeable for debt securities registered in the names and in the authorized
denominations as the Depositary for the Global Security shall direct. The debt
securities of a
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series may also be issued in the form of one or more bearer global debt
securities (a "Bearer Global Security") that will be deposited with a common
depositary for Euroclear and Clearstream, or with a nominee for that depositary
identified in the prospectus supplement relating to the series. The specific
terms and procedures, including the specific terms of the depositary
arrangement, with respect to any portion of a series of debt securities to be
represented by a Bearer Global Security will be described in the prospectus
supplement.
Senior Debt Securities
The payment of principal, premium, if any, and interest on the Senior Debt
Securities will, to the extent and in the manner set forth in the Senior Debt
Indenture, rank equally with all unsecured and unsubordinated debt.
Subordination of Senior Subordinated Debt Securities
The payment of principal, premium, if any, and interest on the Senior
Subordinated Debt Securities will, to the extent and in the manner set forth in
the Senior Subordinated Debt Indenture, be subordinated in right of payment to
the prior payment in full, in cash equivalents, of all Senior Debt.
Upon any payment or distribution of assets to our creditors upon any
liquidation, dissolution, winding up, receivership, reorganization, assignment
for the benefit of creditors, marshaling of assets and liabilities or any
bankruptcy, insolvency or similar proceedings, the holders of all Senior Debt
will first be entitled to receive payment in full of all amounts due or to
become due thereon before the holders of the Senior Subordinated Debt
Securities will be entitled to receive any payment in respect of the principal,
premium, if any, or interest on the Senior Subordinated Debt Securities.
No payments of principal, premium, if any, or interest in respect of the
Senior Subordinated Debt Securities may be made by us if a default in any
payment with respect to Senior Debt has occurred and is continuing. In
addition, during the continuance of any other event of default (other than a
payment default) with respect to Designated Senior Debt pursuant to which the
maturity thereof may be accelerated, no payments of principal, premium, if any,
or interest in respect of the Senior Subordinated Debt Securities may be made
by us for a period (the "Payment Blockage Period") beginning on the date of
delivery of written notice of the holders and ending 179 days thereafter
(unless the Payment Blockage Period shall be terminated by written notice to
the trustee from the holders of Designated Senior Debt or from an agent of
these holders, or the event of default has been cured or waived or has ceased
to exist). Only one Payment Blockage Period may be commenced with respect to
the Senior Subordinated Debt Securities during any period of 360 consecutive
days. No event of default which existed or was continuing on the date of the
beginning of any Payment Blockage Period shall be the basis for the beginning
of any subsequent Payment Blockage Period by the holders of Designated Senior
Debt, unless such event of default shall have been cured or waived for a period
of not less than 90 days.
Due to this subordination, in the event of insolvency, funds that would
otherwise be payable to holders will be paid to the holders of Senior Debt to
the extent necessary to pay the Senior Debt in full, and we may be unable to
meet fully our obligations with respect to the Senior Subordinated Debt
Securities.
"Debt" is defined to mean, with respect to any person at any date of
determination (without duplication):
o all indebtedness for borrowed money;
o all obligations evidenced by bonds, debentures, notes or other
similar instruments;
o all obligations in respect of letters of credit or bankers'
acceptance or other similar instruments (or reimbursement obligations
with respect thereto);
o all obligations to pay the deferred purchase price of property or
services, except trade payables;
o all obligations as lessee under capitalized leases;
o all Debt of others secured by a lien on any asset of the person,
whether or not the Debt is assumed by that person; provided that, for
purposes of determining the amount of any Debt of the type described
in this
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clause, if recourse with respect to that Debt is limited to that
asset, the amount of that Debt shall be limited to the lesser of the
fair market value of the asset or the amount of the Debt;
o all Debt of others guaranteed by that person to the extent that Debt
is guaranteed by such person;
o all redeemable stock valued at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends;
and,
o to the extent not otherwise included in this definition, all
obligations under currency agreements and interest rate agreements.
"Designated Senior Debt" is defined to mean:
o Debt under the Credit Agreement dated as of August 2, 1996 (the
"Credit Agreement") among The AES Corporation, the banks named on the
signature pages thereof and the Morgan Guaranty Trust Company of New
York, as agent for the banks, as such Credit Agreement has been and
may be amended, restated, supplemented or otherwise modified from
time to time; and
o Debt constituting Senior Debt which, at the time of its determination
o has an aggregate principal amount of at least $30 million; and
o is specifically designated by us as "Designated Senior Debt."
"Senior Debt" is defined to mean the principal of, premium, if any, and
interest on all of our Debt whether created, incurred or assumed before, on or
after the date of the Senior Subordinated Debt Indenture; provided that Senior
Debt shall not include:
o our 8.875% Senior Subordinated Debentures due 2027, 8.50% Senior
Subordinated Notes due 2007, 8.375% Senior Subordinated Notes Due
2007 and our 10.25% Senior Subordinated Notes due 2006 which rank
equally with the Senior Subordinated Debt Securities;
o our Debt to any affiliate;
o Debt of ours that, when incurred, and without respect to any election
under Section 1111(b) of Title 11, U.S. Code, was without recourse;
o any other Debt of ours which by the terms of the instrument creating
or evidencing the same are specifically designated as not being
senior in right of payment to the Senior Subordinated Debt
Securities; and
o our redeemable stock.
Subordination of Junior Subordinated Debt Securities
The payment of principal, premium, if any, and interest on the Junior
Subordinated Debt Securities will, to the extent and in the manner set forth in
the Junior Subordinated Debt Indenture, be subordinated in right of payment to
the prior payment in full, in cash or cash equivalents, of all our Senior and
Subordinated Debt.
Upon any payment or distribution of assets to our creditors upon any
liquidation, dissolution, winding up, receivership, reorganization, assignment
for the benefit of creditors, marshaling of assets and liabilities or any
bankruptcy, insolvency or similar proceedings, the holders of all Senior and
Subordinated Debt will first be entitled to receive payment in full of all
amounts due or to become due thereon before the holders of the Junior
Subordinated Debt Securities will be entitled to receive any payment in respect
of the principal, premium, if any, or interest on the Junior Subordinated Debt
Securities.
No payments of principal, premium, if any, or interest in respect of the
Junior Subordinated Debt Securities may be made by us if a default in any
payment with respect to Senior and Subordinated Debt has occurred and is
continuing. In addition, during the continuance of any other event of default
(other than a payment default) with respect to Designated Senior and
Subordinated Debt pursuant to which the maturity thereof may be accelerated, no
payments on account of principal, premium, if any, or
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interest may be made by us during a Payment Blockage Period in respect of these
Junior Subordinated Debt Securities (unless the Payment Blockage Period is
terminated by written notice to the trustee from the holders of Designated
Senior and Subordinated Debt or from an agent of such holders, or the event of
default has been cured or waived or has ceased to exist). Only one Payment
Blockage Period may be commenced with respect to the Junior Subordinated Debt
Securities during any period of 360 consecutive days. No event of default which
existed or was continuing on the date of the beginning of any Payment Blockage
Period with respect to the Designated Senior and Subordinated Debt initiating
the Payment Blockage Period shall be the basis for the beginning of any
subsequent Payment Blockage Period by the holders of such Designated Senior and
Subordinated Debt, unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days.
Due to this subordination, in the event of insolvency, funds that would
otherwise be payable to holders of Junior Subordinated Debt Securities will be
paid to the holders of Senior and Subordinated Debt to the extent necessary to
pay the Debt in full, and we may be unable to meet fully our obligations with
respect to the Junior Subordinated Debt Securities.
"Designated Senior and Subordinated Debt" is defined to mean
o Debt under the Credit Agreement; and
o Debt constituting Senior and Subordinated Debt which, at the time of
its determination
o has an aggregate principal amount of at least $30 million; and
o is specifically designated in the instrument as "Designated Senior
and Subordinated Debt" by us.
"Senior and Subordinated Debt" is defined to mean the principal, premium,
if any, and interest on all of our Debt whether created, incurred or assumed
before, on or after the date of the Junior Subordinated Debt Indenture;
provided that Senior and Subordinated Debt shall not include
o our Debt to any affiliate;
o Debt of ours that, when incurred and without respect to any election
under Section 1111(b) of Title 11, U.S. Code, was without recourse;
o any other Debt of ours which by the terms of the instrument creating
or evidencing the same are specifically designated as not being
senior in right of payment to the Junior Subordinated Debt
Securities, and in particular the Junior Subordinated Debt Securities
shall rank equally with all other debt securities and guarantees
issued to an AES Trust or any other trust, partnership or other
entity affiliated with us which is a financing vehicle of ours in
connection with an issuance of preferred securities by that financing
entity and
o our redeemable stock.
Events of Default
An Event of Default, as defined in the Indentures and applicable to debt
securities issued thereunder, will occur with respect to the debt securities of
any series issued under the Indentures if:
1. we default in paying principal or premium, if any, on any debt
security when due, upon acceleration, redemption, mandatory
repurchase, or otherwise;
2. we default in paying interest on any debt security when it becomes
due, and the default continues for a period of 30 days;
3. we default in performing or breach any other covenant or agreement in
the Indentures and the default or breach continues for a period of 60
consecutive days after written notice by the trustee or by the
holders of 25% or more in aggregate principal amount of the debt
securities of all series issued under an Indenture;
4. a court having jurisdiction enters a decree or order for
o relief in respect of AES or any of our Material Subsidiaries in
an involuntary case under any applicable bankruptcy, insolvency,
or other similar law now
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or hereafter in effect;
o appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator, or similar official of AES or any of our
Material Subsidiaries or for all or substantially all of the
property and assets of AES or any of our Material Subsidiaries
or
o the winding up or liquidation of the affairs of AES or any of
our Material Subsidiaries and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60
consecutive days;
5. AES or any of its Material Subsidiaries
o commences a voluntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary
case under any such law,
o consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official of AES or any of its Material
Subsidiaries or for all or substantially all of the property and
assets of AES or any of its Material Subsidiaries or
o effects any general assignment for the benefit of creditors; or
6. any other Events of Default set forth in the applicable prospectus
supplement occur.
If an Event of Default (other than an Event of Default specified in clause
(4) or (5) with respect to AES) occurs with respect to the debt securities of
any series and continues, then the trustee or the holders of at least 25% in
principal amount of the outstanding debt securities may, by written notice to
us, and the trustee at the request of at least 25% in principal amount of the
outstanding debt securities will, declare the principal, premium, if any, and
accrued interest on the outstanding debt securities to be immediately due and
payable. Upon a declaration of acceleration, the principal, premium, if any,
and accrued interest shall be immediately due and payable.
If an Event of Default specified in clause (4) or (5) above occurs with
respect to AES, the principal, premium, if any, and accrued interest on the
debt securities shall be immediately due and payable, subject to the prior
payment in full of all Senior Debt, without any declaration or other act on the
part of the trustee or any holder. The holders of at least a majority in
principal amount of the outstanding debt securities may, by written notice to
us and to the trustee, waive all past defaults with respect to debt securities
and rescind and annul a declaration of acceleration with respect to debt
securities of that series and its consequences if:
o all existing Events of Default applicable to debt securities of that
series, other than the nonpayment of the principal, premium, if any,
and interest on the debt securities that have become due solely by
that declaration of acceleration, have been cured or waived and
o the rescission would not conflict with any judgment or decree of a
court of competent jurisdiction.
For information as to the waiver of defaults, see "-- Modification and
Waiver."
The holders of at least a majority in principal amount of the outstanding
debt securities may direct the time, method, and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee. However, the trustee may refuse to follow any
direction that conflicts with law or the applicable Indenture, that may involve
the trustee in personal liability, or that the trustee determines in good faith
may be unduly prejudicial to the rights of holders of debt securities who did
not join in giving that direction and the trustee may take any other action it
deems proper that is not inconsistent with the direction received from holders
of outstanding debt securities. A holder may not pursue any remedy with respect
to the applicable Indenture or the debt securities of any series unless:
o the holder gives the trustee written notice of a continuing Event of
Default;
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o the holders of at least 25% in principal amount of outstanding debt
securities make a written request to the trustee to pursue the
remedy;
o the holder or holders offer and, if requested, provide the trustee
indemnity satisfactory to the trustee against any costs, liability or
expense;
o the trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity and
o with that 60-day period, the holders of at least a majority in
principal amount of the outstanding debt securities do not give the
trustee a direction that is inconsistent with the request.
However, these limitations do not apply to the right of any holder of a
debt security to receive payment of the principal, premium, if any, or interest
on, that debt security or to bring suit for the enforcement of any payment, on
or after the due date expressed in the debt securities, which right shall not
be impaired or affected without the consent of the holder.
Each of the Indentures requires that certain of our officers certify, on
or before a date not more than four months after the end of each fiscal year,
that to the best of those officers' knowledge, we have fulfilled all our
obligations under the Indenture. We are also obligated to notify the trustee of
any default or defaults in the performance of any covenants or agreements under
any of the Indentures.
"Material Subsidiary" of a Person is defined to mean, as of any date, any
Subsidiary that would constitute a "significant subsidiary" within the meaning
of Article 1 of Regulation S-X of the Securities Act of 1933.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which a majority of the capital stock
or other ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions are at
the time directly or indirectly owned by such Person.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
Modification and Waiver
The Indentures may be amended or supplemented without the consent of any
holder of debt securities to:
o cure ambiguities, defects, or inconsistencies;
o comply with the terms in "Restriction on Mergers, Consolidations and
Sales of Assets" described below;
o comply with any requirements of the Securities and Exchange
Commission in connection with the qualification of the Indentures
under the Trust Indenture Act of 1939;
o evidence and provide for the acceptance of appointment with respect
to the debt securities by a successor Trustee;
o establish the form or forms of debt securities of any series;
o provide for uncertificated debt securities and to make all
appropriate changes for such purpose; and
o make any change that does not adversely affect the rights of any
holder.
Other modifications and amendments of the Indentures may be made with the
consent of the holders of not less than a majority in principal amount of the
outstanding debt securities of each series affected by the amendment (all such
series voting together as a single class). However, no modification or
amendment may, without the consent of each holder affected:
o change the stated maturity of the principal of, or any sinking fund
obligation or any installment of interest on, any debt security;
o reduce the principal amount, premium, if
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any, or interest on, any debt security;
o reduce the above-stated percentage of outstanding debt securities,
the consent of whose holders is necessary to modify or amend that
Indenture with respect to the debt securities of any series issued
under that Indenture;
o reduce the percentage or principal amount of outstanding debt
securities, the consent of whose holders is necessary for waiver of
compliance with certain provisions of that Indenture or for waiver of
certain defaults.
A supplemental indenture which changes or eliminates any covenant or other
provision of an Indenture which has expressly been included solely for the
benefit of one or more particular series of debt securities issued under an
Indenture, or which modifies the rights of holders of debt securities of that
series with respect to that covenant or provision, shall be deemed not to
affect the rights under the applicable Indenture of the holders of debt
securities of any other series issued under the Indenture or of the coupons
appertaining to those debt securities. It is not necessary for the consent of
the holders under this section of an Indenture to approve the particular form
of any proposed amendment, supplement, or waiver, but it is sufficient if the
consent approves the substance thereof. After an amendment, supplement, or
waiver under this section of an Indenture becomes effective, we will give to
the holders affected thereby a notice briefly describing the amendment,
supplement, or waiver. We will mail supplemental indentures to holders upon
request. Any failure of us to mail a notice, or any defect therein, will not
affect the validity of any supplemental indenture or waiver.
Restriction on Mergers, Consolidations and Sales of Assets
Pursuant to the Indentures, we may not consolidate with, merge with or
into, or transfer all or substantially all of our assets to any Person unless:
o AES shall be the continuing Person, or, if AES is not the continuing
Person, the Person formed by such consolidation or into which we
merged or to which properties and assets of ours are transferred is a
solvent corporation organized and existing under the laws of the
United States or any State thereof or the District of Columbia and
expressly assumes in writing all the obligations of ours under the
Notes,
o immediately after giving effect to such transaction no Event of
Default has occurred and is continuing and
o other conditions as may be established in connection with the
issuance of the applicable Debt Securities are met.
Defeasance and Discharge
The Indentures provide that we are deemed to have paid and will be
discharged from all obligations in respect of the debt securities of any series
on the 123rd day after the deposit referred to below has been made, and that
the provisions of an Indenture will no longer be in effect with respect to the
debt securities issued thereunder (except for, among other matters, certain
obligations to register the transfer or exchange of the Debt Securities of such
series, to replace stolen, lost or mutilated Debt Securities of such series, to
maintain paying agencies and to hold monies for payment in trust) if, among
other things,
o we have deposited with the trustee, in trust, money and/or U.S.
Government Obligations that through the payment of interest and
principal in respect thereof, will provide money in an amount
sufficient to pay the principal, premium, if any, and accrued
interest on the applicable debt securities, on the due date thereof
or earlier redemption (irrevocably provided for under arrangements
satisfactory to the trustee), as the case may be, in accordance with
the terms of the Indenture and the applicable debt securities,
o we have delivered to the trustee
o either
-- an opinion of counsel to the effect that holders will not
recognize income, gain or loss for federal income tax
purposes as a result of the exercise of our option under
this "Defeasance" provision and will be subject to federal
income tax on the same
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amount and in the same manner and at the same times as
would have been the case if the deposit, defeasance and
discharge had not occurred, which opinion of counsel must
be based upon a ruling of the Internal Revenue Service to
the same effect unless there has been a change in
applicable federal income tax law or related treasury
regulations after the date of the Indenture that a ruling
is no longer required or
-- a ruling directed to the trustee received from the Internal
Revenue Service to the same effect as the aforementioned
opinion of counsel and
o an opinion of counsel to the effect that the creation of the
defeasance trust does not violate the Investment Company Act of 1940
and after the passage of 123 days following the deposit, the trust
fund will not be subject to the effect of Section 547 of the U.S.
Bankruptcy Code or Section 15 of the New York Debtor and Creditor
Law,
o immediately after giving effect to that deposit on a pro forma basis,
no Event of Default has occurred and is continuing on the date of the
deposit or during the period ending on the 123rd day after the date
of the deposit, and the deposit will not result in a breach or
violation of, or constitute a default under, any other agreement or
instrument to which we are a party or by which we are bound,
o we are not prohibited from making payments in respect of the
applicable debt securities by the subordination provisions contained
in an Indenture and
o if at that time the applicable debt securities are listed on a
national securities exchange, we have delivered to the trustee an
opinion of counsel to the effect that the debt securities will not be
delisted as a result of a deposit, defeasance and discharge.
As more fully described in the prospectus supplement, the Indentures also
provide for defeasance of certain covenants.
OFFERED SECURITIES
The securities which may be offered from time to time by this prospectus
consist of:
o up to 10,000,000 shares of common stock,
o up to $250,000,000 initial offering price of preferred stock, and
o up to $250,000,000 initial offering price of debt securities.
This prospectus also relates to shares of common stock which may be issuable
upon conversion of preferred stock covered by this prospectus with a market
price for such common stock of up to $250,000,000 in the aggregate as of the
date of issuance of such preferred stock, and upon conversion of debt
securities covered by this prospectus with a market price for such common stock
of up to $250,000,000 in the aggregate as of the date of issuance of such debt
securities. We propose to issue and sell the securities in connection with
acquisitions of and investments in other businesses and assets. The securities
or any combination of the securities, either individually or as units
consisting of one or more of the securities, shall be offered each on terms to
be determined at the time of sale. The securities may be issued in exchange for
shares of capital stock, partnership interests or other assets representing an
interest, direct or indirect, in other entities, in exchange for assets used in
or related to the business of such entities or otherwise pursuant to agreements
providing for such acquisitions or investments, as well as additional shares of
common stock which may be issuable upon conversion of any convertible
securities covered by this prospectus. The consideration for these acquisitions
or investments may consist of equity securities, cash,
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indebtedness, assumption of liabilities or a combination thereof. The terms of
these acquisitions and investments and of the issuance of any securities in
connection therewith will generally be determined by direct negotiations with
the owners of the business or assets to be acquired or invested in or, in the
case of entities which are more widely held, through exchange offers to
stockholders or documents soliciting the approval or statutory mergers,
consolidations or sales of assets. Underwriting discounts or commissions will
generally not be paid by us. However, under certain circumstances, we may issue
securities covered by this prospectus to pay brokers' commissions incurred in
connection with acquisitions or investments. For a description of our common
stock and preferred stock, see "Description of Capital Stock" and for a
description of our debt securities, see "Description of Debt Securities."
This prospectus, as amended or supplemented if appropriate, has also been
prepared for use by persons who receive our securities in acquisitions or
investments, including securities sold hereunder and shares of common stock
received upon conversion of convertible securities issued hereunder ("selling
stockholders"); provided, however, that no selling stockholder is authorized to
use this prospectus to reoffer any such securities without first obtaining our
prior written consent. Resales may be made in the manner described in this
prospectus, as amended or supplemented, in the manner permitted by Rule 145(d)
under the Securities Act or pursuant to exemption from the Securities Act.
Profits realized on resales by selling stockholders under certain circumstances
may be regarded as underwriting compensation under the Securities Act.
Resales by selling stockholders may be made directly to investors or
through a securities firm acting as an underwriter, broker or dealer. When
resales are to be made through a securities firm, such securities firm may be
engaged to act as the selling stockholder's agent in the sale of the securities
by such selling stockholder, or the securities firm may purchase securities
from the selling stockholders as principal and thereafter resell such
securities from time to time. The fees earned by or paid to such securities
firm may be the normal stock exchange commission or negotiated commissions or
underwriting discounts to the extent permissible. In addition, such securities
firm may effect resales through other securities dealers, and customary
commissions or concessions to such other dealers may be allowed. Sales of
securities may be at negotiated prices, at fixed prices, at market prices or at
prices related to market prices then prevailing. Any such sales may be made on
The New York Stock Exchange or other exchange on which such securities are
traded, in the over-the-counter market, by block trade, in special or other
offerings, directly to investors or through a securities firm acting as agent
or principal, or a combination of such methods. Any participating securities
firm may be indemnified against certain liabilities, including liabilities
under the Securities Act. Any participating securities firm may be deemed to be
and underwriter within the meaning of the Securities Act, and any commission
earned by such firm may be deemed to be underwriting discounts or commissions
under the Securities Act.
A prospectus supplement, if required, will be filed under Rule 424(b)
under the Securities Act, disclosing the name of the selling stockholder, the
participating securities firm, if any, the number and kind of securities
involved and other details of such resale to the extent appropriate.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for us
by Davis Polk & Wardwell, New York, New York.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from our Annual Report on Form
10-K have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and has
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been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
28
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Under the By-Laws of The AES Corporation (the "Company"), and in
accordance with Section 145 of the Delaware General Corporation Law ("GCL"),
the Company shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than any action or suit by or in the right of the Company to procure a judgment
in its favor, which is hereinafter referred to as a "derivative action") by
reason of the fact that such person is or was a director, officer or employee
of the Company, or is or was serving in such capacity or as an agent at the
request of the Company for another entity, to the full extent authorized by
Delaware law, against expenses (including, but not limited to, attorneys'
fees), judgments, fines and amounts actually and reasonably incurred in
connection with the defense or settlement of such action, suit or proceeding if
such person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe was
unlawful. Agents of the Company may be similarly indemnified, at the discretion
of the Board of Directors.
Under Section 145 of the GCL, a similar standard of care is applicable in
the case of derivative actions, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with the defense or
settlement of such an action and then, where the person is adjudged to be
liable to the Company, only if and to the extent that the Court of Chancery of
the State of Delaware or the court in which such action was brought determines
that such person is fairly and reasonably entitled to such indemnity and only
for such expenses as the court shall deem proper.
Pursuant to Company's By-Laws, a person eligible for indemnification may
have the expenses incurred in connection with any matter described above paid
in advance of a final disposition by the Company. However, such advances will
only be made upon the delivery of an undertaking by or on behalf of the
indemnified person to repay all amounts so advanced if it is ultimately
determined that such person is not entitled to indemnification.
In addition, under the Company's By-Laws, the Company may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Company or of another corporation against any
liability asserted against and incurred by such person in such capacity, or
arising out of the person's status as such whether or not the Company would
have the power or the obligation to indemnify such person against such
liability under the provisions of the Company's By-Laws.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits (see index to exhibits at E-1).
Item 22. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was
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registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Securities and Exchange Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") that are incorporated by reference
in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post- effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) (1) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145 (c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a) (3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration
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statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(e) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(f) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that is has reasonable grounds to believe that it meets all of the
requirements for filing on Forms S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Arlington, State of Virginia on September 15, 2000.
THE AES CORPORATION
By: /s/ Dennis W. Bakke
-------------------------------------
Dennis W. Bakke
President and Chief Executive Officer
The Company and each person whose signature appears below constitutes and
appoints Dennis W. Bakke and William R. Luraschi and any agent for service
named in this Registration Statement and each of them, his, her or its true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him, her or it and in his, her, or its name, place and
stead, in any and all capacities, to sign and file any and all amendments
(including post-effective amendments) to this Registration Statement, to sign
any related registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same with all exhibits thereto, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he, she, or it might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Roger W. Sant Chairman of the Board September 15, 2000
----------------------------
Roger W. Sant
/s/ Dennis W. Bakke President, Chief Executive September 15, 2000
---------------------------- Officer and Director
Dennis W. Bakke (Principal Executive Officer)
/s/ Dr. Alice F. Emerson Director September 15, 2000
----------------------------
Dr. Alice F. Emerson
Director
----------------------------
Robert F. Hemphill, Jr.
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Signature Title Date
--------- ----- ----
/s/ Frank Jungers Director September 15, 2000
---------------------------
Frank Jungers
Director
----------------------------
John H. McArthur
Director
----------------------------
Hazel O'Leary
/s/ Thomas I. Unterberg Director September 15, 2000
----------------------------
Thomas I. Unterberg
/s/ Robert H. Waterman, Jr. Director September 15, 2000
----------------------------
Robert H. Waterman, Jr.
/s/ Barry J. Sharp Senior Vice President and September 15, 2000
---------------------------- Chief Financial Officer
Barry J. Sharp (Principal Financial and
Accounting Officer)
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EXHIBIT INDEX
Exhibits Description of Exhibit
-------- ----------------------
4.1 Sixth Amended and Restated Certificate of Incorporation of The AES
Corporation is incorporated herein by reference to Exhibit 3.1 to the
Quarterly Report on Form 10-Q of the Registrant for the quarterly
period ended March 31, 2000 filed May 15, 2000.
4.2 By-Laws of The AES Corporation, as amended is incorporated herein
by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q
of the Registrant for the quarterly period ended June 30, 1998
filed August 14, 1998.
4.3 Form of Senior Debt Securities Indenture between the Company and the
Trustee (incorporated by reference to Exhibit 4.1 of Amendment No. 1
to Registration Statement No. 333-81953 on Form S-3 filed on July 13,
1999)
4.4 Form of Senior Subordinated Debt Securities Indenture between the
Company and the Trustee (incorporated by reference to Exhibit 4.2 of
Amendment No. 1 to Registration Statement No. 333- 81953 on Form S-3
filed on July 13, 1999)
4.5 Form of Junior Subordinated Debt Securities Indenture between the
Company and the Trustee (incorporated by reference to Exhibit 4.3 of
Amendment No. 1 to Registration Statement No. 333- 81953 on Form S-3
filed on July 13, 1999)
5.1+ Opinion of Davis Polk & Wardwell
12.1 Computation of ratio of earnings to fixed charges
23.1 Consent of Deloitte & Touche LLP
23.3+ Consent of Davis Polk & Wardwell (included in Exhibit 5.1)
24.1 Powers of Attorney for the Company (included on signature page)
25.1+ Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Bank One, National Association (formerly known as The
First National Bank of Chicago), as Trustee, under the Senior Debt
Securities Indenture
25.2+ Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Bank One, National Association (formerly known as The
First National Bank of Chicago), as Trustee, under the Senior
Subordinated Debt Securities Indenture
25.3+ Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Bank One, National Association (formerly known as The
First National Bank of Chicago), as Trustee, under the Junior
Subordinated Debt Securities Indenture
25.4+ Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee, under the Senior Debt
Securities Indenture
25.5+ Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee, under the Senior
Subordinated Debt Securities Indenture
25.6+ Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee, under the Junior
Subordinated Debt Securities Indenture
---------------------------
+ To be filed by Amendment.
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