Table of Contents
Filed Pursuant to Rule 424(b)(2)
File No. 333-263244
PROSPECTUS SUPPLEMENT
(To Prospectus Dated March 2, 2022)
$950,000,000 7.600%
Fixed-to-Fixed
Reset Rate Junior Subordinated Notes due 2055
We are offering$950,000,000 aggregate principal amount of 7.600%
Fixed-to-Fixed
Reset Rate Junior Subordinated Notes due 2055 (the "notes"). The notes will
bear interest(i) from and including the original issue date (as defined
herein) to, but excluding, January 15, 2030 at the rate of 7.600% per annum
and (ii) from and including January 15, 2030, during each Reset Period (as
defined herein) at arate per annum equal to the Five-year U.S. Treasury Rate
(as defined herein) as of the most recent Reset Interest Determination Date
(as defined herein) plus a spread of 3.201%, to be reset on each Reset Date
(as defined herein). The notes willmature on January 15, 2055. Interest on the
notes will accrue from and including May 21, 2024 and will be payable
semi-annually in arrears on January 15 and July 15 of each year, beginning on
January 15, 2025.
So long as no Event of Default (as defined herein) with respect to the notes
has occurred and is continuing, we may, at our option, deferinterest payments
on notes, from time to time, for one or more deferral periods of up to 20
consecutive semi-annual Interest Payment Periods (as defined herein). During
any deferral period, interest on the notes will continue to accrue at
thethen-applicable interest rate on the notes (as reset from time to time on
any Reset Date occurring during such deferral period in accordance with the
terms of the notes) and, in addition interest on deferred interest will accrue
at thethen-applicable interest rate on the notes (as reset from time to time
on any Reset Date occurring during such deferral period in accordance with the
terms of the notes), compounded semi-annually, to the extent permitted by
applicable law. See"Description of the Notes--Option to Defer Interest
Payments."
At our option, we may redeem notes at the times and at theapplicable
redemption prices described in this prospectus supplement. The notes will be
our unsecured obligations and will rank junior and subordinate in right of
payment to the prior payment in full of our existing and future Senior
Indebtedness(as defined herein). The notes will rank equally in right of
payment with any future unsecured indebtedness that we may incur from time to
time if the terms of such indebtedness provide that it ranks equally with the
notes in right of payment. Noneof our subsidiaries will guarantee the notes.
The notes will be issued only in registered form in minimum denominations of
$2,000 and integral multiples of $1,000 in excess thereof.
We intend to allocate an amount equal to the net proceedings from this
offering to one or more Eligible Green Projects (as defined herein).Pending
such allocation, we intend to use the net proceeds from this offering for
general corporate purposes. See "Use of Proceeds."
The notes are a new issue of securities with no established trading market. We
do not intend to apply for the listing or trading of the noteson any
securities exchange of trading facility or for inclusion of the notes in any
automated quotation system.
Investing inthe notes involves risks that are described in the "
Risk Factors
" section beginning on page
S-13
of this prospectus supplement.
Price to Underwriting Proceeds,
Public(1) Discount Before
Expenses, to
Us
Per Note 100.000 % 1.000 % 99.000 %
Total $ 950,000,000 $ 9,500,000 $ 940,500,000
(1) Plus accrued interest, if any, from May 21, 2024, if settlement occurs after that date.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
thisprospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
Theunderwriters expect to deliver the notes to purchasers in book-entry form
on or about May 21, 2024.
JointBook-Running Managers
Citigroup Goldman Sachs & Co. LLC Mizuho Morgan Stanley SMBC Nikko
Joint Bookrunners
BNP PARIBAS BofA Securities Credit Agricole CIB HSBC MUFG
RBC Capital Markets Santander Scotiabank Wells Fargo Securities
Co-Managers
CIBC Capital Markets Natixis Standard SOCIETE
Chartere GENERALE
d
Bank
The date of this prospectus supplement is May 16, 2024.
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TABLE OF CONTENTS
Page
Prospectus Supplement
About this Prospectus Supplement S-1
Incorporation by Reference S-1
Where You Can Find More Information S-2
Summary S-3
Company Information S-5
Summary Historical Consolidated Financial Information S-6
The Offering S-8
Risk Factors S-13
Forward-Looking Statements S-21
Use of Proceeds S-24
Description of the Notes S-27
U.S. Federal Income Tax Consequences S-44
Underwriting S-49
Legal Matters S-54
Independent Registered Public Accounting Firm S-54
Prospectus
The AES Corporation 1
Where You Can Find More Information 2
Special Note on Forward-Looking Statements 2
Use of Proceeds 2
Description of Securities 3
Validity of Securities 3
Experts 3
We and the underwriters have not authorized anyone to provide any information
other than that contained in or incorporated by reference intothis prospectus
supplement, the accompanying prospectus or any relevant free writing
prospectus prepared by or on behalf of us or to which we have referred you. We
and the underwriters take no responsibility for, and can provide no assurance
as tothe reliability of, any other information that others may give you. We
are not, and the underwriters are not, making an offer or sale of notes in any
jurisdiction where the offer or sale is not permitted. You should assume that
the informationcontained in or incorporated by reference into this prospectus
supplement and the accompanying prospectus is accurate only as of the date
appearing on the front cover of this prospectus supplement or the accompanying
prospectus, as applicable, orthe date of the applicable incorporated document.
Our business, financial condition, results of operations and prospects may
have changed since that date.
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ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement is part of a registration statement that we filed
with the Securities and Exchange Commission (the "SEC")utilizing a "shelf"
registration process. Under this shelf registration process, we are offering
to sell the notes using this prospectus supplement and the accompanying
prospectus. This prospectus supplement describes the specific terms ofthis
offering. The accompanying prospectus gives more general information, some of
which may not apply to this offering. You should read this prospectus
supplement together with the accompanying prospectus and the documents
incorporated by referenceinto this prospectus supplement and the accompanying
prospectus before making a decision to invest in the notes. If the information
in this prospectus supplement or the information incorporated by reference
into this prospectus supplement isinconsistent with the accompanying
prospectus, the information in this prospectus supplement or the information
incorporated by reference into this prospectus supplement will apply and will
supersede that information in the accompanying prospectus.
INCORPORATION BY REFERENCE
We have "incorporated by reference" into this prospectus supplement and the
accompanying prospectus certain documents that we filewith the SEC. This means
that we can disclose important information to you by referring you to another
document filed separately with the SEC. This information incorporated by
reference is a part of this prospectus supplement and the accompanyingprospectus
, unless we provide you with different information in this prospectus
supplement or the information is modified or superseded by a subsequently
filed document. Any information referred to in this way is considered part of
this prospectussupplement and the accompanying prospectus from the date we
file that document.
This prospectus supplement and the accompanyingprospectus incorporate the
documents listed below that we have previously filed with the SEC (other than,
in each case, documents or information deemed to have been furnished and not
filed in accordance with the SEC's rules and regulations),which contain
important information about us, our business, our financial condition and
various important risks you should consider before investing in the notes:
. our Annual Report on
Form
10-K
for the fiscal year ended December 31, 2023 (the "Annual Report"), filed with the SEC on February 26, 2024;
. our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2024 (the "Quarterly Report"), filed with the SEC on May 2, 2024
. our
Definitive Proxy Statement on Schedule 14A
, filed with the SEC on March 14, 2024; and
. our Current Reports on Form
8-K
filed with the SEC on
January 19, 2024
and
April 26, 2024
.
Any reports filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the"Exchange Act") on or after
the date of this prospectus supplement and before the completion of this
offering of the notes will be deemed to be incorporated by reference into this
prospectus supplement and the accompanying prospectus andwill automatically
update, where applicable, and supersede any information contained in this
prospectus supplement or the accompanying prospectus or incorporated by
reference into this prospectus supplement and the accompanying prospectus.
Unlessspecifically stated to the contrary, none of the information that we
disclose under Items 2.02 or 7.01 of any Current Report on Form
8-K
that we have furnished or may from time to time furnish with the SEC isor will
be incorporated by reference into, or otherwise included in, this prospectus
supplement or the accompanying prospectus.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. The SEC also maintains an internet site
athttp://www.sec.gov, from which you can access our filings with the SEC. We
maintain an internet site located at http://www.aes.com, which contains
information pertaining to us. The website (including the information contained
in the website orconnected to the website) is not and shall not be deemed
incorporated into or a part of this prospectus supplement or the accompanying
prospectus.
We have filed a registration statement on Form
S-3
with the SEC with respect to the notes offeredhereby. This prospectus
supplement and the accompanying prospectus do not contain all of the
information included in the registration statement, and you should refer to
the registration statement and its exhibits for that information.
Any statement contained in this prospectus supplement, the accompanying
prospectus or the documents incorporated by reference hereinconcerning,
describing or summarizing the provisions of any document filed with the SEC is
not necessarily complete, and is qualified in its entirety by reference to the
full text of the document filed.
You may obtain, at no cost, copies of each of the documents incorporated by
reference into this prospectus supplement or the accompanyingprospectus (other
than an exhibit to a filing unless that exhibit is specifically incorporated
by reference in that filing) by writing or telephoning the office of General
Counsel, The AES Corporation, 4300 Wilson Boulevard, Arlington, Virginia22203,
telephone number (703)
682-1159.
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SUMMARY
The following summary contains certain information about us and the offering
of the notes. It does not contain all of the information thatmay be important
to you in making a decision to invest in the notes. We urge you to carefully
read the entire prospectus supplement, the accompanying prospectus and the
documents incorporated by reference herein, including our financial
statementsand related notes. You should also read the sections entitled "Risk
Factors" and "Forward-Looking Statements" in this prospectus supplement, our
Annual Report on Form
10-K
for the fiscalyear ended December 31, 2023 (the "Annual Report") and our
Quarterly Report on Form
10-Q
for the period ended March 31, 2024 (the "Quarterly Report"), and any
subsequently filedExchange Act reports for a discussion of important risks
that you should consider before investing in the notes.
Unless otherwiseindicated or the context otherwise requires, the terms "AES,"
"we," "our," "us" and "the Company" refer to The AES Corporation, including
all of its subsidiaries and affiliates, collectively. Theterm "The AES
Corporation" or "Parent Company" refers only to the parent, a publicly held
holding company, The AES Corporation, excluding its subsidiaries and
affiliates.
We are a diversified power generation and utility company organized into the
following four Strategic Business Units ("SBUs"),mainly organized by
technology: Renewables (solar, wind, energy storage, hydro, biomass, and
landfill gas), Utilities (Indianapolis Power & Light Company ("AES Indiana"),
The Dayton Power & Light Company ("AESOhio") and AES El Salvador), Energy
Infrastructure (natural gas, liquefied natural gas, coal,
pet-coke,
diesel, and oil), and New Energy Technologies (green hydrogen, Fluence,
Uplight and 5B).
Strategic Highlights
In 2023 and 2024(through March 31, 2024), we achieved significant milestones
on our strategic objectives, including:
. We signed 6.8 GW of renewables and energy storage under long-term Power Purchase Agreements ("PPAs").
. We completed the construction of 4.1 GW of renewables and energy storage.
. Our backlog, which includes projects with signed contracts, but which are not yet operational, is now 12,650 MW,consisting of:
. 5,848 MW under construction; and
. 6,802 MW with signed PPAs, but that are not yet under construction.
. AES Indiana reached a unanimous settlement agreement for its first rate case since 2018, and received approvalfrom
the IURC in April 2024 to revise customer rates and charges, which is expected to become effective in May 2024.
. AES Ohio received approval from the PUCO for its Electric Security Plan (ESP4),
providing the regulatoryfoundation necessary to enable future investments.
. We exited or announced the sale or closure of 2.1 GW of coal generation in Vietnam, the U.S., and Chile.
. We signed agreements for three-year extensions of 1.4 GW of gas generation at the Southland legacy units inSouthern California.
These extensions will help meet the State of California's grid reliability needs while supporting its decarbonation goals.
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. Awarded up to $2.4 billion of grant funding by the U.S. Department of Energy for two green hydrogen hubswith AES Participation.
. We secured $1.1 billion in asset sale proceeds, to accelerate our
portfolio transformation, outpacing ourtarget of $400 to $600 million.
Business Lines and Strategic Business Units
Within our four SBUs, we have two primary lines of business: generation and
utilities. The generation line of business uses a wide range offuels and
technologies to generate electricity such as coal, gas, hydro, wind, solar,
and biomass. Our utilities business comprises businesses that transmit,
distribute, and in certain circumstances, generate power. In addition, we have
operationsin the renewables area. These efforts include projects primarily in
wind, solar, and energy storage.
Generation
As of March 31, 2024, we owned and/or operated a generation portfolio of
34,920 MW, including generation from our integrated utility, AESIndiana. Our
generation fleet is diversified by fuel type.
Performance drivers of our generation businesses include types of
electricitysales agreements, plant reliability and flexibility, availability
of generation capacity to meet contracted sales, fuel costs, seasonality,
weather variations, economic activity, fixed-cost management, and competition.
Utilities
Ourutility businesses consist of AES Indiana and AES Ohio in the U.S. and four
utilities in El Salvador. AES' six utility businesses distribute power to 2.6
million people and AES' two utilities in the U.S. also include generationcapacit
y totaling 3,500 MW.
AES Indiana, our fully integrated utility, and AES Ohio, our transmission and
distribution regulated utility,each operate as the sole distributors of
electricity within their respective jurisdictions. AES Indiana owns and
operates all of the facilities necessary to generate, transmit and distribute
electricity. AES Ohio owns and operates all of thefacilities necessary to
transmit and distribute electricity. At our distribution business in El
Salvador, we face limited competition due to significant barriers to enter the
market. According to El Salvador's regulation, large regulatedcustomers have
the option of becoming unregulated users and requesting service directly from
generation or commercialization agents.
Ingeneral, our utilities sell electricity directly to
end-users,
such as homes and businesses, and bill customers directly. Key performance
drivers for utilities include the regulated rate of return and tariff,seasonalit
y, weather variations, economic activity and reliability of service.
Recent Developments
On May 15, 2024, AES announced a definitive agreement to sell its 47.3% stake
in AES Brasil Energia S.A. ("AES Brasil") to AurenEnergia ("Buyer") for BRL
11.55 per share, before purchase price adjustments. The sale will be
effectuated through a merger of AES Brasil with the Buyer. AES anticipates
estimated gross cash proceeds of approximately $640 million fromthe sale. The
transaction is expected to close in four to six months and is subject to
customary closing approvals, and a condition precedent related to completion
of a late stage construction project.
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COMPANY INFORMATION
We were incorporated in the State of Delaware in 1981. Our principal executive
office is located at 4300 Wilson Boulevard, Arlington, Virginia22203, and our
telephone number is (703)
522-1315.
The name "AES" and our logo are
AES-owned
trademarks, service marks or trade names. All other trademarks, trade names or
service marks appearing in or incorporated by reference into this prospectus
supplement or the accompanying base prospectusare owned by their respective
holders.
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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The table below presents our summary historical consolidated financial
information for the periods presented, which should be read inconjunction with
"Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the audited consolidated financial statements and
related notes in our Annual Report and "Item 2.Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our unaudited
condensed consolidated financial statements and related notes in our Quarterly
Report, which are incorporated by reference herein. Thesummary consolidated
balance sheet data as of March 31, 2024 have been derived from our unaudited
condensed consolidated financial statements incorporated by reference into
this prospectus supplement. The summary consolidated statement ofoperations
data for each of the years in the three-year period ended December 31, 2023
have been derived from our audited consolidated financial statements
incorporated by reference into this prospectus supplement. The summary
consolidatedstatement of operations data for each of the three-month periods
ended March 31, 2024 and 2023 have been derived from our unaudited condensed
consolidated financial statements incorporated by reference herein.
Our historical results for any prior period are not necessarily indicative of
results to be expected for any future period.
Three Months Ended Years Ended
March 31, December 31,
2024 2023 2023 2022 2021
(unaudited, $ (audited, $
in millions) in millions)
Statement of
Operations Data:
Revenue:
Regulated 853 952 3,423 3,538 2,868
Non-Regulated 2,232 2,287 9,245 9,079 8,273
Total 3,085 3,239 12,668 12,617 11,141
revenue
Cost of
Sales:
Regulated (733 ) (848 ) (2,991 ) (3,162 ) (2,448 )
Non-Regulated (1,733 ) (1,797 ) (7,173 ) (6,907 ) (5,982 )
Total cost (2,466 ) (2,645 ) (10,164 ) (10,069 ) (8,430 )
of sales
Operating 619 594 2,504 2,548 2,711
margin
General and (75 ) (55 ) (255 ) (207 ) (166 )
administrative expenses
Interest (357 ) (330 ) (1,319 ) (1,117 ) (911 )
expense
Interest 105 123 551 389 298
income
Loss on extinguishment (1 ) (1 ) (63 ) (15 ) (78 )
of debt
Other (38 ) (14 ) (99 ) (68 ) (60 )
expense
Other 35 10 89 102 410
income
Gain (loss) on disposal and 43 -- 134 (9 ) (1,683 )
sale of businesses interests
Goodwill -- -- (12 ) (777 ) --
impairment expense
Asset impairment (46 ) (20 ) (1,067 ) (763 ) (1,575 )
expense
Foreign currency (8 ) (42 ) (359 ) (77 ) (10 )
transaction gains (losses)
Other -- -- -- (175 ) --
non-operating
expense
Income (loss) from continuing operations before 277 265 104 (169 ) (1,064 )
taxes and equity in earnings ofaffiliates
Income tax benefit 16 (72 ) (261 ) (265 ) 133
(expense)
Net equity in losses (15 ) (4 ) (32 ) (71 ) (24 )
of affiliates
Income (loss) from 278 189 (189 ) (505 ) (955 )
continuing operations
Gain from disposal of discontinued businesses, -- -- 7 -- 4
net of income tax expense of $7, $0, and
$-1,
respectively
Net income 278 189 (182 ) (505 ) (951 )
(loss)
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Three Months Ended Years Ended
March 31, December 31,
2024 2023 2023 2022 2021
(unaudited, $ (audited, $
in millions) in millions)
Less: Net loss (income) attributable to noncontrolling 154 (38 ) 431 (41 ) 542
interests and redeemable stock ofsubsidiaries
Net income (loss) attributable 432 151 249 (546 ) (409 )
to The AES Corporation
As of
March 31, 2024
(unaudited, $ in
millions)
Balance Sheet Data:
Total Assets $ 47,045
Debt:
Recourse 5,295
Non-recourse 24,308
Total Debt 29,603
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THE OFFERING
The following is a summary of some of the terms of the notes offered hereby.
For a more complete description of the terms of the notes, see"Description of
the Notes" in this prospectus supplement
.
Issuer The AES Corporation.
Notes Offered $950,000,000 aggregate principal amount of 7.600%
Fixed-to-Fixed
Reset Rate Junior Subordinated Notes due 2055.
Maturity The notes will mature on January 15, 2055.
Interest Rate The notes will bear interest (i) from and including May 21, 2024 to, but excluding, January
15, 2030 (the "First Reset Date") at the rate of 7.600% per annum and (ii) from and
including the First Reset Date, during each ResetPeriod at a rate per annum equal to the
Five-year U.S. Treasury Rate as of the most recent Reset Interest Determination Date plus a
spread of 3.201%, to be reset on each Reset Date. For the definitions of the terms "Reset
Period,""Five-year U.S. Treasury Rate," "Reset Interest Determination Date" and "Reset Date"
and for other important information concerning the calculation of interest on the notes,
see "Description of theNotes--Interest Rate and Maturity" in this prospectus supplement.
Interest Payment Dates Subject to our right to defer interest payments as described under
"Optional Interest Deferral" below, interest on the notes will be
payable semi-annually in arrears on January 15 and July 15 of each
year, beginning on January 15, 2025(each, an "Interest Payment Date").
Optional Interest Deferral So long as no Event of Default with respect
to the notes has occurred and is continuing,
we may, at our option, defer interest
payments on the notes,from time to time, for
one or more deferral periods of up to 20
consecutive semi-annual Interest Payment Periods
each (each such deferral period, commencing
on the Interest Payment Date on which
the first such deferred interest payment
otherwisewould have been made, an "Optional
Deferral Period"), except that no such
Optional Deferral Period may extend beyond the
final maturity date of the notes or end on a
day other than the day immediately preceding
an Interest Payment Date. Inother words,
we may declare at our discretion up to a
ten-year
interest payment moratorium on the notes and may choose
to do that on one or more occasions. No interest
will be due or payable on the notesduring any such
Optional Deferral Period unless we elect, at our option,
to redeem notes during such Optional Deferral Period,
in which case accrued and unpaid interest to, but
excluding, the redemption date will be due and payable
on suchredemption date only on the notes being
redeemed, or unless the principal of and interest on
the notes shall have been declared due and payable as
the result of an Event of Default with respect to the
notes, in which case all accrued and unpaidinterest
on the notes shall become due and payable. We may elect,
at our option, to extend the length of any Optional
Deferral Period that is shorter than 20 consecutive
semi-annual Interest Payment Periods (so long as the
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entire Optional Deferral Period does not exceed 20 consecutive semi-annual Interest
Payment Periods or extend beyond the final maturity date of the notes) and to shorten
the length of anyOptional Deferral Period. We cannot begin a new Optional Deferral
Period until we have paid all accrued and unpaid interest on the notes from any previous
Optional Deferral Period. During any Optional Deferral Period, interest on the notes
willcontinue to accrue at the then-applicable interest rate on the notes (as reset from
time to time on any Reset Date occurring during such Optional Deferral Period in
accordance with the terms of the notes). In addition, during any Optional DeferralPeriod,
interest on the deferred interest will accrue at the then-applicable interest rate on
the notes (as reset from time to time on any Reset Date occurring during such Optional
Deferral Period in accordance with the terms of the notes),compounded semi-annually,
to the extent permitted by applicable law. For the definition of the term "Event of
Default," see "Description of the Notes--Events of Default" in this prospectus supplement,
and for the definitionof the term "Interest Payment Period" and other important
information concerning our right to defer interest payments on the notes, see "Description
of the Notes--Option to Defer Interest Payments" in this prospectussupplement.
For information concerning U.S. federal income tax consequences to certain holders if payments of
interest are deferred, see "Risk Factors--Holders subject to U.S. federal income taxation may have to pay
taxeson interest on the notes before they receive payments from us" and "U.S. Federal Income Tax
Consequences--Tax Consequences to U.S. Holders--Exercise of Deferral Option" in this prospectus supplement.
Certain Restrictions During an Optional Deferral Period During an Optional Deferral Period, we may not do any
of the following (subject to certain exceptions):
. declare or pay any dividends or distributions on any Capital Stock (as defined in
"Description of theNotes--Option to Defer Interest Payments") of The AES Corporation;
. redeem, purchase, acquire or make a liquidation payment with respect to any Capital Stock of The AES Corporation;
. pay any principal, interest or premium on, or repay, repurchase or redeem, any indebtedness
of The AESCorporation that ranks equally with or junior to the notes in right of payment; or
. make any payments with respect to any guarantees by The AES Corporation of any indebtedness
if such guaranteesrank equally with or junior to the notes in right of payment.
For further important information, including information concerning the exceptions referred to above,
see "Description of the Notes--Option to Defer Interest Payments" in this prospectus supplement.
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Ranking The notes will be our unsecured obligations and will rank junior and subordinate
in right of payment to the prior payment in full of our existing and future Senior
Indebtedness, to the extent and in the manner set forth under the caption"Description
of the Notes-- Subordination" in this prospectus supplement. For the definition
of the term "Senior Indebtedness," see "Description of the Notes--Subordination"
in this prospectus supplement. Thenotes will rank equally in right of payment with
any future unsecured indebtedness that we may incur from time to time if the terms
of such indebtedness provide that it ranks equally with the notes in right of
payment. The notes will be effectivelysubordinated in right of payment to any secured
indebtedness we have incurred or may incur (to the extent of the value of the
collateral securing such secured indebtedness) and will also be effectively subordinated
to all existing and futureindebtedness and other liabilities and any preferred
equity of our subsidiaries. For additional information, see "Risk Factors--The notes
are subordinated or effectively subordinated to all other indebtedness of The
AES Corporation and itssubsidiaries (other than any unsecured indebtedness The
AES Corporation has incurred or may in the future incur that ranks junior to or
pari passu
with the notes) and the indenture does not
limit the aggregate amount of indebtedness
that TheAES Corporation or its subsidiaries
may incur" and "Description of
the Notes--Ranking" in this prospectus
supplement and "Risk Factors--Risks Related
to the Notes-- The AES Corporation is a
holding company and itsability to make
payments on its outstanding indebtedness,
is dependent upon the receipt of funds
from our subsidiaries," "Risk Factors--Risks
Related to the Notes--The notes are
subordinated or effectively subordinated
to all ofour indebtedness (other than any
unsecured indebtedness that we may in the
future incur that ranks junior to or
pari passu
with the notes) and the indenture does not limit
the aggregate amount of indebtedness that we or
our subsidiaries mayincur" and "Description of the
Notes--Ranking" in this prospectus supplement.
As of March 31, 2024:
. we had approximately $5.3 billion of senior unsecured debt, no secured debt and no subordinated debtoutstanding;
. our subsidiaries, excluding entities held for sale, had approximately $23.9 billion of debt outstanding, allof which was
non-recourse
debt;
. we had approximately $875 million outstanding under supplier financing arrangements; and
. we had approximately $642 million of undrawn borrowing capacity under the revolving facility of our seniorcredit facility.
all of which ranks senior in right of payment to the notes.
No Guarantees The notes will not be guaranteed by any of our subsidiaries.
Mandatory Redemption We will not be required to make mandatory redemption or sinking fund payments
on the notes or to repurchase the notes at the option of the holders.
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Optional Redemption At our option, we may redeem some or all of the notes, as applicable, before their maturity as follows:
. in whole or in part (i) on any day in the period commencing on the date falling
90 days prior to the FirstReset Date and ending on and including the First
Reset Date and (ii) after the First Reset Date, on any Interest Payment Date,
at a redemption price in cash equal to 100% of the principal amount of the
notes being redeemed, plus, subject to theterms described in the first
paragraph under "Description of the Notes-- Redemption--Redemption Procedures;
Cancellation of Redemption" in this prospectus supplement, accrued and unpaid
interest on the notes to be redeemed to, butexcluding, the redemption date;
. in whole but not in part, at any time following the occurrence and
during the continuance of a Tax Event (asdefined in "Description of the
Notes--Redemption--Redemption Following a Tax Event" in this prospectus
supplement) at a redemption price in cash equal to 100% of the principal amount
of the notes, plus, subject to the termsdescribed in the first paragraph
under "Description of the Notes--Redemption--Redemption Procedures;
Cancellation of Redemption" in this prospectus supplement, accrued and
unpaid interest on the notes to, but excluding, theredemption date; and
. in whole but not in part, at any time following the occurrence and during
the continuance of a Rating AgencyEvent (as defined in "Description of the
Notes--Redemption--Redemption Following a Rating Agency Event" in this
prospectus supplement) at a redemption price in cash equal to 102% of the
principal amount of the notes, plus, subjectto the terms described in the
first paragraph under "Description of the Notes--Redemption--Redemption
Procedures; Cancellation of Redemption" in this prospectus supplement, accrued
and unpaid interest on the notes to, butexcluding, the redemption date.
Covenants The notes and related indenture will not limit the amount of Senior Indebtedness
that The AES Corporation may incur or the amount of other indebtedness
or liabilities that The AES Corporation or any of its subsidiaries may incur,
and do notcontain any financial or other similar restrictive covenants.
Book-Entry Form The notes will be issued in registered book-entry form represented
by one or more global notes to be deposited with or on
behalf of The Depository Trust Company, or DTC, or its nominee.
The notes will initially be issued in minimum denominationsof
$2,000 and multiples of $1,000 in excess thereof. Transfers
of the notes will be effected only through the facilities of
DTC. Beneficial interests in the global notes may not be exchanged
for certificated notes except in limited circumstances.
No Prior Market The notes will be new securities for which there is currently no market. Although the underwriters
have informed us that they intend to make a market inthe notes, they are not obligated to do so, and
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they may discontinue market-making activities at any time without notice. Accordingly, we cannot assure you that a liquid market
for the notes will develop or be maintained. The notes will not belisted on any securities exchange or automated quotation system.
Use of Proceeds The expected net proceeds from this offering are estimated to
be approximately $937.5 million, after deducting discounts and
commissions and estimated offering expenses payable by us. We
intend to allocate an amount equal to the net proceedsfrom this
offering to one or more Eligible Green Projects, which may include
the development or redevelopment of such Projects. Pending
such allocation, we intend to use the net proceeds from this
offering for general corporate purposes. See"Use of Proceeds."
Trustee Deutsche Bank Trust Company Americas.
Governing Law The State of New York.
Risk Factors Before investing in the notes, you should carefully consider the information discussed under
the section entitled "Risk Factors" in this prospectus supplement and in our Annual Report.
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RISK FACTORS
Investing in the notes involves a high degree of risk. You should carefully
consider the risks discussed below, together with the financialand other
information contained in or incorporated by reference into this prospectus
supplement and the accompanying prospectus, before deciding whether to invest
in the notes. In addition to the risk factors discussed below, please read
thesections entitled "Risk Factors" and "Forward-Looking Information and Risk
Factor Summary" in our Annual Report, which is incorporated herein by
reference, and the section entitled "Forward-Looking Statements" in
thisprospectus supplement, for more information about important risks that you
should consider before investing in the notes.
Risks Related to theNotes
The AES Corporation is a holding company and its ability to make payments on
its outstanding indebtedness, is dependentupon the receipt of funds from our
subsidiaries.
The AES Corporation is a holding company with no material assets other than
thestock of its subsidiaries. Almost all of The AES Corporation's cash flow is
generated by the operating activities of its subsidiaries. Therefore, The AES
Corporation's ability to make payments on its indebtedness and to fund its
otherobligations is dependent not only on the ability of its subsidiaries to
generate cash, but also on the ability of the subsidiaries to distribute cash
to it in the form of dividends, fees, interest, tax sharing payments, loans or
otherwise.
Our subsidiaries face various restrictions in their ability to distribute
cash. Most of the subsidiaries are obligated, pursuant to loanagreements,
indentures or
non-recourse
financing arrangements, to satisfy certain restricted payment covenants or
other conditions before they may make distributions to The AES Corporation.
Businessperformance and local accounting and tax rules may also limit dividend
distributions. Subsidiaries in foreign countries may also be prevented from
distributing funds to The AES Corporation as a result of foreign governments
restricting therepatriation of funds or the conversion of currencies.
The AES Corporation's subsidiaries are separate and distinct legalentities
and, unless they have expressly guaranteed any of The AES Corporation's
indebtedness, have no obligation, contingent or otherwise, to pay any amounts
due pursuant to such debt or to make any funds available whether by dividends,
fees,loans or other payments.
The notes will be structurally subordinated to the liabilities of our
subsidiaries. Our subsidiaries areseparate and distinct legal entities and
have no obligation, contingent or otherwise, to pay any amounts due on the
notes offered hereby or to make any funds available therefor, whether by
dividends, fees, loans or other payments. Any right we haveto receive any
assets of any of our 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
similarproceedings (and the consequent right of the holders of our debt to
participate in the distribution of, or to realize proceeds from, those assets)
will be structurally subordinated to the claims of any such subsidiary's
creditors (includingtrade creditors and holders of debt issued by such
subsidiary). Accordingly, the notes will be structurally subordinated to all
liabilities of our subsidiaries. At March 31, 2024, our subsidiaries,
excluding entities held for sale, hadapproximately $23.9 billion of debt
outstanding. The indenture governing the notes will not limit the ability of
our subsidiaries to incur additional debt, including guaranteeing other debt
of The AES Corporation.
The notes are subordinated or effectively subordinated to all of our
indebtedness (other than any unsecured indebtedness that we may inthe future
incur that ranks junior to or pari passu with the notes) and the indenture
does not limit the aggregate amount of indebtedness that we or our
subsidiaries may incur.
Pursuant to the terms of the indenture, the notes will be subordinated in
right of payment to all of our existing and future SeniorIndebtedness (as
defined in "Description of the Notes--Subordination"). This means
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that, in the event of (a) our dissolution,
winding-up,
liquidation or reorganization, (b) our failure to pay any interest, principal
or othermonetary amounts due on any of its Senior Indebtedness when due (and
continuance of that default beyond any applicable grace period) or (c)
acceleration of the maturity of any of our Senior Indebtedness as a result of
a default, we will not bepermitted to make any payments on the notes until, in
the case of clause (a), all amounts due or to become due on all of its Senior
Indebtedness have been paid in full, or, in the case of clauses (b) and (c),
all amounts due on its SeniorIndebtedness have been paid in full. For
additional information about the subordination of the notes to our Senior
Indebtedness, see "Description of the Notes--Subordination" in this prospectus
supplement.
At March 31, 2024, we had approximately $29.2 billion aggregate principal
amount of Senior Indebtedness outstanding, excluding debtat entities held for
sale. In addition, the notes will be effectively subordinated in right of
payment to any secured indebtedness we may incur in the future (to the extent
of the value of the collateral securing such secured indebtedness). As ofMarch
31, 2023, the AES Corporation had no secured debt outstanding as a result of
its receipt of an investment grade rating by Standard & Poor's in November
2020. However, prior to November 2020, all outstanding obligations underour
senior credit facility and our senior secured first lien notes due 2025 (the
"2025 Notes") and our senior secured first lien notes due 2030 (the "2030
Notes") were secured by certain of our assets, including the pledge ofcapital
stock of many of The AES Corporation's directly held subsidiaries. If at least
two of Moody's, Standard & Poor's or Fitch cease to provide an investment
grade rating to our long-term debt securities, and we wereunable to obtain an
investment grade rating by another ratings agency, the collateral reversion
provisions in our senior credit facility and the indenture governing the 2025
Notes and the 2030 Notes would require us to secure the indebtednessoutstanding
under such instruments with substantially the same collateral. Most of the
debt of The AES Corporation's subsidiaries is secured by substantially all of
the assets of those subsidiaries. Due to the subordination of the notes to
ourSenior Indebtedness and the effective subordination of the notes to any of
our secured indebtedness, if our assets are distributed upon dissolution,
winding-up,
liquidation or reorganization, holders of ourSenior Indebtedness and any
secured indebtedness would likely recover more, ratably, than the holders of
the notes, and it is possible that no payments would be made to the holders of
the notes.
The indenture governing the notes will not limit the amount of Senior
Indebtedness or secured indebtedness that may be incurred by The AESCorporation
or the amount of other indebtedness or liabilities that may be incurred by The
AES Corporation or any of its subsidiaries. The incurrence by The AES
Corporation or its subsidiaries of additional indebtedness, including the
incurrence ofadditional Senior Indebtedness or secured indebtedness by The AES
Corporation, may have adverse consequences for the holders of the notes,
including making it more difficult for The AES Corporation to satisfy its
obligations with respect to thenotes, a loss of all or part of the trading
value of the notes and a risk that one or more of the credit ratings of the
notes could be lowered or withdrawn. Both The AES Corporation and its
subsidiaries expect to incur substantial amounts ofadditional indebtedness,
including Senior Indebtedness, in the future.
The interest rate on the notes will reset on the First ResetDate and each
subsequent Reset Date.
The interest rate on the notes from their original issue date to the First
Reset Date will be7.600% per annum. Beginning on the First Reset Date, the
interest rate on the notes for each Reset Period will equal the Five-year U.S.
Treasury Rate as of the most recent Reset Interest Determination Date plus a
spread of 3.201%, to be reset oneach Reset Date. We have no control over the
factors that may affect U.S. Treasury rates, including geopolitical, economic,
financial, political, regulatory, judicial or other conditions or events.
The historical Five-year U.S. Treasury Rates are not an indication of future
Five-year U.S. Treasury Rates.
As noted above, the annual interest rate on the notes for each Reset Period
will be set by reference to the Five year U.S. Treasury Rate as ofthe most
recent Reset Interest Determination Date. In the past, U.S. Treasury rates
have experienced significant fluctuations. You should note that historical
levels, fluctuations and trends of U.S. Treasury rates are not necessarily
indicative offuture levels. Any historical upward or downward trend in
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U.S. Treasury rates is not an indication that U.S. Treasury rates are more or
less likely to increase or decrease at any time in the future and you should
not take historical U.S. Treasury ratesas an indication of future U.S.
Treasury Rates.
We can defer interest payments on the notes for one or more Optional
DeferralPeriods of up to 20 consecutive semi-annual Interest Payment Periods
each. This may affect the market price of the notes.
So longas no Event of Default (as defined in "Description of the Notes--Events
of Default") with respect to the notes has occurred and is continuing, we may,
at our option, defer interest payments on the notes, from time to time, for
one ormore Optional Deferral Periods of up to 20 consecutive semi-annual
Interest Payment Periods each, except that no such Optional Deferral Period
may extend beyond the final maturity date of the notes or end on a day other
than the day immediatelypreceding an Interest Payment Date. In other words, we
may declare at our discretion up to a
ten-year
interest payment moratorium on the notes and may choose to do that on one or
more occasions. Moreover,following the end of any Optional Deferral Period, if
all amounts then due on the notes are paid, we could immediately start a new
Optional Deferral Period of up to 20 consecutive semi-annual Interest Payment
Periods. No interest will be paid orpayable on the notes during any Optional
Deferral Period unless we elect, at our option, to redeem notes during such
Optional Deferral Period, in which case accrued and unpaid interest to, but
excluding, the redemption date will be due and payableon such redemption date
only on the notes being redeemed, or unless the principal of and interest on
the notes shall have been declared due and payable as a result of an Event of
Default with respect to the notes, in which case all accrued andunpaid
interest on the notes shall become due and payable. Instead, interest on the
notes would be deferred but would continue to accrue at the then-applicable
interest rate on the notes (as reset from time to time on any Reset Date
occurring duringsuch Optional Deferral Period in accordance with the terms of
the notes). In addition, during any Optional Deferral Period interest on the
deferred interest would accrue at the then-applicable interest rate on the
notes (as reset from time to timeon any Reset Date occurring during such
Optional Deferral Period in accordance with the terms of the notes),
compounded semi-annually, to the extent permitted by applicable law. If we
exercise this interest deferral right, the notes may trade at aprice that does
not reflect the value of accrued and unpaid interest on the notes or that is
otherwise substantially less than the price at which the notes would have
traded if we had not exercised such deferral right. If we exercise this
interestdeferral right and you sell your notes during an Optional Deferral
Period, you may not receive the same return on your investment as a holder
that continues to hold its notes until we pay the deferred interest following
the end of such OptionalDeferral Period. In addition, as a result of our right
to defer interest payments, the market price of the notes may be more volatile
than other securities that do not have these rights.
Holders subject to U.S. federal income taxation may have to pay taxes on
interest on the notes before they receive payments from us.
If we defer interest payments on the notes, a holder that is subject to U.S.
federal income tax on a net income basis will berequired to accrue interest
income for U.S. federal income tax purposes in respect of such holder's
proportionate share of the accrued but unpaid interest on the notes, even if
such holder normally reports income when received. As a result,such a holder
will be required to include the accrued interest in its gross income for
United States federal income tax purposes even though the holder will not have
received any cash. A holder's adjusted tax basis in a note generally will
beincreased by such amounts that it was required to include in gross income.
Unpaid interest accrued on the notes during an Optional Deferral Period will
be payable on the Interest Payment Date immediately following the last day of
such OptionalDeferral Period. If a holder sells its notes on or before the
record date for such Interest Payment Date, then all of the interest accrued
on such notes during the Optional Deferral Period will be paid to the person
who is the registered owner ofthose notes at the close of business on such
record date, and the holder that sold those notes will not receive from us any
of the interest that accrued on those notes during the Optional Deferral
Period and that such holder reported as income fortax purposes. Holders should
consult their tax advisors regarding the tax consequences of an investment in
the notes. For more information regarding the U.S. federal income tax
consequences of owning and disposing of the notes, see "U.S.Federal Income Tax
Consequences."
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Holders of the notes will have limited rights of acceleration.
Holders of the notes and the trustee under the indenture may accelerate
payment of the principal and interest on the notes only upon theoccurrence and
continuation of certain events of default. Payment of principal and interest
on the notes may be accelerated upon the occurrence of an Event of Default
under the indenture related to failure to pay interest within 30 days after it
isdue, failure to pay principal or premium, if any, on the notes when due, and
certain events of bankruptcy, insolvency, receivership or reorganization
relating to The AES Corporation (but not its subsidiaries). Holders of the
notes and the trusteewill not have the right to accelerate payment of the
principal or interest on the notes upon the breach of any other covenant in
the indenture. See "Description of the Notes--Option to Defer Interest
Payments" and "Description ofthe Notes--Events of Default."
You cannot be sure that an active trading market will develop for these notes,
which mayhinder your ability to liquidate your investment.
The notes are a new issue of securities with no established trading market.
Wehave been informed by the underwriters that they intend to make a market for
the notes after the offering is completed. However, the underwriters may cease
their market-making activities at any time. In addition, the liquidity of the
trading marketin the notes, and the market prices quoted for the notes, may be
adversely affected by changes in the overall market for fixed income
securities and by changes in our financial performance or prospects or in the
prospects for companies in ourindustry generally. In addition, such
market-making activity will be subject to limits imposed by the Securities Act
of 1933, as amended (the "Securities Act"), and the Exchange Act. The market
price of the notes may also be impacted byany failure by us to meet or
continue to meet the investment requirements of certain environmentally
focused investors with respect to the notes or with respect to our Eligible
Green Projects. As a result, we cannot assure that an active tradingmarket
will develop for the notes. If no active trading market develops, you may not
be able to resell your notes at their fair market value or at all.
Credit rating downgrades could adversely affect the trading price of the
notes. In addition, we may redeem the notes if a rating agencymakes certain
changes in the equity credit methodology for securities such as the notes.
The trading price for the notes may beaffected by our credit rating. Credit
ratings are continually revised. Any downgrade in our credit ratings could
increase our borrowing costs and adversely affect the trading prices of the
notes or the trading markets for the notes to the extenttrading markets for
the notes develop. Credit ratings are not recommendations to purchase, hold or
sell the notes. Further, the credit ratings agencies may, from time to time in
the future, change the way they analyze securities with featuressimilar to the
notes. This may include, for example, changes to the relationship between
ratings assigned to an issuer's senior securities and ratings assigned to
subordinated securities with features similar to the notes. If any
ratingagencies change their practices for rating these types of securities in
the future, and the ratings of the notes are subsequently lowered, the trading
price of the notes could be negatively affected. In addition, we may redeem
the notes, at ouroption, in whole but not in part, if a rating agency makes
certain changes in the equity credit methodology for securities such as the
notes. See "Description of the Notes--Redemption--Redemption Following a
Rating Agency Event."
The notes are subject to early redemption.
As described under "Description of the Notes--Redemption," we may at our
option redeem the notes in whole or in part at the timesand the applicable
redemption price described thereunder. Consequently, we may choose to redeem
your notes at a time when prevailing interest rates are lower than the
effective interest rate paid on your notes and at times when the trading price
ofyour notes is above the redemption price. You may not be able to reinvest
the redemption proceeds in an investment with a return that is as high as the
return you would have earned on the notes if they had not been redeemed and
with a similar levelof investment risk.
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Investors should not expect us to redeem the notes on the first or any other
date onwhich they are redeemable.
We may redeem some or all of the notes, at our option, in whole or in part,
(i) on any day in theperiod commencing on the date falling 90 days prior to
the First Reset Date and ending on and including the First Reset Date and (ii)
after the First Reset Date, on any Interest Payment Date, at a redemption
price in cash equal to 100% of theprincipal amount of the notes being
redeemed, plus, subject to the terms described in the first paragraph under
"Description of the Notes--Redemption--Redemption Procedures; Cancellation of
Redemption" in this prospectussupplement, accrued and unpaid interest on the
notes to be redeemed to, but excluding, the redemption date. In addition, the
notes may be redeemed by us at our option, in whole but not in part, following
the occurrence and during the continuance ofeither a Tax Event or a Rating
Agency Event (as those terms are defined under "Description of the
Notes--Redemption" in this prospectus supplement). Any decision we may make at
any time to redeem the notes before their final maturitydate will depend upon,
among other things, the strength of our balance sheet, our results of
operations, our access to the capital markets, interest rates, our growth
strategy, and general market conditions at such time. Accordingly, while we
maydecide to do so, investors should not expect us to redeem the notes on the
first or any other date on which they are redeemable.
Wehave a significant amount of debt, which could adversely affect our business
and our ability to fulfill our obligations.
As ofMarch 31, 2024, we had approximately $29.2 billion of outstanding debt on
a consolidated basis, of which approximately $4.2 billion is classified as
current maturity. Since we have such a high level of debt, a substantial
portion ofcash flow from operations must be used to make payments on this
debt. This high level of debt and related security could have other important
consequences to us and our investors, including:
. making it more difficult to satisfy debt service and other obligations at The AES Corporation or individualsubsidiaries;
. increasing the likelihood of a downgrade of our debt, which could cause future debt costs and/or payments
toincrease under our debt and related hedging instruments and consume an even greater portion of cash flow;
. increasing our vulnerability to general adverse industry and economic conditions, including but
not limited toadverse changes in foreign exchange rates, interest rates and commodity prices;
. reducing available cash flow to fund other corporate purposes and grow our business;
. limiting our flexibility in planning for, or reacting to, changes in our business and the industry;
. placing us at a competitive disadvantage to our competitors that are not as highly leveraged; and
. limiting, along with the financial and other restrictive covenants
relating to such indebtedness, among otherthings, our ability to borrow
additional funds as needed or take advantage of business opportunities
as they arise, pay cash dividends or repurchase common stock.
The agreements governing our debt, including the debt of our subsidiaries,
limit, but do not prohibit the incurrence of additional debt. Wewill not be
restricted under the terms of the indenture governing the notes from incurring
additional debt, securing existing or future debt, recapitalizing our debt or
taking a number of other actions that are not limited by the terms of
theindenture governing the notes that could have the effect of diminishing our
ability to make payments on our debt, including the notes, when due. If we
were to become more leveraged, the risks described above would increase.
Further, our actual cashrequirements in the future may be greater than
expected. Accordingly, our cash flows may not be sufficient to repay at
maturity all of the outstanding debt, including the notes, as it becomes due
and, in that event, we may not be able to borrowmoney, sell assets, raise
equity or otherwise raise funds on acceptable terms or at all to refinance our
debt as it becomes due. In addition, our ability to refinance existing or
future indebtedness will depend on the capital markets and
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our financial condition at such time. Any refinancing of our debt could come
at higher interest rates or may require us to comply with onerous covenants,
which could restrict our businessoperations.
The indenture will not require that we allocate amounts relating to this
offering to expenditures meeting theEligibility Criteria or take the other
actions as described under "Use of Proceeds."
While it is our intention toallocate an amount equal to the net proceeds of
this offering to refinance or finance, in whole or in part, new or ongoing
renewable projects that meet the Eligibility Criteria ("Eligible Green
Projects") in, or substantially in, themanner described under "Use of
Proceeds" and to take the other actions as described under "Use of Proceeds,"
any failure to do so will not constitute an event of default under the
indenture nor require us to purchase or redeemany of the notes or make any
additional payments to holders or take or refrain from taking any particular
action as a result thereof. There can be no assurance that the relevant
projects or uses that are the subject of, or related to, any EligibleGreen
Projects will be capable of being implemented in or substantially in such
manner or in accordance with any timing schedule and that accordingly an
amount equal to such proceeds will be totally or partially allocated to such
Eligible GreenProjects. There can also be no assurance that such Eligible
Green Projects will lead to the results or outcomes (whether or not related to
environmental or broader sustainability issues) originally anticipated by us.
Any failure to allocate amountsrelating to this offering to Eligible Green
Projects, meet or continue to meet the investment requirements or aspirations
of certain sustainability focused investors, or take the other actions as
described under "Use of Proceeds," maynegatively affect the market price of
the notes to the extent investors are required or choose to sell their
holdings as a result of such failure.
We may allocate or
re-allocate
amounts relating to this offering in ways that you do notconsider to meet the
criteria for an Eligible Green Project.
We have significant flexibility in allocating amounts relating tothis offering
as described under "Use of Proceeds," including
re-allocating
in the event we no longer own or operate assets to which we originally
allocated such amounts in respect of Eligible GreenProjects or if the assets
to which we originally allocated such amounts no longer meet the criteria for
an Eligible Green Project. The ultimate allocation of amounts relating to this
offering may therefore not meet some or all of your expectationsat the time of
this offering or as they may evolve during the life of this offering, even if
we believe the expenditures to which we allocated such amounts were in respect
of Eligible Green Projects.
We cannot assure you that we will be able to identify sufficient business
activities qualifying as Eligible Green Projects to which we could
re-allocate
amounts relating to this offering if we no longer own or operate a
previously-allocated Eligible Green Project or if a previously-allocated
Eligible Green Project no longer meets the applicable criteria.Any failure to
do so will not constitute an event of default under the indenture nor require
us to purchase or redeem any of the notes or make any additional payments to
holders or to take or refrain from taking any particular action as a
resultthereof.
We cannot provide assurance that disbursements or allocations for Eligible
Green Projects will be made or the amounts of suchdisbursements or allocations
or, if such disbursements or allocations are made, on the timing of such
disbursements or allocation.
Thevalue of the notes may be negatively affected to the extent investors are
required or choose to sell their holdings due to the ultimate allocation of
amounts relating to this offering not meeting their expectations or
requirements.
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The Eligible Green Projects receiving allocations may not meet internationallyre
cognized sustainability standards or your particular investment criteria,
which may cause the market value of the notes to deteriorate. We cannot assure
you that our reporting described under "Use of Proceeds" will meet your needs
orexpectations.
Although we have used the term "Eligible Green Projects" or otherwise referred
to "green"aspects of this financing in this prospectus supplement, there is no
universally agreed definition (legal, regulatory or otherwise) nor market
consensus as to what constitutes a "green" or "sustainable" or anequivalently-la
belled expenditure or as to what precise attributes are required for a
particular expenditure to be defined as "green" or "sustainable" or given such
an equivalent label nor can any assurance be given that such adefinition or
consensus will develop over time.
Accordingly, no assurance is or can be given to investors that the Eligible
GreenProjects will meet any or all investor expectations or requirements
regarding such "green," "sustainable" or other equivalently-labelled
performance objectives or that this offering will constitute a suitable
investment for allinvestors seeking exposure to green assets or providing
funds which can be considered to constitute sustainable financing.
Prospectiveinvestors in this offering must determine for themselves the
relevance of the description of the use of proceeds of this offering for the
purposes of any investment by them together with any other investigation that
they deem necessary. We can giveno assurance that the Eligible Green Projects
to which the amounts relating to this offering are allocated will satisfy, or
continue to satisfy, investor criteria or expectations, taxonomies or
standards regarding environmental impact andsustainability performance, nor
can we give any assurance that the Eligible Green Projects criteria and other
aspects of the framework described under "Use of Proceeds" will satisfy, or
continue to satisfy present or future investorcriteria or expectations,
taxonomies, standards, laws, regulations or industry guidelines.
In addition, we give no assurance that anyinformation that we or any other
person may provide in connection with this offering now or in the future will
be sufficient to enable any potential investor to satisfy any disclosure or
reporting requirements imposed on it from time to time eitheras a result of
their own objectives or those of their clients as set out in their bylaws or
other governing rules and/or investment portfolio mandates. In addition, such
requirements may have been conditioned by the application of laws
andregulations relating to the types of, and criteria relating to, investments
that such funds can make in order to qualify or be eligible as a particular
type of "green" or other sustainable finance related investment. The rules
applicableto such investors and funds, whether internal or resulting from any
such investment portfolio mandates and/or applicable laws and regulations, may
require them to make periodic disclosure of their investments, including any
investment in thisoffering. Such requirements may evolve over time.
The value of the notes may be negatively affected to the extent investors are
requiredor choose to sell their holdings due to our definition of Eligible
Green Projects or reporting relating to this offering not meeting their
expectations or requirements. There will be no external review or second party
opinion in connection with theoffering of the notes. Therefore, our use of the
proceeds from the offering sale of the notes may not comply with all or part
of the framework described under the "Use of Proceeds" or any relevant
legislation or standards.
The market value of the notes may be negatively affected to the extent that
perception by investors of the suitability of the notes asgreen bonds
deteriorates or demand for sustainability-themed investment products
diminishes.
Perception by investors of thesuitability of the notes as green bonds could be
negatively affected by dissatisfaction with our compliance with the framework
described under "Use of Proceeds," controversies involving the environmental
or sustainability impact of ourbusiness or industry, evolving standards or
market consensus as to what constitutes a green bond or the desirability of
investing in green bonds or any opinion or certification as to the suitability
of the notes as green bonds no longer being ineffect. Additionally, the
Eligible
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Green Projects to which we intend to allocate amounts relating to this
offering have complex direct or indirect environmental or sustainability
impacts, and such Eligible Green Projects maybecome controversial or
criticized by activist groups or other stakeholders. None of the initial
purchaser, trustee or any stock exchange, securities market segment or
regulatory body makes any representation as to the suitability of the notes
tomeet or fulfill environmental and/or sustainability criteria, expectations,
impact or performance required by prospective investors, any third-party
reviewer or opinion provider, any stock exchange or securities market. The
value of the notes may benegatively affected to the extent investors are
required or choose to sell their holdings due to deterioration in the
perception by the investor or the market in general as to the suitability of
this offering as green bonds. The value of the notesmay be also negatively
affected to the extent demand for sustainability-themed investment products
diminishes due to evolving investor preferences, increased regulatory or
market scrutiny on funds and strategies dedicated to sustainability
orenvironmental, social or governance themed investing or for other reasons.
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FORWARD-LOOKING STATEMENTS
This prospectus supplement includes or incorporates by reference statements
concerning our expectations, beliefs, plans, objectives, goals,strategies, and
future events or performance. Such statements are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Although we believe that these forward-looking statements and theunderlying
assumptions are reasonable, we cannot assure you that they will prove to be
correct.
Forward-looking statements involve anumber of risks and uncertainties, and
there are factors that could cause actual results to differ materially from
those expressed or implied in our forward-looking statements. Some of those
factors (in addition to the factors described under"Risk Factors" above or the
risk factors incorporated by reference into this prospectus supplement)
include:
. the economic climate, particularly the state of the economy in the areas in which we
operate, which impactsdemand for electricity in many of our key markets, including the
fact that the global economy faces considerable uncertainty for the foreseeable future,
which further increases many of the risks discussed herein and in our Annual Report;
. changes in the price of electricity at which our generation businesses
sell into the wholesale market and ourutility businesses purchase to
distribute to their customers, and the success of our risk management
practices, such as our ability to hedge our exposure to such market price risk;
. changes in the prices and availability of coal, gas and other fuels (including our ability
to have fueltransported to our facilities) and the success of our risk management
practices, such as our ability to hedge our exposure to such market price risk, and
our ability to meet credit support requirements for fuel and power supply contracts;
. changes in and access to the financial markets, particularly changes affecting the availability and cost ofcapital in order
to refinance existing debt and finance capital expenditures, acquisitions, investments and other corporate purposes;
. changes in inflation, demand for power, interest rates and foreign currency exchange
rates, including our abilityto hedge our interest rate and foreign currency risk;
. our ability to fulfill our obligations, manage liquidity
and comply with covenants under our recourse and
non-recourse
debt, including our ability to manage our significant liquidity needs and to comply with
covenants under our revolving credit facility and other existing financing obligations;
. our ability to receive funds from our subsidiaries by way of dividends, fees, interest, loans or otherwise;
. changes in our or any of our subsidiaries' corporate credit ratings or the ratings of our or any of
oursubsidiaries' debt securities or preferred stock, and changes in the rating agencies' ratings criteria;
. our ability to purchase and sell assets at attractive prices and on other attractive terms;
. our ability to compete in markets where we do business;
. our ability to operate power generation, distribution and transmission
facilities, including managingavailability, outages and equipment failures;
. our ability to manage our operational and maintenance costs and the performance and
reliability of our generatingplants, including our ability to reduce unscheduled down times;
. our ability to enter into long-term contracts, which limit volatility in our results of operations and cash
flow,such as PPAs, fuel supply, and other agreements and to manage counterparty credit risks in these agreements;
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. variations in weather, especially mild winters and cooler summers in the areas
in which we operate, theoccurrence of difficult hydrological conditions for
our hydropower plants, as well as hurricanes and other storms and disasters,
wildfires and low levels of wind or sunlight for our wind and solar facilities;
. pandemics, or the future outbreak of any other highly infectious or contagious disease;
. the performance of our contracts by our contract counterparties, including suppliers or customers;
. severe weather and natural disasters;
. our ability to manage global supply chain disruptions;
. our ability to raise sufficient capital to fund development projects or to successfully execute our developmentprojects;
. the success of our initiatives in renewable energy projects and energy storage projects;
. the availability of government incentives or policies that support the development of renewable energy generationprojects;
. our ability to execute on our strategies or achieve expectations related to environmental, social, and governancematters;
. our ability to keep up with advances in technology;
. changes in number of customers or in customer usage;
. the operations of our joint ventures and equity method investments that we do not control;
. our ability to achieve reasonable rate treatment in our utility businesses;
. changes in laws, rules and regulations affecting our international businesses, particularly in developingcountries;
. changes in laws, rules and regulations affecting our utilities businesses, including, but not limited to,regulations which
may affect competition, the ability to recover net utility assets and other potential stranded costs by our utilities;
. changes in law resulting from new local, state, federal or international energy legislation
and changes inpolitical or regulatory oversight or incentives affecting our wind
business and solar projects, our other renewables projects and our initiatives in greenhouse
gas reductions and energy storage, including government policies or tax incentives;
. changes in environmental laws, including requirements for reduced emissions, greenhouse gas
legislation,regulation, and/or treaties and coal combustion residuals regulation and remediation;
. changes in tax laws, including U.S. tax reform, and challenges to our tax positions;
. the effects of litigation and government and regulatory investigations;
. the performance of our acquisitions;
. our ability to maintain adequate insurance;
. decreases in the value of pension plan assets, increases in pension plan expenses, and our
ability to funddefined benefit pension and other postretirement plans at our subsidiaries;
. losses on the sale or write-down of assets due to impairment events or changes
in management intent with regardto either holding or selling certain assets;
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. changes in accounting standards, corporate governance and securities law requirements;
. our ability to maintain effective internal controls over financial reporting;
. our ability to attract and retain talented directors, management and other personnel;
. cyber-attacks and information security breaches;
. data privacy; and
. the ultimate allocation of amounts relating to this offering to Eligible Green Projects.
These factors, in addition to others described herein under "Risk Factors," in
our Annual Report, Quarterly Report and in subsequentsecurities filings,
should not be construed as a comprehensive listing of factors that could cause
results to vary from our forward-looking information.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events,or
otherwise. If one or more forward-looking statements are updated, no inference
should be drawn that additional updates will be made with respect to those or
other forward-looking statements.
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USE OF PROCEEDS
The net proceeds from this offering are estimated to be approximately $937.5
million, after deducting underwriting discounts and commissionsand estimated
offering expenses payable by us.
We intend to allocate an amount equal to the net proceeds from this offering
to one ormore Eligible Green Projects, which may include the development or
redevelopment of such projects. Pending such allocation, we intend to use the
net proceeds from this offering for general corporate purposes.
"Eligible Green Projects" means projects that meet the Eligibility Criteria
(as defined below), including those for which AES madedisbursements within the
three years prior to this offering and will include disbursements through the
maturity date.
"EligibilityCriteria" means any of the following:
1. Renewable Energy:
. Investments in the construction and development of wind and solar renewable energy production,
energy storage,and associated transmission and distribution projects located in the United States;
2. Energy Efficiency:
. Investing in advanced metering infrastructure including smart electric meters and related communication networks;and
. Investments in digital technologies designed to promote changes in customer
behavior leading to improved energyefficiency, including investments
in Uplight and predecessor entities. Note that no more than 10% of an
amount equal to the net proceeds will be allocated to this category.
Exclusions
NetProceeds will not be allocated to the following investments:
. Investments which received an allocation of net proceeds under any
other green financing by the Company or any ofits subsidiaries;
. Fossil fuel generation and fossil fuel energy efficiency investments; or
. Gas transmission and distribution infrastructure.
Process for Project Evaluation and Selection
Projects selected for allocation of net proceeds from a green financing will
be assessed and evaluated by participants from various functionalareas
including AES' Treasury and Sustainability Teams.
Management of Proceeds
The Company expects to allocate the majority of an amount equal to the net
proceeds from this offering within three years of the date of suchfinancing.
Pending such allocation, we intend to use the net proceeds from this offering
to refinance existing indebtedness, fund investments in our Renewables SBU,
fund investments in our U.S. utilities businesses and/or for general
corporatepurposes.
So long as the notes remain outstanding, our internal records will show,
quarterly, the amount of the net proceeds from thenotes allocated to Eligible
Green Projects, as well as the amount of net proceeds pending allocation.
AES will use reasonable efforts tosubstitute any material Eligible Green
Projects that are no longer eligible as soon as practicable upon identifying
an appropriate substitute Eligible Green Project.
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Payment of principal of and interest on the notes will be made from AES'
general fundsand will not be directly linked to the performance of any
Eligible Green Projects.
Reporting
We will provide, and keep readily available, on a designated website,
information on the allocation of net proceeds of the notes, to be updatedat
least annually until full allocation and as necessary thereafter in the event
of material developments. This information will include, subject to any
confidentiality considerations, (i) amounts allocated to eligible Green
Projects, bycategory, (ii) the amount pending allocation, (iii) case studies
with additional information on highlighted projects, and (iv) an assertion by
AES management regarding the proportion of the net proceeds invested in
qualifying EligibleGreen Projects. In the first report published after net
proceeds are fully allocated, the allocations and assertions will be
accompanied by a report from an independent accountant in respect of the
independent accountant's examination ofmanagement's assertion.
Key Performance Indicators (KPIs): Where feasible, AES will report estimated
environmental impacts (on anannual basis where relevant) of projects to which
a portion of the net proceeds of a green financing under this framework are
allocated. Potential KPIs include, but are not limited to, the following:
Eligible Asset Category Potential KPIs
Renewable Energy .
Expected annual greenhouse gas
emissions avoided in metric tons of CO2
.
Expected annual electricityoutput in MWh
.
Energystorage capacity added (MW and MWh)
Energy Efficiency .
Number of smart meters installed
.
Number of utilities usingdigital technologies, and the
number of customers receiving reports based on associated data
.
Most recent annual customer energy usage savings from customers using digital technologies,
andestimated greenhouse gas emissions avoided (metric tons of CO2) as a result
Definition and calculation of KPIs will be at the sole discretion of the
Company.
Green Bond Principles
It is our intention that this offering is in alignment with the Green Bond
Principles 2018, which are a set of voluntary guidelines for theissuance of
green bonds developed by a committee made up of issuers, investors and
intermediaries in the green bond market and are intended to promote integrity
in the green bond market through guidelines that recommend transparency,
disclosure andreporting. The Green Bond Principles have four components:
. use of proceeds;
. process for project evaluation and selection;
. management of proceeds; and
. reporting.
The information and materials found on our website, including, without
limitation, any Green Financing Report and the framework, are not partof or
incorporated by reference into this prospectus supplement or the accompanying
prospectus or any other report or filing filed with the SEC. Neither the notes
nor the indenture governing the notes requires us to use the net proceeds from
thesale of the notes as described above, and any
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failure of the Company to comply with the foregoing will not constitute a
breach of or an event of default under the notes or the indenture governing
the notes. The above description of the useof proceeds from the sale of the
notes is not intended to modify or add any covenant or contractual obligation
undertaken by us under the notes or the indenture governing the notes.
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DESCRIPTION OF THE NOTES
The 7.600%
Fixed-to-Fixed
Reset Rate Junior Subordinated Notesdue 2055 (the "notes") will be a series of
our junior subordinated debt securities issued under an indenture between The
AES Corporation and Deutsche Bank Trust Company Americas, as trustee (the
"Trustee"), to be dated as of theOriginal Issue Date (as defined below) (the
"Indenture"). The following summaries of certain provisions of the Indenture
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all of theprovisions of the Indenture, including the
definition in the Indenture of certain terms. Wherever particular sections or
defined terms of the Indenture are referred to, such sections or defined terms
are incorporated into this prospectus supplementby reference. Forms of the
notes and the Indenture will be filed with the SEC and you may obtain copies
as described under "Where You Can Find More Information" in the accompanying
prospectus.
As used in this "Description of the Notes", the terms "AES", "we", "us" and
"our" mean TheAES Corporation, and do not include any of its subsidiaries.
The Indenture will not limit the aggregate principal amount of juniorsubordinate
d debt that may be issued thereunder and will provide that junior subordinated
debt securities may be issued thereunder from time to time in one or more
series.
General
The notes will constitute aseparate series of our subordinated debt securities
under the Indenture and will be issued in the aggregate principal amount of
$950,000,000. We may, from time to time, without notice to or consent of the
holders of the notes, issue additional notesand any such additional notes
shall form a single series under the Indenture with the notes offered by this
prospectus supplement;
provided
that if any such additional notes are not fungible with the notes for U.S.
federal income taxpurposes, such additional notes will be issued under a
separate CUSIP number. Any such additional notes shall have the same form and
terms as the notes offered by this prospectus supplement (other than the
offering price, the date of issuance and,under certain circumstances, the date
from which interest thereon shall begin to accrue and the first Interest
Payment Date, and except that the provisions of the notes specifying the rate
of interest thereon to but excluding the First Reset Date(as defined below)
shall not be applicable to any such additional notes whose date of original
issuance is on or after the First Reset Date).
InterestRate and Maturity
The notes will mature on January 15, 2055 (the "Final Maturity Date"). The
notes will be subject toredemption at our option as described below under
"--Redemption".
The notes will bear interest (i) from and includingMay 21, 2024 (the "Original
Issue Date") to, but excluding, January 15, 2030 (the "First Reset Date") at
the rate of 7.600% per annum (the "Initial Interest Rate") and (ii) from and
including the First Reset Date,during each Reset Period (as defined below) at
a rate per annum equal to the Five-year U.S. Treasury Rate (as defined below)
as of the most recent Reset Interest Determination Date (as defined below)
plus a spread of 3.201%, to be reset on eachReset Date (as defined below).
Interest on the notes will accrue from the Original Issue Date and will be
payable semi-annually in arrears on January 15 and July 15 (each, an "Interest
Payment Date") of each year, beginning on January 15,2025, to the holders of
record at the close of business on the immediately preceding January 1 and
July 1, respectively (each, a "Record Date"), subject to our right to defer
interest payments as described below under "--Option toDefer Interest
Payments." Interest on the notes will be computed on the basis of a
360-day
year of twelve
30-day
months.
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The applicable interest rate for each Reset Period will be determined by the
calculationagent (as defined below), as of the applicable Reset Interest
Determination Date, in accordance with the following provisions:
"Five-year U.S. Treasury Rate" means, as of any Reset Interest Determination
Date, (i) an interest rate (expressed as adecimal) determined to be the per
annum rate equal to the arithmetic mean of the yields to maturity for U.S.
Treasury securities adjusted to constant maturity with a maturity of five
years from the next Reset Date and trading in the publicsecurities markets,
for the five consecutive business days (as defined below) immediately prior to
the respective Reset Interest Determination Date as published in the most
recent H.15, or (ii) if there is no such published U.S. Treasurysecurity with
a maturity of five years from the next Reset Date and trading in the public
securities markets, then the rate will be determined by interpolation between
the arithmetic mean of the yields to maturity for each of the two series of
U.S.Treasury securities adjusted to constant maturity trading in the public
securities markets, (A) one maturing as close as possible to, but earlier
than, the Reset Date following the next succeeding Reset Interest
Determination Date, and(B) the other maturing as close as possible to, but
later than, the Reset Date following the next succeeding Reset Interest
Determination Date, in each case for the five consecutive business days
immediately prior to the respective ResetInterest Determination Date as
published in the most recent H.15. If the Five-year U.S. Treasury Rate cannot
be determined pursuant to the methods described in clause (i) or (ii) above,
then the Five-year U.S. Treasury Rate will be the sameinterest rate determined
for the prior Reset Interest Determination Date or, if the Five-year U.S.
Treasury Rate cannot be so determined as of the Reset Interest Determination
Date preceding the First Reset Date, then the interest rate applicablefor the
Reset Period beginning on and including the First Reset Date will be deemed to
be the Initial Interest Rate.
"H.15"means the statistical release designated as such, or any successor
publication, published by the Board of Governors of the U.S. Federal Reserve
System (or any successor thereto).
The "most recent H.15" means the H.15 published closest in time but prior to
the close of business on the second business day priorto the applicable Reset
Date.
"Reset Date" means the First Reset Date and January 15 of every fifth year
after 2030.
"Reset Interest Determination Date" means, in respect of any Reset Period, the
day falling two business days prior to the first dayof such Reset Period.
"Reset Period" means the period from and including the First Reset Date to,
but excluding, the nextfollowing Reset Date and thereafter each period from
and including a Reset Date to, but excluding, the next following Reset Date.
As usedunder this caption "Description of the Notes," the term "business day"
means, unless otherwise expressly stated, any day other than (i) a Saturday or
Sunday or (ii) a day on which banking institutions in The City of NewYork are
authorized or obligated by law or executive order to remain closed.
The term "calculation agent" means, at any time,the entity appointed by us and
serving as such agent with respect to the notes at such time. Unless we have
validly called all of the outstanding notes for redemption on a redemption
date occurring prior to the First Reset Date, we will appoint acalculation
agent for the notes prior to the Reset Interest Determination Date immediately
preceding the First Reset Date;
provided
that, if we have called all of the outstanding notes for redemption on a
redemption date occurring prior tothe First Reset Date but we do not redeem
all of the outstanding notes on such redemption date, we will appoint a
calculation agent for the notes as promptly as practicable after such proposed
redemption date. We may terminate any such appointmentand may appoint a
successor calculation agent at any time and from time to time (so long as
there shall always be a calculation agent in respect of the notes when so
required). We may appoint AES or an affiliate of AES as calculation agent.
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As provided above, the applicable interest rate for each Reset Period will be
determined bythe calculation agent as of the applicable Reset Interest
Determination Date. Promptly upon such determination, the calculation agent
will notify us of the interest rate for the Reset Period and we will promptly
notify, or cause the calculationagent to promptly notify, the Trustee and each
paying agent of such interest rate. The calculation agent's determination of
any interest rate, and its calculation of the amount of interest for any
Interest Payment Period (as defined below under"--Option to Defer Interest
Payments") beginning on or after the First Reset Date, will be on file at our
principal offices, will be made available to any holder or beneficial owner of
the notes upon request and will be final andbinding in the absence of manifest
error.
If any Interest Payment Date, redemption date or the maturity date of the
notes is not abusiness day (as defined in the Indenture) at any place of
payment, then payment of the principal, premium, if any, and interest may be
made on the next business day (as defined in the Indenture) at that place of
payment. In that case, no interestwill accrue on the amount payable for the
period from and after the applicable Interest Payment Date, redemption date or
maturity date, as the case may be.
No Listing
The notes are a new issue ofsecurities with no established trading market. We
do not intend to apply for the listing or trading of the notes on any
securities exchange or trading facility or for inclusion of the notes in any
automated quotation system.
Ranking
The notes will be our unsecuredobligations and will rank junior and
subordinate in right of payment to the prior payment in full of our existing
and future Senior Indebtedness (as defined below under "--Subordination"), to
the extent and in the manner set forthunder the caption "--Subordination"
below. The notes will rank equally in right of payment with any future
unsecured indebtedness that we may incur from time to time if the terms of
such indebtedness provide that it ranks equally withthe notes in right of
payment. At March 31, 2024, AES had approximately $5.3 billion of senior
unsecured and recourse debt outstanding.
In addition, the notes will be effectively subordinated in right of payment to
any secured indebtedness we may incur (to the extent of thevalue of the
collateral securing such secured indebtedness). As of March 31, 2024, AES had
no secured debt outstanding as a result of its receipt of an investment grade
rating by Standard & Poor's in November 2020. As a result,the collateral under
the indenture governing our senior secured notes (such indenture, the "Secured
Indenture") and our senior credit facility were released from the liens
securing our obligations thereunder. However, if at least two ofMoody's,
Standard & Poor's and Fitch cease to provide an investment grade rating to our
long-term debt securities, and we were unable to obtain an investment grade
rating by another ratings agency, the collateral reversionprovisions in the
Secured Indenture and our senior credit facility would require us to secure
the indebtedness outstanding under these instruments with substantially the
same collateral.
The notes are our obligations exclusively and are not the obligations of any
of our subsidiaries or any entities we account for as equitymethod
investments. Because we conduct our operations primarily through, and
substantially all our consolidated assets are held by, our subsidiaries and
entities we do not control, which include equity method investments, the notes
will beeffectively subordinated in right of payment to all existing and future
indebtedness and other liabilities and any preferred equity of our
subsidiaries. At March 31, 2024, our subsidiaries, excluding entities held for
sale, had
non-recourse
debt of approximately $23.9 billion outstanding, to which the notes would be
effectively subordinated in right of payment.
The Indenture will not limit the amount of Senior Indebtedness that may be
incurred by AES or the amount of other indebtedness or liabilitiesthat may be
incurred by AES or any of its subsidiaries. For additional information, see
"Risk Factors-- Risks Related to the Notes--The notes are subordinated or
effectively
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subordinated to all other indebtedness of AES and its subsidiaries (other than
any unsecured indebtedness AES may incur in the future that ranks junior to, or
pari passu
with, the notes),and the Indenture will not limit the aggregate amount of
indebtedness that AES or its subsidiaries may incur" in this prospectus
supplement and "Risk Factors--Risks Related to our Indebtedness and Financial
Condition--The AESCorporation's ability to make payments on its outstanding
indebtedness is dependent upon the receipt of funds from our subsidiaries." in
our Annual Report on Form
10-K
for the year endedDecember 31, 2023 incorporated by reference in this
prospectus supplement and the accompanying prospectus.
Agreement by Holders to Tax Treatment
Each holder (and beneficial owner) of the notes will, by accepting any notes
(or a beneficial interest therein), be deemed to haveagreed that such holder
(or beneficial owner) intends that the notes constitute indebtedness of AES,
and will treat the notes as indebtedness of AES, for United States federal,
state and local tax purposes.
Subordination
The notes will besubordinated in right of payment to the prior payment in full
of all our Senior Indebtedness. This means that upon:
(a) any payment by, or distribution of the
assets of, AES upon its dissolution,
winding-up,
liquidation or reorganization, whether voluntary or involuntary or
in bankruptcy, insolvency, receivership or other proceedings; or
(b) a failure to pay any interest, principal or other monetary amounts due on any of AES's Senior
Indebtednesswhen due and continuance of that default beyond any applicable grace period; or
(c) acceleration of the maturity of any Senior Indebtedness of AES as a result of a default;
the holders of all of AES's Senior Indebtedness will be entitled to receive:
. in the case of clause (a) above, payment of all amounts due or to become due on all Senior Indebtedness; or
. in the case of clauses (b) and (c) above, payment of all amounts due on all Senior Indebtedness,
before the holders of the notes are entitled to receive any payment. So long
as any of the events in clauses (a), (b), or(c) above has occurred and is
continuing, any amounts payable or assets distributable on the notes will
instead be paid or distributed, as the case may be, directly to the holders of
Senior Indebtedness to the extent necessary to pay, in thecase of clause (a)
above, all amounts due or to become due upon all such Senior Indebtedness, or,
in the case of clauses (b) and (c) above, all amounts due on all such Senior
Indebtedness, and, if any such payment or distribution isreceived by the
Trustee under the Indenture or the holders of any of the notes before all
Senior Indebtedness due and to become due or due, as applicable, is paid, such
payment or distribution must be paid over to the holders of the unpaid
SeniorIndebtedness. Subject to paying the Senior Indebtedness due and to
become due in the case of clause (a) or the Senior Indebtedness due in the
case of clauses (b) and (c), the holders of the notes will be subrogated to
the rights of theholders of the Senior Indebtedness to receive payments
applicable to the Senior Indebtedness until the notes are paid in full.
"Senior Indebtedness" means, with respect to the notes, (i) indebtedness of
AES, whether outstanding at the date of theIndenture or incurred, created or
assumed after such date, (a) in respect of money borrowed by AES (including
any financial derivative, hedging or futures contract or similar instrument,
to the extent any such item is primarily a financingtransaction) and (b)
evidenced by debentures, bonds, notes, credit or loan agreements or other
similar instruments or agreements issued or entered into by AES; (ii) all
finance lease obligations of AES; (iii) all obligations of AESissued or
assumed as the deferred purchase price of property, all conditional sale
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obligations of AES and all obligations of AES under any title retention
agreement (but excluding, for the avoidance of doubt, trade accounts payable
arising in the ordinary course of business andlong-term purchase obligations);
(iv) all obligations of AES for the reimbursement of any letter of credit,
banker's acceptance, security purchase facility or similar credit transaction;
and (v) all obligations of the type referred to inclauses (i) through (iv)
above of other persons for the payment of which AES is responsible or liable
as obligor, guarantor or otherwise, except for any obligations, instruments or
agreements of the type referred to in any of clauses(i) through (v) above
that, by the terms of the instruments or agreements creating or evidencing the
same or pursuant to which the same is outstanding, are subordinated or equal
in right of payment to the notes.
Due to the subordination of the notes, if assets of AES are distributed upon
its dissolution,
winding-up,
liquidation or reorganization, holders of its Senior Indebtedness and other
indebtedness and obligations that are not equal or junior to the notes in
right of payment will likely recover more,ratably, than holders of the notes,
and it is possible that no payments will be made to the holders of the notes.
The subordination provisions described above will cease to apply in the event
of defeasance or satisfaction and discharge of the notesas described under
"--Defeasance and Discharge" and "--Satisfaction and Discharge," respectively.
The notesand the Indenture do not limit our ability to incur Senior
Indebtedness or our or any of our subsidiaries' ability to incur other secured
and unsecured indebtedness or liabilities or to issue preferred equity. We
expect that we and oursubsidiaries will incur substantial additional amounts
of indebtedness, including Senior Indebtedness, in the future.
Redemption
Optional Redemption
We may redeem some orall of the notes, at our option, in whole or in part (i)
on any day in the period commencing on the date falling 90 days prior to the
First Reset Date and ending on and including the First Reset Date and (ii)
after the First Reset Date, onany Interest Payment Date, at a redemption price
in cash equal to 100% of the principal amount of the notes being redeemed,
plus, subject to the terms described in the first paragraph under
"--Redemption Procedures; Cancellation ofRedemption" below, accrued and unpaid
interest on the notes to be redeemed to, but excluding, the redemption date.
Redemption Following a TaxEvent
We may at our option redeem the notes, in whole but not in part, at any time
following the occurrence and during the continuanceof a Tax Event (as defined
below) at a redemption price in cash equal to 100% of the principal amount of
the notes, plus, subject to the terms described in the first paragraph under
"--Redemption Procedures; Cancellation of Redemption"below, accrued and unpaid
interest on the notes to, but excluding, the redemption date.
A "Tax Event" means that we havereceived an opinion of counsel experienced in
such matters to the effect that, as a result of:
. any amendment to, clarification of, or change, including any announced prospective change, in the laws ortreaties of the
United States or any of its political subdivisions or taxing authorities, or any regulations under those laws or treaties;
. an administrative action, which means any judicial decision or any official
administrative pronouncement, ruling,regulatory procedure, notice or
announcement, including any notice or announcement of intent to issue or adopt
any administrative pronouncement, ruling, regulatory procedure or regulation;
. any amendment to, clarification of, or change in the official position or the interpretation of
anyadministrative action or judicial decision or any interpretation or pronouncement that provides for a
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position with respect to an administrative action or judicial decision that differs
from the previously generally accepted position, in each case by any legislative
body, court, governmentalauthority or regulatory body, regardless of the time or manner
in which that amendment, clarification or change is introduced or made known; or
. a threatened challenge asserted in writing in connection with a tax audit
of us or any of our subsidiaries, or apublicly-known threatened challenge
asserted in writing against any other taxpayer that has raised capital through
the issuance of securities that are substantially similar to the notes,
which amendment, clarification or change is effective or the administrative
action is taken or judicial decision, interpretation or pronouncement is
issued orthreatened challenge is asserted or becomes publicly-known after the
date of this prospectus supplement, there is more than an insubstantial risk
that interest payable by us on the notes is not deductible, or within 90 days
would not be deductible,in whole or in part, by us for United States federal
income tax purposes.
Redemption Following a Rating Agency Event
We may at our option redeem the notes, in whole but not in part, at any time
following the occurrence and during the continuance of a RatingAgency Event
(as defined below) at a redemption price in cash equal to 102% of the
principal amount of the notes, plus, subject to the terms described in the
first paragraph under "--Redemption Procedures; Cancellation of Redemption"below
, accrued and unpaid interest on the notes to, but excluding, the redemption
date.
"Rating Agency Event" means, as of anydate, a change, clarification or
amendment in the methodology published by any nationally recognized
statistical rating organization within the meaning of Section 3(a)(62) of the
Securities Exchange Act of 1934, as amended (or any successorprovision
thereto), that then publishes a rating for AES (together with any successor
thereto, a "rating agency") in assigning equity credit to securities such as
the notes, (a) as such methodology was in effect on the date of thisprospectus
supplement, in the case of any rating agency that published a rating for AES
as of the date of this prospectus supplement, or (b) as such methodology was
in effect on the date such rating agency first published a rating for AES,
inthe case of any rating agency that first publishes a rating for AES after
the date of this prospectus supplement (in the case of either clause (a) or
(b), the "current methodology"), that results in (i) any shortening of
thelength of time for which a particular level of equity credit pertaining to
the notes by such rating agency would have been in effect had the current
methodology not been changed or (ii) a lower equity credit (including up to a
lesser amount)being assigned by such rating agency to the notes as of the date
of such change, clarification or amendment than the equity credit that would
have been assigned to the notes by such rating agency had the current
methodology not been changed.
Redemption Procedures; Cancellation of Redemption
Notwithstanding any statement under this caption "--Redemption" to the
contrary, installments of interest on the notes that aredue and payable on any
Interest Payment Date falling on or prior to a redemption date for the notes
will be payable on that Interest Payment Date to the registered holders
thereof as of the close of business on the relevant Record Date according
tothe terms of the notes and the Indenture, except that, if the redemption
date for any notes falls on any day during an Optional Deferral Period (as
defined below under "--Option to Defer Interest Payments"), accrued and unpaid
interest(including, to the extent permitted by applicable law, any compound
interest (as defined below under "--Option to Defer Interest Payments")) on
such notes will be paid on such redemption date to the persons entitled to
receive theredemption price of such notes. For the avoidance of doubt, the
Interest Payment Date falling immediately after the last day of an Optional
Deferral Period shall not be deemed to fall on a day during such Optional
Deferral Period.
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Notice of redemption will be mailed at least 10 days but not more than 60 days
before theredemption date to each registered holder of the notes to be
redeemed. Once notice of redemption is mailed, the notes called for redemption
will become due and payable on the redemption date at the applicable
redemption price, plus, subject to theterms described in the immediately
preceding paragraph, accrued and unpaid interest to, but excluding, the
redemption date, and will be paid upon surrender thereof for redemption,
unless (a) the notice of redemption provides that suchredemption shall be
subject to the condition described in the next succeeding paragraph and (b)
such redemption shall have been canceled in accordance with the provisions of
the next succeeding paragraph because such condition shall not havebeen
satisfied. If only part of a note is redeemed, the Trustee will issue in the
name of the registered holder of the note and deliver to such holder a new
note in a principal amount equal to the unredeemed portion of the principal of
the notesurrendered for redemption. If we elect to redeem all or a portion of
the notes, then, unless otherwise provided in such notice of redemption as
described in the next succeeding paragraph, the redemption will not be
conditional upon receipt by thepaying agent or the Trustee of monies
sufficient to pay the redemption price.
If, at the time a notice of redemption is given,(i) we have not effected
satisfaction and discharge or defeasance of the notes as described under
"--Satisfaction and Discharge" or "--Defeasance and Discharge" and (ii) such
notice of redemption is not beinggiven in connection with or in order to
effect satisfaction and discharge or defeasance of the notes, then, if the
notice of redemption so provides and at our option, the redemption may be
subject to the condition that the Trustee shall havereceived, on or before the
applicable redemption date, monies in an amount sufficient to pay the
redemption price and accrued and unpaid interest on the notes called for
redemption to, but excluding, the redemption date. If monies in such amount
arenot received by the Trustee on or before such redemption date, such notice
of redemption shall be automatically canceled and of no force or effect, such
proposed redemption shall be automatically canceled and we shall not be
required to redeem thenotes called for redemption on such redemption date. In
the event that a redemption is canceled, we will, not later than the business
day immediately following the proposed redemption date, deliver, or cause to
be delivered, notice of suchcancellation to the registered holders of the
notes called for redemption (which notice will also indicate that any notes or
portions thereof surrendered for redemption shall be returned to the
applicable holders), and we will direct the Trustee to,and the Trustee will,
promptly return any notes or portions thereof that have been surrendered for
redemption to the applicable holders.
In the case of a partial redemption, selection of the notes for redemption
will be made pro rata, by lot or by such other method as theTrustee in its
sole discretion deems appropriate and fair. No notes of a principal amount of
$2,000 or less will be redeemed in part. If any note is to be redeemed in part
only, the notice of redemption that relates to the note will state theportion
of the principal amount of the note to be redeemed. A new note in a principal
amount equal to the unredeemed portion of the note will be issued in the name
of the holder of the note upon surrender for cancellation of the original
note. Forso long as the notes are held by DTC (or another depositary), the
redemption of the notes shall be done in accordance with the policies and
procedures of the depositary.
Unless we default in payment of the redemption price or the proposed
redemption is canceled in accordance with the provisions set forth in
theimmediately preceding paragraph, on and after the redemption date interest
will cease to accrue on the notes or portions thereof called for redemption.
Option to Defer Interest Payments
Solong as no Event of Default (as defined below under "--Events of Default")
with respect to the notes has occurred and is continuing, we may, at our
option, defer interest payments on the notes, from time to time, for one or
moredeferral periods of up to 20 consecutive Interest Payment Periods (as
defined below) each (each such deferral period, commencing on the Interest
Payment Date on which the first such deferred interest payment otherwise would
have been made, an"Optional Deferral Period"), except that no such Optional
Deferral Period may extend beyond the Final Maturity Date of the notes or end
on a day other than the day immediately preceding an Interest Payment Date.
During any OptionalDeferral Period, interest on the notes will continue to
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accrue at the then-applicable interest rate on the notes (as reset from time
to time on any Reset Date occurring during such Optional Deferral Period in
accordance with the terms of the notes).In addition, during any Optional
Deferral Period interest on the deferred interest ("compound interest") will
accrue at the then-applicable interest rate on the notes (as reset from time
to time on any Reset Date occurring during suchOptional Deferral Period in
accordance with the terms of the notes), compounded semi-annually, to the
extent permitted by applicable law. No interest will be due or payable on the
notes during an Optional Deferral Period, except upon a redemption ofany notes
on any redemption date during such Optional Deferral Period (in which case all
accrued and unpaid interest (including, to the extent permitted by applicable
law, any compound interest) on the notes to be redeemed to, but excluding,
suchredemption date will be due and payable on such redemption date), or
unless the principal of and interest on the notes shall have been declared due
and payable as the result of an Event of Default with respect to the notes (in
which case all accruedand unpaid interest, including, to the extent permitted
by applicable law, any compound interest, on the notes shall become due and
payable). All references in the notes and, insofar as relates to the notes,
the Indenture, to "interest" onthe notes shall be deemed to include any such
deferred interest and, to the extent permitted by applicable law, any compound
interest, unless otherwise expressly stated or the context otherwise requires.
Before the end of any Optional Deferral Period that is shorter than 20
consecutive Interest Payment Periods, we may elect, at our option, toextend
such Optional Deferral Period, so long as the entire Optional Deferral Period
does not exceed 20 consecutive Interest Payment Periods or extend beyond the
Final Maturity Date of the notes. We may also elect, at our option, to shorten
thelength of any Optional Deferral Period. No Optional Deferral Period
(including as extended or shortened) may end on a day other than the day
immediately preceding an Interest Payment Date. At the end of any Optional
Deferral Period, if all amountsthen due on the notes, including all accrued
and unpaid interest thereon (including, without limitation and to the extent
permitted by applicable law, any compound interest), are paid, we may elect to
begin a new Optional Deferral Period;
provided
,
however
, that, without limitation of the foregoing, we may not begin a new Optional
Deferral Period unless we have paid all accrued and unpaid interest on the
notes (including, without limitation and to the extent permittedby applicable
law, any compound interest) from any previous Optional Deferral Periods.
During any Optional Deferral Period, we will notdo any of the following
(subject to the exceptions set forth in the next succeeding paragraph):
. declare or pay any dividends or distributions on any Capital Stock (as defined below) of AES;
. redeem, purchase, acquire or make a liquidation payment with respect to any Capital Stock of AES;
. pay any principal, interest or premium on, or repay, repurchase or redeem, any
indebtedness of AES that ranksequally with or junior to the notes in right of payment; or
. make any payments with respect to any guarantees by AES of any indebtedness if
such guarantees rank equally withor junior to the notes in right of payment.
However, during an Optional Deferral Period, we may (a) declare andpay
dividends or distributions payable solely in shares of our common stock
(together, for the avoidance of doubt, with cash in lieu of any fractional
share) or options, warrants or rights to subscribe for or purchase shares of
our common stock,(b) declare and pay any dividend in connection with the
implementation of a plan (a "Rights Plan") providing for the issuance by us to
all holders of our common stock of rights entitling them to subscribe for or
purchase common stockor any class or series of our preferred stock, which
rights (1) are deemed to be transferred with such common stock, (2) are not
exercisable until the occurrence of a specified event or events and (3) are
also issued in respect offuture issuances of our common stock, (c) issue any
of shares of our Capital Stock under any Rights Plan or redeem or repurchase
any rights distributed pursuant to a Rights Plan, (d) reclassify our Capital
Stock or exchange or convert oneclass or series of our Capital Stock for
another class or series of our Capital Stock, (e) purchase fractional
interests in shares of our Capital Stock pursuant to the conversion or
exchange provisions of such Capital Stock or the securitybeing converted or
exchanged, (f) purchase, acquire or withhold shares of our common stock
related to the issuance of our common stock or rights under any dividend
reinvestment plan or
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related to any of our benefit plans for our directors, officers, employees,
consultants or advisors, including any employment contract, and (g) for the
avoidance of doubt, convertconvertible Capital Stock of AES into other Capital
Stock of AES in accordance with the terms of such convertible Capital Stock
(together, for the avoidance of doubt, with cash in lieu of any fractional
share).
We will give the holders of the notes and the Trustee notice of our election
of, or any shortening or extension of, an Optional DeferralPeriod at least 10
business days prior to the earlier of (1) the next succeeding Interest Payment
Date or (2) the date upon which we are required to give notice to any
applicable self-regulatory organization or to holders of the notes ofthe next
succeeding Interest Payment Date or the Record Date therefor. The Record Date
for the payment of deferred interest and, to the extent permitted by
applicable law, any compound interest payable on the Interest Payment Date
immediatelyfollowing the last day of an Optional Deferral Period will be the
regular Record Date with respect to such Interest Payment Date.
"Capital Stock" means (i) in the case of a corporation or a company, corporate
stock or shares; (ii) in the case of anassociation or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock; (iii) in the case of a partnership or limited
liability company, partnership or membershipinterests (whether general or
limited); and (iv) any other interest or participation that confers on a
person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing person.
"Interest Payment Period" means the semi-annual period from and including an
Interest Payment Date to but excluding the nextsucceeding Interest Payment
Date, except for the first Interest Payment Period which shall be the period
from and including the Original Issue Date to but excluding January 15, 2030.
Events of Default
An "Event ofDefault" occurs with respect to the notes if:
(a) we default in paying principal or premium, if any, on the notes when due, upon acceleration, redemption
orotherwise (whether or not such payment is prohibited by the subordination provisions applicable to the notes);
(b) we default in paying interest on the notes when it becomes due (whether or not such payment
is prohibited bythe subordination provisions applicable to the notes), except as the result
of a deferral of interest payments in accordance with the provisions discussed above under
"--Option to Defer Interest Payments", and the default continues fora period of 30 days;
(c) we default in performing or breach any other covenant or agreement in the Indenture with
respect to the notesand the default or breach continues for a period of 60 consecutive
days after written notice by the Trustee or by the holders of 33% or more in aggregate
principal amount of the notes issued under the Indenture affected thereby; or
(d) AES files for bankruptcy or other specified events of bankruptcy,
insolvency, receivership or reorganizationoccur with respect to AES.
If an Event of Default with respect to the notes specified in clause (a) or
(b) aboveoccurs and is continuing, the Trustee or the holders of at least 33%
in aggregate principal amount of the notes may, by written notice to us, and
the Trustee at the request of at least 33% in aggregate principal amount of
notes will, declare theprincipal, premium, if any, and accrued interest on the
notes (including, without limitation, any deferred interest and, to the extent
permitted by applicable law, any compound interest) to be immediately due and
payable (notwithstanding anydeferral of interest payments in accordance with
the provisions discussed above under "--Option to Defer Interest Payments").
Upon declaration of acceleration, the principal, premium, if any, and accrued
interest on the notes shall beimmediately due and payable.
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If an Event of Default described in clause (c) above occurs and is continuing,
neitherthe Trustee nor the holders of the notes will be entitled to declare
the principal, premium, if any, or accrued interest on the notes, to be
immediately due and payable. See "Risk Factors--Holders of the notes will have
limited rights ofacceleration." However, they may exercise the other rights
and remedies available under the Indenture upon the occurrence of such an
Event of Default.
If an Event of Default specified in clause (d) above occurs, the principal,
premium, if any, and accrued interest on the notes shall beimmediately due and
payable, without any declaration or other act on the part of the Trustee or
any holder.
If, at any time after theprincipal of the notes shall have become due and
payable and before any judgment for payment shall have been obtained or
entered, the holders of at least a majority in principal amount of the notes
issued under the Indenture that have beenaccelerated (voting as a single
class), by written notice to us and to the Trustee, may waive all past
defaults with respect to the notes and rescind and annul a declaration of
acceleration with respect to the notes if:
(a) all existing Events of Default, other than the nonpayment of the principal, premium, if any, and interest onthe notes
that have become due solely by that declaration of acceleration, have been cured, waived or otherwise remedied; and
(b) AES will have deposited with the Trustee an amount sufficient to pay all matured amounts of interest, principaland
premium, if any, which have become due other than by acceleration and all amounts owed to the Trustee.
Forinformation as to the waiver of defaults, see "--Modification and Waiver."
Subject to certain conditions, the holders of atleast a majority in principal
amount of debt securities of each series issued under the Indenture that are
affected (voting as a single class) may direct the time, method, and place of
conducting any proceeding for any remedy available to theTrustee or exercising
any trust or power conferred on the Trustee with respect to the notes.
However, the Trustee may refuse to follow any direction that conflicts with
law or the Indenture, that may involve the Trustee in personal liability,
orthat the Trustee determines in good faith may be unduly prejudicial to the
rights of holders of debt securities of such series who did not join in giving
that direction, and the Trustee may take any other action it deems proper that
is notinconsistent with the direction received from holders of outstanding
debt securities of such series.
A holder of the notes of a seriesmay not pursue any remedy with respect to the
Indenture unless:
(a) the holder gives the Trustee written notice of a continuing Event of Default;
(b) the holders of at least 33% in principal amount of outstanding notes of
such series makes a written request tothe Trustee to pursue the remedy;
(c) the holder or holders offer and, if requested, provide the Trustee indemnity
satisfactory to the Trusteeagainst any costs, liability or expense;
(d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer ofindemnity; and
(e) within that
60-day
period, the holders of at least a majority inprincipal amount of the notes of such series
do not give the Trustee a written direction that is inconsistent with the request.
However, these limitations do not apply to the right of any holder of the
notes to receive payment of the principal, premium, if any, orinterest on, the
notes or to bring suit for the enforcement of any payment, on or after the due
date expressed in the notes, which right shall not be impaired or affected
without the consent of the holder.
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The Indenture requires that certain of our officers certify, on or before a
date not morethan 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 theperformance of any covenants or agreements under the Indenture.
Modification and Waiver
The Indenture may be amended or supplemented without the consent of any holder
of the notes of a series to:
. cure ambiguities, defects, or inconsistencies;
. comply with the terms in "--Restriction on Mergers, Consolidations and Sales of Assets" and"--Reports" described below;
. comply with any requirements of the SEC in connection with the
qualification of the Indenture under the TrustIndenture Act of 1939;
. evidence and provide for the acceptance of appointment with respect to the notes by a successor trustee;
. establish the form of notes of a series;
. provide for uncertificated notes and to make all appropriate changes for such purpose; and
. make any change that does not adversely affect the rights of any holder.
Other modifications and amendments of the Indenture may be made with the
consent of the holders of not less than a majority in principalamount of the
outstanding debt securities of each series affected by the amendment (all such
series voting as a separate class). However, no modification or amendment may,
without the consent of each holder affected:
. change the stated maturity of the principal of, or any sinking fund
obligation or any installment of interest on,the notes of such series;
. reduce the principal amount, premium, if any, or interest on the notes of such series;
. reduce the above-stated percentage of outstanding notes, the consent of whose holders is
necessary to modify oramend the Indenture with respect to the notes of such series; or
. reduce the percentage or principal amount of outstanding debt securities of any series, the consent of whoseholders
is necessary for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults.
A supplemental indenture which changes or eliminates any covenant or other
provision of the Indenture which has expressly been included solelyfor the
benefit of one or more particular series of the debt securities issued under
the Indenture, or which modifies the rights of holders of the debt securities
of that series with respect to that covenant or provision, shall be deemed not
toaffect the rights under the Indenture of the holders of the 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 sectionof the 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 the Indenture
becomes effective, we will give to the holders affected therebya 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 orwaiver.
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Restriction on Mergers, Consolidations and Sales of Assets
Pursuant to the Indenture, we may not consolidate with, merge with or into, or
transfer all or substantially all of our assets to any Personunless:
. AES shall be the continuing Person, or, if AES is not the continuing Person, the Person formed by
suchconsolidation 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 expresslyassumes in writing, by supplemental indenture, all our obligations under the notes; and
. AES delivers to the Trustee (i) an opinion of counsel to the
effect that such transaction and suchsupplemental indenture
comply with the Indenture, that all conditions precedent provided
for in the Indenture have been complied with and that such
supplemental indenture is a legal, valid and binding obligation
of AES or the continuing Person, and(ii) an officers' certificate
to the effect that immediately after giving effect to such
transaction, no Event of Default has occurred and is continuing.
Reports
We will covenant to deliver tothe Trustee, within 15 days after we are
required to file the same with the SEC, copies of the annual reports and of
the information, documents, and other reports which we may be required to file
with the SEC pursuant to Section 13 or 15(d) ofthe Exchange Act.
Satisfaction and Discharge
The Indenture will at our request be discharged and will cease to be of
further effect (except for, among other matters, certain obligations
toregister the transfer or exchange of notes, to replace stolen, lost or
mutilated notes, to maintain paying agencies and to hold monies for payment in
trust) as to all the notes of any series outstanding, when:
. either:
. we have paid or caused to be paid the principal, premium, if any,
and interest on all the notes of any seriesoutstanding when due; or
. we have delivered to the Trustee for cancellation all notes of any series theretofore authenticated; or
. (i) all the notes of such series not theretofore delivered to the Trustee for cancellation have
become due andpayable, or will by their terms become due and payable within one year, or are
to be called for redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and (ii) we have irrevocablydeposited or caused to be
deposited with the Trustee, in trust, funds (whether in cash or United States government
obligations) in an amount sufficient to pay at maturity or upon redemption all notes of such series
not theretofore delivered to theTrustee for cancellation, including principal, premium, if any,
and interest due or to become due on or prior to such date of maturity, as the case may be;
. we have paid or caused to be paid all other sums payable under the Indenture by us with respect to notes of suchseries; and
. upon our request for written acknowledgment of satisfaction and discharge,
we have delivered to the Trustee anofficers' certificate and an opinion of
counsel stating that all conditions precedent under the Indenture relating
to the satisfaction and discharge of the Indenture have been complied with.
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Defeasance and Discharge
The Indenture provides that we are deemed to have paid and will be discharged
from all obligations in respect of the notes of any series on the123rd day
after the deposit referred to below has been made, and that the provisions of
the Indenture will no longer be in effect with respect to the notes of such
series (except for, among other matters, certain obligations to register the
transferor exchange of notes, to replace stolen, lost or mutilated notes, to
maintain paying agencies and to hold monies for payment in trust) if, among
other things:
. we have deposited with the Trustee, in trust, money and/or United
States government obligations that, through thepayment 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 notes of such series, on the date due thereof or
earlier redemption (irrevocablyprovided for under arrangements
satisfactory to the Trustee), as the case may be, in accordance
with the terms of the Indenture and the notes of such series;
. we have delivered to the Trustee:
. either:
. an opinion of counsel to the effect that beneficial owners of such series of notes will not
recognize income,gain or loss for U.S. federal income tax purposes as a result of the exercise
of our option under this "Defeasance and Discharge" provision and will be subject to U.S.
federal income tax on the same amount and in the same manner and at thesame 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 (the "IRS") to the same
effect unless there has been achange in applicable federal income tax law or related treasury
regulations after the date of the Indenture such that a ruling is no longer required; or
. a ruling directed to the Trustee received from the IRS to the same effect as the aforementioned opinion ofcounsel; and
. an opinion of counsel to the effect that the creation of the defeasance trust does
not violate the InvestmentCompany 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;
. immediately after giving effect to that deposit on a pro forma basis, no Event of Default has occurred
and iscontinuing 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 whichwe are a party or by which we are bound, and
. if at that time the notes of such series are listed on a national securities exchange, we have delivered to theTrustee an
opinion of counsel to the effect that such notes will not be delisted as a result of a deposit, defeasance and discharge.
Defeasance of Certain Obligations
Theindenture provides that we may make the same type of deposit referred to
above under "--Defeasance and Discharge" and be released from certain
restrictive covenants in the notes of any series, including the covenants
described aboveunder "--Restriction on Mergers, Consolidations and Sales of
Assets" and "--Reports", and clause (3) described above under "--Events of
Default" shall no longer be deemed Events of Default, if:
. we have deposited with the Trustee, in trust, money and/or United
States government obligations that, through thepayment 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 notes of such series, on the date due thereof or
earlier redemption (irrevocablyprovided for under arrangements
satisfactory to the Trustee), as the case may be, in accordance
with the terms of the Indenture and the notes of such series;
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. we have delivered to the Trustee:
. an opinion of counsel to the effect that beneficial owners of such series of notes will not recognize income,gain
or loss for U.S. federal income tax purposes as a result of the exercise of our option under this "Defeasance
of Certain Obligations" provision and will be subject to U.S. federal income tax on the same amount and in the
same mannerand at the same times as would have been the case if the deposit and defeasance had not occurred; and
. an opinion of counsel to the effect that the creation of the defeasance trust does
not violate the InvestmentCompany 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;
. immediately after giving effect to that deposit on a pro forma basis, no Event of Default has occurred
and iscontinuing 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 whichwe are a party or by which we are bound, and
. if at that time the notes of such series are listed on a national securities exchange, we have delivered to theTrustee an
opinion of counsel to the effect that such notes will not be delisted as a result of a deposit, defeasance and discharge.
Book-Entry, Delivery and Form
Except asset forth below, each series of notes will be issued in registered,
global form in minimum denominations of $2,000 and integral multiples of
$1,000 in excess of $2,000.
Each series of notes initially will be represented by one or more notes in
registered, global form without interest coupons (collectively, the"Global
Notes"). The Global Notes will be deposited upon issuance with the Trustee as
custodian for DTC, and registered in the name of DTC or its nominee, in each
case for credit to an account of a direct or indirect participant in DTC
asdescribed below.
Except as set forth below, the Global Notes may be transferred, in whole and
not in part, only to another nominee of DTCor to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for
notes in certificated form ("Certificated Notes") except in the limited
circumstances described below. See "--DepositaryProcedures-Exchange of Global
Notes for Certificated Notes" below.
In addition, transfers of beneficial interests in the GlobalNotes will be
subject to the applicable rules and procedures of DTC and its direct or
indirect participants (including, if applicable, those of Euroclear and
Clearstream), which may change from time to time.
Depositary Procedures
The followingdescription of the operations of DTC, Euroclear and Clearstream
are provided solely as a matter of convenience. These operations and
procedures are solely within the control of the respective settlement systems
and are subject to changes by them. Weand the Trustee take no responsibility
for these operations and procedures and urge you to contact the system or
their participants directly to discuss these matters.
DTC has advised us that it is a limited-purpose trust company created to hold
securities for its participating organizations (collectively,the "Participants")
and to facilitate the clearance and settlement of transactions in those
securities between Participants through electronic book-entry changes in
accounts of its Participants. The Participants include securities brokersand
dealers, banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to other entities such
as banks, brokers, dealers and trust companies that maintain a custodial
relationshipwith a Participant, either directly or indirectly (collectively,
the "Indirect Participants").
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Persons who are not Participants may beneficially own securities held by or on
behalf of DTConly through Participants or the Indirect Participants. The
ownership of interests in, and transfers of ownership interests in, each
security held by or on behalf of DTC are recorded on the records of the
Participants and the Indirect Participants.
DTC has also advised us that, pursuant to procedures established by it,
ownership of interests in the Global Notes will be shown on, andthe transfer
of ownership of these interests will be effected only through, records
maintained by DTC (with respect to the Participants) or by the Participants
and the Indirect Participants (with respect to other owners of beneficial
interest in theGlobal Notes).
Investors in the Global Notes who are Participants in DTC's system may hold
their interests therein directly throughDTC. Investors in the Global Notes
that are not Participants may hold their interests indirectly through
organizations (including Euroclear and Clearstream) which are Participants in
such system. Euroclear and Clearstream will hold interests in theGlobal Notes
on behalf of their participants through customers' securities accounts in
their respective names on the books of their respective depositaries. All
interests in a Global Note, including those held through Euroclear or
Clearstream,may be subject to the procedures and requirements of DTC. Those
interests held through Euroclear or Clearstream may also be subject to the
procedures and requirements of such systems. The laws of some states require
that certain persons takephysical delivery in definitive form of securities
they own. Consequently, the ability to transfer beneficial interests in a
Global Note to such persons will be limited to that extent. Because DTC can
act only on behalf of Participants, which inturn act on behalf of Indirect
Participants, the ability of a person having beneficial interests in a Global
Note to pledge such interests to persons that do not participate in the DTC
system, or otherwise take actions in respect of such interests,may be affected
by the lack of a physical certificate evidencing such interests.
Except as described below, owners of interests in theGlobal Notes will not
have notes registered in their name, will not receive physical delivery of
notes in certificated form and will not be considered the registered owners or
"holders" thereof under the Indenture for any purpose.
Payments in respect of the principal of, and interest (including additional
interest) and premium, if any, on a Global Note registered in thename of DTC
or its nominee will be payable to DTC in its capacity as the registered holder
under the Indenture. Under the terms of the Indenture, we and the Trustee will
treat the persons in whose names the Notes, including the Global Notes,
areregistered as the owners of the notes for the purpose of receiving payments
and all other purposes. Consequently, neither we, the Trustee nor any agent of
us or the Trustee has or will have any responsibility or liability for:
(a) any aspect of DTC's records or any Participant's or Indirect Participant's records relating
topayments made on account of beneficial ownership interests in the Global Notes or for
maintaining, supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficialownership interests in the Global Notes; or
(b) any other matter relating to the actions or practices of DTC or any of its Participants or IndirectParticipants.
DTC has advised us that its current practice, upon receipt of any payment in
respect of securities suchas the notes (including principal and interest), is
to credit the accounts of the relevant Participants with the payment on the
payment date unless DTC has reason to believe it will not receive payment on
such payment date. Each relevant Participantis credited with an amount
proportionate to its beneficial ownership of an interest in the principal
amount of the relevant security as shown on the records of DTC. Payments by
the Participants and the Indirect Participants to the beneficial ownersof
notes will be governed by standing instructions and customary practices and
will be the responsibility of the Participants or the Indirect Participants
and will not be the responsibility of DTC, the Trustee or us. Neither we nor
the Trustee willbe liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the notes, and we and the Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
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Transfers between Participants in DTC will be effected in accordance with
DTC'sprocedures, and will be settled in
same-day
funds, and transfers between Participants in Euroclear and Clearstream will be
effected in accordance with their respective rules and operating procedures.
Cross-market transfers between the Participants in DTC, on the one hand, and
Euroclear or Clearstream participants, on the other hand, will beeffected
through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear
orClearstream, as the case may be, by the counter-party in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or Clearstream, as the case may be,
will, if thetransaction meets the settlement requirements, deliver
instructions to its respective depositary to take action to effect final
settlement on its behalf by delivering or receiving interests in the relevant
Global Note in DTC, and making or receivingpayment in accordance with normal
procedures for same day fund settlement applicable to DTC. Euroclear
participants and Clearstream participants may not deliver instructions
directly to the depositaries for Euroclear or Clearstream.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes only at the direction of one or more Participantsto whose
account DTC has credited the interests in the Global Notes and only in respect
of such portion of the aggregate principal amount of the notes as to which
such Participant or Participants has or have given such direction. However, if
thereis an Event of Default under the notes, DTC reserves the right to
exchange the Global Notes for legended notes in certificated form, and to
distribute such notes to its Participants.
Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures to facilitate transfers of interests in the Global Notes
amongparticipants in DTC, Euroclear and Clearstream, they are under no
obligation to perform or to continue to perform such procedures, and may
discontinue such procedures at any time. Neither we nor the Trustee nor any of
our respective agents will haveany responsibility for the performance by DTC,
Euroclear or Clearstream or their respective participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Exchange of Global Notes for Certificated Notes
A Global Note is exchangeable for Certificated Notes if:
(1) DTC (a) notifies us that it is unwilling or unable to continue as depositary for the Global Notes, and wefail
to appoint a successor depositary, or (b) has ceased to be a clearing agency registered under the Exchange Act;
(2) at our option, we notify the Trustee in writing that we elect to cause the issuance of the Certificated Notes;or
(3) there has occurred and is continuing a Default or Event of Default with respect to the notes and DTC requestssuch exchange.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon priorwritten notice given to the Trustee by or on
behalf of DTC in accordance with the Indenture. In all cases, Certificated
Notes delivered in exchange for any Global Note or beneficial interests in
Global Notes will be registered in the names, andissued in any approved
denominations, requested by or on behalf of the depositary (in accordance with
its customary procedures).
Same Day Settlementand Payment
We will make payments in respect of the notes represented by the Global Notes
(including principal, premium, if any, andinterest) through the paying agent
by wire transfer of immediately available funds to the
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accounts specified by the Global Note holder. We will make all payments of
principal, interest and premium, if any, with respect to Certificated Notes
through the paying agent by wire transfer ofimmediately available funds to the
accounts specified by the holders thereof or, if no account is specified, by
mailing a check to that holder's registered address. The notes represented by
the Global Notes are expected to trade in DTC'sSame Day Funds Settlement
System, and any permitted secondary market trading activity in the notes will,
therefore, be required by DTC to be settled in immediately available funds. We
expect that secondary trading in any Certificated Notes will alsobe settled in
immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Clearstreamparticipant purchasing an interest in a Global Note from a
Participant in DTC will be credited, and any crediting of this type will be
reported to the relevant Euroclear or Clearstream participant, during the
securities settlement processing day(which must be a business day for
Euroclear and Clearstream) immediately following the settlement date of DTC.
DTC has advised us that cash received in Euroclear or Clearstream as a result
of sales of interests in a Global Note by or through aEuroclear or Clearstream
participant to a Participant in DTC will be received with value on the
settlement date of DTC but will be available in the relevant Euroclear or
Clearstream cash account only as of the business day for Euroclear
orClearstream following DTC's settlement date.
Governing Law
The Indenture and notes will be governed by and construed in accordance with
the laws of the State of New York.
Information Concerning the Trustee
AESand its subsidiaries may maintain deposit accounts and conduct other
banking transactions with the Trustee in the ordinary course of business.
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U.S. FEDERAL INCOME TAX CONSEQUENCES
The following are the material U.S. federal income tax consequences of
ownership and disposition of the notes. This discussion applies only tonotes
that meet both of the following conditions:
. they are purchased by those initial holders who purchase notes at the "issue price,"
which will equalthe first price to the public (not including bond houses, brokers or
similar persons or organizations acting in the capacity of underwriters, placement
agents or wholesalers) at which a substantial amount of the notes is sold for money; and
. they are held as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, asamended (the "Code").
This discussion does not describe all aspects of U.S. federal income taxes and
does notdeal with all of the tax consequences that may be relevant to holders
in light of their particular circumstances or to holders subject to special
rules such as:
. financial institutions;
. insurance companies;
. dealers or traders using a
mark-to-market
method of tax accounting for the notes;
. persons holding notes as part of a hedge, "straddle" or integrated transaction;
. U.S. Holders (as defined below) whose functional currency is not the U.S. dollar;
. regulated investment companies or real estate investment trusts;
. partnerships or other entities classified as partnerships for U.S. federal income tax purposes;
. persons subject to any special tax accounting rules under Section 451 of the Code;
. tax-exempt
organizations; or
. persons subject to the alternative minimum tax.
If an entity or arrangement treated as a partnership for U.S. federal income
tax purposes holds notes, the U.S. federal income tax treatmentof a partner
will generally depend upon the status of the partner and the activities of the
partnership. Partners of partnerships holding notes should consult their tax
advisors as to the particular U.S. federal income tax consequences to them
ofholding and disposing of the notes.
This summary is based on the Code, administrative pronouncements, judicial
decisions and final,temporary and proposed U.S. Treasury Regulations in effect
as of the date hereof, changes to any of which subsequent to the date of this
prospectus supplement may affect the tax consequences described herein,
possibly with retroactive effect.
This summary addresses only U.S. federal income tax consequences. Persons
considering the purchase of notes should consult their tax advisorswith regard
to the application of the U.S. federal income or other federal tax laws
(including estate and gift tax laws and the Medicare tax on investment income)
to their particular situations as well as any tax consequences arising under
the lawsof any state, local or foreign taxing jurisdiction.
Classification of the Notes
The determination of whether a security should be classified as indebtedness
or equity for U.S. federal income tax purposes requires a judgmentbased on all
relevant facts and circumstances. There is no statutory, judicial or
administrative authority that directly addresses the U.S. federal income tax
treatment of securities similar to the notes. In the opinion of Davis Polk
&Wardwell LLP, under current law and based on the facts contained in this
prospectus supplement, the terms of the indenture and the notes, and such
assumptions and representations of the Company and its officers and other
representatives as arecustomary for transactions similar in nature to those
described in this prospectus supplement and which were relied upon in
rendering this opinion, the notes should be classified for U.S.
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federal income tax purposes as indebtedness (although there is no controlling
authority directly on point). The opinion of Davis Polk & Wardwell LLP is not
binding on the InternalRevenue Service (the "IRS") or the courts. Moreover, no
rulings have been or will be sought from the IRS with respect to the
transactions described in this prospectus supplement. Accordingly, we cannot
assure holders that the IRS will notchallenge the opinion described herein or
that a court would not sustain such a challenge. If the IRS were to
successfully challenge the classification of the notes as indebtedness,
interest payments on the notes would be treated for U.S. federalincome tax
purposes as dividends to the extent of our current or accumulated earnings and
profits. In the case of
Non-U.S.
Holders (as defined below), interest payments treated as dividends would be
subject towithholding of United States income tax, except to the extent
provided by an applicable income tax treaty. In addition, such a determination
would constitute a Tax Event that would entitle us to redeem the notes as
described under "Descriptionof the Notes--Redemption--Redemption Following a
Tax Event." We agree, and by acquiring an interest in a note, each holder of a
note will agree, to treat the notes as indebtedness for U.S. federal income
tax purposes, and the remainderof this discussion assumes such treatment.
Holders should consult their tax advisors regarding the tax consequences that
would apply if the notes are not treated as indebtedness for U.S. federal
income tax purposes.
Tax Consequences to U.S. Holders
As usedherein, the term "U.S. Holder" means a beneficial owner of a note that
is, for U.S. federal income tax purposes:
. a citizen or individual resident of the United States;
. a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created
ororganized in or under the laws of the United States, any state thereof or the District of Columbia; or
. an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.
Payments of Interest
The notes should be treated as "variable rate debt instruments" for U.S.
federal income tax purposes. If the notes were not treatedas variable rate
debt instruments, then the notes would be treated as "contingent payment debt
instruments," in which case U.S. Holders could be required to accrue interest
income on the notes in excess of stated interest and would berequired to treat
as ordinary income rather than as capital gain any income realized on a
taxable disposition of the notes. Applicable Treasury Regulations set forth
rules to determine whether a variable rate debt instrument is treated as
issuedwith original issue discount for U.S. federal income tax purposes
("OID"). Based on the application of these Treasury Regulations and the
expected pricing terms of the notes, we do not expect the pricing of the notes
to result in the notesas being treated as issued with OID. We have the option
under certain circumstances to defer payments of stated interest on the notes.
Under the Treasury Regulations relating to OID, a debt instrument is deemed to
be issued with OID if there is morethan a "remote" contingency that periodic
stated interest payments due on the instrument will not be timely paid. We
believe the likelihood of our exercising the option to defer payment of stated
interest on the notes is remote within themeaning of the Treasury Regulations
in part because our exercise of the option to defer payments of stated
interest on the notes would generally prevent us from:
. declaring or paying any dividend or distribution on any Capital Stock of The AES Corporation;
. redeeming, purchasing, acquiring or making a liquidation payment with respect to any Capital Stock of The AESCorporation;
. paying any principal, interest or premium on, or repaying, repurchasing or redeeming, any indebtedness
of The AESCorporation that ranks equally with or junior to the notes in right of payment; and
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. making any payments with respect to any guarantees by The AES Corporation of any
indebtedness if such guaranteesrank equally with or junior to the notes in right of payment.
Similarly, if certain circumstances occur (see"Description of the
Notes--Redemption--Redemption Following a Rating Agency Event"), we will be
obligated to pay amounts in excess of stated principal on the notes. If there
is only a remote likelihood that such payments will bemade, such excess
payments will not affect the amount of interest income that a U.S. Holder
recognizes. We believe the likelihood that we will make any such payments is
remote within the meaning of the Treasury Regulations.
Based on these positions, a U.S. Holder should generally be required to
recognize any stated interest as ordinary income at the time it isreceived or
accrued on the notes in accordance with such holder's regular method of
accounting for United States federal income tax purposes.
Our determination that the contingencies described above are remote is binding
on a U.S. Holder unless such holder discloses its contraryposition in the
manner required by applicable Treasury Regulations. Our determination is not,
however, binding on the IRS. There can be no assurance that the IRS or a court
will agree with these positions. The meaning of the term "remote"in the
Treasury Regulations has not yet been addressed in any rulings or other
guidance by the IRS or any court. If the possibility of interest deferral were
determined not to be remote, the notes would be treated as issued with OID and
all statedinterest would be treated as OID as long as the notes are
outstanding. In that case, U.S. Holders would be required to accrue interest
income on the notes using a constant yield method whether or not they receive
any cash payment attributable tothat interest, regardless of their regular
method of accounting for U.S. federal income tax purposes.
Moreover, if the possibility ofexcess payments following a Rating Agency Event
were determined not to be remote, the notes could be treated as "contingent
payment debt instruments," in which case U.S. Holders could be required to
accrue interest income on the notes inexcess of stated interest and would be
required to treat as ordinary income rather than as capital gain any income
realized on a taxable disposition of the notes, as described above.
The remainder of this discussion assumes the notes will not be treated as
issued with OID or as contingent payment debt instruments.
Exercise of Deferral Option
Under the Treasury Regulations, if we exercise our option to defer the payment
of interest on the notes, the notes will be treated as if theyhad been
redeemed and reissued solely for OID purposes. In that event, all remaining
interest payments on the notes (including interest on deferred interest) would
be treated as OID, which U.S. Holders would be required to accrue and include
intaxable income, without regard to such U.S. Holders' regular method of
accounting for U.S. federal income tax purposes. The amount of OID income
includible in such U.S. Holders' taxable income would be determined on the
basis of a constantyield method over the remaining term of the notes, and the
actual receipt of future payments of stated interest on the notes would no
longer be separately reported as taxable income. The total amount of OID that
would accrue during the deferralperiod would be approximately equal to the
amount of the cash payment due immediately following the end of that period. A
U.S. Holder's adjusted tax basis in its notes would be increased by any OID
included in the U.S. Holder's income anddecreased by the actual receipt of
cash interest payments on the notes.
Sale, Exchange or Retirement of the Notes
Upon the sale, exchange or retirement of a note that is a taxable disposition,
a U.S. Holder will recognize taxable gain or loss equal to thedifference
between the amount realized on such sale, exchange or retirement and the U.S.
Holder's adjusted tax basis in the note, which will generally equal the cost
of the note. For these purposes, the amount realized does not include
anyamount attributable to accrued interest. Amounts attributable
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to accrued interest are treated as interest as described under "Payments of
Interest" above. If the notes are treated as having been issued or reissued
with OID, such adjusted tax basiswill also be increased by the amount of any
OID previously included in a U.S. Holder's gross income with respect to the
notes and decreased by any payments received on the notes since and including
the date that the notes were deemed to beissued with OID.
Gain or loss realized on the sale, exchange or retirement of a note will
generally be capital gain or loss and will belong-term capital gain or loss if
at the time of sale, exchange or retirement the note has been held for more
than one year. The deductibility of capital losses is subject to limitations.
Backup Withholding and Information Reporting
Information returns generally will be filed with the IRS in connection with
payments on the notes (including OID) and the proceeds from a saleor other
disposition of the notes. A U.S. Holder will be subject to backup withholding
on these payments if the U.S. Holder fails to provide its correct taxpayer
identification number to the applicable withholding agent and comply with
certaincertification procedures or otherwise establish an exemption from
backup withholding. Backup withholding is not an additional tax. The amount of
any backup withholding from a payment to a U.S. Holder will be allowed as a
credit against the U.S.Holder's U.S. federal income tax liability and may
entitle the U.S. Holder to a refund, provided that the required information is
timely furnished to the IRS.
Tax Consequences to
Non-U.S.
Holders
As used herein, the term
"Non-U.S.
Holder" means a beneficial owner of a note that is, forU.S. federal income tax
purposes:
. a nonresident alien individual;
. a foreign corporation; or
. a foreign estate or trust.
The term
"Non-U.S.
Holder" does not include a beneficial owner who is an individual presentin the
United States for 183 days or more in the taxable year of disposition or who
is (or may become while holding notes) a former citizen or resident of the
United States. Such a beneficial owner should consult his or her own tax
advisor regardingthe U.S. federal income tax consequences of the sale,
exchange or other disposition of a note.
Payments on the Notes
Subject to the discussions below concerning backup withholding and FATCA (as
defined below), payments of principal, interest (including anyOID) and premium
on the notes to a
Non-U.S.
Holder generally will not be subject to U.S. federal income or withholding tax,
provided
that, in the case of interest:
. the
Non-U.S.
Holder does not own, actually or constructively, 10% or moreof the total combined voting power of all classes of our stock
entitled to vote and is not a controlled foreign corporation related, directly or indirectly, to us through stock ownership; and
. the
Non-U.S.
Holder certifies on a
properly executed IRS Form
W-8
appropriate to the
Non-U.S.
Holder's circumstances, under penalties of perjury, that it is not a United
States person. Special certification rules apply to notes thatare held through
non-U.S.
intermediaries.
Subject to the discussion belowconcerning income of a
Non-U.S.
Holder that is effectively connected with the conduct of a trade or business
in the United States, if a
Non-U.S.
Holder cannot satisfythe requirements described above, payments of interest on
the notes to such
Non-U.S.
Holder will generally be subject to U.S. federal withholding tax at a rate of
30%, unless the
Non-U.S.
Holder provides the applicable withholding agent
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with a properly executed IRS Form
W-8
appropriate to the
Non-U.S.
Holder's circumstances claiming an exemptionfrom or reduced rate of
withholding under an applicable income tax treaty and complies with any other
applicable procedures. See the discussion below under "FATCA" regarding
withholding on interest under the FATCA rules.
Sale, Exchange or Retirement of the Notes
A
Non-U.S.
Holder of a note will not be subject to U.S. federal income tax on gain
realized on thesale, exchange or retirement of such note, unless the gain is
effectively connected with the conduct by the
Non-U.S.
Holder of a trade or business in the United States, subject to an applicable
income taxtreaty providing otherwise, although any amounts attributable to
accrued interest will generally be treated as described above under "Payments
on the Notes." See the discussion below under "FATCA" regarding withholding
under theFATCA rules on gross proceeds of the sale, exchange or retirement of
the notes.
Non-U.S.
Holder Engaged in a U.S. Trade or Business
If a
Non-U.S.
Holder of a note is engaged in atrade or business in the United States, and if
income or gain on the note is effectively connected with the conduct of this
trade or business (and if required by an applicable income tax treaty, the
income or gain is attributable to a permanentestablishment or fixed base
maintained by the
Non-U.S.
Holder in the United States), the
Non-U.S.
Holder, although exempt from the withholding tax on interest discussedabove,
will generally be taxed in the same manner as a U.S. Holder (see "Tax
Consequences to U.S. Holders" above), except that the
Non-U.S.
Holder will be required to provide to the applicablewithholding agent a
properly executed IRS Form
W-8ECI
in order to claim an exemption from withholding tax on interest. These
Non-U.S.
Holders should consult their taxadvisors with respect to other U.S. tax
consequences of the ownership and disposition of notes, including, in the case
of a corporation, the possible imposition of a branch profits tax at a rate of
30% (or a lower rate under an applicable income taxtreaty).
Backup Withholding and Information Reporting
Information returns generally will be filed with the IRS in connection with
interest payments on the notes. Copies of the information returnsreporting
such interest payments and any withholding may also be made available to the
tax authorities in the country in which the
Non-U.S.
Holder resides under the provisions of an applicable income taxtreaty. Unless
the
Non-U.S.
Holder complies with certification procedures to establish that it is not a
United States person, information returns may be filed with the IRS in
connection with the proceeds froma sale or other disposition of the notes, and
the
Non-U.S.
Holder may be subject to backup withholding on payments on the notes or on the
proceeds from a sale or other disposition of the notes. Compliance withthe
certification procedures required to claim the exemption from withholding tax
on interest described above will satisfy the certification requirements
necessary to avoid backup withholding as well. Backup withholding is not an
additional tax. Theamount of any backup withholding from a payment to a
Non-U.S.
Holder will be allowed as a credit against the
Non-U.S.
Holder's U.S. federal income tax liability andmay entitle the
Non-U.S.
Holder to a refund
,
provided that the required information is furnished to the IRS.
FATCA
Provisions in the Code and theU.S. Treasury Regulations promulgated
thereunder, commonly referred to as "FATCA," generally impose a withholding
tax of 30% on payments to certain
non-U.S.
entities (including financialintermediaries) with respect to certain financial
instruments, unless various U.S. information reporting and due diligence
requirements have been satisfied. An intergovernmental agreement between the
United States and the
non-U.S.
entity's jurisdiction may modify these requirements. Withholding under these
rules (if applicable) applies to payments of interest on the notes (including
any OID) and to payments of gross proceeds ofthe sale, exchange or retirement
of the notes. However, under proposed U.S. Treasury Regulations (the preamble
to which specifies that taxpayers are permitted to rely on them pending
finalization), no withholding will apply on payments of grossproceeds.
Non-U.S.
Holders, and U.S. Holders holding notes through a
non-U.S.
intermediary, should consult their tax advisors regarding the potential
application ofFATCA to the notes.
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UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement
between us and Citigroup Global Markets Inc., GoldmanSachs & Co. LLC, Mizuho
Securities USA LLC, Morgan Stanley & Co. LLC and SMBC Nikko Securities
America, Inc., as representatives of the underwriters named below, each of the
underwriters has severally agreed to purchase, and wehave agreed to sell to
each underwriter, the aggregate principal amount of notes set forth opposite
such underwriter's name below.
Underwriters Principal
Amount of
Notes
Citigroup Global Markets Inc. $ 190,000,000
Goldman Sachs & Co. LLC 116,375,000
Mizuho Securities USA LLC 116,375,000
Morgan Stanley & Co. LLC 116,375,000
SMBC Nikko Securities America, Inc. 116,375,000
BNP Paribas Securities Corp. 28,500,000
BofA Securities, Inc. 28,500,000
Credit Agricole Securities (USA) Inc. 28,500,000
HSBC Securities (USA) Inc. 28,500,000
MUFG Securities Americas Inc. 28,500,000
RBC Capital Markets, LLC 28,500,000
Santander US Capital Markets LLC 28,500,000
Scotia Capital (USA) Inc. 28,500,000
Wells Fargo Securities, LLC 28,500,000
CIBC World Markets Corp. 9,500,000
Natixis Securities Americas LLC 9,500,000
Standard Chartered Bank 9,500,000
SG Americas Securities, LLC 9,500,000
Total $ 950,000,000
The underwriting agreement provides that the obligations of the underwriters
to purchase the notes included inthis offering are subject to approval of
legal matters by counsel and to other conditions. The underwriters are
obligated to purchase all notes if they purchase any notes.
The underwriters propose to offer some of the notes of each series directly to
the public at the applicable public offering price set forth onthe cover page
of this prospectus supplement and some of the notes of each series to dealers
at the applicable public offering price. After the initial offering of the
notes of the applicable series to the public, the underwriters may change
therelated public offering prices and concessions. The offering of the notes
by the underwriters is subject to receipt and acceptance of the notes and
subject to the underwriters' right to reject any order in whole or in part.
Discounts and Commissions
The notes soldby the underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus
supplement. Any notes sold by the underwriters to securities dealers may be
sold at a price that represents aconcession not in excess of 0.600% of the
principal amount of the notes. Any such securities dealers may resell notes to
certain other dealers at a price that represents a concession of not more than
0.400% of the principal amount of the notes. Ifall the notes are not sold at
the initial public offering price, the representatives may change the offering
price and the other selling terms.
The following table shows the underwriting discounts to be received by the
underwriters in connection with this offering:
Per Note 1.000 %
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The notes are new issues of securities with no established trading markets. We
have beenadvised by the underwriters that the underwriters intend to make a
market of the notes but they are not obligated to do so and may discontinue
market making with respect to the notes at any time without notice. No
assurance can be given as to theliquidity of any public trading markets for
the notes or the development or continuation of such trading markets.
In connection with thisoffering, the underwriters may purchase and sell notes
in the open market. These transactions may include over-allotment, syndicate
covering transactions and stabilizing transactions. Over-allotment involves
syndicate sales of notes of a series inexcess of the aggregate principal
amount of notes of such series to be purchased by the underwriters in this
offering, which creates a syndicate short position. Syndicate covering
transactions involve purchases of the notes in the open market afterthe
distribution has been completed in order to cover syndicate short positions.
Stabilizing transactions consist of certain bids or purchases of notes made
for the purpose of preventing or retarding a decline in the market prices of
the notes whilethis offering is in progress.
Any of these activities may have the effect of preventing or retarding a
decline in the market prices ofthe notes. They may also cause the prices of
the notes to be higher than the prices that otherwise would exist in the open
market in the absence of these transactions. The underwriters may conduct
these transactions in the
over-the-counter
market or otherwise. If the underwriters commence any of these transactions,
they may discontinue them at any time.
The underwriters also may impose a penalty bid. This occurs when a particular
underwriter repays to the underwriters a portion of theunderwriting discount
received by it because the representatives have repurchased notes sold by or
for the account of such underwriter in stabilizing or short covering
transactions.
We estimate that our total expenses for this offering, excluding underwriting
discounts, will be approximately $3.0 million.
We have agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act, or tocontribute
to payments the underwriters may be required to make because of any of those
liabilities.
The underwriters and theirrespective affiliates are full-service financial
institutions engaged in various activities, which may include sales and
trading, commercial and investment banking, advisory, investment management,
investment research, principal investment, hedging,market making, brokerage
and other financial and
non-financial
activities and services. Certain of the underwriters and their respective
affiliates have, from time to time, performed, and may in the futureperform,
various financial advisory, cash management, investment banking, commercial
banking and general financing services for us and our affiliates in the
ordinary course of business for which they have received, or may receive,
customary fees andexpenses. Affiliates of certain of the underwriters are
agents and/or lenders under our revolving credit facility.
In the ordinary courseof their various business activities, the underwriters
and their respective affiliates, officers, directors and employees may
purchase, sell or hold a broad array of investments including serving as
counterparties to certain derivative and hedgingarrangements and actively
trade securities, derivatives, loans, commodities, currencies, credit default
swaps and other financial instruments for their own account and for the
accounts of their customers, and such investment and trading activitiesmay
involve or relate to our assets, securities and/or instruments (directly, as
collateral securing other obligations or otherwise) and/or persons and
entities with relationships with us. Certain of the underwriters or their
affiliates have alending relationship with us. Certain of those underwriters
or their affiliates routinely hedge, certain other underwriters or their
affiliates have hedged and are likely to hedge and certain other underwriters
or their affiliates may hedge, theircredit exposure to us consistent with
their customary risk management policies. Typically, such underwriters and
their affiliates would hedge such exposure by entering into transactions which
consist of either the purchase of credit
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default swaps or the creation of short positions in our securities, including
potentially the notes offered hereby. Any such credit default swaps or short
positions could adversely affect futuretrading prices of the notes offered
hereby. The underwriters and their respective affiliates may also communicate
independent investment recommendations, market color or trading ideas and/or
publish or express independent research views in respectof such assets,
securities or instruments and may at any time hold, or recommend to clients
that they should acquire, long and/or short positions in such assets,
securities and instruments.
Selling Restrictions
Canada
The notes may be sold only to purchasers purchasing, or deemed to be
purchasing, as principals that are accredited investors, asdefined in National
Instrument 45-106
Prospectus Exemptions
or subsection 73.3(1) of the
Securities Act
(Ontario), and are permitted clients, as defined in National
Instrument 31-103
Registration Requirements, Exemptions and Ongoing Registrant Obligations
. Any resale of the notes must be made in accordance with an exemption from,
or in a transaction not subject to,the prospectus requirements of applicable
securities laws.
Securities legislation in certain provinces or territories of Canada
mayprovide a purchaser with remedies for rescission or damages if this
prospectus supplement and the accompanying prospectus (including any amendment
thereto) contain a misrepresentation, provided that the remedies for
rescission or damages areexercised by the purchaser within the time limit
prescribed by the securities legislation of the purchaser's province or
territory. The purchaser should refer to any applicable provisions of the
securities legislation of the purchaser'sprovince or territory for particulars
of these rights or consult with a legal advisor.
Pursuant to section 3A.3 of National
Instrument 33-105
Underwriting Conflicts
(NI 33-105),
the underwriters are not required to comply with the disclosure requirements of
NI 33-105
regarding underwriter conflicts of interest in connection with this offering.
European Economic Area
The notes are not intended to be offered, sold or otherwise made available to
and should not be offered, sold or otherwise made available toany retail
investor in the European Economic Area ("EEA"). For these purposes, a retail
investor means a person who is one (or more) of: (i) a retail client as
defined in point (11) of Article 4(1) of Directive 2014/65/EU (asamended,
"MiFID II"); or (ii) a customer within the meaning of Directive (EU) 2016/97
(as amended, the "Insurance Distribution Directive"), where that customer
would not qualify as a professional client as defined in point(10) of Article
4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation
(EU) 2017/1129 (the "Prospectus Regulation"). Consequently no key information
document required by Regulation (EU) No 1286/2014 (asamended, the "PRIIPs
Regulation") for offering or selling the notes or otherwise making them
available to retail investors in the EEA has been prepared and therefore
offering or selling the notes or otherwise making them available to anyretail
investor in the EEA may be unlawful under the PRIIPs Regulation.
United Kingdom
The notes are not intended to be offered, sold or otherwise made available to
and should not be offered, sold or otherwise made available toany retail
investor in the United Kingdom ("U.K."). For these purposes, a retail investor
means a person who is one (or more) of: (i) a retail client, as defined in
point (8) of Article 2 of Regulation (EU) No 2017/565 as itforms part of
domestic law by virtue of the European Union (Withdrawal) Act 2018 ("EUWA");
(ii) a customer within the meaning of the provisions of the Financial Services
and Markets Act 2000 ("FSMA") and any rules or regulationsmade under the FSMA
to implement Directive (EU) 2016/97, where that customer would not qualify as
a professional client, as defined in point (8) of Article 2(1) of Regulation
(EU) No 600/2014 as it forms part of domestic law by virtue of theEUWA; or
(iii) not a qualified
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investor as defined in Article 2 of Regulation (EU) 2017/1129 as it forms part
of domestic law by virtue of the EUWA. Consequently no key information
document required by Regulation (EU) No1286/2014 as it forms part of domestic
law by virtue of the EUWA (the "U.K. PRIIPs Regulation") for offering or
selling the notes or otherwise making them available to retail investors in
the U.K. has been prepared and therefore offeringor selling the notes or
otherwise making them available to any retail investor in the U.K. may be
unlawful under the U.K. PRIIPs Regulation.
Hong Kong
Thenotes have not been and will not be offered or sold in Hong Kong Special
Administrative Region of the People's Republic of China ("Hong Kong") by means
of any document other than (i) in circumstances which do not constitute
anoffer to the public within the meaning of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance (Cap.32, Laws of Hong Kong) (the "CO"), or
(ii) to "professional investors" within the meaning of the Securities
andFutures Ordinance (Cap.571, Laws of Hong Kong) (the "SFO") and any rules
made thereunder, or (iii) in other circumstances which do not result in the
document being a "prospectus" within the meaning of the CO, and noadvertisement,
invitation or document relating to the notes has been or will be issued or in
the possession of any person for the purpose of issue (in each case whether in
Hong Kong or elsewhere), which is directed at, or the contents of which
arelikely to be accessed or read by, the public in Hong Kong (except if
permitted to do so under the securities laws of Hong Kong) other than with
respect to notes which are or are intended to be disposed of only to persons
outside Hong Kong or only to"professional investors" within the meaning of the
SFO and any rules made thereunder.
The contents of this document have notbeen reviewed by any regulatory
authority in Hong Kong. You are advised to exercise caution in relation to the
offering. If you are in any doubt about any of the contents of this document,
you should obtain independent professional advice.
Japan
The noteshave not been and will not be registered under the Financial
Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended (the
"FIEA")). The notes may not be offered or sold, directly or indirectly, in
Japan or to, or for thebenefit of, any resident of Japan (including any person
resident in Japan or any corporation or other entity organized under the laws
of Japan), or to others for
re-offering
or resale, directly or indirectly,in Japan or to or for the benefit of any
resident of Japan, except pursuant to an exemption from the registration
requirements of the FIEA and otherwise in compliance with any relevant laws
and regulations of Japan.
Singapore
Thisprospectus supplement and the accompanying prospectus have not been
registered as a prospectus with the Monetary Authority of Singapore.
Accordingly, this prospectus supplement, the accompanying prospectus and any
other document or material inconnection with the offer or sale, or invitation
for subscription or purchase, of the notes may not be circulated or
distributed, nor may the notes be offered or sold, or be made the subject of
an invitation for subscription or purchase, whetherdirectly or indirectly, to
persons in Singapore other than (i) to an institutional investor (as defined
in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore (the
"SFA")), (ii) to a relevant person (as definedin Section 275(2) of the SFA)
pursuant to Section 275(1) of the SFA, or any person pursuant to Section
275(1A) of the SFA, and in accordance with the conditions specified in Section
275 of the SFA or (iii) otherwise pursuantto, and in accordance with the
conditions of, any other applicable provision of the SFA, in each case subject
to the conditions set forth in the SFA.
Where the notes are subscribed or purchased under Section 275 of the SFA by a
relevant person which is: (a) a corporation (which isnot an accredited
investor as defined in Section 4A of the SFA) the sole business of which is to
hold investments and the entire share capital of which is owned by one or more
individuals, each of
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whom is an accredited investor; or (b) a trust (where the trustee is not an
accredited investor) whose sole purpose is to hold investments and each
beneficiary is an accredited investor,shares, debentures and units of shares
and debentures of that corporation or the beneficiaries' rights and interest
in that trust shall not be transferable for 6 months after that corporation or
that trust has acquired the notes underSection 275 of the SFA except: (1) to
an institutional investor under Section 274 of the SFA or to a relevant person
(as defined in Section 275(2) of the SFA), or any person pursuant to Section
275(1A), and in accordancewith the conditions, specified in Section 275 of the
SFA; (2) where no consideration is or will be given for the transfer; or (3)
by operation of law.
Singapore Securities and Futures Act Product Classification--Solely for the
purposes of our obligations pursuant to Sections 309B(1)(a)and 309B(1)(c) of
the SFA, we have determined, and hereby notify all relevant persons (as
defined in Section 309A of the SFA) that the notes are a "prescribed capital
markets product" (as defined in the Securities and Futures (CapitalMarkets
Products) Regulations 2018) and an Excluded Investment Product (as defined in
MAS Notice SFA
04-N12:
Notice on the Sale of Investment Products and MAS Notice
FAA-N16:
Notice on Recommendations on Investment Products).
Extended Settlement
We expect that delivery of the notes will be made to investors on May 21,
2024, which will be the third business day following the tradedate (such
settlement being referred to as "T+3"). Under Rule 15c6-1 of the Exchange Act,
trades in the secondary market generally are required to settle in two
business days, unless the parties to any such trade expressly agree
otherwise.Accordingly, purchasers who wish to trade their notes more than two
business days prior to May 21, 2024, will be required, by virtue of the fact
that the senior notes initially settle in T+3, to specify alternative
settlement arrangements toprevent a failed settlement. Purchasers of the notes
who wish to trade the notes during such period should consult their advisors.
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LEGAL MATTERS
Certain legal matters in connection with the offering of the notes will be
passed upon for us by Davis Polk & Wardwell LLP, New York,New York. Certain
legal matters in connection with the offering of the notes will be passed upon
for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York,
New York.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The consolidated financial statements of The AES Corporation appearing in The
AES Corporation's Annual Report on Form
10-K,
filed with the SEC on February 26, 2024, for the three years in the period
ended December 31, 2023 and the effectiveness of The AES Corporation's
internal control over financial reporting as ofDecember 31, 2023, have been
audited by Ernst & Young LLP, independent registered public accounting firm,
as set forth in their reports thereon included therein, and incorporated
herein by reference.
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PROSPECTUS
The AES Corporation
Common Stock, Preferred Stock, Depositary Shares,
Debt Securities, Warrants, Purchase Contracts and Units
We may offer from time to time common stock, preferred stock, depositary
shares representing preferred stock, debt securities, warrants,purchase
contracts or units. In addition, certain selling securityholders to be
identified in a prospectus supplement may offer and sell these securities from
time to time, in amounts, at prices and on terms that will be determined at
the time thesecurities are offered. Specific terms of these securities will be
provided in supplements to this prospectus. You should read this prospectus
and any supplement carefully before you invest.
Our common stock and corporate units are listed on the New York Stock Exchange
under the symbol "AES" and "AESC",respectively.
Investing in these securities involves certain risks. See "
Risk Factors
" beginning on page 56 of our annual report on Form
10-K
for the year ended December 31, 2021, which is incorporated by reference herein.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, ordetermined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This prospectusmay not be used to sell securities unless accompanied by a
prospectus supplement
.
The date ofthis prospectus is March 2, 2022
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We have not authorized anyone to provide any information other than that
contained orincorporated by reference in this prospectus or in any free
writing prospectus prepared by or on behalf of us or to which we have referred
you. We take no responsibility for, and can provide no assurance as to the
reliability of, any otherinformation that others may give you. 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 or anyprospectus supplement or in
any such free writing prospectus is accurate as of any date other than their
respective dates.
The terms"AES", "we," "us," and "our" refer to The AES Corporation and its
subsidiaries.
TABLE OF CONTENTS
Page
The AES Corporation 1
Where You Can Find More Information 2
Special Note on Forward-Looking Statements 2
Use of Proceeds 2
Description of Securities 3
Validity of Securities 3
Experts 3
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THE AES CORPORATION
Incorporated in 1981, AES is a global energy company accelerating the future
of energy. Together with our many stakeholders, we are improvinglives by
delivering the greener, smarter energy solutions the world needs. Our diverse
workforce is committed to continuous innovation and operational excellence,
while partnering with our customers on their strategic energy transitions
andcontinuing to meet their energy needs today.
We are organized into four market-oriented SBUs: US and Utilities (United
States, PuertoRico and El Salvador); South America (Chile, Colombia, Argentina
and Brazil); MCAC (Mexico, Central America and the Caribbean); and Eurasia
(Europe and Asia). We have two lines of business: generation and utilities.
Each of our SBUs participates inour first business line, generation, in which
we own and/or operate power plants to generate and sell power to customers,
such as utilities, industrial users, and other intermediaries. Our US and
Utilities SBU participates in our second businessline, utilities, in which we
own and/or operate utilities to generate or purchase, distribute, transmit and
sell electricity to
end-user
customers in the residential, commercial, industrial and governmentalsectors
within a defined service area. In certain circumstances, our utilities also
generate and sell electricity on the wholesale market.
Our principal offices are located at 4300 Wilson Boulevard, Arlington,
Virginia 22203. Our telephone number is (703)
522-1315.
Our website address is
http://www.aes.com
. We are not incorporating the contents of the website into this prospectus.
The name "AES" and our logo are AES owned trademarks, service marks or trade
names. All other trademarks, trade names or servicemarks appearing or
incorporated by reference in this prospectus are owned by their respective
holders.
About this Prospectus
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission, or the SEC, utilizing a"shelf"
registration process. Under this shelf process, we and/or the selling
securityholders may sell any combination of the securities described in this
prospectus in one or more offerings. This prospectus provides you with a
generaldescription of the securities we and/or the selling securityholders may
offer. Each time we and/or the selling securityholders sell securities
pursuant to the registration statement of which this prospectus forms a part,
we will provide a prospectussupplement 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. You should read
both this prospectus and any prospectus supplementtogether with additional
information described under the heading "Where You Can Find More Information."
We have filed orincorporated by reference exhibits to the registration
statement of which this prospectus forms a part. You should read the exhibits
carefully for provisions that may be important to you.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. The SEC maintains an Internet website athttp://www.sec
.gov, from which interested persons can electronically access our reports,
proxy and information statements and other information that we file
electronically with the SEC, including the registration statement and the
exhibits andschedules thereto.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we candisclose 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 SEC will automatically update and supersedethis information. We
incorporate by reference the documents listed below and all documents we file
pursuant to Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act
of 1934, as amended, on or after the date of this prospectus andprior to the
termination of the offering under this prospectus and any prospectus
supplement (other than, in each case, documents or information deemed to have
been furnished and not filed in accordance with SEC rules):
(a) Annual Report on
Form
10-K
for the year ended December 31, 2021;
(b)
Definitive Proxy Statement on Schedule 14A
filed with the SEC on March 3, 2021;
(c) The description of our common stockcontained on
Form
8-A/A
filed with the SEC on May 12, 2000, including any amendment or report filedfor
the purpose of updating that description.
You may request a copy of these filings at no cost, by writing or telephoning
the office ofthe General Counsel, The AES Corporation, 4300 Wilson Boulevard,
Arlington, Virginia 22203, telephone number (703)
522-1315.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus, including the documents incorporated by reference herein,
contains "forward-looking statements" within the meaningof the Private
Securities Litigation Reform Act of 1995. Although we believe that these
forward-looking statements and the underlying assumptions are reasonable, we
cannot assure you that they will prove to be correct. Forward-looking
statementsinvolve a number of risks and uncertainties, and there are factors
that could cause actual results to differ materially from those expressed or
implied in our forward-looking statements. Some of those factors (in addition
to others describedelsewhere in this prospectus and in subsequent securities
filings) include those factors discussed under the captions entitled "Risk
Factors" and "Management's Discussion and Analysis of Financial Condition and
Results ofOperations" in our Annual Report on Form
10-K
for the year ended December 31, 2021.
Although we believe the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, level
ofactivity, performance or achievements. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of any of
these forward-looking statements. We undertake no obligation to publicly
update or revise anyforward-looking statements, whether as a result of new
information, future events, or otherwise. If one or more forward-looking
statements are updated, no inference should be drawn that additional updates
will be made with respect to those or otherforward-looking statements.
USE OF PROCEEDS
Unless otherwise indicated in a prospectus supplement, the net proceeds from
the sale of the securities will be used for general corporatepurposes,
including working capital, acquisitions, retirement of debt and other business
opportunities. In the case of a sale by a selling securityholder, we will not
receive any of the proceeds from such sale.
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DESCRIPTION OF SECURITIES
We and/or the selling securityholders may sell, from time to time, in one or
more offerings, the following securities:
. common stock;
. preferred stock;
. depositary shares;
. debt securities;
. warrants;
. purchase contracts; and
. units.
We will set forth in the applicable prospectus supplement or other offering
material a description of the common stock, preferred stock,depositary shares,
debt securities, warrants, purchase contracts and units, which may be offered
under this prospectus. Any common stock or preferred stock that we offer may
include rights to acquire our common stock or preferred stock under
anyshareholder rights plan then in effect, if applicable under the terms of
any such plan. The terms of the offering of securities, including the initial
offering price and the net proceeds to us, will be contained in the prospectus
supplement or otheroffering material relating to such offer. The prospectus
supplement or any other offering material may also add, update or change
information contained in this prospectus. You should carefully read this
prospectus, any prospectus supplement or otheroffering material before you
invest in any of our securities.
VALIDITY OF SECURITIES
The validity of the securities in respect of which this prospectus is being
delivered will be passed on for us by Davis Polk &Wardwell LLP.
EXPERTS
The consolidated financial statements of The AES Corporation appearing in The
AES Corporation's Annual Report (Form
10-K)
for the year ended December 31, 2021, and the effectiveness of The AES
Corporation's internal control over financial reporting as of December 31,
2021, have been audited by Ernst &Young LLP, independent registered public
accounting firm, as set forth in their reports thereon included therein, and
incorporated herein by reference. Such financial statements are, and audited
financial statements to be included in subsequentlyfiled documents will be,
incorporated herein in reliance upon the reports of Ernst & Young LLP
pertaining to such financial statements and the effectiveness of our internal
control over financial reporting as of the respective dates (to theextent
covered by consents filed with the SEC) given on the authority of such firm as
experts in accounting and auditing.
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$950,000,000 7.600% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2055
PROSPECTUSSUPPLEMENT
Joint Book-Running Managers
Citigroup
GoldmanSachs & Co. LLC
Mizuho
Morgan Stanley
SMBCNikko
Joint Bookrunners
BNP PARIBAS
BofASecurities
Credit Agricole CIB
HSBC
MUFG
RBC Capital Markets
Santander
Scotiabank
Wells Fargo Securities
Co-Managers
CIBC Capital Markets
Natixis
StandardChartered Bank
SOCIETE GENERALE
May 16, 2024
Exhibit 107
Calculation of Filing Fee Table
424(b)(2)
(Form Type)
The AES Corporation
(ExactName of Registrant as Specified in its Charter)
Table 1: Newly Registered Securities
Security Security Fee Amount Proposed Maximum Fee Amount
Type Class Calculation Registered Maximum Aggregate Rate of
Title or Offering Offering Registration
Carry Price Price Fee(1)
Forward Per
Rule Unit
Fees to Debt 7.600% Rule $950,000,000 100.000% $950,000,000 0.00014760 $140,220
Be Paid Fixed-to-Fixed 457(r)
Reset Rate Junior
Subordinated Notes due 2055
Fees -- -- -- -- -- -- --
Previously
Paid
Total Offering $950,000,000 $140,220
Amounts
Total Fees --
Previously Paid
Total Fee --
Offsets
Net Fee Due $140,220
(1) This registration fee table shall be deemed to update the "Registration fee" in Item 14.
OtherExpenses of Issuance and Distribution in the Company's Registration Statement on Form
S-3
(File
No. 333-263244)
in accordance with Rules 456(b) and
457(r)under the Securities Act of 1933.
{graphic omitted}