As filed with the Securities and Exchange Commission on October 6, 2000
Registration No. 333-45916
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION Washington,ON DECEMBER 7, 2000
REGISTRATION NO. 333-49644
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Amendment No.-------------
AMENDMENT NO. 1
to
FormTO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE AES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 4911 54-1163725
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4991 54-1163725
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
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1001 North 19th Street
Arlington, VirginiaNORTH 19TH STREET
ARLINGTON, VIRGINIA 22209
(703) 522-1315
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Barry(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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BARRY J. SharpSHARP
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
THE AES CORPORATION
1001 North 19th Street
Arlington, VirginiaNORTH 19TH STREET
ARLINGTON, VIRGINIA 22209
(703) 522-1315
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Richard D. Truesdell, Jr.
Davis Polk(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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Copies to:
MICHAEL E. GIZANG, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & Wardwell
450 Lexington Avenue
New York, New York 10017FLOM LLP
FOUR TIMES SQUARE
NEW YORK, NY 10036
(212) 450-4000
Approximate date of commencement of proposed sale to the public: From time
to time735-3000
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APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after the effective date of this Registration Statement.Statement becomes
effective and upon consummation of the transactions described in the enclosed
prospectus.
If the securities being registered on this Formform are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box:box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act"), check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-----------------------CALCULATION OF REGISTRATION FEE
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CALCULATION
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT PRICE REGISTRATION FEE
=================================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class Amount to be Offering Price Per Aggregate Offering Amount of
of Securities to be Registered Registered(1) Unit(1) Price Registration Fee(1)
- ---------------------------------------------------------------------------------------------------------------------------------FEE(2)
Common Stock, $.01 par value $0.01 per share ("Common Stock")............... 10,000,000 $60.66 $606,600,000 $160,143(6)
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Preferred Stock ........................ - $250,000,000(3)3,736,023 N/A N/A $ 66,000(6)
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Common Stock............................ - (4) -
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Debt Securities ........................ 100% $250,000,000(3) $ 66,000(6)
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Common Stock............................ - (5) -
=================================================================================================================================36,327.00
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(1) Or, if any securities are issued with an original issue discount, such
greater amount as shall result in initial aggregate offering pricesThis Registration Statement relates to common stock, par value $0.01 per
share, of The AES Corporation ("AES") issuable to holders of ADSs of
Gener S.A. ("Gener") each representing 68 shares of common stock of Gener
in the amounts set forth next to the title of each class of securities to be
registered.
(2) Estimated solely for the purposeexchange offer (the "U.S. Offer") described herein. For purposes of
calculating the amountregistration fee, the Proposed Maximum Aggregate Offering
Price has been determined by multiplying an assumed maximum exchange ratio
of 0.2519685 for each Gener ADS common stock by 14,827,343, the aggregate
number of shares of Gener ADSs outstanding on September 30, 2000, the last
practicable date prior to the commencement of the U.S. Offer for which
this information is available. The actual exchange ratio will not be
determined until just prior to the expiration date.
(2) The registration fee in accordance with Rulewas calculated pursuant to Rules 457(f)(1) and
457(c) underbased upon the Securities Act
on the basis of theper ADS market value of the Gener ADSs to be
exchanged in the U.S. Offer which is the average of the high and low
sales prices of Gener ADSs, as reported on the New York Stock Exchange
Composite Transaction Tape on November 2, 2000, multiplied by the
14,827,343 ADSs outstanding as of September 30, 2000, the last
practicable day prior to the commencement of the U.S. Offer. This fee was
paid to the Commission on November 9, 2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION"), ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS MAY BE CHANGED. WE MAY NOT SELL THESE
SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Offer to Exchange Each Outstanding American Depositary Share
(Each American Depositary Share Represents 68 Shares of Common Stock)
of
GENER S.A.
For Common Stock of The AES Corporation
Having A Value Of $16
by
MERCURY CAYMAN CO. III, LTD.
a wholly owned subsidiary of
THE AES CORPORATION
OUR OFFER AND THE WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, DECEMBER 11, 2000, UNLESS EXTENDED. GENER AMERICAN DEPOSITARY
SHARES TENDERED PURSUANT TO OUR OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION OF OUR OFFER.
Through Mercury Cayman Co. III, Ltd., the Purchaser, we are offering to
exchange, for each outstanding American Depositary Share, ADS, of Gener S.A.,
that is validly tendered and not withdrawn prior to the expiration of our
offer, a fraction of an AES share having a value of $16 as more fully described
in the sections captioned "SUMMARY--The Proposed Transaction; The Offers" and
"THE PROPOSED TRANSACTIONS; OUR OFFERS". This value, after adjusting for the
fact that each ADS represents 68 Gener shares, is equal to the price we are
offering in our simultaneous offer to purchase 3,466,600,000 shares of Gener
common stock in the Republic of Chile, the Chilean offer.
Our offer will not proceed unless Gener shareholders approve the
amendments to Gener's Bylaws by the affirmative vote of holders of at least 75%
of the outstanding Gener shares (including Gener shares represented by Gener
ADSs) at an extraordinary meeting of Gener shareholders. Most significantly,
these amendments will eliminate the restriction currently contained in Gener's
Bylaws that limits to 20% the percentage of Gener shares that may be owned and
voted by one shareholder, directly or through related persons and which
otherwise require Gener to comply with the provisions of Decree Law 3,500.
WE URGE ALL HOLDERS OF GENER ADSS TO VOTE THEIR GENER ADSS IN FAVOR OF THE
AMENDMENTS TO GENER'S BYLAWS, WHETHER OR NOT THEY INTEND TO TENDER THEIR GENER
ADSS IN OUR OFFER.
On October 22, 2000, Gener announced a proposed transaction with the
TotalFinaElf Group pursuant to which, among other things, Gener would have
contributed all of its electricity generation and transmission assets in
Argentina to a newly formed holding company in which TotalFinaElf would have
held an 80% equity interest and in which Gener would have held the remaining
20% equity interest. The TotalFinaElf proposal also provided for TotalFinaElf
to acquire newly issued Gener capital stock which would have represented
approximately 20% of the outstanding Gener capital stock on September 8, 2000.
(3) Estimated solelya post issuance
basis. On November 28, 2000, TotalFinaElf terminated its agreement with Gener
relating to the TotalFinaElf proposal and entered into an agreement with us,
the TotalFinaElf Agreement, pursuant to which we have agreed, subject to the
terms and conditions of the TotalFinaElf Agreement more fully described later
in this prospectus, among other things, to cause Gener to sell to TotalFinaElf
all of Gener's electricity generation and transmission assets in Argentina if we
are successful in acquiring at least a majority of the outstanding Gener
shares, including shares represented by Gener ADSs.
We entered into a letter agreement dated November 3, 2000, the Copec
Letter, with Compania de Petroleos de Chile S.A., commonly called by the
acronym Copec, a Chilean publicly traded stock corporation and the holder of
approximately .0006% of the outstanding Gener shares and Servicios de
Combustibles Limitada, Servicios, a Chilean company, wholly owned subsidiary of
Copec and the holder of approximately 19.7% of the outstanding Gener shares.
When we refer to Copec in this prospectus, we mean Copec and Servicios
together. Copec has stated it intends to tender all its Gener shares pursuant
to the Chilean offer.
The Chilean offer will be effected pursuant to an auction transaction on
the Santiago Stock Exchange, commonly referred to as a "remate". We will
purchase Gener shares during, but outside of, our offer pursuant to the Chilean
offer. These purchases may be made at prices which, when adjusted for the purposefact
that each Gener ADS represents 68 shares, are higher than the value of calculatingthe AES
stock to be exchanged for each Gener ADS in our offer. However, if we make
purchases in the Chilean offer at such higher prices, then, prior to the
expiration of our offer, we will increase the amount of AES stock to be
exchanged for each ADS in our offer so that its value equals the registration feehighest price
paid by us in accordance with Rule 457 (a)the Chilean offer. The Chilean offer will be scheduled to occur
as soon as practicable, and in any event within 12 Chilean trading days, after
the effectiveness of the amendments to Gener's Bylaws.
Our obligation to exchange AES shares for Gener ADSs is subject to
significant conditions which are more fully described under the Securities Act.
(4) Shares of Common Stock as may be issued upon conversion of Preferred Stock
registered hereby with a market price for such Common Stock of upsection
captioned "OUR OFFER--Conditions to $250,000,000 in the aggregate as of the date of issuance of such Preferred
Stock.
(5) Shares of Common Stock as may be issued upon conversion of Debt Securities
registered hereby with a market price for such Common Stock of up to
$250,000,000 in the aggregate as of the date of issuance of such Debt
Securities. (6) Previously paid.
(6) Previously paid.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, October 6, 2000
PROSPECTUS
THE AES CORPORATION
Common Stock
Preferred Stock
Debt Securities
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In connection with acquisitions of or investments in other businesses or
assets, we may issue and sell, from time to time:
o up to 10,000,000 shares of our common stock, $.01 par value per
share,
o up to $250,000,000 initial offering price of shares of our preferred
stock, par value $.01 per share, issuable in series, and
o up to $250,000,000 initial offering price of debt securities.
Specific terms of these securities will be provided in supplements to this
prospectus.
We anticipate that any acquisitions or investments will consist principally of
acquisitions of and investments in other businesses and assets. The
consideration for such acquisitions and investments may consist of shares of
equity securities, cash, indebtedness, assumption of liabilities or any
combination thereof.
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This prospectus may be used by persons who receive shares of common stock,
shares of preferred stock or debt securities in connection with acquisitions
and investments by us and who wish to resell these securities. We have not
authorized any person to use this prospectus in connection with resales of
securities without our prior written consent.
Our Offer".
AES's common stock trades on the New York Stock Exchange under the symbol
"AES."
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Investing in these securities involves certain risks. See "Risk Factors"
beginning"AES", Gener's ADSs trade on the New York Stock Exchange under the symbol "CHR"
and Gener's common stock trades on the Santiago Stock Exchange under the symbol
"GENER".
FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION
WITH OUR OFFER PLEASE CAREFULLY READ THE SECTION CAPTIONED "RISK FACTORS" on
page 3.
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These securities have not been approved or disapproved by18.
Neither the Securities and Exchange Commission ornor any state securities
commission nor the Superintendencia de Valores y Seguros has approved or
disapproved of these securities or passed upon the Securities
and Exchange Commissionadequacy or any state securities commission determined ifaccuracy of this
prospectus is truthful or complete.prospectus. Any representation to the contrary is a criminal offense.
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THE DEALER MANAGER FOR OUR OFFER IS:
DEUTSCHE BANC ALEX. BROWN
The date of this preliminary prospectus is December 7, 2000
TABLE OF CONTENTS
PAGE
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QUESTIONS AND ANSWERS ABOUT THE TRANSACTION ..................................... 1
WHERE YOU CAN FIND MORE INFORMATION ............................................. 8
RELIEF GRANTED BY THE SEC ....................................................... 10
AMENDMENTS TO GENER'S BYLAWS .................................................... 12
SUMMARY ......................................................................... 14
The Proposed Transaction; The Offers ........................................... 14
Information Concerning the TotalFinaElf Group Proposal ......................... 14
Reasons for the Offers ......................................................... 15
Our Offer ...................................................................... 15
Risk Factors ................................................................... 18
Certain Tax Considerations ..................................................... 18
Market Prices of AES Shares and Gener ADSs and Shares .......................... 18
The Companies .................................................................. 19
RISK FACTORS .................................................................... 20
Risks Relating to the Proposed Offers .......................................... 20
Risks Relating to AES's Business ............................................... 21
THE COMPANIES ................................................................... 26
The AES Corporation ............................................................ 26
Gener S.A. ..................................................................... 26
Mercury Cayman Co. III, Ltd. ................................................... 27
THE PROPOSED TRANSACTION; THE OFFERS ............................................ 27
BACKGROUND AND REASONS FOR OUR OFFER ............................................ 28
OUR OFFER ....................................................................... 29
Terms of Our Offer; Expiration Date ............................................ 29
Extension, Termination and Amendment ........................................... 29
Exchange of Gener ADSs; Delivery of AES Shares ................................. 30
Cash Instead of Fractional AES Shares .......................................... 31
Withdrawal Rights .............................................................. 31
Procedure for Accepting Our Offer .............................................. 32
Certain Tax Considerations ..................................................... 34
U.S. Federal Income Tax Consequences of Our Offer ............................ 34
Chilean Income Tax Consequences of Our Offer ................................. 35
Purpose of the Offers; Plans for Gener ......................................... 36
Effect of Our Offer and the Chilean Offer on the Market for Gener ADSs and Gener
Shares; Registration of Gener ADSs under the Exchange Act; Margin Regulations 40
Conditions of Our Offer ........................................................ 41
Certain Legal Matters; Regulatory Approvals .................................... 46
Relationships with Gener ....................................................... 48
Source and Amount of Funds ..................................................... 48
Fees and Expenses .............................................................. 48
Accounting Treatment ........................................................... 49
Stock Exchange Listing ......................................................... 49
THE CHILEAN OFFER ............................................................... 50
MARKET PRICES AND DIVIDENDS ..................................................... 51
AES SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA ................................ 54
GENER SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA .............................. 55
COMPARATIVE PER SHARE DATA ...................................................... 57
i
PAGE
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DESCRIPTION OF AES COMMON STOCK ...................................................... 58
General ............................................................................. 58
Transfer Agent and Registrar ........................................................ 58
COMPARATIVE RIGHTS OF GENER STOCKHOLDERS AND AES STOCKHOLDERS ........................ 58
General ............................................................................. 58
Directors ........................................................................... 59
Limitation of Director Liability in Certain Circumstances ........................... 59
Indemnification and Insurance ....................................................... 60
Antitakeover Provisions ............................................................. 60
Issuance of Preferred Stock ......................................................... 61
Voting Rights; Cumulative Voting .................................................... 61
Action Without a Meeting ............................................................ 62
Special Meetings .................................................................... 62
Voting and Appraisal Rights With Respect to Corporate Reorganizations ............... 62
Amendments to Charter Documents ..................................................... 62
Bylaws .............................................................................. 63
Preemptive Rights ................................................................... 63
Dividends ........................................................................... 64
Liquidation ......................................................................... 64
Director Nominations/Shareholder Proposals .......................................... 64
FORWARD-LOOKING STATEMENTS ........................................................... 65
LEGAL MATTERS ........................................................................ 65
EXPERTS .............................................................................. 65
MISCELLANEOUS ........................................................................ 65
Schedule I--Information Concerning the Directors and Executive Officers of AES and the
Purchaser
Schedule II--Purchases of Gener ADSs
ii
All references to "dollars" or "$" in this prospectus are to U.S. dollars,
and all references to "Pesos" or "Ch$" are to Chilean Pesos. On November 8,
2000, the daily observed exchange rate between the Ch$ and the dollar, as
reported by the Central Bank of Chile, was Ch$576.58 to $1.00. Except as
otherwise noted in this prospectus, all references to Peso amounts are stated
in nominal Pesos, meaning Pesos which have not been adjusted in any way to
reflect the effects of inflation.
THE INFORMATION CONCERNING GENER IN THIS PROSPECTUS IS TAKEN FROM PUBLICLY
AVAILABLE INFORMATION CONCERNING GENER FILED WITH THE SEC. ALTHOUGH WE HAVE NO
KNOWLEDGE THAT WOULD INDICATE THAT ANY STATEMENTS CONTAINED HEREIN BASED UPON
SUCH REPORTS AND DOCUMENTS ARE UNTRUE, WE TAKE NO RESPONSIBILITY FOR THE
ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN SUCH REPORTS AND OTHER
DOCUMENTS OR FOR ANY FAILURE BY GENER TO DISCLOSE EVENTS THAT MAY HAVE OCCURRED
AND MAY AFFECT THE SIGNIFICANCE OR ACCURACY OF ANY SUCH INFORMATION BUT THAT
ARE UNKNOWN TO US.
THIS DOCUMENT INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT AES AND GENER FROM DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, THE SEC, THAT HAVE NOT BEEN INCLUDED IN OR DELIVERED WITH THIS
DOCUMENT. THIS INFORMATION IS AVAILABLE AT THE INTERNET WEB SITE THE SEC
MAINTAINS AT HTTP://WWW.SEC.GOV, AS WELL AS FROM OTHER SOURCES. SEE THE SECTION
CAPTIONED "WHERE YOU CAN FIND MORE INFORMATION".
YOU ALSO MAY REQUEST COPIES OF THESE DOCUMENTS FROM US, WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST TO OUR INFORMATION AGENT AT ITS ADDRESS OR
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS. IN ORDER TO
RECEIVE TIMELY DELIVERY OF THE DOCUMENTS, YOU MUST MAKE YOUR REQUEST NO LATER
THAN DECEMBER 1, 2000.
iii
QUESTIONS AND ANSWERS ABOUT THE TRANSACTION
We are offering, through Mercury Cayman Co. III, Ltd., our wholly owned
subsidiary, to exchange AES shares for Gener ADSs. We are also offering
pursuant to our simultaneous offer in Chile, the Chilean offer, to purchase for
cash 3,466,600,000 Gener shares. According to Gener's ownership description
provided on Gener's Internet site at http://www.gener.com, as of September 30,
2000, -----------------------the Gener ADSs and Gener shares we seek to acquire pursuant to our offer
and the Chilean offer, together with the 659,900 Gener ADSs and 6,800 Gener
shares currently owned by us, represent approximately 80% of the outstanding
Gener shares. The following are some of the questions that you as a holder of
Gener ADSs may have and answers to those questions. The information in this
summary is not complete and we urge you to read carefully the remainder of this
document and the accompanying ADS Letter of Transmittal.
WHAT ARE THE MOST IMPORTANT FEATURES OF YOUR OFFER?
o A SIGNIFICANT PREMIUM FOR YOUR ADSs. The $16 value of the AES stock we
are offering to exchange for each Gener ADS pursuant to our offer
represents approximately a 39.2% premium on the average closing price of
Gener ADSs for the ten consecutive trading days prior to the day we
announced the offers.
o AN OPPORTUNITY TO SELL. Our offer provides holders of Gener ADSs an
opportunity to sell their Gener ADSs in return for AES shares. AES shares
trade in large volume on the NYSE and provide an investment with far
greater liquidity than Gener ADSs.
o GREATER UPSIDE POTENTIAL. Holders of Gener ADSs will enjoy an
opportunity to participate in the greater upside potential resulting from
our offer through ownership of AES shares, which have generated
substantially better shareholder returns than Gener ADSs over the past
two years.
WHAT WILL I RECEIVE IN EXCHANGE FOR MY GENER ADSS?
In exchange for each Gener ADS you validly tender and do not withdraw
before the expiration of our offer, you will receive a fraction of an AES
share having a value, determined over a measuring period, that is equal
to the price per share we are offering in the Chilean offer, after
adjusting for the fact that each Gener ADS represents 68 shares of Gener
common stock. Based on the Chilean Peso equivalent of $0.235294118 per
Gener share we are currently offering in the Chilean offer and adjusting
for the 68 Gener shares represented by each Gener ADS, you would receive
$16 worth of AES common stock for each Gener ADS you tender and do not
withdraw prior to the expiration of our offer. You will not receive any
fractional AES shares in the offer. Instead, you will receive cash in an
amount equal to the value of any fractional AES shares you would
otherwise have been entitled to receive.
HOW IS THE EXCHANGE RATIO OF AES SHARES FOR GENER ADSS DETERMINED?
We will determine the exchange ratio -- that is, the fraction of an AES
share to be exchanged for each Gener ADS -- by dividing the highest price
paid in the Chilean offer by the average share price of AES common shares
over the measuring period and multiplying this amount by 68, the number
of Gener shares represented by each Gener ADS.
The average share price of AES shares will be calculated by taking the
average of the high and low selling prices of AES shares, as reported on
the New York Stock Exchange Composite Transaction Tape, for each of the
ten New York Stock Exchange trading days ending on the second New York
Stock Exchange trading day immediately prior to the date on which our
offer expires, including any extensions of the expiration of our offer.
1
The closing price of AES common shares on the New York Stock Exchange on
November 2, 2000, the last practicable trading day before the
announcement of our offer was $60.875. If this were the average AES share
price over the ten New York Stock Exchange trading day measuring period,
the exchange ratio would be 0.2628337, based on the price of the Chilean
Peso equivalent of $0.235294118 per share we are offering in the Chilean
offer and adjusting for the fact that each Gener ADS represents 68 Gener
shares.
Because the market prices of AES shares change, the market value of the
AES stock you receive, on the date you receive it, may be more or less
than the price, after adjusting for the 68 Gener shares represented by
each Gener ADS, we are offering in the Chilean offer.
HOW WILL I KNOW WHAT THE ACTUAL EXCHANGE RATIO IS?
No later than two business days before our offer expires, we will notify
you by issuing a press release announcing the final exchange ratio and
filing that press release with the SEC. You can also call our Dealer
Manager, Deutsche Bank Securities Inc. toll-free at 877-305-4920 to
request information about the exchange ratio.
WHAT IS THE MARKET VALUE OF MY GENER ADSS AS OF A RECENT DATE?
On November 2, 2000, the last trading day before we announced the offers,
the closing price of Gener ADSs reported on the New York Stock Exchange
Composite Transaction Tape was $12.125 per Gener ADS. The $16 worth of
AES common stock you would receive for each Gener ADS pursuant to our
offer represents an approximate 32% premium over the closing price of the
Gener ADS on November 2, 2000, the last New York Stock Exchange trading
day prior to the announcement of the offers and an approximate 39.2%
premium over the average closing price of the Gener ADS for the ten
consecutive trading days prior to such announcement. We advise you to
obtain a recent quotation for the Gener ADSs in deciding whether to
tender your Gener ADSs.
WILL I BE TAXED ON THE AES SHARES I RECEIVE?
The receipt of AES shares for Gener ADSs by a U.S. Holder pursuant to our
offer will be a taxable transaction for United States federal income tax
purposes and possibly for state, local and foreign income tax purposes as
well.
The receipt of AES shares for Gener ADSs by a Non-U.S. Holder pursuant to
our offer will generally not be a taxable transaction for United States
federal income tax purposes.
The receipt of AES shares for Gener ADSs by a Chilean holder pursuant to
our offer will be a taxable transaction for Chilean income tax purposes.
The receipt of AES shares for Gener ADSs by a non-Chilean holder pursuant
to our offer will generally not be a taxable transaction for Chilean
income tax purposes.
BECAUSE TAX MATTERS ARE COMPLICATED, WE ENCOURAGE YOU TO CONTACT YOUR TAX
ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES OF OUR OFFER TO YOU.
FOR A MORE DETAILED DISCUSSION OF THE U.S. FEDERAL AND CHILEAN INCOME TAX
CONSEQUENCES OF OUR OFFER, SEE THE SECTION CAPTIONED "OUR OFFER--CERTAIN
TAX CONSIDERATIONS".
2
WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
Tendering holders of Gener ADSs will not be obligated to pay transfer
taxes on the exchange of their Gener ADSs pursuant to our offer, except
as set forth in Instruction 6 of the ADS Letter of Transmittal. Holders
of Gener ADSs will bear all costs and expenses associated with any
deposit or withdrawal of Gener shares with Citibank, N.A., as Depositary.
If you are the record owner of your ADSs and you tender your ADSs to us
in the offer, you will not have to pay brokerage fees or similar
expenses. If you own your ADSs through a broker or other nominee, and
your broker or other nominee tenders your ADSs on your behalf, your
broker or nominee may charge you a fee and we will not be responsible for
paying that fee. You should rely onlyconsult your broker or nominee to determine
whether any charges will apply.
WHERE CAN I FIND MORE INFORMATION ON YOU?
You can find more information about us from various sources described in
the section captioned "WHERE YOU CAN FIND MORE INFORMATION".
WHAT ARE THE SECURITIES SOUGHT IN YOUR OFFERS?
In our offer, we are seeking to exchange each outstanding Gener ADS for a
fraction of an AES share having a value, over the measuring period, of
$16. In the Chilean offer, we are seeking to purchase 3,466,600,000 Gener
shares for the Chilean Peso equivalent of $0.235294118, in cash, per
Gener share. According to Gener's ownership description provided on
Gener's Internet site at http://www.gener.com, as of September 30, 2000,
Gener ADSs represented approximately 17.91% of the total Gener shares
outstanding. The 3,466,600,000 Gener shares sought in the Chilean offer
represent approximately 75% of Gener shares that were outstanding as of
the date of such report, excluding the Gener shares represented by Gener
ADSs. THE NUMBER OF GENER ADSS AVAILABLE FOR TENDER INTO OUR OFFER IS
SUBJECT TO CHANGE ON A DAILY BASIS AS A RESULT OF DEPOSITS AND
WITHDRAWALS OF GENER SHARES UNDER THE GENER DEPOSIT AGREEMENT WITH
CITIBANK, N.A., AS DEPOSITARY.
CAN YOU INCREASE OR DECREASE THE NUMBER OF GENER ADSS AND/OR SHARES YOU ARE
OFFERING TO EXCHANGE AND PURCHASE UNDER YOUR OFFERS?
Upon the terms and subject to the conditions of our offer, we will accept
all Gener ADSs properly tendered and will exchange them for AES shares.
Upon the terms and subject to the conditions of the Chilean offer, if
more than 3,466,600,000 Gener shares are tendered pursuant to the Chilean
offer, we will accept all Gener shares properly tendered in the Chilean
offer on a pro rata basis.
If the Gener shares tendered in the Chilean offer represent less than a
majority of the outstanding Gener shares, including shares represented by
ADSs, we may elect, in our sole discretion and subject to applicable law,
including applicable law relating to possible extensions of the
expiration of our offer, to waive the minimum condition relating to the
number of Gener shares tendered, to increase the number of Gener shares
to be purchased pursuant to the Chilean offer, to extend our offer and
the Chilean offer or terminate our offer and the Chilean offer without
the purchase of any Gener ADSs or Gener shares.
HOW MUCH ARE YOU OFFERING TO PAY FOR GENER SHARES IN THE CHILEAN OFFER?
In the Chilean offer we are offering to pay the Chilean Peso equivalent
of $0.235294118 per Gener share, net to each seller in cash and without
interest. The purchase price of the Chilean Peso equivalent of
$0.235294118 per Gener share being offered pursuant to the Chilean offer
represents an approximate 30.6% premium on the closing price of the Gener
shares on November 2, 2000, the last Santiago Stock Exchange trading day
prior to the announcement of
3
the offers and an approximate 39.8% premium on the average closing price
of the Gener shares for the ten consecutive trading days prior to such
announcement. The Chilean offer will be effected through an auction
procedure on the Santiago Stock Exchange commonly referred to as a
"remate".
There is a possibility that other bidders will choose to participate in
the remate and that we will increase the price we pay for the Gener
shares we acquire in the Chilean offer in order to be successful against
such other bidders. If this occurs, we will increase the amount of AES
stock to be exchanged for each Gener ADS in our offer so that its value,
after adjusting for the fact that each Gener ADS represents 68 Gener
shares, is equal to the highest price per share paid by us in the Chilean
offer and we will extend our offer in compliance with applicable U.S.
securities laws so that you will receive the increased amount of AES
stock in exchange for your Gener ADSs.
WHAT ARE THE CONDITIONS TO YOUR OFFER?
Our offer is subject to the following conditions:
-- Gener shareholders having approved the amendments to Gener's Bylaws by
the affirmative vote of at least 75% of the outstanding Gener shares,
including Gener shares represented by Gener ADSs, and the effectiveness
of these amendments under Chilean law;
-- Our being satisfied, in our sole discretion, that the proposed
TotalFinaElf transaction has been terminated or will not proceed. This
condition was satisfied on November 28, 2000 when TotalFinaElf terminated
its agreement with Gener with respect to the TotalFinaElf proposal and
entered into the TotalFinaElf Agreement with us;
-- Our having made any purchases of Gener shares in the Chilean offer;
-- The low per share selling price of the AES shares on the New York Stock
Exchange on any New York Stock Exchange trading day between the date of
our offer and the expiration of our offer, including any extensions
thereof, not having been less than $50. On each of November 22, 2000,
December 4, 2000, December 5, 2000, December 6, 2000 and December 7, 2000,
the low per share selling price of AES shares on the New York Stock
Exchange was less than $50.00. We have waived the condition of our offer
that the low per share selling price of AES shares on the New York Stock
Exchange not be below $50.00 on any date between the date of our offer and
the expiration of our offer for these five dates. We can offer no
assurances, however, that we will similarly waive this condition again if
the low per share selling price of AES shares on the New York Stock
Exchange is below $50.00 for any other date in the future. If we do waive
this condition again in the future, we intend to issue a press release to
that effect at the time of such waiver;
-- The Registration Statement of which this prospectus is a part having
been declared effective by the SEC;
-- The waiting period and any extension thereof applicable to our offer
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, the HSR Act, having expired or having been terminated and our
having received clearance or approval under any other applicable
antitrust law of any foreign or domestic jurisdiction. We announced on
November 22, 2000 that early termination of the waiting period under the
HSR Act with respect to the purchase of Gener ADSs and Gener shares
pursuant to the offers was granted by the U.S. Federal Trade Commission
and the Antitrust Division of the U.S. Department of Justice on November
20, 2000, thereby satisfying this condition;
-- Our having received approval to acquire the Gener shares and the Gener
ADSs in the offers from the United States Federal Energy Regulatory
Commission; and
-- the other customary conditions more fully described in the section
captioned "OUR OFFER-- Conditions of Our Offer".
4
These conditions to our offer are discussed in the section captioned "OUR
OFFER--Conditions of Our Offer."
WHAT ARE THE CONDITIONS TO YOUR CHILEAN OFFER?
The Chilean offer is subject to the following conditions:
-- All of the conditions to our offer having been satisfied or waived by us
for purposes of the Chilean offer even if we have not waived these
conditions for purposes of our offer;
-- Our having received tenders of a number of Gener shares in the Chilean
offer which represents at least a majority of the total number of
outstanding Gener shares, including Gener shares represented by Gener
ADSs; and
-- Our having obtained funds sufficient to pay for the 3,466,600,000 Gener
shares we seek in the Chilean offer and to pay all fees and expenses
incurred in connection with our offers. We announced in a press release
on November 22, 2000, that we had waived the financing condition in the
Chilean offer.
IS AES'S FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN YOUR OFFER?
Yes. Gener ADSs accepted in our offer will be exchanged for AES shares;
you should consider AES's financial condition before you decide to become
one of AES's stockholders through our offer. Also, because our offer is
conditioned upon our having made purchases in the Chilean offer which
will require us to obtain funds which we do not currently have available
or committed to us, you should consider our financial condition in order
to evaluate the likelihood that we will obtain these funds.
WHAT PERCENTAGE OF YOUR SHARES WILL GENER SHAREHOLDERS OWN AFTER YOUR OFFER?
Assuming an exchange ratio of 0.2519685, using the AES closing share
price on November 8, 2000, if we exchange all of the Gener shares
represented by Gener ADSs reported to be outstanding on September 30,
2000, former Gener shareholders would own approximately 0.8% of the
outstanding AES shares.
DOES GENER SUPPORT YOUR OFFER?
As of the date of this prospectus, the board of directors of Gener has
not reviewed our offer and has not taken a position with respect to our
offer. Pursuant to Rule 14e-3 under the Securities Exchange Act of 1934,
Gener is required within 10 days of the date of this prospectus to
provide its security holders with a statement of Gener's position with
respect to our offer.
DO THE STATEMENTS ON THE COVER PAGE REGARDING THE POSSIBILITY THAT THE
INFORMATION IN THIS PROSPECTUS MAY BE CHANGED AND THE REGISTRATION STATEMENT
FILED WITH THE SEC NOT YET BEING EFFECTIVE MEAN THAT YOUR OFFER HAS NOT
COMMENCED?
No. Our offer has commenced and completion of this prospectus and
effectiveness of the Registration Statement are not necessary for you to
tender your Gener ADSs. The SEC recently changed its rules to permit
exchange offers to begin before the related Registration Statement has
become effective, and we are taking advantage of the rule changes with
the goal of completing our offer faster than similar share exchanges
could previously be accomplished. We cannot, however, accept any Gener
ADSs tendered in our offer until the Registration Statement is declared
effective by the SEC.
5
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN YOUR OFFER?
You will have at least until 12:00 midnight, New York City time, on
Monday, December 11, 2000 to decide whether to tender your Gener ADSs
pursuant to our offer. If you cannot deliver everything that is required
in order to make a valid tender by that time, you may be able to use a
guaranteed delivery procedure which is described later in this prospectus
under the section captioned "OUR OFFER--Exchange of Gener ADSs; Delivery
of AES shares".
UNDER WHAT CIRCUMSTANCES CAN YOUR OFFER BE EXTENDED?
We expressly reserve the right, in our sole discretion but subject to
applicable law, to extend the period of time during which our offer
remains open.
HOW WILL I BE NOTIFIED IF YOUR OFFER IS EXTENDED?
If we extend our offer, we will inform ChaseMellon Shareholder Services
L.L.C. and D.F. King & Co., Inc., the Exchange Agent and the Information
Agent, respectively, for our offer, of that fact, and will make a public
announcement of the extension, not later than 9:00 a.m., New York City
time, on the business day after the day on which our offer was previously
scheduled to expire.
HOW DO I PARTICIPATE IN YOUR OFFER?
To tender your Gener ADSs, prior to 12:00 midnight, New York City time,
on Monday, December 11, 2000, unless our offer is extended:
o you must deliver your ADRs representing Gener ADSs and a properly
completed and duly executed ADS Letter of Transmittal to the Exchange
Agent at the address appearing on the back cover page of this prospectus;
or
o the Exchange Agent must receive a confirmation of receipt of your Gener
ADSs by book-entry transfer and a properly completed and duly executed
ADS Letter of Transmittal; or
o you must comply with the guaranteed delivery procedure.
If you have any questions about our offer or the proposed transaction,
please call the Information Agent or the Dealer Manager for assistance at
their respective addresses and telephone numbers set forth on the back
cover of this prospectus.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED GENER ADSS?
You can withdraw previously tendered Gener ADSs at any time until our
offer has expired and, if we have not agreed to accept your Gener ADSs
and exchange them for AES shares by January 11, 2001, you can withdraw
them at any time until we do accept your Gener ADSs.
HOW DO I WITHDRAW PREVIOUSLY TENDERED GENER ADSS?
To withdraw Gener ADSs, you must deliver a written or facsimile notice of
withdrawal with the required information to the Exchange Agent while you
still have the right to withdraw the Gener ADSs.
WILL YOUR OFFER BE FOLLOWED BY A MERGER?
We do not have any present plans to effect a merger following the
completion of the offers. However, we may decide to purchase, directly or
indirectly through affiliates, additional Gener ADSs or Gener shares
following completion of the offers, through open market purchases,
privately negotiated transactions, additional tender offers or otherwise,
at prices that may be more or less than the value of the AES stock to be
exchanged for Gener ADSs in our offer and the price to be paid pursuant
to the Chilean offer and/or for different consideration.
6
WILL GENER CONTINUE AS A PUBLIC COMPANY?
Yes. Gener shares will continue to be listed and traded on the Santiago
Stock Exchange. Following the exchange of Gener ADSs pursuant to our
offer, it is unlikely that the Gener ADSs will continue to meet the
listing requirements of the New York Stock Exchange.
IF I DECIDE NOT TO TENDER, HOW WILL YOUR OFFERS AFFECT THE GENER SHARES OR
GENER ADSS?
The exchange of Gener ADSs pursuant to our offer and the purchase of
Gener shares pursuant to the Chilean offer will substantially reduce the
number of Gener ADSs and Gener shares that might otherwise trade and will
reduce the number of holders of both the Gener ADSs and the Gener shares.
The reduction in publicly traded Gener ADSs and Gener shares will
adversely affect liquidity and will adversely affect market value of the
Gener ADSs and could also adversely affect the liquidity, marketability
and market value of the Gener shares.
Holders of Gener ADSs do not have appraisal rights in connection with our
offer.
WHOM CAN I TALK TO IF I HAVE QUESTIONS ABOUT YOUR EXCHANGE OFFER?
You can call either D.F. King & Co., Inc., the Information Agent, toll
free at (800) 755-3105 or Deutsche Bank Securities Inc., the Dealer
Manager, toll free at (877) 305-4920.
7
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission, the SEC. Gener files
annual and current reports with the SEC. You may read and copy any reports,
statements or other information that we and Gener file at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference room.
Our and Gener's public filings are also available to the public from commercial
document retrieval services and at the Internet Web site maintained by the SEC
at http://www.sec.gov.
We have filed a Form S-4 Registration Statement to register with the SEC
the offering and sale of our shares to be issued to holders of Gener ADSs. This
prospectus is a part of that Registration Statement. As allowed by SEC rules,
this prospectus does not contain all the information that stockholders can find
in the Registration Statement or the exhibits to the Registration Statement.
We also filed with the SEC a statement on Schedule TO pursuant to rule
14d-3 under the Securities Exchange Act of 1934, as amended, the Exchange Act,
furnishing certain information about our offer. You may read and copy the
Schedule TO and any amendments to it at the SEC's public reference room
referred to above.
The SEC allows us to incorporate information into this prospectus "by
reference," which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus,
except for any information superseded by information contained directly in this
prospectus. This prospectus incorporates by reference the documents set forth
below that AES and Gener have previously filed with the SEC. These documents
contain important information about AES and Gener and their financial
condition.
AES FILINGS (FILE NO. 001-12291):
o Amended Annual Report on Form 10-K/A for fiscal year ended December 31,
1999, filed on September 7, 2000;
o Annual Report on Form 10-K for fiscal year ended December 31, 1999,
filed on March 30, 2000;
o Quarterly Report on Form 10-Q for fiscal quarter ended September 30,
2000, filed on November 14, 2000;
o Quarterly Report on Form 10-Q for fiscal quarter ended June 30, 2000,
filed on August 11, 2000;
o Quarterly Report on Form 10-Q for fiscal quarter ended March 31, 2000,
filed on May 15, 2000;
o Current Report on Form 8-K filed on November 28, 2000;
o Current Report on Form 8-K filed on November 8, 2000;
o Current Report on Form 8-K filed on October 31, 2000;
o Current Report on Form 8-K filed on September 1, 2000;
o Amended Current Report on Form 8-K/A filed on August 18, 2000;
o Current Report on Form 8-K filed on July 28, 2000;
o Current Report on Form 8-K filed on July 27, 2000;
o Current Report on Form 8-K filed on June 21, 2000;
o Current Report on Form 8-K filed on May 12, 2000;
o Current Report on Form 8-K filed on May 8, 2000;
o Amended Current Report on Form 8-K/A filed on February 11, 2000;
o Amended Tender Offer Statement on Schedule TO-T/A filed on November 28;
2000;
8
o Amended Tender Offer Statement on Schedule TO-T/A filed on November 22,
2000;
o Amended Tender Offer Statement on Schedule TO-T/A filed on November 22,
2000;
o Tender Offer Statement on Schedule TO-T filed on November 9, 2000;
o Written Communications of Business Combination Transaction pursuant to
Rule 425 filed on December 4, 2000;
o Written Communications of Business Combination Transaction pursuant to
Rule 425 filed on November 28, 2000;
o Written Communications of Business Combination Transaction pursuant to
Rule 425 filed on November 20, 2000;
o Written Communications of Business Combination Transaction pursuant to
Rule 425 filed on November 7, 2000;
o Written Communications of Business Combination Transaction pursuant to
Rule 425 filed on November 3, 2000; and
o The description of our common stock set forth in our Registration
Statement on Form 8-A filed on October 9, 1996, including all amendments
and reports filed for the purpose of updating such description.
GENER FILINGS (FILE NO. 001-13210):
o Annual Report on Form 20-F for fiscal year ended December 31, 1999,
filed on April 26, 2000 (except for the report of Gener's independent
accountants contained therein which is not incorporated herein by
reference because the consent of Gener's independent accountants has not
yet been obtained nor has exemptive relief under Rule 437 promulgated
under the Securities Act of 1933, as amended been granted to us by the
SEC).
o Report by Foreign Issuer on Form 6-K dated November 17, 2000;
o Report by Foreign Issuer on Form 6-K for fiscal quarter ended September
30, 2000, filed on November 13, 2000;
o Report by Foreign Issuer on Form 6-K dated November 10, 2000;
o Report by Foreign Issuer on Form 6-K dated November 8, 2000;
o Report by Foreign Issuer on Form 6-K dated October 30, 2000;
o Report by Foreign Issuer on Form 6-K dated October 24, 2000;
o Report by Foreign Issuer on Form 6-K for fiscal quarter ended March 31,
2000, filed on May 18, 2000;
o Report by Foreign Issuer on Form 6-K for fiscal quarter ended June 30,
2000, filed on August 16, 2000;
o Report by Foreign Issuer on Form 6-K dated April 26, 2000;
o Report by Foreign Issuer on Form 6-K dated April 25, 2000;
o Amended Tender Offer Statement on Schedule TO-T/A filed on November 28,
2000;
o Amended Tender Offer Statement on Schedule TO-T/A filed on November 22,
2000;
o Amended Tender Offer Statement on Schedule TO-T/A filed on November 22,
2000;
o Tender Offer Statement on Schedule TO-T filed on November 9, 2000;
o Solicitation/Recommendation Statement on Schedule 14D-9 filed on
November 22, 2000;
o Beneficial Ownership Statement on Schedule 13D filed on November 15,
2000;
9
o Written Communications of Business Combination Transaction pursuant to
Rule 425 filed on December 4, 2000;
o Written Communications of Business Combination Transaction pursuant to
Rule 425 filed on November 28, 2000;
o Written Communications of Business Combination Transaction pursuant to
Rule 425 filed on November 20, 2000;
o Written Communications of Business Combination Transaction pursuant to
Rule 425 filed on November 7, 2000;
o Written Communications of Business Combination Transaction pursuant to
Rule 425 filed on November 3, 2000; and
o The description of the Gener ADRs set forth in Chilgener's (Gener's
previous name) Registration Statement on Form F-6 filed on June 28, 1994,
including all amendments and reports filed for the purpose of updating
such description.
We hereby incorporate by reference additional documents that either we or
Gener may file with the SEC between the date of this prospectus and the
expiration date of our offer. These include, but are not limited to, periodic
reports, such as annual reports on Form 10-K or 20-F, quarterly reports on Form
10-Q, current reports on Form 8-K and Reports by Foreign Issuer on Form 6-K, as
well as proxy statements.
If you are a stockholder, you may have received some of the documents
incorporated by reference. You also may obtain any of these documents upon
request to: D.F. King & Co., Inc. or from the SEC at the SEC's Internet Web
site described above.
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM US, PLEASE CONTACT THE
INFORMATION AGENT NO LATER THAN DECEMBER 1, 2000 TO RECEIVE THEM BEFORE THE
EXPIRATION DATE OF OUR OFFER. If you request any incorporated documents, the
Information Agent will mail them to you by first-class mail, or other equally
prompt means, within one business day of receipt of your request.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN MAKING YOUR DECISION WHETHER TO TENDER YOUR
GENER ADSS INTO OUR OFFER. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT DIFFERS FROM THAT CONTAINED IN THIS PROSPECTUS. THIS
PROSPECTUS IS DATED NOVEMBER 9, 2000. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN
THAT DATE, AND NEITHER THE MAILING OF THIS PROSPECTUS TO SHAREHOLDERS NOR THE
ISSUANCE OF AES SHARES IN OUR OFFER SHALL CREATE ANY IMPLICATION TO THE
CONTRARY.
RELIEF GRANTED BY THE SEC
In order to facilitate the making of our offer, in a letter dated November
6, 2000, the SEC has issued an order granting us and our subsidiaries,
including the Purchaser, relief with respect to certain rules under the
Exchange Act. Specifically, the SEC order confirms that (1) the Chilean offer
may be conducted without compliance with Section 14(d) of the Exchange Act and
the rules promulgated thereunder and (2) we may offer to purchase Gener shares
in the Chilean offer for the Chilean Peso equivalent of $0.235294118 while
offering to exchange AES shares having a value of $16, determined over the
measuring period, for Gener ADSs in our offer. The SEC has also granted us,
Deutsche Bank Securities Inc., our Dealer Manager and its affiliates, our
Chilean stockbroker and other nominees or brokers, in each case acting as our
agents, exemptive relief from the provisions of Rule 14e-5 under the Exchange
Act which permit us to conduct the Chilean offer and purchase Gener shares
thereunder while simultaneously conducting our offer for Gener ADSs.
10
In connection with receiving this relief, we have agreed to the following
conditions:
-- In the United States we will not purchase Gener ADSs or Gener shares
except pursuant to our offer;
-- Outside of the United States, prior to the expiration of our offer, we
will not purchase Gener ADSs or Gener shares except pursuant to the
Chilean offer;
-- We will disclose in the United States and Chile the purchase of Gener
shares pursuant to the Chilean offer;
-- If we increase the price paid in the Chilean offer for Gener shares, we
will make a corresponding increase in the amount of the AES shares to be
exchanged for Gener ADSs in our offer; and
-- Other customary conditions.
In addition, we have made a request to Gener that it deliver to us a
consent from Gener's independent accountants to the incorporation by reference,
in our Registration Statement on Form S-4 of which this prospectus is a part
and in any future amendment thereto, of Gener's independent accountants' report
dated February 4, 2000, previously filed in Gener's 20-F for the fiscal year
ended December 31, 1999 and to the inclusion of a reference to Gener's
independent accountants' in the section captioned "Experts" in our Registration
Statement so that we may file such consent with the SEC as part of the
Registration Statement in accordance with Rule 439 promulgated under the
Securities Act. To date, Gener has yet to respond to our request. If we do not
receive a consent from Gener's independent accountants prior to the date our
Registration Statement becomes effective, we will request the SEC to exempt us
from filing Gener's independent accountants' consent with the Registration
Statement pursuant to Rule 437 of the Securities Act.
11
AMENDMENTS TO GENER'S BYLAWS
Gener's Bylaws currently provide that no person may own or vote, directly
or indirectly through related parties, more than 20% of the voting capital
stock of Gener and that Gener shall otherwise comply with the provisions of
Decree Law 3,500, including Chapter XII thereof, Chapter XII. Among other
things, Chapter XII provides that no shareholder, directly or through related
persons, may own or vote more than 65% of the voting capital stock of a company
or such lesser amount as may be specified in the company's bylaws. Our offer is
subject to the satisfaction of the Gener Bylaw Condition set forth in the
section captioned, "OUR OFFER--Conditions of Our Offer". In order for this
condition to be satisfied, the holders of at least 75% of the outstanding Gener
shares, including Gener shares represented by Gener ADSs, must approve the
amendments to Gener's Bylaws.
Under Chilean law, holders of at least 10% of the outstanding capital
stock have the right to require a company to convene a meeting of its
shareholders. Under Chilean law, shareholders must be notified of such a
meeting at least 15 days prior to the date of the meeting and the meeting must
be held within 30 days of the date on which a company receives notice of such a
demand from a 10% or more shareholder. Copec has agreed in the Copec Letter, at
our request, to exercise its right as a 10% or more Gener shareholder to make a
shareholder's demand for Gener to hold a shareholders' meeting in order to
approve the amendments to Gener's Bylaws. We are requesting that Copec take the
action necessary to require the Gener board of directors to convene the Gener
shareholder's meeting and we expect that such a request will be made by Copec
promptly.
The Gener shareholders' meeting will consider amending Gener's Bylaws to
eliminate Articles 1 bis, 5 bis, 9 bis, 17 bis, 20 bis, 21 bis, 24, 27 bis and
29 bis and to amend Article 35 to eliminate the reference to Decree Law 3,500.
Articles 1 bis and 35 provide that Gener is subject to Decree Law 3,500.
Articles 5 bis and 27 bis of Gener's Bylaws provide that no one person, or
group of related persons, may own or be entitled to vote, more than 20% of the
outstanding capital stock of Gener. Article 9 bis requires maintenance of
certain asset ratios set forth in Decree Law 3,500. Article 17 bis provides
that in exercising its duties the board of directors shall act within the
limits set forth in the investment and financing policies approved by the
shareholders pursuant to Article 20 bis. Article 21 bis requires shareholder
approval to sell assets identified by the investment and financing policies as
essential for the conduct of Gener's business, as well as any change to the
investment and financing policies approved by shareholders. Article 29 bis
requires shareholders to receive prior to the annual meeting the report issued
by the inspector of accounts pursuant to Article 20 and the board of directors'
proposal with respect to Gener's investment and financing policies. Finally,
Article 24 provides that the vote of shareholders representing at least 75% of
the outstanding shares of Gener is required to amend, Articles 1 bis, 5 bis, 9
bis, 14 bis, 17 bis, 20 bis, 21 bis, 24, 27 bis and 29 bis. OUR OFFER AND THE
CHILEAN OFFER WILL NOT PROCEED UNLESS GENER SHAREHOLDERS APPROVE THE AMENDMENTS
TO GENER'S BYLAWS BY THE AFFIRMATIVE VOTE OF HOLDERS OF AT LEAST 75% OF THE
OUTSTANDING GENER SHARES, INCLUDING GENER SHARES REPRESENTED BY GENER ADSS, AND
THE AMENDMENTS BECOME EFFECTIVE UNDER CHILEAN LAW. WE URGE YOU TO VOTE FOR THE
AMENDMENTS TO GENER'S BYLAWS REGARDLESS OF WHETHER YOU INTEND TO TENDER YOUR
GENER ADSS IN OUR OFFER.
Pursuant to Chilean law, the amendments to Gener's Bylaws, even if adopted
by the holders of 75% of the outstanding Gener shares as required by Gener's
Bylaws, will not become effective until they are published and recorded. While
we cannot give any assurance as to this timing, our Chilean counsel has advised
us that these actions could be accomplished within 10 business days of the
Gener shareholders' meeting approving the amendments to Gener's Bylaws. The
Gener Bylaw Condition to the offers will not be satisfied until the amendments
to Gener's Bylaws are effective under Chilean law.
Chapter XII. If a company complies with Chapter XII, Chilean pension funds
may invest a larger portion of their assets in such companies than in companies
that are not subject to Chapter XII. Generally, companies that elect to comply
with Chapter XII are required to include in their bylaws the following
provisions: (a) no person, directly or indirectly through a related party, may
own or vote more than a specified percentage of the outstanding voting capital
stock of the company, which percentage may not exceed 65%; (b) minority
shareholders must hold at least 10% of the outstanding voting capital stock of
the company; and (c) at least 15% of the voting capital stock of the company
shall be owned by more than
12
100 shareholders, each owning shares with a value of at least a specified
amount. The company's bylaws must also provide that the company maintain a
minimum ratio relating to the company's adjusted assets to total assets, as
determined in accordance with Decree Law 3,500, and that the shareholders shall
approve investment and financing policies and the sale of assets identified by
the company's investment and financing policies as essential to the conduct of
the company's business. If Gener shareholders approve such amendments to
Gener's Bylaws, under Chilean law, Gener will no longer be subject to Decree
Law 3,500. As a result, the amount of the investments the Chilean pension funds
are permitted to maintain will be less than if Gener continued to be subject to
such laws. However, we believe that if these Chilean pension funds sell their
full pro rata portion of Gener shares in the Chilean offer, they will
sufficiently decrease their ownership of Gener shares to fall within allowable
limits under Chilean law and will not be required to sell their remaining Gener
shares.
VOTING INSTRUCTIONS--HOLDERS OF GENER ADSS. HOLDERS OF GENER ADSS WHO
DESIRE TO VOTE IN FAVOR OF THE AMENDMENTS TO GENER'S BYLAWS AND WHO HAVE
QUESTIONS AS TO VOTING PROCEDURES SHOULD CONTACT THE INFORMATION AGENT OR THE
DEALER MANAGER AT THEIR RESPECTIVE ADDRESSES AND TELEPHONE NUMBERS SET FORTH ON
THE BACK COVER OF THIS PROSPECTUS.
The Gener Deposit Agreement pursuant to which the Gener ADSs are issued
provides that, upon receipt of any notice of any meeting of holders of Gener
shares, the Depositary will provide to the Gener ADS holders copies of all
materials received by it and request from such holders voting instructions.
Upon receipt of any such instructions, the Depositary is required to vote or
cause to be voted, or to grant a proxy to a person designated by Gener to vote,
the shares represented by the Gener ADSs in accordance with the instructions
set forth in such request. The Depositary shall not, under any circumstance,
exercise any voting discretion over the Gener ADSs. If no voting instructions
are received by the Depositary on or before the voting cut-off date with
respect to any vote of shareholders, then a holder shall be deemed to have
instructed the Depositary to give a discretionary proxy with full powers of
substitution to the Chairman of Gener's board of directors, or a person
designated by him, on any matters other than matters as to which the Chairman
of Gener's board of directors directs the Depositary that he does not wish such
proxy to be given. Currently, Citibank, N.A. is the Depositary.
VOTING PROCEDURES--HOLDERS OF GENER SHARES. IN ORDER TO VOTE GENER SHARES
IN FAVOR OF THE AMENDMENTS TO GENER'S BYLAWS, HOLDERS OF GENER SHARES MUST
EITHER (1) APPEAR IN PERSON AT THE MEETING OF GENER SHAREHOLDERS TO CONSIDER
THE AMENDMENTS TO GENER'S BYLAWS WHEN IT IS SCHEDULED BY GENER AND VOTE THEIR
GENER SHARES OR (2) COMPLETE AND DELIVER THE POWER OF ATTORNEY DELIVERED WITH
THE CHILEAN OFFER MATERIALS OR WITH GENER'S NOTICE OF THE SHAREHOLDERS MEETING,
IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH THEREIN.
13
SUMMARY
This summary highlights selected information from this prospectus, and may
not contain all the information that is important to you. To better understand
the proposed transaction and the separate offers to holders of Gener ADSs and
Gener shares, you should read this entire document carefully, as well as those
additional documents to which we refer you. You may obtain the information
incorporated by reference into this prospectus by following the instructions in
the section captioned "WHERE YOU CAN FIND MORE INFORMATION".
THE PROPOSED TRANSACTION; THE OFFERS
We are proposing to acquire control of, and at least a majority of the
equity interest in, Gener. We are offering to exchange a fraction of an AES
share having a value of $16, calculated over the ten New York Stock Exchange
trading day measuring period ending on the second New York Stock Exchange
trading day immediately prior to the date on which our offer expires, for each
Gener ADS that is validly tendered and not properly withdrawn prior to the
expiration of our offer. Simultaneously, in Chile, we are making a separate
offer to purchase 3,466,600,000 Gener shares for the Chilean Peso equivalent of
$0.235294118, in cash, per Gener share. The $16 value we are offering for each
Gener ADS is equal to the Chilean Peso equivalent of $0.235294118 we are
offering for each Gener share in the Chilean offer after adjusting for the fact
that each Gener ADS represents 68 Gener shares.
INFORMATION CONCERNING THE TOTALFINAELF GROUP PROPOSAL
On October 22, 2000, Gener announced a proposal from the TotalFinaElf
Group, a major French oil company. Under this proposal TotalFinaElf would have
acquired new Gener shares to be issued as part of a capital increase, subject to
the preemptive rights of current Gener shareholders. The TotalFinaElf proposal
was subject to approval by Gener shareholders, negotiation and execution of
definitive agreements, completion by TotalFinaElf of due diligence, receipt of
all required regulatory and other approvals and other conditions. On November
28, 2000, TotalFinaElf terminated its agreement with Gener relating to the
TotalFinaElf proposal.
On November 28, 2000, we entered into the TotalFinaElf Agreement which
provides, among other things, that if we are successful in acquiring at least a
majority of the outstanding Gener shares, including Gener shares represented by
Gener ADSs, as a Gener shareholder we will take action to cause Gener to enter
into an agreement to sell to TotalFinaElf all of the capital stock that Gener
owns in Central Puerto S.A., Hidroneuquen S.A., Termoandes S.A. and Interandes
S.A., the Electricity Companies, and other interests in Argentina, the Acquired
Interests, consisting of all of the subordinated indebtedness owned by Gener and
its affiliates of Hidroelectrica, a 59% owned subsidiary of Hidroneuquen, all
of Gener's rights and obligations under management contracts with the
Electricity Companies, all of Gener's interests in projects under study or
development for electricity transmission or generation facilities in Argentina
and in the project under study to develop facilities for transmitting
electricity between the Yacyreta region in Argentina and the Sao Paulo region
in Brazil, for a purchase price of $652 million in cash, subject to certain
adjustments. Concurrently with such sale, approximately $274 million of
indebtedness of Termoandes and Interandes would be repaid. If we purchase Gener
shares in the offers but do not acquire a majority of the outstanding Gener
shares, including Gener shares represented by Gener ADSs, we have agreed with
TotalFinaElf that we will use our reasonable best efforts to acquire at least a
majority of the outstanding Gener shares, including Gener shares represented by
Gener ADSs. TotalFinaElf has agreed not to take any action that would frustrate
or prevent the consummation of the offers. We and TotalFinaElf have agreed to
cooperate and to use our reasonable best efforts to support the consummation of
the transactions contemplated by the TotalFinaElf Agreement, including the
offers. The sale to TotalFinaElf of the Electricity Companies' shares and the
Acquired Interests is subject to a number of conditions, including satisfaction
by TotalFinaElf of a due diligence review. In addition, under the TotalFinaElf
Agreement, TotalFinaElf has the right at its option to purchase the shares of
all or any of the Electricity Companies and to purchase or not purchase the
Acquired Interests in the projects under study and/or development. The
TotalFinaElf Agreement provides for termination by the parties in certain
14
events, including upon the termination of the offers without the purchase of
any Gener shares or Gener ADSs thereunder. The TotalFinaElf Agreement is filed
as an exhibit to the Registration Statement on Form S-4 of which this
prospectus is a part and is incorporated by reference in this prospectus. We
have not authorized anyonerecommend that you carefully read the complete TotalFinaElf Agreement for its
terms and other information which may be important to you.
REASONS FOR THE OFFERS
We believe that our offers will provide Gener with the long-term strategic
partner that Gener originally announced it was seeking to provide youthe financial
resources, technology and business opportunities that would allow Gener to
continue growing. In addition, we believe our proposed transaction presents a
unique opportunity to improve the efficiency and productivity of Gener and to
reduce costs and enhance the quality of Gener's services in order to benefit
its shareholders, customers and the communities it serves. We believe that the
proposed transaction will produce the following benefits:
o An opportunity for Gener shareholders to sell their shares
o Increased competitiveness
o Substantial cost savings
o Increased management strength and expertise with different information.significant experience
in the Latin American and global energy industries
o Financial strength
o Increased diversification into new markets
o Increased market presence and opportunities
OUR OFFER
SUMMARY OF OUR OFFER.
We are not making an offer of these securities in any
state whereoffering, upon the offer is not permitted. You should not assume thatterms and subject to the information contained in or incorporated by referenceconditions set forth in
this prospectus and in the related ADS Letter of Transmittal, to exchange a
fraction of an AES share having a value of $16, measured over the ten New York
Stock Exchange Trading days ending on the second New York Stock Exchange
Trading day immediately prior to the date on which our offer expires, for each
Gener ADS you validly tender and do not properly withdraw prior to the
expiration of our offer. The actual fraction of an AES share you will receive
for each Gener ADS you validly tender and do not withdraw prior to the
expiration of our offer will be equal to $16 divided by the average of the high
and low selling prices per share of AES common stock, as reported on the New
York Stock Exchange Composite Transaction Tape, for each of the ten New York
Stock Exchange trading days ending on the second New York Stock Exchange
trading day immediately preceding the date on which our offer expires. We are
making our offer through the Purchaser, our wholly owned subsidiary. The term
"expiration of our offer" means 12:00 midnight, New York City time, on Monday,
December 11, 2000, unless we extend the period of time for which our offer is
accurateopen, in which case the term "expiration of our offer" means the latest time
and date on which our offer, as so extended, expires. Simultaneously, we are
making, in Chile, a separate offer to purchase 3,466,600,000 Gener shares for
the Chilean Peso equivalent of $0.235294118, in cash, per Gener share.
CONDITIONS OF OUR OFFER.
Our offer is subject to the following:
o Gener shareholders having approved the amendments to Gener's Bylaws by
the affirmative vote of at least 75% of the outstanding Gener shares,
including Gener shares represented by Gener ADSs, and these amendments
having become effective under Chilean law;
15
o Our being satisfied, in our reasonable discretion, that the proposed
TotalFinaElf transaction has been terminated or will not proceed. This
condition was satisfied on November 28, 2000 when TotalFinaElf terminated
its agreement with Gener with respect to the TotalFinaElf proposal and
entered into the TotalFinaElf Agreement with us;
o Our having made any purchases of Gener shares in the Chilean offer;
o The low per share selling price of the AES shares on the New York Stock
Exchange from the date of our offer through the date on which our offer
expires not having been less than $50. On each of November 22, 2000,
December 4, 2000, December 5, 2000, December 6, 2000 and December 7, 2000,
the low per share selling price of AES shares on the New York Stock
Exchange was less than $50.00. We have waived the condition of our offer
that the low per share selling price of AES shares on the New York Stock
Exchange not be below $50.00 on any date between the date of our offer and
the expiration of our offer for these five dates. We can offer no
assurances, however, that we will similarly waive this condition again if
the low per share selling price of AES shares on the New York Stock
Exchange is below $50.00 for any other date in the future. If the low per
share selling price of AES shares on any future New York Stock Exchange
Trading Day prior to the expiration of our offer is less than $50.00 and
we waive this condition for such date, we intend to issue a press release
to that effect at the time of such waiver;
o The Registration Statement of which this prospectus is a part having
been declared effective by the SEC;
o The waiting period and any extension thereof applicable to our offer
under the HSR Act having expired or having been terminated and our having
received clearance or approval under any other applicable antitrust law
of any dateforeign or domestic jurisdiction. We announced on November 22,
2000 that early termination of the waiting period under the HSR Act with
respect to the purchase of Gener ADSs and Gener shares pursuant to the
offers was granted by the U.S. Federal Trade Commission and the Antitrust
Division of the U.S. Department of Justice on November 20, 2000, thereby
satisfying this condition;
o Our having received approval to acquire the Gener shares and the Gener
ADSs in the offers from the United States Federal Energy Regulatory
Commission; and
o the other customary conditions more fully described in the section
captioned "OUR OFFER-- Conditions of Our Offer".
These conditions to our offer are discussed in greater detail in the section
captioned "OUR OFFER--Conditions of Our Offer."
TIMING OF OUR OFFER.
Our offer is currently scheduled to expire on Monday, December 11, 2000;
however, we reserve the right, at any time or from time to time, in our sole
discretion and regardless of whether or not any of the conditions specified in
the section captioned, "OUR OFFER--Conditions of Our Offer" shall have been
satisfied, to extend, for any reason, the period of time during which our offer
is open and to amend our offer in any respect by giving oral or written notice
of such extension or amendment to the Exchange Agent followed as promptly as
practicable by public announcement thereof. For more information you should
read the discussion in the section captioned, "OUR OFFER--Extension,
Termination and Amendment".
The Chilean offer will be scheduled to occur as soon as practicable, and
in any event within 12 Chilean trading days, after the effectiveness of the
amendments to Gener's Bylaws. Subject to applicable law and to the extent
practicable, our offer will be extended as necessary to cause our offer to
expire no later than the next business day after the completion of the Chilean
offer.
16
EXTENSION, TERMINATION AND AMENDMENT.
We reserve the right, at any time or from time to time, in our sole
discretion and regardless of whether or not any of the conditions specified in
the section captioned, "OUR OFFER--Conditions of Our Offer" have been
satisfied, to extend for any reason the period of time during which our offer
remains open and to amend our offer in any respect by giving oral or written
notice of such extension or amendment to the Exchange Agent followed as
promptly as practicable by public announcement thereof. If we decide to extend
our offer, we will make our announcement to that effect no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled expiration date. During any such extension, all Gener ADSs previously
tendered and not withdrawn will remain subject to our offer, subject to your
right to withdraw your Gener ADSs in accordance with the procedures set forth
in the section captioned, "OUR OFFER--Withdrawal Rights". We can give no
assurance that we will exercise our right to extend or amend our offer.
Subject to applicable rules and regulations, we also reserve the right, in
our sole discretion, at any time or from time to time, (a) to delay acceptance
for exchange or, regardless of whether we previously accepted Gener ADSs for
exchange, our exchange of any Gener ADSs pursuant to our offer or to terminate
our offer and not accept or exchange any Gener ADSs not previously accepted or
exchanged, upon the failure of any of the conditions of our offer to be
satisfied and (b) to waive any condition, other than the datecondition relating to
the effectiveness of the Registration Statement for the AES shares to be issued
in our offer, or otherwise to amend our offer in any respect, by giving oral or
written notice of such delay, termination or amendment to the exchange agent
and by making a public announcement thereof. In the case of an extension, any
such announcement will be issued no later than 9:00 A.M., New York City time,
on the front of this prospectus.
-----------------------
TABLE OF CONTENTS
-----------------------
Page
----
About This Prospectus........................................................2
Risk Factors.................................................................3
Where You Can Find More Information..........................................9
Incorporation of Documents by Reference.....................................10
Special Note on Forward-Looking Statements..................................10
Use of Proceeds.............................................................10
Ratio of Earningsnext business day after the previously scheduled expiration date.
Subject to Fixed Charges..........................................10
The Company.................................................................11
Description of Capital Stock................................................11
Description of Debt Securities..............................................17
Offered Securities..........................................................26
Legal Matters...............................................................27
Experts.....................................................................27
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statementapplicable law, including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that we filed withany material change in the Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may issue and sell any combination of the
securities described in this prospectusinformation
published, sent or given to you in connection with oneour offer be promptly sent
promptly and in a manner reasonably designed to inform you of such change, and
without limiting the manner in which we may choose to make any public
announcement, we assume no obligation to publish, advertise or more
acquisitionsotherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
EXCHANGE OF GENER ADSS; DELIVERY OF AES SHARES.
Upon the terms and subject to the conditions of our offer, including, if
our offer is extended or investments. This prospectus provides you with a general
descriptionamended, the terms and conditions of any such
extension or amendment, we will accept for exchange, and will exchange, all
Gener ADSs validly tendered by the expiration date and not properly withdrawn
as promptly as practicable after the later of the securitiesexpiration date and the
satisfaction or waiver of the conditions of our offer.
WITHDRAWAL RIGHTS.
Your tender of Gener ADSs pursuant to our offer is irrevocable, except
that Gener ADSs tendered pursuant to our offer may be withdrawn at any time
prior to the expiration of our offer, and, unless we previously accepted them
pursuant to our offer, may offer. Eachalso be withdrawn at any time we issueafter January 11,
2001.
PROCEDURE FOR TENDERING SHARES.
For you validly to tender Gener ADSs pursuant to our offer, (a) a properly
completed and sell
securities, we will provide a prospectus supplement that will contain specific
information about the termsduly executed ADS Letter of Transmittal, or manually executed
facsimile of that offering. The prospectus supplement may
also add, updatedocument, along with any required signature guarantees, or change information contained in this prospectus. This
prospectus has also been prepared for use by persons who receive securitiesan
agent's message, which is explained below, in connection with acquisitions or investmentsa book-entry
transfer, and any other required documents must be transmitted to and received
by us. In connection with resales,
a prospectus supplement, if required, will disclose the nameExchange Agent at its address set forth on the back cover of the selling
stockholder as well as the specific terms of the resale. You should read both this
prospectus and any prospectus supplement together with additional
informationeither Gener ADRs for the Gener ADSs to be tendered must be
transmitted to and received by the Exchange Agent at such address or such Gener
ADSs must be tendered pursuant to the procedures for book-entry transfer
described underbelow, and a confirmation of such delivery received by the heading "Where You Can Find More Information."
2Exchange
Agent including an agent's message (which is explained below) if the tendering
shareholder has not delivered an ADS Letter of Transmittal, in each case before
the expiration date, or (b) the guaranteed delivery procedure described below
must be complied with.
17
RISK FACTORS
PurchasersIn deciding whether to tender your Gener ADSs pursuant to our offer, you
should carefully read this prospectus and the documents to which we refer you.
You should also carefully consider the following factors:
o the risk that the AES stock Gener ADS holders will receive will be worth
less than $16 per Gener ADS;
o the risks that we will not achieve the benefits we expect from the
transaction, including the risk that the amount and timing of the Securities should read this entire Prospectus carefully.
Ownership ofcost
savings and other expected benefits from the Securities involves certain risks. The following factors
shouldtransaction may be considered carefully in evaluating AES and its business before
purchasing the Securities offered by this Prospectus.
Ourdifferent
from what we expect;
o our high degree of leverage and our financial flexibility and the risk
that we will not be able to raise sufficient capital to fund future
projects and future acquisitions;
o the risk associated with conducting operations outside of the U.S.,
especially in less developed countries;
o the increasing global competition in our industry;
o the uncertainties associated with project development; and
o the extensive governmental regulations, including regulations relating
to environmental matters, to which we and Gener are subject.
See the description in the section captioned "RISK FACTORS" for a more
complete discussion of these factors and others.
CERTAIN TAX CONSIDERATIONS
The receipt of AES shares for Gener ADSs by a U.S. Holder pursuant to our
offer will be a taxable transaction for United States federal income tax
purposes and possibly for state, local and foreign income tax purposes as well.
The receipt of AES shares for Gener ADSs by a non-U.S. Holder pursuant to
our offer generally will not be a taxable transaction for United States federal
income tax purposes.
The receipt of AES shares for Gener ADSs by a Chilean Holder pursuant to
our offer generally will be a taxable transaction for Chilean income tax
purposes.
The receipt of AES shares for Gener ADSs by a non-Chilean Holder pursuant
to our offer will generally not be a taxable transaction for Chilean income tax
purposes.
BECAUSE TAX MATTERS ARE COMPLICATED, WE ENCOURAGE YOU TO CONTACT YOUR TAX
ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES OF OUR OFFER TO YOU. FOR A
MORE DETAILED DISCUSSION OF THE U.S. FEDERAL AND CHILEAN INCOME TAX
CONSEQUENCES OF OUR OFFER SEE THE DESCRIPTION IN THE SECTION CAPTIONED, "OUR
OFFER--CERTAIN TAX CONSIDERATIONS".
MARKET PRICES OF AES SHARES AND GENER ADSS AND SHARES
The following table presents:
o the closing price of AES shares, as reported on the New York Stock
Exchange Composite Transaction Tape; and
o the closing price of Gener ADSs, as reported on the New York Stock
Exchange Composite Transaction Tape, and the closing price of Gener
shares, as reported on the Santiago Stock Exchange.
in each case, the last day for which such information could practicably be
calculated prior to the date of this prospectus.
18
AES GENER GENER
DATE SHARES ADSS SHARES
- ------------------ ----------- ------------ -------
November 8, 2000 $ 63.50 $ 16.375 Ch$138
We urge you to obtain current market quotations before making any decision
with respect to the offer.
THE COMPANIES
The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
AES is a global power company committed to serving the world's needs for
electricity in a socially responsible way. AES's electricity "generation"
business consists of sales to wholesale customers (generally, electric
utilities, regional electric companies or wholesale commodity markets known as
"power pools") for further resale to end users. AES also sells electricity
directly to end users such as commercial, industrial, governmental and
residential customers through its "distribution" business. AES's generating
assets include interests in over 140 facilities totaling over 48 gigawatts of
capacity. AES's electricity distribution network has over 957,000 km of
conductor and associated rights of way and sells over 135,000 gigawatt hours
per year to over 19 million end-use customers. In addition, through its various
retail electricity supply businesses, AES sells electricity to over 154,000
end-use customers. Revenues during 1999 were $3.25 billion and total assets as
of December 31, 1999 were $20.9 billion.
Gener S.A.
Miraflores 222, 4th Floor
Santiago, Chile
Gener is the second largest electricity generation group in Chile in terms
of operating revenue and generating capacity. Gener is also engaged in the
following businesses: electricity generation in Colombia, Argentina and Peru;
shipping and port services in Chile; coal mining in Colombia; coal sales to
third parties in Chile and Colombia; natural gas transportation in Chile and
Argentina; electricity distribution in Argentina; and energy trading in the
United States and Canada. Gener also has expanded its activities to include
electricity generation in the Dominican Republic; a joint venture for the
operation and maintenance of thermal generation plants; oil and gas exploration
and production in Argentina and Chile; and water treatment for industrial
customers in Chile. At December 31, 1999, Gener's consolidated total assets
were Ch$ 1,960,612 million (about $3,699 million). In 1999, Gener reported
consolidated operating income of Ch$ 77,555 million (about $146.4 million) and
consolidated net income of Ch$ 6,423 million (about $12.1 million).
Mercury Cayman Co. III, Ltd.
c/o The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
The Purchaser is a newly formed limited company organized under the laws
of the Cayman Islands and a wholly owned subsidiary of AES. The Purchaser was
organized to facilitate our offer and has not carried on any material business
activities other than in connection with our offer.
19
RISK FACTORS
In deciding whether to tender your Gener ADSs pursuant to our offer, you
should carefully read this prospectus and the documents to which we refer you.
You should also carefully consider the following factors:
RISKS RELATING TO THE PROPOSED OFFERS
WE MAY NOT ACHIEVE THE BENEFITS WE EXPECT FROM THE ACQUISITION OF GENER. THIS
MAY HAVE AN ADVERSE EFFECT ON OUR OVERALL BUSINESS, FINANCIAL AND OPERATING
RESULTS.
We decided to pursue the acquisition of Gener with the expectation that
the acquisition will result in benefits to our overall company arising out of
combining Gener's operations with our existing operations. To realize any
benefits or synergies from the acquisition of Gener, we will face the following
post-acquisition challenges:
o increasing the competitiveness of Gener's operations;
o implementing cost savings;
o retaining and assimilating the management and employees of Gener with
our management and employees;
o retaining Gener's customers, suppliers and strategic partners;
o achieving full utilization of Gener's assets and resources;
o developing and maintaining uniform standards, controls, procedures,
policies and information systems;
o responding to any adverse changes in the economic, political or other
conditions in the market in which Gener operates; and
o completing in a timely manner certain sales of Gener assets in order to
comply with regulations in jurisdictions which limit the energy
generation and distribution capacity we may own or otherwise.
If we are not successful in addressing these and other challenges, then
the expected benefits of the acquisition of Gener will not be realized and, as
a result, our operating results and the market price of our common stock may be
adversely affected. Further, we cannot assure you that our growth rate
following the acquisition and the integration of Gener's operations with our
existing operations will equal the historical growth rates we have experienced.
More generally, our views about the expected benefits of our proposed
transaction are based on publicly available information about Gener. Gener may
have other information, not available to us, that would significantly affect
our abilityestimates or views.
SUBSTANTIALLY ALL OF GENER'S OPERATIONS ARE OUTSIDE THE UNITED STATES.
Because substantially all of Gener's operations are outside the United
States, the development of Gener's business is subject to fulfillsubstantial risk. See
the section captioned "--Risks Relating to AES Business--We already do a
significant amount of our obligations under our securities.business outside the United States, which presents
significant risks."
THE VALUE OF THE AES STOCK GENER ADS HOLDERS RECEIVE MAY BE LESS THAN $16 PER
GENER ADS.
The AES stock received by Gener ADS holders in exchange for their Gener
ADSs may be worth less than $16 per Gener ADS because the market price of AES
shares on the date Gener ADS holders receive them in exchange for their ADSs
may be less than the average of the high and low selling prices over the
measuring period used to calculate the fraction of an AES share to be exchanged
for each ADS.
20
RISKS RELATING TO AES'S BUSINESS
OUR HIGH DEGREE OF LEVERAGE COULD AFFECT OUR FINANCIAL FLEXIBILITY.
We had approximately $15,720$19,728 million of outstanding indebtedness
(including trade payables and other liabilities) as of JuneSeptember 30, 2000. As
of September 30, 2000, we had a consolidated ratio of total debt to total book
capitalization (including current debt) of approximately 74%. As a result of
our leverage, we might be significantly limited in our ability to meet our debt
service obligations, to finance the acquisition, development or completion of
additional projects, to compete effectively or to operate successfully under
adverse economic conditions.
As of June 30, 2000, we had a consolidated ratio of total debt to
total book capitalization (including current debt) of approximately 69%.
Holders of our Debt Securities will be subordinated to many of our other
creditors. The Senior Subordinated Debt Securities will be subordinated to all
Senior Debt, including, but not limited to, the amounts outstanding under our
current $850 million revolving credit facility. The Junior Subordinated Debt
Securities will be subordinated to all of our Senior and Senior Subordinated
Debt, including, but not limited to, the amounts outstanding under our current
$850 million revolving credit facility. As of June 30, 2000, we had
approximately $1,677 million in aggregate principal amount of Senior Debt
(which includes $277 million of letters of credit) and $2,744 million in
aggregate principal amount of Senior and Senior Subordinated Debt.
Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, receivership, reorganization, assignment
for the benefit of creditors, marshaling of assets and liabilities or any
bankruptcy, insolvency or similar proceedings, the holders of Senior Debt will
be entitled to receive payment in full of all amounts due under all Senior Debt
before the holders of the Senior Subordinated Debt Securities will be entitled
to receive any payment in respect of the Senior Subordinated Debt Securities;
holders of Senior and Senior Subordinated Debt will be entitled to receive
payment in full of all amounts due under all Senior and Senior Subordinated
Debt before the holders of the Junior Subordinated Debt Securities will be
entitled to receive any payment in respect of the Junior Subordinated Debt
Securities.
No payments in respect of the Senior Subordinated Debt Securities or
Junior Subordinated Debt Securities may be made
o if a default has occurred and is continuing in a payment under the
Senior Debt or Senior and Senior Subordinated Debt, respectively, or
o during certain periods when an event of default under certain Senior
Debt or Senior and Senior Subordinated Debt, respectively, permits
the respective lenders thereunder to accelerate the maturity thereof.
See "Description of Debt Securities--Subordination of Senior Subordinated
Debt Securities" and "Description of Debt Securities--Subordination of Junior
Subordinated Debt Securities."
The Debt Securities will be effectively subordinated to the indebtedness
and other obligations (including trade payables) of our subsidiaries. At June
30, 2000, the indebtedness and obligations of our subsidiaries aggregated
approximately $16,265 million. Our ability to pay principal of, premium, if
any, and interest on the Debt Securities will be dependent upon the receipt of
funds from our subsidiaries by way of dividends, fees, interest, loans or
otherwise. Most of our subsidiaries with interests in power generation
facilities currently are obligated, pursuant to loan agreements or indentures,
to satisfy certain restricted payment covenants before they may make
distributions to us. Moreover, unless otherwise provided in the prospectus
supplement, the Indentures for the Debt Securities will permit our subsidiaries
to maintain or add to such restrictions. Our subsidiaries are separate and
distinct legal entities and have no obligation, contingent or otherwise, to pay
any amounts due pursuant to the Debt Securities or to make any funds available
therefor, whether by dividends, loans or other payments, and do not guarantee
the payment of interest on or principal of the Debt Securities. Any right we
have to receive any assets of any of our
3
subsidiaries upon any liquidation, dissolution, winding up, receivership,
reorganization, assignment for the benefit of creditors, marshaling of assets
and liabilities or any bankruptcy, insolvency or similar proceedings (and the
consequent right of the holders of the Debt Securities to participate in the
distribution of, or to realize proceeds from, those assets) will be effectively
subordinated to the claims of any such subsidiary's creditors (including trade
creditors and holders of debt issued by such subsidiary).
We do a significant amount of our business outside the United States which
presents significant risks.WE DO A SIGNIFICANT AMOUNT OF OUR BUSINESS OUTSIDE THE UNITED STATES, WHICH
PRESENTS SIGNIFICANT RISKS.
Our involvement in the development of new businessesprojects and the acquisition of
existing plants in locations outside the United States is increasing and a
large portion of our current development and acquisition activities are for
projects and plants outside the United States.
The financing, development and operation of projects outside the United
States entail significant political and financial uncertainties (including,
without limitation, uncertainties associated with first-time privatization
efforts in the countries involved, currency exchange rate fluctuations,
currency repatriation restrictions, regulation of the electricity business,
currency inconvertibility, tax law, political instability, civil unrest, and
expropriation) and other credit quality, liquidity or structuring issues that
have the potential to cause substantial delays in respect of or material
impairment of the value of the project being developed or operated, which we
may not be capable of fully insuring or hedging against. The ability to obtain
financing on a commercially acceptable non-recourse basis in developing nations
has become more difficult. Even when such non-recourse financing is available,
lenders may require us to make higher equity investments than historically have
been the case. In addition, financing in countries with less than
investment
gradeinvestment-grade sovereign credit ratings may also require substantial
participation by multilateral financing agencies. There can be no assurance
that such financing can be obtained when needed.
The uncertainty of the legal environment in certain countries in which we
are or in the future may be developing, constructing or operating could make it
more difficult for us to enforce our respective rights under agreements
relating to such businesses. In addition, the laws and regulations of certain
countries may limit our ability to hold a majority interest in some of the
businesses that we may develop or acquire. International businesses we own may,
in certain cases, be expropriated by applicable governments. Although we may
have legal recourse in enforcing our rights under agreements and recovering
damages for breaches thereof, there can be no assurance that any such legal
proceedings will be successful or resolved in a timely manner.
Global competition is increasing and could adversely affect us.successful.
GLOBAL COMPETITION IS INCREASING AND COULD ADVERSELY AFFECT US.
The global power production market is characterized by numerous strong and
capable competitors, many of whom may have extensive and diversified
developmental or operating experience (including both domestic and
international experience) and financial resources similar to or greater than
ours. Further,Furthermore, in recent years, the power production industry has been
characterized by strong and increasing competition with respect to both
obtaining power sales agreements and acquiring existing power generation
assets. In certain markets, these factors have caused reductions in prices
contained in new power sales agreements and, in many cases, have caused higher
acquisition prices for existing assets through competitive bidding practices.
The evolution of competitive electricity markets and the development of highly
efficient gas-fired power plants have also caused, or are anticipated to cause,
price pressure in certain power markets where we sell or intend to sell power.
ThereWe can begive no assurance that the foregoing competitive factors will not have a
material adverse effect on us.
Development uncertainties.DEVELOPMENT UNCERTAINTIES.
The majority of the projects that we develop are large and complex and the
completion of any such project is subject to substantial risks. Development can
require us to expend significant sums for preliminary engineering, permitting,
legal and other expenses in preparation for competitive bids which we may not
win or before it can be determined whether a project is feasible, economically
attractive or
21
capable of being financed. Successful development and construction is
contingent upon, among other things, negotiation of satisfactory engineering,
construction, fuel supply and power sales contracts with other project
participants, receipt of required governmental permits and consents and timely
implementation and satisfactory completion of construction. There can be no
assurance that we will be able to obtain new power sales contracts, overcome
local opposition, if any, obtain the necessary site agreements, fuel supply and
ash disposal agreements, construction contracts,
4
steam sales contracts,
licenses and certifications, environmental and other permits and financing
commitments necessary for the successful development of our projects. There can
be no assurance that development efforts on any particular project, or our
efforts generally, will be successful. If these development efforts are not
successful, we may abandon a project under development. At the time of
abandonment, we would expense all capitalized development costs incurred in
connection therewith and could incur additional losses associated with any
related contingent liabilities. Our future growth is dependent, in part, upon
the demand for significant amounts of additional electrical generating capacity
and our ability to obtain contracts to supply portions of this capacity. Any
material unremedied delay in, or unsatisfactory completion of, construction of
our projects could, under certain circumstances, have an adverse effect on our
ability to meet our obligations, including the
payment of principal of, premium, if any, and interest on Debt Securities.obligations. We may also be faced with certain development
uncertainties arising out of doing business outside of the United States. See
"--Wethe section captioned "--Risks Relating to AES Business--We do a significant
amount of our business outside the United States, which presents significant
risks."
Our acquisitions may not perform as expected.OUR ACQUISITIONS MAY NOT PERFORM AS EXPECTED.
We have achieved a majority of our growth through acquisitions and expect
that we will continue to grow, in part, through acquisitions. Although each of
the acquired businesses had a significant operating history at the time we
acquired them, we have a limited history of owning and operating many of these
businesses. In addition, most of these businesses were government owned and
some were operated as part of a larger integrated utility prior to their
acquisition. There can be no assurances that we will be successful in
transitioning these businesses to private ownership, and that such businesses
will perform as expected or that the returns from such businesses will support
the indebtedness incurred to acquire them or the capital expenditures needed to
develop them.
We may not be able to raise sufficient capital to fund acquisitions and
greenfield projects or refinance existing debt.WE MAY NOT BE ABLE TO RAISE SUFFICIENT CAPITAL TO FUND FUTURE PROJECTS AND
FUTURE ACQUISITIONS AND GREENFIELD PROJECTS.
Each of our projects under development and those independent power
facilities we have acquired, committed to acquire or may seek to acquire may
require substantial capital investment. Continued access to capital with
acceptable terms is necessary to assure the success of future projects and acquisitions, and may be necessary to refinance certain
existing debt.these projects. We have
utilized project financing loans to fund the capital expenditures associated
with constructing and acquiring our electric power plants and related assets to
the extent possible. Project financing borrowings have been substantially
non-recourse to our other subsidiaries and affiliates and to us as the parent
company and are generally secured by the capital stock, physical assets,
contracts and cash flow of the related project subsidiary or affiliate. We
intend to continue to seek, where possible, such non-recourse project
financing. However, depending on market conditions and the unique
characteristics of individual projects, such financing may not be available or
our traditional providers of project financing, particularly multinational
commercial banks, may seek higher borrowing spreads and increased equity
contributions.
Furthermore, because of the reluctance of commercial lending institutions
to provide non-recourse project financing (including financial guarantees) in
certain less developed economies, we have sought and will continue to seek, in
such locations, direct or indirect (through credit support or guarantees)
project financing from a limited number of multilateral or bilateral
international financial institutions or agencies. As a precondition to making
such project financing available, these institutions may also require
governmental guarantees of certain project and sovereign related risks.
Depending on the policies of specific governments, such guarantees may not be
offered and as a result, we may determine that sufficient financing will
ultimately not be available to fund the related project. In addition, we are
frequently required to provide more sponsor equity for projects that sell their
electricity into the merchant market than for projects that sell their
electricity under long term contracts.
22
In addition to the project financing loans, if available, we provide a
portion, or in certain instances all, of the remaining long-term financing
required to fund development, construction, or acquisition. These investments
have generally taken the form of equity investments or loans, which are
subordinated to the project financing loans. The funds for these investments
have been provided by cash flows from operations and by the proceeds from
borrowings under our short-term credit facilities and issuances of senior
notes, senior subordinated notes, convertible debentures, convertible trust preferred
securities and common stock.
5
Our ability to arrange for financing on either a fully recourse or a
substantially non-recourse basis and the costs of such capital are dependent on
numerous factors, including general economic and capital market conditions, the
availability of bank credit, rating agency ratings, investor confidence, the
continued success of current projects and provisions of tax and securities laws
which are conducive to raising capital in this manner. Should future access to
capital not be available, we may decide not to build new plants or acquire
existing facilities. While a decision not to build new plants or acquire
existing facilities would not affect the results of operations of our currently
operating facilities or facilities under construction, such a decision would
affect our future growth.
The performance of our generation business is dependent to a large degree
on certain of our larger projects and their customers.THE PERFORMANCE OF OUR GENERATION BUSINESS IS DEPENDENT TO A LARGE DEGREE ON
CERTAIN OF OUR LARGER PROJECTS AND THEIR CUSTOMERS.
The nature of most of our generation plants (based on revenues) is such
that each facility generally relies on one power sales contract with a single
customer for the majority, if not all, of its revenues over the life of the
power sales contract. The prolonged failure of any significant customer to
fulfill its contractual obligations could have a substantial negative impact on
these revenues. We have sought to reduce this risk, in part, by entering into
power sales contracts with utilities or other customers of strong credit
quality and by locating its plants in different geographic areas in order to
mitigate the effects of regional economic downturns.
Our revenues are becoming less predictable.OUR REVENUES ARE BECOMING LESS PREDICTABLE.
Our business primarily consists of businesses with long-term contracts or
retail concessions, and we expect the contract-based portfolio to be an
effective hedge against future energy and electricity market price risks.
However, an increasing proportion of our current and expected future revenues
are derived from businesses without significant long-term revenue contracts.
Our increasing reliance on non-
contractnon-contract businesses could cause our results of
operations to become more volatile.
Our distribution businesses are subject to greater regulatory scrutiny
than our generation business.OUR DISTRIBUTION BUSINESSES ARE SUBJECT TO GREATER REGULATORY SCRUTINY THAN OUR
GENERATION BUSINESS.
Our distribution businesses face increased regulatory and political
scrutiny in the normal conduct of their operations. This scrutiny may adversely
impact our results of operations, to the extent that such scrutiny or pressure
prevents us from reducing losses as quickly as we planned or denies us a rate
increase called for by our concession agreements. In general, these businesses
have lower margins and are more dependent on regulation to ensure expected
annual rate increases for inflation and increased power costs, among other
things. There can be no assurance that these rate reviews will be granted, or
occur in a timely manner.
We are subject to significant government regulation.WE ARE SUBJECT TO SIGNIFICANT GOVERNMENT REGULATION.
Our generation business in the United States is subject to the provisions
of various laws and regulations, including the Public Utility Regulatory
Policies Act of 1978, as amended, commonly referred to asoften called the PURPA, and the Public
Utility Holding Company Act, as amended, commonly referred to asoften called the PUHCA. PURPA provides
to qualifying facilities, commonly referred to as QFs, certain exemptions from
substantial federal and state legislation, including regulation as public
utilities. PUHCA regulates public utility holding companies and their
subsidiaries. It is necessary for us to obtain approval under PUHCA in order to
maintain majority ownership in our domestic power plants that are QFs.
Currently a material portion of our domestic revenues are received from QFs.
Moreover, all of our domestic non-QF plants are Exempt Wholesale Generators,
commonlyoften referred to as EWGs.the EWG. An EWG is a facility that has been authorized by
the U.S. Federal Energy Regulatory Commission, commonly referred to asoften called the FERC, to sell
wholesale power at
23
market-based rates. We enjoy exemptions under PUHCA related to our foreign
utility acquisitions and holdings. We cannot ensure that we will be able to
maintain appropriate PUHCA exemptions for all of our businesses. If we decide
to acquire another U.S. utility or utility assets, we may be required to divest
either all or part of CILCORP, an integrated electric and gas distribution
company owned and operated by AES serving Central Illinois, or take other steps
resulting in a loss of control or as may be required by the Securities and Exchange Commission.SEC. We believe
that, upon the occurrence of an event that would threaten the QF status of one
of our domestic plants, we would be able to react in a manner that would avoid
the loss of QF status (such as by replacing the steam customer). In the event
we were unable to avoid the loss of such status for one of our plants, to avoid
public utility holding company status, we could apply to the FERC to obtain
status as an EWG, or could restructure the ownership of the project subsidiary.
EWGs, however, are subject to broader regulation by FERC and may be subject to
state public utility commissions regulation regarding non-rate matters. In
addition, any restructuring of a project subsidiary could result in, among
other things, 6
a reduced financial interest in such subsidiary, which could
result in a gain or loss on the sale of the interest in such subsidiary, the
removal of such subsidiary from our consolidated income tax group or our
consolidated financial statements, or an increase or decrease in our results of
operations. Pending electric utility industry restructuring proposals could have an
adverse effect on us.AES's businesses outside the United States are also subject to
various laws and regulations.
PENDING ELECTRIC UTILITY INDUSTRY RESTRUCTURING PROPOSALS COULD HAVE AN ADVERSE
EFFECT ON US.
Several states have passed legislation that allows electricity customers
to choose their electricity supplier in a competitive electricity market,
(so-calledso-called "retail access" or "customer choice" laws),laws, and all but two of the
remaining states are considering such legislation. In addition to state
restructuring legislation, some members of Congress have proposed new Federal
legislation to encourage customer choice and recovery of stranded assets.
Several bills have been submitted to Congress on electricity restructuring. In
anticipation of restructuring legislation, many U.S. utilities are seeking ways
to lower their costs in order to become more competitive. These include the
costs that utilities are required to pay under QF contracts. Many utilities are
therefore seeking ways to lower these contract prices by renegotiating the
contracts, or in some cases by litigation. In 1999, we renegotiated contracts
for two of our QFs--Thames (a partial prepayment) and Placerita (a complete
buyout). The Thames transaction has been approved by the Connecticut Department
of Public Utilities Commission.
The FERC and many state utility commissions are currently studying a
number of proposals to restructure the electric utility industry in the United
States. Such restructuring would permit utility customers to choose their
utility supplier in a competitive electric energy market. The FERC issued a
final rule in April 1996 which requires utilities to offer wholesale customers
and suppliers open access onto utility transmission lines, on a comparable basis
to the utilities' own use of the lines. The final rule is subject to rehearing
and may become the subject of court litigation. Many utilities have already
filed "open access" tariffs. The utilities contend that they should recover
from departing customers their fixed costs that will be "stranded" by the
ability of their wholesale customers (and perhaps eventually, their retail
customers) to choose new electric power suppliers. The FERC final rule endorses
the recovery of legitimate and verifiable "stranded costs." These may include
the costs utilities are required to pay under many QF contracts which the
utilities view as excessive when compared with current market prices. Many
utilities are therefore seeking ways to lower these contract prices or rescind
the contracts altogether, out of concern that their shareholders will be
required to bear all or part of such "stranded" costs. Some utilities have
engaged in litigation against QFs to achieve these ends.
In addition, future United States electric rates may be deregulated in a
restructured United States electric utility industry and increasedindustry. This increase in
competition may result in lower rates and less profit margin for United States
electricity sellers. Falling electricity prices, the introduction of commodity
markets for electricity and uncertainty as to the future structure of the
industry has rendered the long-term power purchase contracts obsolete. As a
result, in the generation business we are increasingly dependent upon prices
for electricity determined in electricity spot markets. Such prices can be very
volatile and the effect on us of this volatility cannot be predicted.
The United States Congress is considering proposed legislation which would
repeal PURPA entirely, or at least repeal the obligation of utilities to
purchase from QFs. There is strong support for
24
grandfathering existing QF contracts if such legislation is passed, and also
support for requiring utilities to conduct competitive bidding for new electric
generation if the PURPA purchase obligation is eliminated. Various bills have
also proposed a repeal of PUHCA. Repeal of PUHCA would allow power generators
and vertically integrated utilities to acquire retail utilities in the United
States that are geographically widespread, as opposed to the current
limitations of PUHCA which requirerequires that retail electric systems be capable of
physical interconnection. In addition, registered holding companies would be
free to acquire non-utility businesses, which they may not do now, with certain
limited exceptions. In the event that PUHCA is repealed, competition would
likely increase. Repeal of PURPA and/or PUHCA may or may not be part of
comprehensive legislation to restructure the electric utility industry, allow
retail competition, and deregulate most electric rates. The effect of any such
repeal cannot be predicted, although any such repeal could have a material
adverse effect on us.
From time to time we are subject to material litigation and regulatory
proceedings.FROM TIME TO TIME WE ARE SUBJECT TO MATERIAL LITIGATION AND REGULATORY
PROCEEDINGS.
From time to time, we and our affiliates are parties to litigation and
7
regulatory proceedings. InvestorsYou should review the descriptions of such matters
contained in our Annual, Quarterly and Current Reports filed with the Securities and Exchange CommissionSEC and
incorporated by reference herein. There can be no assurances that the outcome
of such matters will not have a material adverse effect on our consolidated
financial position.
Our business is subject to stringent environmental regulations.OUR BUSINESS IS SUBJECT TO STRINGENT ENVIRONMENTAL REGULATIONS.
Our activities are subject to stringent environmental regulation by
federal, state, local and foreign governmental authorities. These regulations
generally involve effluents into the water, emissions into the air, the use of
water, wetlands preservation, waste disposal, endangered species, and noise
regulation, among others. Congress and other foreign governmental authorities
also may consider proposals to restrict or tax certain emissions. These
proposals, if adopted, could impose additional costs on the operation of our
power plants. There can be no assurance that we would be able to recover all or
any increased costs from our customers or that our business, financial
condition or results of operations would not be materially and adversely
affected by future changes in domestic or foreign environmental laws and
regulations. We have made and will continue to make capital and other
expenditures to comply with environmental laws and regulations. There can be no
assurance that such expenditures will not have a material adverse effect on our
financial condition or results of operations.
Our directors and officers have significant ownership interests in us and
can exert significant influence or control over matters requiring stockholder
approval.OUR DIRECTORS AND OFFICERS HAVE SIGNIFICANT OWNERSHIP INTERESTS IN US AND CAN
EXERT SIGNIFICANT INFLUENCE OR CONTROL OVER MATTERS REQUIRING STOCKHOLDER
APPROVAL.
As of February 4, 2000, our two founders, Roger W. Sant and Dennis W.
Bakke, and their immediate families, together owned beneficially approximately
18.4% of our outstanding Common Stock.common stock. As a result of their ownership
interests, Messrs. Sant and Bakke may be able to significantly influence or
exert control over our affairs, including the election of our directors. As of
February 4, 2000, all of our officers and directors and their immediate
families together owned beneficially approximately 24.9% of our outstanding
Common Stock.common stock. To the extent that they decide to vote together, these
stockholders would be able to significantly influence or control the election
of our directors, our management and policies and any action requiring
stockholder approval, including significant corporate transactions.
Our adherence to our "shared principles" could have an adverse impact on
our results of operations.OUR ADHERENCE TO OUR "SHARED PRINCIPLES" COULD HAVE AN ADVERSE IMPACT ON OUR
RESULTS OF OPERATIONS.
A core part of our corporate culture is a commitment to "shared
principles": to act with integrity, to be fair, to have fun and to be socially
responsible. We seek to adhere to these principles not as a means to achieve
economic success, but because adherence is a worthwhile goal in and of itself.
However, if we perceive a conflict between these principles and profits, we
will try to adhere to our principles -- evenprinciples--even though doing so might result in
diminished or foregone opportunities or financial benefits.
Shares eligible for future sale.SHARES ELIGIBLE FOR FUTURE SALE.
From time to time, our subsidiaries incur indebtedness that is secured by
a pledge of shares of our common stock held by that subsidiary. The sale of a
substantial number of such shares in the public market upon any foreclosure or
otherwise could have an adverse effect on the market price of our common stock.
Risk of fraudulent transfer. Various fraudulent conveyance laws have been
enacted forSee the protection of creditors and may be applied by a court on behalf
of any unpaid creditor or a representative of our creditors in a lawsuit to
subordinate or avoid Debt Securities in favor of our other existing or future
creditors. Under applicable provisionssection captioned "OUR OFFER--Purpose of the U.S. Bankruptcy code or
comparable provisions of state fraudulent transfer or conveyance laws, if we at
the time of issuance of Debt Securities,
o incurred such indebtedness with intent to hinder, delay or defraud
any of our present or future creditors or contemplated insolvency
with a design to prefer one or more creditors to the exclusion in
whole or in part of others or
o received less than reasonably equivalent value or fair considerationOffers; Plans for issuing Debt Securities and we:
o were insolvent,
o were rendered insolvent by reason of the issuance of the Debt
Securities,
o were engaged or about to engage in business or a transaction for
which our remaining assets constitute unreasonably small capital
to carry on our business, or
8Gener".
25
o intended to incur, or believed that we would incur, debts beyond
our ability to pay such debts as they mature,
then, in each case, a court of competent jurisdiction could void, in whole
or in part, the Debt Securities.
Among other things, a legal challenge of the Debt Securities on fraudulent
conveyance grounds may focus on the benefits, if any, realized by us as a
result of our issuance of the Debt Securities.
The measure of insolvency for purposes of the foregoing will vary
depending upon the law applied in such case. Generally, however, we would be
considered insolvent if the sum of our debts, including contingent liabilities,
were greater than all of our assets at fair valuation or if the present fair
market value of our assets were less than the amount that would be required to
pay the probable liability on our existing debts, including contingent
liabilities, as they become absolute and mature. There can be no assurance
that, after providing for all prior claims, there will be sufficient assets to
satisfy the claims of the holders of the Debt Securities.
Management believes that, for purposes of all such insolvency, bankruptcy
and fraudulent transfer or conveyance laws, the Debt Securities are being
incurred without the intent to hinder, delay or defraud creditors and for
proper purposes and in good faith, and that we, after the issuance of the Debt
Securities, will be solvent, will have sufficient capital for carrying on our
business and will be able to pay our debts as they mature. There can be no
assurance, however, that a court passing on such questions would agree with
management's view.
There is no prior public market for many of the securities that may be
offered pursuant to this prospectus -- as a result there could be significant
price volatility for such securities. Prior to the offering, there has been no
public market for many of the securities that may be offered pursuant to this
prospectus. There can be no assurance that an active trading market for any of
such securities will develop or be sustained. If such a market were to develop,
such securities could trade at prices that may be higher or lower than their
initial offering price depending upon many factors, including prevailing
interest rates, our operating results and the markets for similar securities.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission You may read and copy
any document that we file at the public reference rooms of the Securities and
Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
Suite 1300, New York, New York 10048. You may obtain information on the
operation of the public reference rooms by calling the Securities and Exchange
Commission at 1-800-SEC-0330. The Securities and Exchange Commission also
maintains an Internet site at http://www.sec.gov, from where you can access our
filings.
This prospectus constitutes part of a Registration Statement on Form S-4
filed with the Securities and Exchange Commission under the Securities Act of
1933 (the "Securities Act"). It omits some of the information contained in the
Registration Statement, and reference is made to the Registration Statement for
further information onTHE COMPANIES
THE AES and the securities offered hereby. Any statement
contained in this prospectus concerning the provisions of any document filed as
an exhibit to the Registration Statement or otherwise filed with the Securities
and Exchange Commission is not necessarily complete, and in each instance
reference is made to the copy of the document filed.
9
INCORPORATION OF DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is an important part of this prospectus,
and information that we file later with the Securities and Exchange Commission
will automatically update and supersede this information. In particular, our
annual filing on Form 10-K will supersede all previously filed annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
We incorporate by reference the documents listed below and any future filings
made with the Securities and Exchange Commission under Sections 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934 until we issue and sell all
of the securities:
(a) Annual Report and Amended Annual Report on Form 10-K for the year
ended December 31, 1999;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000
and June 30, 2000;
(c) Current Reports on Form 8-K and Form 8-K/A filed on February 11, 2000,
May 8, 2000, May 12, 2000, June 21, 2000, July 27, 2000, July 28,
2000, August 18, 2000 and September 1, 2000.
You may request a copy of these filings at no cost, by writing or
telephoning the office of William R. Luraschi, Vice President, General Counsel
and Secretary, The AES Corporation, 1001 North 19th Street, Arlington,
Virginia, telephone number (703) 522-1315.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties, and assumptions related to AES, including those set forth under
"Risk Factors" in this prospectus and those set forth under the caption
"Cautionary Statements and Risk Factors" in our annual report on Form 10-K,
which is incorporated by reference in this prospectus.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions,
the forward-looking events discussed in this prospectus might not occur. USE OF
PROCEEDS
This prospectus relates to shares of common stock, shares of preferred
stock and debt securities which may be offered and issued by AES from time to
time in connection with acquisitions of or investments in other businesses or
assets. Other than the businesses or assets acquired, there will be no proceeds
to AES from these offerings.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges is as follows:
Six Months
Ended
Year Ended December 31, June 30,
---------------------------- ----------
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges... 2.20 1.88 1.46 1.65 1.50 1.51
10
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income from continuing operations before income taxes and
minority interest, plus depreciation of previously capitalized interest, plus
fixed charges, less capitalized interest, less excess of earnings over
dividends of less-than-fifty-percent-owned companies, less minority interest in
pre-tax income of subsidiaries that have not incurred fixed charges, less
preference security dividend requirements of a consolidated subsidiary. Fixed
charges consist of interest (including capitalized interest) on all
indebtedness, amortization of debt discount and capitalized expenses,
preference security dividend requirements of a consolidated subsidiary, and
that portion of rental expense which we believe to be representative of an
interest factor.
During the period from January 1, 1995 until June 30, 2000, no shares of
preferred stock were issued or outstanding, and during that period we did not
pay any preferred stock dividends.
THE COMPANYCORPORATION
We are a global power company committed to serving the world's needs for
electricity in a socially responsible way. Our electricity "generation"
business consists of sales to wholesale customers, (generallygenerally, electric
utilities, regional electric companies or wholesale commodity markets known as
"power pools")pools," for further resale to end-users.end users. We also sell electricity
directly to end-usersend users such as commercial, industrial, governmental and
residential customers through our "distribution" business.
Sales withinby our generation business are made under long-term contracts from
power plants owned by our subsidiaries and affiliates, as well as directly into
power pools. We own new plants constructed for such purposes, ("greenfield"
plants)commonly called
"greenfield" plants, as well as older power plants acquired through
competitively bid privatization initiatives or negotiated acquisitions.
Electricity sales by our distribution businesses, including our
affiliates, are generally made pursuant ofto the provisions of long-term
electricity sale concessions granted by the appropriate governmental
authorities. In certain cases, these distribution companies are "integrated",
in that they also own electric power plants for the purpose of generating a
portion of the electricity they sell.
Our generating assets include interests in over 140 facilities totaling
over 48 gigawatts of capacity. Our electricity distribution network has over
957,000 km of conductor and associated rights of way and sells over 135,000
gigawatt hours per year to over 19 million end-use customers. In addition,
through our various retail electricity supply businesses, we sell electricity
to over 154,000 end-use customers. Revenues during 1999 were $3.25 billion and
total assets were $20.9 billion as of December 31, 1999.
We were incorporated in Delaware in 1981.
We have our principal executive offices at 1001 North 19th Street,
Arlington, Virginia 22209 (telephone number (703) 522-1315).
GENER S.A.
THE FOLLOWING AND OTHER INFORMATION CONTAINED IN THIS PROSPECTUS
CONCERNING GENER IS TAKEN FROM PUBLICLY AVAILABLE INFORMATION CONCERNING GENER
FILED WITH THE SEC. SUCH INFORMATION MAY BE EXAMINED AND COPIES MAY BE OBTAINED
AT THE PLACES AND IN THE MANNER SET FORTH UNDER THE SECTION CAPTIONED "WHERE
YOU CAN FIND MORE INFORMATION". ALTHOUGH WE HAVE NO KNOWLEDGE THAT WOULD
INDICATE THAT ANY STATEMENTS CONTAINED HEREIN BASED UPON SUCH REPORTS AND
DOCUMENTS ARE UNTRUE, WE TAKE NO RESPONSIBILITY FOR THE ACCURACY OR
COMPLETENESS OF THE INFORMATION CONTAINED IN SUCH REPORTS AND OTHER DOCUMENTS
OR FOR ANY FAILURE BY GENER TO DISCLOSE EVENTS THAT MAY HAVE OCCURRED AND MAY
AFFECT THE SIGNIFICANCE OR ACCURACY OF ANY SUCH INFORMATION BUT THAT ARE
UNKNOWN TO US.
Gener is the second largest electricity generation group in Chile in terms
of operating revenue and generating capacity. As of December 31, 1999, Gener
and its 50%-owned related company, Guacolda, accounted for approximately 23.5%
of Chile's total generating capacity. Gener is also engaged, directly or
through subsidiaries and related companies, in:
o electricity generation in Colombia, Argentina and the Dominican
Republic;
o shipping and port services in Chile;
o coal mining in Colombia;
o coal sales to third parties in Chile and Colombia;
o natural gas transportation in Chile and Argentina; and
o energy trading in the United States and Canada.
26
Recently, Gener expanded its activities to include:
o a joint venture for the operation and maintenance of thermal generation
plants;
o oil and gas exploration and production in Argentina and Chile; and
o water and distribution treatment for industrial customers in Chile.
Gener recently increased its stake in several core generation facilities,
including:
o the purchase of an additional 31.97% in Central Puerto from
Sempra/PSE&G, doubling Gener's ownership interest and causing Central
Puerto to become a consolidated subsidiary; and
o the acquisition of an additional interest in Hidroelectrica Piedra del
Aguila, HPDA, increasing Gener's ownership interest to 29.5%. Gener also
recently sold its minority stake in Egenor (Peruvian generator) and in
Energia San Juan (Argentine distributor), and acquired generation assets
in the Dominican Republic.
On April 19, 2000, Gener announced that it had decided to seek a long term
partnership with a first class company that would contribute financial
resources, technology and business opportunities that would allow Gener to
continue growing. Gener's board of directors decided to engage the services of
Warburg Dillon Read, a subsidiary of the Union Bank of Switzerland, to obtain
their advice in the analysis and search of options for strategic alliance.
MERCURY CAYMAN CO. III, LTD.
Mercury Cayman Co. III, Ltd., the Purchaser, is a newly formed limited
company organized under the laws of the Cayman Islands and a wholly owned
subsidiary of us organized to facilitate the acquisition of Gener. The
Purchaser has not carried on any material business activities other than in
connection with the acquisition of Gener. We own directly all of the
outstanding equity interest in the Purchaser. Until immediately prior to the
time that the Purchaser exchanges AES shares for Gener ADSs pursuant to our
offer, it is not expected that the Purchaser will have any significant assets
or liabilities or engage in material business activities other than those
incident to the transactions contemplated by our offer.
THE PROPOSED TRANSACTION; THE OFFERS
We intend to acquire, through the offers, control of, and a majority of
the equity interest in, Gener. We intend, as soon as practicable after
completion of our offer, to seek majority representation on Gener's board of
directors. Although we have not made any firm decision with respect to the
remaining members of Gener's board of directors, we believe that such other
members could include current members of Gener's board of directors and other
individuals not affiliated with us.
We are offering to exchange each Gener ADS for a fraction of an AES share
having a value of $16. This fraction of an AES share will be determined by
dividing $16 by the average of the high and low selling prices of one AES share
on the New York Stock Exchange, as reported on the New York Stock Exchange
Composite Transaction Tape, for each of the ten New York Stock Exchange trading
days ending on the second New York Stock Exchange trading day immediately prior
to the expiration of our offer. Our offer is subject to significant conditions
more fully described in the section captioned, "OUR OFFER--Conditions of Our
Offer". Based upon Gener's ownership description provided in Gener's Internet
site at http://www.gener.com, as of September 30, 2000, Gener ADSs represented
approximately 17.91% of the outstanding Gener shares. Simultaneously with our
offer, we are also making through a wholly owned subsidiary the Chilean offer
to purchase for cash 3,466,600,000 Gener shares, representing according to
Gener's 20-F approximately 75% of the outstanding Gener shares, excluding Gener
shares represented by Gener ADSs, at the Chilean Peso equivalent of
$0.235294118 per Gener share. The cash payment per Gener share in the Chilean
offer is equal to the value, over the measuring period, of the fraction of an
AES share offered in exchange for each Gener ADS pursuant to our offer, after
adjusting for the fact each Gener ADS represents 68 Gener shares.
Based upon the number of Gener ADSs outstanding according to Gener's
ownership description provided in Gener's Internet site at
http://www.gener.com, if we purchase all outstanding Gener ADSs
27
pursuant to our offer and the 3,466,600,000 Gener shares sought pursuant to the
Chilean offer, when added to the Gener shares and Gener ADSs we already own, we
would own approximately 80% of the outstanding Gener shares, including Gener
shares represented by Gener ADSs.
BACKGROUND AND REASONS FOR OUR OFFER
We have considered the possible acquisition of Gener in connection with
our overall investment in electric generation and distribution in Latin
America. In April 2000, following Gener's announcement that it was seeking a
strategic partner, we studied in greater detail an acquisition of a significant
interest in Gener. We also approached Copec regarding the possible acquisition
of the Gener shares held by Copec. On October 22, 2000, Gener announced the
proposal from the TotalFinaElf Group. On October 27, 2000, Copec publicly
announced its opposition to the TotalFinaElf proposal and announced its
intention to call a meeting of Gener shareholders to consider and vote upon the
amendments to Gener's Bylaws. Thereafter, we and our representatives met with
Copec to discuss Copec's view of the TotalFinaElf proposal and other matters.
On November 4, 2000, we entered into the Copec Letter and announced our
intention to make our offer and made the Chilean offer.
We believe that our offers will provide Gener with the long-term strategic
partner that Gener originally announced it was seeking to provide financial
resources, technology and business opportunities that would allow Gener to
continue growing. In addition, we believe our proposed transaction presents a
unique opportunity to improve the efficiency and productivity of Gener and to
reduce costs and enhance the quality of Gener's services in order to benefit
its shareholders, customers and communities it serves. We believe that the
proposed transaction will produce the following benefits:
o an opportunity for Gener shareholders to sell their shares;
o increased competitiveness;
o substantial cost savings;
o management strength with significant expertise in the Latin American and
global energy industries;
o financial strength;
o increased diversification into new markets; and
o increased market presence and opportunities.
28
OUR OFFER
TERMS OF OUR OFFER; EXPIRATION DATE
We are offering, upon the terms and subject to the conditions set forth in
this prospectus, to exchange a fraction of an AES share having a value of $16
for each Gener ADS that is validly tendered and not properly withdrawn prior to
the expiration of our offer. This fraction of an AES share will be determined
by dividing $16 by the average of the high and low selling prices per AES share
on the New York Stock Exchange, as reported on the New York Stock Exchange
Composite Transaction Tape, for each of the ten New York Stock Exchange trading
days ending on the second New York Stock Exchange trading day immediately prior
to the date on which our offer expires. We are making our offer through our
wholly owned subsidiary, the Purchaser, a limited company organized under the
laws of the Cayman Islands. You will not receive any fractional AES shares.
Instead, after taking into account all Gener ADSs you validly tender and do not
withdraw prior to the expiration of our offer, you will receive cash in an
amount equal to any fractional AES shares you would otherwise be entitled to
receive, expressed as a decimal and rounded to the nearest 0.01 of a share,
multiplied by the average of the high and low selling prices of AES shares as
reported on the New York Stock Exchange Composite Transaction Tape for each of
the ten New York Stock Exchange trading days ending on the second New York
Stock Exchange trading day immediately prior to the date on which our offer
expires, including any extensions of the expiration of our offer.
We have the right to terminate our offer if at any time on or prior to the
expiration of our offer the low per share selling price of AES shares on the
New York Stock Exchange is less than $50.
The term "expiration of our offer" shall mean 12:00 midnight, New York
City time, on Monday, December 11, 2000, unless we shall have extended the
period of time for which our offer is open, in which event the term "expiration
of our offer" shall mean the latest time and date at which our offer, as so
extended by us, shall expire.
Our offer is also subject to the conditions set forth in the section
captioned, "--Conditions of Our Offer". If any of these conditions is not
satisfied, we may terminate our offer and return all tendered Gener ADSs to
tendering ADS holders, extend our offer and, subject to withdrawal rights as
set forth in the section captioned "--Withdrawal Rights", retain all such Gener
ADSs until the expiration of our offer as so extended, waive such conditions
and, subject to any requirement to extend the period of time during which our
offer is open, accept all Gener ADSs validly tendered by the expiration date
and not withdrawn, or delay acceptance of Gener ADSs, subject to applicable
law, until the satisfaction or waiver of the conditions of our offer. For a
description of our right to extend the period of time during which our offer is
open and to amend, delay or terminate our offer, see the description in the
sections captioned "--Extension, Termination and Amendment" and "--Certain
Legal Matters; Regulatory Approvals".
We have delivered our offer materials to Citibank, N.A., as Depositary
under the Gener Deposit Agreement, and have requested Gener to make a request
to the Depositary to distribute our offer materials to beneficial holders of
Gener ADSs. We have also requested from the Gener a list of all holders of
Gener ADSs. Under the Gener Deposit Agreement, the Depositary has agreed to
distribute to holders of Gener ADSs materials as requested by Gener and to
provide Gener with a list of holders of Gener ADSs upon request. We intend to
use the list of holders of Gener ADSs to transmit our offer materials to
holders of Gener ADSs and to solicit their vote in favor of amendments to
Gener's Bylaws and against the TotalFinaElf proposal. We believe that Gener
should take such actions under the Gener Deposit Agreement to enable holders of
Gener ADSs to receive directly our offer materials.
EXTENSION, TERMINATION AND AMENDMENT
We reserve the right, at any time or from time to time, in our sole
discretion and regardless of whether or not any of the conditions specified in
the section captioned "--Conditions of Our Offer" shall have been satisfied, to
extend, for any reason, the period of time during which our offer is open and
to amend our offer in any respect by giving oral or written notice of such
extension or amendment to the Exchange Agent followed as promptly as
practicable by public announcement thereof. During any such
29
extension, all Gener ADSs previously tendered and not withdrawn will remain
subject to our offer, subject to the rights of a tendering holder to withdraw
its Gener ADSs in accordance with the procedures set forth in the section
captioned "--Withdrawal Rights". We can give no assurance that we will exercise
our right to extend or amend our offer.
The Chilean offer will be scheduled to occur as soon as practicable, and
in any event, within 12 Chilean trading days, after the effectiveness of the
amendments to Gener's Bylaws. Subject to applicable law and to the extent
practicable, our offer will be extended as necessary to cause our offer to
expire no later than 24 hours after the completion of the Chilean offer.
Subject to the SEC's applicable rules and regulations, we also reserve the
right, in our sole discretion, at any time or from time to time, (a) to delay
acceptance for exchange of or, regardless of whether we previously accepted
Gener ADSs for exchange, exchange of any Gener ADSs pursuant to our offer or to
terminate our offer and not accept or exchange any Gener ADSs not previously
accepted, or exchanged, upon the failure of any of the conditions of our offer
to be satisfied and (b) to waive any condition or otherwise amend our offer in
any respect, by giving oral or written notice of such delay, termination or
amendment to the Exchange Agent and followed as promptly as practicable by
public announcement thereof. In the case of an extension, any such announcement
will be issued no later than 9:00 A.M., New York City time, on the next
business day after the previously scheduled expiration date. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the offer be promptly sent to
stockholders in a manner reasonably designed to inform stockholders of such
change) and without limiting the manner in which we may choose to make any
public announcement, we assume no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
If we will make a material change in the terms of our offer or the
information concerning our offer, or if we will waive a material condition of
our offer, we will extend our offer to the extent required under the Exchange
Act. If, prior to the expiration date, we change the percentage of Gener ADSs
being sought or the consideration offered to you, that change will apply to all
holders whose Gener ADSs are accepted for exchange pursuant to our offer. If at
the time notice of that change is first published, sent or given to you, our
offer is scheduled to expire at any time earlier than the tenth business day
from and including the date that such notice is first so published, sent or
given, we will extend our offer until the expiration of that ten business-day
period. For purposes of our offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
A.M. through 12:00 midnight, New York City time.
EXCHANGE OF GENER ADSS; DELIVERY OF AES SHARES
Upon the terms and subject to the conditions of our offer, including, if
our offer is extended or amended, the terms and conditions of any such
extension or amendment, we will accept for exchange, and will exchange, Gener
ADSs validly tendered by the expiration date and not withdrawn as soon as
practicable after the later of the expiration date and the satisfaction or
waiver of the conditions set forth in the section captioned "--Terms of Our
Offer; Expiration of Our Offer". In addition, we reserve the right, in our sole
discretion and subject to applicable law, to delay the acceptance for exchange
or the exchange of Gener ADSs in order to comply in whole or in part with any
applicable law. For a description of our right to terminate our offer and not
accept the Gener ADSs for exchange or to delay acceptance of the Gener ADSs for
exchange. See the section captioned "--Extension; Termination and Amendment".
For purposes of our offer, we shall be deemed to have accepted for
exchange tendered Gener ADSs when, as and if we shall give oral or written
notice to the Exchange Agent of our acceptance of the tender of such Gener
ADSs. The Exchange Agent will deliver AES shares in exchange for Gener ADSs
pursuant to our offer and cash instead of fractional AES shares as soon as
practicable after receipt of such notice. The Exchange Agent will act as agent
for the tendering shareholders for the purpose of receiving AES shares and cash
to be paid instead of fractional AES shares from us and transmitting such stock
and cash to tendering shareholders. In all cases, exchange of Gener ADSs
tendered and accepted for exchange
30
pursuant to our offer will be made only after timely receipt by the Exchange
Agent of Gener ADRs for such Gener ADSs (or of a confirmation of a book-entry
transfer of such Gener ADSs, into the exchange agent's account at the
Book-Entry Transfer Facility, as defined in the section captioned "--Procedures
for Accepting Our Offer", a properly completed and duly executed ADS Letter of
Transmittal, or facsimiles thereof, and all other required documents.
Accordingly, delivery of the AES shares and payment of cash instead of
fractional AES shares may be made to tendering shareholders at different times
if delivery of the Gener ADSs and other required documents occurs at different
times. For a description of the procedure for tendering Gener ADSs pursuant to
our offer, see the section captioned "--Procedures for Accepting Our Offer".
Under no circumstances will interest be paid by us on the cash paid for
fractional shares, even if there is a delay in making the exchange and payment.
If we increase the value of the consideration to be paid for Gener ADSs
pursuant to our offer, we will pay such increased consideration for all Gener
ADSs exchanged pursuant to our offer.
If any tendered Gener ADSs are not accepted for exchange pursuant to our
offer for any reason, or if certificates are submitted for more Gener ADSs than
are tendered, certificates for such unexchanged or untendered Gener ADSs will
be returned (or, in the case of Gener ADSs tendered by book-entry transfer,
such Gener ADSs will be credited to an account maintained at the Book-Entry
Transfer Facility), without expense to the tendering shareholder, as promptly
as practicable following the expiration or termination of our offer.
CASH INSTEAD OF FRACTIONAL AES SHARES
We will not issue certificates representing fractional AES shares pursuant
to our offer. Instead, each tendering Gener ADS holder who would otherwise be
entitled to a fractional AES share will receive cash in an amount equal to such
fraction (expressed as a decimal and rounded to the nearest 0.01 of a share)
multiplied by the average of the high and low selling prices of AES shares as
reported on the New York Stock Exchange Composite Transaction Tape for each of
the ten New York Stock Exchange trading days ending on the second New York
Stock Exchange trading day immediately prior to the date on which our offer
expires, including any extensions of the expiration of our offer. You will not
receive any interest on the cash to be given for fractional AES shares, even if
there is a delay in making the exchange and payment.
WITHDRAWAL RIGHTS
Your tender of Gener ADSs pursuant to our offer is irrevocable, except
that Gener ADSs tendered pursuant to our offer may be withdrawn at any time
prior to the expiration of our offer, and, unless we previously accepted them
pursuant to our offer, may also be withdrawn at any time after January 11,
2001. If we extend the period of time during which our offer is open, are
delayed in accepting for exchange the Gener ADSs or are unable to exchange the
Gener ADSs pursuant to our offer for any reason, then, without prejudice to our
rights under our offer, the Exchange Agent may, on our behalf, retain all Gener
ADSs tendered and such Gener ADSs may not be withdrawn except as otherwise
provided in this section. Any such delay will be an extension of our offer to
the extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Exchange Agent at its address set forth on the back cover of this prospectus
and must specify the name of the person who tendered the Gener ADSs to be
withdrawn and the number of Gener ADSs to be withdrawn and the name of the
registered holder of Gener ADSs, if different from that of the person who
tendered such Gener ADSs. If the Gener ADSs to be withdrawn have been delivered
to the Exchange Agent, a signed notice of withdrawal with (except in the case
of Gener ADSs tendered by an Eligible Institution) signatures guaranteed by an
Eligible Institution must be submitted prior to the release of such Gener ADSs.
In addition, such notice must specify, in the case of Gener ADSs tendered by
delivery of certificates, the name of the registered holder (if different from
that of the tendering shareholder) and the serial numbers shown on the
particular Gener ADRs evidencing the Gener ADSs to be withdrawn or, in the case
of Gener ADSs tendered by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Gener
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ADSs. Withdrawals may not be rescinded, and Gener ADSs withdrawn will
thereafter be deemed not validly tendered for purposes of our offer. However,
withdrawn Gener ADSs may be tendered again by following one of the procedures
described in the section captioned "--Procedure for Accepting Our Offer" at any
time prior to the expiration of our offer.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by us, in our sole discretion,
which determination shall be final and binding. Neither we, the Purchaser, the
Dealer Manager, the Exchange Agent, the Information Agent nor any other person
will be under any duty to give notification of any defect or irregularity in
any notice of withdrawal or incur any liability for failure to give any such
notification.
PROCEDURE FOR ACCEPTING OUR OFFER
To tender Gener ADSs pursuant to our offer, either (a) a properly
completed and duly executed ADS Letter of Transmittal (or facsimile thereof)
and all other documents required by the ADS Letter of Transmittal must be
received by the Exchange Agent at its address set forth on the back cover of
this prospectus and either Gener ADRs for the Gener ADSs to be tendered must be
received by the Exchange Agent at such address or such Gener ADSs must be
delivered pursuant to the procedures for book-entry transfer described below
(and a confirmation of such delivery received by the Exchange Agent, including
an Agent's Message (as defined below) if the tendering shareholder has not
delivered an ADS Letter of Transmittal), in each case by the expiration date,
or (b) the guaranteed delivery procedure described below must be complied with.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility (as hereinafter defined) to and received by the Exchange
Agent and forming a part of a Book-Entry Confirmation which states that the
Book-Entry Transfer Facility has received an express acknowledgment from the
participant tendering the Gener ADSs which are the subject of such Book-Entry
Confirmation that such participant has received and agrees to be bound by the
terms of the ADS Letter of Transmittal and that we may enforce such agreement
against such participant.
Book-Entry Delivery. The Exchange Agent will establish an account with
respect to the Gener ADSs at The Depository Trust Company ("Book-Entry Transfer
Facility") for purposes of our offer within two business days after the date of
our offer, and any financial institution that is a participant in the system of
the Book-Entry Transfer Facility may make delivery of Gener ADSs by causing the
Book-Entry Transfer Facility to transfer such Gener ADSs into the Exchange
Agent's account in accordance with the procedures of the Book-Entry Transfer
Facility. However, although delivery of Gener ADSs may be effected through
book-entry transfer, the ADS Letter of Transmittal (or facsimile thereof)
properly completed and duly executed, together with any required signature
guarantees or an Agent's Message and any other required documents must, in any
case, be received by the Exchange Agent at one of its addresses set forth on
the back cover of this prospectus by the expiration date, or the guaranteed
delivery procedure described below must be complied with. DELIVERY OF THE ADS
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Partial Tenders. If fewer than all of the Gener ADSs delivered to the
Exchange Agent are to be tendered, the holder thereof should so indicate in the
ADS Letter of Transmittal by filling in the number of Gener ADSs which are to
be tendered in the box entitled "Number of ADSs Tendered" in the ADS Letter of
Transmittal. In such case, a new ADR for the untendered Gener ADSs represented
by the old ADR will be sent to the person(s) signing such ADS Letter of
Transmittal (or delivered as such person properly indicates thereon) as
promptly as practicable following the date the tendered Gener ADSs are
purchased.
ALL GENER ADSS DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN
TENDERED UNLESS OTHERWISE INDICATED. SEE INSTRUCTION 4 OF THE ADS LETTER OF
TRANSMITTAL.
Signature Guarantees. Except as otherwise provided in the next sentence,
all signatures on an ADS Letter of Transmittal must be guaranteed by a
financial institution (including most banks, savings and loan associations and
brokerage houses) which is a participant in the Securities Transfer Agents
Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP) or the
New York Stock Exchange
32
Medallion Program (MSP) (an "Eligible Institution"). Signatures on an ADS
Letter of Transmittal need not be guaranteed (a) if the ADS Letter of
Transmittal is signed by the registered holder of the ADSs tendered therewith
and such holder has not completed the box entitled "Special Issuance
Instructions" on the ADS Letter of Transmittal or (b) if such Gener ADSs are
tendered for the account of an Eligible Institution. See Instructions 1 and 5
of the ADS Letter of Transmittal.
IF THE GENER ADSS ARE REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
SIGNER OF THE ADS LETTER OF TRANSMITTAL, THEN THE TENDERED GENER ADRS MUST BE
ENDORSED OR ACCOMPANIED BY APPROPRIATE STOCK POWERS, SIGNED EXACTLY AS THE NAME
OR NAMES OF THE REGISTERED OWNER OR OWNERS APPEAR ON THE GENER ADRS, WITH THE
SIGNATURES ON THE GENER ADRS OR STOCK POWERS GUARANTEED AS AFORESAID. SEE
INSTRUCTIONS 1 AND 5 OF THE ADS LETTER OF TRANSMITTAL.
Guaranteed Delivery. If you desire to tender your Gener ADSs pursuant to
our offer and cannot deliver such Gener ADSs and all other required documents
to the Exchange Agent by the expiration date, or you cannot complete the
procedure for delivery by book-entry transfer on a timely basis, such Gener
ADSs may nevertheless be tendered if all of the following conditions are met:
o such tender is made by or through an Eligible Institution;
o a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by us is received by the Exchange
Agent by the expiration date; and
o the ADRs for such Gener ADSs (or a confirmation of a book-entry transfer
of such Gener ADSs into the Exchange Agent's account at the Book-Entry
Transfer Facility), together with a properly completed and duly executed
ADS Letter of Transmittal (or facsimile thereof) with any required
signature guarantee or an Agent's Message and any other documents
required by the ADS Letter of Transmittal, are received by the Exchange
Agent within six New York Stock Exchange trading days after the date of
execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, mail,
telegram, telex or facsimile transmission to the Exchange Agent and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice.
In all cases, exchange of Gener ADSs tendered and accepted for exchange
pursuant to our offer will be made only after timely receipt by the Exchange
Agent of Gener ADRs for such Gener ADSs (or of a confirmation of a book-entry
transfer of such Gener ADSs, into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed ADS Letter
of Transmittal (or facsimiles thereof) and all other required documents.
Accordingly, delivery of the AES shares and payment of cash instead of
fractional AES shares may be made to tendering shareholders at different times
if delivery of the Gener ADSs and other required documents occur at different
times.
THE METHOD OF DELIVERY OF GENER ADSS AND ALL OTHER REQUIRED DOCUMENTS,
INCLUDING THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK
OF THE TENDERING SHAREHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ENSURE A TIMELY DELIVERY. IF CERTIFICATES FOR GENER ADSS ARE
SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED.
Backup Withholding. Under the "backup-withholding" provisions of U.S.
federal income tax law, unless a tendering Gener ADS holder satisfies the
conditions described in Instruction 11 of the ADS Letter of Transmittal or is
otherwise exempt, the gross proceeds from the disposition of the Gener ADSs may
be subject to backup withholding tax at a rate of 31%. To prevent backup
withholding, each holder should complete, sign and deliver the Substitute Form
W-9 provided in the ADS Letter of Transmittal prior to receipt of any payment
or, if such holder is a Non-U.S. Holder (as defined below) not subject to
backup withholding under U.S. federal income tax law, such holder should
complete, sign and deliver an Internal Revenue Service Form W-8BEN (or other
applicable form) prior to receipt of any payment. See Instruction 11 of the ADS
Letter of Transmittal.
Tender of Gener ADSs and Representations by Holder. The tender of Gener
ADSs pursuant to any one of the procedures described above will constitute your
representation and warranty that (a) you own
33
the Gener ADSs being tendered within the meaning of Rule 14e-4 promulgated
under the Exchange Act, (b) the tender of such Gener ADSs complies with Rule
14e-4 and (c) you have the full power and authority to tender and assign the
Gener ADSs tendered, as specified in the ADS Letter of Transmittal. Our
acceptance to exchange the Gener ADSs tendered pursuant to our offer will
constitute a binding agreement between you and us upon the terms and subject to
the conditions of our offer.
Matters Concerning Validity, Eligibility and Acceptance. We will determine
all questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for exchange of any tender of Gener
ADSs in our sole discretion. All our determinations in these matters will be
final and binding. We reserve the absolute right to reject any or all tenders
of Gener ADSs determined by us not to be in proper form or the acceptance for
exchange of or exchange for which may, in the opinion of our counsel, be
unlawful. We also reserve the absolute right to waive any defect or
irregularity in any tender of Gener ADSs. Neither we, the Purchaser, the Dealer
Manager, the Exchange Agent, the Information Agent nor any other person will be
under any duty to give notification of any defect or irregularity in tenders or
incur any liability for failure to give any such notification.
IF YOU HAVE ANY QUESTIONS ABOUT THE PROCEDURE FOR TENDERING GENER ADSS,
PLEASE CONTACT THE INFORMATION AGENT OR THE DEALER MANAGER AT THEIR RESPECTIVE
ADDRESSES AND TELEPHONE NUMBERS SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.
CERTAIN TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax and Chilean
income tax consequences of the exchange of Gener ADSs pursuant to our offer.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF OUR OFFER
The following is a summary of certain U.S. federal income tax consequences
of our offer to holders of Gener ADSs whose Gener ADSs are tendered and
exchanged for AES shares pursuant to our offer. The discussion is for general
information only and does not purport to consider all aspects of U.S. federal
income taxation that might be relevant to holders of Gener ADSs. This
discussion is based on current law which is subject to change, possibly with
retroactive effect. The discussion applies only to persons who hold Gener ADSs
as capital assets and may not apply to Gener ADSs received pursuant to the
exercise of employee stock options or otherwise as compensation. The discussion
is not intended to address the U.S. federal income tax consequences of our
offer to certain categories of investors (such as banks, insurance companies,
tax-exempt organizations, dealers in securities or foreign currency, persons
holding Gener ADSs as part of a "straddle," "hedging" or "conversion
transaction," persons owning directly, indirectly or by attribution, currently
or during the past five years, Gener shares and/or Gener ADSs representing in
the aggregate 10% or more (by voting power or value) of the outstanding Gener
shares and certain expatriates or former long-term residents of the United
States) that may be subject to special treatment under the U.S. federal income
tax laws. The discussion does not address any aspect of state, local or foreign
tax law.
For purposes of this discussion, a "U.S. Holder" is a holder of Gener ADSs
that is for U.S. federal income tax purposes (i) a citizen or resident of the
United States, (ii) a corporation or other entity taxable as a corporation
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia, (iii) an estate the income of which is
subject to U.S. federal income taxation regardless of its source or (iv) a
trust if (a) a U.S. court can exercise primary supervision over the
administration of such trust and (b) one or more U.S. persons have the
authority to control all of the substantial decisions of such trust. In the
case of a partnership or other entity taxable as a partnership, any partner
described in any of (i) through (iv) of this paragraph is also generally
treated as a U.S. Holder. A "Non-U.S. Holder" is a holder of Gener ADSs that is
not a U.S. Holder.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, YOU SHOULD CONSULT YOUR TAX
ADVISOR REGARDING THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO YOU AND THE
PARTICULAR TAX EFFECTS TO YOU OF OUR OFFER, INCLUDING THE APPLICATION AND
EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS AND SUCH HOLDER'S ABILITY TO CLAIM
FOREIGN TAX CREDITS, IF ANY.
34
Ownership of Gener ADSs in General. For U.S. federal income tax purposes,
holders of Gener ADSs generally will be treated as the owners of Gener shares
represented by such Gener ADSs.
Exchange of Gener ADSs for AES Shares by U.S. Holders. The receipt of AES
shares in exchange of Gener ADSs pursuant to our offer will be a taxable
transaction for U.S. federal income tax purposes. Therefore, a U.S. Holder may
be liable for the payment of U.S. federal income tax in connection with our
offer without receiving cash with which to pay such tax. A U.S. Holder will
recognize gain or loss on the exchange of Gener ADSs for AES shares equal to
the difference, if any, between (i) the fair market value of the AES shares
received and any cash received in lieu of fractional AES shares by such U.S.
Holder and (ii) such U.S. Holder's tax basis in the Gener ADSs surrendered. YOU
ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO DETERMINING YOUR GAIN,
LOSS, AMOUNT REALIZED, TAX BASIS AND HOLDING PERIOD IN CONNECTION WITH GENER
ADSS TENDERED AND EXCHANGED FOR AES SHARES PURSUANT TO OUR OFFER.
In general, any gain or loss recognized upon the exchange will be treated
as long-term capital gain or loss if the Gener ADSs (or Gener shares
represented by such Gener ADSs) have been held for more than one year and
otherwise as short-term capital gain or loss. Long-term capital gain recognized
by individuals generally will be subject to a maximum U.S. federal income tax
rate of 20%. Certain limitations may apply to the use of capital losses.
Gain recognized by a U.S. Holder generally will be treated as U.S. source
income. Consequently, in the event that, contrary to the discussion below in
the section captioned, "--Certain Tax Considerations-- Chilean Income Tax
Consequences of Our Offer", a sale of the Gener ADSs is subject to Chilean
income tax, a U.S. Holder will not be permitted to use the foreign tax credit
for Chilean income tax imposed on the gain unless it can apply the credit
against U.S. federal income tax due on other income from foreign sources in the
appropriate foreign tax credit category or, alternatively, such holder may
deduct such Chilean income tax on its U.S. federal income tax return.
Exchange of Gener ADSs for AES Shares by Non-U.S. Holders. A Non-U.S.
Holder generally will not be subject to U.S. federal income or withholding tax
with respect to any gain realized on an exchange of Gener ADSs pursuant to our
offer unless (i) the gain is effectively connected with a trade or business (or
attributable to a permanent establishment under an applicable tax treaty) of
such holder within the United States or (ii) the gain is realized by an
individual Non-U.S. Holder who is present in the United States for at least 183
days in the taxable year of the sale and certain other conditions are met.
For a discussion of backup withholding tax consequences, see the section
captioned, "--Procedures for Accepting Our Offer-Backup Withholding" above.
CHILEAN INCOME TAX CONSEQUENCES OF OUR OFFER
The discussion set out below is based upon Chilean income tax laws
presently in force, including Ruling No. 324 of January 29, 1990 of the Chilean
Internal Revenue Service and other applicable regulations and rulings in force
on the date of our offer. The discussion is not intended as tax advice to any
particular holder, which can be rendered only in light of that holder's
particular tax situation. You are urged to consult your tax advisor with
respect to the specific tax consequences of our offer to you.
Under Chilean law, provisions contained in statutes such as tax rates
applicable to non-Chilean investors, the computation of taxable income for
Chilean purposes and the manner in which Chilean taxes are imposed and
collected may be amended only by another statute. In addition, the Chilean tax
authorities enact rulings and regulations of either general or specific
application and interpret the provisions of Chilean tax law. A Chilean tax may
not be assessed retroactively against taxpayers who act in good faith relying
on such rulings, regulations and interpretations, but Chilean tax authorities
may change said rulings, regulations and interpretations prospectively,
provided that a newly enacted statute introducing changes to existing law may
provide that one or more of such changes apply retroactively. There is no
income tax treaty in force between Chile and the United States of America.
Exchange of Gener ADSs by Non-Chilean Holders. Any gain recognized by an
individual who is not domiciled or resident in Chile or any legal entity that
is not organized under the laws of Chile and does not have a permanent
establishment in Chile (a "Non-Chilean Holder") upon the exchange of the Gener
ADSs for AES shares pursuant to our offer will not be subject to Chilean
taxation.
35
Exchange of Gener ADSs by Chilean Holders. Any gain recognized by any
person other than a Non-Chilean Holder (a "Chilean Holder") upon the exchange
of the Gener ADSs for AES shares pursuant to our offer will be subject to
Chilean income taxes by adding such gain to the net income of such Chilean
Holder and applying to such income the tax rate which would otherwise be
applicable on such Chilean Holder's income under Chilean law.
No Chilean stamp, issue, registration or similar taxes or duties will
apply to the sale of Gener ADSs pursuant to our offer.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, YOU SHOULD CONSULT YOUR TAX
ADVISOR REGARDING THE APPLICABILITY OF THE RULES DISCUSSED ABOVE TO YOU AND THE
PARTICULAR TAX EFFECTS TO YOU OF OUR OFFER.
PURPOSE OF THE OFFERS; PLANS FOR GENER
Purpose. The purpose of the offers is to enable us to acquire control of,
and at least a majority of the equity interest in, Gener. According to Gener's
20-F, the Gener ADSs and the Gener shares to be purchased pursuant to our offer
and the Chilean offer, together with the 659,900 Gener ADS and the 6,800 Gener
shares currently owned by us, represent approximately 80% of the outstanding
Gener shares, including Gener shares represented by Gener ADSs. We believe that
the acquisition of the majority equity interest in Gener is consistent with our
strategy in helping meet the world's need for electricity by participating in
competitive power markets as they develop by constructing new plants or by
acquiring and operating existing generation facilities or distribution systems
in these markets.
Gener's Bylaws currently provide that no person may own or vote, directly
or indirectly through related parties, more than 20% of the voting capital
stock of Gener and that Gener shall otherwise comply with the provisions of
Decree Law 3,500, including Chapter XII thereof. Our offer will not proceed
unless Gener shareholders approve the amendments to Gener's Bylaws to eliminate
the provisions of Articles 1 bis, 5 bis, 9 bis, 17 bis, 20 bis, 21 bis, 24, 27
bis and 29 bis and amend Article 35 to eliminate the reference to Decree Law
3,500.
The Gener shareholders' meeting will consider amending Gener's Bylaws to
eliminate Articles 1 bis, 5 bis, 9 bis, 17 bis, 20 bis, 21 bis, 24, 27 bis and
29 bis and to amend Article 35 to eliminate the reference to Decree Law 3,500.
Articles 1 bis and 35 provide that Gener is subject to Decree Law 3,500.
Articles 5 bis and 27 bis of Gener's Bylaws provide that no one person, or
group of related persons, may own or be entitled to vote, more than 20% of the
outstanding capital stock of Gener. Article 9 bis requires maintenance of
certain asset ratios set forth in Decree Law 3,500. Article 17 bis provides
that in exercising its duties the board of directors shall act within the
limits set forth in the investment and financing policies approved by the
shareholders pursuant to Article 20 bis. Article 21 bis requires shareholder
approval to sell assets identified by such investment and financing policies as
essential for the conduct of Gener's business as well as any change to the
investment and financing policies approved by shareholders. Article 29 bis
requires shareholders to receive prior to the annual meeting the report issued
by the inspector of accounts pursuant to Article 20 and the board of directors'
proposal with respect to Gener's investment and financing policies. Finally,
Article 24 provides that the vote of shareholders representing at least 75% of
the outstanding shares of Gener is required to amend Articles 1 bis, 5 bis, 9
bis, 14 bis, 17 bis, 20 bis, 21 bis, 24, 27 bis and 29 bis.
If Gener shareholders approve such amendments to Gener's Bylaws, under
Chilean law, Gener will no longer be subject to Decree law 3,500. As a result,
the size of the investments Chilean pension funds are permitted to maintain
will be less than if Gener contained to be subject to such laws. However, we
believe that in the event these Chilean pension funds sell their maximum pro
rata portion of Gener shares in the Chilean offer, the number of Gener shares
held by these Chilean pension funds will be sufficiently reduced to comply with
the ownership limits imposed by Chilean law and they will not be required to
sell their remaining Gener shares. The holders of at least 75% of the
outstanding Gener shares, including Gener shares represented by Gener ADSs,
must approve these amendments at a meeting of Gener shareholders.
36
Under Chilean law, holders of at least 10% of the outstanding capital
stock have the right to require a company to convene a meeting of its
stockholders. Under Chilean law, shareholders must be notified of such a
meeting at least 15 days prior to the date of the meeting and the meeting must
be held within 30 days of such request. In the Copec Letter, Copec has agreed
at our request to make a shareholder's request to call a Gener shareholders'
meeting in order to approve the amendments to Gener's Bylaws. We intend to
request that Copec take the action necessary to require the Gener board of
directors to convene the Gener shareholders' meeting shortly.
Pursuant to Chilean law, the amendments to Gener's Bylaws, even if adopted
by the holders of 75% of the outstanding Gener shares as required by Gener's
Bylaws, will not become effective until they are published and recorded. While
we can give no assurance as to this timing, our Chilean counsel has advised us
that these actions could be accomplished within 10 business days of the Gener
shareholders' meeting approving the amendments to Gener's Bylaws.
We intend, as soon as practicable after consummation of the offers, to
seek majority representation on Gener's board of directors. Under Chilean law
and Gener's Bylaws, the directors of Gener serve at the pleasure of
shareholders and may be removed and new directors may be elected by
shareholders. Under Chilean law and Gener's Bylaws, at least a majority of the
Gener shares present or represented is required to remove the current directors
and elect new directors. Based on Chilean law and Gener's Bylaws, we believe
that upon the exchange and purchase of Gener ADSs and Gener shares pursuant to
the offers, we will have the ability to appoint all the members of Gener's
board of directors. We intend that a majority of our designees would be AES
people. Although we have not made any firm decision with respect to the
remaining members of Gener's board of directors, we believe that such other
members could include current members of Gener's board of directors and other
individuals not affiliated with us.
Pursuant to Chilean law and Gener's Bylaws, subject to the matters
reserved to shareholders discussed below, Gener's board of directors is
empowered to manage the business and affairs of Gener. Among others, Gener's
board of directors has the power to call shareholders' meetings, propose
dividend policies, allow the subscription of authorized but unissued shares and
authorize actions regarding the assets of Gener.
Under Chilean law, if we acquire more than 662/3% of Gener's outstanding
shares, including Gener shares represented by Gener ADSs, we would be able to
make certain fundamental changes regarding Gener by ourselves. More
particularly, Chilean law and Gener's Bylaws provide that a vote of the holders
of at least 662/3% of the outstanding shares would be required to take any of
the following actions: (i) transformation, division or merger of Gener; (ii)
the amendment of its duration, currently Gener is a corporation of indefinite
duration, or the early dissolution; (iii) change of the domicile of Gener; (iv)
reduction in Gener's capital; (v) approval and valuation of capital
contributions made to Gener in property other than cash; (vi) amendment of the
provisions of Gener's Bylaws prescribing actions to be taken at shareholders'
meetings and limits on the powers of the board of directors; (vii) reduction of
the number of members of the board of directors of Gener; (viii) transfer of
all of Gener's assets and liabilities or all Gener's assets; (ix) changes in
the manner of distributing Gener's profits; and (x) the curing of technical
defects in Gener's organizational documents or any amendment thereto.
Chilean law provides for statutory withdrawal rights for minority Gener
shareholders where holders of at least 662/3% of the total shares outstanding
adopt resolutions at a shareholders' meeting authorizing certain of the
fundamental changes set forth above. Following the adoption of such a
resolution relating to a fundamental change by a majority of at least 662/3% of
total shares outstanding, Gener shareholders who opposed the adoption of such
resolution or who did not attend the shareholders' meeting at which such
resolution was adopted and who notified Gener of their opposition to the
adoption of the resolution would be considered dissenting shareholders entitled
to statutory withdrawal rights. Dissenting shareholders would have thirty days
from the date of the shareholders' meeting at which the resolution authorizing
a fundamental change was adopted to notify Gener of their dissent and their
intention to exercise their statutory withdrawal rights as a result of such
action. The board of directors of Gener would then have an additional thirty
days, measured from the expiration of the original thirty day period beginning
on the date of the shareholders' meeting at which the resolution was adopted,
to hold another
37
shareholders' meeting to consider the revocation of the resolution that
triggered the withdrawal right. If the board of directors did not call a second
meeting of the shareholders or the resolution were not revoked at such meeting,
all dissenting shareholders who previously notified Gener of their dissent
would have the right to compel Gener to purchase their Gener shares. Such
purchases would have to be made within sixty days of the original shareholders'
meeting at which the resolution was adopted at a price equal to the weighted
average trading price of Gener shares on stock exchanges in Chile during the
two months preceding the date of the original shareholders' meeting at which
the resolution authorizing the fundamental change was adopted.
Presently pending in Chile is a bill approved by the Chilean legislature
on November 7, 2000 which, if adopted in its current form, would require any
person, after acquiring control of 662/3% or more of the voting power as we are
planning to do in the offers, to conduct a tender offer for all remaining
shares of the company within 30 days following the acquisition of such control
at a price per share equal to the weighted average trading price of the
company's shares on stock exchanges in Chile during the two months preceding
the acquisition of such control. If the acquiring person failed to hold such a
tender offer, holders of remaining shares would be entitled to the statutory
withdrawal rights described above which, essentially, would allow them to sell
their stock to the company, then controlled by the acquiring person at a price
per share equal to the weighted average trading price of Gener shares on stock
exchanges in Chile during the two months preceeding the expiration of the
30-day period referred to above. We do not know if and when the pending bill
will become law. We also cannot predict whether the provisions of such law
would apply to the offers.
Plans for Gener. In connection with the offers, we have reviewed, and will
continue to review, on the basis of publicly available information relating to
Gener, various possible business strategies that we might consider in the event
that we acquire majority control of pursuant to the offers. In addition, if and
to the extent that we acquire control of Gener pursuant to the offers or we
otherwise obtain access to the books and records of Gener, we intend to conduct
a detailed review of Gener and its assets, corporate structure, dividend
policy, capitalization, operations, properties, policies, management and
personnel and, subject to applicable regulatory rules and regulations, to
consider and determine what, if any, changes would be desirable in light of the
circumstances which then exist. Although no firm decision has been made, we
anticipate the possibility that in connection with such review we will consider
possible sales of Gener assets which are not directly related to the generation
and transmission of electricity. In addition, because of AES's ownership of
generation and distribution assets in the Dominican Republic and local
regulatory constraints, we expect to seek to sell Gener's generation assets
located in the Dominican Republic.
Further, we intend to review the existing capital structure of Gener in
order to determine whether changes could be made which could benefit Gener's
shareholders. Following completion of the offers and completion of our review
of the matters set forth above and such other matters as we deem appropriate,
we intend over the next several years to seek to distribute to all Gener
shareholders any amounts that are determined to be in excess of Gener's then
current and reasonable anticipated future capital requirements. Any amounts to
be distributed will be determined by reference to such requirements, the
results of our review, the financial condition of Gener and the availability of
sufficient reserves and funds to effect such distributions. However, we can
give no assurance as to the amounts, if any, of any such distribution or the
timing thereof.
We intend following the purchase of Gener ADSs and Gener shares pursuant
to the offers to provide certain services to Gener under services agreements
that would be entered into between our affiliates and Gener. We have entered
into agreements of this type in connection with other international investments
made by us in other companies and businesses. Pursuant to these services
agreements, Gener would be provided with technical advice and assistance in
connection with, among others, operating and maintenance services for Gener's
electric distribution activity and capital improvements to Gener's facilities,
industrial and consumer safety measures, compliance with international
technical standards, strategic and financial planning, internal auditing
policies and accounting, invoicing and other automated systems. The services
agreements would enable Gener to benefit from our expertise as a result of our
38
operation of more than 80 electric distribution and industrial facilities in 14
countries. Such services would be rendered in exchange for a fee based on
Gener's revenues. The services agreements would be subject to applicable laws
and regulations. We believe these services will benefit Gener and all holders
of Gener ADSs and Gener shares.
Gener shareholders and holders of Gener ADSs do not have statutory
appraisal rights as a result of our offer and the Chilean offer. We currently
do not have any plans or intentions following completion of the offers to
propose any "second-step" merger or other business combination, but we reserve
the right to do so in the future.
On November 28, 2000, we entered into an agreement with TotalFinaElf, the
Total Agreement, which provides, among other things, that if we are successful
in acquiring at least a majority of the outstanding Gener shares, including
Gener shares represented Gener ADSs, as a shareholder of Gener we will take
action to cause Gener to enter into an agreement to sell to TotalFinaElf all of
the capital stock that Gener owns in Central Puerto S.A., Hidroneuquen S.A.,
Termoandes S.A. and Interandes S.A., the Electricity Companies, and other
interests in Argentina, the Acquired Interests, consisting of all of the
subordinated indebtedness owned by Gener and its affiliates of Hidroelectrica, a
59% owned subsidiary of Hidroneuquen, all of Gener's rights and obligations
under management contracts with the Electricity Companies, all of Gener's
interests in projects under study or development to develop electricity
transmission or generation facilities in Argentina and in the project under
study to develop facilities for transmitting electricity between the Yacyreta
region in Argentina and the Sao Paulo region in Brazil, for a purchase price of
$652 million in cash, subject to certain adjustments. Concurrently with such
sale, approximately $274 million of indebtedness of Termoandes and Interandes
would be repaid. If we purchase Gener shares in the offers but do not acquire a
majority of the outstanding Gener shares, including Gener shares represented by
Gener ADSs, we have agreed with TotalFinaElf that we will use our reasonable
best efforts to acquire at least a majority of the outstanding Gener shares,
including Gener shares represented by Gener ADSs. TotalFinaElf has agreed not to
take any action that would frustrate or prevent the consummation of the offers.
We and TotalFinaElf have agreed to cooperate and to use our reasonable best
efforts to support the consummation of the transactions contemplated by the
Total Agreement, including the offers. The sale to TotalFinaElf of the
Electricity Companies' shares and the Acquired Interests is subject to a number
of conditions, including satisfaction by TotalFinaElf of a due diligence review.
In addition, under the Total Agreement, TotalFinaElf has the right at its option
to purchase the Shares of all or any of the Electricity Companies and to
purchase or not purchase the Acquired Interests in the projects under study
and/or development. The Total Agreement provides for termination by the parties
in certain events, including upon the termination of the offers without the
purchase of any Gener shares or ADSs thereunder.
Except as otherwise disclosed in this prospectus, we do not have any
present plans or proposals that relate to or would result in any extraordinary
corporate transaction, such as a merger, reorganization, liquidation, or
similar transaction involving Gener or any of its subsidiaries, or a sale or
transfer of a material amount of assets of Gener or any of its subsidiaries or
any material changes in Gener's capitalization or dividend policy or any other
material changes in Gener's corporate structure or business or the composition
of Gener's board of directors or management.
The Copec Letter. The Copec Letter is filed as an exhibit to the
Registration Statement on Form S-4 of which this prospectus is a part and is
incorporated by reference in this prospectus. We believe the following summary
describes the material terms of the Copec Letter. However, we recommend that
you read carefully the complete Copec Letter for its terms and other
information that may be important to you.
No Solicitation. Copec has agreed in the Copec Letter:
o not directly or indirectly to request, initiate or encourage any
proposal relating to an alternative offer;
o not to participate in any discussions or negotiations or assist any
person with regard to an alternative offer; and
39
o to inform us immediately if Copec has learned about any alternative
offer.
Call of Gener Shareholders' Meeting; Voting. Copec has agreed to exercise
its right as a 10% or more Gener shareholder to demand that Gener's board of
directors call a meeting of Gener's shareholders to consider and take action on
the amendments to Gener's Bylaws to allow our offer and the Chilean offer to
take place. Copec has also agreed to vote the Gener shares held by it in favor
of the amendments to Gener's Bylaws.
Tender Into Our Chilean Offer. Copec has stated that it is willing to
tender its Gener shares pursuant to our Chilean offer.
Termination of Copec Letter.
o The Copec Letter has a term of 120 days and may be terminated if we
terminate our U.S. or Chilean offer.
o The Copec Letter may also be terminated by Copec if another more
advantageous offer for the purchase of Gener shares has been made and we
have not matched or improved upon the terms of such offer.
EFFECT OF OUR OFFER AND THE CHILEAN OFFER ON THE MARKET FOR GENER ADSS AND
GENER SHARES; REGISTRATION OF GENER ADSS UNDER THE EXCHANGE ACT; MARGIN
REGULATIONS
Effects on Market for Gener ADSs. The exchange of Gener ADSs pursuant to
our offer will reduce substantially the number of Gener ADSs that might
otherwise trade publicly and will reduce the number of holders of Gener ADSs.
In view of the number and value of the Gener ADSs and Gener shares that would
remain outstanding after completion of our offer and the Chilean offer and of
the number of Gener shares that would be available for deposit following the
completion of the Chilean offer, we do not believe that there will continue to
be a liquid market for the Gener ADSs.
The Gener ADSs are currently listed on the New York Stock Exchange. We do
not believe that the New York Stock Exchange listing for the Gener ADSs will be
maintained following the purchase of Gener ADSs pursuant to our offer.
The Gener ADSs are currently "margin securities" under the regulations of
the Board of Governors of the Federal Reserve System, Federal Reserve Board,
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of such securities. If the New York Stock Exchange listing
for the Gener ADSs is terminated following our purchase of Gener ADSs pursuant
to our offer as we anticipate, the Gener ADSs will no longer constitute margin
securities for the purposes of the Federal Reserve Board's margin regulations
and, therefore, could no longer be used as collateral for loans made by
brokers.
Effects on Market for Gener Shares. The purchase of Gener shares pursuant
to the Chilean offer will substantially reduce the number of Gener shares that
might otherwise trade publicly and may also reduce the number of holders of
Gener shares. In view of the number and value of the Gener shares that would
remain outstanding after completion of our offer and the Chilean offer, we
believe that there will continue to be a market for the Gener shares. However,
a reduction in publicly traded Gener shares could adversely affect the
liquidity and market value of the Gener shares.
The Gener shares are traded on the Santiago Stock Exchange. We recognize
that the existence of a liquid trading market for the Gener shares in Chile is
important to the holders of Gener shares. Consequently, our current strategy is
to cause Gener to maintain the listing of those Gener shares on the Santiago
Stock Exchange.
Registration of Gener ADSs under the Exchange Act. Gener ADSs are
currently registered under the Exchange Act. Such registration may be
terminated upon application of Gener to the SEC if the Gener ADSs are not
listed on a national securities exchange and there are fewer than 300 record
holders of the Gener ADSs resident in the United States. Termination of the
registration of the Gener ADSs under the Exchange Act would substantially
reduce the information required to be furnished by Gener
40
to holders of Gener ADSs and to the SEC and would make certain of the
provisions of the Exchange Act, such as the requirements of Rules 13e-3 and
13e-4 under the Exchange Act with respect to "going private" transactions, no
longer applicable to the Gener ADSs. Furthermore, "affiliates" of Gener and
persons holding restricted securities of Gener may be deprived of the ability
to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act. Following the purchase of Gener ADSs pursuant to our offer, we
expect to seek to terminate the registration of the Gener ADSs as we expect
there will then be fewer than 300 record holders of the Gener ADSs resident in
the United States.
CONDITIONS OF OUR OFFER
Notwithstanding any other provisions of our offer, we shall not be
required to accept for exchange and, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to our obligation to exchange for or return tendered securities
promptly after termination or withdrawal of our offer), we may postpone the
acceptance for exchange of, or exchange for, tendered Gener ADSs, and may, in
our reasonable judgment, extend, terminate or amend our offer as to any Gener
ADSs not then accepted for exchange if in our reasonable judgment the following
conditions have not been satisfied on or before the date of expiration of our
offer. If events occur prior to the expiration of our offer which constitutes
the failure of one of the conditions of our offer to be satisfied, we intend to
issue a press release and make appropriate filings with the SEC to inform ADS
holders of these events and our then current intentions with respect to either
waiving such failure of a condition of our offer or terminating our offer as a
result of such failure.
BYLAW CONDITION
The amendments to Gener's Bylaws must have been approved and must have
become effective under Chilean law.
TOTALFINAELF TRANSACTION CONDITION
We, in our sole discretion, must be satisfied that the proposed
TotalFinaElf transaction has been terminated or will not proceed.This condition
was satisfied on November 28, 2000, when TotalFinaElf terminated its agreement
with Gener and entered into the TotalFinaElf Agreement with us.
PURCHASE OF GENER SHARES IN THE CHILEAN OFFER CONDITION
We must have purchased at least one Gener share in the Chilean offer.
MINIMUM AES SHARE PRICE CONDITION
The low per share selling price of AES shares on the New York Stock
Exchange on any New York Stock Exchange trading day between the date of our
offer and the expiration of our offer, including any extensions thereof, will
be no less than $50. On each of November 22, 2000, December 4, 2000, December 5,
2000, December 6, 2000 and December 7, 2000, the low per share selling price of
AES shares on the New York Stock Exchange was less than $50.00. We have waived
the condition of our offer that the low per share selling price of AES shares on
the New York Stock Exchange not be below $50.00 on any date between the date of
our offer and the expiration of our offer for these five dates. We can offer no
assurances, however, that we will similarly waive this condition again if the
low per share selling price of AES shares on the New York Stock Exchange is
below $50.00 for any other date in the future. If the low per share selling
price of AES shares on any future New York Stock Exchange Trading Day prior to
the expiration of our offer is less than $50.00 and we waive this condition for
such date, we intend to issue a press release to that effect at the time of such
waiver.
HSR CONDITION
The waiting period, and any extension thereof, applicable to our offer
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
must have expired or been terminated and all required approvals under any other
applicable antitrust law must have been obtained. We announced on
41
November 22, 2000 that early termination of the waiting period under the HSR
Act with respect to the purchase of Gener ADSs and Gener shares pursuant to the
offers was granted by the U.S. Federal Trade Commission and the Antitrust
Division of the U.S. Department of Justice on November 20, 2000, thereby
satisfying this condition.
FERC CONDITION
We must have received an approval from the Federal Energy Regulatory
Commission prior to the acquisition of control of, and a majority of the equity
interest in, Gener under the Federal Power Act.
REGISTRATION STATEMENT EFFECTIVENESS CONDITION
The Registration Statement on Form S-4 of which this prospectus is a part
must have become effective under the Securities Act and not be the subject of
any stop order or proceedings seeking a stop order.
NYSE LISTING CONDITION
The AES shares issuable to you in our offer must have been approved for
listing on the New York Stock Exchange, subject to official notice of issuance.
GOVERNMENTAL ACTIONS CONDITION
o There shall not have been threatened, instituted or pending any action,
proceeding, application or claim before any court, governmental,
regulatory or administrative agency or commission, authority or tribunal,
domestic, foreign or supranational, or by any government, governmental
authority or other regulatory or administrative agency or commission,
domestic, foreign or supranational, or by any other person, domestic or
foreign, whether brought by Gener, an affiliate of Gener or any other
person, which:
o challenges or seeks to challenge the acquisition by us of the Gener
shares or Gener ADSs;
o restrains, delays or prohibits or seeks to restrain, delay or prohibit
us from making our offer or the Chilean offer;
o prohibits the performance by us or by anyone else of any of the
contracts or other arrangements entered into or proposed to be entered
into by us in connection with our offer or the Chilean offer;
o obtains or seeks to obtain any material damages or otherwise adversely
seeks to affect adversely the transactions contemplated by our offer
or the Chilean offer;
o prohibits or limits or seeks to prohibit or limit our ownership or
operation of all or any portion of our businesses or assets or Gener's
businesses or assets, including, without limitation, the businesses or
assets of our respective affiliates and subsidiaries;
o compels us or seeks to compel us to dispose of or hold separate all or
any portion of our own businesses or assets or Gener's businesses or
assets, including, without limitation, the businesses or assets of our
respective affiliates and subsidiaries;
o imposes or seeks to impose any limitation on our ability to conduct
our own business or own our assets as a result of the transactions
contemplated by our offer or the Chilean offer;
o makes or seeks to make the acceptance for exchange or payment,
purchase of, or exchange or payment for, some or all of the Gener ADSs
or Gener shares pursuant to our offer or the Chilean offer, illegal or
delays our ability to accept for exchange or payment, purchase of, or
exchange or payment for, some or all of the Gener ADSs or Gener shares
pursuant to our offer or the Chilean offer;
o restricts our ability, or renders us unable, to accept for exchange or
payment, exchange or purchase or pay for some or all of the Gener ADSs
or Gener shares pursuant to our offer or the Chilean offer;
42
o imposes or seeks to impose limitations on our ability or the ability
of any affiliate of ours effectively to acquire or hold or to exercise
full rights of ownership of the Gener ADSs or the Gener shares,
including, without limitation, the right to vote the Gener shares
purchased by us on an equal basis with all other Gener shares on all
matters properly presented to the shareholders of Gener;
o adversely affects Gener or its subsidiaries or affiliates or us, or
our affiliates or subsidiaries;
o might result in a diminution in the value of the Gener ADSs or Gener
shares or of the benefits expected to be derived by us as a result of
the transactions contemplated by our offer or the Chilean offer; or
o in our reasonable opinion and discretion, imposes or seeks to impose
any material condition which makes our offer or the Chilean offer,
more onerous, burdensome or disadvantageous to us.
CHANGE OF LAW CONDITION
o There shall not be any action taken, or any statute, rule, regulation,
order, decree or injunction shall be sought, proposed, enacted,
promulgated, entered, enforced or deemed or become applicable to our
offer or the Chilean offer, or, any other action shall not have been
taken, proposed or threatened, by any government, governmental authority
or other regulatory or administrative agency or commission or court,
domestic, foreign or supranational, that, in our reasonable judgment,
might, directly or indirectly, result in any of the consequences referred
to in the Governmental Actions Condition.
GENER ADVERSE CHANGE CONDITIONS
o No change, or any condition, event or development involving a
prospective change, shall have occurred or been threatened in the
business, properties, assets, liabilities, capitalization, shareholders'
equity, financial or other condition, operations, licenses, franchises,
permits, permit applications, tariffs or tariff structure, results of
operations or prospects of Gener or any of its subsidiaries or affiliates
which, in our reasonable judgment, is or may be adverse to Gener or any
of its subsidiaries or affiliates and we shall not have become aware of
any fact which, in our reasonable judgment, has or may have adverse
significance with respect to either the value of Gener or any of its
subsidiaries or affiliates or the value to us of the Gener shares or
Gener ADSs.
o We shall not have become aware:
o that any material contractual right of Gener or any of its
subsidiaries or affiliates shall be impaired or otherwise adversely
affected or that any material amount of indebtedness of Gener or any
of its subsidiaries shall become accelerated or otherwise become due
prior to its stated due date, in either case with or without notice or
the lapse of time or both, as a result of the transactions
contemplated by our offer or the Chilean offer;
o of any covenant, term or condition in any of Gener's or any of its
subsidiaries' instruments or agreements that are or may be materially
adverse to the value of the Gener shares or Gener ADSs in our hands;
or
o of any material fact not previously disclosed publicly by Gener that
might adversely affect Gener or any of its respective subsidiaries or
us that might result in a diminution in the value of the Gener ADSs or
Gener shares or of the benefits expected to be derived by us as a
result of the transactions contemplated by our offer or the Chilean
offer.
ADVERSE MARKET AND NATIONAL AND INTERNATIONAL CHANGES CONDITION
o There shall not have occurred:
o any general suspension of trading in, or limitation on prices for,
securities on any United States national securities exchange, Chilean
securities exchange or the United States Over-the-Counter market;
43
o a declaration of a banking moratorium or any suspension of payment in
respect of banks in the United States or Chile, whether mandatory or
not mandatory;
o any limitation, whether or not mandatory, by any United States or
Chilean governmental authority or agency on, or other event which, in
our sole judgment, might affect the extension of credit by banks or
other lending institutions;
o commencement of a war, armed hostilities or other national or
international crisis directly or indirectly involving Chile or the
United States;
o a change or development involving a prospective change in:
o the valuation of the Chilean Peso relative to the U.S. dollar; or
o exchange controls, currency exchange rates or any suspension of, or
limitation on, the markets for currency;
o any change in taxation, including any stock transfer duty or
withholding affecting the Gener ADSs or Gener shares;
o any change or development in foreign investment regulation in Chile,
the effect of which change or development is to make it, in our
reasonable judgment, impracticable to proceed with our offer or the
Chilean offer on the terms and in the manner contemplated;
o any adverse change in the market price of the Gener shares or Gener
ADSs or in the general political, market, economic, regulatory or
financial conditions in Chile that could have a material adverse
effect on Gener's businesses, operations or prospects or the trading
in or the value of the Gener shares or Gener ADSs; or
o in our reasonable judgment, a material acceleration or worsening of
any of the economic, political or other national or international
conditions existing at the time of the commencement of our offer or
the Chilean offer.
CHANGES IN GENER CAPITAL STOCK CONDITION
o Gener or any subsidiary of Gener shall not have, at any time after the
announcement of our offer or the Chilean offer:
o issued, distributed, pledged, sold or authorized, proposed or
announced the issuance of or sale, distribution or pledge to any
person of :
o any shares of its capital stock;
o the capital stock of any of its subsidiaries;
o securities convertible into any such capital stock;
o any rights, warrants or options to acquire any such securities or
any other securities of Gener or its subsidiaries; or
o any other securities in respect of, in lieu of, or in substitution
for, Gener shares outstanding on November 3, 2000;
o declared, paid or proposed to declare or pay any dividend or
distribution on any Gener shares, other than the regular dividends on
the Gener shares not in excess of the amount per share, and with
record and payment dates, in accordance with recent practice, or on
any other security;
o issued, authorized, recommended or proposed the issuance or payment of
any other distribution in respect of the Gener shares, whether payable
in cash, securities or other property;
o altered or proposed to alter any material term of any outstanding
security;
44
o incurred or announced its intention to incur any debt other than in
the ordinary course of business and consistent with past practice or
any debt containing covenants, which are unusual for Gener or more
onerous, burdensome or disadvantageous than those customarily agreed
by Gener;
o issued, sold or authorized or announced or proposed the issuance of or
sale to any person of:
o any debt securities;
o any securities convertible into or exchangeable for debt
securities; or
o any rights, warrants or options entitling the holder thereof to
purchase or otherwise acquire any debt securities;
o split, combined or otherwise changed, or authorized or proposed the
split, combination or other change of the Gener shares or its
capitalization;
o authorized, recommended, proposed or entered into or publicly
announced its intent to enter into any merger, consolidation,
liquidation, dissolution, business combination, joint venture,
strategic alliance or similar arrangement, acquisition or disposition
of a material amount of assets or securities, any material change in
its capitalization, any waiver, release or relinquishment of any
material contract rights or comparable rights of Gener or any of its
subsidiaries or affiliates or any agreement contemplating any of the
foregoing or any comparable event not in the ordinary course of
business, or taken any action to implement any such transaction
previously authorized, recommended, proposed or publicly announced;
o amended or proposed or authorized any amendments to Gener's Bylaws,
other than as contemplated by the amendments to Gener's Bylaws on
which our offer is conditioned; or
o agreed in writing or otherwise to take any of the foregoing actions or
we shall have learned about any such action which has not previously
been publicly disclosed by Gener.
ALTERNATIVE PROPOSAL CONDITION
o There shall not have been publicly proposed to be made nor shall we have
learned that any other person or entity (including Gener or any of its
subsidiaries or affiliates) or "group," within the meaning of Section
13(d)(3) of the Exchange Act:
o has made or intends to make a tender offer or exchange offer for Gener
shares or Gener ADSs representing in the aggregate at least fifteen
percent of the outstanding Gener shares;
o shall have acquired or proposed to acquire beneficial ownership of
more than ten percent of any class or series of capital stock of
Gener, including the Gener shares, through the acquisition of stock,
the formation of a group or otherwise;
o shall have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of more than ten percent of
any class or series of capital stock of Gener, including the Gener
shares, other than acquisitions for bona fide arbitrage purposes only;
o No person or entity (including Gener or any of its subsidiaries or
affiliates) or "group" within the meaning of Section 13(d)(3) of the
Exchange Act who owns 5% or more as of the date of our offer or the
Chilean offer:
o shall have acquired an additional two percent or more of any class or
series of capital stock of Gener, including the Gener shares;
o shall have entered into a definitive agreement or an agreement in
principle or made a proposal with respect to a tender or exchange
offer for some or all the Gener shares or a merger, consolidation or
other business combination or joint venture, strategic alliance or
similar arrangement with or involving Gener or any of its subsidiaries
or affiliates; or
o shall have formed or become a member of a group with the purpose or
effect of influencing the management or operations of Gener or to
elect a number of directors of Gener equal to their proportionate
ownership in Gener.
45
AGREEMENT WITH GENER CONDITION
o We shall not have:
o reached an agreement or understanding with Gener that our offer or
the Chilean offer shall be terminated or amended; or
o entered into a definitive agreement or an agreement in principle
with Gener relating to a business combination or joint venture,
strategic alliance or similar arrangement or a purchase of Gener
shares, Gener ADSs or assets of Gener.
TERMINATION OF THE CHILEAN OFFER CONDITION
o The Chilean offer shall not have been terminated.
These conditions are for our sole benefit and may be asserted by us in our
reasonable judgment regardless of the circumstances, including any action or
omission by us, giving rise to any such conditions or may be waived by us in our
reasonable discretion in whole or in part at any time and from time to time. No
failure by us at any time to exercise any of the foregoing rights shall be
deemed a waiver of any of these rights. Any determination by us concerning any
condition or event described in this section shall be final and binding.
CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
Hart-Scott-Rodino. Under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, the HSR Act, and the rules that have been promulgated thereunder, some
acquisitions may not be consummated unless information has been furnished to
the Antitrust Division of the Department of Justice and the Federal Trade
Commission and some waiting period requirements have been satisfied. The
acquisition of Gener shares pursuant to the offers is subject to the HSR Act.
On November 6, 2000, we filed with the Antitrust Division and the Federal Trade
Commission a Notification and Report Form under the HSR Act with respect to the
offers. Under the applicable provisions of the HSR Act, the purchase of Gener
shares under the offers cannot be consummated until the expiration or early
termination of a waiting period that began on November 6, 2000. The initial
waiting period under the HSR Act is 30 days. Either the Federal Trade
Commission or the Antitrust Division may issue a request for additional
information or documentary material, which would extend the waiting period
until 20 days after we substantially comply with such request.
Some large Gener stockholders, those that would receive more than $15
million in AES shares, may be required to make separate filings with the
Federal Trade Commission and Antitrust Division under the HSR Act and the
related rules in conjunction with the receipt of AES shares. If you must make
such a filing, you will then be required to observe applicable waiting periods
under the HSR Act and the related rules before receiving AES shares. If you are
obligated to make such a filing, we will deposit the AES shares to be
exchanged, pursuant to the applicable rules, pending expiration or early
termination of the waiting period. We announced on November 22, 2000 that early
termination of the waiting period under the HSR Act with respect to the
purchase of Gener ADSs and Gener shares pursuant to the offers was granted by
the U.S. Federal Trade Commission and the Antitrust Division of the U.S.
Department of Justice on November 20, 2000.
The acquisition of Gener shares may also require notification to the
competition and other regulatory authorities of various countries in which both
we and Gener conduct business, depending on the requirements in such countries.
Although we can give no assurance, except as otherwise set forth in our offer
we anticipate receiving all required clearances under foreign competition laws
on a timely basis.
Federal Power Act. Section 203 of the Federal Power Act provides that no
public utility shall sell or otherwise dispose of its jurisdictional facilities
or, directly or indirectly, merge or consolidate such facilities with those of
any other person or acquire any security of any other public utility without
first having obtained authorization from the Federal Energy Regulatory
Commission. The approval of the FERC is required in order to complete our
acquisition of Gener shares in the offers because of Gener's
46
50% interest in MEGA, a U.S. power marketer. Under Section 203 of the Federal
Power Act, the FERC will approve an acquisition if it finds such acquisition
"consistent with the public interest." In reviewing an acquisition, the FERC
generally evaluates: (i) whether the acquisition will adversely affect
competition, (ii) whether the acquisition will adversely affect customer rates
and (iii) whether the acquisition will impair the effectiveness of regulation.
AES has filed the appropriate application with the FERC requesting that the
FERC approve the acquisition under Section 203 of the Federal Power Act.
Although we cannot give any assurances, we anticipate that we will receive FERC
clearance on a timely basis.
Chilean Corporate Law. Under Article 54 of the Chilean Securities Market
Law, any person or group of persons intending to take control of a publicly
traded Chilean company must announce such intent to the public by publishing in
a Chilean national newspaper a notice of intention to acquire control that
contains the information prescribed by Article 54 and duly notifying the
Superintendencia de Valores y Seguros, SVS, and the stock exchanges in Chile on
which the securities of such company are traded. In accordance with Article 54,
on November 4, 2000 we published in the El Mercurio of Santiago a notice of
intention to acquire control of Gener as required by Chilean law, and we also
notified the SVS, the Santiago Stock Exchange and the other stock exchanges in
Chile on November 3, 2000.
In accordance with Article 12 of the Securities Market Law, we must report
the results of the offers to the SVS and the Santiago Stock Exchange within
five days of the date of each of our offer and the Chilean offer. In addition,
we must give notice of the acquisition of shares representing 10% or more of
the ownership interest in Gener and any shares in excess of 10% within five
days after the acquisition. We intend to take, or cause to be taken, all steps
necessary to comply with Article 12 of the Chilean Securities Market Law.
Chilean Antitrust and Competition Law. We are not required under Chilean
law to notify the Chilean Antitrust Authority, the CAA, of the offers. The CAA
does, however, have broad authority to investigate any intended transaction
that the CAA determines is likely to cause an adverse effect on, or lessen,
competition. Although we do not believe that the CAA will investigate, we
cannot give any assurance that the CAA will not determine that our offer and
the Chilean offer are anticompetitive and subject to the scrutiny of the CAA.
Other. Based upon our examination of publicly available information
concerning Gener, it appears that Gener and its subsidiaries own property and
conduct business in a number of foreign countries in addition to those
described above. In connection with the acquisition of Gener shares and Gener
ADSs pursuant to our offer and the Chilean offer, the laws of certain of those
foreign countries may require the filing of information with, or the obtaining
of the approval of, governmental authorities therein. We intend to seek further
information regarding the applicability of any such laws and currently intend
to take such action as they may require, but we cannot give any assurance that
such approvals will be obtained. If any action is taken prior to completion of
our offer by any such government or governmental authority, we may not be
obligated to accept for payment or pay for any tendered Gener shares or ADSs.
General. Based on our examination of publicly available information filed
by Gener with the SEC and other publicly available information concerning
Gener, except as discussed in this section and elsewhere in this prospectus, we
are not aware of:
o any governmental license or regulatory permit that appears to be
material to Gener's business that might be adversely affected by our
acquisition of Gener ADSs or shares as contemplated in our offer or the
Chilean offer;
o any approval or other action by any government or governmental
administrative or regulatory authority or agency, domestic or foreign,
that would be required for the acquisition or ownership of Gener ADSs or
shares by us as contemplated in our offer and the Chilean offer;
o any approval or other action by any government or governmental
administrative regulatory authority or agency, domestic or foreign; or
o any consent, waiver or other approval that would be required as a result
of or in connection with our offer and the Chilean offer.
47
Should any such approval or other action be required, we currently intend
to seek such approval or take such other action. We cannot predict whether we
would be required to delay the acceptance for payment of or payment for Gener
ADSs tendered pursuant to our offer pending the outcome of any such matter. We
can give no assurance that we would be able to obtain any such approval or take
such other action, if needed.
RELATIONSHIPS WITH GENER
Ownership of Gener Shares and Other Transactions. As of the date of our
offer, we beneficially own 659,900 Gener ADSs and 6,800 Gener shares,
representing less than 0.8% of the outstanding Gener shares as reported in
Gener's 20-F. All such Gener ADSs were acquired in open market transactions on
the New York Stock Exchange. The 6,800 Gener shares were acquired as a result
of the withdrawal of Gener shares from the Depositary. Except as set forth on
Schedule II, neither AES nor any of its directors, executive officers or
affiliates is the beneficial owner of any Gener ADSs or Gener shares. See
Schedule II of this prospectus for further information with respect to our
purchases of Gener ADSs.
On December 1, 2000, we effected the sale of 29,920,000 Gener shares in a
block trade on the Santiago Stock Exchange. All of these shares were acquired
as a result of the withdrawal of shares from the Depositary. The net price per
share in this transaction was the Chilean peso equivalent of U.S. $0.221053655.
Our total net proceeds from this transaction were U.S. $6,613,925.37. Following
this transaction, we are the beneficial owner of 219,900 Gener ADSs and 6,800
Gener shares.
In May 1999, through two of our subsidiaries, we entered into an
agreement, negotiated at arms-length, with Merchant Energy Company of the
Americas, Inc., or MEGA, a subsidiary of Gener in the U.S. Pursuant to this
agreement we agreed to pay MEGA consistent with customary industry practice an
annual fee of $1 million for its services in assisting us in locating customers
for our natural gas and electricity on "spot" or other short-term sales. Under
the agreement we are obligated to pay MEGA additional fees, subject to a $1
million minimum, for arranging certain long-term agreements with customers. As
a result of two such long-term agreements we achieved with the assistance of
MEGA, we have agreed to pay MEGA a total bonus of $2.5 million over the next
five years. MEGA has exercised its right to terminate the agreement as of
November 26, 2000. Except as described above, we have had no other
relationships with MEGA.
Except as otherwise described in this prospectus, neither we nor the
Purchaser, nor, to the best of our knowledge, any of the persons listed in
Schedule I to this prospectus, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of Gener,
including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or voting of such securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
loans, guarantees of profits, division of profits or loss or the giving or
withholding of proxies. Except as set forth in this prospectus, since January
1, 1998, neither we nor Purchaser nor, to the best of our knowledge, any of the
persons listed in Schedule I hereto, has had any business relationship or
transaction with Gener or any of its executive officers, directors, or
affiliates that is required to be reported under the rules and regulations of
the SEC applicable to our offer.
SOURCE AND AMOUNT OF FUNDS
We estimate that the total amount of funds required to purchase the Gener
shares pursuant to the Chilean offer and to pay costs and expenses related to
the offers will be approximately $845 million.
We plan to obtain the funds to purchase the Gener shares pursuant to the
Chilean offer and to pay related fees and expenses by the time Gener shares are
purchased in the Chilean offer. We are considering a variety of alternatives to
obtain such funds, including borrowings and issuances of debt, equity and
convertible securities by us and our subsidiaries. We believe that such funds
can be obtained on a timely basis.
FEES AND EXPENSES
Except as set forth in this section, we will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
Gener ADSs pursuant to our offer.
48
Deutsche Bank Securities Inc. is acting as Dealer Manager in connection
with our offer and as financial advisor to us in connection with the proposed
acquisition of a controlling interest in Gener. Deutsche Securities Corredores
de Bolsa Limitada, an affiliate of Deutsche Bank Securities Inc., is acting as
Dealer Manager in connection with our Chilean offer, and as Chilean proxy
solicitation coordinator in connection with our solicitation of Gener
shareholder votes in favor of the amendments to Gener's Bylaws and against the
TotalFinaElf proposal. Deutsche Bank Securities Inc. will receive customary
compensation for acting in the foregoing capacities. Such compensation will not
exceed $5.5 million in the aggregate. We also have agreed to reimburse Deutsche
Bank Securities Inc. for its out-of-pocket expenses, including the fees and
expenses of legal counsel and other advisors, incurred in connection with its
engagement, and to indemnify Deutsche Bank Securities Inc. and certain related
persons against certain liabilities and expenses in connection with its
engagement, including certain liabilities under the federal securities laws. In
the ordinary course of business, Deutsche Bank Securities Inc. and its
affiliates may actively trade the debt and equity securities of Gener for their
own account and for the accounts of customers, and accordingly, may at any time
hold a long or short position in such securities.
We have retained ChaseMellon Shareholder Services, LLC to act as the
Exchange Agent in connection with our offer. The Exchange Agent has not been
retained to make solicitations or recommendations in its role as Exchange
Agent. The Exchange Agent will receive reasonable and customary compensation
for its services, will be reimbursed for certain reasonable out-of-pocket
expenses and will be indemnified against certain liabilities in connection
therewith, including certain liabilities under the U.S. federal securities
laws.
We have retained D.F. King & Co., Inc. to act as the Information Agent in
connection with our offer. The Information Agent may contact holders of Gener
ADSs by mail, telephone, telex, telegraph and personal interviews and may
request brokers, dealers and other nominee shareholders to forward materials
relating to our offer to beneficial owners. The Information Agent will also
assist us in soliciting the votes of Gener ADS holders and shareholders in
favor of the amendments to Gener's Bylaws and against the proposed TotalFinaElf
transaction. The Information Agent will receive reasonable and customary
compensation for its services, will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities in
connection therewith, including certain liabilities under the U.S. federal
securities laws.
ACCOUNTING TREATMENT
The acquisition of Gener shares by AES in the Chilean offer and the Gener
shares represented by Gener ADSs acquired in our offer will be accounted for
under the purchase method of accounting under U.S. generally accepted
accounting principles, which means that Gener's results of operations will be
included with ours from the closing date and its consolidated assets and
liabilities will be recorded at their fair values at the same time except for
the minority interest in the assets and liabilities which will remain at
historical cost.
STOCK EXCHANGE LISTING
AES shares are listed on the New York Stock Exchange. We will make an
application as necessary to list on the New York Stock Exchange the shares that
we will issue and exchange pursuant to our offer.
49
THE CHILEAN OFFER
Simultaneously with the commencement of our offer, we are conducting an
auction transaction on the Santiago Stock Exchange in Chile known as a "remate"
that we refer to as the Chilean offer. In the Chilean offer we are offering to
purchase 3,466,600,000 Gener shares representing approximately 75% of the
outstanding Gener shares, excluding Gener shares represented by ADSs, at the
Chilean Peso equivalent of $0.235294118, payable in cash, per Gener share. The
cash payment per Gener share in the Chilean offer is the same, after adjusting
for the 68 Gener shares represented by each Gener ADS, as the value of the
fraction of an AES share offered in exchange for each Gener ADS pursuant to our
offer. Although stated in U.S. dollars, this price will be paid to tendering
Gener shareholders in Chilean Pesos at the average daily observed exchange rate
between the Ch$ and the dollar, as reported by the Central Bank of Chile for
each of the ten business days immediately prior to the third trading day
preceding the date on which the "remate" occurs.
The Chilean offer is conditioned upon (i) all of the conditions to our
offer having been satisfied or waived by us for purposes of the Chilean offer,
even if we do not waive such conditions for purposes of our offer, (ii) Gener
shareholder approval of the amendments to Gener's Bylaws, (iii) the number of
Gener shares we are able to purchase in the Chilean offer, representing at
least a majority of the outstanding Gener shares and (iv) that we have obtained
funds sufficient to purchase the maximum number of shares we are offering to
purchase in the Chilean offer and pay all fees and expenses incurred in
connection with the offers. We announced on November 22, 2000 that we had
waived the financing condition in the Chilean offer.
In general, Gener shareholders who wish to sell their Gener shares in a
stock "remate" must deliver to a Chilean broker eligible to participate in the
Chilean offer their shares and instructions as to the price at which the Gener
shares may be sold. In the Chilean offer:
o all Gener shares will be required to be tendered through a single
Chilean broker;
o the scheduled time for the Chilean offer will be the opening of business
on the designated day;
o tender rights will be terminated for all holders of Gener shares (other
than stock brokers as to which tender rights will terminate as of 18:00
Santiago, Chile time) as of 14:00, Santiago Chile time on the third
trading day and withdrawal rights will be terminated for all holders of
Gener shares at 18:00 Santiago, Chile time on the third trading day prior
to the Chilean auction; and
o we will agree not to purchase Gener shares at a price lower than that
specified in the Chilean offer.
The single Chilean broker requirement will result in de facto prorationing
in the Chilean offer because the tendering Chilean broker will tender, as the
first allotment, the maximum number of Gener shares sought by us in the Chilean
offer. We will then buy the first allotment of Gener shares and will not
purchase additional Gener shares in the Chilean offer. As all Gener shares will
have been tendered by the same Chilean broker at the same price, the Chilean
broker will divide the proceeds of the sale pro-rata among the tendering Gener
shareholders. We will not purchase Gener shares in the Chilean offer in a
manner that would fail to result in this effective prorationing among the
tendering Chilean holders.
50
MARKET PRICES AND DIVIDENDS
AES shares are currently traded on the New York Stock Exchange under the
symbol "AES". Shares of Gener's common stock are traded in the New York Stock
Exchange in the form of Gener ADSs, where each Gener ADS represents 68 shares
of Gener common stock. The Gener ADSs are evidenced by ADRs and Gener's trading
symbol on the New York Stock Exchange is "CHR". Shares of Gener's common stock
are also traded on the Santiago Stock Exchange under the symbol "GENER". The
following tables set forth, for the periods indicated, (1) the high and low
closing sales prices for AES common stock as reported by the New York Stock
Exchange, (2) the high and low closing sales prices of Gener's common stock as
reported on the Santiago Stock Exchange and (3) the quarterly high and low
daily closing prices of Gener ADS on the New York Stock Exchange for the
indicated periods, all as reported by Bloomberg L.P. The following Chilean
Pesos information reflects historical amounts at the trade dates and has not
been restated in constant Pesos.
Price Range of AES and Gener Common Stock and Gener ADSs
GENER AES
------------------------------------------------- -----------------------
SANTIAGO STOCK
EXCHANGE PER SHARE NYSE PER GENER ADS NYSE PER SHARE
----------------------- ----------------------- -----------------------
CH$ $ $
LOW HIGH LOW HIGH LOW HIGH
---------- ---------- ---------- ---------- ---------- ----------
1998
First Quarter .......... 125.0 158.0 18.94 24.50 19.94 26.94
Second Quarter ......... 121.0 158.0 18.06 23.94 23.13 28.84
Third Quarter .......... 75.1 138.0 10.81 20.56 12.13 27.13
Fourth Quarter ......... 96.5 138.0 13.94 19.25 16.25 23.69
1999
First Quarter .......... 92.0 130.5 13.00 18.38 16.25 24.47
Second Quarter ......... 132.5 158.0 17.50 22.25 18.78 29.44
Third Quarter .......... 120.0 158.0 15.25 20.63 26.97 33.19
Fourth Quarter ......... 108.0 127.0 13.75 16.06 25.63 37.38
2000
First Quarter .......... 99.0 126.0 13.06 16.69 34.81 44.09
Second Quarter ......... 99.0 115.5 12.81 15.00 36.81 48.88
Third Quarter .......... 104.5 119.5 12.56 15.25 46.19 69.14
Fourth Quarter (through
October 30) .......... 90.0 108.0 10.63 13.13 51.00 70.63
On November 2, 2000, the last full day of trading on the New York Stock
Exchange prior to the public announcement of our offers, the reported closing
sales price of the AES shares and Gener ADSs on the New York Stock Exchange and
the Gener shares on Santiago Stock Exchange were $60.875, $12.125 and Ch$103,
respectively.
AES Share Dividends. No cash dividends have been declared or paid on AES
common stock since December 22, 1993, in order to preserve capital for AES
equity investments in projects.
The ability of AES to declare and pay dividends is dependent, among other
things, on:
o the ability of AES's project subsidiaries to declare and pay dividends
and otherwise distribute cash to AES;
o the ability to service its debt; and
o the ability to meet certain criteria for paying dividends under its
corporate credit facility and under existing indentures related to its
debt securities.
51
The ability of the AES's project subsidiaries to declare and pay cash
dividends to AES is subject to certain limitations in the project loans,
governmental provisions and other agreements entered into by such project
subsidiaries. Such limitations permit the payment of cash dividends out of
current cash flow for quarterly, semiannual or annual periods only at the end
of such periods and only after payment of principal and interest on project
loans due at the end of such periods, and in certain cases after providing for
debt services reserves.
Gener Share Dividends. The dividend information set forth below has been
obtained from publicly available information and is set forth in nominal
amounts which have not been restated in constant Chilean Pesos.
The table below sets forth the amounts of annual dividends, on a per share
basis in nominal Chilean Pesos, for each of the calendar years indicated, as
reported in the Gener's 20-F. Per ADS amounts are shown without deduction of
Chilean withholding taxes.
PER SHARE PER GENER ADS
---------------------- --------------
(CH$) ($) ($)
1998 ......... 4.70 0.010 0.67
1999 ......... 1.16 0.002 0.15
Gener's board of directors has determined that Gener will pay dividends
equal to 66% of consolidated net income after taxes, having consideration for
Gener's financial condition and prospects, and will retain the balance of net
income as retained earnings. Gener's dividend policy for each year is announced
to their shareholders at their annual shareholders' meeting, including the
policy intended to be followed by the Gener board of directors for interim
dividends for that year. At their meeting, shareholders consider and approve
the final dividend proposed by the Gener board of directors in respect of the
prior year's results, and ratify the interim dividends previously declared and
paid. As requested by local law, unless otherwise decided by all shareholders,
Gener must distribute a cash dividend in an amount equal to at least 30% of
Gener's consolidated net income for that year, determined on a Chilean GAAP
basis, unless and except to the extent that Gener has accumulated losses.
Gener typically pays three provisional dividends and a final dividend for
each fiscal year. Under this arrangement:
o a provisional dividend of approximately 30% of the consolidated net
income for the first five months of the year is paid in July or August;
o a second provisional dividend of approximately 55% of the consolidated
net income for the months of June, July and August is paid in November;
o a third provisional dividend of approximately 60% of the consolidated
net income for the months of September, October and November is paid at
the end of January of the following year; and
o a fourth and final dividend is paid in April or May of the following
year in a amount to ensure that the aggregate annual dividend is equal to
approximately 66% of the consolidated net income for the year taxes.
In the first three quarters of 1999, Gener incurred a net loss on a
consolidated basis. Consequently, Gener's Board decided not to declare
provisionals dividends for 1999 called for Gener's policy. On April, 2000, the
Ordinary Shareholders Meeting approved to pay on April 26, 2000 a final
dividend of Ch$0.66 per share or Ch$44.88 per Gener ADS.
Dividends are not price-level adjusted between the end of the preceding
year and the date of the declaration of the final dividend.
52
It is expected that Gener's board of directors will recommend dividends
for the 2000 fiscal year consistent with Gener's general practice as described
above. Gener's board of directors reviews the dividend policy annually, and
although there are no current plans to recommend a change in the dividend
policy, the amount and timing of a dividend payment is subject to revision from
time to time, depending upon:
o revenues;
o costs;
o cash flow;
o capital requirements; and
o market conditions.
Accordingly, there can be no assurance as to the amount, if any, or timing
of dividend payments in the future. Any change in dividend policy would
ordinarily be effective for dividends declared in the year following the
adoption of the change. In addition, Gener must file a notice as to any such
change of policy with the Chilean authorities. Accordingly, a change in policy
would become publicly available information.
According to Gener's publicly filed documents, Gener expects that
dividends received from subsidiaries and related companies will become an
increasingly significant portion of its cash flow. Some of these subsidiaries
and related companies are or may become parties to credit agreements containing
restrictions on the payment of dividends. Gener has given no assurances that
these contractual restrictions will not limit its ability to maintain its
current dividend policy in the future.
53
AES SUMMARY SELECTED
CONSOLIDATED FINANCIAL DATA
Set forth below are summary selected financial data for The AES
Corporation as of December 31, 1999 and June 30, 2000 and for the five year
period ended December 31, 1999 and for the six month periods ended June 30,
1999 and June 30, 2000. The summary selected financial data for the five year
period ended December 31, 1999 have been extracted from AES's audited
consolidated financial statements which are incorporated by reference in this
prospectus. The unaudited data for the six month periods ended June 30, 1999
and June 30, 2000 have been extracted from AES's quarterly unaudited reports
filed on Form 10-Q, which are incorporated by reference in this prospectus.
SIX MONTHS ENDED
JUNE 30,
YEARS ENDED DECEMBER 31, (UNAUDITED)
--------------------------------------------------------- -----------------------
1995 1996 1997 1998 1999 1999 2000
--------- ----------- ----------- ----------- ----------- ----------- -----------
(IN MILLIONS OF DOLLARS,
EXCEPT PER SHARE
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) AMOUNTS)
INCOME STATEMENT DATA:
Revenues ................................. $ 679 $ 835 $ 1,411 $ 2,398 $ 3,253 $ 1,278 $ 3,014
Income before extraordinary item ......... 107 125 188 307 245 58 292
Net income ............................... 107 125 185 311 228 58 285
BALANCE SHEET DATA:
Total assets ............................. $2,341 $ 3,622 $ 8,909 $ 10,781 $ 20,880 $ 11,237 $ 29,020
Long-term debt ........................... 1,307 2,118 5,731 7,196 13,017 7,886 17,248
Short-term borrowings .................... 50 88 -- 8 335 -- --
Stockholders' equity ..................... 549 721 1,481 1,794 2,637 1,514 3,990
CASH FLOW DATA:
Cash flows from operations ............... $ 200 $ 195 $ 193 $ 528 $ 197 $ 159 $ 611
Cash flows from financing activities ..... 127 886 3,723 1,503 6,369 1,106 2,728
Cash flows (used in) investing
activities .............................. (343) (1,135) (3,799) (1,842) (6,388) (1,365) (2,808)
EARNINGS PER SHARE DATA:
Basic earnings per share:
Before extraordinary item ................ $ 0.36 $ 0.41 $ 0.57 $ 0.87 $ 0.64 $ 0.16 $ 0.69
Extraordinary item ....................... -- -- (0.01) 0.01 (0.04) -- (0.02)
------ -------- -------- -------- -------- -------- --------
Basic earnings per share ................. $ 0.36 $ 0.41 $ 0.56 $ 0.88 $ 0.60 $ 0.16 $ 0.67
====== ======== ======== ======== ======== ======== ========
Diluted earnings per share:
Before extraordinary item ................ $ 0.35 $ 0.40 $ 0.56 $ 0.84 $ 0.62 $ 0.16 $ 0.66
Extraordinary item ....................... -- -- (0.01) 0.01 (0.04) -- (0.02)
------ -------- -------- -------- -------- -------- --------
Diluted earnings per share ............... $ 0.35 $ 0.40 $ 0.55 $ 0.85 $ 0.58 $ 0.16 $ 0.64
====== ======== ======== ======== ======== ======== ========
54
GENER SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA
The following selected summary consolidated financial data relating to
Gener S.A. and its subsidiaries has been taken or derived from the audited
financial statements contained in Gener's 20-F and the unaudited financial
statements contained in Gener's Report by Foreign Issuer on Form 6-K for fiscal
quarter ended June 30, 2000, filed on August 16, 2000. More comprehensive
financial information is included in such reports and the other documents filed
by Gener with the SEC, and the financial data set forth below is qualified in
its entirety by reference to such reports and other documents, including the
financial statements and related notes contained therein. Such reports and
other documents may be obtained as described in the section captioned "Where
You Can Find More Information" in this prospectus. The financial statements of
Gener are presented in Chilean Pesos and are prepared in accordance with
generally accepted accounting principles in Chile, Chilean GAAP, and the rules
of the SVS relating thereto, both of which differ in certain respects from
generally accepted accounting principles in the United States, U.S. GAAP. Note
30 to Gener's consolidated financial statements provides a description of the
principal differences between Chilean GAAP and U.S. GAAP and a reconciliation
to U.S. GAAP of Gener's net income for the years ended 1997, 1998 and 1999.
The financial data of Gener as of and for the years ended December 31,
1995, 1996, 1997, 1998 and 1999 have been restated in constant Chilean Pesos as
of December 31, 1999. The financial data of Gener as of and for the six months
ended June 30, 1999 and 2000 have been restated in constant Chilean Pesos as of
June 30, 2000. The financial information for the year ended December 31, 1999
and the six months ended June 30, 2000 is presented also in U.S. dollars
translated from constant Chilean Pesos as of December 31, 1999 and as of June
30, 2000, respectively, at an exchange rate of Ch $530.07 to $1.00 and Ch
$536.90 to $1.00, respectively.
1995 1996 1997 1998
------------- ------------- ------------- -------------
MILLIONS MILLIONS MILLIONS MILLIONS
OF OF OF OF
CONSTANT CONSTANT CONSTANT CONSTANT
CH$ CH$ CH$ CH$
------------- ------------- ------------- -------------
Income Statement Data:
Chilean GAAP:
Operating Revenue ...................... 144,098 176,936 288,563 290,447
Operating expense ...................... (65,882) (93,255) (143,181) (159,284)
Depreciation (5) ....................... (17,686) (19,750) (28,920) (32,440)
Administrative and selling expense ..... (17,829) (14,142) (19,838) (21,073)
Operating Income ....................... 42,701 49,789 96,624 77,650
Share of net income and losses of
related companies ..................... 4,623 6,396 10,164 13,199
Financial income ....................... 6,927 6,965 13,926 20,303
Financial expense ...................... (14,487) (16,693) (39,275) (47,253)
Other non-operating income
(expense), net ........................ 15,845 3,530 3,988 (7,829)
Income taxes ........................... 938 (1,345) (7,425) (998)
Minority interest ...................... (629) (1,027) (1,721) (10,231)
Net income ............................. 55,918 47,615 76,282 44,841
Consolidated ratio of earnings to
fixed charges (unaudited) (5) ......... 3.90 3.39 2.93 2.07
Net income per share ................... 13.27 11.30 13.65 8.03
Net income per ADS ..................... 902.40 768.13 928.47 545.78
Dividends per share (5) ................ 7.0676 8.1589 7.6932 5.4699
Shares outstanding at end of period
(000s) (5) ............................ 4,215,380 4,215,380 5,586,821 5,586,821
Dividends per ADS (5) .................. 469.38 601.17 563.21 371.96
SIX MONTHS ENDED
JUNE 30,
---------------------------------------
1999 1999 1999 2000 2000
------------- ------------- ------------- ------------- -----------
MILLIONS MILLIONS MILLIONS
OF MILLIONS OF OF MILLIONS
CONSTANT OF CONSTANT CONSTANT OF
CH$ $(1) CH$ CH$ $
------------- ------------- ------------- ------------- -----------
Income Statement Data:
Chilean GAAP:
Operating Revenue ...................... 441,689 833.3 245,425 207,469 385.2
Operating expense ...................... (275,269) (519.3) (169,120) (161,026) (299.0)
Depreciation (5) ....................... (49,587) ( 93.5) -- -- --
Administrative and selling expense ..... (39,278) ( 74.1) (20,510) (11,690) ( 21.7)
Operating Income ....................... 77,555 146.4 55,795 34,753 64.5
Share of net income and losses of
related companies ..................... 3,899 7.4 (2,515) (874) ( 1.6)
Financial income ....................... 6,813 12.9 3,708 4,361 8.1
Financial expense ...................... (53,188) (100.3) (25,544) (31,128) ( 57.8)
Other non-operating income
(expense), net ........................ (2,507) ( 4.7) (15,731) 5,567 10.3
Income taxes ........................... (9,990) ( 18.8) (4,163) (614) ( 1.1)
Minority interest ...................... (16,160) ( 30.5) (10,154) (3,728) ( 6.9)
Net income ............................. 6,423 12.1 1,396 8,337 15.5
Consolidated ratio of earnings to
fixed charges (unaudited) (5) ......... 1.48 1.48 -- -- --
Net income per share ................... 1.14 0.0 10.08 2.40 0.0
Net income per ADS ..................... 77.57 0.1 685.11 163.25 0.30
Dividends per share (5) ................ 2.2272 0.0 -- -- --
Shares outstanding at end of period
(000s) (5) ............................ 5,630,563 5,630,563 -- -- --
Dividends per ADS (5) .................. 151.45 0.3 -- -- --
55
1995 1996 1997 1998
------------- ------------- ------------- -------------
MILLIONS MILLIONS MILLIONS MILLIONS
OF OF OF OF
CONSTANT CONSTANT CONSTANT CONSTANT
CH$ CH$ CH$ CH$
------------- ------------- ------------- -------------
U.S. GAAP (4):
Operating Revenue .......................... 144,098 176,936 288,563 290,447
Operating income ........................... 44,609 51,323 98,085 79,178
Depreciation ............................... (15,769) (18,207) (27,459) (30,912)
Financial income ........................... 6,927 6,965 13,926 20,303
Financial expense .......................... (14,487) (16,693) (39,275) (47,253)
Share of net income and loss of
related companies ......................... 4,904 7,574 11,875 13,060
Other non operating income
(expense), net ............................ 18,648 3,406 865 (8,561)
Net income ................................. 36,400 47,974 74,343 37,630
Consolidated ratio of earnings to
fixed charges (unaudited) ................. 4.16 3.52 2.93 2.09
Net income per share ....................... 8.63 11.38 13.31 6.74
Net income per ADS ......................... 587.18 773.89 904.87 458.01
Weighted average shares
outstanding (000s) ........................ 4,215,380 4,215,380 5,586,821 5,586,821
Balance Sheet Data:
Chilean GAAP:
Total assets ............................... 774,630 1,182,011 1,472,283 1,685,220
Long term liabilities ...................... 189,785 549,664 471,538 706,269
Total interest bearing liabilities (5) ..... 191,433 516,651 522,293 637,374
Total shareholders equity .................. 518,682 531,200 787,508 796,602
Ratio of total shareholders equity to
total capitalization (3) (5) .............. 0.73 0.51 0.60 0.56
U.S. GAAP (4):
Total assets ............................... 758,170 1,168,241 1,461,100 1,679,879
Long term liabilities ...................... 214,209 576,318 500,179 2,800,778
Total interest bearing liabilities ......... 191,433 516,651 522,293 637,374
Total shareholders equity .................. 477,799 490,775 747,683 751,905
Ratio of total shareholders equity to
total capitalization (3) .................. 0.71 0.49 0.59 0.54
SIX MONTHS ENDED
JUNE 30,
--------------------------------------
1999 1999 1999 2000 2000
------------- ------------- ------------ ------------ ------------
MILLIONS MILLIONS MILLIONS
OF MILLIONS OF OF MILLIONS
CONSTANT OF CONSTANT CONSTANT OF
CH$ $(1) CH$ CH$ $
------------- ------------- ------------ ------------ ------------
U.S. GAAP (4):
Operating Revenue .......................... 441,689 833.3 -- -- --
Operating income ........................... 79,062 149.2 -- -- --
Depreciation ............................... (48,080) ( 90.7) -- -- --
Financial income ........................... 6,813 12.9 -- -- --
Financial expense .......................... (53,188) ( 100.3) -- -- --
Share of net income and loss of
related companies ......................... (1,749) ( 3.3) -- -- --
Other non operating income
(expense), net ............................ 6,546 12.3 -- -- --
Net income ................................. (2,826) ( 5.3) -- -- --
Consolidated ratio of earnings to
fixed charges (unaudited) ................. 1.63 1.63 -- -- --
Net income per share ....................... ( 0.50) 0.00 -- -- --
Net income per ADS ......................... (34.21) 0.00 -- -- --
Weighted average shares
outstanding (000s) ........................ 5,617,952 5,617,952 -- -- --
Balance Sheet Data:
Chilean GAAP:
Total assets ............................... 1,960,612 3,698.8 2,005,406 1,915,529 3,556.4
Long term liabilities ...................... 826,043 1,558.4 949,760 807,544 1,499.3
Total interest bearing liabilities (5) ..... 825,477 1,557.3 -- -- --
Total shareholders equity .................. 794,355 1,498.6 808,796 812,147 1,507.8
Ratio of total shareholders equity to
total capitalization (3) (5) .............. 0.49 0.49 -- -- --
U.S. GAAP (4):
Total assets ............................... 1,968,788 3,714.2 -- -- --
Long term liabilities ...................... 893,690 1,686.0 -- -- --
Total interest bearing liabilities ......... 825,477 1,557.3 -- -- --
Total shareholders equity .................. 741,159 1,398.2 -- -- --
Ratio of total shareholders equity to
total capitalization (3) .................. 0.47 0.47 -- -- --
- ---------
(1) Chilean Peso amounts have been translated into U.S. dollars at the rate
of Ch$530.07 = $1.00, the observed exchange rate on December 31, 1999
(the rate used by Gener for December 31, 1999 financial reporting
purposes).
(2) For purposes of computing the ratio of consolidated earnings to fixed
charges, consolidated earnings consist of earnings before income taxes
plus fixed charges, and excluding any loss recognized on equity
investments. Fixed charges consist of interest expense, including
capitalized interest, and amortization of capitalized debt expense and
discount.
(3) Total capitalization equals total interest bearing liabilities, excluding
short-term debt, plus total shareholders equity.
(4) U.S. GAAP financial statements for Gener are not available as of June 30,
2000 and 1999 as Gener is not required to file a U.S. GAAP reconciliation
footnote for interim periods.
(5) Depreciation, consolidated ratio of earnings to fixed charges, shares
outstanding at end of period (000s), dividends per share, dividends per
ADS, total interest bearing liabilities and ratio of total shareholders
equity to total capitalization are not available as of or for the six
months ended June 30, 2000 and 1999 as they are not included in the June
30, 2000 Gener 6-K filing.
56
COMPARATIVE PER SHARE DATA
The following table presents historical per share information for AES and
Gener for the year ended December 31, 1999. The information in the table below
should be read in conjunction with the historical financial statements of the
corporations incorporated by reference in this Registration Statement in the
section captioned, "Selected Consolidated Financial Data" of AES and Gener.
YEAR ENDED
DECEMBER 31, 1999
------------------
AES Historical Per Share
Earnings from continuing operations
Basic earnings per share .............................. $ 0.64
Diluted earnings per share ............................ 0.62
Cash Dividends ......................................... --
Book Value ............................................. 6.89
Gener Historical Per Share
Earnings from continuing operations
Basic earnings per share .............................. 0.00
Diluted earnings per share ............................ 0.00
Cash dividends ......................................... 0.00
Book Value ............................................. 0.25
AES/Gener Pro Forma Per Share
Earnings from continuing operations
Basic earnings per share .............................. 0.42
Diluted earnings per share ............................ 0.41
Cash dividends ......................................... --
Book Value ............................................. 7.42
Equivalent Pro Forma Per Share for Gener ADS Holders (1)
Earnings from continuing operations
Basic earnings per share .............................. 0.11
Diluted earnings per share ............................ 0.11
Cash Dividends ......................................... --
Book Value ............................................. 1.95
- ---------
(1) The equivalent pro forma per share data is calculated by multiplying the
AES/Gener pro forma per share data by the exchange ratio for Gener ADS so
that the pro forma per share amounts are equated to the respective values
of one ADS. Each ADS represents 68 Gener shares.
(2) Comparative per share for the period ended June 30, 2000, is not included
herein as Gener is not required to file a U.S. GAAP reconciliation
footnote for interim periods.
57
DESCRIPTION OF CAPITALAES COMMON STOCK
GENERAL
Under ourAES's certificate of incorporation (the "Certificate of
Incorporation"), we areand by-laws, AES is authorized to
issue 1,200,000,000500,000,000 shares of common stock, par value $.01 per share, and
50,000,000 shares of preferred stock, no par value.
The following summary contains a description of certain general terms of
theAES common stock and the preferred stock to which any prospectus supplement may
relate. Certain terms of any series of preferred stock offered by a prospectus
supplement will be described in the prospectus supplement relating thereto. If
indicated in the prospectus supplement, the terms of any series may differ from
the terms set forth below.stock. The description of certain provisions of theAES common
stock and the preferred stock is
subject to and qualified by reference to the provisions of our certificate of
incorporation, and, in the case of the
preferred stock, to the certificate of designation (the "Certificate of
Designation") relating to each particular series of preferred stock which will
be filed or incorporated by reference as an exhibit to the registration
statement of which this prospectus is a part.
Common Stockincorporation.
As of July 31,September 30, 2000, there were 456,774,338457,742,582 shares of common stock
outstanding. The holders of common stock are entitled to one vote per share on
all matters to be voted upon by the stockholders. Subject to preferences that
may be applicable to any outstanding preferred stock, the holders of common
stock are entitled to receive ratably dividends as may be declared from time to
time by ourthe board of directors out of funds legally available to pay dividends.
If we liquidate ourthe corporation liquidates its business, the holders of common stock are
entitled to share ratably in all assets after we pay ourthe corporation pays its
liabilities and the liquidation preference of any outstanding preferred stock.
The common stock has no
11
preemptive or conversion rights or other subscription
rights. There are no redemption or sinking fund provisions applicable to the
common stock. All outstanding shares of common stock are fully paid and
non-assessable, and any shares of common stock in respect of which this
prospectus is being delivered will be fully paid and non-assessable.
TRANSFER AGENT AND REGISTRAR
AES has appointed First Chicago Trust Company, a Division of Equiserve, as
its Transfer Agent and registrar for its common stock. The transfer agentTransfer Agent's
telephone number in the United States is 800-519-3111.
COMPARATIVE RIGHTS OF GENER STOCKHOLDERS
AND AES STOCKHOLDERS
GENERAL
If the conditions to our offer are satisfied, holders of Gener ADSs who
tendered their Gener ADSs into our offer and whose Gener ADSs were accepted for
our commonexchange will become stockholders of AES. AES is a corporation organized under,
and governed by, the Delaware General Corporation Law, the DGCL, whereas Gener
is a corporation organized under, and governed by, the Chilean Ley de
Sociedades Anonimas No. 18,046, the Chilean Corporations Act, and the
Reglamento de Sociedades Anonimas, the Regulations. In addition, Gener is
currently subject to the provisions of Decree Law No. 3,500, as amended. As
described in the section captioned "AMENDMENTS TO GENER'S BYLAWS", if the
amendment to Gener's Bylaws are approved Gener will no longer be subject to
these provisions.
Holders of Gener ADSs are not holders of Gener shares and as such may not
have all the rights of holders of Gener shares. Holders of Gener ADSs have only
the rights specified in the Gener Deposit Agreement. Reference is made to the
Gener Deposit Agreement which has been filed with the SEC and may be inspected
and copies of it may be obtained in the manner set forth under the section
captioned "WHERE YOU CAN FIND MORE INFORMATION". However, under the Gener
Deposit Agreement, holders of Gener ADSs have the right to withdraw and obtain
directly the Gener shares represented by such Gener ADSs.
The following is a brief summary of certain differences between the DGCL
applicable to AES and the Chilean Corporations Act and Regulations applicable
to Gener. This summary also explains certain differences between AES's
certificate of incorporation, AES's Certificate and Bylaws, AES's Bylaws, and
Gener's estatutos, Gener's Bylaws, which effectively serve the purpose of both
the articles of incorporation and bylaws of a company incorporated in Delaware.
The purpose of this summary is to briefly indicate the differences between
holding AES capital stock is EquiServe.
Price Rangeand Gener capital stock to the extent such
differences are
58
created by the state corporation laws applicable to AES and the Chilean
Corporations Act and the Regulations applicable to Gener, or that arise because
of differences between AES's Certificate and Bylaws and Gener's Bylaws. THIS
SUMMARY IS QUALIFIED BY REFERENCE TO THE DGCL, THE CHILEAN CORPORATIONS ACT,
THE REGULATIONS, AES'S CERTIFICATE AND BYLAWS AND GENER'S BYLAWS.
DIRECTORS
AES. AES's Bylaws provide that the number of directors of AES Common Stockshall be
nine or such other number as to be determined by a resolution of the board of
directors. These directors are elected annually by stockholders of AES. Each
director holds office until his or her successor is duly elected and Common Stock Dividends
Our common stockshall
qualify. The number of directors of AES is traded oncurrently nine. Section 141 of the
New York Stock ExchangeDGCL provides that unless otherwise specified or in the case of a board whose
directors are elected in staggered terms, any director or the entire board of
directors may be removed, with or without cause, by the holders of a majority
of shares. AES's Certificate provides that directors may be removed for cause
by a majority vote of shareholders. AES's Bylaws also provide that newly
created directorships resulting from any increase in the number of directors
and any vacancy in the board of directors resulting from death, resignation, or
removal from office shall be filled by a majority vote of the remaining
directors. Provided a quorum is present, a resolution of the Board may be
adopted by a majority of the members voting.
Gener. Gener's Bylaws provide that Gener shall be administered by a board
of directors made up of seven members. Under the Chilean Corporations Act, the
entire board of directors is elected at an ordinary general shareholders'
meeting. Staggered elections of the board of directors are not permitted under
the symbol
"AES." The following table sets forthChilean Corporations Act. Directors hold office for the periods indicated the intra-day
high and low sale prices for the common stock as reported on the Composite
Tape. In April 2000, we announced a two-for-one stock split, in the formterm of a
stock dividend, for holders of record on May 1, 2000 of our common stock, which
was paid on June 1, 2000. The prices set forth below are adjusted for such
stock split.
High Low
------- -------
1998
First Quarter................................... $ 27.16 $ 19.69
Second Quarter.................................. 29.00 22.82
Third Quarter................................... 27.69 11.50
Fourth Quarter.................................. 23.69 16.00
1999
First Quarter................................... $ 24.63 $ 16.41
Second Quarter.................................. 29.88 18.38
Third Quarter................................... 33.35 26.53
Fourth Quarter.................................. 38.19 25.22
2000
First Quarter................................... $ 44.72 $ 34.25
Second Quarter.................................. 49.63 35.56
Third Quarter (through September 14, 2000) ..... 67.50 45.13
No cash dividends have been paid on common stock since December 22, 1993
in order to provide capital for our equity investments in projects.
Our ability to declare and pay dividends is dependent, among other things,
on
o the ability of our project subsidiaries to declare and pay dividends
and otherwise distribute cash to us;
o our ability to service our parent company debt and
o our ability to meet certain criteria for paying dividends under our
corporate credit facility and under existing indentures of our debt
securities.
The ability of our subsidiaries to declare and pay dividends and otherwise
distribute cash to us is subject to certain limitations in the project loans
and other documents entered into by our project subsidiaries. These limitations
permit the payment of dividends out of current cash flow for quarterly,
semi-annual or annual periods onlythree years,
at the end of these periods and only afterwhich a new election of the board of directors takes place, at
which previous members may be removed or re-elected. The Chilean Corporations
Act provides that a director cannot be individually removed but rather the
entire board of directors may be removed by an ordinary or special
shareholders' meeting with or without cause. The Chilean Corporations Act also
provides that in case of a vacancy in the board of directors, the board of
directors may appoint a replacement director, but a new election of the entire
board of directors shall take place at the next ordinary shareholders' meeting.
Provided a quorum is present, a resolution of the board of directors may
be adopted by the vote of the majority of the members voting. In the case of a
tie, the chairman of the meeting shall have a casting vote.
LIMITATION OF DIRECTOR LIABILITY IN CERTAIN CIRCUMSTANCES
AES. As permitted by the DGCL, AES's Certificate provides that directors
of AES shall not be personally liable to AES or its stockholders for monetary
damages resulting from a breach of fiduciary duty as a director except for
liability arising out of (a) any breach of the director's duty of loyalty to
AES or its stockholders, (b) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (c) payment of principala
dividend or approval of a stock repurchase in violation of Section 174 of the
DGCL or (d) any transaction from which the director derived an improper
personal benefit. This provision protects AES's directors against any personal
liability for monetary damages from breaches of their duty of care. Article X
has no effect on the availability of equitable remedies, such as an injunction
or rescission, based upon a director's breach of his duty of care. Article X
does not apply to officers of AES who are not directors of AES.
Gener. The Chilean Corporations Act provides, in general terms, that the
directors shall be jointly and severally liable for the damages caused to the
corporation or its shareholders by wilful misconduct or negligence. Any
stipulation in the bylaws or agreement by the shareholders exempting or
limiting the legal liability of directors shall be deemed null and void. In
addition, the directors shall be jointly and severally liable among and with
the corporation for damages and fines arising from a breach of the Chilean
Corporations Act, the Regulations, the bylaws or the rulings of the SVS. In
addition, the Chilean Corporations Act prohibits directors from engaging in
conduct not in furtherance of the corporate interest but made in the interest
of the directors or related third parties. The culpability of a director is
presumed, among other circumstances, when such director is unduly benefitted,
directly or indirectly, from a corporate transaction which damages the
corporation.
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INDEMNIFICATION AND INSURANCE
AES. Under Section 145 of the DGCL, directors, officers, employees and
agents of a corporation may be indemnified against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement in connection
with specified actions, suits or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation--a "derivative action") if they acted in good faith and in a manner
they reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, regarding any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such actions. The DGCL requires court approval before
there can be any indemnification where the person seeking indemnification has
been found liable to the corporation. To the extent that a person otherwise
eligible to be indemnified is successful on project loans duethe merits of any claim or defense
described above, indemnification for expenses (including attorneys' fees)
actually and reasonably incurred is mandated by the DGCL. This indemnification
is not deemed exclusive of any rights to which an indemnified party may be
entitled under any bylaw, agreement, shareholder or disinterested director
vote, or otherwise.
Under AES's Bylaws, and in accordance with Section 145 of the DGCL, AES
shall indemnify, to the fullest extent permitted by the DGCL, any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding. These include civil, criminal,
administrative or investigative proceedings by reason of the fact that the
person is or was a director or officer of or employed by us, or is or was
serving in that capacity or as an agent at the endrequest of us for another
entity. This indemnification covers expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with the defense
or settlement of an action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to
AES's best interests and, with respect to any criminal action or proceeding,
had no reasonable cause to believe was unlawful. AES shall indemnify the
covered people in a derivative action under the same conditions, except that no
indemnification is permitted without judicial approval if the person is
adjudged to be liable to AES in the performance of his or her duty. Agents of
AES may be similarly indemnified at the discretion of the board of directors.
Pursuant to AES's Bylaws, a person eligible for indemnification may have
the expenses incurred in connection with any matter described above paid in
advance of a final disposition by AES. However, these periods.
Cash dividend paymentsadvances will only be
made if the indemnified person undertakes to repay all advanced amounts if it
is determined that the person is not entitled to indemnification.
In addition, under AES's Bylaws, AES may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or agent
of AES or of another corporation against any liability arising out of the
person's status as a director, officer, employee or agent of AES whether or not
AES would have the power to indemnify such person against such liability under
the provisions of its Bylaws. AES maintains directors' and officers' insurance.
Gener. Gener's Bylaws do not contain any stipulation exempting or limiting
the legal liability of Gener's directors.
ANTITAKEOVER PROVISIONS
AES. Section 203 of the DGCL ("Section 203"), which applies to AES,
regulates all transactions with major stockholders after they become major
stockholders. Section 203 prohibits a Delaware corporation from engaging in
mergers, dispositions of 10% or more of its assets, issuances of stock and
other transactions ("business combinations") with a person or group that owns
15% or more of the voting stock of the corporation (an "interested
stockholder"), for a period of three years after the interested stockholder
crosses the 15% threshold. These restrictions on transactions involving an
interested stockholder do not apply if (a) before the interested stockholder
owned 15% or more of the voting stock, the board of directors approved the
business combination or the transaction that resulted in the person or group
becoming an interested stockholder; (b) in the transaction that resulted in the
person or group
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becoming an interested stockholder, the person or group acquired at least 85%
of the voting stock other than stock owned by inside directors and certain
employee stock plans; or (c) after the person or group became an interested
stockholder, the board of directors and at least two-thirds of the voting stock
other than stock owned by the interested stockholder approves the business
combination.
Gener. Article five bis of Gener's Bylaws provides that no individual or
entity, public or private, directly or through other persons, shall concentrate
more than 20% of the capital with voting rights of Gener common stock. The
foregoing restriction does not apply to the Depositary as record owner of the
Gener shares represented by Gener ADSs, but it does apply to Gener ADS holders.
Further, Article 27 bis of Gener's Bylaws provides that no person may itself or
on behalf of other shareholders vote more than 20% of Gener's outstanding
shares of voting capital stock. In calculating such percentage, any Gener
shares of related persons shall be added to the Gener shares of such
shareholder. Moreover, no person can represent shareholders who jointly hold
more that 20% of the subscribed shares of voting capital stock are limitedof Gener.
Pursuant to a certain percentageArticle 14 bis of cash flow under our corporate credit agreement. The indentures relatingGener's Bylaws, notwithstanding any other
provision in the Chilean Corporations Act to the contrary, all acts and
contracts that Gener enters into with its majority shareholders, directors or
officers, or any person related to them, require the preliminary approval of
two thirds of the board of directors. In addition, transactions with directors
must be on terms no more favorable to such directors than those generally
available through arms length negotiations and such transactions must be
reported at the next shareholders' meeting. One of the conditions to our existing senior subordinated notes precludeoffer
and the paymentChilean offer is the approval of cash dividends
if:
o atGener's shareholders of amendments to
Gener's Bylaws, to eliminate; among others, the timeprovisions which limit the
right of a paymentshareholders to own or vote more than 20% of cash dividends or after giving effect
thereto an event of default occurred;
o an event that would become an event of default occurred and is
continuing;
12
o certain fixed charge coverage ratios are not met or
o if the payment of dividends, together with other restricted payments,
would exceed certain limits.
Preferred StockGener's voting capital
stock.
ISSUANCE OF PREFERRED STOCK
AES. As of July 31,November 8, 2000, there were noAES had 50,000,000 authorized shares of
Preferred Stockpreferred stock with no par value, none of which are outstanding. OurAES's board
of directors has the authority to issue preferred stock in one or more classes
or series and to fix the rights, preferences, privileges and restrictions
thereof, including dividend rights, dividend rates, conversion rights, exchange
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any class or series or the
designation of such class or series, without any further action by the
stockholders. Preferred stock, if issued, will not be entitled to any
preemptive or similar rights.
The prospectus supplementGenerally, the issuance of preferred stock by AES could (a) result in a
class of securities outstanding which will describehave certain preferences regarding
dividends and distributions in a liquidation over AES common stock and might
provide for certain rights (whether general, special, conditional or limited)
that could dilute the termsvoting rights of AES common stock and (b) result in
dilution of the net income per share and net book value per share relating to
AES common stock. Further, the issuance of any additional shares of AES common
stock, pursuant to any conversion rights granted holders of any preferred
stock, being offered, including:
o the specific designation, number of shares, seniority and purchase
price;
o any liquidation preference per share;
o any date of maturity;
o any redemption, repayment or sinking fund provisions;
o any dividend rate or rates and the dates on which any such dividends
will be payable (or the method by which such rates or dates will be
determined);
o any voting rights;
o if other than the currencymay also result in dilution of the United States,voting rights, net income per share
and net book value of AES common stock.
Gener. The Chilean Corporations Act vests in shareholders the currency or
currencies including composite currencies in which suchauthority to
issue preferred stock is denominated and/in one or in which payments willmore classes or may be payable;
oseries and to fix the method by which amounts in respect of such preferred stock may be
calculated and any commodities, currencies or indices, or value, rate
or price, relevant to such calculation;
o whether such preferred stock is convertible or exchangeable and, if
so, the securities or rights into which such preferred stock is
convertible or exchangeable, and the terms and conditions upon which
such conversions or exchanges will be effected including conversion
or exchange prices or rates, the conversion or exchange period and
any other related provisions;
o the place or places where dividends and other payments on the
preferred stock will be payable; and
o any additional voting, dividend, liquidation, redemption and other rights,
preferences, privileges limitations and restrictions.
Allrestrictions thereof. Any such issuance must be
approved by the vote of the holders of two thirds of the shares of the affected
classes or series at a special shareholders meeting. The Chilean Corporations
Act provides that dissenting shareholders of the affected classes or series
have appraisal rights upon approval of the creation or amendment of the
preferences of other classes or series. See "Voting and Appraisal Rights With
Respect to Corporate Reorganizations" below. Gener currently has no shares of
preferred stock offered hereby,authorized or issuableoutstanding.
VOTING RIGHTS; CUMULATIVE VOTING
AES. The holders of AES common stock and Gener common stock are entitled
to one vote per share on all matters to be voted upon conversion,
exchangeby the holders of such
shares.
61
Section 214 of the DGCL provides that no cumulative voting rights, in
respect of elections of directors, exist under Delaware law, unless a
corporation's certificate of incorporation provides for such cumulative voting.
AES's Certificate does not provide for cumulative voting in elections of
directors.
Gener. Pursuant to Article 66 of the Chilean Corporations Act and under
Article 27 of Gener's Bylaws, directors are elected using cumulative voting.
Each shareholder has one vote per share and may cast all of his votes in favor
of one nominee or exercisemay apportion his votes among any number of securities, will, when issued,nominees.
ACTION WITHOUT A MEETING
AES. Under the DGCL unless otherwise provided in a company's certificate
of incorporation, any action required or permitted to be fully paid and
non-assessable. Anytaken at a
stockholder's meeting may be taken by written consent signed by the holders of
the number of shares of preferred stock that are issued would have priority overbeen required to effect the common stock with respect to dividendaction at an
actual meeting of the stockholders. The AES certificate of incorporation is
silent on this matter so that AES shareholders may take action by written
consent.
Gener. The Chilean Corporations Act does not allow action without a
shareholders' meeting.
SPECIAL MEETINGS
AES. Under Section 211(d) of the DGCL, the board of directors or liquidation rightsthose
persons authorized by the corporation's certificate of incorporation or both.
The transfer agent for each seriesBylaws
may call a special meeting of preferred stock will be described in
the applicable prospectus supplement.
Description of Certain Provisions of Our Certificate of Incorporation and
By-Laws
Our Certificate of Incorporation and By-Laws contain several provisions
that may make the acquisition of control of AES through a tender offer, open
market purchases, a proxy fight or otherwise more difficult. Below is a
description of certain of these provisions in the Certificate of Incorporation
and By-Laws.
Special Meetings of Stockholders. Our By-Lawscorporation's stockholders. AES's Bylaws
provide that unless
otherwise prescribed by law,a special meetings of stockholdersmeeting may be called by a resolution adoptedthe Chairman of the board of
directors, by the President or by a majority of the entire board of directors,directors.
Gener. Special shareholders' meetings may be called by the
chairman of the board of
directors, at any time, when deemed appropriate and must be called by the board
of directors when requested by shareholders representing at least 10% of the
issued and outstanding voting capital stock or by the president. Only business as
specified inSVS. In the noticeevent of stockholdersa
request by shareholders representing at least 10% of the special meeting shall be
considered.
Stockholder Nomination of Directors. Our By-Laws contain a procedure for
stockholder
13
nomination of directors. The By-Laws provide that any record owner ofissued and outstanding
voting capital stock, entitled to be voted generally in the election of directors may nominate one or
more persons for election as a director at a stockholders meeting only if
written notice is given to our secretary of the intent to make a nomination.
The notice must be given, with respect to an annual meeting, not later than 90
days in advance of the annual meeting. With respect to a special meeting, the
notice must be given not later than the close of business on the seventh day
following the earlier of
o the date on which notice of such special meeting is first given to
stockholders and
o the date on which a public announcement of such meeting is first
made.
Each notice must include:
o the name and address of each stockholder who intends to appear in
person or by proxy to make the nomination and of the person or
persons to be nominated;
o a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming
them) pursuant to which the nomination is to be made by the
stockholder;
o other information regarding each nominee proposed as would have been
included in a proxy statement filed pursuant to Rule 14a-8 under the
Exchange Act and
o the consent of each nominee to serve if elected.
The presiding officer of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with this procedure.
The procedure for stockholder nomination of directors described above may
have the effect of precluding a nomination for election of directors at a
particular meeting if the required procedure is not followed.
Elimination of Liability; Indemnification. Except as described below, the
Certificate of Incorporation eliminates the liability of members of ourGener board of directors is required to uscall such a
meeting within 30 days from the request.
VOTING AND APPRAISAL RIGHTS WITH RESPECT TO CORPORATE REORGANIZATIONS
AES. Unless a greater percentage is specified in a corporation's
certificate of incorporation, the DGCL requires a majority vote of stockholders
to approve a merger, sale of assets or our stockholders for monetary damages resulting from
breaches of their fiduciary duties as directors. Directors remain liable for
breaches of their duty of loyalty to us or our stockholders, as well as for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law and transactions from which a director derives
improper personal benefit. The Certificate of Incorporation also does not
release directors of liability undersimilar reorganization transaction.
Under Section 174251(f) of the Delaware General
Corporation Law (the "GCL"), which makes directors personally liable for
unlawful dividends or unlawful stock repurchases or redemptions if the unlawful
conduct is willful or results from negligence.
Under our By-Laws, and in accordance with Section 145DGCL, however, no vote of the GCL, we shall
indemnify to the fullest extent permitted by the GCL any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding. These include civil, criminal,
administrative or investigative proceedings by reason of the fact that the
person is or was a director or officer of or employed by us, or is or was
serving in that capacity or as an agent at the request of us for another
entity. Our indemnification covers expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with the defense
or settlement of an action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to
our best interests and, with respect to any criminal action or proceeding, had
no reasonable cause to believe was unlawful. We will indemnify persons in a
derivative action under the same conditions, except that no indemnification is
permitted without judicial approval if the person is adjudged to be liable to
us in the performance of his or her duty. Derivative actions are actions by us
or in the right of us to procure a judgment in our favor. Agents of ours may be
similarly indemnified at the discretion of the board of directors.
Under Section 145 of the GCL, a similar duty of care is applicable in the
case of derivative actions, except that indemnification only extends to
expenses incurred in connection with the defense or settlementstockholders of a
derivative
action and then, wherecorporation surviving the personmerger is adjudged to be liable to us, onlyrequired if and
to the extent that the Court of Chancery of the State of Delaware or the court
in which the action was brought determines that the person is fairly and
reasonably
14
entitled to the indemnity and only for those expenses as the court deems
proper.
Pursuant to our By-Laws, a person eligible for indemnification may have
the expenses incurred in connection with any matter described above paid in
advance of a final disposition by us. However, these advances will only be made
if the indemnified person undertakes to repay all advanced amounts if it is
determined that the person is not entitled to indemnification.
In addition, under our By-Laws, we may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of us
or of another corporation against any liability arising out of the person's
status as director, officer, employee or agent of us whether or not we would
have the power to indemnify such person against such liability under the
provisions of our By-Laws. We maintain directors' and officers' insurance.
Depositary Shares
General. We may, at our option, elect to offer fractional shares of
preferred stock, rather than full shares of preferred stock. If we exercise
this option, we will issue to the public receipts for depositary shares, and
each of these depositary shares will represent a fraction (to be set forth in
the application prospectus supplement) of a share of a particular series of
preferred stock.
The shares of any series of preferred stock underlying the depositary
shares will be deposited under a deposit agreement between us and a bank or
trust company selected by us. The depositary will have its principal office in
the United States and a combined capital and surplus of at least $50,000,000.
Subject to the terms of the deposit agreement, each owner of a depositary share
will be entitled, in proportion, to the applicable fraction of a share of
preferred stock underlying that depositary share, to all the rights and
preferences of the preferred stock underlying that depositary share. Those
rights include dividend, voting, redemption and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock underlying
the depositary shares, in accordance with the terms of the offering. Copies of
the forms of deposit agreement and depositary receipt will be filed as exhibits
to the registration statement. The following summary of the deposit agreement,
the depositary shares and the depositary receipts is not complete. You should
refer to the forms of the deposit agreement and depositary receipts that will
be filed with the Securities and Exchange Commission in connection with the
offering of the specific depositary shares.
Pending the preparation of definitive engraved depositary receipts, the
depositary may, upon our written order, issue temporary depositary receipts
substantially identical to the definitive depositary receipts but not in
definitive form. These temporary depositary receipts entitle their holders to
all the rights of definitive depositary receipts which are to be prepared
without unreasonable delay. Temporary depositary receipts will then be
exchangeable for definitive depositary receipts at our expense.
Dividends and Other Distributions. The depositary will distribute all cash
dividends or other cash distributions received with respect to the preferred
stock to the record holders of depositary shares relating to the preferred
stock in proportion to the number of depositary shares owned by those holders.
If there is a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
that are entitled to receive the distribution, unless the depositary determines
that it is not feasible to make the distribution. If this occurs, the
depositary may, with our approval, sell the property and distribute the net
proceeds from the sale to the applicable holders.
Redemption of Depositary Shares. If a series of preferred stock
represented by depositary shares is subject to redemption, the depositary
shares will be redeemed from the proceeds received by the depositary resulting
from the redemption, in whole or in part, of that series of preferred stock
held by the depositary. The redemption price per depositary share will be equal
to the applicable redemption fraction of the redemption price per share payable
with respect to that series of the preferred stock. Whenever we redeem shares
of preferred stock that are held by the depositary, the depositary will redeem,
as of the same redemption date, the number
15
of depositary shares representing the shares of preferred stock so redeemed. If
fewer than all the depositary shares are to be redeemed, the depositary shares
to be redeemed will be selected by lot or pro rata as may be determined by the
depositary.
Voting the Preferred Stock. Upon receipt of notice of any meeting at which
the holders of the preferred stock are entitled to vote, the depositary will
mail the information contained in such notice to the record holders of the
depositary shares underlying the preferred stock. Each record holder of the
depositary shares on the record date (which will be the same date as the record
date for the preferred stock) will be entitled to instruct the depositary as to
the exercise of the voting rights pertaining to the amount of the preferred
stock represented by such holder's depositary shares. The depositary will then
try, as far as practicable, to vote the number of shares of preferred stock
underlying those depositary shares in accordance with such instructions, and we
will agree to take all actions which may be deemed necessary by the depositary
to enable the depositary to do so. The depositary will not vote the shares of
preferred stock to the extent it does not receive specific instructions from
the holders of depositary shares underlying the preferred stock.
Amendment and Termination of the Depositary Agreement. The form of
depositary receipt evidencing the depositary shares and any provision of the
deposit agreement may at any time be amended by agreement between us and the
depositary. However, any amendment which materially and adversely alters the
rights of the holders of depositary shares will not be effective unless the
amendment has been approved by the holders of at least a majority of the
depositary shares then outstanding. The deposit agreement may be terminated by
us or by the depositary only if (a) all outstanding depositary shares have been
redeemed or (b) there has been a final distribution of the underlying preferred
stock in connection with our liquidation, dissolution or winding up and the
preferred stock has been distributed to the holders of depositary receipts.
Charges of Depositary. We will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. We will also pay charges of the depositary in connection with the
initial deposit of the preferred stock and any redemption of the preferred
stock. Holders of depositary receipts will pay other transfer and other taxes
and governmental charges and those other charges, including a fee for the
withdrawal of shares of preferred stock upon surrender of depositary receipts,
as are expressly provided in the deposit agreement to be for their accounts.
Miscellaneous. The depositary will forward to holders of depositary
receipts all reports and communications from us that we deliver to the
depositary and that we are required to furnish to the holders of the preferred
stock.
Neither we nor the depositary will be liable if either of us is prevented
or delayed by law or any circumstance beyond our control in performing our
respective obligations under the deposit agreement. Our obligations and those
of the depositary will be limited to performance in good faith of our
respective duties under the deposit agreement. Neither we nor the depositary
will be obligated to prosecute or defend any legal proceeding in respect of any
depositary shares or preferred stock unless satisfactory indemnity is
furnished. We and the depositary may rely upon written advice of counsel or
accountants, or upon information provided by persons presenting preferred stock
for deposit, holders of depositary receipts or other persons believed to be
competent and on documents believed to be genuine.
Resignation and Removal of Depositary. The depositary may resign at any
time by delivering notice to us of its election to resign. We may remove the
depositary at any time. Any resignation or removal will take effect upon the
appointment of a successor depositary and its acceptance of the appointment.
The successor depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
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DESCRIPTION OF DEBT SECURITIES
The debt securities may consist of Senior Debt Securities, Subordinated
Debt Securities or Junior Subordinated Debt Securities. The Senior Debt
Securities will be issued under an indenture (the "Senior Debt Indenture")
between AES, as issuer, and either Bank One, National Association (formerly
known as The First National Bank of Chicago) or The Bank of New York, as
trustee. The Senior Subordinated Debt Securities will be issued under an
indenture (the "Senior Subordinated Debt Indenture") between AES, as issuer,
and either Bank One, National Association (formerly known as The First National
Bank of Chicago) or The Bank of New York, as trustee. The Junior Subordinated
Debt Securities will be issued under an indenture (the "Junior Subordinated
Debt Indenture") between AES, as issuer, and either Bank One, National
Association (formerly known as The First National Bank of Chicago) or The Bank
of New York, as trustee. The Senior Debt Indenture, the Senior Subordinated
Debt Indenture and the Junior Subordinated Debt Indenture are collectively
referred to herein as the "Indentures."
The Indentures have been incorporated by reference or included herein as
exhibits to the registration statement of which this Prospectus is a part and
are also available for inspection at the office of the trustee. The Indentures
are subject to and governed by the Trust Indenture Act of 1939 (the "Trust
Indenture Act"). Section references contained herein are applicable to each of
the Indentures. The following summaries of the Indentures are not complete.
Where reference is made to particular provisions of the Indentures, these
provisions, including definitions of certain terms, are incorporated by
reference. The Indentures are substantially identical except for provisions
relating to subordination.
General
None of the Indentures limits the amount of debt securities which may be
issued thereunder. Each Indenture provides that debt securities issuable
thereunder may be issued up to the aggregate principal amount which may be
authorized by us from time to time. The prospectus supplement will describe the
terms of any debt securities being offered (the "Offered Debt Securities")
including:
o the designation, aggregate principal amount and authorized
denominations of the Offered Debt Securities;
o the date or dates on which the Offered Debt Securities mature;
o the rate or rates per annum at which the Offered Debt Securities will
bear interest and the method of calculating interest rates, if any;
o the dates on which any interest will be payable and the record dates
for any interest payments;
o any mandatory or optional redemption terms or prepayment, conversion,
sinking fund or exchangeability provisions;
o the place where the principal of and interest on the Offered Debt
Securities will be payable;
o if other than denominations of $1,000 or multiples thereof, the
denominations in which the Offered Debt Securities will be issuable;
o whether the Offered Debt Securities will be
issued in the form of
Global Securities (as defined below) or certificates;
o additional provisions, if any, relating to the defeasancemerger does not exceed 20% of the Offered Debt Securities;
o the currency or currencies, if other than the currencyshares of the United
States, in which payment of the principal of and interest on the
Offered Debt Securities will be payable;
o whether the Offered Debt Securities will be issuable in registered
form or bearer form ("Bearer Securities") or both and, if Bearer
Securities are issuable, any restrictions applicablesurviving
corporation outstanding immediately prior to the exchange
of one form for another and the offer, sale and delivery of Bearer
Securities;
17
o any applicable United States federal income tax consequences,
including whether and under what circumstances we will pay additional
amounts on Offered Debt Securities held by a person who is not a U.S.
Person (as defined in each prospectus supplement relating to any
particular series of debt securities offered thereby) in respect of
any tax, assessment or governmental charge withheld or deducted and,
if so, whether we will have the option to redeem these Offered Debt
Securities rather than pay the additional amounts;
o the dates on which premium, if any, will be payable;
o our right, if any, to defer payment of interest and the maximum
length of any deferral period;
o any listing on a securities exchange;
o the initial public offering price and
o other specific terms, including any additional events of default or
covenants provided for with respect to the Offered Debt Securities.
As described in each prospectus supplement relating to any particular
series of debt securities offered thereby, the indenture may contain covenants
limiting:
o the incurrence of debt by us;
o the incurrence of debt by subsidiaries of us;
o the making of certain payments by us and our subsidiaries;
o subsidiary mergers;
o business activities of us and our subsidiaries;
o the issuance of preferred stock of subsidiaries;
o asset dispositions;
o transactions with affiliates;
o liens and
o mergers and consolidations involving AES.
Book-Entry Systems
If so specified in any prospectus supplement relating to debt securities,
debt securities of any series may be issued under a book-entry system in the
form of one or more global securities (each, a "Global Security"). Each Global
Security will be deposited with, or on behalf of, a depositary, which will be
The Depository Trust Company, New York, New York (the "Depositary"). The Global
Securities will be registered in the name of the Depositary or its nominee.
The Depositary has advised us that the Depositary is a limited purpose
trust company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York banking law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. The Depositary was created
to hold securities of its participants and to facilitate the clearance and
settlement of securities transactions among its participants through electronic
book-entry changes in accounts of the participants, thereby eliminating the
need for physical movement of securities certificates. The Depositary's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations, some of which (and/or
their representatives) own the Depositary. Access to the Depositary's
book-entry system is also available to others, such as banks, brokers, dealers,
and trust companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly.
When a Global Security is issued in registered form, the Depositary will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the debt securities represented by each Global Security to
the participants' accounts. The accounts to be credited will be designated by
the underwriters, dealers, or agents, if any. If debt securities are offered
and sold directly by us, we will designate the accounts to be credited.
Ownership of
18
beneficial interests in the Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests by participants in the Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, the
participants' records. The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of the securities in definitive
form. These laws may impair the ability to transfer beneficial interests in a
Global Security.
So long as the Depositary or its nominee is the owner of record of a
Global Security, we consider the Depositary or its nominee the sole owner or
holder of the debt securities represented by the Global Security for all
purposes under the Indenture under which the debt securities are issued. Except
as set forth below, owners of beneficial interests in a Global Security will
not be entitled to have the debt security represented by the Global Security
registered in their names, and will not receive or be entitled to receive
physical delivery of the Debt Securities in definitive form and will not be
considered the owners or holders thereof under the Indenture under which these
debt securities are issued. Accordingly, each person owning a beneficial
interest in a Global Security must rely on the procedures of the Depositary.
Persons who are not participants must rely on the procedures of the participant
through which they own their interest. We understand that under existing
industry practices, if we request any action of holders or if any owner of a
beneficial interest in a Global Security desires to give or take any action
which a holder is entitled to give or take under the applicable Indenture, the
Depositary would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instruction of beneficial owners holding
through them.
Payments of principal, premium, if any, and interest on debt securities
represented by a Global Security registered in the name of the Depositary or
its nominee will be made to the Depositary or nominee, as the registered owner.
None of AES, the trustee or any other agent of us or agent of the trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Security or for maintaining, supervising, or reviewing any records relating to
such beneficial ownership interests.
We have been advised by the Depositary that the Depositary will credit
participants' accounts with payments of principal, premium, if any, or interest
on the payment date thereof in amounts proportionate to their respective
beneficial interests in the principal amount of the Global Security as shown on
the records of the Depositary. We expect that payments by participants to
owners of beneficial interests in the Global Security held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers
registered in "street name," and will be the responsibility of such
participants.
A Global Security may not be transferred except as a whole:
o by the Depositary to a nominee or successor of the Depositary or
o by a nominee of the Depositary to another nominee of the Depositary.
A Global Security representing all but not part of an offering of debt
securities hereby is exchangeable for debt securities in definitive form of
like tenor and terms if:
o The Depositary notifies us that it is unwilling or unable to continue
as depositary for the Global Security or if at any time the
Depositary is no longer eligible to be in good standing as a clearing
agency registered under the Exchange Act, and we do not appoint a
successor depositary within 90 days after we receive notice or become
aware of the ineligibility or
o We in our sole discretion at any time determine not to have all of
the debt securities represented in an offering of Offered Debt
Securities by a Global Security and notify the trustee thereof.
A Global Security exchangeable pursuant to the preceding sentence shall be
exchangeable for debt securities registered in the names and in the authorized
denominations as the Depositary for the Global Security shall direct. The debt
securities of a
19
series may also be issued in the form of one or more bearer global debt
securities (a "Bearer Global Security") that will be deposited with a common
depositary for Euroclear and Clearstream, or with a nominee for that depositary
identified in the prospectus supplement relating to the series. The specific
terms and procedures, including the specific terms of the depositary
arrangement, with respect to any portion of a series of debt securities to be
represented by a Bearer Global Security will be described in the prospectus
supplement.
Senior Debt Securities
The payment of principal, premium, if any, and interest on the Senior Debt
Securities will, to the extent and in the manner set forth in the Senior Debt
Indenture, rank equally with all unsecured and unsubordinated debt.
Subordination of Senior Subordinated Debt Securities
The payment of principal, premium, if any, and interest on the Senior
Subordinated Debt Securities will, to the extent and in the manner set forth in
the Senior Subordinated Debt Indenture, be subordinated in right of payment to
the prior payment in full, in cash equivalents, of all Senior Debt.
Upon any payment or distribution of assets to our creditors upon any
liquidation, dissolution, winding up, receivership, reorganization, assignment
for the benefit of creditors, marshaling of assets and liabilities or any
bankruptcy, insolvency or similar proceedings, the holders of all Senior Debt
will first be entitled to receive payment in full of all amounts due or to
become due thereon before the holders of the Senior Subordinated Debt
Securities will be entitled to receive any payment in respect of the principal,
premium, if any, or interest on the Senior Subordinated Debt Securities.
No payments of principal, premium, if any, or interest in respect of the
Senior Subordinated Debt Securities may be made by us if a default in any
payment with respect to Senior Debt has occurred and is continuing. In
addition, during the continuance of any other event of default (other than a
payment default) with respect to Designated Senior Debt pursuant to which the
maturity thereof may be accelerated, no payments of principal, premium, if any,
or interest in respect of the Senior Subordinated Debt Securities may be made
by us for a period (the "Payment Blockage Period") beginning on the date of
delivery of written notice of the holders and ending 179 days thereafter
(unless the Payment Blockage Period shall be terminated by written notice to
the trustee from the holders of Designated Senior Debt or from an agent of
these holders, or the event of default has been cured or waived or has ceased
to exist). Only one Payment Blockage Period may be commenced with respect to
the Senior Subordinated Debt Securities during any period of 360 consecutive
days. No event of default which existed or was continuing on the date of the beginning of any Payment Blockage Period shall be the basis for the beginning
of any subsequent Payment Blockage Period by the holders of Designated Senior
Debt, unless such event of default shall have been cured or waived for a period
of not less than 90 days.
Due to this subordination, in the event of insolvency, funds that would
otherwise be payable to holders will be paid to the holders of Senior Debt to
the extent necessary to pay the Senior Debt in full,merger and we may be unable to
meet fully our obligations with respect to the Senior Subordinated Debt
Securities.
"Debt" is defined to mean, with respect to any person at any date of
determination (without duplication):
o all indebtedness for borrowed money;
o all obligations evidenced by bonds, debentures, notes orif
other similar instruments;
o all obligations in respect of letters of credit or bankers'
acceptance or other similar instruments (or reimbursement obligations
with respect thereto);
o all obligations to pay the deferred purchase price of property or
services, except trade payables;
o all obligations as lessee under capitalized leases;
o all Debt of others secured by a lien on any assetcertain conditions are met.
Section 262 of the person,
whetherDGCL does not provide for dissenters' rights of
appraisal for (a) the sale, lease or not the Debt is assumed by that person; provided that, for
purposesexchange of determining the amount of any Debt of the type described
in this
20
clause, if recourse with respect to that Debt is limited to that
asset, the amount of that Debt shall be limited to the lesser of the
fair market value of the asset or the amount of the Debt;
o all Debt of others guaranteed by that person to the extent that Debt
is guaranteed by such person;
o all redeemable stock valued at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends;
and,
o to the extent not otherwise included in this definition, all
obligations under currency agreements and interest rate agreements.
"Designated Senior Debt" is defined to mean:
o Debt under the Credit Agreement dated as of August 2, 1996 (the
"Credit Agreement") among The AES Corporation, the banks named on the
signature pages thereof and the Morgan Guaranty Trust Company of New
York, as agent for the banks, as such Credit Agreement has been and
may be amended, restated, supplemented or otherwise modified from
time to time; and
o Debt constituting Senior Debt which, at the time of its determination
o has an aggregate principal amount of at least $30 million; and
o is specifically designated by us as "Designated Senior Debt."
"Senior Debt" is defined to mean the principal of, premium, if any, and
interest on all of our Debt whether created, incurred or assumed before, on or
after the date of the Senior Subordinated Debt Indenture; provided that Senior
Debt shall not include:
o our 8.875% Senior Subordinated Debentures due 2027, 8.50% Senior
Subordinated Notes due 2007, 8.375% Senior Subordinated Notes Due
2007 and our 10.25% Senior Subordinated Notes due 2006 which rank
equally with the Senior Subordinated Debt Securities;
o our Debt to any affiliate;
o Debt of ours that, when incurred, and without respect to any election
under Section 1111(b) of Title 11, U.S. Code, was without recourse;
o any other Debt of ours which by the terms of the instrument creating
or evidencing the same are specifically designated as not being
senior in right of payment to the Senior Subordinated Debt
Securities; and
o our redeemable stock.
Subordination of Junior Subordinated Debt Securities
The payment of principal, premium, if any, and interest on the Junior
Subordinated Debt Securities will, to the extent and in the manner set forth in
the Junior Subordinated Debt Indenture, be subordinated in right of payment to
the prior payment in full, in cash or cash equivalents, of all our Senior and
Subordinated Debt.
Upon any payment or distribution of assets to our creditors upon any
liquidation, dissolution, winding up, receivership, reorganization, assignment
for the benefit of creditors, marshaling of assets and liabilities or any
bankruptcy, insolvency or similar proceedings, the holders of all Senior and
Subordinated Debt will first be entitled to receive payment in full of all
amounts due or to become due thereon before the holders of the Junior
Subordinated Debt Securities will be entitled to receive any payment in respect
of the principal, premium, if any, or interest on the Junior Subordinated Debt
Securities.
No payments of principal, premium, if any, or interest in respect of the
Junior Subordinated Debt Securities may be made by us if a default in any
payment with respect to Senior and Subordinated Debt has occurred and is
continuing. In addition, during the continuance of any other event of default
(other than a payment default) with respect to Designated Senior and
Subordinated Debt pursuant to which the maturity thereof may be accelerated, no
payments on account of principal, premium, if any, or
21
interest may be made by us during a Payment Blockage Period in respect of these
Junior Subordinated Debt Securities (unless the Payment Blockage Period is
terminated by written notice to the trustee from the holders of Designated
Senior and Subordinated Debt or from an agent of such holders, or the event of
default has been cured or waived or has ceased to exist). Only one Payment
Blockage Period may be commenced with respect to the Junior Subordinated Debt
Securities during any period of 360 consecutive days. No event of default which
existed or was continuing on the date of the beginning of any Payment Blockage
Period with respect to the Designated Senior and Subordinated Debt initiating
the Payment Blockage Period shall be the basis for the beginning of any
subsequent Payment Blockage Period by the holders of such Designated Senior and
Subordinated Debt, unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days.
Due to this subordination, in the event of insolvency, funds that would
otherwise be payable to holders of Junior Subordinated Debt Securities will be
paid to the holders of Senior and Subordinated Debt to the extent necessary to
pay the Debt in full, and we may be unable to meet fully our obligations with
respect to the Junior Subordinated Debt Securities.
"Designated Senior and Subordinated Debt" is
defined to mean
o Debt under the Credit Agreement; and
o Debt constituting Senior and Subordinated Debt which, at the time of
its determination
o has an aggregate principal amount of at least $30 million; and
o is specifically designated in the instrument as "Designated Senior
and Subordinated Debt" by us.
"Senior and Subordinated Debt" is defined to mean the principal, premium,
if any, and interest on all of our Debt whether created, incurred or assumed
before, on or after the date of the Junior Subordinated Debt Indenture;
provided that Senior and Subordinated Debt shall not include
o our Debt to any affiliate;
o Debt of ours that, when incurred and without respect to any election
under Section 1111(b) of Title 11, U.S. Code, was without recourse;
o any other Debt of ours which by the terms of the instrument creating
or evidencing the same are specifically designated as not being
senior in right of payment to the Junior Subordinated Debt
Securities, and in particular the Junior Subordinated Debt Securities
shall rank equally with all other debt securities and guarantees
issued to an AES Trust or any other trust, partnership or other
entity affiliated with us which is a financing vehicle of ours in
connection with an issuance of preferred securities by that financing
entity and
o our redeemable stock.
Events of Default
An Event of Default, as defined in the Indentures and applicable to debt
securities issued thereunder, will occur with respect to the debt securities of
any series issued under the Indentures if:
1. we default in paying principal or premium, if any, on any debt
security when due, upon acceleration, redemption, mandatory
repurchase, or otherwise;
2. we default in paying interest on any debt security when it becomes
due, and the default continues for a period of 30 days;
3. we default in performing or breach any other covenant or agreement in
the Indentures and the default or breach continues for a period of 60
consecutive days after written notice by the trustee or by the
holders of 25% or more in aggregate principal amount of the debt
securities of all series issued under an Indenture;
4. a court having jurisdiction enters a decree or order for
o relief in respect of AES or any of our Material Subsidiaries in
an involuntary case under any applicable bankruptcy, insolvency,
or other similar law now
22
or hereafter in effect;
o appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator, or similar official of AES or any of our
Material Subsidiaries or for all or substantially all of
the property and assets of AES or any of our Material Subsidiaries
or
o the winding up or liquidationa corporation, (b) a merger in which stockholders receive shares
of the affairs of AES or any of
our Material Subsidiaries and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60
consecutive days;
5. AES or any of its Material Subsidiaries
o commences a voluntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary
case under any such law,
o consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official of AES or any of its Material
Subsidiaries or for all or substantially all of the property and
assets of AES or any of its Material Subsidiaries or
o effects any general assignment for the benefit of creditors; or
6. any other Events of Default set forth in the applicable prospectus
supplement occur.
If an Event of Default (other than an Event of Default specified in clause
(4) or (5) with respect to AES) occurs with respect to the debt securities of
any series and continues, then the trustee or the holders of at least 25% in
principal amount of the outstanding debt securities may, by written notice to
us, and the trustee at the request of at least 25% in principal amount of the
outstanding debt securities will, declare the principal, premium, if any, and
accrued interest on the outstanding debt securities to be immediately due and
payable. Upon a declaration of acceleration, the principal, premium, if any,
and accrued interest shall be immediately due and payable.
If an Event of Default specified in clause (4) or (5) above occurs with
respect to AES, the principal, premium, if any, and accrued interest on the
debt securities shall be immediately due and payable, subject to the prior
payment in full of all Senior Debt, without any declaration or other act on the
part of the trustee or any holder. The holders of at least a majority in
principal amount of the outstanding debt securities may, by written notice to
us and to the trustee, waive all past defaults with respect to debt securities
and rescind and annul a declaration of acceleration with respect to debt
securities of that series and its consequences if:
o all existing Events of Default applicable to debt securities of that
series, other than the nonpayment of the principal, premium, if any,
and interest on the debt securities that have become due solely by
that declaration of acceleration, have been cured or waived and
o the rescission would not conflict with any judgment or decree of a
court of competent jurisdiction.
For information as to the waiver of defaults, see "-- Modification and
Waiver."
The holders of at least a majority in principal amount of the outstanding
debt securities may direct the time, method, and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee. However, the trustee may refuse to follow any
direction that conflicts with law or the applicable Indenture, that may involve
the trustee in personal liability, or that the trustee determines in good faith
may be unduly prejudicial to the rights of holders of debt securities who did
not join in giving that direction and the trustee may take any other action it
deems proper that is not inconsistent with the direction received from holders
of outstanding debt securities. A holder may not pursue any remedy with respect
to the applicable Indenture or the debt securities of any series unless:
o the holder gives the trustee written notice of a continuing Event of
Default;
23
o the holders of at least 25% in principal amount of outstanding debt
securities make a written request to the trustee to pursue the
remedy;
o the holder or holders offer and, if requested, provide the trustee
indemnity satisfactory to the trustee against any costs, liability or
expense;
o the trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity and
o with that 60-day period, the holders of at least a majority in
principal amount of the outstanding debt securities do not give the
trustee a direction that is inconsistent with the request.
However, these limitations do not apply to the right of any holder of a
debt security to receive payment of the principal, premium, if any, or interest
on, that debt security or to bring suit for the enforcement of any payment, on
or after the due date expressed in the debt securities,surviving corporation which right shall not
be impaired or affected without the consent of the holder.
Each of the Indentures requires that certain of our officers certify, on
or before a date not more than four months after the end of each fiscal year,
that to the best of those officers' knowledge, we have fulfilled all our
obligations under the Indenture. We are also obligated to notify the trustee of
any default or defaults in the performance of any covenants or agreements under
any of the Indentures.
"Material Subsidiary" of a Person is defined to mean, as of any date, any
Subsidiary that would constitute a "significant subsidiary" within the meaning
of Article 1 of Regulation S-X of the Securities Act of 1933.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which a majority of the capital stock
or other ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions are at
the time directly or indirectly owned by such Person.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
Modification and Waiver
The Indentures may be amended or supplemented without the consent of any
holder of debt securities to:
o cure ambiguities, defects, or inconsistencies;
o comply with the terms in "Restriction on Mergers, Consolidations and
Sales of Assets" described below;
o comply with any requirements of the Securities and Exchange
Commission in connection with the qualification of the Indentures
under the Trust Indenture Act of 1939;
o evidence and provide for the acceptance of appointment with respect
to the debt securities by a successor Trustee;
o establish the form or forms of debt securities of any series;
o provide for uncertificated debt securities and to make all
appropriate changes for such purpose; and
o make any change that does not adversely affect the rights of any
holder.
Other modifications and amendments of the Indentures may be made with the
consent of the holders of not less than a majority in principal amount of the
outstanding debt securities of each series affected by the amendment (all such
series voting together as a single class). However, no modification or
amendment may, without the consent of each holder affected:
o change the stated maturity of the principal of, or any sinking fund
obligation or any installment of interest on, any debt security;
o reduce the principal amount, premium, if
24
any, or interest on, any debt security;
o reduce the above-stated percentage of outstanding debt securities,
the consent of whose holders is necessary to modify or amend that
Indenture with respect to the debt securities of any series issued
under that Indenture;
o reduce the percentage or principal amount of outstanding debt
securities, the consent of whose holders is necessary for waiver of
compliance with certain provisions of that Indenture or for waiver of
certain defaults.
A supplemental indenture which changes or eliminates any covenant or other
provision of an Indenture which has expressly been included solely for the
benefit of one or more particular series of debt securities issued under an
Indenture, or which modifies the rights of holders of debt securities of that
series with respect to that covenant or provision, shall be deemed not to
affect the rights under the applicable Indenture of the holders of debt
securities of any other series issued under the Indenture or of the coupons
appertaining to those debt securities. It is not necessary for the consent of
the holders under this section of an Indenture to approve the particular form
of any proposed amendment, supplement, or waiver, but it is sufficient if the
consent approves the substance thereof. After an amendment, supplement, or
waiver under this section of an Indenture becomes effective, we will give to
the holders affected thereby a notice briefly describing the amendment,
supplement, or waiver. We will mail supplemental indentures to holders upon
request. Any failure of us to mail a notice, or any defect therein, will not
affect the validity of any supplemental indenture or waiver.
Restriction on Mergers, Consolidations and Sales
of Assets
Pursuant to the Indentures, we may not consolidate with, merge with or
into, or transfer all or substantially all of our assets to any Person unless:
o AES shall be the continuing Person, or, if AES is not the continuing
Person, the Person formed by such consolidation or into which we
merged or to which properties and assets of ours are transferred is a
solvent corporation organized and existing under the laws of the
United States or any State thereof or the District of Columbia and
expressly assumes in writing all the obligations of ours under the
Notes,
o immediately after giving effect to such transaction no Event of
Default has occurred and is continuing and
o other conditions as may be established in connection with the
issuance of the applicable Debt Securities are met.
Defeasance and Discharge
The Indentures provide that we are deemed to have paid and will be
discharged from all obligations in respect of the debt securities of any series
on the 123rd day after the deposit referred to below has been made, and that
the provisions of an Indenture will no longer be in effect with respect to the
debt securities issued thereunder (except for, among other matters, certain
obligations to register the transfer or exchange of the Debt Securities of such
series, to replace stolen, lost or mutilated Debt Securities of such series, to
maintain paying agencies and to hold monies for payment in trust) if, among
other things,
o we have deposited with the trustee, in trust, money and/or U.S.
Government Obligations that through the payment of interest and
principal in respect thereof, will provide money in an amount
sufficient to pay the principal, premium, if any, and accrued
interest on the applicable debt securities, on the due date thereof
or earlier redemption (irrevocably provided for under arrangements
satisfactory to the trustee), as the case may be, in accordance with
the terms of the Indenture and the applicable debt securities,
o we have delivered to the trustee
o either
-- an opinion of counsel to the effect that holders will not
recognize income, gain or loss for federal income tax
purposes as a result of the exercise of our option under
this "Defeasance" provision and will be subject to federal
income tax on the same
25
amount and in the same manner and at the same times as
would have been the case if the deposit, defeasance and
discharge had not occurred, which opinion of counsel must
be based upon a ruling of the Internal Revenue Service to
the same effect unless there has been a change in
applicable federal income tax law or related treasury
regulations after the date of the Indenture that a ruling
is no longer required or
-- a ruling directed to the trustee received from the Internal
Revenue Service to the same effect as the aforementioned
opinion of counsel and
o an opinion of counsel to the effect that the creation of the
defeasance trust does not violate the Investment Company Act of
1940 and after the passage of 123 days following the deposit,
the trust fund will not be subject to the effect of Section 547
of the U.S. Bankruptcy Code or Section 15 of the New York Debtor
and Creditor Law,
o immediately after giving effect to that deposit on a pro forma
basis, no Event of Default has occurred and is continuing on the
date of the deposit or during the period ending on the 123rd day
after the date of the deposit, and the deposit will not result
in a breach or violation of, or constitute a default under, any
other agreement or instrument to which we are a party or by
which we are bound,
o we are not prohibited from making payments in respect of the
applicable debt securities by the subordination provisions
contained in an Indenture and
o if at that time the applicable debt securities are listed on a national securities
exchange weor held by more than 2,000 stockholders or (c) stockholders of a
corporation surviving a merger if no vote of such stockholders is required to
approve the merger.
Gener. The Chilean Corporations Act provides that mergers, sales of all
assets and certain similar reorganization transactions must be approved at a
special shareholders meeting by two thirds of the issued and outstanding voting
capital stock of the relevant corporation. Moreover, the Chilean Corporations
Act provides that dissenting shareholders have deliveredappraisal rights upon approval
of a merger of the corporation with another entity or the sale of all the
assets and liabilities or all the assets of the corporation and in certain
other circumstances the shares of the affected classes or series. Holders of
Gener shares do not have appraisal rights in connection with the offers.
AMENDMENTS TO CHARTER DOCUMENTS
AES. The DGCL requires approval of stockholders holding a majority of the
voting power of AES in order to amend AES's Certificate.
62
Gener. Under Article 23 the bylaws can only be amended in a special
shareholders' meeting with the affirmative vote of a majority of the voting
shares present or represented at a duly convened meeting of shareholders.
However, certain matters require the vote of two thirds of the shares of voting
capital stock. These matters are:
(1) the transformation of the corporation, its division and its merger
with another company;
(2) the amendment of its duration, if any;
(3) the dissolution of the corporation;
(4) the change of domicile of the corporation;
(5) the reduction of its capital;
(6) the approval and valuation of capital contributions made in property
other than cash;
(7) the amendment of the powers bestowed on a shareholders meeting and
the limits on the powers of the board of directors;
(8) the reduction of the number of members of the board of directors;
(9) the transfer of all assets and liabilities of the corporation or the
totality of its assets;
(10) the manner of distributing corporate profits;
(11) others provided in the bylaws (Gener's Bylaws do not provide any
other matters requiring two thirds majority vote); and
(12) the curing of annulment arising out of formal vices in the
incorporation of the company or any amendments of the bylaws including
any of the above matters.
Amendments to the trustee an
opinionbylaws, the purpose of counselwhich is to create, amend or
suppress preferences, shall be approved by two thirds of the effectshareholders of
the affected classes or series.
Article 24 of Gener's Bylaws provides that the debt securities will not be
delisted as a resultamendment of a deposit, defeasancearticles 1
bis, 5 bis, 9 bis, 14 bis, 17 bis, 20 bis, 21 bis, 24, 27 bis and discharge.
As more fully described in29 bis of
Gener's Bylaws which among other things, limit to 20% the prospectus supplement, the Indentures also
provide for defeasancenumber of certain covenants.
OFFERED SECURITIES
The securitiesGener
shares which may be voted and/or owned by any stockholder or persons related to
such stockholder and subject Gener to the provisions of Decree Law 3,500 may
only be amended by the vote of holders of at least 75% of the issued and
outstanding voting shares. Most of these articles are within the amendments
which must be adopted and become effective under Chilean law to allow our offer
to proceed.
BYLAWS
Section 109 of the DGCL places the power to adopt, amend or repeal bylaws
in the corporation's shareholders, but permits the corporation, in its
certificate of incorporation, to also vest such power with the board of
directors. AES's Certificate contains such a provision. Although the board of
directors of AES has been vested with such authority, AES's stockholders also
have the power to adopt, amend or repeal the Bylaws by majority vote. Gener's
Bylaws may only be amended by a special shareholders' meeting.
PREEMPTIVE RIGHTS
AES. Under Section 102 of the DGCL, preemptive rights are not available
unless otherwise provided in a corporation's certificate of incorporation.
AES's Certificate does not provide for any such preemptive rights.
Gener. Article 25 of the Chilean Corporations Act requires a corporation
to offer existing shareholders the right to purchase a sufficient number of
shares or convertible securities to maintain their existing percentage of
ownership in the corporation whenever it issues new shares or convertible
securities. Preemptive rights are offered to Citibank, N.A., as the Depositary
as registered owner of the
63
Gener shares underlying the Gener ADSs. However, under the Gener Deposit
Agreement United States holders of Gener ADSs are not entitled to exercise
their preemptive rights, unless a Registration Statement under the Securities
Act is effective with respect to the underlying shares or an exemption from the
registration requirements is available. In the absence of an effective
Registration Statement under the Securities Act or an available exemption from
the registration thereunder, the Depositary will sell such rights at public or
private sale and shall allocate the proceeds to the accounts of the Gener ADSs
holders otherwise entitled to such rights.
Under the Chilean Corporations Act, shareholders can waive, transfer or
exercise their preemptive rights during a period of 30 days following the
publication by Gener of an advertisement informing of such rights. During such
period and for an additional 30-day period, Gener cannot offer any unsubscribed
shares to third parties on terms which are more favorable to those third
parties than to those offered to its shareholders. At the end of such periods,
the corporation can offer the unsubscribed shares to third parties on different
terms and at a different price than those offered to shareholders, provided
that such unsubscribed shares are sold on a Chilean stock exchange.
DIVIDENDS
AES. The holders of shares of AES common stock are entitled to receive
ratably dividends as may be declared from time to time by this prospectus
consist of:
o upits board of
directors out of funds legally available to 10,000,000 sharespay dividends, subject to any
preferential rights of common stock,
o up to $250,000,000 initial offering priceany holders of preferred stock,stock.
Delaware corporations may pay dividends out of surplus or, if there is no
surplus, out of net profits for the fiscal year in which declared and o up to $250,000,000 initial offering price of debt securities.
This prospectus also relates to shares of common stock which may be issuable
upon conversion of preferred stock covered by this prospectus with a market
price for such common stock of up to $250,000,000 in the
aggregate aspreceding fiscal year. Section 170 of the date of issuance of such preferred stock, and upon conversion of debt
securities covered by this prospectus with a market price for such common stock
of up to $250,000,000 in the aggregate as of the date of issuance of such debt
securities. We propose to issue and sell the securities in connection with
acquisitions of and investments in other businesses and assets. The securities
or any combination of the securities, either individually or as units
consisting of one or more of the securities, shall be offered each on terms to
be determined at the time of sale. The securitiesDGCL also provides that dividends may be issued in exchange for
shares of capital stock, partnership interests or other assets representing an
interest, direct or indirect, in other entities, in exchange for assets used in
or related to the business of such entities or otherwise pursuant to agreements
providing for such acquisitions or investments, as well as additional shares of
common stock which may be issuable upon conversion of any convertible
securities covered by this prospectus. The consideration for these acquisitions
or investments may consist of equity securities, cash,
26
indebtedness, assumption of liabilities or a combination thereof. The terms of
these acquisitions and investments and of the issuance of any securities in
connection therewith will generally be determined by direct negotiations with
the owners of the business or assets to be acquired or invested in or, in the
case of entities which are more widely held, through exchange offers to
stockholders or documents soliciting the approval or statutory mergers,
consolidations or sales of assets. Underwriting discounts or commissions will
generally
not be paid out of net profits if, after the payment of the dividend, capital
is less than the capital represented by us. However, under certain circumstances, wethe outstanding stock of all classes
having a preference upon the distribution of assets.
Gener. In accordance with Article 79 of the Chilean Corporations Act and
Gener's Bylaws, Gener must distribute an annual cash dividend equal to at least
30% of Gener's annual consolidated net income calculated in accordance with
Chilean GAAP, unless otherwise decided by a unanimous vote of the holders of
the issued shares and provided there are no accumulated losses. If there is no
net income in a given year, Gener can elect, but is not legally obligated, to
distribute dividends out of retained earnings. Gener may issue
securities covered by this prospectusgrant an option to pay brokers' commissions incurredits
shareholders to receive any dividend in connection with acquisitionsexcess of 30% of net income in cash, in
Gener shares or investments. For a description of our common
stock and preferred stock, see "Description of Capital Stock" and for a
description of our debt securities, see "Description of Debt Securities."
This prospectus, as amended or supplemented if appropriate, has also been
prepared for use by persons who receive our securities in acquisitions or
investments, including securities sold hereunder and shares of common stock
received upon conversionpublic corporations that Gener holds. Shareholders
who do not expressly elect to receive a dividend other than in cash are legally
presumed to have decided to receive the dividend in cash. A United States
holder of convertible securities issued hereunder ("selling
stockholders"); provided, however, that no selling stockholder is authorized to
use this prospectus to reoffer any such securities without first obtaining our
prior written consent. ResalesGener ADSs may, be made in the manner described in this
prospectus, as amended or supplemented, in the manner permitted by Rule 145(d)absence of an effective Registration Statement
under the Securities Act or pursuant toan available exemption from the Securities Act.
Profits realized on resalesregistration
thereunder, effectively be required to receive a dividend in cash.
LIQUIDATION
Subject to any preferences that might be applicable to outstanding AES or
Gener preferred stock, the holders of common stock of AES and Gener,
respectively, are entitled to share ratably in all net assets paid to
shareholders upon liquidation of the corporation, after payment or provision
for payment of the debts and other liabilities of the corporation. According to
the Chilean Corporations Act, holders of shares which have not been fully paid
are only entitled to share in a liquidation with respect to such portion of the
shares which have been paid.
DIRECTOR NOMINATIONS/SHAREHOLDER PROPOSALS
AES's Bylaws impose certain notice and information requirements in
connection with the nomination by selling stockholders under certain circumstances
may be regarded as underwriting compensation undershareholders of candidates for election to
the Securities Act.
Resalesboard of directors or the proposal by selling stockholders may be made directly to investors or
through a securities firm acting as an underwriter, broker or dealer. When
resales areshareholders of business to be acted
upon at an annual meeting of shareholders. Gener's Bylaws contain no such
requirements.
THIS SUMMARY OF THE MATERIAL DIFFERENCES BETWEEN THE CORPORATION LAWS OF
DELAWARE AND CHILE, GENER'S BYLAWS AND AES'S CERTIFICATE AND BYLAWS DOES NOT
PURPORT TO BE A COMPLETE LISTING OF DIFFERENCES
64
IN THE RIGHTS AND REMEDIES OF HOLDERS OF SHARES OF CHILEAN CORPORATIONS AS
OPPOSED TO DELAWARE CORPORATIONS AND STOCKHOLDERS OF GENER AND STOCKHOLDERS OF
AES IN PARTICULAR. THE DIFFERENCES CAN BE DETERMINED IN FULL BY REFERENCE TO
THE CHILEAN CORPORATIONS ACT, THE REGULATIONS, THE DGCL, GENER'S BYLAWS AND
AES'S CERTIFICATE AND BYLAWS. THE DGCL AND THE CHILEAN CORPORATIONS ACT PROVIDE
THAT SOME OF THE STATUTORY PROVISIONS AS THEY AFFECT VARIOUS RIGHTS OF HOLDERS
OF SHARES MAY BE MODIFIED BY PROVISIONS IN THE CERTIFICATE OF INCORPORATION AND
BYLAWS FOR DELAWARE CORPORATIONS OR THE BYLAWS FOR CHILEAN CORPORATIONS.
FORWARD-LOOKING STATEMENTS
All statements included or incorporated by reference in this prospectus or
made through a securities firm,by our management, other than statements of historical fact regarding U.S.
or Gener, are "forward-looking" statements. Examples of forward-looking
statements include statements regarding our or Gener's future financial
results, operating results, service successes, business strategies, projected
costs, future service offerings, competitive positions and plans and objectives
of our management for future operations. In some cases, you can identify
forward-looking statements by words such securities firmas may, be
engagedwill, should, would, expects,
plans, anticipates, believes, estimates, projects, predicts, projection,
potential or continue or the negative of these or other comparable words. These
forward-looking statements are subject to actknown and unknown risks,
uncertainties and other factors. Actual developments could differ significantly
from those contemplated in these forward-looking statements. The
forward-looking information is based on various factors and was derived using
numerous assumptions. Forward-looking statements made by us and Purchaser speak
only as the selling stockholder's agent in the sale of the securities
by such selling stockholder,date they are made, and neither we nor the Purchaser have any
obligation to update or the securities firm may purchase securities
from the selling stockholdersrevise them, whether as principal and thereafter resell such
securities from time to time. The fees earned bya result of new information,
future events or paid to such securities
firm may be the normal stock exchange commission or negotiated commissions or
underwriting discounts to the extent permissible. In addition, such securities
firm may effect resales through other securities dealers, and customary
commissions or concessions to such other dealers may be allowed. Sales of
securities may be at negotiated prices, at fixed prices, at market prices or at
prices related to market prices then prevailing. Any such sales may be made on
The New York Stock Exchange or other exchange on which such securities are
traded, in the over-the-counter market, by block trade, in special or other
offerings, directly to investors or through a securities firm acting as agent
or principal, or a combination of such methods. Any participating securities
firm may be indemnified against certain liabilities, including liabilities
under the Securities Act. Any participating securities firm may be deemed to be
and underwriter within the meaning of the Securities Act, and any commission
earned by such firm may be deemed to be underwriting discounts or commissions
under the Securities Act.
A prospectus supplement, if required, will be filed under Rule 424(b)
under the Securities Act, disclosing the name of the selling stockholder, the
participating securities firm, if any, the number and kind of securities
involved and other details of such resale to the extent appropriate.otherwise.
LEGAL MATTERS
The legalityvalidity of the securitiesAES shares offered hereby will be passed upon for usThe
AES Corporation by Davis PolkSkadden, Arps, Slate, Meagher & Wardwell, New York, New York.Flom LLP.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this statement/prospectus by reference from ourAES's Annual
Report on Form 10-K, and from ourAES's Current Report on Form 8-K/A filed February
11, 2000, relating to The AES Drax, Ltd., have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports, which are
incorporated herein by reference, and have 27
been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
28MISCELLANEOUS
Our offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Gener ADSs in any jurisdiction in which the making of our
offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, we may, in our discretion, take such action as we may
deem necessary to make our offer in any such jurisdiction and extend our offer
to holders of Gener ADSs in such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF US, THE PURCHASER NOT CONTAINED IN THIS PROSPECTUS
OR IN THE ADS LETTER OF TRANSMITTAL OR THE NOTICE OF GUARANTEED DELIVERY AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED.
We have filed with the SEC a Registration Statement on Form S-4 and a
Tender Offer Statement on Schedule TO, together with exhibits, pursuant to Rule
14d-3 of the General Rules and Regulations under the Exchange Act, furnishing
certain additional information with respect to our offer. The Registration
Statement on Form S-4 and Schedule TO and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the offices of the
SEC in the manner set forth in the section captioned, "Where You Can Find More
Information" (except that such information will not be available at the
regional offices of the SEC).
65
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE
OFFICERS OF THE AES CORPORATION AND MERCURY CAYMAN CO. III, LTD.
1. DIRECTORS AND EXECUTIVE OFFICERS OF THE AES CORPORATION
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of AES and
certain other information are set forth below. The principal business address
of AES and, unless otherwise indicated, the business address of each person
identified below is 1001 North 19th Street, Suite 2000, Arlington, Virginia
22209. Its telephone number is (703) 522-1315. Where no date is shown, the
individual has occupied the position indicated for the past five years. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with AES. All directors and executive officers listed
below are United States citizens. Directors are identified by an asterisk.
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------- -----------------------------------------------------------------------
Dennis W. Bakke* Co-founder of AES with Roger Sant in 1981 and director of AES since
1986. He has been President of AES since 1987 and Chief Executive
Officer since January 1994. He is a trustee of Rivendell School and a
member of the Board of Directors of MacroSonix Corporation in
Richmond, Virginia.
Alice F. Emerson* Director of AES since 1993. She is a Senior Advisor at The Andrew W.
Mellon Foundation. She is a member of the Boards of Directors of the
World Resources Institute, the FleetBoston Financial Corporation,
Champion International Corporation, Eastman Kodak Company,
Salzburg Seminar, and the MGH Institute of Health Professions.
Mark S. Fitzpatrick Appointed Executive Vice President in February 2000, was Senior Vice
President until February 2000, and was appointed Vice President of
AES in 1987. Mr. Fitzpatrick became Managing Director of Applied
Energy Services Electric Limited for the United Kingdom and Western
Europe operations in 1990.
Paul T. Hanrahan Senior Vice President of AES since 1997, and was appointed Vice
President of AES effective January 1994. Since May 1, 1998, Mr.
Hanrahan has been Managing Director of AES Americas, a business
group within AES responsible for all of AES's activities in South
America. From February 1995 until 1998 he was President and Chief
Executive Officer of AES Chigen, where he served as Executive Vice
President, Chief Operating Officer and Secretary from December 1993
until February 1995.
Robert F. Hemphill, Jr.* Director of AES since June 1996. He served as Executive Vice President
of AES from 1982 to June 1996. He currently is the Managing Director
of Toucan Capital Corporation (an international venture capital firm).
He also serves on the Boards of the National Museum of American
History and the Pacific International Center for High Technology
Research, and is a member of the Advisory Board of Venture House, an
internet investment company.
SI-1
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------- ----------------------------------------------------------------------------
Frank Jungers* Director of AES since 1983. He has been consultant to various
companies since prior to 1994. Mr. Jungers is the retired Chairman of the
Board and Chief Executive Officer of the Arabian American Oil
Company. He currently serves on the Boards of Directors of Thermo
Electron Corporation, Esco Corporation and Statia Terminals. He is
also Chairman of the Advisory Board of Common Sense Partners, L.P.
He is also Trustee of the Board of Trustees of the American University
in Cairo and serves as a Trustee to the High Desert Museum and Oregon
Health Sciences University Foundation.
Lenny M. Lee Vice President of AES since February 2000 and has served as Managing
Director of AES Transpower since June 1998. As Managing Director of
AES Transpower, Mr. Lee leads the AES group responsible for all of
AES's business, including project development and plant operations, in
Australia, New Zealand, portions of Southeast Asia (Thailand, Indonesia,
Malaysia and Vietnam) Hawaii and Southern China. Prior to his
appointment, Mr. Lee developed various projects within the same
group. Mr. Lee has been with AES since August 1987.
William R. Luraschi Vice President of AES since January 1998, Secretary since February 1996
and General Counsel of AES since January 1994. Prior to that, Mr.
Luraschi was an Attorney with the law firm of Chadbourne & Parke
L.L.P.
John H. McArthur* Director of AES since January 1997. He is the retired Dean of the
Harvard Business School, and has been a private business consultant
and active investor in various companies since prior to 1994. He serves
as Senior Advisor to the President of the World Bank Group. He is also
a member of the Boards of Directors of BCE Inc., Cabot Corporation,
the Columbia/HCA Healthcare Corporation, Glaxo Wellcome plc,
Rohm & Haas Corporation, Springs Industries, Inc., and KOC Holdings,
A.S. Istanbul. He also serves in various capacities with non-profit health,
government, and education organizations in America, Canada, Europe
and Asia.
David G. McMillen Vice President of AES since December 1991. He was appointed
President of AES Shady Point in 1995 and is currently plant manager of
the AES Shady Point facility. He was President of AES Thames from
1989 to 1995.
Roger F. Naill Vice President at AES since 1981. Mr. Naill's group provides advice on
long-term financial forecasts, tracks accountability measures for safety,
environment, reliability, new energy legislation and AES values, and is
a special advisor to the President.
Hazel R. O'Leary* Director of AES since April 1997. Mrs. O'Leary was the seventh
Secretary of the United States Department of Energy from 1993 to 1997.
She is consultant and Attorney to a diverse group of domestic and
international energy and sustainable development firms. She also serves
on the Board of the Kaiser Group International and UAL, Corporation,
the parent company of United Airlines. In addition, Mrs. O'Leary serves
on the non-profit Boards of Morehouse College, the Andrew Young
Center of International Development, the World Wildlife Fund and the
Keystone Center.
SI-2
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------ ----------------------------------------------------------------------------
Shahzad S. Qasim Vice President of AES since February 2000 and has served as Managing
Director of AES Oasis since April 1998. As Managing Director of AES
Oasis, Mr. Qasim leads the AES group responsible for all of AES's
business, including project development and plant operations, in Pakistan,
India, portions of South Asia and the Middle East. Prior to his
appointment, Mr. Qasim had been developing various projects within
the same geographical region for AES. Mr. Qasim has been with AES
since November 1992.
William Ruccius Vice President of AES since February 2000 and has served as Managing
Director of AES Orient since June 1998. As Managing Director of AES
Orient, Mr. Ruccius leads the AES group responsible for all of AES's
business, including project development and plant operations, in
Northern China and most of North and East Asia including the
Philippines. From June 1996 until his appointment as Managing Director,
he was President and CEO of AES Lal Pir and AES Pak Gen, AES's
duel Pakistani generating facilities. Prior to that Mr. Ruccius was Plant
Manager at AES Hawaii from April 1995 to June 1996 and worked at
AES Deepwater from June 1993 to April 1995.
John Ruggirello Executive Vice President of AES since February 2000, was Senior Vice
President until February 2000 and was appointed Vice President in
January 1997. Mr. Ruggirello heads an AES group responsible for
project development, construction and plant operations in much of the
United States and Canada. He served as President of AES Beaver
Valley from 1990 to 1996.
J. Stuart Ryan Executive Vice President of AES since February 2000, was Senior Vice
President until February 2000 and is Managing Director of the AES
Pacific group which is responsible for AES's business in the western
United States. Between 1994 and 1998, Mr. Ryan lead the AES
Transpower group responsible for AES's activities in Asia (excluding
China). From 1994 through 1997, he served as Vice President of AES.
Roger W. Sant* Co-founder of AES with Dennis Bakke in 1981. He has been Chairman
of the Board and a director of AES since its inception, and he held the
office of Chief Executive Officer through December 31, 1993. He
currently is Chairman of the Boards of Directors of The Summit
Foundation and The World Wildlife Fund U.S., and serves on the
Boards of Directors of The World Resources Institute, the World Wide
Fund for Nature and Marriott International, Inc.
Barry J. Sharp Senior Vice President and Chief Financial Officer of AES since
January 1998 and had been Vice President and Chief Financial Officer
since 1987. He also served as Secretary of AES until February 1996. Mr.
Sharp is a certified public accountant.
Sarah Slusser Vice President of AES since January 1999, and was appointed President
of AES Aurora, Inc., effective April 1997. AES Aurora is a wholly
owned subsidiary of AES and a group of AES which is responsible for
business development, construction and operations of facilities and
projects in Mexico, Central America, the Caribbean and the Gulf States
in the United States. Prior to that, Ms. Slusser served as Project Director
for various AES projects in the same region from 1993 to 1997.
SI-3
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------- --------------------------------------------------------------------------
Paul D. Stinson Vice President of AES since January 1998. Since July 1999, Mr. Stinson
has been Managing Director of AES Great Plains, Ltd., a wholly owned
subsidiary of AES, which is a group of AES responsible for business
development, construction and operations of facilities and projects in
the U.S. Mid-West. From April 1997 to July 1999, Mr. Stinson served as
Managing Director of AES Silk Road, Ltd. Mr. Stinson served as
Managing Director of Medway Power Ltd. from 1994 until 1997 and was
Plant Manager of the Medway Power Station owned by Medway Power
Ltd. from 1992 to 1997.
Thomas A. Tribone Executive Vice President since January 1998, and Senior Vice President
of AES from 1990 to January 1998. Mr. Tribone leads AES Think, a
group involved in energy, telecom and internet businesses in South
America and the U.S.
Thomas I. Unterberg* Director of AES since 1984. He has been a Managing Director of C.E.
Unterberg, Towbin (an investment banking firm) since 1989. He currently
serves on the Boards of Directors of Electronics for Imaging, Inc.,
Systems and Computer Technology Corporation, ECCS, Inc., Centrax
Corporation, Inc. and Club One, LLC. During 1999, Unterberg Harris,
an affiliate of C.E. Unterberg, Towbin, the investment banking firm in
which Mr. Unterberg is a Managing Director, acted as a co-managing
underwriter for a financial offering of AES which included the October 7,
1999 offering of 14 million shares of Common Stock, par value $0.01 per
share.
Robert H. Waterman, Jr.* Director of AES since 1985. He is the founder and has been the Chief
Executive Officer of The Waterman Group, Inc. (a business consulting
firm) since 1985. His business includes research and writing, consulting
and venture management. He currently is Chairman of the Board of
University ProNet, Inc. and serves on the boards of several non-profit
organizations including the World Wildlife Fund and the Restless Legs
Syndrome Foundation.
Kenneth R. Woodcock Senior Vice President of AES since 1987. Mr. Woodcock is responsible
for coordinating AES's relationships with the investment community,
and he provides support for AES's business development activities
worldwide.
SI-4
2. DIRECTORS AND EXECUTIVE OFFICERS OF MERCURY CAYMAN CO. III, LTD.
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of the
Purchaser and certain other information are set forth below. The principal
business address of the Purchaser and, unless otherwise indicated, the business
address of each person identified below is c/o The AES Corporation, 1001 North
19th Street, Arlington, Virginia 22209. Purchaser's telephone number at this
address is (703) 522-1315. Where no date is shown, except in the case of
positions with the Purchaser, the individual has occupied the position
indicated for the past five years. Unless otherwise indicated, each occupation
set forth opposite an individual's name refers to position with Purchaser.
Other than as indicated, all directors and executive officers listed below are
United States citizens.
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------- ----------------------------------------------------------------------
James A. Abbott Vice President and Chief Financial Officer of Mercury Cayman Co.
III, Ltd. since October 2000. Since August 2000 Mr. Abbott has been
Project Development Manager for the AES Americas and AES
Andes groups. Prior to joining AES Mr. Abbott worked for
PriceWaterhouseCoopers for approximately 5 years.
Steven P. Clancy Vice President of Mercury Cayman Co. III, Ltd. since October 2000.
Vice President of Tax for AES Americas since 1998. Prior to joining
AES, Mr. Clancy was Senior Tax Manager for Deloitte & Touche in
the Washington, DC office since 1993.
Victor Galleguillo Vice President of Mercury Cayman Co. III, Ltd. since October 2000.
Chief Financial Officer of AES Andes since March 2000. Director
Financial Accounting of AES Americas since June 1999, and Director
Financial Accounting of AES Americas since February 1998. Prior to
February 1998, he was Audit Manager for Arthur Andersen in
Buenos Aires, Argentina for three years. Mr. Galleguillo is a citizen
of Argentina.
Paul T. Hanrahan Director and Vice President of Mercury Cayman Co. III, Ltd. since
October 2000. Senior Vice President of AES since 1997, and was
appointed Vice President of AES effective January 1994. Since
May 1, 1998, Mr. Hanrahan has been Managing Director of AES
Americas, a business group within AES responsible for all of AES's
activities in South America. From February 1995 until 1998 he was
President and Chief Executive Officer of AES Chigen, where he
served as Executive Vice President, Chief Operating Officer and
Secretary from December 1993 until February 1995.
Willard C. Hoagland, III Treasurer of Mercury Cayman Co. III, Ltd. since October 2000. Mr.
Hoagland is currently Director of Finance and Administration of
AES and has held that position since 1994.
SI-5
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------- ----------------------------------------------------------------------
Naveed Ismail Director and President of Mercury Cayman Co. III, Ltd. since
October 2000. Since May 2000 Mr. Ismail has been President of AES
Andes, a business group within AES responsible for all of AES's
activities in Argentina, Uruguay and Chile. From August 1998 to
March 2000 he was President and Chief Executive Officer of AES
Ekibastuz in Kazakhstan. Prior to August 1998 Mr. Ismail was
involved in the development, construction and operation of AES Lal
Pir and Pak Gen power plants in Pakistan. Mr. Ismail has been with
AES since 1994. Mr. Ismail is a citizen of the Republic of Pakistan.
William R. Luraschi Vice President of Mercury Cayman Co. III, Ltd. since October 2000.
Vice President of AES since January 1998, Secretary since February
1996 and General Counsel of AES since January 1994. Prior to that,
Mr. Luraschi was an Attorney with the law firm of Chadbourne &
Parke L.L.P.
Leith Mann Assistant Secretary of Mercury Cayman Co. III, Ltd. since October
2000. Assistant Secretary for AES since February 2000. Ms. Mann has
been with AES since 1981.
Kevin L. Polchow Vice President of Mercury Cayman Co. III, Ltd. since October 2000.
Mr. Polchow is currently the Tax Director of AES. He assumed that
position in 1994.
Jeffrey A. Safford Director of Mercury Cayman Co. III, Ltd. since October 2000. Vice
President and Chief Financial Officer of AES Americas, a business
group within AES responsible for all of AES's activities in South
America. From April 1994 until Mr. Safford's appointment to such
offices in September 1998, he served as Vice President and Chief
Financial Officer and Secretary of AES China Generating Co., Ltd.,
and performed the function of principal accounting officer. He is a
Certified Public Accountant.
Maureen B. Shearer Secretary of Mercury Cayman Co. III, Ltd. since October 2000. She is
currently Assistant Secretary of AES and has held that position since
February 2000. Ms. Shearer has been with AES since 1989.
SI-6
SCHEDULE II
PURCHASES OF GENER ADSs
The following tables set forth information concerning purchases of Gener
ADSs and shares during the past 60 days by AES. All purchases of Gener ADSs
were effected on the New York Stock Exchange. The Gener shares were acquired as
a result of the withdrawal of Gener shares from the Depositary.
PURCHASE DATE AMOUNT PRICE PER GENER ADS
- ----------------------- --------- --------------------
October 23, 2000 100,000 $ 11.00
October 30, 2000 60,000 11.73
October 31, 2000 500,000 12.00
SII-1
Facsimile copies of the ADS Letter of Transmittal, properly completed and
duly signed, will be accepted. The ADS Letter of Transmittal, ADRs for the
Gener ADSs and any other required documents should be sent by each holder of
the Gener ADSs or his or her broker, dealer, commercial bank, trust company or
other nominee to the exchange agent at the addresses set forth below.
THE EXCHANGE AGENT FOR OUR OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES L.L.C.
By Mail: Facsimile Transmission: By Hand:
Reorganization Department (for Eligible Institutions Only) Reorganization Department
PO Box 3301 (201) 296-4293 120 Broadway
South Hackensack, NJ 07606 13th Floor
Confirmation of Fax: New York, NY 10271
(201) 296-4860
By Overnight Courier:
Reorganization Department
85 Challenger Road
Mail Stop-Reorg
Ridgefield Park, NJ 07660
Questions or requests for assistance or additional copies of our
prospectus, the ADS Letter of Transmittal and the ADS Notice of Guaranteed
Delivery may be directed to the information agent or the dealer manager at
their respective addresses and telephone numbers set forth below. A holder of
Gener ADSs also may contact his or her broker, dealer, commercial bank, trust
company or other nominee for assistance concerning our offer.
The Information Agent for our offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Call Toll Free: (800) 755-3105
The Dealer Manager for our offer is:
DEUTSCHE BANC ALEX. BROWN
Deutsche Bank Securities Inc.
130 Liberty Street
New York, New York 10006
Call Toll Free (877) 305-4920
PART II
INFORMATION NOT REQUIRED IN PROXY STATEMENT/PROSPECTUS
ItemITEM 20. Indemnification of Directors and Officers.
Under the By-Laws of The AES Corporation (the "Company"), and in
accordance withINDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, ("GCL"Article VIII of AES's
Bylaws, as amended, and indemnification agreements entered into by AES with its
directors provide for the exculpation of directors and the indemnification of
officers, directors, employees and agents under certain circumstances.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation--a "derivative action"),
if they acted in good faith and in a manner they reasonably believed to be in
or not opposed to the Company shall indemnifybest interests of the corporation and, with respect to
any criminal action or proceedings, had no reasonable cause to believe their
conduct was unlawful.
A similar standard is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement
of such action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's charter, Bylaws,
disinterested director vote, stockholder vote, agreement or otherwise.
Set forth below is Article VIII of AES's Bylaws pertaining to
indemnification of officers, directors, employees and agents and insurance,
which is in full compliance with Section 145 of the Delaware General Corporate
Law:
Section 8.01. (A) Any person who was or is a party or is threatened to be
made a party to or was or is involved (as a witness or otherwise) in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than any action or suit by or
in the right of the CompanyCorporation to procure a judgment in its favor which is hereinafter referred to as a(a
"derivative action")) by reason of the fact that such personhe or she is or was a
director, officer or employee of the Company,Corporation, or is or was serving in such capacity or as an agent at the
request of the Company forCorporation as a director, officer, employee or agent of another
entity,corporation, partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, shall be indemnified by the
fullCorporation, to the extent authorized by the laws of the State of Delaware law,as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than such laws permitted prior to such
amendment), against all expenses (including, but not limited to, attorneys'
fees),fees, judgments, fines, penalties and amounts paid in settlement) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action, suit or proceeding ifproceeding. In the event of any derivative action, such
person acted in good faithpersons shall be indemnified by the Corporation under the same conditions and in a manner the person reasonably believed
to be in or not opposed
to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe was
unlawful. Agents of the Company may be similarly indemnified, at the discretion
of the Board of Directors.
Under Section 145 of the GCL, a similar standard of care is applicable in
the case of derivative actions,same extent as specified above, except that no indemnification only extendsis
permitted in respect of any claim, issue or matter as to expenses (including attorneys' fees) incurred in connection with the defense or
settlement ofwhich such an action and then, where the person ispersons
shall have been adjudged to be liable to the Company,Corporation unless and only if and to the
extent that the Court of Chancery of
the State of Delaware or the court in which such action or suit was
brought determinesshall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to such indemnity and only for such expenses aswhich the Court
of Chancery or such other court shall deem proper. PursuantThe indemnification
expressly provided by statute in a specific case shall not be deemed exclusive
of any other rights to Company's By-Laws,which any person indemnified may be entitled under any
lawful agreement, vote of the stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action
in another capacity while hold in such office, and shall continue as to a
person eligible forwho has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
(B) The right to indemnification may
haveconferred in this Article VIII is and
shall be a contract right. The right to indemnification conferred in this
Article VIII shall include the right to be paid by the Corporation the expenses
(including attorneys' fees and retainers therefor) reasonably incurred in
connection with any
matter described above paidII-1
such proceeding in advance of aits final disposition, such advances to be paid
by the Company. However,Corporation within 20 days after the receipt by the Corporation of a
statement or statements from a director, officer or employee of the Corporation
requesting such advance or advances will
onlyfrom time to time; provided, however, the
payment of such expenses incurred by a director, officer or employee in his or
her capacity as a director, officer or employee in advance of the final
disposition of a proceeding shall be made only upon delivery to the delivery of an undertaking by or on behalf of the
indemnified personemployee to
repay all amounts so advanced if it isshall ultimately be determined that such
persondirector, officer or employee is not entitled to be indemnified under this
Article VIII or otherwise.
(C) To obtain indemnification under this Article VIII, an indemnitee shall
submit to the Corporation a written request, including therein or therewith
such documentation and information as is reasonably available to such person
and is reasonably necessary to determine whether and to what extent the
indemnitee is entitled to indemnification.
In addition, under the Company's By-Laws, the Company(D) The Corporation may purchase and maintain insurance, on behalf ofat its expense, to protect
itself and any person who is or was a director, officer, employee or agent of the CompanyCorporation or of
another corporation, partnership, joint venture; trust or other enterprise
including service with respect to employee benefit plans, against any expense,
liability asserted against and incurred by such person in such capacity, or arising out of the person's status as suchloss, whether or not the CompanyCorporation would have the power or the obligation to
indemnify such person against such expense, liability or loss under the General
Corporation Law of the State of Delaware. To the extent that the Corporation
maintains any policy or policies providing such insurance, each such director,
officer or employee, and each such agent to which rights to indemnification
have been granted as provided in paragraph (E) of this Article VIII, shall be
covered by such policy or policies in accordance with its or their terms to the
maximum extent of the coverage thereunder for any such director, officer,
employee or agent.
(E) The Corporation may, to the extent authorized from time to time by the
board of directors, grant rights to indemnification, and rights to be paid by
the Corporation the expenses incurred in connection with any proceeding in
advance of its final disposition to any agent of the Corporation to the fullest
extent of the provisions of this Article VIII with respect to the
Company's By-Laws.
Itemindemnification and advancement of expenses of directors, officers and
employees of the Corporation.
In addition, AES has entered into indemnification agreements with its
directors and officers pursuant to which AES has agreed to indemnify such
directors and officers in accordance with, and to the fullest extent permitted
by, the Delaware General Corporation Law against any and all expenses,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by the indemnitee in connection with any proceeding in which the
indemnitee was or is made a party or was or is involved by reason of the fact
that the indemnitee is or was a director or an officer.
AES has also purchased liability insurance policies covering certain
directors and officers of AES.
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ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
- ---------- -------------------------------------------------------------------------------
3.1 Sixth Amended and Restated Certificate of Incorporation of The AES
Corporation (incorporated by reference to Exhibit 3.1 to The AES Corporation
Quarterly Report on Form 10-Q filed May 15, 2000).
3.2 The AES Corporation Bylaws, as amended (incorporated by reference to
Exhibit 3.2 to the AES Corporation Quarterly Report on Form 10-Q filed on
August 14, 1998).
5.1* Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding the legality of
the securities.
23.1* Consent of Skadden, Arps, Slate, Meagher & Flom LLP (set forth in Exhibit
5.1).
23.4 Consent of Deloitte and Touche LLP.**
24.1 Powers of Attorney (set forth on signature page).
99.1 Form of ADS Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.**
99.4 Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.**
99.5 Form of Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.**
99.6 Summary Advertisement published in The Wall Street Journal on November 13, 2000.**
99.7 Press Release issued by AES on November 3, 2000 (incorporated by reference
to the filing by AES pursuant to Rule 425 on November 3, 2000).
99.8 Letter Agreement between AES and Compania de Petroleos de Chile S.A.,
dated November 3, 2000 (incorporated by reference to Exhibit (d) by AES on
Schedule TO-T filed on November 9, 2000).
99.9 Press Release issued by AES on November 22, 2000 (incorporated by reference
to Exhibit (a)(9) by AES on Schedule TO-T/A filed on November 22, 2000).
99.10 Press Release issued by AES on November 28, 2000 (incorporated by reference
to Exhibit (a)(10) by AES on Schedule TO-T/A filed on November 30, 2000).
99.11 Agreement, dated as of November 28, 2000, between AES, TotalFinalElf, and
Total Gas and Power Ventures (incorporated by reference to Exhibit (a)(11) by
AES on Schedule TO-T/A filed on November 30, 2000).
99.12 Press Release issued by AES on December 7, 2000 (incorporated by reference
to Exhibit (a)(12) by AES on Schedule TO-T/A filed on December 7, 2000).
- ----------
* To be filed by amendment
** Previously filed
II-3
(b) Financial Statement Schedules
(a) Exhibits (see index to exhibits at E-1).
ItemThe Financial Statement Schedules have previously been filed as part of
AES's Form 10-K for the fiscal year ended December 31, 1999.
(c) None
ITEM 22. Undertakings
(a)UNDERTAKINGS.
(A) The undersigned Registrantregistrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) toTo include any prospectus required byin Section 10(a)(3) of
the Securities Act of 1933;
(ii) toTo reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
II-1
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) under the Securities Act, if, in the aggregate, the
changes in volume and price represent no more than a 20 percent20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; andand;
(iii) toTo include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Securities and Exchange Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") that are incorporated by reference
in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b)(B) The undersigned Registrantregistrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant'sregistrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) (1)(C) The undersigned Registrantregistrant hereby undertakes as follows:undertakes:
(1) that, prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145 (c)145(c), the issuer undertakes
that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.form;
(2) The Registrant undertakes that every prospectus:prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements
of Section 10(a)(3) of the Securities Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a
part of an
II-4
amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act, of 1933, each such
post-effective amendment shall be deemed to be a new registration
II-2
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e)(D) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(E) The undersigned Registrantregistrant hereby undertakes to respond to requests
for information that is incorporated by reference into the
prospectus pursuant to ItemItems 4, 10(b), 11, or 13 of this form,Form,
within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed
subsequent to the effective date of the registration statement
through the date of responding to the request.
(f)(F) The undersigned Registrantregistrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the
subject of and included in the registration statement when it became
effective.
II-3II-5
SIGNATURES
Pursuant to the requirements of the Securities Act, of 1933, the Company
certifies that is has reasonable grounds to believe that it meets all of the
requirements for filing on Forms S-4 andregistrant has
duly caused this Amendment No. 1 to
the Registration Statementregistration statement on Form S-4 to be signed on its behalf
by the undersigned, hereuntothereunto duly authorized, in the City of Arlington, State
of Virginia, on October
6,the 7th day of December, 2000.
THE AES CORPORATION
By: /s/ Dennis W. Bakke
-------------------------------------------------------------
Name: Dennis W. Bakke
----------------------------
Title: President and Chief
ExecutiveFinancial Officer
-----------------------------
Pursuant to the requirements of the Securities Act, of 1933, this Amendment
No. 1 to the Registration Statementregistration
statement has been signed below by the following persons in the capacities indicatedand on the
dates indicated.
Signature Title Date
--------- ----- ----
* Chairman of the Board October 6, 2000
- ------------------------
Roger W. Sant
/s/ Dennis W. Bakke President, Chief Executive October 6, 2000
- ------------------------ Officer and Director
Dennis W. Bakke (Principal Executive Officer)
* Director October 6, 2000
- ------------------------
Dr. Alice F. Emerson
Director
- ------------------------
Robert F. Hemphill, Jr.
* Director October 6, 2000
- ------------------------
Frank Jungers
Director
- ------------------------
John H. McArthur
Director
- ------------------------
Hazel O'Leary
II-4
Signature Title Date
--------- ----- ----
* Director October 6, 2000
- ------------------------
Thomas I. Unterberg
* Director October 6, 2000
- ------------------------
Robert H. Waterman, Jr.
* Senior Vice President and October 6, 2000
- ------------------------ Chief Financial Officer
Barry J. Sharp (Principal Financial and
Accounting Officer)
* By: /s/ Dennis W. Bakke
---------------------------
Dennis W. Bakke
Attorney-in-Fact
II-5
EXHIBIT INDEX
Exhibits Description of Exhibit
- -------- ----------------------
4.1 Sixth Amended and Restated Certificate of Incorporation of The AES
Corporation is incorporated herein by reference to Exhibit 3.1 to
the Quarterly Report on Form 10-Q of the Registrant for the
quarterly period ended March 31, 2000 filed May 15, 2000.
4.2 By-Laws of The AES Corporation, as amended is incorporated herein
by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q
of the Registrant for the quarterly period ended June 30, 1998
filed August 14, 1998.
4.3 Form of Senior Debt Securities Indenture between the Company and
the Trustee (incorporated by reference to Exhibit 4.1 of Amendment
No. 1 to Registration Statement No. 333-81953 on Form S-3 filed on
July 13, 1999)
4.4 Form of Senior Subordinated Debt Securities Indenture between the
Company and the Trustee (incorporated by reference to Exhibit 4.2
of Amendment No. 1 to Registration Statement No. 333- 81953 on
Form S-3 filed on July 13, 1999)
4.5 Form of Junior Subordinated Debt Securities Indenture between the
Company and the Trustee (incorporated by reference to Exhibit 4.3
of Amendment No. 1 to Registration Statement No. 333- 81953 on
Form S-3 filed on July 13, 1999)
5.1 Opinion of Davis Polk & Wardwell
12.1* Computation of ratio of earnings to fixed charges
23.1 Consent of Deloitte & Touche LLP
23.3 Consent of Davis Polk & Wardwell (included in Exhibit 5.1)
24.1* Powers of Attorney for the Company
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Bank One, National Association (formerly known as The
First National Bank of Chicago), as Trustee, under the Senior Debt
Securities Indenture
25.2 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Bank One, National Association (formerly known as The
First National Bank of Chicago), as Trustee, under the Senior
Subordinated Debt Securities Indenture
25.3 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Bank One, National Association (formerly known as The
First National Bank of Chicago), as Trustee, under the Junior
Subordinated Debt Securities Indenture
25.4 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee, under the Senior
Debt Securities Indenture
25.5 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee, under the Senior
Subordinated Debt Securities Indenture
25.6 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee, under the Junior
Subordinated Debt Securities Indenture
- ---------
* Previously filed.
E-I
SIGNATURE TITLE DATE
- ------------------------------ --------------------------------------- -----------------
/s/ Roger W. Sant* Chairman of the Board December 7, 2000
- -------------------------
Roger W. Sant
/s/ Dennis W. Bakke President, Chief Executive Officer December 7, 2000
- ------------------------- (principal executive officer) and
Dennis W. Bakke Director
/s/ Alice F. Emerson* Director December 7, 2000
- -------------------------
Dr. Alice F. Emerson
/s/ Robert F. Hemphill, Jr.* Director December 7, 2000
- -------------------------
Robert F. Hemphill, Jr.
/s/ Frank Jungers* Director December 7, 2000
- -------------------------
Frank Jungers
/s/ John H. McArthur* Director December 7, 2000
- -------------------------
John H. McArthur
/s/ Hazel R. O'Leary* Director December 7, 2000
- -------------------------
Hazel R. O'Leary
/s/ Thomas I. Unterberg* Director December 7, 2000
- -------------------------
Thomas I. Unterberg
/s/ Robert H. Waterman, Jr.* Director December 7, 2000
- -------------------------
Robert H. Waterman, Jr.
/s/ Barry J. Sharp* Senior Vice President and Chief December 7, 2000
- ------------------------- Financial Officer (Principal Financial
Barry J. Sharp and Accounting Officer)
*By: /s/ Dennis W. Bakke
-------------------
Dennis W. Bakke, as
Attorney-in-Fact for each
of the persons indicated
II-6