As filed with the Securities and Exchange Commission on November 18, 1996
Registration No. 333-15487
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
The AES Corporation Delaware 54-1163725
AES Trust I Delaware application pending
AES Trust II Delaware application pending
AES Trust III Delaware application pending
(Exact name of Registrant (State or other (I.R.S. employer
as specified in jurisdiction identification number)
its charter) of incorporation
or organization)
1001 North 19th Street
Arlington, Virginia 22209
(703) 522-1315
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
Barry J. Sharp
1001 North 19th Street
Arlington, Virginia 22209
(703) 522-1315
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Richard D. Truesdell, Jr.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities being offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
This 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 Commission, acting
pursuant to said section 8(a), may determine.
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectuses to be used
in connection with offerings of the following securities:
(1) Debt Securities (consisting of Senior Debt Securities, Senior
Subordinated Debt Securities and Junior Subordinated Debt
Securities), Preferred Stock, Common Stock, Stock Purchase
Contracts and Stock Purchase Units of The AES Corporation.
(2) Preferred Securities of AES Trust I, AES Trust II or AES Trust
III, severally, Junior Subordinated Debt Trust Securities of
The AES Corporation and Guarantees by The AES Corporation of
Preferred Securities issued by AES Trust I, AES Trust II or
AES Trust III.
Each offering of securities made under this Registration Statement will be
made pursuant to one of these Prospectuses, with the specific terms of the
securities offered thereby set forth in an accompanying Prospectus Supplement.
SUBJECT TO COMPLETION, DATED NOVEMBER 18, 1996
PROSPECTUS
[LOGO]
The AES Corporation
$750,000,000
Common Stock, Preferred Stock, Debt Securities, Stock Purchase Contracts and
Stock Purchase Units
The AES Corporation (the "Company" or "AES") may from time to time offer,
together or separately, (i) shares of its common stock, par value $.01 per
share (the "Common Stock"), (ii) shares of its preferred stock, no par value
(the "Preferred Stock"), (iii) unsecured senior debt securities (the "Senior
Debt Securities"), (iv) unsecured senior subordinated debt securities (the
"Senior Subordinated Debt Securities"), (v) unsecured junior subordinated
securities (the "Junior Subordinated Debt Securities"), (vi) Stock Purchase
Contracts to purchase Common Stock ("Stock Purchase Contracts") and (vii)
Stock Purchase Units ("Stock Purchase Units"), each representing ownership of
a Stock Purchase Contract and Debt Securities or debt obligations of third
parties, including U.S. Treasury securities, securing the holder's obligation
to purchase Common Stock under the Stock Purchase Contract, in each case in
one or more series and in amounts, at prices and on terms to be determined
at or prior to the time of sale. The Senior Debt Securities, Senior
Subordinated Debt Securities and Junior Subordinated Securities are
collectively referred to herein as the "Debt Securities." The Debt
Securities, Common Stock, Preferred Stock, Stock Purchase Contracts and
Stock Purchase Units are collectively referred to herein as the
"Securities."
See "Risk Factors" Beginning On Page 4 For A Discussion of
Certain Factors That Should Be Considered By Prospective Investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The Common Stock and Preferred Stock offered pursuant to this Prospectus
may be issued in one or more series or issuances in U.S. dollars or in one
or more foreign currencies, currency units or composite securities to be
determined at or prior to the time of any offering. The Stock Purchase
Contracts and the Stock Purchase Units offered pursuant to this Prospectus
may be issued in one or more series and amounts, at prices and on terms to
be determined at or prior to the time of any such offering. The Debt
Securities offered pursuant to this Prospectus may consist of debentures,
notes or other evidences of indebtedness in one or more series and in
amounts, at prices and on terms to be determined at or prior to the time of
any such offering. The Company's obligations under the Senior Debt
Securities will rank pari passu with all unsecured and unsubordinated debt
(as defined herein) of the Company. The Company's obligations under the
Senior Subordinated Debt Securities will be subordinated in right of
payment to the prior payment in full of all Senior Debt (as defined
herein). The Company's obligations under the Junior Subordinated Debt
Securities will be subordinated in right of payment to the prior payment in
full of all Senior and Senior Subordinated Debt (as defined herein) of the
Company. See "Description of Debt Securities."
By separate prospectus, the form of which is included in the Registration
Statement of which this Prospectus forms a part, two Delaware statutory
business trusts (the "AES Trusts"), which are wholly owned subsidiaries of the
Company, may from time to time severally offer preferred securities guaranteed
by the Company to the extent set forth therein and the Company may offer from
time to time junior subordinated debt securities either directly or to an AES
Trust. The aggregate public offering price of the securities to be offered by
the Prospectus and such other prospectus shall not exceed $750,000,000 (or its
equivalent in one or more foreign currencies, currency units or composite
currencies).
Specific terms of the Securities in respect of which this Prospectus is
being delivered (the "Offered Securities") will be set forth in a Prospectus
Supplement with respect to such Offered Securities, which Prospectus
Supplement will describe, without limitation and where applicable, the
following: (i) in the case of Common Stock, the specific designation, number
of shares, purchase price and the rights and privileges thereof, together with
any qualifications or restrictions thereon and any listing on a securities
exchange; (ii) in the case of Preferred Stock, the specific designation,
number of shares, purchase price and the rights, preferences and privileges
thereof and any qualifications or restrictions thereon (including dividends,
liquidation value, voting rights, terms for the redemption, conversion or
exchange thereof and any other specific terms of the Preferred Stock) and any
listing on a securities exchange; (iii) in the case of Debt Securities, the
specific designation, aggregate principal amount, authorized denomination,
maturity, premium, if any, exchangeability, redemption, conversion, prepayment
or sinking fund provisions, if any, interest rate (which may be fixed or
variable), if any, method, if any, of calculating interest payments and dates
for payment thereof, dates on which premium, if any, will be payable, the
right of the Company, if any, to defer payment of interest on the Debt
Securities and the maximum length of such deferral period, the initial public
offering price, any listing on a securities exchange and other specific terms
of the offering; (iv) in the case of Stock Purchase Contracts, the designation
and number of shares of Common Stock issuable thereunder, the purchase price
of the Common Stock, the date or dates on which the Common Stock is required
to be purchased by the holders of the Stock Purchase Contracts, any periodic
payments required to be made by the Company to the holders of the Stock
Purchase Contract or vice versa, and the terms of the offering and sale
thereof, and (v) in the case of Stock Purchase Units, the specific terms of
the Stock Purchase Contracts and any Debt Securities or debt obligations of
third parties securing the holder's obligation to purchase the Common Stock
under the Stock Purchase Contracts, and the terms of the offering and sale
thereof. Unless otherwise indicated in the Prospectus Supplement, the Company
does not intend to list any of the Securities other than the Common Stock and
the Preferred Stock on a national securities exchange. Any Prospectus
Supplement relating to any series of Offered Securities will contain
information concerning certain United States federal income tax
considerations, if applicable, to the Offered Securities.
The Offered Securities may be offered directly, through agents designated
from time to time, through dealers or through underwriters. Such agents or
underwriters may act alone or with other agents or underwriters. See "Plan
of Distribution." Any such agents, dealers or underwriters will be set forth
in a Prospectus Supplement. If an agent of the Company, or a dealer or
underwriter is involved in the offering of the Offered Securities, the agent's
commission, dealer's purchase price, underwriter's discount and net proceeds
to the Company, as the case may be, will be set forth in, or may be calculated
from, the Prospectus Supplement. Any underwriters, dealers or agents
participating in the offering may be deemed "underwriters" within the meaning
of the Securities Act of 1933.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
The date of this Prospectus is , 1996.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OF
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
AVAILABLE INFORMATION
AES is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the "Commission").
These reports, proxy and information statements and other information may be
inspected without charge and copied at the public reference facilities
maintained by the Commission at its principal offices at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such materials also can be obtained at prescribed rates
from the Public Reference Section of the Commission at the principal offices
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Such material may also be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006. Such material may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov.
The Company has filed with the Commission a Registration
Statement on Form S-3 under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Securities offered hereby (including
all amendments and supplements thereto, the "Registration Statement"). This
Prospectus, which forms a part of the Registration Statement, does not contain
all the information set forth in the Registration Statement and the exhibits
filed thereto, certain parts of which have been omitted in accordance with the
rules and regulations of the Commission. Statements contained herein
concerning the provisions of any documents are not necessarily complete and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference. The
Registration Statement and the exhibits thereto can be inspected and copied at
the public reference facilities and regional and other offices referred to
above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference
thereto and makes a part hereof the following documents, heretofore filed with
the Commission pursuant to the Exchange Act: (i) the Company's Annual Report
on Form 10-K for the year ended December 31, 1995; (ii) the Company's
Quarterly Report on Form 10-Q for the quarters ended September 30, 1996, June
30, 1996 and March 31, 1996; (iii) the Company's Current Reports on Form 8-K
filed on July 1, 1996, June 12, 1996, May 30, 1996, February 26, 1996 and
February 6, 1996; (iv) the description of the Common Stock contained in the
Company's Registration Statement on Form 8-A (File No.0-19281) filed on
October 10, 1996 and (v) the Company's Registration Statement on Form S-3
filed on June 12, 1996.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to termination of the offering being made hereby shall be
deemed to be incorporated in this Prospectus by reference and to be a part
hereof from the respective dates of the filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus and the Registration Statement of which it is
a part to the extent that a statement contained herein or in any subsequently
filed document which also is, or is deemed to be, incorporated by reference
herein, modifies or supersedes such earlier statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus or such Registration
Statement.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus has been delivered, upon written or
oral request of any such person, a copy of any and all of the documents
referred to above which have been or may be incorporated in this Prospectus by
reference, other than exhibits to such documents which are not specifically
incorporated by reference into such documents. Requests for such copies
should be directed to William R. Luraschi, General Counsel and Secretary, The
AES Corporation, 1001 North 19th Street, Arlington, Virginia 22209, telephone
(703) 522-1315.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus
Supplement, proceeds from the sale of the Offered Securities will be used by
the Company for general corporate purposes and initially may be temporarily
invested in short-term securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges.
Nine Months
Ended
Year Ended December 31, September 30,
---------------------------------------------- -------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- -------------
Ratio of earnings to fixed charges...... 1.31 1.37 1.63 2.08 2.18 2.04
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 fixed charges, less capitalized interest, less
excess of earnings over dividends of less-than-fifty-percent-owned
companies. Fixed charges consist of interest (including capitalized
interest) on all indebtedness, amortization of debt discount and expense
and that portion of rental expense which the Company believes to be
representative of an interest factor. A statement setting forth the
computation of the above ratios is on file as an exhibit to the
Registration Statement of which this Prospectus is a part.
During the period from January 1, 1991 until September 30, 1996, no
shares of Preferred Stock were issued or outstanding, and during that
period the Company did not pay any Preferred Stock dividends.
THE COMPANY
With a presence in over 35 countries, The AES Corporation is a
global power company committed to supplying electricity to customers
world-wide in a socially responsible way. The Company, based in Arlington,
Virginia, markets power principally from electric generating facilities that
it develops, owns and operates. AES was one of the original entrants in the
independent power market and today is one of the world's largest independent
power companies, based on net equity ownership of generating capacity (in
megawatts) in operation or under construction.
Over the last six years, the Company has experienced
significant growth. This growth has resulted primarily from the development
and construction of new plants ("greenfield development") and also from the
acquisition of existing plants, primarily through competitively bid
privatization initiatives outside the United States.
In part, the Company's strategy in helping meet the world's
need for electricity is to participate in competitive power generation markets
as they develop either by greenfield development or by acquiring and operating
existing facilities in these markets.
Other elements of the Company's strategy include:
bullet Supplying energy to customers at the lowest cost possible,
taking into account factors such as reliability and environmental
performance.
bullet Constructing or acquiring projects of a relatively large
size (generally larger than 100 megawatts).
bullet Entering into power sales contracts with electric utilities
or other customers with credit strength.
The Company also strives for operating excellence as a key
element of its strategy, which it believes it accomplishes by minimizing
organizational layers and maximizing company-wide participation in
decision-making. AES has attempted to create an operating environment that
results in safe, clean and reliable electricity generation. Because of this
emphasis, the Company prefers to operate all facilities which it develops or
acquires; however, there can be no assurance that the Company will have
operating control of all of its facilities in the future.
The Company, a corporation organized under the laws of
Delaware, was formed in 1981. The principal office of the Company is located
at 1001 North 19th Street, Arlington, Virginia 22209, and its telephone number
is (703) 522-1315.
RISK FACTORS
Purchasers of the Securities should read this entire Prospectus
carefully. Ownership of the Securities involves certain risks. The following
factors should be considered carefully in evaluating AES and its business
before purchasing the Securities offered by this Prospectus.
Leverage and Subordination. The Company and its subsidiaries
had approximately $2.1 billion of outstanding indebtedness at September 30,
1996. As a result of the Company's level of debt, the Company might be
significantly limited in its ability to meet its debt service obligations, to
finance the acquisition and development of additional projects, to compete
effectively or to operate successfully under adverse economic conditions. As
of September 30, 1996, the Company had a consolidated ratio of total debt to
total book capitalization (including current debt) of approximately 75%.
The Senior Subordinated Debt Securities will be subordinated to
all Senior Debt, including, but not limited to, the amounts outstanding under
the Company's current $425 million credit facility. The Junior Subordinated
Debt Securities will be subordinated to all Senior and Senior Subordinated
Debt of the Company, including, but not limited to, the amounts outstanding
under the Company's current $425 million credit facility. As of September
30, 1996, the Company had approximately $331 million in aggregate principal
amount of Senior Debt and $656 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 of the Company, the
holders of Senior Debt will first be entitled to receive payment in full of
all amounts due or to become 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 principal of, premium, if any, or interest on such
Senior Subordinated Debt Securities and holders of Senior and Senior
Subordinated Debt will first be entitled to receive payment in full of all
amounts due or to become 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 principal of, premium, if
any, or interest on such Junior Subordinated Debt Securities. No payments
on account of principal, premium, if any, or interest in respect of the
Senior Subordinated Debt Securities or Junior Subordinated Debt Securities
may be made if there shall have occurred and be continuing a default in any
payment under any Senior Debt or Senior and Senior Subordinated Debt, and
Senior Subordinated Debt, respectively, or 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 the Company's
subsidiaries. At September 30, 1996, the indebtedness and obligations of the
Company's subsidiaries, aggregated approximately $1.5 billion. The ability of
the Company to pay principal of, premium, if any, and interest on the Debt
Securities will be dependent upon the receipt of funds from its subsidiaries
by way of dividends, fees, interest, loans or otherwise. Most of the
Company's subsidiaries with interests in power generation facilities currently
have in place, and the Indentures for the Debt Securities will, under certain
circumstances, permit the Company's subsidiaries to enter into, arrangements
that restrict their ability to make distributions to the Company by way of
dividends, fees, interest, loans or otherwise. The Company's 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 of the Company to receive any assets of any of its
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 of the
Company (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). The Company currently conducts substantially all of its
operations through its subsidiaries.
Doing Business Outside the United States. The Company's
involvement in the development of new projects and the acquisition of existing
plants in locations outside the United States is increasing and most of the
Company's current development and acquisition activities are for projects and
plants outside the United States. The Company, through subsidiaries,
affiliates and joint ventures, has ownership interests in 27 power plants
outside the United States in operation or under construction. Five of such
power plants are located in Argentina; four in Brazil; two in England; two in
Northern Ireland; two in Pakistan; eight in the People's Republic of China;
three in Hungary; and one in Kazakhstan.
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, currency inconvertibility,
political instability, civil unrest, and expropriation) and other 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 AES 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 may also require higher investments by the Company than
historically have been the case. In addition, financing in countries with
less than investment grade sovereign credit ratings may also require
substantial participation by multilateral financing agencies. There can be
no assurance that such financing can be obtained when needed.
The uncertainty of the legal environment in certain countries
in which the Company, its subsidiaries and its affiliates are or in the future
may be developing, constructing or operating could make it more difficult for
the Company to enforce its respective rights under agreements relating to such
projects. In addition, the laws and regulations of certain countries may
limit the Company's ability to hold a majority interest in some of the
projects that it may develop or acquire. International projects owned by
the Company may, in certain cases, be expropriated by applicable
governments. Although AES may have legal recourse in enforcing its rights
under agreements and recovering damages for breaches thereof, there can be
no assurance that any such legal proceedings will be successful.
Competition. 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 the Company. Further, in recent years, the power
production industry has been characterized by strong and increasing
competition with respect to both obtaining power sales agreements and
acquiring existing power generation assets. In certain markets, these factors
have caused reductions in prices contained in new power sales agreements and,
in many cases, have caused higher acquisition prices for existing assets
through competitive bidding practices. The evolution of competitive
electricity markets and the development of highly efficient gas-fired power
plants have also caused, or are anticipated to cause, price pressure in
certain power markets where the Company sells or intends to sell power. There
can be no assurance that the foregoing competitive factors will not have a
material adverse effect on the Company.
Development Uncertainties. The majority of the projects that
AES develops are large and complex and the completion of any such project is
subject to substantial risks. Development can require the Company to expend
significant sums for preliminary engineering, permitting, legal and other
expenses in preparation for competitive bids which the Company may not win or
before it can be determined whether a project is feasible, economically
attractive or capable of being financed. Successful development and
construction is contingent upon, among other things, negotiation on terms
satisfactory to the Company of 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 AES 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, steam sales contracts, licenses and certifications,
environmental and other permits and financing commitments necessary for the
successful development of its projects. There can be no assurance that
development efforts on any particular project, or the Company's efforts
generally, will be successful. If these development efforts are not
successful, the Company may abandon a project under development. At the time
of abandonment, the Company would expense all capitalized development costs
incurred in connection therewith and could incur additional losses associated
with any related contingent liabilities. The future growth of the Company is
dependent, in part, upon the demand for significant amounts of additional
electrical generating capacity and its ability to obtain contracts to supply
portions of this capacity. Any material unremedied delay in, or
unsatisfactory completion of, construction of the Company's projects could,
under certain circumstances, have an adverse effect on the Company's
ability to meet its obligations, including the payment of principal of,
premium, if any and interest on Debt Securities. The Company also is faced
with certain development uncertainties arising out of doing business
outside of the United States. See "--Doing Business Outside the United
States."
Uncertainty of Access to Capital for Future Projects. Each of
AES's projects under development and those independent power facilities it 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. AES has substantially utilized project financing
loans to fund the capital expenditures associated with constructing and
acquiring its electric power plants and related assets. Project financing
borrowings have been substantially non- recourse to other subsidiaries and
affiliates and to AES 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. The Company intends to continue to seek, where
possible, such non-recourse project financing in connection with the assets
which the Company or its affiliates may develop, construct or acquire.
However, depending on market conditions and the unique characteristics of
individual projects, such financing may not be available or the Company's
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, the Company, in such
locations, has and will continue to seek 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, AES may determine that
sufficient financing will ultimately not be available to fund the related
project.
In addition to the project financing loans, if available, AES
provides 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 the short-term credit facilities and issuances
of senior subordinated notes, convertible debentures and common stock of the
Company.
The Company's 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, investor
confidence in the Company, 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, AES 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 AES on its currently operating facilities
or facilities under construction, such a decision would affect the future
growth of AES.
Dependence on Utility Customers and Certain Projects. The
nature of most of AES's power projects 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. During
1995, four customers, including Connecticut Light & Power Company, a
subsidiary of Northeast Utilities, accounted for 73% of the Company's
revenues. The prolonged failure of any one utility customer to fulfill its
contractual obligations could have a substantial negative impact on AES's
primary source of revenues. AES has 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.
Four of the Company's plants collectively represented
approximately 61% of AES's consolidated total assets at December 31, 1995 and
generated approximately 80% of AES's consolidated total revenues for the year
ended December 31, 1995.
In October 1996, Moody's Investor Service and Standard & Poor's
revised their ratings of the senior unsecured long-term debt of Connecticut
Light & Power Company from Baa3/BBB- to Ba1/BB+.
Regulatory Uncertainty. AES's cogeneration operations in the
United States are subject to the provisions of various laws and regulations,
including the Public Utility Regulatory Policies Act of 1978, as amended
("PURPA") and the Public Utility Holding Company Act, as amended ("PUHCA").
PURPA provides to qualifying facilities ("QFs") certain exemptions from
substantial federal and state legislation, including regulation as public
utilities. PUHCA regulates public utility holding companies and their
subsidiaries. AES is not and will not be subject to regulation as a holding
company under PUHCA as long as the domestic power plants it owns are QFs under
PURPA. QF status is conditioned on meeting certain criteria, and would be
jeopardized, for example, by the loss of a steam customer. The Company
believes that, upon the occurrence of an event that would threaten the QF
status of one of its domestic plants, it 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 the Company were unable to avoid the loss of such
status for one of its plants, to avoid public utility holding company status,
AES could apply to the Federal Energy Regulatory Commission ("FERC") to obtain
status as an Exempt Wholesale Generator ("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, 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 the
consolidated income tax group or the consolidated financial statements of the
Company, or an increase or decrease in the results of operations of the
Company.
The United States Congress is considering proposed legislation
which would repeal PURPA entirely, or at least repeal the obligation of
utilities to purchase from QFs. There is strong support for grandfathering
existing QF contracts if such legislation is passed, and also support for
requiring utilities to conduct competitive bidding for new electric generation
if the PURPA purchase obligation is eliminated. Various bills have also
proposed repeal of PUHCA. Repeal of PUHCA would allow both independents and
vertically integrated utilities to acquire retail utilities in the United
States that are geographically widespread, as opposed to the current
limitations of PUHCA which require that retail electric systems be capable of
physical integration. 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 of a PUHCA repeal, competition for
independent power generators from vertically integrated utilities 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 the Company.
Electric Utility Industry Restructuring Proposals. The FERC
and many state utility commissions are currently studying a number of
proposals to restructure the electric utility industry in the United States.
Such restructuring would permit utility customers to choose their utility
supplier in a competitive electric energy market. The FERC issued a final rule
in April 1996 which requires utilities to offer wholesale customers and
suppliers open access on utility transmission lines, on a comparable basis to
the utilities' own use of the lines. The final rule is subject to rehearing
and may become the subject of court litigation. Many utilities have already
filed "open access" tariffs. The utilities contend that they should recover
from departing customers their fixed costs that will be "stranded" by the
ability of their wholesale customers (and perhaps eventually, their retail
customers) to choose new electric power suppliers. The FERC final rule
endorses the recovery of legitimate and verifiable "stranded costs." These
may include the costs utilities are required to pay under many QF contracts
which the utilities view as excessive when compared with current market
prices. Many utilities are therefore seeking ways to lower these contract
prices or rescind the contracts altogether, out of concern that their
shareholders will be required to bear all or part of such "stranded" costs.
Some utilities have engaged in litigation against QFs to achieve these
ends.
In addition, future United States electric rates may be
deregulated in a restructured United States electric utility industry and
increased competition may result in lower rates and less profit for United
States electricity sellers. Falling electricity prices and uncertainty as to
the future structure of the industry is inhibiting United States utilities
from entering into long-term power purchase contracts. The effect of any such
restructuring on the Company cannot be predicted, although any such
restructuring could have a material adverse effect on the Company.
Litigation and Regulatory Proceedings. From time to time,
the Company and its affiliates are parties to litigation and
regulatory proceedings. Investors should review the descriptions of
such matters contained in the Company's Annual, Quarterly and Current
Reports filed with the Commission and incorporated by reference herein.
There can be no assurances that the outcome of such matters will not have a
material adverse effect on the Company's consolidated financial position.
Business Subject to Stringent Environmental Regulations. AES's
activities are subject to stringent environmental regulation by federal,
state, local and foreign governmental authorities. For example, the Clean Air
Act Amendments of 1990 impose more stringent standards than those previously
in effect, and require states to impose permit fees on certain emissions.
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 AES's power plants. There
can be no assurance that AES would be able to recover all or any increased
costs from its customers or that its 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. The Company has
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 the Company's
financial condition or results of operations.
Control by Existing Stockholders. As of September 30, 1996,
AES's two founders, Roger W. Sant and Dennis W. Bakke, and their immediate
families together owned beneficially approximately 26% of AES's outstanding
Common Stock. As a result of their ownership interests, Messrs. Sant and
Bakke may be able to significantly influence or exert control over the affairs
of AES, including the election of the Company's directors. As of September
30, 1996, all of AES's officers and directors and their immediate families
together owned beneficially approximately 35% of AES's outstanding Common
Stock. To the extent that they decide to vote together, these stockholders
would be able to significantly influence or control the election of AES's
directors, the management and policies of AES and any action requiring
stockholder approval, including significant corporate transactions.
Adherence to AES's Principles--Possible Impact on Results of
Operations. A core part of AES's corporate culture is a commitment to "shared
principles": to act with integrity, to be fair, to have fun and to be socially
responsible. The Company seeks 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 the Company perceives a conflict between these
principles and profits, the Company will try to adhere to its principles--even
though doing so might result in diminished or foregone opportunities or
financial benefits.
No Prior Public Market--Possible Price Volatility of Debt
Securities and Preferred Stock. Prior to the offering, there has been no
public market for the Senior Debt Securities, the Junior Subordinated Debt
Securities or the Preferred Stock. There can be no assurance that an active
trading market for the Senior Debt Securities, the Junior Subordinated Debt
Securities or the Preferred Stock will develop or be sustained. If such a
market were to develop, the Senior Debt Securities, the Junior Subordinated
Debt Securities or the Preferred Stock could trade at prices that may be
higher or lower than their initial offering price depending upon many factors,
including prevailing interest rates, the Company's operating results and the
markets for similar securities. Historically, the market for non-investment
grade debt has demonstrated substantial volatility in the prices of securities
similar to the Debt Securities. There can be no assurance that the future
market for the Debt Securities will not be subject to similar volatility.
DESCRIPTION OF CAPITAL STOCK
Under the Amended and Restated Certificate of Incorporation of
the Company (the "Certificate of Incorporation"), the authorized capital stock
of the Company consists of 100,000,000 shares of Common Stock, par value $.01
per share, and 1,000,000 shares of Preferred Stock, no par value.
The following summary contains a description of certain general
terms of the Common Stock and the Preferred Stock to which any Prospectus
Supplement may relate. Certain terms of any series of Preferred Stock offered
by a Prospectus Supplement will be described in the Prospectus Supplement
relating thereto. If so indicated in the Prospectus Supplement, the terms of
any series may differ from the terms set forth below. The description of
certain material provisions of the Common Stock and the Preferred Stock is
subject to and qualified in its entirety by reference to the provisions of the
Company's 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 the case may be, as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such Preferred Stock.
Common Stock
As of September 30, 1996, there were 77,099,303 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 such dividends, if any, as may be
declared from time to time by the Board of Directors of the Company (the
"Board of Directors") out of funds legally available therefor. In the event
of the liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share ratably in all assets remaining after
payment of liabilities, subject to prior distribution rights of the Preferred
Stock, if any, then outstanding. The Common Stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding
shares of Common Stock are fully paid and non-assessable, and any shares of
Common Stock in respect of which this Prospectus is being delivered will be
fully paid and non-assessable.
The transfer agent for the Company's Common Stock is First
Chicago Trust Company.
Price Range of AES Common Stock and Common Stock Dividends
AES Common Stock began trading on the New York Stock Exchange
on October 16, 1996 under the symbol "AES." Prior to that date, Common Stock
had been quoted on the NASDAQ National Market System ("NASDAQ/NMS") under the
symbol "AESC." The following table sets forth for the periods indicated the
high and low sale prices for the Common Stock as reported by NASDAQ/NMS.
1994 High Low
- ---- -------- -------
First Quarter....... 24 1/2 19 1/2
Second Quarter...... 21 1/2 16
Third Quarter....... 20 1/8 15 3/4
Fourth Quarter...... 21 3/4 17 1/2
1995
- ----
First Quarter....... 19 3/4 16
Second Quarter...... 19 1/4 16
Third Quarter....... 21 5/8 18 1/2
Fourth Quarter...... 24 18 3/4
1996
- ----
First Quarter....... 25 1/4 21
Second Quarter...... 29 5/8 22 1/4
Third Quarter....... 40 1/2 27 7/8
On December 7, 1993, the Board of Directors authorized a three-for-two
stock split, effected in the form of a stock dividend, payable to
stockholders of record on January 15, 1994. Additionally, on February 17,
1994, the Company declared a 3% stock dividend, payable to stockholders of
record on March 10, 1994. No cash dividends have been paid on Common Stock
since December 22, 1993 in order to provide capital for the Company's
equity investments in projects.
The Company's ability to declare and pay dividends is dependent,
among other things, on the ability of its project subsidiaries to declare
and pay dividends (and otherwise distribute cash) to it, the Company's
ability to service its parent company debt and the Company's ability to
meet certain criteria for paying dividends under its corporate credit
facility and under existing indentures of Debt Securities.
The ability of the Company's subsidiaries to declare and pay dividends
and otherwise distribute cash to the Company is subject to certain
limitations in the project loans and other documents entered into by such
project subsidiaries. Such limitations permit the payment of dividends out
of current cash flow for quarterly, semi-annual or annual periods only at
the end of such periods and only after payment of principal and interest on
project loans due at the end of such periods.
Cash dividend payments on Common Stock are limited to a certain
percentage of cash flow under the Company's corporate credit agreement.
The indentures relating to the Company's existing senior subordinated notes
preclude the payment of cash dividends if at the time of such payment or
after giving effect thereto an event of default (as defined) or an event
that, after the giving of notice or lapse of time or both, would become an
event of default, shall have occurred and be continuing, if certain fixed
charge coverage ratios are not met or if the payment of such dividends,
together with other restricted payments, would exceed certain limits.
Preferred Stock
As of September 30, 1996, there were no shares of Preferred
Stock outstanding.
The Board of Directors has the authority to issue Preferred
Stock in one or more classes or series and to fix, by resolution, 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 or vote by the stockholders. Preferred
Stock, if issued, will not be entitled to any preemptive or similar rights.
The applicable Prospectus Supplement will describe the following terms of any
Preferred Stock in respect of which the Prospectus is being delivered (to the
extent applicable to such Preferred Stock): (i) the specific designation,
number of shares, seniority and purchase price; (ii) any liquidation
preference per share; (iii) any date of maturity; (iv) any redemption,
repayment or sinking fund provisions; (v) 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); (vi) any voting rights; (vii) if other
than the currency of the United States, the currency or currencies including
composite currencies in which such Preferred Stock is denominated and/or in
which payments will or may be payable; (viii) 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;
(ix) 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; (x) the
place or places where dividends and other payments on the Preferred Stock will
be payable; and (xi) any additional voting, dividend, liquidation, redemption
and other rights, preferences, privileges, limitations and restrictions.
All shares of Preferred Stock offered hereby, or issuable upon
conversion, exchange or exercise of Securities, will, when issued, be fully
paid and non-assessable. Any shares of Preferred Stock that are issued would
have priority over the Common Stock with respect to dividend or liquidation
rights or both.
The transfer agent for each series of Preferred Stock will be
described in the applicable Prospectus Supplement.
Description of Certain Provisions of Certificate of Incorporation and By-Laws
The Certificate of Incorporation and By-Laws of AES contain
several provisions that may make the acquisition of control of AES by means of
a tender offer, open market purchases, a proxy fight or otherwise more
difficult. Set forth below is a description of certain of these provisions in
the Certificate of Incorporation and By-Laws.
Special Meetings of Stockholders. AES's By-Laws provide that,
unless otherwise prescribed by law, special meetings of stockholders may be
called by a resolution adopted by a majority of the entire Board of Directors,
by the Chairman of the Board or by the President and shall be called by the
Chairman of the Board or by the President upon written request of stockholders
owning at least 10% of stock entitled to vote. Only such business as shall be
specified in the notice of stockholders of the special meeting shall be
considered.
Stockholder Nomination of Directors. AES's By-Laws contain a
procedure for stockholder nomination of directors. The By-Laws provide that
any record owner of stock entitled to be voted generally in the election of
directors may nominate one or more persons for election as a director at a
stockholders meeting only if written notice is given to the Secretary of AES
of the intent to make such nomination. The notice must be given, with respect
to an annual meeting, not later than 90 days in advance of such annual meeting
and with respect to a special meeting, not later than the close of business on
the seventh day following the earlier of (a) the date on which notice of such
special meeting is first given to stockholders and (b) the date on which a
public announcement of such meeting is first made. Each notice must include
(i) 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; (ii) 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; (iii) such
other information regarding each nominee proposed by such stockholder as would
have been included in a proxy statement filed pursuant to Rule 14a-8 under the
Exchange Act; and (iv) 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 set forth
below, the Certificate of Incorporation eliminates the liability of AES's
directors to AES or its stockholders for monetary damages resulting from
breaches of their fiduciary duties as directors. Directors remain liable for
breaches of their duty of loyalty to the Company or its 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 absolve directors of liability under Section 174 of the Delaware
General Corporation Law (the "GCL"), which makes directors personally liable
for unlawful dividends or unlawful stock repurchases or redemptions if the
unlawful conduct is willful or results from negligence.
Under AES's By-Laws, and in accordance with Section 145 of the
GCL, AES shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than any action or suit by or in the right of the Company to procure a
judgment in its favor, a "derivative action") by reason of the fact that such
person is or was a director or officer of or employed by AES, or is or was
serving in such capacity or as an agent at the request of the Company for
another entity, to the full extent authorized by Delaware law, against
expenses (including, but not limited to, attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with the defense or settlement of such action, suit or proceeding if such
person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of AES, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe was
unlawful. AES shall 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 the Company in the
performance of his or her duty. Agents of the Company may be similarly
indemnified at the discretion of the Board of Directors.
Under Section 145 of the GCL, a similar of care is applicable
in the case of derivative actions, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with the defense or
settlement of such an action and then, where the person is adjudged to be
liable to AES, only if and to the extent that the Court of Chancery of the
State of Delaware or the court in which such action was brought determines
that such person is fairly and reasonably entitled to such indemnity and only
for such expenses as the court shall deem proper.
Pursuant to AES's By-Laws, a person eligible for
indemnification may have the expenses incurred in connection with any matter
described above paid in advance of a final disposition by AES. However, such
advances will only be made upon the delivery of an undertaking by or on
behalf of the indemnified person to repay all amounts so advanced if it is
ultimately determined that such person is not entitled to indemnification.
In addition, under AES's By-Laws, the Company may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of AES or of another corporation against any liability
asserted against and incurred by such person in such capacity, or arising out
of the person's status as such whether or not AES would have the power or the
obligation to indemnify such person against such liability under the
provisions of AES's By-Laws. The Company maintains directors' and officers'
insurance.
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 The AES Corporation, as issuer, and The First National
Bank of Chicago, as trustee. The Senior Subordinated Debt Securities will be
issued under an indenture (the "Senior Subordinated Debt Indenture") dated
as of July 1, 1996 between The AES Corporation, as issuer, and The First
National Bank of Chicago, as trustee. The Junior Subordinated Debt
Securities will be issued under an indenture (the "Junior Subordinated Debt
Indenture") between The AES Corporation, as issuer, and The First National
Bank of Chicago, as trustee. The First National Bank of Chicago, in its
capacity as trustee under each of the Indentures, is referred to herein as
the "Trustee."
Copies of the Indentures (or the forms thereof) 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, as amended (the "Trust Indenture
Act"). Section references contained herein are applicable to each of the
Indentures. The following summaries of certain provisions of the Indentures
do not purport to be complete, and where reference is made to particular
provisions of the Indentures, such provisions, including definitions of
certain terms, are incorporated by reference as a part of such summaries or
terms, which are qualified in their entirety by such 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 from time to time by the Company. Reference is made to the
Prospectus Supplement for the following terms of the Debt Securities (to the
extent such terms are applicable to such Debt Securities) in respect of which
this Prospectus is being delivered (the "Offered Debt Securities"): (i) the
designation, aggregate principal amount and authorized denominations of the
Offered Debt Securities; (ii) the date or dates on which the Offered Debt
Securities will mature; (iii) the rate or rates per annum at which the Offered
Debt Securities will bear interest and the method of calculating such rates,
if any; (iv) the dates on which any such interest will be payable and the
record dates for any such interest payments; (v) any mandatory or optional
redemption terms or prepayment, conversion, sinking fund or exchangeability
provisions; (vi) the place where the principal of and interest on the Offered
Debt Securities will be payable; (vii) if other than denominations of $1,000
or multiples thereof, the denominations in which the Offered Debt Securities
will be issuable; (viii) whether the Offered Debt Securities shall be issued
in the form of Global Securities (as defined below) or certificates; (ix)
additional provisions, if any, relating to the defeasance of the Offered Debt
Securities; (x) the currency or currencies, if other than the currency of the
United States, in which payment of the principal of and interest on the
Offered Debt Securities will be payable; (xi) whether the Offered Debt
Securities will be issuable in registered form or bearer form ("Bearer
Securities") or both and, if Bearer Securities are issuable, any restrictions
applicable to the exchange of one form for another and the offer, sale and
delivery of Bearer Securities; (xii) any applicable United States federal
income tax consequences, including whether and under what circumstances the
Company 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 the Company will have the option to redeem such Offered
Debt Securities rather than pay such additional amounts; (xiii) the dates on
which premium, if any, will be payable; (xiv) the right of the Company, if
any, to defer payment of interest and the maximum length of such deferral
period; (xv) any listing on a securities exchange; (xvi) the initial public
offering price; and (xvii) 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 under
which such Debt Securities are issued may contain covenants limiting: (i) the
incurrence of debt by the Company; (ii) the incurrence of debt by subsidiaries
of the Company; (iii) the making of certain payments by the Company and its
subsidiaries; (iv) subsidiary mergers; (v) business activities of the Company
and its subsidiaries; (vi) the issuance of preferred stock of subsidiaries;
(vii) asset dispositions; (viii) transactions with affiliates; (ix) liens; and
(x) mergers and consolidations involving the Company.
Book-Entry System
If so specified in any accompanying 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, unless otherwise specified in the accompanying
Prospectus Supplement, 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 the Company 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.
Upon the issuance of a Global Security 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 such
Global Security to the accounts of participants. The accounts to be credited
will be designated by the underwriters, dealers, or agents, if any, or by the
Company, if such Debt Securities are offered and sold directly by the Company.
Ownership of 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, records maintained by such participants. The laws of some
jurisdictions may require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such 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, the Depositary or such nominee, as the case may be, will
be considered the sole owner or holder of the Debt Securities represented by
such Global Security for all purposes under the Indenture under which such
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 such Global Security registered in their names, and will not
receive or be entitled to receive physical delivery of such Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the Indenture under which such Debt Securities are issued. Accordingly, each
person owning a beneficial interest in a Global Security must rely on the
procedures of the Depositary and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder of record under the applicable Indenture
pursuant to which the Debt Securities relating to such Global Security are
issued. The Company understands that under existing industry practices, if
the Company requests 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 of, 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 such Depositary or such nominee, as
the case may be, as the registered owner of such Global Security. None of the
Company, the Trustee or any other agent of the Company 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
such Global Security or for maintaining, supervising, or reviewing any records
relating to such beneficial ownership interests.
The Company has 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. The Company
expects 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 by
the Depositary to a nominee or successor of the Depositary or by a nominee of
the Depositary to another nominee of the Depositary. A Global Security
representing all but not part of an offering of Offered Debt Securities hereby
is exchangeable for Debt Securities in definitive form of like tenor and terms
if (i) the Depositary notifies the Company that it is unwilling or unable to
continue as depositary for such Global Security or if at any time the
Depositary is no longer eligible to be or in good standing as a clearing
agency registered under the Exchange Act, and in either case, a successor
depositary is not appointed by the Company within 90 days of receipt by the
Company of such notice or of the Company becoming aware of such ineligibility,
or (ii) the Company in its sole discretion at any time determines not to have
all of the Debt Securities represented in an offering of Offered Debt
Securities by a Global Security and notifies the Trustee thereof. A Global
Security exchangeable pursuant to the preceding sentence shall be exchangeable
for Debt Securities registered in such names and in such authorized
denominations as the Depositary for such Global Security shall direct. The
Debt Securities of a 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 Euro-clear and CEDEL, or with a nominee
for such depositary identified in the Prospectus Supplement relating to such
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 relating to such series.
Senior Debt Securities
The payment of principal of, 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 pari passu with all unsecured and
unsubordinated debt of the Company.
Subordination of Senior Subordinated Debt Securities
The payment of principal of, 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 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 of the Company, 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 of, premium, if any, or interest on the Senior
Subordinated Debt Securities.
No payments on account of principal, premium, if any, or
interest in respect of the Senior Subordinated Debt Securities may be made by
the Company if there shall have occurred and be continuing a default in any
payment with respect to Senior Debt. 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, from and after the date of receipt by the Trustee of written
notice from the holders of such Designated Senior Debt or from an agent of
such holders, no payments on account of principal, premium, if any, or
interest in respect of the Senior Subordinated Debt Securities may be made by
the Company for a period (the "Payment Blockage Period") commencing on the
date of delivery of such notice and ending 179 days thereafter (unless such
Payment Blockage Period shall be terminated by written notice to the Trustee
from the holders of such Designated Senior Debt or from an agent of such
holders, or such 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
commencement of any Payment Blockage Period with respect to the Designated
Senior Debt initiating such Payment Blockage Period shall be or be made the
basis for the commencement of any subsequent Payment Blockage Period by the
holders of such Designated Senior Debt, unless such event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
By reason of such subordination, in the event of insolvency,
funds that would otherwise be payable to holders will be paid to the holders
of Senior Debt to the extent necessary to pay the Senior Debt in full, and the
Company may be unable to meet fully its 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), (i) all indebtedness of such
person for borrowed money, (ii) all obligations of such person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations
of such person in respect of letters of credit or bankers' acceptance or other
similar instruments (or reimbursement obligations with respect thereto), (iv)
all obligations of such person to pay the deferred purchase price of property
or services, except trade payables, (v) all obligations of such person as
lessee under capitalized leases, (vi) all Debt of others secured by a lien on
any asset of such person, whether or not such Debt is assumed by such person;
provided that, for purposes of determining the amount of any Debt of the type
described in this clause, if recourse with respect to such Debt is limited to
such asset, the amount of such Debt shall be limited to the lesser of the fair
market value of such asset or the amount of such Debt, (vii) all Debt of
others guaranteed by such person to the extent such Debt is guaranteed by such
person, (viii) all redeemable stock valued at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends and (ix)
to the extent not otherwise included in this definition, all obligations of
such person under currency agreements and interest rate agreements.
"Designated Senior Debt" is defined to mean (i) Debt under the
Credit Agreement dated as of August 2, 1996 (the "Credit Agreement") among the
Company, 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 (ii) Debt constituting Senior Debt which, at
the time of its determination, (A) has an aggregate principal amount of at
least $30 million and (B) is specifically designated as "Designated Senior
Debt" by the Company.
"Senior Debt" is defined to mean the principal of (and premium,
if any) and interest on all Debt of the Company whether created, incurred or
assumed before, on or after the date of the Senior Subordinated Debt
and Subordinated Debt; provided that Senior Debt shall not include (i) the
Company's 9 3/4% Senior Subordinated Notes Due 2000 and the Company's 10
1/4% Senior Subordinated Notes due 2006 which rank pari passu with the
Senior Subordinated Debt Securities, (ii) Debt of the Company to any
affiliate, (iii) Debt of the Company that, when incurred, and without
respect to any election under Section 1111(b) of Title 11, U.S. Code, was
without recourse, (iv) any other Debt of the Company 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 (v) redeemable stock of the Company.
Subordination of Junior Subordinated Debt Securities
The payment of principal of, 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
Senior and Subordinated Debt of the Company.
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 of the Company, 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 of, premium, if any, or
interest on the Junior Subordinated Debt Securities.
No payments on account of principal, premium, if any, or
interest in respect of the Junior Subordinated Debt Securities may be made by
the Company if there shall have occurred and be continuing a default in any
payment with respect to Senior and Subordinated Debt. 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, from and after the date of receipt
by the Trustee of written notice from holders of such Designated Senior and
Subordinated Debt or from an agent of such holders, no payments on account
of principal, premium, if any, or interest may be made by the Company
during a Payment Blockage Period in respect of such Junior Subordinated
Debt Securities (unless such Payment Blockage Period shall be terminated by
written notice to the Trustee from the holders of such Designated Senior
and Subordinated Debt or from an agent of such holders, or such 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 commencement of
any Payment Blockage Period with respect to the Designated Senior and
Subordinated Debt initiating such Payment Blockage Period shall be or be
made the basis for the commencement 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.
By reason of such 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 of the
Company to the extent necessary to pay such Debt in full, and the Company
may be unable to meet fully its obligations with respect to the Junior
Subordinated Debt Securities.
"Designated Senior and Subordinated Debt" is defined to mean
(i) Debt under the Credit Agreement and (ii) Debt constituting Senior
and Subordinated Debt which, at the time of its determination, (A) has an
aggregate principal amount of at least $30 million and (B) is specifically
designated in the instrument as "Designated Senior and Subordinated Debt"
by the Company.
"Senior and Subordinated Debt" is defined to mean the
principal of (and premium, if any) and interest on all Debt of the Company
whether created, incurred or assumed before, on or after the date of the
Junior Subordinated Debt Indenture; provided that such Senior and
Subordinated Debt shall not include (i) Debt of the Company to any
affiliate, (ii) Debt of the Company that, when incurred and without
respect to any election under Section 1111(b) of Title 11, U.S. Code, was
without recourse, (iii) any other Debt of the Company 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 pari passu with all other debt securities and guarantees issued to an
AES Trust or any other trust, partnership or other entity affiliated with
the Company which is a financing vehicle of the Company in connection with
an issuance of preferred securities by such financing entity, and (iv)
redeemable stock of the Company.
Events of Default
An Event of Default, as defined in each of the Indentures and
applicable to Debt Securities issued under such Indenture, will occur with
respect to the Debt Securities of any series issued under such Indenture if:
(i) the Company defaults in the payment of principal of (or premium, if any,
on) any Debt Security of such series issued under such Indenture when the same
becomes due and payable at maturity, upon acceleration, redemption, mandatory
repurchase, or otherwise; (ii) the Company defaults in the payment of interest
on any Debt Security of such series issued under such Indenture when the same
becomes due and payable, and such default continues for a period of 30 days;
(iii) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in such Indenture with respect to the
Debt Securities of any series issued under such Indenture and such default or
breach continues for a period of 30 consecutive days after written notice by
the Trustee or by the holders (as defined in the Indenture) of 25% or more in
aggregate principal amount of the Debt Securities of all series issued under
such Indenture; (iv) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company or any of its
subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, (B) appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator, or
similar official of the Company or any of its subsidiaries or for all or
substantially all of the property and assets of the Company or any of its
subsidiaries or (C) the winding up or liquidation of the affairs of the
Company or any of its subsidiaries and, in each case, such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days; (v)
the Company or any of its subsidiaries (A) 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, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official of the Company or any of its subsidiaries
or for all or substantially all of the property and assets of the Company
or any of its subsidiaries or (C) effects any general assignment for the
benefit of creditors; and (vi) 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 (iv) or (v) above that occurs with respect to the Company)
occurs with respect to the Debt Securities of any series issued under an
Indenture, and if such Event of Default is continuing under such Indenture,
then, and in each and every such case, except for any series of Debt
Securities issued under such Indenture the principal of which shall have
already become due and payable, either the Trustee or the holders of not less
than 25% in aggregate principal amount of the Debt Securities of any such
series issued under such Indenture (each such series voting as a separate
class) by written notice to the Company (and to the Trustee if such notice is
given by the holders (the "Acceleration Notice")), may, and the Trustee at the
request of such holders shall, declare the principal of, premium, if any, and
accrued interest on the Debt Securities of such series to be immediately due
and payable. Upon a declaration of acceleration, such principal of, premium,
if any, and accrued interest shall be immediately due and payable. If an
Event of Default specified in clause (iv) or (v) above occurs with respect to
the Company, the principal of, premium, if any, and accrued interest on the
Debt Securities then outstanding under each of the Indentures shall ipso facto
become and be immediately due and payable 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 of any series under an
Indenture may, by written notice to the Company and to the Trustee, waive all
past defaults with respect to Debt Securities of such series and rescind and
annul a declaration of acceleration with respect to Debt Securities of such
series and its consequences if (i) all existing Events of Default applicable
to Debt Securities of such series, other than the nonpayment of the principal
of, premium, if any, and interest on the Debt Securities that have become due
solely by such declaration of acceleration, have been cured or waived and (ii)
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 aggregate principal
amount of the outstanding Debt Securities of any series under an Indenture 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 such series of Debt Securities
not joining in the giving of such direction and may take any other action it
deems proper that is not inconsistent with any such direction received from
holders of Debt Securities of such series. A holder may not pursue any remedy
with respect to the applicable Indenture or the Debt Securities of any series
issued under such Indenture unless: (i) the holder gives the Trustee written
notice of a continuing Event of Default; (ii) the holders of at least 25% in
aggregate principal amount of outstanding Debt Securities of such series make
a written request to the Trustee to pursue the remedy; (iii) such holder or
holders offer the Trustee indemnity satisfactory to the Trustee against any
costs, liability or expense; (iv) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of such series do not give
the Trustee a direction that is inconsistent with the request. However, such
limitations do not apply to the right of any holder of a Debt Security to
receive payment of the principal of, premium, if any, or interest on, such
Debt Security or to bring suit for the enforcement of any such payment, on or
after the due date expressed in the Debt Securities, which right shall not be
impaired or affected without the consent of the holder.
Each of the Indentures requires that certain officers of the
Company certify, on or before a date not more than four months after the end
of each fiscal year, that to the best of such officers, knowledge, the Company
has fulfilled all its obligations under such Indenture. The Company is also
obligated to notify the Trustee of any default or defaults in the performance
of any covenants or agreements under any of the Indentures.
Modification and Waiver
Each of the Indentures provides that the Company and the
Trustee may amend or supplement such Indenture or the Debt Securities of any
series issued under such Indenture without notice to or the consent of any
holder: (i) to cure any ambiguity, defect, or inconsistency in such Indenture;
provided that such amendments or supplements shall not adversely affect the
interests of the holders in any material respect; (ii) to comply with Article
5 of such Indenture; (iii) to comply with any requirements of the Commission
in connection with the qualification of such Indenture under the Trust
Indenture Act of 1939, as amended; (iv) to evidence and provide for the
acceptance of appointment with respect to the Debt Securities of any or all
series issued under such Indenture by a successor Trustee; (v) to establish
the form or forms of Debt Securities of any series issued under such Indenture
or of the coupons pertaining to such Debt Securities as permitted by such
Indenture; (vi) to provide for uncertificated Debt Securities and to make all
appropriate changes for such purpose; and (vii) to make any change that does
not materially and adversely affect the rights of any holder.
Each of the Indentures also provides that modifications and
amendments of such Indenture may be made by the Company and the Trustee with
the consent of the holders of not less than a majority in aggregate principal
amount of the outstanding Debt Securities of each series issued under such
Indenture affected thereby (each series voting as a separate class); provided,
however, that no such modification or amendment may, without the consent of
each holder affected thereby, (i) change the stated maturity of the principal
of, or any sinking fund obligation or any installment of interest on, any Debt
Security issued under such Indenture, (ii) reduce the principal amount of, or
premium, if any, or interest on, any Debt Security issued under such
Indenture, (iii) reduce the above-stated percentage of outstanding Debt
Securities issued under such Indenture the consent of whose holders is
necessary to modify or amend such Indenture with respect to the Debt
Securities of any series issued under such Indenture, (iv) reduce the
percentage or aggregate principal amount of outstanding Debt Securities of any
series issued under the Indenture the consent of whose holders is necessary
for waiver of compliance with certain provisions of such 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 such Indenture, or which modifies the rights of
holders of Debt Securities of such series with respect to such 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
such Indenture or of the coupons appertaining to such Debt Securities. It
shall not be 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 shall be sufficient if such consent approves the
substance thereof. After an amendment, supplement, or waiver under this
section of an Indenture becomes effective, the Company shall give to the
holders affected thereby a notice briefly describing the amendment,
supplement, or waiver. The Company will mail supplemental indentures to
holders upon request. Any failure of the Company to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity
of any such supplemental indenture or waiver.
Restriction on Mergers, Consolidations and Sales of Assets
Pursuant to the Indentures, the Company may not consolidate
with, merge with or into, or transfer all or substantially all of its assets
(as an entirety or substantially an entirety in one transaction or a series of
related transactions), to any Person (as defined in the Indentures) unless:
(i) the Company shall be the continuing Person, or the Person (if other than
the Company) formed by such consolidation or into which the Company is merged
or to which properties and assets of the Company are transferred shall be a
solvent corporation organized and existing under the laws of the United States
or any State thereof or the District of Columbia and shall expressly assume in
writing all the obligations of the Company under the Notes, (ii) immediately
after giving effect to such transaction no Event of Default or event or
condition which through the giving of notice or lapse of time or both would
become an Event of Default shall have occurred and be continuing and (iii)
such other conditions as may be established in connection with the issuance of
the applicable Debt Securities.
Defeasance and Discharge
Each of the Indentures provides that the Company shall be
deemed to have paid and shall be discharged from any and all obligations in
respect of the Debt Securities of any series issued under such Indenture on
the 123rd day after the deposit referred to below has been made, and the
provisions of such Indenture will no longer be in effect with respect to the
Debt Securities of such series 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, (A) the Company has deposited with
the Trustee, in trust, money and/or U.S. Government Obligations that through
the payment of interest and principal in respect thereof, in accordance with
their terms will provide money in an amount sufficient to pay the principal
of, 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 such Indenture and the applicable Debt Securities, (B) the
Company has delivered to the Trustee (i) either (x) 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 Company's exercise of its option under
this "Defeasance" provision and will be subject to federal income tax on the
same amount and in the same manner and at the same times as would have been
the case if such 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 such Indenture that
a ruling is no longer required or (y) a ruling directed to the Trustee
received from the Internal Revenue Service to the same effect as the
aforementioned opinion of counsel and (ii) 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, (C)
immediately after giving effect to such deposit on a pro forma basis, no Event
of Default, or event that after the giving of notice or lapse of time or both
would become an Event of Default, shall have occurred and be continuing on the
date of such deposit or during the period ending on the 123rd day after the
date of such deposit, and such deposit shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which the Company is a party or by which the Company is bound, (D) the
Company is not prohibited from making payments in respect of the applicable
Debt Securities by the subordination provisions contained in such Indenture
and (E) if at such time the applicable Debt Securities are listed on a
national securities exchange, the Company has delivered to the Trustee an
opinion of counsel to the effect that such Debt Securities will not be
delisted as a result of such deposit, defeasance and discharge.
As more fully described in the Prospectus Supplement, each of
the Indentures also provides for defeasance of certain covenants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
AES may issue Stock Purchase Contracts, representing contracts obligating
holders to purchase from the Company, and the Company to sell to the holders,
a specified number of shares of Common Stock at a future date or dates. The
price per share of Common Stock may be fixed at the time the Stock Purchase
Contracts are issued or may be determined by reference to a specific formula
set forth in the Stock Purchase Contracts. The Stock Purchase Contracts may
be issued separately or as a part of units ("Stock Purchase Units") consisting
of a Stock Purchase Contract and Debt Securities or debt obligations of third
parties, including U.S. Treasury securities, securing the holders' obligations
to purchase the Common Stock under the Stock Purchase Contracts. The Stock
Purchase Contracts may require AES to make periodic payments to the holders of
the Stock Purchase Units or vice versa, and such payments may be unsecured or
prefunded on some basis. The Stock Purchase Contracts may require holders to
secure their obligations thereunder in a specified manner.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units. The description in the Prospectus
Supplement will not purport to be complete and will be qualified in its
entirety by reference to the Stock Purchase Contracts, and, if applicable,
collateral arrangements and depositary arrangements, relating to such Stock
Purchase Contracts or Stock Purchase Units.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities in any of three
ways (or in any combination thereof): (i) through underwriters or dealers;
(ii) directly to a limited number of purchasers or to a single purchaser; or
(iii) through agents. The Prospectus Supplement with respect to any Offered
Securities will set forth the terms of the offering of such Offered
Securities, including the name or names of any underwriters, dealers or agents
and the respective amounts of such Offered Securities underwritten or
purchased by each of them, the initial public offering price of such Offered
Securities and the proceeds to the Company from such sale, any discounts,
commissions or other items constituting compensation from the Company and any
discounts, commissions or concessions allowed or reallowed or paid to dealers
and any securities exchanges on which such Offered Securities may be listed.
Any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale of any Offered Securities,
such Offered Securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. Such Offered Securities may be
either offered to the public through underwriting syndicates represented by
managing underwriters, or directly by underwriters. Unless otherwise set
forth in the Prospectus Supplement, the obligations of the underwriters to
purchase such Offered Securities will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all of such
Offered Securities if any are purchased.
Offered Securities may be sold directly by the Company or
through agents designated by the Company from time to time. Any agent
involved in the offer or sale of Offered Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will
authorize underwriters, dealers or agents to solicit offers by certain
purchasers to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Agents and underwriters may be entitled under agreements
entered into with the Company to indemnification by the Company against
certain civil liabilities, including liabilities under the Securities Act, or
to contribution with respect to payments which the agents or underwriters may
be required to make in respect thereof. Agents and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
LEGAL MATTERS
The legality of the Securities offered hereby will be passed
upon for the Company by Davis Polk & Wardwell.
EXPERTS
The consolidated financial statements incorporated in this
Prospectus by reference from the Company's Registration Statement on Form S-3
filed on June 12, 1996, and the consolidated financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated by reference herein, and such consolidated financial
statements and consolidated financial statement schedules have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The financial statements of Light Servicos de Electricidade S.A.
incorporated in this Prospectus by reference, from the Form 8-K of the AES
Corporation dated May 30, 1996, for the years ended December 31, 1995 and
1994 have been audited by Deloitte Touche Tohmatsu, Rio de Janeiro, Brazil,
independent auditors, as stated in their reports, which are incorporated
herein by reference, and have been so incorporated in reliance upon the
reports of such firm given upon their authority as experts in accounting
and auditing.
======================================== ====================================
No person has been authorized to give
any information or to make any
representations,other than those $750,000,000
contained or incorporated by reference
in this Prospectus or any Prospectus
Supplement, in connection with any
offering contemplated hereby, and, if The AES Corporation
given or made, such information or
representations must not be relied upon Debt Securities
as having been authorized by the company, Common Stock
any underwriter, agent or dealer. Preferred Stock
Neither the delivery of this Prospectus Stock Purchase Contracts
or any Prospectus Supplement nor any Stock Purchase Units
sale made hereunder or thereunder
shall under any circumstances create
any implication that there has been no
change in the affairs of the Company
since the date hereof or thereof.
Neither this Prospectus nor any __________
Prospectus Supplement shall constitute PROSPECTUS
an offer to sell or a solicitation of an __________
offer to buy any securities by
anyone in any jurisdiction in which
such offer or solicitation is not
authorized or in which the person
making such offer or solicitation is not
qualified to do so or to any person
to whom it is unlawful to make such
offer or solicitation.
Table of Contents
Page
----
Available Information............... 1
Incorporation of Certain Information
by Reference...................... 1
Use of Proceeds..................... 2
Ratios of Earnings to Fixed Charges. 2
The Company......................... 3
Risk Factors........................ 4
Description of Capital Stock........ 10
Description of Debt Securities...... 14
Description of Stock Purchase
Contracts and Stock Purchase
Units.............................. 22
Plan of Distribution................. 23
Legal Matters........................ 23
Experts.............................. 23 , 1996
======================================== ====================================
SUBJECT TO COMPLETION, DATED NOVEMBER 18, 1996
PROSPECTUS
[LOGO]
The AES Corporation
$750,000,000
Junior Subordinated Debt Securities
AES Trust I
AES Trust II
AES Trust III
Preferred Trust Securities guaranteed to the extent set forth herein by The
AES Corporation
The AES Corporation (the "Company" or "AES") may from time to time offer,
together or separately unsecured junior subordinated securities (the "Junior
Subordinated Debt Trust Securities") consisting of debentures, notes or other
evidences of indebtedness in one or more series and in amounts, at prices and
on terms to be determined at or prior to the time of any such offering. The
Junior Subordinated Debt Trust Securities when issued will be unsecured
obligations of the Company. The Company's obligations under the Junior
Subordinated Debt Trust Securities will be subordinate and junior in right of
payment to all Senior and Subordinated Debt (as defined herein) of the
Company.
See "Risk Factors" Beginning On Page 4 For A Discussion of Certain
Factors That Should Be Considered By Prospective Investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AES Trust I, AES Trust II and AES Trust III (collectively, the "AES
Trusts"), each a statutory business trust formed under the laws of the
State of Delaware, may offer and sell, from time to time, preferred trust
securities representing undivided beneficial interests in the assets of the
respective AES Trust (the "Preferred Securities" and, together with the
Junior Subordinated Debt Trust Securities, the "Securities"). The
Preferred Securities may be offered in amounts, at prices and on terms to
be determined at or prior to the time of any such offering. The payment of
periodic cash distributions ("distributions") with respect to Preferred
Securities of each of the AES Trusts out of moneys held by the Property
Trustee (as defined herein) of each of the AES Trusts, and payments on
liquidation of each AES Trust and on redemption of Preferred Securities of
such AES Trust, will be guaranteed by the Company as and to the extent
described herein (each such guarantee, a "Preferred Securities Guarantee").
See "Description of the Preferred Securities Guarantees." The Company's
obligation under each Preferred Securities Guarantee is an unsecured
obligation of the Company and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Company, including the Junior
Subordinated Debt Trust Securities, except those made pari passu or
subordinate by their terms, and (ii) senior to all capital stock now or
hereafter issued by the Company and to any guarantee now or hereafter
entered into by the Company in respect of any of its capital stock. Junior
Subordinated Debt Trust Securities may be issued and sold from time to time
in one or more series by the Company to an AES Trust, or a trustee of such
trust, in connection with the investment of the proceeds from the offering
of Preferred Securities and Common Securities (as defined herein) of such
AES Trust. The Junior Subordinated Debt Trust Securities purchased by an
AES Trust may be subsequently distributed pro rata to holders of Preferred
Securities and Common Securities in connection with the dissolution of such
AES Trust, upon the occurrence of certain events as may be described in an
accompanying Prospectus Supplement.
Specific terms of the Junior Subordinated Debt Trust Securities and
Preferred Securities in respect of which this Prospectus is being delivered
(the "Offered Securities") will be set forth in a Prospectus Supplement
with respect to such Offered Securities, which will describe, without
limitation and where applicable, the following: (i) in the case of Junior
Subordinated Debt Trust Securities, the specific designation, aggregate
principal amount, authorized denomination, maturity, premium, if any,
exchangeability, redemption, conversion, prepayment or sinking fund
provisions, if any, interest rate (which may be fixed or variable), if any,
method, if any, of calculating interest payments, and dates for payment
thereof, dates on which premium, if any, will be payable, the right of the
Company, if any, to defer payment of interest on the Junior Subordinated
Debt Trust Securities and the maximum length of such deferral period, the
public offering price, any listing on a securities exchange and other
specific terms of the offering; and (ii) in the case of Preferred
Securities, the specific designation, number of securities, liquidation
amount per security, initial public offering price, and any listing on a
securities exchange, distribution rate (or method of calculation thereof),
dates on which distributions shall be payable and dates from which
distributions shall accrue, voting rights (if any), terms for any
conversion or exchange into other securities, any redemption or sinking
fund provisions, any other rights, preferences, privileges, limitations or
restrictions relating to the Preferred Securities and the terms upon which
the proceeds of the sale of the Preferred Securities shall be used to
purchase a specific series of Junior Subordinated Debt Trust Securities of
the Company. Unless otherwise indicated in the Prospectus Supplement, the
Company does not intend to list any of the Offered Securities on a national
securities exchange.
Any Prospectus Supplement relating to any series of Offered Securities
will contain information concerning certain United States federal income tax
considerations, if applicable, to the Offered Securities. By separate
prospectus, the form of which is included in the Registration Statement of
which this Prospectus is a part, the Company may offer from time to time debt
securities or preferred stock. The aggregate initial public offering price of
the securities to be offered by this Prospectus and such other prospectus
shall not exceed $750,000,000.
The Offered Securities may be offered directly, through agents designated
from time to time, through dealers or through underwriters. Such agents or
underwriters may act alone or with other agents or underwriters. See "Plan
of Distribution." Any such agents, dealers or underwriters will be set forth
in a Prospectus Supplement. If an agent of the Company and/or any AES Trust,
or a dealer or underwriter is involved in the offering of the Offered
Securities, the agent's commission, dealer's purchase price, underwriter's
discount and net proceeds to the Company, as the case may be, will be set
forth in, or may be calculated from, the Prospectus Supplement. Any
underwriters, dealers or agents participating in the offering may be deemed
"underwriters" within the meaning of the Securities Act of 1933.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
The date of this Prospectus is November , 1996.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OF
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
AVAILABLE INFORMATION
The AES Corporation is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy and information
statements and other information with the Securities and Exchange Commission
(the "Commission"). These reports, proxy and information statements and other
information may be inspected without charge and copied at the public reference
facilities maintained by the Commission at its principal offices at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
regional offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such materials also can be obtained at prescribed
rates from the Public Reference Section of the Commission at the principal
offices of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material may also be inspected at the offices of
the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006. Such material may also be accessed electronically by
means of the Commission's home page on the Internet at http://www.sec.gov.
The Company has filed with the Commission a Registration
Statement on Form S-3 under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Securities offered hereby (including
all amendments and supplements thereto, the "Registration Statement"). This
Prospectus, which forms a part of the Registration Statement, does not contain
all the information set forth in the Registration Statement and the exhibits
filed thereto, certain parts of which have been omitted in accordance with the
rules and regulations of the Commission. Statements contained herein
concerning the provisions of any documents are not necessarily complete and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference. The
Registration Statement and the exhibits thereto can be inspected and copied at
the public reference facilities and regional and other offices referred to
above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference
thereto and makes a part hereof the following documents, heretofore filed with
the Commission pursuant to the Exchange Act: (i) the Company's Annual Report
on Form 10-K for the year ended December 31, 1995; (ii) the Company's
Quarterly Report on Form 10-Q for the quarters ended September 30, 1996, June
30, 1996 and March 31, 1996, (iii) the Company's Current Reports on Form
8-K filed on July 1, 1996, June 12, 1996, May 30, 1996, February 26, 1996
and February 6, 1996 (iv) the description of the Common Stock contained in
the Company's Registration Statement on Form 8-A (File No.0-19281),
filed on October 10, 1996 and (v) the Company's Registration Statement on
Form S-3 filed on June 12, 1996.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to termination of the offering being made hereby shall be
deemed to be incorporated in this Prospectus by reference and to be a part
hereof from the respective dates of the filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus and the Registration Statement of which it is
a part to the extent that a statement contained herein or in any subsequently
filed document which also is, or is deemed to be, incorporated by reference
herein, modifies or supersedes such earlier statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus or such Registration
Statement.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus has been delivered, upon written or
oral request of any such person, a copy of any and all of the documents
referred to above which have been or may be incorporated in this Prospectus by
reference, other than exhibits to such documents which are not specifically
incorporated by reference into such documents. Requests for such copies
should be directed to William R. Luraschi, General Counsel and Secretary, The
AES Corporation, 1001 North 19th Street, Arlington, Virginia 22209, telephone
(703) 522-1315.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus
Supplement, proceeds from the sale of the Junior Subordinated Debt Trust
Securities will be used by the Company for general corporate purposes and
initially may be temporarily invested in short-term securities.
Each AES Trust will use all proceeds received from the sale of
its Trust Securities to purchase Junior Subordinated Debt Trust Securities
from the Company.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges.
Nine Months
Ended
Year Ended December 31, September 30,
------------------------------------------------------ -------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- -------------
Ratio of earnings to fixed charges .. 1.31 1.37 1.63 2.08 2.18 2.04
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 fixed charges, less capitalized interest, less
excess of earnings over dividends of less-than-fifty-percent-owned
companies. Fixed charges consist of interest (including capitalized
interest) on all indebtedness, amortization of debt discount and expense
and that portion of rental expense which the Company believes to be
representative of an interest factor. A statement setting forth the
computation of the above ratios of earnings to fixed charges is on file as
an exhibit to the Registration Statement of which this Prospectus is a
part.
During the period from January 1, 1991 until September 30, 1996, no
shares of Preferred Stock were issued or outstanding, and during that
period the Company did not pay any Preferred Stock dividends.
THE COMPANY
With a presence in over 35 countries, The AES Corporation is a
global power company committed to supplying electricity to customers
world-wide in a socially responsible way. The Company, based in Arlington,
Virginia, markets power principally from electric generating facilities that
it develops, owns and operates. AES was one of the original entrants in the
independent power market and today is one of the world's largest independent
power companies, based on net equity ownership of generating capacity (in
megawatts) in operation or under construction.
Over the last six years, the Company has experienced
significant growth. This growth has resulted primarily from the development
and construction of new plants ("greenfield development") and also from the
acquisition of existing plants, primarily through competitively bid
privatization initiatives outside the United States.
In part, the Company's strategy in helping meet the world's
need for electricity is to participate in competitive power generation markets
as they develop either by greenfield development or by acquiring and operating
existing facilities in these markets.
Other elements of the Company's strategy include:
bullet Supplying energy to customers at the lowest cost possible,
taking into account factors such as reliability and environmental
performance.
bullet Constructing or acquiring projects of a relatively large
size (generally larger than 100 megawatts).
bullet Entering into power sales contracts with electric utilities
or other customers with credit strength.
The Company also strives for operating excellence as a key
element of its strategy, which it believes it accomplishes by minimizing
organizational layers and maximizing company-wide participation in
decision-making. AES has attempted to create an operating environment that
results in safe, clean and reliable electricity generation. Because of this
emphasis, the Company prefers to operate all facilities which it develops or
acquires; however, there can be no assurance that the Company will have
operating control of all of its facilities in the future.
The Company, a corporation organized under the laws of
Delaware, was formed in 1981. The principal office of the Company is located
at 1001 North 19th Street, Arlington, Virginia 22209, and its telephone number
is (703) 522-1315.
RISK FACTORS
Purchasers of the Securities should read this entire Prospectus
carefully. Ownership of the Securities involves certain risks. The following
factors should be considered carefully in evaluating AES and its business
before purchasing the Securities offered by this Prospectus.
Leverage and Subordination. The Company and its subsidiaries
had approximately $2.1 billion of outstanding indebtedness at September 30,
1996. As a result of the Company's level of debt, the Company might be
significantly limited in its ability to meet its debt service obligations, to
finance the acquisition and development of additional projects, to compete
effectively or to operate successfully under adverse economic conditions. As
of September 30, 1996, the Company had a consolidated ratio of total debt to
total book capitalization (including current debt) of approximately 75%.
The Junior Subordinated Debt Trust Securities will be
subordinated to all Senior and Senior Subordinated Debt including, but not
limited to, the Company's current $425 million credit facility debt. As of
September 30, 1996, the Company had approximately $656 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 of the Company, the
holders of Senior and Senior Subordinated Debt will first be entitled to
receive payment in full of all amounts due or to become due under all
Senior and Subordinated Debt before the holders of the Junior Subordinated
Debt Trust Securities will be entitled to receive any payment in respect
of the principal of, premium, if any, or interest on such Junior
Subordinated Debt Trust Securities. No payments on account of principal,
premium, if any, or interest in respect of the Junior Subordinated Debt
Trust Securities may be made if there shall have occurred and be
continuing a default in any payment under any Senior and Senior
Subordinated Debt or during certain periods when an event of default under
certain Senior and Subordinated Debt permits the lenders thereunder to
accelerate the maturing of such Senior and Senior Subordinated Debt. See
"Description of Junior Subordinated Debt Trust Securities--Subordination."
The Preferred Securities will rank subordinate and junior in right of
payment to all other liabilities of the Company, including the Junior
Subordinated Debt Trust Securities, except those made pari passu by their
terms and (ii) senior to all capital stock now or hereafter issued by the
Company and to any guarantee now or hereafter entered into by the Company
in respect of any of its capital stock. See "Description of the Preferred
Securities Guarantees--Status of the Preferred Securities Guarantees."
The Junior Subordinated Debt Trust Securities will be
effectively subordinated to the indebtedness and other obligations (including
trade payables) of the Company's subsidiaries. At September 30, 1996, the
indebtedness and obligations of the Company's subsidiaries, aggregated
approximately $1.5 billion. The ability of the Company to pay principal of,
premium, if any, and interest on the Junior Subordinated Debt Trust Securities
will be dependent upon the receipt of funds from its subsidiaries by way of
dividends, fees, interest, loans or otherwise. There are no terms in the
Junior Subordinated Debt Trust Securities, the Preferred Securities or the
Preferred Securities Guarantee that limit the Company's or its subsidiaries'
ability to incur additional indebtedness. Most of the Company's subsidiaries
with interests in power generation facilities currently have in place
arrangements that restrict their ability to make distributions to the Company
by way of dividends, fees, interest, loans or otherwise. The Company's
subsidiaries are separate and distinct legal entities and have no obligation,
contingent or otherwise, to pay any amounts due pursuant to the Junior
Subordinated Debt Trust Securities or the Preferred 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 Junior
Subordinated Debt Trust Securities or the Preferred Securities. Any right of
the Company to receive any assets of any of its 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 of the Company (and the
consequent right of the holders of the Junior Subordinated Debt Trust
Securities and the Preferred 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). The Company currently conducts
substantially all of its operations through its subsidiaries. See
"Description of the Preferred Securities Guarantees--Status of the Preferred
Securities Guarantees" and "Description of the Junior Subordinated Debt
Securities--Subordination."
Ability of AES to Make Distributions. The ability of the AES
Trusts to make distributions and other payments on the Preferred Securities is
solely dependent upon the Company making interest and other payments on the
Junior Subordinated Debt Trust Securities deposited as trust assets as and
when required. If the Company were not to make distributions or other
payments on the Junior Subordinated Debt Trust Securities for any reason,
including as a result of the Company's election to defer the payment of
interest on the Junior Subordinated Debt Trust Securities by extending the
interest period on the Junior Subordinated Debt Trust Securities, the AES
Trusts will not make payments on the Trust Securities (as defined herein). In
such an event, holders of the Preferred Securities would not be able to rely
on the Preferred Securities Guarantee since distributions and other payments
on the Preferred Securities are subject to such Guarantee only if and to the
extent that the Company has made a payment to the Property Trustee (as defined
herein) of interest or principal on the Junior Subordinated Debt Trust
Securities deposited in the Trust as trust assets. Instead, holders of
Preferred Securities would rely on the enforcement by the Property Trustee of
its rights as registered holder of the Junior Subordinated Debt Trust
Securities against the Company pursuant to the terms of the Indenture (as
defined herein). However, if the Trust's failure to make distributions on the
Preferred Securities is a consequence of the Company's exercise of its right
to extend the interest payment period for the Junior Subordinated Debt Trust
Securities, the Property Trustee will have no right to enforce the payment of
distributions on the Preferred Securities until an Event of Default (as
defined herein) under the Declaration (as defined herein) shall have occurred.
The Declaration provides that the Company shall pay for all
debts and obligations (other than with respect to the Trust Securities) and
all costs and expenses of the AES Trusts, including any taxes and all costs
and expenses with respect thereto, to which the AES Trusts may become subject,
except for United States withholding taxes. No assurance can be given that
the Company will have sufficient resources to enable it to pay such debts,
obligations, costs and expenses on behalf of the AES Trusts.
Option to Extend Interest Payment Period; Tax Impact of
Extension. So long as the Company shall not be in default in the payment of
interest on the Junior Subordinated Debt Trust Securities, the Company has the
right under the Indenture to defer payments of interest on the Junior
Subordinated Debt Trust Securities by extending the interest payment period
from time to time on the Junior Subordinated Debt Trust Securities for an
extension period not exceeding 20 consecutive quarterly interest periods (an
"Extension Period"), during which no interest shall be due and payable. In
such an event, quarterly distributions on the Preferred Securities would not
be made by the applicable AES Trust during any such Extension Period. If the
Company exercises the right to extend an interest payment period, the Company
may not during such Extension Period declare or pay dividends on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect
to, any of its common stock or preferred stock; provided that (i) the Company
will be permitted to pay accrued dividends upon the exchange or redemption of
any series of preferred stock of the Company as may be outstanding from time
to time, in accordance with the terms of such stock and (ii) the foregoing
will not apply to stock dividends paid by the Company. Under the Amended and
Restated Certificate of Incorporation the Company is authorized to issue up to
1,000,000 shares of preferred stock. As of September 30, 1996, no shares of
the Company's preferred stock were outstanding. The Company may from time to
time offer shares of its preferred stock to the public.
Prior to the termination of any Extension Period, the Company
may further extend such Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed
20 consecutive quarterly interest periods. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements. The
Company may also prepay at any time all or any portion of the interest accrued
during an Extension Period. Consequently, there could be multiple Extension
Periods of varying lengths throughout the term of the Junior Subordinated Debt
Trust Securities, not to exceed 20 consecutive quarters or to cause any
extension beyond the maturity of the Junior Subordinated Debt Trust
Securities. See any accompanying Prospectus Supplement relating to Junior
Subordinated Debt Trust Securities.
Because the Company has the right to extend the interest
payment period for an Extension Period of up to 20 consecutive quarterly
interest periods on various occasions, the Junior Subordinated Debt Trust
Securities will be treated as issued with "original issue discount" for United
States federal income tax purposes. As a result, holders of Preferred
Securities will be required to include their pro rata share of original issue
discount in gross income as it accrues for United States federal income tax
purposes in advance of the receipt of cash. Generally, all of a
securityholder's taxable interest income with respect to the Junior
Subordinated Debt Trust Securities will be accounted for as "original issue
discount" and actual distributions of stated interest will not be separately
reported as taxable income. See any accompanying Prospectus Supplement
relating to Junior Subordinated Debt Trust Securities.
Special Event Redemption or Distribution. Upon the occurrence
and during the continuation of a Tax Event or Investment Company Event (each
as defined herein), which may occur at any time, the applicable AES Trust
shall, unless the Junior Subordinated Debt Trust Securities are redeemed in
the limited circumstances described below, be dissolved with the result that
Junior Subordinated Debt Trust Securities having an aggregate principal amount
equal to the aggregate stated liquidation amount of, and bearing accrued and
unpaid distributions on, the Preferred Securities and Common Securities would
be distributed on a Pro Rata Basis (as defined herein under "The AES Trusts")
to the holders of the Preferred Securities and Common Securities in
liquidation of such Trust. In the case of a Tax Event, in certain
circumstances, the Company shall have the right to redeem at any time the
Junior Subordinated Debt Trust Securities in whole or in part, in which event
the applicable AES Trust will redeem Preferred Securities and Common
Securities on a Pro Rata Basis to the same extent as the Junior Subordinated
Debt Trust Securities are redeemed. There can be no assurance as to the
market prices for Preferred Securities or the Junior Subordinated Debt Trust
Securities which may be distributed in exchange for Preferred Securities if a
dissolution and liquidation of the applicable AES Trust were to occur.
Accordingly, the Preferred Securities that an investor may purchase, or the
Junior Subordinated Debt Trust Securities that the investor may receive on
dissolution and liquidation of the applicable AES Trust, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby. Because holders of Preferred Securities may
receive Junior Subordinated Debt Trust Securities upon the occurrence of a
Special Event (as defined herein), prospective purchasers of Preferred
Securities are also making an investment decision with regard to the Junior
Subordinated Debt Trust Securities and should carefully review all the
information regarding the Junior Subordinated Debt Trust Securities contained
in any accompanying Prospectus Supplement relating to Junior Subordinated Debt
Trust Securities.
If enacted in their present form, certain legislative proposals
in the Revenue Reconciliation Bill of 1996 (the "Bill") would prevent the
Company from deducting interest on the Junior Subordinated Debt Trust
Securities. The Bill as proposed would be effective generally for instruments
issued on or after December 7, 1995. However, on March 29, 1996, the Chairmen
of the Senate Finance and House Ways and Means Committees issued a joint
statement to the effect that it was their intention that the effective date of
the President's legislative proposals, if adopted, will be no earlier than the
date of appropriate Congressional action.
There can be no assurance, however, that current or future
federal legislative proposals if enacted would not prevent the Company from
deducting interest on the Junior Subordinated Debt Trust Securities. This
would constitute a Tax Event and could result in the distribution of any
Junior Subordinated Debt Trust Securities to holders of the Preferred
Securities or, in certain circumstances, the redemption of such securities by
the Company and the distribution of the resulting cash in redemption of the
Preferred Securities. See any accompanying Prospectus Supplement relating to
Junior Subordinated Debt Trust Securities.
"Tax Event" means that the Regular Trustees (as defined herein)
shall have obtained an opinion of a nationally recognized independent tax
counsel experienced in such matters (a "Dissolution Tax Opinion") to the
effect that on or after the date of any accompanying Prospectus Supplement
relating to Junior Subordinated Debt Trust Securities as a result of (a) any
amendment to, or change in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, (b) any amendment to, or change in, an interpretation or application
of any such laws or regulations by any legislative body, court, governmental
agency or regulatory authority (including the enactment of any legislation and
the publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
effective or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after the date of such Prospectus
Supplement, there is more than an insubstantial risk that (i) the applicable
AES Trust is, or will be within 90 days of the date thereof, subject to United
States federal income tax with respect to income accrued or received on the
Junior Subordinated Debt Trust Securities, (ii) the applicable AES Trust is,
or will be within 90 days of the date thereof, subject to more than a de
minimis amount of other taxes, duties or other governmental charges or (iii)
interest payable by the Company to the applicable AES Trust on the Junior
Subordinated Debt Trust Securities is not, or within 90 days of the date
thereof will not be, deductible by the Company for United States federal income
tax purposes.
"Investment Company Event" means that the Regular Trustees
shall have received an opinion of nationally recognized independent counsel
experienced in practice under the Investment Company Act of 1940, as amended
(the "1940 Act"), that as a result of the occurrence of a change in law or
regulation or a change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), there is more than an insubstantial risk that an
AES Trust is or will be considered an "investment company" which is required
to be registered under the 1940 Act, which Change in 1940 Act Law becomes
effective on or after the date of any accompanying Prospectus Supplement
relating to Junior Subordinated Debt Trust Securities.
"Special Event" means a Tax Event or an Investment Company
Event.
Limiting Voting Rights. Holders of Preferred Securities will
have limited voting rights, but will not be able to appoint, remove or
replace, or to increase or decrease the number of, Trustees, which rights are
vested exclusively in the Common Securities (as defined herein under "The AES
Trusts").
Trading Prices of Preferred Securities. The Preferred
Securities constitute a new issue of securities with no established trading
market. The Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the
underlying Junior Subordinated Debt Trust Securities. A holder who disposes
of his Preferred Securities between record dates for payments of distributions
thereon will be required to include accrued but unpaid interest on the Junior
Subordinated Debt Trust Securities through the date of disposition in income
as ordinary income, and to add such amount to his adjusted tax basis in his
pro rata share of the underlying Junior Subordinated Debt Trust Securities
deemed disposed of. Accordingly, such a holder will recognize a capital loss
to the extent the selling price (which may not fully reflect the value of
accrued but unpaid interest) is less than the holders adjusted tax basis
(which will include accrued but unpaid interest). Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes. See any accompanying Prospectus
Supplement relating to Junior Subordinated Debt Trust Securities.
Potential Market Volatility During Extension Period. As
described above, the Company has the right to extend an interest payment
period on the Junior Subordinated Debt Trust Securities from time to time
for a period not exceeding 20 consecutive quarterly interest periods. If
the Company determines to extend an interest payment period, or if the
Company thereafter extends an Extension Period or prepays interest accrued
during an Extension Period as described above, the market price of the
Preferred Securities is likely to be affected. In addition, as a result of
such rights, the market price of the Preferred Securities (which represent
an undivided interest in Junior Subordinated Debt Trust Securities) may be
more volatile than other securities on which original issue discount
accrues that do not have such rights. A holder that disposes of its
Preferred Securities during an Extension Period, therefore, may not receive
the same return on its investment as a holder that continues to hold its
Preferred Securities. See any accompanying Prospectus Supplement relating
to Junior Subordinated Debt Trust Securities.
No Prior Public Market--Possible Price Volatility of the
Securities. Prior to the offering, there has been no public market for the
Securities. There can be no assurance that an active trading market for the
Securities will develop or be sustained. If such a market were to develop,
the Securities, could trade at prices that may be higher or lower than their
offering price depending upon many factors, including prevailing interest
rates, the Company's operating results and the markets for similar securities.
Historically, the market for non-investment grade debt has demonstrated
substantial volatility in the prices of securities similar to the Securities.
There can be no assurance that the future market for the Securities will not
be subject to similar volatility. Accordingly, no assurance can be given as
to the liquidity of the Securities.
Doing Business Outside the United States. The Company's
involvement in the development of new projects and the acquisition of existing
plants in locations outside the United States is increasing and most of the
Company's current development and acquisition activities are for projects and
plants outside the United States. The Company, through subsidiaries and joint
ventures, has ownership interests in 27 power plants outside the United States
in operation or under construction. Five of such power plants are located in
Argentina; four in Brazil; two in England; two in Northern Ireland; two in
Pakistan; eight in the People's Republic of China; three in Hungary; and one
in Kazakhstan.
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, currency convertibility,
political instability, civil unrest, and expropriation) and other 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 AES 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 may also require higher investments by the Company than
historically have been the case. In addition, financing in countries with
less than investment grade sovereign credit ratings may also require
substantial participation by multilateral financing agencies. There can be no
assurance that such financing can be obtained when needed.
The uncertainty of the legal environment in certain countries
in which the Company, its subsidiaries and its affiliates are or in the future
may be developing, constructing or operating could make it more difficult for
the Company to enforce its respective rights under agreements relating to such
projects. In addition, the laws and regulations of certain countries may
limit the Company's ability to hold a majority interest in some of the projects
that it may develop or acquire. International projects owned by the Company
may, in certain cases, be expropriated by applicable governments. Although
AES may have legal recourse in enforcing its rights under agreements and
recovering damages for breaches thereof, there can be no assurance that any
such legal proceedings will be successful.
Competition. 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 the Company. Further, in recent years, the power
production industry has been characterized by strong and increasing
competition with respect to both obtaining power sales agreements and
acquiring existing power generation assets. In certain markets, these factors
have caused reductions in prices contained in new power sales agreements and,
in many cases, have caused higher acquisition prices for existing assets
through competitive bidding practices. The evolution of competitive
electricity markets and the development of highly efficient gas-fired power
plants have also caused, or are anticipated to cause, price pressure in
certain power markets where the Company sells or intends to sell power. There
can be no assurance that the foregoing competitive factors will not have a
material adverse effect on the Company.
Development Uncertainties. The majority of the projects that
AES develops are large and complex and the completion of any such project is
subject to substantial risks. Development can require the Company to expend
significant sums for preliminary engineering, permitting, legal and other
expenses in preparation for competitive bids which the Company may not win or
before it can be determined whether a project is feasible, economically
attractive or capable of being financed. Successful development and
construction is contingent upon, among other things, negotiation on terms
satisfactory to the Company of 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 AES 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, steam sales contracts, licenses and certifications,
environmental and other permits and financing commitments necessary for the
successful development of its projects. There can be no assurance that
development efforts on any particular project, or the Company's efforts
generally, will be successful. If these development efforts are not
successful, the Company may abandon a project under development. At the time
of abandonment, the Company would expense all capitalized development costs
incurred in connection therewith and could incur additional losses associated
with any related contingent liabilities. The future growth of the Company is
dependent, in part, upon the demand for significant amounts of additional
electrical generating capacity and its ability to obtain contracts to supply
portions of this capacity. Any material unremedied delay in, or
unsatisfactory completion of, construction of the Company's projects could,
under certain circumstances, have an adverse effect on the Company's
ability to meet its obligations, including the payment of principal of,
premium, if any and interest on Debt Securities. The Company also is faced
with certain development uncertainties arising out of doing business
outside of the United States. See "--Doing Business Outside the United
States."
Uncertainty of Access to Capital for Future Projects. Each of
AES's projects under development and those independent power facilities it 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. AES has primarily utilized project financing loans
to fund the capital expenditures associated with constructing and acquiring
its electric power plants and related assets. Project financing borrowings
have been substantially non-recourse to other subsidiaries and affiliates and
to AES 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. The Company intends to continue to seek, where possible, such
non-recourse project financing in connection with the assets which the Company
or its affiliates may develop, construct or acquire. However, depending on
market conditions and the unique characteristics of individual projects, the
Company's 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, the Company, in such
locations, has and will continue to seek 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, AES may determine that
sufficient financing will ultimately not be available to fund the related
project.
In addition to the project financing loans, if available, AES
provides 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 short-term credit facilities, and issuances of
senior subordinated notes, convertible debentures and common stock of the
Company.
The Company's 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, investor
confidence in the Company, 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, AES 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 AES on its currently operating facilities
or facilities under construction, such a decision would affect the future
growth of AES.
Dependence on Utility Customers and Certain Projects. The
nature of most of AES's power projects 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. During
1995, four customers, including Connecticut Light & Power Company, a
subsidiary of Northeast Utilities, accounted for 73% of the Company's
revenues. The prolonged failure of any one utility customer to fulfill its
contractual obligations could have a substantial negative impact on AES's
primary source of revenues. AES has 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.
Four of the Company's plants collectively represented
approximately 61% of AES's consolidated total assets at December 31, 1995 and
generated approximately 80% of AES's consolidated total revenues for the year
ended December 31, 1995.
In October 1996, Moody's Investor Service and Standard & Poor's
revised their ratings of the senior unsecured long-term debt of Connecticut
Light & Power Company from Baa3/BBB- to Ba1/BB+.
Regulatory Uncertainty. AES's cogeneration operations are
subject to the provisions of various laws and regulations, including the
Public Utility Regulatory Policies Act of 1978, as amended ("PURPA") and the
Public Utility Holding Company Act, as amended ("PUHCA"). PURPA provides to
qualifying facilities ("QFs") certain exemptions from substantial federal and
state legislation, including regulation as public utilities. PUHCA regulates
public utility holding companies and their subsidiaries. AES is not and will
not be subject to regulation as a holding company under PUHCA as long as the
domestic power plants it owns are QFs under PURPA. QF status is conditioned
on meeting certain criteria, and would be jeopardized, for example, by the
loss of a steam customer. The Company believes that, upon the occurrence of
an event that would threaten the QF status of one of its domestic plants, it
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 the Company were
unable to avoid the loss of such status for one of its plants, to avoid public
utility holding company status, AES could apply to the Federal Energy
Regulatory Commission ("FERC") to obtain status as an Exempt Wholesale
Generator ("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, 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 the consolidated income tax group or the
consolidated financial statements of the Company, or an increase or decrease
in the results of operations of the Company.
The United States Congress is considering proposed legislation
which would repeal PURPA entirely, or at least repeal the obligation of
utilities to purchase from QFs. There is strong support for grandfathering
existing QF contracts if such legislation is passed, and also support for
requiring utilities to conduct competitive bidding for new electric generation
if the PURPA purchase obligation is eliminated. Various bills have also
proposed repeal of PUHCA. Repeal of PUHCA would allow both independents and
vertically integrated utilities to acquire retail utilities in the United
States that are geographically widespread, as opposed to the current
limitations of PUHCA which require that retail electric systems be capable of
physical integration. 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 of a PUHCA repeal, competition for
independent power generators from vertically integrated utilities 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 the Company.
Electric Utility Industry Restructuring Proposals. The FERC
and many state utility commissions are currently studying a number of
proposals to restructure the electric utility industry in the United States.
Such restructuring would permit utility customers to choose their utility
supplier in a competitive electric energy market. The FERC issued a final rule
in April 1996 which requires utilities to offer wholesale customers and
suppliers open access on utility transmission lines, on a comparable basis to
the utilities' own use of the lines. The final rule is subject to rehearing
and may become the subject of court litigation. Many utilities have already
filed "open access" tariffs. The utilities contend that they should recover
from departing customers their fixed costs that will be "stranded" by the
ability of their wholesale customers (and perhaps eventually, their retail
customers) to choose new electric power suppliers. The FERC final rule
endorses the recovery of legitimate and verifiable "stranded costs." These may
include the costs utilities are required to pay under many QF contracts which
the utilities view as excessive when compared with current market prices.
Many utilities are therefore seeking ways to lower these contract prices or
rescind the contracts altogether, out of concern that their shareholders will
be required to bear all or part of such "stranded" costs. Some utilities have
engaged in litigation against QFs to achieve these ends.
In addition, future United States electric rates may be
deregulated in a restructured United States electric utility industry and
increased competition may result in lower rates and less profit for United
States electricity sellers. Falling electricity prices and uncertainty as to
the future structure of the industry is inhibiting United States utilities
from entering into long-term power purchase contracts. The effect of any such
restructuring on the Company cannot be predicted, although any such
restructuring could have a material adverse effect on the Company.
Litigation and Regulatory Proceedings. From time to time,
the Company and its affiliates are parties to litigation and
regulatory proceedings. Investors should review the descriptions of
such matters contained in the Company's Annual, Quarterly and Current
Reports filed with the Commission and incorporated by reference herein.
There can be no assurances that the outcome of such matters will not have a
material adverse effect on the Company's consolidated financial position.
Business Subject to Stringent Environmental Regulations. AES's
activities are subject to stringent environmental regulation by federal,
state, local and foreign governmental authorities. For example, the Clean Air
Act Amendments of 1990 impose more stringent standards than those previously
in effect, and require states to impose permit fees on certain emissions.
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 AES's power plants. There
can be no assurance that AES would be able to recover all or any increased
costs from its customers or that its 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. The Company has
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 the Company's
financial condition or results of operations.
Control by Existing Stockholders. As of September 30, 1996,
AES's two founders, Roger W. Sant and Dennis W. Bakke, and their immediate
families together owned beneficially approximately 26% of AES's outstanding
Common Stock. As a result of their ownership interests, Messrs. Sant and
Bakke may be able to significantly influence or exert control over the affairs
of AES, including the election of the Company's directors. As of September
30, 1996, all of AES's officers and directors and their immediate families
together owned beneficially approximately 35% of AES's outstanding Common
Stock. To the extent that they decide to vote together, these stockholders
would be able to significantly influence or control the election of AES's
directors, the management and policies of AES and any action requiring
stockholder approval, including significant corporate transactions.
Adherence to AES's Principles--Possible Impact on Results of
Operations. A core part of AES's corporate culture is a commitment to "shared
principles": to act with integrity, to be fair, to have fun and to be socially
responsible. The Company seeks 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 the Company perceives a conflict between these
principles and profits, the Company will try to adhere to its principles--even
though doing so might result in diminished or foregone opportunities or
financial benefits.
THE AES TRUSTS
Each of the AES Trust I, AES Trust II and AES Trust III is a
statutory business trust formed on November 1, 1996 under the Delaware
Business Trust Act (the "Business Trust Act") pursuant to a separate
declaration of trust among the Trustees (as defined herein) of such AES
Trust and the Company and the filing of a certificate of trust with the
Secretary of State of the State of Delaware. Such declaration will be
amended and restated in its entirety (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, as of the
date the Preferred Securities of such AES Trust are initially issued. Each
Declaration will be qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
This description summarizes the material terms of the
Declarations and is qualified in its entirety by reference to the form of
Declaration, which has been filed as an exhibit to the Registration Statement
of which this Prospectus is a part, and the Trust Indenture Act.
Trust Securities
Upon issuance of any Preferred Securities by an AES Trust, the
holders thereof will own all of the issued and outstanding Preferred
Securities of such AES Trust. The Company will acquire securities
representing common undivided beneficial interests in the assets of each AES
Trust (the "Common Securities" and, together with the Preferred Securities,
the "Trust Securities") in an amount equal to at least 3% of the total capital
of such AES Trust and will own, directly or indirectly, all of the issued and
outstanding Common Securities of each AES Trust. The Preferred Securities and
the Common Securities will rank pari passu with each other and will have
equivalent terms; provided that (i) if a Declaration Event of Default (as
defined herein under "--Events of Default") under the Declaration of an AES
Trust occurs and is continuing, the holders of Preferred Securities of such
AES Trust will have a priority over holders of the Common Securities of such
AES Trust with respect to payments in respect of distributions and payments
upon liquidation, redemption and maturity and (ii) holders of Common
Securities have the exclusive right (subject to the terms of the Declaration)
to appoint, remove or replace the Trustees and to increase or decrease the
number of Trustees. Each AES Trust exists for the purpose of (a) issuing its
Preferred Securities, (b) issuing its Common Securities to the Company, (c)
investing the gross proceeds from the sale of the Trust Securities in Junior
Subordinated Debt Trust Securities of the Company and (d) engaging in only
such other activities as are necessary, convenient or incidental thereto. The
rights of the holders of the Preferred Securities, including economic rights,
rights to information and voting rights, are set forth in the applicable
Declaration, the Business Trust Act and the Trust Indenture Act.
Powers and Duties of Trustees
The number of trustees (the "Trustees") of each AES Trust shall
initially be five. Three of such Trustees (the "Regulator Trustees") are
individuals who are employees or officers of the Company. The fourth such
trustee will be The First National Bank of Chicago, which is unaffiliated with
the Company and which will serve as the property trustee (the "Property
Trustee") and act as the indenture trustee for purposes of the Trust Indenture
Act. The fifth such trustee is First Chicago Delaware Inc. that has its
principal place of business in the State of Delaware (the "Delaware Trustee").
Pursuant to each Declaration, legal title to the Junior Subordinated Debt
Trust Securities purchased by an AES Trust will be held by the Property
Trustee for the benefit of the holders of the Trust Securities of such AES
Trust, and the Property Trustee will have the power to exercise all rights,
powers and privileges under the Indenture (as defined under "Description of
the Junior Subordinated Debt Trust Securities") with respect to the Junior
Subordinated Debt Trust Securities. In addition, the Property Trustee will
maintain exclusive control of a segregated non-interest bearing bank account
(the "Property Account") to hold all payments in respect of the Junior
Subordinated Debt Trust Securities purchased by an AES Trust for the benefit
of the holders of Trust Securities. The Property Trustee will promptly make
distributions to the holders of the Trust Securities out of funds from the
Property Account. The Preferred Securities Guarantees are separately
qualified under the Trust Indenture Act and will be held by The First National
Bank of Chicago, acting in its capacity as indenture trustee with respect
thereto, for the benefit of the holders of the applicable Preferred
Securities. As used in this Prospectus and any accompanying Prospectus
Supplement, the term "Property Trustee" with respect to an AES Trust refers to
The First National Bank of Chicago acting either in its capacity as a Trustee
under the relevant Declaration and the holder of legal title to the Junior
Subordinated Debt Trust Securities purchased by that Trust or in its capacity
as indenture trustee under, and the holder of, the applicable Preferred
Securities Guarantee, as the context may require. The Company, as the direct
or indirect owner of all of the Common Securities of each AES Trust, will have
the exclusive right (subject to the terms of the related Declaration) to
appoint, remove or replace Trustees and to increase or decrease the number of
Trustees, provided that the number of Trustees shall be, except under
certain circumstances, at least five and the majority of Trustees shall be
Regular Trustees. The term of an AES Trust will be set forth in the
Prospectus Supplement, but may terminate earlier as provided in such
Declaration.
The duties and obligations of the Trustees of an AES Trust
shall be governed by the Declaration of such AES Trust, the Business Trust
Act and the Trust Indenture Act. Under its Declaration, each AES Trust
shall not, and the Trustees shall cause such AES Trust not to, engage in
any activity other than in connection with the purposes of such AES Trust
or other than as required or authorized by the related Declaration. In
particular, each AES Trust shall not and the Trustees shall cause each AES
Trust not to (a) invest any proceeds received by such AES Trust from
holding the Junior Subordinated Debt Trust Securities purchased by such AES
Trust but shall promptly distribute from the Property Account all such
proceeds to holders of Trust Securities pursuant to the terms of the
related Declaration and of the Trust Securities; (b) acquire any assets
other than as expressly provided in the related Declaration; (c) possess
Trust property for other than a Trust purpose; (d) make any loans, other
than loans represented by the Junior Subordinated Debt Trust Securities;
(e) possess any power or otherwise act in such a way as to vary the assets
of such AES Trust or the terms of its Trust Securities in any way
whatsoever; (f) issue any securities or other evidences of beneficial
ownership of, or beneficial interests in, such AES Trust other than its
Trust Securities; (g) incur any indebtedness for borrowed money or (h)(i)
direct the time, method and place of exercising any trust or power
conferred upon the Indenture Trustee (as defined under "Description of the
Junior Subordinated Debt Trust Securities") with respect to the Junior
Subordinated Debt Trust Securities deposited in that AES Trust as trust
assets or upon the Property Trustee of that AES Trust with respect to its
Preferred Securities, (ii) waive any past default that is waivable under
the Indenture or the Declaration, (iii) exercise any right to rescind or
annul any declaration that the principal of all of the Junior Subordinated
Debt Trust Securities deposited in that AES Trust as trust assets shall be
due and payable or (iv) consent to any amendment, modification or
termination of the Indenture or such Junior Subordinated Debt Trust
Securities, in each case where such consent shall be required, unless in
the case of this clause (h) the Property Trustee shall have received an
unqualified opinion of nationally recognized independent tax counsel
recognized as expert in such matters to the effect that such action will
not cause such AES Trust to be classified for United States federal income
tax purposes as an association taxable as a corporation or a partnership
and that such AES Trust will continue to be classified as a grantor trust
for United States federal income tax purposes.
Books and Records
The books and records of each AES Trust will be maintained at
the principal office of such AES Trust and will be open for inspection by a
holder of Preferred Securities of such AES Trust or his representative for any
purpose reasonably related to his interest in such AES Trust during normal
business hours. Each holder of Preferred Securities will be furnished
annually with unaudited financial statements of the applicable AES Trust as
soon as available after the end of such AES Trust's fiscal year.
Voting
Holders of Preferred Securities will have limited voting
rights, but will not be able to appoint, remove or replace, or to increase or
decrease the number of, Trustees, which rights are vested exclusively in the
Common Securities.
The Property Trustee
The Property Trustee, for the benefit of the holders of the
Trust Securities of an AES Trust, is authorized under each Declaration to
exercise all rights under the Indenture with respect to the Junior
Subordinated Debt Trust Securities deposited in such AES Trust as trust
assets, including its rights as the holder of such Junior Subordinated Debt
Trust Securities to enforce the Company's obligations under such Junior
Subordinated Debt Trust Securities upon the occurrence of an Indenture Event
of Default (as defined herein under "Description of the Junior Subordinated
Debt Trust Securities--Indenture Events of Default"). The Property Trustee
shall also be authorized to enforce the rights of holders of Preferred
Securities of an AES Trust under the related Preferred Securities Guarantee.
If any AES Trust's failure to make distributions on the Preferred Securities
of an AES Trust is a consequence of the Company's exercise of any right under
the terms of the Junior Subordinated Debt Trust Securities deposited in such
AES Trust as trust assets to extend the interest payment period for such
Junior Subordinated Debt Trust Securities, the Property Trustee will have no
right to enforce the payment of distributions on such Preferred Securities
until a Declaration Event of Default shall have occurred. Holders of at least
a majority in liquidation amount of the Preferred Securities held by an AES
Trust will have the right to direct the Property Trustee for that AES Trust
with respect to certain matters under the Declaration for that AES Trust and
the related preferred Securities Guarantee. If the Property Trustee fails to
enforce its rights under the Indenture or fails to enforce the Preferred
Securities Guarantee, to the extent permitted by applicable law, any holder of
Preferred Securities may, after a period of 30 days has elapsed from such
Holder's written request to the Property Trustee to enforce such risks
institute a legal proceeding against the Company to enforce such rights or
the Preferred Securities Guarantee, as the case may be. In addition, the
holders of at least 25% in aggregate liquidation preference of the
outstanding Preferred Securities would have the right to directly institute
proceedings for enforcement of payments to such holders of principal of, or
premium, if any, or interest on the Junior Subordinated Debt Trust
Securities having a principal amount equal to the aggregate liquidation
preference of the Preferred Securities of such holders (a "Direct Action").
In connection with such Direct Action, the Company will be subrogated to
the rights of such holder of Preferred Securities under the Declaration to
the extent of any payment made by the Company to such holders of Preferred
Securities in such Direct Action.
Distributions
Pursuant to each Declaration, distributions on the Preferred
Securities of an AES Trust must be paid on the dates payable to the extent
that the Property Trustee for that AES Trust has cash on hand in the
applicable Property Account to permit such payment. The funds available for
distribution to the holders of the Preferred Securities of an AES Trust will
be limited to payments received by the Property Trustee in respect of the
Junior Subordinated Debt Trust Securities that are deposited in the AES Trust
as trust assets. If the Company does not make interest payments on the Junior
Subordinated Debt Trust Securities deposited in an AES Trust as trust assets,
the Property Trustee will not make distributions on the Preferred Securities
of such AES Trust. Under the Declaration, if and to the extent the Company
does make interest payments on the Junior Subordinated Debt Trust Securities
deposited in an AES Trust as trust assets, the Property Trustee is obligated
to make distributions on the Trust Securities of such AES Trust on a Pro Rata
Basis (as defined below). The payment of distributions on the Preferred
Securities of an AES Trust is guaranteed by AES on a subordinated basis as and
to the extent set forth under "Description of the Preferred Securities
Guarantee." A Preferred Securities Guarantee is a full and unconditional
guarantee from the time of issuance of the applicable Preferred Securities,
but the Preferred Securities Guarantee covers distributions and other payments
on the applicable Preferred Securities only if and to the extent that the
Company has made a payment to the Property Trustee of interest or principal on
the Junior Subordinated Debt Trust Securities deposited in the AES Trust as
trust assets. As used in this Prospectus, the term "Pro Rata Basis" shall
mean pro rata to each holder of Trust Securities of an AES Trust according to
the aggregate liquidation amount of the Trust Securities of such AES Trust
held by the relevant holder in relation to the aggregate liquidation amount of
all Trust Securities of such AES Trust outstanding unless, in relation to a
payment, a Declaration Event of Default under the Declaration has occurred and
is continuing, in which case any funds available to make such payment shall be
paid first to each holder of the Preferred Securities of such AES Trust pro
rata according to the aggregate liquidation amount of the Preferred Securities
held by the relevant holder in relation to the aggregate liquidation amount of
all the Preferred Securities of such AES Trust outstanding, and only after
satisfaction of all amounts owed to the holders of such Preferred Securities,
to each holder of Common Securities of such AES Trust pro rata according to
the aggregate liquidation amount of such Common Securities held by the
relevant holder in relation to the aggregate liquidation amount of all Common
Securities of such AES Trust outstanding.
Events of Default
If an Indenture Event of Default occurs and is continuing with
respect to Junior Subordinated Debt Trust Securities deposited in an AES Trust
as trust assets, an Event of Default under the Declaration (a "Declaration
Event of Default") of such AES Trust will occur and be continuing with respect
to any outstanding Trust Securities of such AES Trust. In such event, each
Declaration provides that the holders of Common Securities of such AES Trust
will be deemed to have waived any such Declaration Event of Default with
respect to the Common Securities until all Declaration Events of Default with
respect to the Preferred Securities of such AES Trust have been cured or
waived. Until all such Declaration Events of Default with respect to the
Preferred Securities of such AES Trust have been so cured or waived, the
Property Trustee will be deemed to be acting solely on behalf of the holders
of the Preferred Securities of such AES Trust and only the holders of such
Preferred Securities will have the right to direct the Property Trustee with
respect to certain matters under such Declaration and consequently under the
Indenture. In the event that any Declaration Event of Default with respect to
the Preferred Securities of such AES Trust is waived by the holders of the
Preferred Securities of such AES Trust as provided in the Declaration, the
holders of Common Securities pursuant to such Declaration have agreed that
such waiver also constitutes a waiver of such Declaration Event of Default
with respect to the Common Securities for all purposes under the Declaration
without any further act, vote or consent of the holders of the Common
Securities.
Record Holders
Each Declaration provides that the Trustees of such AES Trust
may treat the person in whose name a Certificate representing its Preferred
Securities is registered on the books and records of such AES Trust as the
sole holder thereof and of the Preferred Securities represented thereby for
purposes of receiving distributions and for all other purposes and,
accordingly, shall not be bound to recognize any equitable or other claim to
or interest in such certificate or in the Preferred Securities represented
thereby on the part of any person, whether or not such AES Trust shall have
actual or other notice thereof. Preferred Securities will be issued in fully
registered form. Unless otherwise specified in a Prospectus Supplement,
Preferred Securities will be represented by a global certificate registered on
the books and records of such AES Trust in the name of a depositary (the
"Depositary") named in an accompanying Prospectus Supplement or its nominee.
Under each Declaration:
(i)such AES Trust and the Trustees thereof shall be entitled to
deal with the Depositary (or any successor depositary) for all purposes,
including the payment of distributions and receiving approvals, votes or
consents under the related Declaration, and except as set forth in the related
Declaration with respect to the Property Trustee, shall have no obligation to
persons owning a beneficial interest in Preferred Securities ("Preferred
Security Beneficial Owners") registered in the name of and held by the
Depositary or its nominee; and
(ii)the rights of Preferred Security Beneficial Owners shall be
exercised only through the Depositary (or any successor depositary) and shall
be limited to those established by law and agreements between such Preferred
Security Beneficial Owners and the Depositary and/or its participants. With
respect to Preferred Securities registered in the name of and held by the
Depositary or its nominee, all notices and other communications required under
each Declaration shall be given to, and all distributions on such Preferred
Securities shall be given or made to, the Depositary (or its successor).
The specific terms of the depositary arrangement with respect
to the Preferred Securities will be disclosed in the applicable Prospectus
Supplement.
Debts and Obligations
In each Declaration, the Company has agreed to pay for all
debts and obligations (other than with respect to the Trust Securities) and
all costs and expenses of the applicable AES Trust, including the fees and
expenses of its Trustees and any taxes and all costs and expenses with respect
thereto, to which such AES Trust may become subject, except for United States
withholding taxes. The foregoing obligations of the Company under each
Declaration are for the benefit of, and shall be enforceable by, any person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice thereof. Any
such Creditor may enforce such obligations of the Company directly against the
Company and the Company has irrevocably waived any right or remedy to require
that any such Creditor take any action against any AES Trust or any other
person before proceeding against the Company. The Company has agreed in each
Declaration to execute such additional agreements as may be necessary or
desirable in order to give full effect to the foregoing.
DESCRIPTION OF THE PREFERRED SECURITIES
Each AES Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each AES Trust authorizes the Regular
Trustees of such AES Trust to issue on behalf of such AES Trust one series of
Preferred Securities. Each Declaration will be qualified as an indenture
under the Trust Indenture Act. The Preferred Securities will have such terms,
including distributions, redemption, voting, liquidation rights and such other
preferred, deferred or other special rights or such restrictions as shall be
set forth in the related Declaration or made part of such Declaration by the
Trust Indenture Act. Reference is made to the Prospectus Supplement relating
to the Preferred Securities of an AES Trust for specific terms, including (i)
the specific designation of such Preferred Securities, (ii) the number of
Preferred Securities issued by such AES Trust, (iii) the annual distribution
rate (or method of calculation thereof) for Preferred Securities issued by
such AES Trust, the date or dates upon which such distributions shall be
payable and the record date or dates for the payment of such distributions,
(iv) whether distributions on Preferred Securities issued by such AES Trust
shall be cumulative, and, in the case of Preferred Securities having such
cumulative distribution rights, the date or dates or method of determining the
date or dates from which distribution on Preferred Securities issued by such
AES Trust shall be cumulative, (v) the amount or amounts which shall be paid
out of the assets of such AES Trust to the holders of Preferred Securities of
such AES Trust upon voluntary or involuntary dissolution, winding-up or
termination of such AES Trust, (vi) the obligation or right, if any, of such
AES Trust to purchase or redeem Preferred Securities issued by such AES Trust
and the price or prices at which, the period or periods within which and the
terms and conditions upon which Preferred Securities issued by such AES Trust
shall or may be purchased or redeemed, in whole or in part, pursuant to such
obligation or right, (vii) the voting rights, if any, of Preferred Securities
issued by such AES Trust in addition to those required by law, including the
number of votes per Preferred Security and any requirement for the approval by
the holders of Preferred Securities, or of Preferred Securities issued by one
or more AES Trusts, or of both, as a condition to specified actions or
amendments to the Declaration of such AES Trust, (viii) terms for any
conversion or exchange into other securities and (ix) any other relevant
rights, preferences, privileges, limitations or restrictions of Preferred
Securities issued by such AES Trust consistent with the Declaration of such
AES Trust or with applicable law. All Preferred Securities offered hereby
will be guaranteed by the Company as and to the extent set forth below under
"Description of the Preferred Securities Guarantees." Certain United States
federal income tax considerations applicable to any offering of Preferred
Securities will be described in the Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each
AES Trust will issue one series of Common Securities. The Declaration of each
AES Trust authorizes the Regular Trustees of such trust to issue on behalf of
such AES Trust one series of Common Securities having such terms including
distributions, redemption, voting, liquidation rights or such restrictions as
shall be set forth therein. The terms of the Common Securities issued by an
AES Trust will be substantially identical to the terms of the Preferred
Securities issued by such AES Trust and the Common Securities will rank pari
passu, and payments will be made thereon on a Pro Rata Basis with the
Preferred Securities except that if a Declaration Event of Default occurs
and is continuing, the rights of the holders of such Common Securities to
payment in respect of distributions and payments upon liquidation,
redemption and maturity will be subordinated to the rights of the holders
of such Preferred Securities. Except in certain limited circumstances, the
Common Securities issued by an AES Trust will also carry the right to vote
and to appoint, remove or replace any of the Trustees of that AES Trust.
All of the Common Securities of an AES Trust will be directly or indirectly
owned by the Company.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the
Preferred Securities Guarantees that will be executed and delivered by the
Company for the benefit of the holders from time to time of Preferred
Securities. Each Preferred Security Guarantee will be separately qualified
under the Trust Indenture Act and will be held by The First National Bank of
Chicago, acting in its capacity as indenture trustee with respect thereto, for
the benefit of holders of the Preferred Securities of the applicable AES
Trust. The terms of each Preferred Securities Guarantee will be those set
forth in such Preferred Securities Guarantee and those made part of such
Guarantee by the Trust Indenture Act. This description summarizes the
material terms of the Preferred Securities Guarantees and is qualified in its
entirety by reference to the form of Preferred Securities Guarantee, which is
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part, and the Trust Indenture Act. Section and Article references used
herein are references to the provisions of the form of Preferred Securities
Guarantee.
General
Pursuant to each Preferred Securities Guarantee, the Company
will irrevocably and unconditionally agree, to the extent set forth therein,
to pay in full, to the holders of the Preferred Securities issued by an AES
Trust, the Guarantee Payments (as defined herein) (without duplication of
amounts theretofore paid by such AES Trust), to the extent not paid by such
AES Trust, regardless of any defense, right of set-off or counterclaim that
such AES Trust may have or assert. The following payments or distributions
with respect to Preferred Securities issued by an AES Trust to the extent not
paid or made by such AES Trust (the "Guarantee Payments"), will be subject to
the Preferred Securities Guarantee (without duplication): (i) any accrued and
unpaid distributions on such Preferred Securities, and the redemption price,
including all accrued and unpaid distributions to the date of redemption, with
respect to any Preferred Securities called for redemption by such AES Trust
but if and only to the extent that in each case the Company has made a payment
to the related Property Trustee of interest or principal on the Junior
Subordinated Debt Trust Securities deposited in such AES Trust as trust assets
and (ii) upon a voluntary or involuntary dissolution, winding-up or
termination of such AES Trust (other than in connection with the distribution
of such Junior Subordinated Debt Trust Securities to the holders of Preferred
Securities or the redemption of all of the Preferred Securities upon the
maturity or redemption of such Junior Subordinated Debt Trust Securities) the
lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on such Preferred Securities to the date of payment, to
the extent such AES Trust has funds available therefor or (b) the amount of
assets of such AES Trust remaining available for distribution to holders of
such Preferred Securities in liquidation of such AES Trust. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Company to the holders of Preferred Securities or
by causing the applicable AES Trust to pay such amounts to such holders.
The Preferred Securities Guarantee is a full and unconditional
guarantee from the time of issuance of the applicable Preferred Securities,
but the Preferred Securities Guarantee covers distributions and other payments
on such Preferred Securities only if and to the extent that the Company has
made a payment to the Property Trustee of interest or principal on the Junior
Subordinated Debt Trust Securities deposited in the applicable AES Trust as
trust assets. If the Company does not make interest or principal payments on
the Junior Subordinated Debt Trust Securities deposited in the applicable AES
Trust as trust assets, the Property Trustee will not make distributions of the
Preferred Securities of such AES Trust and the AES Trust will not have funds
available therefor.
The Company's obligations under the Declaration for each Trust,
the Preferred Securities Guarantee issued with respect to Preferred Securities
issued by that Trust, the Junior Subordinated Debt Trust Securities purchased
by that Trust and the related Indenture (as defined below) in the aggregate
will provide a full and unconditional guarantee on a subordinated basis by the
Company of payments due on the Preferred Securities issued by that Trust.
Certain Covenants of the Company
In each Preferred Securities Guarantee, the Company will
covenant that, so long as any Preferred Securities issued by the applicable
AES Trust remain outstanding, the Company will not (A) declare or pay any
dividends on, or redeem, purchase, acquire or make a distribution or
liquidation payment with respect to, any of its common stock or preferred
stock or make any guarantee payment with respect thereto or (B) make any
payment of interest, premium (if any) or principal on any debt securities
issued by the Company which rank pari passu with or junior to the Junior
Subordinated Debt Trust Securities, if at such time (i) the Company shall be
in default with respect to its Guarantee Payments or other payment obligations
under the Preferred Securities Guarantee, (ii) there shall have occurred any
Declaration Event of Default under the related Declaration or (iii) in the
event that Junior Subordinated Debt Trust Securities are issued to an AES
Trust in connection with the issuance of Trust Securities by such AES Trust,
the Company shall have given notice of its election to defer payments of
interest on such Junior Subordinated Debt Trust Securities by extending the
interest payment period as provided in the terms of the Junior Subordinated
Debt Trust Securities and such period, or any extension thereof, is
continuing: provided that (a) the Company will be permitted to pay accrued
dividends (and cash in lieu of fractional shares) upon the conversion of
Preferred Stock of the Company as may be outstanding from time to time, in
each case in accordance with the terms of such stock and (ii) the foregoing
will not apply to stock dividends paid by the Company. In addition, so long
as any Preferred Securities remain outstanding, the Company has agreed (i) to
remain the sole direct or indirect owner of all of the outstanding Common
Securities issued by the applicable AES Trust and shall not cause or permit
the Common Securities to be transferred except to the extent permitted by the
related Declaration; provided that any permitted successor of the Company
under the Indenture may succeed to the Company's ownership of the Common
Securities issued by the applicable AES Trust and (ii) to use reasonable
efforts to cause such AES Trust to continue to be treated as a grantor trust
for United States federal income tax purposes except in connection with a
distribution of Junior Subordinated Debt Trust Securities.
Amendments and Assignment
Except with respect to any changes that do not adversely affect
the rights of holders of Preferred Securities (in which case no consent will
be required), each Preferred Securities Guarantee may be amended only with the
prior approval of the holders of not less than 66 2/3% in liquidation amount
of the outstanding Preferred Securities issued by the applicable AES Trust.
The manner of obtaining any such approval of holders of such Preferred
Securities will be set forth in an accompanying Prospectus Supplement. All
guarantees and agreements contained in a Preferred Securities Guarantee shall
bind the successors, assignees, receivers, trustees and representatives of the
Company and shall inure to the benefit of the holders of the Preferred
Securities of the applicable AES Trust then outstanding. Except in connection
with a consolidation, merger or sale involving the Company that is permitted
under the Indenture, the Company may not assign its obligations under any
Preferred Securities Guarantee.
Termination of the Preferred Securities Guarantees
Each Preferred Securities Guarantee will terminate and be of no
further force and effect as to the Preferred Securities issued by the
applicable AES Trust upon full payment of the redemption price of all
Preferred Securities of such AES Trust, or upon distribution of the Junior
Subordinated Debt Trust Securities to the holders of the Preferred Securities
of such AES Trust in exchange for all of the Preferred Securities issued by
such AES Trust, or upon full payment of the amounts payable upon liquidation
of such AES Trust. Notwithstanding the foregoing, each Preferred Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Preferred Securities issued by the applicable
AES Trust must restore payment of any sums paid under such Preferred
Securities or such Guarantee.
Status of the Preferred Securities Guarantees
The Company's obligations under each Preferred Securities
Guarantee to make the Guarantee Payments will constitute an unsecured
obligation of the Company and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Company, including the Junior
Subordinated Debt Trust Securities, except those made pari passu or
subordinate by their terms, and (ii) senior to all capital stock now or
hereafter issued by the Company and to any guarantee nor or hereafter entered
into by the Company in respect of any of its capital stock. The Company's
obligations under each Preferred Securities Guarantee will rank pari passu
with each other Preferred Securities Guarantee. Because the Company is a
holding company, the Company's obligations under each Preferred Securities
Guarantee are also effectively subordinated to all existing and future
liabilities, including trade payables, of the Company's subsidiaries, except
to the extent that the Company is a creditor of the subsidiaries recognized as
such. Each Declaration provides that each holder of Preferred Securities
issued by the applicable AES Trust by acceptance thereof agrees to the
subordination provisions and other terms of the related Preferred Securities
Guarantee.
Each Preferred Securities Guarantee will constitute a guarantee
of payment and not of collection (that is, the guaranteed party may institute
a legal proceeding directly against the guarantor to enforce its rights under
the guarantee without first instituting a legal proceeding against any other
person or entity). Each Preferred Securities Guarantee will be deposited with
The First National Bank of Chicago, as indenture trustee, to be held for the
benefit of the holders of the Preferred Securities issued by the applicable
AES Trust. The First National Bank of Chicago shall enforce the Preferred
Securities Guarantee on behalf of the holders of the Preferred Securities
issued by the applicable AES Trust. The holders of not less than a majority
in aggregate liquidation amount of the Preferred Securities issued by the
applicable AES Trust have the right to direct the time, method and place of
conducting any proceeding for any remedy available in respect of the related
Preferred Securities Guarantee, including the giving of directions to The
First National Bank of Chicago . If The First National Bank of Chicago fails
to enforce such Preferred Securities Guarantee as above provided, any holder
of Preferred Securities issued by the applicable AES Trust may institute a
legal proceeding directly against the Company to enforce its rights under such
Preferred Securities Guarantee, without first instituting a legal proceeding
against the applicable AES Trust or any other person or entity.
Miscellaneous
The Company will be required to provide annually to The First
National Bank of Chicago a statement as to the performance by the Company of
certain of its obligations under the Preferred Securities Guarantees and as to
any default in such performance. The Company is required to file annually
with The First National Bank of Chicago an officer's certificate as to the
Company's compliance with all conditions under Preferred Securities
Guarantees.
The First National Bank of Chicago, prior to the occurrence of
a default, undertakes to perform only such duties as are specifically set
forth in the applicable Preferred Securities Guarantee and, after default with
respect to a Preferred Securities Guarantee, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provision, The First National Bank of Chicago is
under no obligation to exercise any of the powers vested in it by a Preferred
Securities Guarantee at the request of any holder of Preferred Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
Governing Law
The Guarantees will be governed by, and construed in accordance
with, the laws of the State of New York.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT TRUST SECURITIES
Junior Subordinated Debt Trust Securities may be issued from
time to time in one or more series under an Indenture (the "Indenture")
between the Company and The First National Bank of Chicago, as trustee (the
"Indenture Trustee"). The form of Junior Subordinated Debt Trust Securities
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. The following description summarizes the
material terms of the Indenture, and is qualified in its entirety by reference
to the Indenture and the Trust Indenture Act. Whenever particular provisions
or defined terms in the Indenture are referred to herein, such provisions or
defined terms are incorporated by reference herein. Section and article
references used herein are references to provisions of the Indenture.
General
The Junior Subordinated Debt Trust Securities will be
unsecured, junior subordinated obligation of the Company. The Indenture does
not limit the amount of additional indebtedness the Company or any of its
subsidiaries may incur. Since the Company is a holding company, the Company's
rights and the rights of its creditors, including the holders of Junior
Subordinated Debt Securities, to participate in the assets of any subsidiary
upon the latter's liquidation or recapitalization will be subject to the prior
claims of the subsidiary's creditors, except to the extent that the Company
may itself be a creditor with recognized claims against the subsidiary.
The Indenture does not limit the aggregate principal amount of
indebtedness which may be issued thereunder and provides that Junior
Subordinated Debt Trust Securities may be issued thereunder from time to time
in one or more series. The Junior Subordinated Debt Trust Securities are
issuable in one or more series pursuant to an indenture supplemental to the
Indenture.
In the event Junior Subordinated Debt Trust Securities are
issued to an AES Trust or a Trustee of such trust in connection with the
issuance of Trust Securities by such AES Trust, such Junior Subordinated Debt
Trust Securities subsequently may be distributed pro rata to the holders of
such Trust Securities in connection with the dissolution of such AES Trust
upon the occurrence of certain events described in the Prospectus Supplement
relating to such Trust Securities. Only one series of Junior Subordinated
Debt Trust Securities will be issued to an AES Trust or a trustee of such
trust in connection with the issuance of Trust Securities by such AES Trust.
Reference is made to the Prospectus Supplement which will
accompany this Prospectus for the following terms of the series of Junior
Subordinated Debt Trust Securities being offered thereby (to the extent such
terms are applicable to the Junior Subordinated Debt Trust Securities): (i)
the specific designation of such Junior Subordinated Debt Trust Securities,
aggregate principal amount, purchase price and premium, if any; (ii) any limit
on the aggregate principal amount of such Junior Subordinated Debt Trust
Securities; (iii) the date or dates on which the principal of such Junior
Subordinated Debt Trust Securities is payable and the right, to extend or
defer such date or dates; (iv) the rate or rates at which such Junior
Subordinated Debt Trust Securities will bear interest or the method of
calculating such rate or rates, if any; (v) the date or dates from which such
interest shall accrue, the interest payment dates on which such interest will
be payable or the manner of determination of such interest payment dates and
the record dates for the determination of holders to whom interest is payable
on any such interest payment dates; (vi) the right, if any, to extend the
interest payment periods and the duration of such extension; (vii) the period
or periods within which, the price or prices at which, and the terms and
conditions upon which, such Junior Subordinated Debt Trust Securities may be
redeemed, in whole or in part, at the option of the Company; (viii) the
obligation, if any of the Company to redeem or purchase such Junior
Subordinated Debt Trust Securities pursuant to any sinking fund or analogous
provisions or at the option of the holder thereof and the period or periods
for which, the price or prices at which, and the terms and conditions upon
which, such Junior Subordinated Debt Trust Securities shall be redeemed or
purchased, in whole or part, pursuant to such obligation; (ix) any
exchangeability, conversion or prepayment provisions of the Junior
Subordinated Debt Trust Securities; (x) any applicable United States federal
income tax consequences, including whether and under what circumstances the
Company will pay additional amounts on the Junior Subordinated Debt Trust
Securities held by a person who is not a U.S. person in respect of any tax,
assessment or governmental charge withheld or deducted and, if so, whether the
Company will have the option to redeem such Junior Subordinated Debt Trust
Securities rather than pay such additional amounts; (xi) the form of such
Junior Subordinated Debt Trust Securities; (xii) if other than denominations
of $25 or any integral multiple thereof, the denominations in which such
Junior Subordinated Debt Trust Securities shall be issuable; (xiii) any and
all other terms with respect to such series, including any modification of or
additions to the events of default or covenants provided for with respect to
such series, including any modification of or additions to the events of
default or covenants provided for with respect to the Junior Subordinated Debt
Trust Securities, and any terms which may be required by or advisable under
applicable laws or regulations not inconsistent with the Indenture; and (xiv)
whether such Junior Subordinated Debt Trust Securities are issuable as a
global security, and in such case, the identity of the depositary. (Section
2.01)
Unless otherwise indicated in the Prospectus Supplement
relating thereto, the Junior Subordinated Debt Trust Securities will be issued
in United States dollars in fully registered form without coupons in
denominations of $25 or integral multiples thereof. Junior Subordinated Debt
Trust Securities may be presented for exchange and Junior Subordinated Debt
Trust Securities in registered form may be presented for transfer in the
manner, at the places and subject to the restrictions set forth in the Junior
Subordinated Debt Trust Securities and the Prospectus Supplement. Such
services will be provided without charge, other than any tax or other
governmental charge payable in connection therewith, but subject to the
limitations provided in the Junior Subordinated Debt Trust Securities. Junior
Subordinated Debt Trust Securities in bearer form and the coupons, if any,
appertaining thereto will be transferable by delivery.
Junior Subordinated Debt Trust Securities may bear interest at
a fixed rate or a floating rate. Junior Subordinated Debt Trust Securities
bearing no interest or interest at a rate that at the time of issuance is
below the prevailing market rate will be sold at a discount below their stated
principal amount. Special United States federal income tax considerations
applicable to any such discounted Junior Subordinated Debt Trust Securities or
to certain Junior Subordinated Debt Trust Securities issued at par which are
treated as having been issued at a discount for United States federal income
tax purposes will be described in the relevant Prospectus Supplement.
Certain Covenants of the Company Applicable to the Junior Subordinated Debt
Securities
If Junior Subordinated Debt Trust Securities are issued to an
AES Trust in connection with the issuance of Trust Securities by such AES
Trust, the Company will covenant in the Indenture that, so long as the
Preferred Securities issued by the applicable AES Trust remain outstanding,
the Company will not declare or pay any dividends on, or redeem, purchase,
acquire or make a distribution or liquidation payment with respect to, any of
its common stock or preferred stock or make any guarantee payment with respect
to, any of its common stock or preferred stock or make any guarantee payment
with respect thereto if at such time (i) the Company shall be in default with
respect to its Guarantee Payments or other payment obligations under the
related Preferred Securities Guarantee, (ii) there shall have occurred any
Indenture Event of Default with respect to the Junior Subordinated Debt Trust
Securities or (iii) in the event that Junior Subordinated Debt Trust
Securities are issued to an AES Trust in connection with the issuance of Trust
Securities by such AES Trust, the Company shall have given notice of its
election to defer payments of interest on such Junior Subordinated Debt Trust
Securities by extending the interest payment period as provided in the terms
of such Junior Subordinated Debt Trust Securities and such period, or any
extension thereof, is continuing; provided that (x) the Company will be
permitted to pay accrued dividends (and cash in lieu of fractional shares)
upon the conversion of any Preferred Stock of the Company as may be
outstanding from time to time, in each case in accordance with the terms of
such stock and (y) the foregoing will not apply to any stock dividends paid
by the Company. In addition, if Junior Subordinated Debt Trust Securities
are issued to an AES Trust in connection with the issuance of Trust
Securities by such AES Trust, for so long as the Preferred Securities
issued by the applicable AES Trust remain outstanding, the Company has
agreed (i) to remain the sole direct or indirect owner of all of the
outstanding Common Securities issued by the applicable AES Trust and not to
cause or permit the Common Securities to be transferred except to the
extent permitted by the related Declaration; provided that any permitted
successor of the Company under the Indenture may succeed to the Company's
ownership of the Common Securities issued by the applicable AES Trust, (ii)
to comply fully with all of its obligations and agreements contained in the
related Declaration and (iii) not to take any action which would cause the
applicable AES Trust to cease to be treated as a grantor trust for United
States federal income tax purposes, except in connection with a
distribution of Junior Subordinated Debt Trust Securities.
Subordination
The payment of principal of, premium, if any, and interest on
the Junior Subordinated Trust Securities will, to the extent and in the manner
set forth in the Indenture, be subordinated in right of payment to the prior
payment in full, in cash or cash equivalents, of all Senior and
Subordinated Debt of the Company.
Upon any payment or distribution of assets to creditors upon
any liquidation, dissolution, winding up, receivership, reorganization,
assignment for the benefit of creditors, marshalling of assets and liabilities
or any bankruptcy, insolvency or similar proceedings of the Company, 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 Trust Securities will be
entitled to receive any payment in respect of the principal of, premium, if
any, or interest on the Junior Subordinated Debt Trust Securities.
No payments on account of principal, premium, if any, or
interest in respect of the Junior Subordinated Debt Trust Securities may be
made by the Company if there shall have occurred and be continuing a default
in any payment with respect to Senior and Subordinated Debt or during
certain periods when an event of default under certain Senior and
Subordinated Debt permits the lenders thereunder to accelerate the maturity
of such Senior and Subordinated Debt. 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, from and after the date of receipt by the
Trustee of written notice from holders of such Designated Senior and
Subordinated Debt or from an agent of such holders, no payments on account
of principal, premium, if any, or interest in respect of the Junior
Subordinated Debt Trust Securities may be made by the Company during a
period (the "Payment Blockage Period") commencing on the date of delivery
of such notice and ending 179 days thereafter (unless such Payment Blockage
Period shall be terminated by written notice to the Trustee from the
holders of such Designated Senior and Subordinated Debt or from an agent of
such holders, or such 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 Trust Securities during any period
of 360 consecutive days. No event of default which existed or was
continuing on the date of the commencement of any Payment Blockage Period
with respect to the Designated Senior and Subordinated Debt initiating such
Payment Blockage Period shall be or be made the basis for the commencement
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.
By reason of such subordination, in the event of insolvency,
funds that would otherwise be payable to holders of Junior Subordinated Debt
Trust Securities will be paid to the holders of Senior and Subordinated Debt
of the Company to the extent necessary to pay such Debt in full, and the
Company may be unable to meet fully its obligations with respect to the
Junior Subordinated Debt Trust Securities.
"Debt" is defined to mean, with respect to any person at any
date of determination (without duplication), (i) all indebtedness of such
person for borrowed money, (ii) all obligations of such person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations
of such person in respect of letters of credit or bankers' acceptance or other
similar instruments (or reimbursement obligations with respect thereto), (iv)
all obligations of such person to pay the deferred purchase price of property
or services, except trade payables, (v) all obligations of such person as
lessee under capitalized leases, (vi) all Debt of others secured by a lien on
any asset of such person, whether or not such Debt is assumed by such person;
provided that, for purposes of determining the amount of any Debt of the type
described in this clause, if recourse with respect to such Debt is limited to
such asset, the amount of such Debt shall be limited to the lesser of the fair
market value of such asset or the amount of such Debt, (vii) all Debt of
others guaranteed by such person to the extent such Debt is guaranteed by such
person, (viii) all redeemable stock valued at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends and (ix)
to the extent not otherwise included in this definition, all obligations of
such person under currency agreements and interest rate agreements.
"Designated Senior and Subordinated Debt" is defined to mean
(i) Debt under the Credit Agreement dated as of May 20, 1996 (the "Credit
Agreement") among the Company, 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 (ii) Debt
constituting Senior and Subordinated Debt which, at the time of its
determination, (A) has an aggregate principal amount of at least $30
million and (B) is specifically designated in the instrument evidencing
such Senior and Subordinated Debt as "Designated Senior and Subordinated
Debt" by the Company.
"Senior and Subordinated Debt" is defined to mean the
principal of (and premium, if any) and interest on all Debt of the Company
whether created, incurred or assumed before, on or after the date of the
Indenture; provided that such Senior and Subordinated Debt shall not
include (i) Debt of the Company to any Affiliate, (ii) Debt of the
Company that, when incurred and without respect to any election under
Section 1111(b) of Title 11, U.S. Code, was without recourse, (iii) any
other Debt of the Company 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 Trust Securities, and in
particular the Junior Subordinated Debt Trust Securities shall rank pari
passu with all other debt securities and guarantees issued to any trust,
partnership or other entity affiliated with the Company which is a
financing vehicle of the Company in connection with an issuance of
preferred securities by such financing entity, and (iv) redeemable stock of
the Company.
Indenture Events of Default
The Indenture provides that any one or more of the following
described events, which has occurred and is continuing, constitutes an
"Indenture Event of Default" with respect to each series of Junior
Subordinated Debt Securities:
(a) failure for 30 days to pay interest on the Junior
Subordinated Debt Trust Securities of such series when due; provided that a
valid extension of the interest payment period by the Company shall not
constitute a default in the payment of interest for this purpose;
(b) failure to pay principal of or premium, if any, on the Junior
Subordinated Debt Trust Securities of such series when due whether at
maturity, upon redemption, by declaration or otherwise;
(c) failure to observe or perform any other covenant contained in
the Indenture with respect to such series for 90 days after written notice to
the Company from the Indenture Trustee or the holders of at least 25% in
principal amount of the outstanding Junior Subordinated Debt Trust Securities
of such series; or
(d) certain events in bankruptcy, insolvency or reorganization of
the Company.
In each and every such case, unless the principal of all the
Junior Subordinated Debt Trust Securities of that series shall have already
become due and payable, either the Indenture Trustee or the holders of not
less than 25% in aggregate principal amount of the Junior Subordinated Debt
Trust Securities of that series then outstanding, by notice in writing to the
Company (and to the Indenture Trustee if given by such holders), may declare
the principal of all the Junior Subordinated Debt Trust Securities of that
series to be due and payable immediately, and upon any such declaration the
same shall become and shall be immediately due and payable. (Section 6.01)
The holders of a majority in aggregate outstanding principal
amount of the Junior Subordinated Debt Trust Securities of that series have
the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Indenture Trustee. (Section 6.06) The
Indenture Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of the Junior Subordinated Debt Trust Securities of that
series may declare the principal due and payable immediately upon an Indenture
Event of Default with respect to such series, but the holders of a majority in
aggregate outstanding principal amount of Junior Subordinated Debt Trust
Securities of such series may annul such declaration and waive the default if
the default has been cured and a sum sufficient to pay all matured
installments of interest and principal otherwise than by acceleration and any
premium has been deposited with the Indenture Trustee. (Sections 6.01 and
6.06)
The holders of a majority in aggregate outstanding principal
amount of the Junior Subordinated Debt Trust Securities of that series may, on
behalf of the holders of all the Junior Subordinated Debt Trust Securities of
that series, waive any past default, except a default in the payment of
principal, premium, if any, or interest (unless such default has been cured
and a sum sufficient to pay all matured installments of interest and principal
otherwise than by acceleration and any premium has been deposited with the
Indenture Trustee) or a call for redemption of Junior Subordinated Debt Trust
Securities. (Section 6.06) The Company is required to file annually with the
Indenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants under the Indenture. (Section
5.03)
If Junior Subordinated Debt Trust Securities are issued to an
AES Trust in connection with the issuance of Trust Securities of such AES
Trust, then under the applicable Declaration an Indenture Event of Default
with respect to such series of Junior Subordinated Debt Trust Securities will
constitute a Declaration Event of Default.
Modification of the Indenture
The Indenture contains provisions permitting the Company and
the Indenture Trustee, with the consent of the holders of not less than a
majority in principal amount of the outstanding Junior Subordinated Debt Trust
Securities of each series affected, to modify the Indenture or any
supplemental indenture affecting the rights of the holders of such Junior
Subordinated Debt Securities; provided that no such modification may, without
the consent of the holder of each outstanding Junior Subordinated Debt Trust
Security affected thereby, (i) extend the fixed maturity of any Junior
Subordinated Debt Trust Securities of any series, reduce the principal amount
thereof, reduce the rate or extent the time of payment of interest thereon,
reduce any premium payable upon the redemption thereof, without the consent of
the holder of each Junior Subordinated Debt Trust Security so affected or (ii)
reduce the percentage of Junior Subordinated Debt Trust Securities, the
holders of which are required to consent to any such modification, without the
consent of the holders of each Junior Subordinated Debt Trust Security then
outstanding and affected thereby. (Section 9.02)
Book-Entry and Settlement
If any Junior Subordinated Debt Trust Securities of a series
are represented by one or more global securities (each, a "Global Security"),
the applicable Prospectus Supplement will describe the circumstances, if any,
under which beneficial owners of interests in any such Global Security may
exchange such interests for Junior Subordinated Debt Trust Securities of such
series and of like tenor and principal amount in any authorized form and
denomination. Principal of and any premium and interest on a Global Security
will be payable in the manner described in the applicable Prospectus
Supplement.
The specific terms of the depositary arrangement with respect
to any portion of a series of Junior Subordinated Debt Trust Securities to be
represented by a Global Security will be described in the applicable Prospectus
Supplement.
Consolidation, Merger and Sale
The Indenture will provide that the Company may not consolidate
with or merge into any other person or transfer or lease its properties and
assets substantially as an entirety to any person and may not permit any person
to merge into or consolidate with the Company unless (i) either the Company
will be the resulting or surviving entity or any successor or purchaser is a
corporation organized under the laws of the United States of America, any State
or the District of Columbia, and any such successor or purchaser expressly
assumes the Company's obligations under the Indenture and (ii) immediately
after giving effect to the transaction no Event of Default shall have occurred
and be continuing. (Section 10.01)
Defeasance and Discharge
Under the terms of the Indenture, the Company will be
discharged from any and all obligations in respect of the Junior Subordinated
Debt Trust Securities of a series (except in each case for certain obligations
to register the transfer or exchange of such Junior Subordinated Debt Trust
Securities, replace stolen, lost or mutilated Junior Subordinated Debt Trust
Securities of that series, maintain paying agencies and hold moneys for
payment in trust) if (i) the Company irrevocably deposits with the Indenture
Trustee cash or U.S. Government Obligations, as trust funds in an amount
certified to be sufficient to pay at maturity (or upon redemption) the
principal of, premium, if any, and interest on all outstanding Junior
Subordinated Debt Trust Securities of such series; (ii) such deposit will not
result in a breach or violation of, or constitute a default under, any
agreement or instrument to which the Company is a party or by which it is
bound; (iii) the Company delivers to the Indenture Trustee an opinion of
counsel to the effect that the holders of the Junior Subordinated Debt Trust
Securities of such series will not recognize income, gain or loss for United
States federal income tax purposes as a result of such defeasance and that
defeasance will not otherwise alter holders' United States federal income tax
treatment of principal, premium and interest payments on such Junior
Subordinated Debt Trust Securities of such series (such opinion must be based
on a ruling of the Internal Revenue Service or a change in United States
federal income tax law occurring after the date of such Junior Subordinated
Debt Trust Securities Indenture, since such a result would not occur under
current tax law); (iv) the Company has delivered to the Indenture Trustee an
Officer's Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the defeasance contemplated by
such provision have been complied with; and (v) no event or condition shall
exist that, pursuant to the subordination provisions applicable to such
series, would prevent the Company from making payments of principal of,
premium, if any, and interest on the Junior Subordinated Debt Trust Securities
of such series at the date of the irrevocable deposit referred to above.
(Section 11.01)
Governing Law
The Indenture and the Junior Subordinated Debt Trust Securities
will be governed by the laws of the State of New York. (Section 13.05)
Information Concerning the Indenture Trustee
The Indenture Trustee, prior to default, undertakes to perform
only such duties as are specifically set forth in the Indenture and, after
default, shall exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. (Section 7.01) Subject to
such provision, the Indenture Trustee is under no obligation to exercise any
of the powers vested in it by the Junior Subordinated Debt Trust Securities
Indenture at the request of any holder of Junior Subordinated Debt Trust
Securities, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities that might be incurred thereby. (Section
7.02) The Indenture Trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its
duties if the Trustee reasonably believes that repayment or adequate indemnity
is not reasonably assured to it. (Section 7.01)
The Company and its subsidiaries maintain ordinary banking and
trust relationships with The First National Bank of Chicago and its affiliates.
Miscellaneous
The Company will have the right at all times to assign any of
its rights or obligations under the Indenture to a direct or indirect
wholly-owned subsidiary of the Company; provided that, in the event of any
such assignment, the Company will remain jointly and severally liable for all
such obligations. Subject to the foregoing, the Indenture will be binding
upon and inure to the benefit of the parties thereto and their respective
successors and assigns. The Indenture provides that it may not otherwise be
assigned by the parties thereto other than by the Company to a successor or
purchaser pursuant to a consolidation, merger or sale permitted by the
Indenture. (Section 13.11)
PLAN OF DISTRIBUTION
The Company may sell any series of Junior Subordinated Debt
Trust Securities and the AES Trusts may sell the Preferred Securities being
offered hereby in any of three ways (or in any combination thereof): (i)
through underwriters or dealers; (ii) directly to a limited number of
purchasers or to a single purchaser; or (iii) through agents. The Prospectus
Supplement with respect to any Offered Securities will set forth the terms of
the offering of such Offered Securities, including the name or names of any
underwriters, dealers or agents and the respective amounts of such Offered
Securities underwritten or purchased by each of them, the initial public
offering price of such Offered Securities and the proceeds to the Company from
such sale, any discounts, commissions or other items constituting compensation
from the Company and any discounts, commissions or concessions allowed or
reallowed or paid to dealers and any securities exchanges on which such
Offered Securities may be listed. Any public offering price and any discounts
or concessions allowed or reallowed or paid to dealers may be changed from
time to time.
If underwriters are used in the sale of any Offered Securities,
such Offered Securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. Such Offered Securities may be
either offered to the public through underwriting syndicates represented by
managing underwriters, or directly by underwriters. Unless otherwise set
forth in the Prospectus Supplement, the obligations of the underwriters to
purchase such Offered Securities will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all of such
Offered Securities if any are purchased.
Offered Securities may be sold directly by the Company or
through agents designated by the Company from time to time. Any agent
involved in the offer or sale of Offered Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will
authorize underwriters, dealers or agents to solicit offers by certain
purchasers to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Agents and underwriters may be entitled under agreements
entered into with the Company to indemnification by the Company against
certain civil liabilities, including liabilities under the Securities Act, or
to contribution with respect to payments which the agents or underwriters may
be required to make in respect thereof. Agents and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus
Supplement, certain matters of Delaware law relating to the validity of the
Preferred Securities will be passed upon by Richards, Layton & Finger,
Wilmington. The legality of the Junior Subordinated Debt Trust Securities
and the Preferred Securities offered hereby will be passed upon for the
Company by Davis Polk & Wardwell.
EXPERTS
The consolidated financial statements incorporated in this
Prospectus by reference from the Company's Registration Statement on Form S-3
filed on June 12, 1996, and the consolidated financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated by reference herein and such consolidated financial
statements and consolidated financial statement schedules have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The financial statements of Light Servicos de Electicidade
S.A., from Form 8-K of the AES Corporation dated May 30, 1996, incorporated
in this Prospectus by reference, for the years ended December 31, 1995 and
1994 have been audited by Deloitte Touche Tohmatsu, Rio de Janeiro, Brazil,
independent auditors, as stated in their reports, which are incorporated
herein by reference, and have been so incorporated in reliance upon the
reports of such firm given upon their authority as experts in accounting
and auditing.
======================================== ====================================
No person has been authorized to give any
information or to make any representations,
other than those contained or incorporated by
reference in this Prospectus or any Prospectus $750,000,000
Supplement, in connection with any offering
contemplated hereby, and, if given or made, The AES Corporation
such information or representations must not be
relied upon as having been authorized by the Junior Subordinated
company, any underwriter, agent or dealer. Debt Securities
Neither the delivery of this Prospectus or any
Prospectus Supplement nor any sale made AES TRUST I
hereunder or thereunder shall under any AES TRUST II
circumstances create any implication that there AES TRUST III
has been no change in the affairs of the
Company since the date hereof or thereof. Preferred Securities
Neither this Prospectus nor any Prospectus
Supplement shall constitute an offer to ----------
sell or a solicitation of an offer to PROSPECTUS
buy any securities by anyone in any ----------
jurisdiction in which such offer
or solicitation is not authorized or in
which the person making such offer or
solicitation is not qualified to do so
or to any person to whom it is
unlawful to make such offer or
solicitation.
Table of Contents
Page
----
Available Information................. 1
Incorporation of Certain Information
by Reference....................... 1
Use of Proceeds...................... 2
Ratios of Earnings to Fixed Charges.. 2
The Company.......................... 3
Risk Factors......................... 4
The AES Trusts....................... 12
Description of Preferred Securities.. 17
Description of Preferred Securities
Guarantees......................... 18
Description of Junior Subordinated
Debt Trust Securities.............. 21
Plan of Distribution................. 28
Legal Matters........................ 28
Experts.............................. 29 , 1996
======================================== ====================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the expenses in connection with
the issuance and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are
estimates, except the SEC registration fee.
SEC Registration filing fee..................... $225,273
Printing and engraving expenses................. $ 75,000
Blue sky fees and expenses (including counsel).. $ 7,500
Legal fees and expenses......................... $125,000
Fees of accountants............................. $ 75,000
Fees of trustee................................. $ 10,000
________
Total.......................................... $517,773
========
Item 15. Indemnification of Directors and Officers
Under the Company's By-Laws, and in accordance with Section 145
of the Delaware General Corporation Law ("GCL"), the Company shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than any action or suit by or
in the right of the Company to procure a judgment in its favor, which is
hereinafter referred to as a "derivative action") by reason of the fact that
such person is or was a director, officer or employee of the Company, or is or
was serving in such capacity or as an agent at the request of the Company for
another entity, to the full extent authorized by Delaware law, against
expenses (including, but not limited to, attorneys' fees), judgments, fines
and amounts actually and reasonably incurred in connection with the defense or
settlement of such action, suit or proceeding if such person acted in good
faith and in a manner the person reasonably believed to be in or not opposed
to the best interests of the Company, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe was unlawful. Agents of the
Company may be similarly indemnified, at the discretion of the Board of
Directors.
Under Section 145 of the GCL, a similar standard of care is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with
the defense or settlement of such an action and then, where the person is
adjudged to be liable to the Company, only if and to the extent that the Court
of Chancery of the State of Delaware or the court in which such action was
brought determines that such person is fairly and reasonably entitled to such
indemnity and only for such expenses as the court shall deem proper.
Pursuant to Company's By-Laws, a person eligible for
indemnification may have the expenses incurred in connection with any matter
described above paid in advance of a final disposition by the Company.
However, such advances will only be made upon the delivery of an undertaking
by or on behalf of the indemnified person to repay all amounts so advanced if
it is ultimately determined that such person is not entitled to
indemnification.
In addition, under the Company's By-Laws, the Company may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Company or of another corporation
against any liability asserted against and incurred by such person in such
capacity, or arising out of the person's status as such whether or not the
Company would have the power or the obligation to indemnify such person
against such liability under the provisions of the Company's By-Laws.
Item 16. Exhibits.
Exhibits Description of Exhibit
- -------- ----------------------
1.1 Form of Underwriting Agreement (Debt Securities)
1.2 Form of Underwriting Agreement (Common Stock and Preferred Stock)
1.3 Form of Underwriting Agreement (Stock Purchase Contracts and Stock
Purchase Units)
1.4 Form of Underwriting Agreement (Preferred Securities)
4.1 Form of Senior Debt Securities Indenture between the Company and
The First National Bank of Chicago+
4.2 Senior Subordinated Debt Securities Indenture dated as of
July 1, 1996 between the Company and The First National
Bank of Chicago+
4.3 Form of Junior Subordinated Debt Securities Indenture between the
Company and The First National Bank of Chicago+
4.4 Form of Junior Subordinated Debt Trust Securities Indenture
between the Company and The First National Bank of Chicago+
4.5 Declaration of Trust of AES Trust I+
4.6 Certificate of Trust of AES Trust I+
4.7 Declaration of Trust of AES Trust II+
4.8 Certificate of Trust of AES Trust II+
4.9 Form of Amended and Restated Declaration of Trust for each of AES
Trust I, AES Trust II and AES Trust III+
4.10 Form of Preferred Security (included in Exhibit 4.9)+
4.11 Form of Supplemental Indenture to be used in connection with
issuance of Junior Subordinated Debt Trust Securities and
Preferred Securities+
4.12 Form of Junior Subordinated Debt Trust Security (included in
Exhibit 4.11)+
4.13 Form of Preferred Securities Guarantee with respect to Preferred
Securities+
4.14 Declaration of Trust of AES Trust III
4.15 Certificate of Trust of AES Trust III
4.16 Form of Purchase Contract Agreement
4.17 Form of Pledge Agreement
5.1 Opinion of Davis Polk & Wardwell++
5.2 Opinion of Delaware counsel++
12.1 Statement re: Computation of ratio of earnings to fixed charges+
23.1 Consent of Deloitte & Touche LLP*
23.2 Consent of Deloitte Touche Tohmatsu*
23.3 Consent of Davis Polk & Wardwell (included in Exhibit 5.1)++
23.4 Consent of Delaware counsel (included in Exhibit 5.2)++
24.1 Powers of Attorney for the Company
24.2 Powers of Attorney for the Company as sponsor, to sign the
Registration Statement on behalf of AES Trust I and AES Trust II
(included in Exhibits 4.5 and 4.7)+
24.3 Power of Attorney for the Company as sponsor, to sign the
Registration Statement on behalf of AES Trust III (included in
Exhibit 4.15)
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of 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 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 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 First National Bank of Chicago, as Trustee, with
respect to the Junior Subordinated Debt Trust Securities
Indenture+
25.5 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Preferred Securities of AES Trust I+
25.6 Statement of Eligibility under The Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Preferred Securities of AES Trust II+
25.7 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee,
under the Preferred Securities Guarantee of the Company with
respect to the Preferred Securities of AES Trust I+
25.8 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Preferred Securities Guarantee of the Company
with respect to the Preferred Securities of AES Trust II+
25.9 Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First national Bank of Chicago, as Trustee,
with respect to the Preferred Securities of AES Trust III
25.10 Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee,
under the Preferred Securities Guarantee of the Company with
respect to the Preferred Securities of AES Trust III.
25.11 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Junior Subordinated Debt Trust Securities
Indenture+
___________
++ To be filed by amendment.
+ Previously filed
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement; provided, however, that the undertakings set
forth in paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or
furnished to the 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, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) 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.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions described under Item 15
above, 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 registrar 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 against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that is has reasonable grounds to believe that it meets
all of the requirements for filing on Forms S-3 and has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Arlington, State of
Virginia on November 18, 1996.
THE AES CORPORATION
By: /s/ Dennis W. Bakke
-----------------------------
Dennis W. Bakke
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities indicated on November 18, 1996.
Signature Title Date
--------- ----- ----
* Chairman of the Board November 18, 1996
- ------------------------------
Roger W. Sant
/s/ Dennis W. Bakke President, Chief November 18, 1996
- ------------------------------ Executive Officer and
Dennis W. Bakke Director (Principal
Executive Officer)
* Director November 18, 1996
- ------------------------------
Vicki-Ann Assevero
* Director November 18, 1996
- ------------------------------
Dr. Alice F. Emerson
* Director November 18, 1996
- ------------------------------
Robert F. Hemphill, Jr.
* Director November 18, 1996
- ------------------------------
Frank Jungers
* Director November 18, 1996
- ------------------------------
Dr. Henry R. Linden
* Director November 18, 1996
- ------------------------------
Russell E. Train
* Director November 18, 1996
- ------------------------------
Thomas I. Unterberg
* Director November 18, 1996
- ------------------------------
Robert H. Waterman, Jr.
/s/ Barry J. Sharp Vice President and November 18, 1996
- ------------------------------ Chief Financial
Barry J. Sharp Officer (Principal
Financial and
Accounting Officer)
*By: /s/ Barry J. Sharp November 18, 1996
---------------------------
Barry J. Sharp
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AES
Trust I and AES Trust II each certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Forms S-3 and
has duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Arlington, State of Virginia on November 18, 1996.
AES TRUST I
By: The AES Corporation, as Sponsor
By: /s/ William R. Luraschi
------------------------------
Name: William R. Luraschi
Title: General Counsel and Secretary
AES TRUST II
By: The AES Corporation, as Sponsor
By: /s/ William R. Luraschi
------------------------------
Name: William R. Luraschi
Title: General Counsel and Secretary
AES TRUST III
By: The AES Corporation, as Sponsor
By: /s/ William R. Luraschi
------------------------------
Name: William R. Luraschi
Title: General Counsel and Secretary
EXHIBIT INDEX
Sequentially
Exhibits Description of Exhibit Numbered Page
- -------- ---------------------- -------------
1.1 Form of Underwriting Agreement (Debt Securities)
1.2 Form of Underwriting Agreement (Common Stock and
Preferred Stock)
1.3 Form of Underwriting Agreement (Stock Purchase
Contracts and Stock Purchase Units)
1.4 Form of Underwriting Agreement (Preferred
Securities)
4.1 Form of Senior Debt Securities Indenture between
the Company and The First National Bank of Chicago+
4.2 Senior Subordinated Debt Securities Indenture
dated as of July 1, 1996 between the Company
and The First National Bank of Chicago+
4.3 Form of Junior Subordinated Debt Securities Indenture
between the Company and The First National
Bank of Chicago+
4.4 Form of Junior Subordinated Debt Trust Securities
Indenture between the Company and The First
National Bank of Chicago+
4.5 Declaration of Trust of AES Trust I+
4.6 Certificate of Trust of AES Trust I+
4.7 Declaration of Trust of AES Trust II+
4.8 Certificate of Trust of AES Trust II+
4.9 Form of Amended and Restated Declaration of
Trust for each of AES Trust I, AES Trust II
and AES Trust III+
4.10 Form of Preferred Security (included in Exhibit 4.9)+
4.11 Form of Supplemental Indenture to be used in
connection with issuance of Junior Subordinated
Debt Trust Securities and Preferred Securities+
4.12 Form of Junior Subordinated Debt Trust Security
(included in Exhibit 4.11)+
4.13 Form of Preferred Securities Guarantee with
respect to Preferred Securities+
4.14 Declaration of Trust of AES Trust III
4.15 Certificate of Trust of AES Trust III
4.16 Form of Purchase Contract Agreement
4.17 Form of Pledge Agreement
5.1 Opinion of Davis Polk & Wardwell++
5.2 Opinion of Delaware counsel++
12.1 Statement re: Computation of ratio of earnings
to fixed charges+
23.1 Consent of Deloitte & Touche LLP*
23.2 Consent of Deloitte Touche Tohmatsu*
23.3 Consent of Davis Polk & Wardwell (included
in Exhibit 5.1)++
23.4 Consent of Delaware counsel (included
in Exhibit 5.2)++
24.1 Powers of Attorney for the Company
24.2 Powers of Attorney for the Company as sponsor,
to sign the Registration Statement on behalf
of AES Trust I and AES Trust II (included in
Exhibits 4.5 and 4.7)+
24.3 Power of Attorney for the Company as sponsor, to
sign the Registration Statement on behalf of
AES Trust III (included in Exhibit 4.15)
25.1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of 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 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 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 First National
Bank of Chicago, as Trustee, with respect to the
Junior Subordinated Debt Trust Securities Indenture+
25.5 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, with respect to the
Preferred Securities of AES Trust I+
25.6 Statement of Eligibility under The Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, with respect to the
Preferred Securities of AES Trust II+
25.7 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, under the Preferred
Securities Guarantee of the Company with
respect to the Preferred Securities of AES Trust I+
25.8 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, with respect to the
Preferred Securities Guarantee of the Company
with respect to the Preferred Securities of
AES Trust II+
25.9 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First national
Bank of Chicago, as Trustee, with respect to the
Preferred Securities of AES Trust III
25.10 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The First National Bank of
Chicago, as Trustee, under the Preferred Securities
Guarantee of the Company with respect to the
Preferred Securities of AES Trust III.
25.11 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, with respect to the
Junior Subordinated Debt Trust Securities Indenture+
___________
++ To be filed by amendment.
+ Previously filed