Dominican Republic
Press Release

AES Announces Sale of Itabo Generation Facility in the Dominican Republic

Bnamericas Published: Tuesday, June 30, 2020

AES release

ARLINGTON, Va., June 30, 2020 /PRNewswire/ -- The AES Corporation (NYSE: AES) announced today an agreement to sell 100% of its equity interest in the 295 MW Itabo power plant in San Cristobal, Dominican Republic to Grupo Linda, a Dominican-based conglomerate.  AES has owned and operated the Itabo facility, which includes a 260 MW coal-fired plant, and a 35 MW gas turbine, for more than two decades.  Grupo Linda has co-owned AES Dominicana, AES' generation and natural gas business in the Dominican Republic, with AES since 2014.

"The sale of Itabo will enable us to continue to decarbonize our portfolio, while simultaneously strengthening our relationship with Grupo Linda and reinforcing our commitment to strategic partnerships in the region," said Andrés Gluski, AES President and Chief Executive Officer.  "By selling this facility, AES is better positioned to identify, develop and invest in innovative and sustainable energy solutions that will help to further transform the Dominican Republic's energy matrix."

Last week, AES announced the sale of the 1,740 MW OPGC 1&2 coal-fired power plants, which when taken together with the sale of Itabo, will decrease AES' generation from coal in MWh by eleven percentage points, to approximately 34% of its total generation.  AES has committed to reduce its generation from coal to below 30% by the end of this year and to less than 10% by the end of 2030. 

Net equity proceeds to AES from the sale of its entire interest in Itabo are approximately $101 million.  The closing of this transaction is subject to regulatory approvals and customary closing conditions.  AES expects final closing to occur in the fourth quarter of 2020.  In the Dominican Republic, AES will continue to own and operate 697 MW of generation capacity, as well as a regasification facility with a 70 TBTU LNG storage tank.    

The sale of Itabo was previously assumed in the Company's 2020 guidance and longer-term expectations.  Accordingly, the Company is reaffirming its 2020 Adjusted EPS guidance of $1.32 to $1.42, its 2020 Parent Free Cash Flow expectation of $725 to $775 million, and its expectation for average annual growth of 7% to 9% in Adjusted EPS and Parent Free Cash Flow through 2022.

Adjusted EPS and Parent Free Cash Flow are non-GAAP financial measures. See below for definitions.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EPS guidance or its Parent Free Cash Flow expectation without unreasonable effort.

Adjusted EPS is defined as diluted earnings per share from continuing operations excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses related to derivative transactions and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, and the tax impact from the repatriation of sales proceeds and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt; (f) costs directly associated with a major restructuring program, including, but not limited to, workforce reduction efforts, relocations, and office consolidation; and (g) tax benefit or expense related to the enactment effects of 2017 U.S. tax law reform and related regulations and any subsequent period adjustments related to enactment effects.

Parent Free Cash Flow should not be construed as an alternative to Net Cash Provided by Operating Activities which is determined in accordance with GAAP. Parent Free Cash Flow is equal to Subsidiary Distributions less cash used for interest costs, development, general and administrative activities, and tax payments by the Parent Company.   Parent Free Cash Flow is used for dividends, share repurchases, growth investments, recourse debt repayments, and other uses by the Parent Company.

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