Following yesterday's announcement of AEI's assets sale, the company is expected to use the proceeds to pre-pay all the holding company's financial obligations, which as of Sept. 30, 2010 were approximately $1 billion. The outstanding balance of the proceeds may be used to pay dividends, since the company has not been able to provide liquidity to its shareholders.
Proceeds from the sale of assets, which according to the company could amount up to $4.8 billion, will be sufficient to cover the company's debt. As of Sept. 30, 2010, AEI's parent company debt was composed of a $861 million senior secured term loan due 2014 and $188 million of payment in-kind (PIK) notes due 2018. Under the terms of the syndicated loan, the company is required to make a mandatory prepayment of its debt in case of significant subsidiaries divestures if proceeds are not reinvested.
The company is currently revising its business strategy. AEI's remaining assets are, for the most part, electricity generation plants and other projects located in countries with speculative grade ratings. This implies a more volatile and higher risk cash flow generation for the holding company, which could negatively affect the company's credit quality depending on the ensuing capital structure.
AEI's Issuer Default Rating (IDR), term loan and revolving credit facilities ratings remain at 'BB' with a Positive Rating Outlook pending further developments.
Additional information is available at www.fitchratings.com.
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Fitch Ratings
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Lucas Aristizabal,
+1-312-368-3260
Director
Fitch, Inc.
70 West Madison St.
Chicago,
IL 60602
or
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Daniel R. Kastholm, CFA,
+1-312-368-2070
Managing Director
or
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Managing
Director
Joe Bormann, CFA, +1-312-368-3349
or
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Email: brian.bertsch@fitchratings.com