Item 1.01 Entry into a Material Definitive Agreement
On December 4, 2020, The AES Corporation (the "Company" or "AES") completed its
previously announced offering of $800,000,000 aggregate principal amount of its
1.375% Senior Notes due 2026 (the "2026 Notes") and $1,000,000,000 aggregate
principal amount of 2.450% Senior Notes due 2031 (the "2031 Notes", and together
with the 2026 Notes, the "New Notes") pursuant to the terms of the purchase
agreement, dated November 19, 2020 (the "Purchase Agreement"), among AES and the
representatives of the initial purchasers named therein (the "Initial
Purchasers").
The public offering price of the 2026 Notes and the 2031 Notes was 99.945% and
99.962% of the principal amount, respectively. AES intends to allocate an amount
equal to the net proceeds from the offering to one or more eligible green
projects. Pending such allocation, AES intends to use the net proceeds from this
offering to fund purchases of any and all of its 5.500% senior notes due 2025
(the "2025 Notes"), 6.000% senior notes due 2026 (the "6.000% 2026 Notes") and
5.125% senior notes due 2027 (the "2027 Notes" and, together with the 2025 Notes
and the 6.000% 2026 Notes, the "Tender Offer Notes") in tender offers (the
"Tender Offers"), to fully redeem any of the Tender Offer Notes not tendered in
connection with the Tender Offers, to fully redeem the $65.0 million aggregate
principal amount outstanding of its 4.500% notes due 2023 (the "2023 Notes") and
$63.0 million aggregate principal amount outstanding of its 5.500% notes due
2024 (the "2024 Notes" and together with the Tender Offer Notes and the 2023
Notes, the "Outstanding Notes"), to pay certain related fees and expenses and
for general corporate purposes. In conjunction with the Tender Offers, AES is
soliciting consents (the "Consent Solicitations") to the adoption of certain
proposed amendments to the indentures governing the Tender Offer Notes to
substantially remove all the restrictive covenants and events of default, as
well as to alter the notice requirements for optional redemption with respect to
each series of Tender Offer Notes.
The New Notes were issued on December 4, 2020 pursuant to a Senior Indenture,
dated as of December 8, 1998 (the "Base Indenture"), as amended and supplemented
by a ninth supplemental indenture, dated as of April 3, 2003 (the "Ninth
Supplemental Indenture") and the twenty-sixth supplemental indenture, dated as
of December 4, 2020 (the "Twenty-Sixth Supplemental Indenture", and together
with the Base Indenture and the Ninth Supplemental Indenture, the "Indenture"),
between AES and Deutsche Bank Trust Company Americas, as successor to Wells
Fargo Bank, N.A. and Bank One, National Association (formerly known as The First
National Bank of Chicago), as Trustee.
Interest on the 2026 Notes accrues at a rate of 1.375% per annum, and interest
on the 2031 Notes accrues at a rate of 2.450% per annum. Interest on each series
of New Notes is payable on January 15 and July 15 of each year, beginning July
15, 2021. The 2026 Notes will mature on January 15, 2026, and the 2031 Notes
will mature on January 15, 2031.
AES may redeem all or a part of the 2026 Notes, at any time prior to December
15, 2025, on any one or more occasions, at a redemption price equal to the
greater of (i) 100% of the principal amount of the 2026 Notes to be redeemed
(ii) the sum of the present values of the principal amount of the 2026 Notes to
be redeemed and the remaining scheduled payments of interest on the 2026 Notes
from the redemption date to December 15, 2025, discounted from the scheduled
payment dates to the redemption date semiannually (assuming a 360-day year
consisting of twelve 30-day months) at a discount rate equal to the Treasury
Rate (as defined in the Indenture) plus 15 basis points. AES may redeem all or a
part of the 2031 Notes, at any time prior to October 15, 2030, on any one or
more occasions, at a redemption price equal to the greater of (i) 100% of the
principal amount of the 2031 Notes to be redeemed and (ii) the sum of the
present values of the principal amount of the 2031 Notes to be redeemed and the
remaining scheduled payments of interest on the 2031 Notes from the redemption
date to October 15, 2030, discounted from the scheduled payment dates to the
redemption date semiannually (assuming a 360-day year consisting of twelve
30-day months) at a discount rate equal to the Treasury Rate (as defined in the
2031 notes) plus 25 basis points.
Upon the occurrence of a Change of Control Triggering Event (as defined in the
Indenture), AES must offer to repurchase each series of New Notes at a price
equal to 101.00% of their principal amount, plus accrued and unpaid interest, if
any, to, but not including, the date of repurchase. The Indenture also contains
covenants, subject to certain exceptions, restricting the ability of AES to
incur debt secured by any Principal Property (as defined in the Indenture) or by
the debt or capital stock of any subsidiary held by the AES; to enter into any
sale-lease back transactions involving any Principal Property; or to
consolidate, merge, convey or transfer substantially all of its assets; as well
as other covenants that are customary for debt securities like the New Notes. In
addition, the Indenture contains customary events of default.
The Notes were sold to the Initial Purchasers for resale to qualified
institutional buyers under Rule 144A of the Securities Act of 1933, as amended
(the "Securities Act"), and to persons outside the United States under
Regulation S of the Securities Act.
AES has also agreed to register the Notes under the Securities Act by filing an
exchange offer registration statement or, under special circumstances, a shelf
registration statement with the Securities and Exchange Commission pursuant to a
registration rights agreement, dated as of December 4, 2020 (the "Registration
Rights Agreement"), between AES and BofA Securities, Inc., Barclays Capital
Inc., Mizuho Trust & Banking Co. and Morgan Stanley & Co. LLC as representative
of the initial purchasers. Failure to timely comply with certain provisions of
the Registration Rights Agreement will result in increased interest on the
Notes.
The Notes were issued in a transaction exempt from registration under the
Securities Act or any state securities laws. Therefore, the Notes may not be
offered or sold in the United States absent registration or an applicable
exemption from the registration requirements of the Securities Act and any
applicable state securities laws. This Form 8-K and the Exhibits hereto do not
constitute an offer to sell any securities or a solicitation of an offer to
purchase any securities.
The foregoing description of the Indenture, the New Notes and the Registration
Rights Agreement is qualified in its entirety by reference to the Indenture, the
forms of New Notes and the Registration Rights Agreement. The Twenty-Sixth
Supplemental Indenture, the form of the 2026 Notes, the form of the 2031 Notes
and the Registration Rights Agreement are attached to this Current Report on
Form 8-K as Exhibit 4.1, Exhibit 4.2, Exhibit 4.3 and Exhibit 4.4, respectively.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of Registrant
The information set forth under Item 1.01 above is hereby incorporated into this
Item 2.03 by reference.
Item 8.01 Other Events.
On December 4, 2020, the Company issued a press release announcing the early
results of the Tender Offers and Consent Solicitations. A copy of the press
release is attached hereto as Exhibit 99.1 and is hereby incorporated by
reference in this Item 8.01 of this Current Report on Form 8-K.
Safe Harbor Disclosure
This Current Report on Form 8-K contains forward-looking statements within the
meaning of the Securities Act of 1933 and of the Securities Exchange Act of
1934. Forward-looking statements are not intended to be a guarantee of future
results, but instead constitute AES' current expectations based on reasonable
assumptions. Such forward-looking statements include, but are not limited to,
the proposed use of proceeds of the New Notes, the ultimate allocation of
amounts relating to the offering of the New Notes to eligible green projects
under AES' green financing framework and other expected effects of the offering
of the New Notes.
Actual results could differ materially from those projected in AES'
forward-looking statements due to risks, uncertainties and other factors.
Important factors that could affect actual results are discussed in AES' filings
with the Securities and Exchange Commission (the "SEC"), including, but not
limited to, the risks discussed under Item 1A "Risk Factors" and Item 7:
Management's Discussion & Analysis in AES' 2019 Annual Report on Form 10-K and
in subsequent reports filed with the SEC. Readers are encouraged to read AES'
filings to learn more about the risk factors associated with AES' business. AES
undertakes no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
Any Stockholder who desires a copy of the Company's 2019 Annual Report on Form
10-K filed February 28, 2020 with the SEC may obtain a copy (excluding Exhibits)
without charge by addressing a request to the Office of the Corporate Secretary,
The AES Corporation, 4300 Wilson Boulevard, Arlington, Virginia 22203. Exhibits
also may be requested, but a charge equal to the reproduction cost thereof will
be made. A copy of the Form 10-K may also be obtained by visiting the Company's
website at www.aes.com.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
4.1 Twenty-Sixth Supplemental Indenture, dated December 4, 2020, between
AES and Deutsche Bank Trust Company Americas, as Trustee.
4.2 Form of 1.375% Senior Notes due 2026 (included in Exhibit 4.1)
4.3 Form of 2.450% Senior Notes due 2031 (included in Exhibit 4.1)
4.4 Registration Rights Agreement dated as of December 4, 2020, between
AES and BofA Securities, Inc., Barclays Capital Inc., Mizuho Trust &
Banking Co. and Morgan Stanley & Co. LLC as representative of the
initial purchasers.
99.1 Press Release, dated December 4, 2020, announcing the early results of
the Tender Offers and Consent Solicitations
101 Inline XBRL Document Set for the Cover Page from this Current Report on
Form 8-K, formatted as Inline XBRL.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
© Edgar Online, source Glimpses