greenfield development projects and acquisitions
in many countries. Several of these, if consummated, would require
the Company to obtain substantial additional financing, including
both debt and equity financing.
Certain
subsidiaries and affiliates of the Company (domestic and non-U.S.)
have signed long- term contracts or made similar arrangements
for the sale of electricity and are in various stages of developing
the related greenfield power plants. Successful completion depends
upon overcoming substantial risks, including, but not limited
to, risks relating to failures of siting, financing, construction,
permitting, governmental approvals or termination of the power
sales contract as a result of a failure to meet certain milestones.
As of December 31, 1999, capitalized costs for projects under
development and in early stage construction were approximately
$53 million. The Company believes that these costs are recover-
able; however, no assurance can be given that individual projects
will be completed and reach commercial operation.
The
Company has been actively involved in the acquisition and operation
of electricity assets in countries that are restructuring and
deregulating the electricity industry. Some of these acquisitions
have been made from other electricity companies that have chosen
to exit the electricity generation business. In these situations,
sellers generally seek to complete competitive solicitations
in less than one year, which is much faster than the time incurred
to complete |
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greenfield developments, and require payment
in full on transfer. AES believes that its experience in competitive
markets and its worldwide integrated group structure (with its
significant geographic coverage and presence) enable it to react
quickly and creatively in such situations.
The
financing for such acquisitions, in contrast to that for greenfield
development, often must be arranged quickly and therefore may
preclude the Company from arranging non-recourse project financing
(the Company's historically preferred financing method, which
is discussed further under "Capital Resources, Liquidity and
Market Risk"). Moreover, acquisitions that are large, that occur
simultaneously with one another or those occurring simultaneously
with commencing construction on several greenfield developments
would potentially require the Company to obtain substantial
additional financing, including both debt and equity. As a result,
and in order to enhance its financial capabilities to respond
to these more accelerated opportunities, the Company maintains
a $600 million revolving line and letter of credit facility
(the Revolver) and a $250 million letter of credit facility.
AES also maintains a "universal shelf' registration statement
with the SEC which allows for the public issuance of various
additional debt and preferred or common equity securities, either
individually or in combination, and which currently represents
approximately $932 million in unused potential proceeds from
the issuance of public securities. |
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