AES Enters Agreements to Sell Equity Interests in Oman and Pakistan Businesses

The AES Corporation (NYSE: AES) announced that it has entered into agreements to sell its entire interests in its Oman and Pakistan businesses for approximately $200 million. As a result of the transactions, $276 million of non-recourse debt (as of September 30, 2009) will remain at the Oman and Pakistan businesses and will be removed from AES’ consolidated balance sheet. The transactions are subject to customary purchase price adjustments and approvals and are expected to close during the first half of 2010.

Paul Hanrahan, AES President and Chief Executive Officer, said, “These facilities have been very successful investments for AES, particularly when we look at operational and financial performance indicators. Our decision to sell the businesses is in line with our strategy to unlock the value of our portfolio. We continue to see compelling development opportunities throughout the world as countries look for more sources of affordable and sustainable power.”

The businesses are being sold to two separate buyers as a result of an auction process that began in the second quarter of 2009. AES indirectly holds interests in the Oman and Pakistan facilities through AES Oasis, which is owned 61.1 percent by AES and 38.9 percent by the IDB Infrastructure Fund. The transactions include the following facilities:

• 456 MW Barka, Oman. AES has a 35 percent stake in the Barka combined cycle gas facility and desalination plant (91,000 cubic meters per day) and has full ownership of the companies that provide technical services. AES will sell its interests to ACWA Power International, a Saudi Arabian and desalination water company. Barka’s 15-year power and water purchase agreement with the Omani Power and Water Procurement Company S.A.O.C. expires in 2018.
• 362 MW Lal Pir and 365 MW Pak Gen, Pakistan. AES has a 55 percent ownership interest in the two oil-fired facilities, which under the agreement will be sold to a consortium led by Nishat Mills Limited, a Pakistani industrial firm. Both Lal Pir and Pak Gen provide electricity to the Pakistan Water and Power Development Authority under 30-year power purchase agreements (PPA). Lal Pir’s PPA runs through 2027 and Pak Gen’s PPA ends in 2028.

Until the transactions close, the businesses will be reported as discontinued operations and their earnings will not be reported as part of income from continuing operations. During 2009, the Oman and Pakistan businesses are expected to contribute net income of $25 million, or $0.04 diluted Earnings Per Share (EPS) and to contribute subsidiary distributions (see definition) of $16 million. In 2010, these businesses are currently projected to contribute net income of $15 million, or $0.02 diluted EPS. The sale of the Pakistan assets is expected to result in a non-cash, after-tax impairment of $107 million, or $0.16 diluted EPS in 2009. In addition, the Oman sale is expected to result in a non-cash, after-tax gain of $78 million, or $0.12 diluted EPS, which will be recorded when the transaction closes in 2010. However, neither the impairment nor the gain will have an impact on Adjusted EPS (a non-GAAP financial measure, see definition).

AES will continue to have a presence in the Middle East and South Asia, where it will also pursue potential development opportunities. Earlier this year AES brought the 380 MW Amman East combined cycle gas facility in Jordan into commercial operation and currently has 62 MW of small hydropower projects under construction in Turkey. AES entered Pakistan in 1993 as one of the first Independent Power Producers and began commercial operations in Oman in 2003.

About AES

The AES Corporation (NYSE:AES) is a Fortune 500 global power company with generation and distribution businesses. Through our diverse portfolio of thermal and renewable energy sources, we provide affordable and sustainable energy to 29 countries. Our workforce of 25,000 people is committed to operational excellence and meeting the world's changing power needs. Our 2008 revenues were $16 billion and we own and manage $35 billion in total assets. BusinessWeek named AES to its 2009 “BW 50 Best Performers” list. To learn more, please visit www.aes.com.

Definition of Adjusted Earnings Per Share

Adjusted Earnings Per Share (a non-GAAP financial measure) is defined as diluted earnings per share from continuing operations excluding gains or losses of the consolidated entity due to (a) mark-to-market amounts related to FAS 133 derivative transactions, (b) unrealized foreign currency gains or losses, (c) significant gains or losses due to dispositions and acquisitions of business interests, (d) significant losses due to impairments, and (e) costs due to the early retirement of debt. AES believes that adjusted earnings per share better reflects the underlying business performance of the Company, and is considered in the Company’s internal evaluation of financial performance. Factors in this determination include the variability due to mark‐to‐market gains or losses related to derivative transactions, currency gains or losses, losses due to impairments and strategic decisions to dispose or acquire business interests or retired debt which affect results in a given period or periods. Adjusted earnings per share should not be construed as an alternative to earnings per share, which is determined in accordance with GAAP.

Definition of Subsidiary Distributions

Subsidiary distributions should not be construed as an alternative to Net Cash Provided by Operating Activities which is determined in accordance with GAAP. Subsidiary distributions are important to the Parent Company because the Parent Company is a holding company that does not derive any significant direct revenues from its own activities but instead relies on its subsidiaries' business activities and the resultant distributions to fund the debt service, investment and other cash needs of the holding company. The reconciliation of difference between the subsidiary distributions and the Net Cash Provided by Operating Activities consists of cash generated from operating activities that is retained at the subsidiaries for a variety of reasons which are both discretionary and non-discretionary in nature. These factors include, but are not limited to, retention of cash to fund capital expenditures at the subsidiary, cash retention associated with non-recourse debt covenant restrictions and related debt service requirements at the subsidiaries, retention of cash related to sufficiency of local GAAP statutory retained earnings at the subsidiaries, retention of cash for working capital needs at the subsidiaries, and other similar timing differences between when the cash is generated at the subsidiaries and when it reaches the Parent Company and related holding companies.

Safe Harbor Disclosure

This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES’ current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to, our accurate projections of future interest rates, commodity price and foreign currency pricing, continued normal levels of operating performance and electricity volume at our distribution companies and operational performance at our generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth investments at normalized investment levels and rates of return consistent with prior experience.

Actual results could differ materially from those projected in our 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, including, but not limited to, the risks discussed under Item 1A “Risk Factors” in AES’ 2008 Annual Report on Form 10-K. Readers are encouraged to read AES’ filings to learn more about the risk factors associated with AES’s business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.