institutional presentation 3q11
TRANSCRIPT
1
InstitutionalNovember, 2011
2
AES Brasil Group
• Presence in Brazil since 1997
• Comprised of four companies in the sectors ofenergy generation and distribution
• 7.4 thousand AES Brasil People
• Investments 1998-2010: R$ 6.9 billion
• Good corporate governance practices
• Sustainable practices in businesses
• Safety as a main value
• Strong cash generation capacity
• 25% of minimum pay-out according to bylaws
• Differentiated practice of dividend distributionsince 2006:
– AES Tietê: 100% of net income on quarterlybasis
– AES Eletropaulo: distribution above theminimum required (25% of net income) onsemi-annually basis
3
(AES Eletropaulo) (AES Sul)
(AES Eletropaulo)
(AES Eletropaulo)
(AES Brasil)
(AES Tietê)
(AES Tietê)
(AES Eletropaulo)
(AES Tietê)
(AES Tietê)(AES Eletropaulo)
(AES Brasil)
AES Brasil widely recognized in 2009-2011
Quality and safety Management excellence Environmental concern
(AES Tietê) (AES Eletropaulo)
(AES Tietê)
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AESInfoenergy
AESUruguaiana
AESEletropaulo
AESTietê
AES Corp BNDES
C = Common SharesP = Preferred Shares
T = Total
Shareholding Structure
C 99.99%T 99.99%
C 76.45%P 7.38%T 34.87%
Cia. Brasiliana de Energia
C 50.00% - 1 shareP 100%T 53.85%
C 50.00% + 1 shareP 0.00%T 46.15%
C 71.35%P 32.34%T 52.55%
C 99.00%T 99.00%
AES Sul
T 99.70%
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24.2% 28.3% 39.5% 8.0%
8.5%56.2%19.2%16.1%
Others2Free Float
Listed Companies Shareholding Composition
1 – parent companies, AES Corp and BNDES, have equal voting capital on the Companies: 38.2% on AES Eletropaulo and 35.7% on AES Tietê 2 – includes Federal Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively
¹ ¹
6CEMIG AES BRASIL NEOENERGIA CPFL TRACTEBEL COPEL EDP LIGHT DUKE CESP
2.3 2.2
1.81.6
1.21.0
0.6 0.6
0.20.1
AES Brasil is the second largest group in electric sectorEbitda1 – 2010 (R$ Billion)
Net Income1 – 2010 (R$ Billion)
1 – excluding Eletrobrás Source: Companies’ financial reports
CEMIG AES BRASIL CPFL NEOENERGIA TRACTEBEL CESP EDP LIGHT COPEL DUKE
4.54.2
3.43.0 2.6
2.0 1.6 1.6 1.5
0.6
7Source: ANEEL (Regulator) – BIG (August, 2011)
AES Tietê is the 2nd largest among private
generation companies and 10th largest overall
10 largest gencos correspond to 62% of the total
installed capacity
There are three mega hydropower plants under
construction in the North region of Brazil with 18 GW
in installed capacity
– Santo Antonio and Jirau (Madeira River): 7 GW
– Belo Monte (Xingu River): 11 GW
Generation Installed Capacity (MW) - 2011Privately held companies
Total Installed Capacity: 115 GW
AES Tietê is an important player among private energy generators
AES TIETÊ 2% DUKE
2%TRACTEBEL
6%
COPEL4%
PETROBRÁS 5%
CEMIG6%
ITAIPU6%
CESP6%
Eletronorte8%FURNAS
8%
CHESF9%
Others37%
8
AES Brasil is the largest distribution group in Brazil
Consumption (GWh) - 2010
Consumers – Dec/2010
• 64 discos in Brazil distributing 419 TWh
• AES Brasil is the largest electricitydistribution group in Brazil:
– AES Eletropaulo: 43 TWh distributed,
representing 10.3% of the Brazilian
market
– AES Sul: 9 TWh distributed,
representing 2.2% of the Brazilian
market
There is a limited opportunity forcompetition in Brazil as discos arerestricted to operate within theirconcession areas
13%
12%
10%
7%6%6%
6%
40%
12%
12%
12%
16%7%7%
5%
30%
A
AES Brasil
CPFL Energia
Cemig
Neo Energia
Copel
Light
EDP
Outros
10
AES Tietê Overview
17 hydroelectric plants within the states of São Paulo
and Minas Gerais
30-year concession valid until 2029; renewable for
another 30 years
Installed capacity of 2,659 MW, with physical guarantee1
of 1,280 MW
Almost all the amount of energy that AES Tietê can sell
in the long term is contracted to AES Eletropaulo until
the end of 2015
As a pure energy generator, AES Tietê can only invest in
its core business
343 employees
Generation facilities
1 - Amount of energy allowed to be long term contracted
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Hydro: 73%
SHPP: 4%
Natural gas: 8%
Biomass: 5%
Oil: 3%
Nuclear: 2%
Coal: 2%Diesel: 1%Wind: 1%Steam: 1%
Others: 10% Hydro: 67%
SHPP: 4%Natural gas: 7%
Biomass: 5%
Oil: 5%
Nuclear: 2%Coal: 2%Diesel: 1%
Wind: 7%
Steam: 0%
Others: 17%
Total installed capacity is expected to reach 171 GW by 2020
Brazilian energy matrix is not expected to materially change over the next 10 years
1- Source: EPE (Energetic Research Company), Ten-year Energy Plan 2020, May/2011 2 - Small Hydro Power Plant
Energy sector in Brazil:supply perspectives
Installed Energy Capacity in Brazil1
2020: 171 GW2011: 115 GW
2
2
12
Distribution CompaniesTrading
Companies
Distribution Companies
Free Clients
Auctions
Energy sector in Brazil:contracting environment
Regulated Market Free Market
Spot Market PPAs1
1 – Power Purchase Agreement
• Main auctions (reverse auctions):
– New Energy (A-5): Delivery in 5 years, 15-
30 years regulated PPA1
– New Energy (A-3): Delivery in 3 years, 15-
30 years regulated PPA
– Existing Energy (A-1): Delivery in 1 year,
5-15 years PPA
Trading Companies
Free Clients
2008 2009 2010 9M10 9M11
11,138 11,108 11,108 8,578 8,045
1,680 2,331 1,980
1,554 1,535
331 1,150 1,340
1,135 1,188
117 301
215 346
13
Energy Generation (MW average1) Billed Energy (GWh)
Billed energy growth due to high availability and bilateral contracts
1- Generated energy divided by the amount of hours 2-Leap year 3- Energy Reallocation Mechanism
AES Eletropaulo MRE Spot market Other bilateral contracts3
2
13,148
14,706 14,729
11,48311,114
-3%
118%
130% 125%
2008 2009 2010 9M10 9M11
1,512
1,6651,599
1,703
1,550
Generation - Mwavg
129%126%
Generation/Physical guarantee
2009 2010 2011 (e) 9M10 9M11
43 70
151
46
105 13
12
18
7
14
56
82
169
53
119
Investments New SHPPs*
14
Investments (R$ million) 9M11 Investments
Investments in the modernization of Nova Avanhandava, Ibitinga and Caconde
power plants
*Small Hydro Power Plants
+122%
84%
12%4%
Equipment and Modernization
New SHPPs*
IT projects
15
Growth opportunities
Perspectives
• Project features- Combined cycle using natural gas
- Estimated investment of R$ 1.1 billion
- Natural gas consumption: 2.5 million m3/day
- 550 MW of installed capacity
• Next events
• Updates
- Environmental license obtained on October, 20th 2011 (valid for 5 years)
- Gas unavailability for A-5 Energy Auction in 2011
- Obtain installation license- Participate in A-3 Auction expected to be realized in
March 2012- Evaluate energy offering in free market
(54)2008 2009 2010 9M10 9M11
1,309 1,311
9 1,254 1,255 1,320
1,035 1,048
Recurring Non-recurring
16
Ebitda (R$ million)Net Revenue (R$ million)
Financial highlights*
(*) 2009 and 2010 numbers in IFRS
78% 75% 75% 78% 78%
Ebitda margin
+1%+1%
2008 2009 2010 9M10 9M11
1,605 1,670 1,754 1,334 1,344
816 784542
31
28
692 706
737
570 582
100%
110%117%
12.0%11.0% 11.0%
0 , 0 %
2 , 0 %
4 , 0 %
6 , 0 %
8 , 0 %
1 0 , 0 %
1 2 , 0 %
1 4 , 0 %
1 6 , 0 %
0%
20%
40%
60%
80%
100%
120%
17
Net Income and Dividend Pay-out1 (R$ million)
1 – Gross amount (*) 2009 and 2010 numbers in IFRS
Practice of total net income distribution on quarterly basis*
(74)(36)
(78)
Recurring Non-recurring IFRS EffectPay-out Yield Pref
(40)
-5%+2%
2008 2009 9M10 9M112010
0.3x 0.3x 0.3x 0.3x 0.4x
2008 2009 2010 9M10 9M11
0.4 0.4 0.4 0.5 0.6
18
Debt profile
Net Debt (R$ billion) Amortization Schedule – Principal (R$ million)
• September, 2011:– Average debt cost in 9M11 was 115% of CDI1 p.a. or 15% p.a.– Average debt maturity of 2.8 years– Net debt: R$ 0.6 billion– Net debt/EBITDA: 0.4x
1 – Brazilian Interbank Interest Rate
Net debt / EBITDA
Net debt
2013 2014 2015
300 300 300
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Capital Markets
2 – Index: 12/30/2010 = 100
AES Tietê X Ibovespa X IEE Daily Avg. Volume (R$ thousand)
• Common shares and preferred shares listed on BM&FBOVESPAunder the tickers GETI3 and GETI4
• ADRs at US OTC Market under the tickers AESAY and AESYY
Preferred Common
1 – Total Shareholder Return
YTD2
2008 2009 2010 9M11
5,468 8,086 9,683 9,458
2,692 2,101
4,239 3,370 8,160 10,187
13,922 12,828
IBOVESPAAES TIETÊ PF TSR1
50
70
90
110
dez-10 mar-11 jun-11 set-11
-2%
+5%
-25%
+2%
IEE
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AES Eletropaulo Overview
Largest electricity distribution company in Latin America
Serving 24 municipalities in the São Paulo Metropolitan area
Concession contract valid until 2028; renewable for another 30
years
Concession area with the highest GDP in Brazil
45 thousand kilometers of lines, 1.2 million electricity poles and
6.1 million consumption units in a concession area of 4,526 km2
Total distributed volume of 43 TWh in 2010
As a pure energy distributor, AES Eletropaulo can only invest
within its concession area
5,647 employees
Concession Area
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Regulatory Opex
(PMSO)
Investment Remuneration
Depreciation
Energy Purchase
TransmissionSector Charges
Tariff Reset and Readjustment
• Tariff Reset is applied each 4 years for AES Eletropaulo − Base date: Jul/2011− Parcel A: costs pass trough the tariff− Parcel B: costs are set by ANEEL
• Tariff Readjustment: annually − Parcel A costs pass trough the tariff− Parcel B cost are adjusted by IGPM +/- X(1) Factor
RemunerationAsset Base
X Depreciation
X WACC
Regulatory Ebitda
Parcel A - Non-Manageable Costs
Parcel B - Manageable Costs
• Remuneration Asset Base:– Applicable investments used to
calculate the Investment Remuneration (applying WACC) and Depreciation
• Regulatory Opex:– Efficient cost structure, determined by
ANEEL (National Electricity Agency)
• Parcel A Costs− Non-manageable costs that totally
pass- through to the tariff− Losses reduction improve the pass-
through effectiveness
1 – X Factor: index that capture productivity gains
Energy sector in Brazil:regulatory methodology
23
Energy sector in Brazil:demand perspectives
4.4% p.a.
4.6% p.a
Macroeconomic Scenario
Brazilian Consumption Evolution (TWh)
EPE’s1 Assumptions:
• Emerging markets will grow faster than
developed economies, positively affecting
industrial sector in Brazil;
• Recovery of investment rates, favorable
credit conditions and labor market growth
• Domestic economy growth due to the
World Cup and Olympic Games
• Income elasticity of energy demand (2010-
2020): 0.98
• Households growth: 2.2% p.a
1 - Source: EPE (Energetic Research Company)
2005-2009 2010 2011-2015 2016-2020
World 3.4 4.6 4.5 3.9Brazil 3.6 7.2 5.0 5.0
GDP - Annual growth
2004 2005 2006 2007 2008 2009 2010 2011 (e) 2020
331 346 358 378 393 389419 441
659
24
Consumption Evolution
Total Market1 (GWh) 9M11 Consumption Share1 (GWh)
36%
14%
18%
26%
6%
1 – Net of own consumption
+5%
36%
26%
18%
13%
6%
Residential
Commercial
Free Clients
Industrial
Others
Captive Market Free Clients
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
2008 2009 2010 9M10 9M11
33.860 34.436 35.43426.352 27.523
7.383 6.832 7.911
5.846 6.246
41.243 41.26943.345
32.198 33.769
25
Investments amounted R$ 530 million in 9M11
Investments Breakdown (R$ million) Investments 9M11 (R$ million)
+38%
0
100
200
300
400
500
600
700
800
2009 2010 2011(e) 9M10 9M11
478654 715
362513
37
2829
22
16516
682744
383530
Capex Paid by Customers
166
128
125 27
21 16
47
Maitenance
Client Service
System Expansion
Losses Recovery
IT
Paid by the Clients
Others
26
Action Plan 2011 - 2012:
¹ Equipment purchase, increase in maintenance and construction and prunning teams
Action Plan 2011 – 2012: Action Details
• Addition of 120 emergency teams, totaling 473 teamsduring summer season
• Expand capacity on clients attendance:–increase 38% call center positions (150positions)– contract 300 positions for call center in standby condition– automated attendance increase from 2thousand call / hour to 54 thousand call hour– double SMS capacity to 100 thousand day
• Deployment of mobile agency and field actions toreceive indemnifications requests
• Increase on pruning, maintenance and constructionteams (580 electricians)
Investments
Operational expenses
Emergency attendance
Preventive maintenance¹
Customer attendance
Tree trimming
Other process improvements
99
42
35
7
23
26
9
In 2011: R$ 48 million in investiments and R$ 81 million in operational expenses
68
43
2
7
122
27
SAIFI - System Average Interruption Frequency Index SAIDI - System Average Interruption Duration Index
SAIDI & SAIFI
8th5th 7th1st7th 3rd
Sources: ANEEL, AES Eletropaulo and ABRADEE
ABRADEE ranking position among the 28 utilities with more than 500 thousand customers
► 2011 SAIDI ANEEL Reference: 8.68 hours ► 2011 SAIFI ANEEL Reference: 6.93 times
2008 2009 2010 9M10 9M11
9.20 11.86 10.68 11.95 10.30
SAIDI (hours)
10.92 10.09
9.32
SAIDI Aneel Target
8.41 7.87
7.39
SAIFI Aneel Target
2008 2009 2010 9M10 9M11
5.206.17 5.43 6.06 5.42
SAIFI (times)
28
Losses (%)
1 – Current technical losses used retroactively as a reference
Collection rate (% over Gross Revenues)
Operational Indexes
2008 2009 2010 9M10 9M11
6.5 6.5 6.5 6.5 6.5
5.1 5.3 4.4 4.5 4.1
11.6 11.810.9 11.0 10.6
2008 2009 2010 9M10 9M11
98.5101.1 102.4 100.3 103.0
Technical Losses ¹ Commercial Losses
29
Ebitda (R$ million)Net Revenues (R$ million)
Financial Highlights*
(*) 2009 and 2010 numbers in IFRS
+5%
- 8%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2008 2009 2010 9M10 9M11
7,530
8,7869,697
7,046 7,371
RecurringRegulatory assets and liabilitiesNon-recurring
2008 2009 2010 9M10 9M11
1,607 1,486 1,6301,325 1,326
-202
357
245 332 89
87
426
301 58 1,696 1,775
2,413
1,870 1,716
301 – Gross amount
Net Income and Dividend Payout1 (R$ million)
Practice of dividend distributionon semi-annually basis*
(*) 2009 and 2010 numbers in IFRS
-15%
0 Q 0 Q
Net Income - ex one-off and regulatory assets and liabilitiesRegulatory assets and liabilitiesOne-off
101.5% 93.4%
115.4%
20.3% 20.4%
28.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
Pay-out Yield PN2008 2009 2010 9M10 9M11
698 689836
583 582
93
162
171 214
329374
350
282 89
1,027 1,156
1,348
1,037 885
31
Amortization Schedule – Principal (R$ million)
1 – Brazilian Interbank Interest Rate 2 – Pension Fund
• September, 2011:– Average debt cost in 3Q11 was 112% of CDI1 or 12.6% p.a.– Average debt maturity of 6.9 years– Net debt: R$ 2.9 billion – Net debt/EBITDA of 1.2x adjusted with Pension Fund
Debt ProfileNet Debt (R$ billion)
²
Local Currency (ex FCesp) Fcesp
2008 2009 2010 9M10 9M11
2.5 2.7 2.4 2.6 2.9
Net Debt (R$ billion)
1.5x1.4x
0.9x
Net Debt/Ebitda Adjusted with Fcesp
1.0x 1.2x
2011 2012 2013 2014 2015 2016 2017 2018 2019 -2028
281 301532
226 335 225375
180
80 45
48
5155
5862
847
22
360 346
579
277390
283437
1,047
32
Average Daily Volume (R$ thousand)
Capital Markets
AES Eletropaulo X Ibovespa X IEE
• Common shares and preferred shares listed on BM&FBOVESPA under thetickers ELPL3 and ELPL4
• ADRs at US OTC Market
1 – Index: 12/30/2010 = 100
A
65
75
85
95
105
115
125
Dec-10 Mar-11 May-11 Jul-11 Sep-11
9M11 1
Ibovespa IEE AES Eletropaulo PN AES Eletropaulo TSR²
+ 2%
- 24 %
- 11%
+ 11%
Ex dividends: 04/30/2011
A
15,000.00
17,000.00
19,000.00
21,000.00
23,000.00
25,000.00
27,000.00
29,000.00
2008 2009 2010 9M11
25,677
21,960
24,496
28,500
B
B Ex dividends: 08/11/2011
2 – Total Shareholder Return
Social Responsibility
34
• 300 benefited children between 1 and 6 years old
• Own investments amounting R$ 2.1 million in 2010
• Units: Santo Amaro and Guarapiranga
• Over 5.2 thousand children, teenagers,
and adults have been benefited
• Own and incentive investments:
approximately R$ 17 million in 2010
• Activities of acting, dancing, circus arts, visual arts, music, gymnastics, courses of income generation, and education of safe use of electrical power and the right use of natural resources
• 7 operating units
“Casa da Cultura e Cidadania” Project
“Centros Educacionais Infantis Luz e Lápis” - Project
Social Responsibility
35
Social Responsibility
• Launched in December, 2008;• Objective: to get the co-workers committed to the transformation of low income communities and development of
non-governmental institutions;• 1,199 volunteers
Volunteering Program
Acting to Transform
Distributing Energy of
Good
Specific social mobilization or emergency campaign.
Winter clothes, Christmas campaign, among others.
Opportunities for volunteering in social organizations, which are
partners of AES Brazil
Co-workers can enroll in volunteer activities available at AES Brazil volunteering portal
since September/09www.energiadobem.com.br
Attachments
37
Costs and Expenses
Costs and operational expenses1 (R$ million)
1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses
2
Energy Purchase, Transmission and Connection Charges, and Water Resources
Other Costs and Expenses
2008 2009 2010 9M10 9M11
239 214 246174 181
112 201187
125 115
351
415 433
299 296
2008 2009 2010 9M10 9M11
485700 647
461 475
329
352 443
308 368
379
254 165
202 67
1,193 1,306
1,255
970 909
Personnel and Payroll Material and Third Party Others
38
Costs and Expenses
Costs and operational expenses1 (R$ million)
1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses3 – In 2009 expenses with Pension Fund increased due to inflation rate (IGP-M) increase and reversal of R$ 63 million in 4Q08 caused by actuarial liability adjustment
PMS and Other Expenses (R$ million)
32008 2009 2010 9M10 9M11
4,700 5,125 5,4904,036 4,220
1,1931,306
1,255
970 909
5,8936,431
6,745
5,006 5,129
Energy Supply and Transmission Charges PMS² and Others Expenses
Action Plan: R$ 242 million with increase of R$ 122 million in emergency teams
39
Concluded in September 2011
Concluded until November 2011
availability of 353 emergency teams 38% increase in call center positions (150 positions) doubling of SMS receipt capacity to 100 thousand / day training of 276 maintanance and construction electricians hiring of 30 addicional pruning electricians
training of 240 electricians for emergency attendances in powered grid begginig of 276 maintanance and constructions electritcians activitiesand training conclusion of other 304 300 addicional stand by positions in call center for emergencysituations increase of call center service capacity by 27 times from 2 thousand to54 thousand calls/hours
December to March increase of 120 emergency teams, totaling 473 teams
40
Expansion Requirement of 15% Increase installed capacity in Sao Paulo State by 15% (400 MW), either in greenfield projects or through long term purchase agreement with new plants
The obligation was supposed to be accomplished by December 2007, however AES Tietê was not able to comply with this requirement due to the following restrictions:
– Insufficient remaining hydro resources within the State of São Paulo
– Environmental restrictions
– Insufficiency of gas supply / timing issue
– More restricted regulation on energy sale established by the New Model of Electric Sector (Law # 10,848/2004) which eliminated the self dealing
• In August 2008, Aneel informed that the issue is not linked to the concession
• On July 27th, 2009, AES Tietê was notified by the State Government Attorney’s Office to present arguments on compliance with the expansion obligation
– The Company filed a response on July, 29th, which exhausts the procedure for notification. Possible deployment depends on new manifestation of the Prosecution
• Popular law action against Federal Government, Aneel, AES Tietê, and Duke
– 2008 – In October, defense filed on first instance by AES Tietê; In December, the author replied AES Tietê defense
– 2010 – In September, due to the plaintiffs failure to specify the individuals that should be named as Defendants, a favorable decision was rendered by the 1st Instance Court (but there can be appeals)
• On September 6th, 2011, the Company was summoned to answer a claim filed by the State of São Paulo requesting AES Tietê to fulfill, within 24 months, the obligation to expand its installed capacity. Due to a a preliminary injunction granted in favor of the State of São Paulo, the Company had to present its plan for the compliance with the Expansion Requirement by December 12th
– Against the injunction, AES Tietê filed an appeal to the State of São Paulo Court of Appeals, which, on November 3rd, granted a relief order which suspended the 60-day-period that the company would have to present its plans and stayed the injunction granted by the First Instance Court
• Efforts being made by the Company to meet the obligation:
– Signing of two long-term energy contracts, from sugar cane biomass, totaling 10 MW
– SHPP São Joaquim, which started operating in July, 2011 with 3 MW of installed capacity, in São João da Boa Vista (State of São Paulo)
– SHPP São João, with 4 MW of installed capacity, in São João da Boa Vista (State of São Paulo), to be operational in 2011
– Project development of a 550MW gas fired thermal plant, located in Canas (State of São Paulo)
41
Next Steps:
1 - The auditing procedure (AP) is expected to
begin by the 1st
half of 2012
2 – AP is expected to be concluded in at least 6 months
3 - After AP’s conclusion, a 1st level court
decision will be released
4 - Appealing to the 2nd instance
court
5 - Foreclosure starts.
Presentation of guaranty
6 - Request to withdraw the
guaranty
7 - Appeals to the 3rd instance
courts
Eletrobras Lawsuit
Nov/86
Stated-owned Eletropaulo
borrowed money from Eletrobras
Dec/88
State-owned Eletropaulo and
Eletrobras disagreed on how
to calculate interest over that loan and a lawsuit
was started
Sep/03
The 2nd level of court excluded
AES Eletropaulo from the
discussion based on the spin-off
agreement
Jun/06
The SCJ decided to send the
Execution Suit back to the 1st
level of court
May/09
Eletrobras requested the 1st
level of court judge to appoint
an expert
Jan/98 Oct/05
Eletrobras and CTEEP appealed
to the Superior Court of Justice
(SCJ)
Dec/10Sep/01
Eletrobras, after winning the
interest calculation
discussion, filed an Execution Suit to collect the due
amount
State-owned Eletropaulo was spun-off into four companies and, according to our understanding based on the
spin-off agreement, the discussion was transferred to
CTEEP
Privatization event . State-
owned Eletropaulo
became AES Eletropaulo
Apr/98
Eletrobras requested the
beginning of the appraisal
procedure, which is under 1st. instance
court analysis
Jul/11
On July 7, the judge determined Eletropaulo and
CTEEP to present their
considerations, which occurred in
August
42
Any party with an intention to dispose its shares should first provide the other party the right to buythat participation at the same price offered by a third party
Once the offering party exercises the Drag Along clause, offered party is obligated to dispose of all its shares at the time, if the Right of 1st Refusal is not exercised by offered party
In the case of change in Brasiliana’s control, tag along rights are triggered for the following companies (only if AES is no longer controlling shareholder):
– AES Eletropaulo: Tag along of 100% in its common and preferred shares– AES Tietê: Tag along of 80% in its common shares– AES Elpa: Tag along of 80% in its common shares
Shareholders AgreementOn Dec 2003 AES and BNDES signed a Shareholders’ Agreement to regulate their relationship as shareholders ofBrasiliana and its controlled companies. The Agreement is available at www.aeseletropaulo.com.br/ri
Shareholders can dispose its share at any time, considering the following terms:
Right of 1st refusal
Drag alongrights
Tag alongrights
43
Brazilian Main Taxes
AES Eletropaulo
• Income Tax / Social Contribution:
– 34% over taxable income
• ICMS: 22% over Revenue (average rate)
– Residential: 25%
– Industrial and Commercial: 18%
– Public Entities: free
• PIS/Cofins:
– 9.25% over Revenue minus Costs
AES Tietê
• Income Tax / Social Contribution:
– 34% over taxable income
• ICMS (VAT tax)
– deferred tax
• PIS/Cofins (sales tax):
– Eletropaulo´s PPA: 3.65% over Revenue
– Other bilateral contracts: 9.25% over Revenue
minus Costs
The statements contained in this document with regard to the business prospects, projected operating and financialresults, and growth potential are merely forecasts based on the expectations of the Company’s Management inrelation to its future performance. Such estimates are highly dependent on market behavior and on the conditionsaffecting Brazil’s macroeconomic performance as well as the electric sector and international market, and they aretherefore subject to changes.
Contacts:[email protected]
+ 55 11 2195 7048