The AES Corporation (AES, Financial) has successfully completed its previously announced offering of $500 million aggregate principal amount of its 6.950% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2055. This strategic financial maneuver was executed under AES's automatic shelf registration statement filed with the Securities and Exchange Commission (SEC).
The public offering price of the Notes was set at 99.985% of the principal amount. AES plans to utilize the net proceeds from this offering to repay existing indebtedness, including borrowings under the revolving facility of its senior credit facility, and for general corporate purposes. This move is expected to enhance the company's financial flexibility and support its ongoing corporate strategies.
The issuance of the Notes was facilitated through an Underwriting Agreement with prominent financial institutions including J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, Morgan Stanley & Co. LLC, and Credit Agricole Securities (USA) Inc. The Notes were issued on December 6, 2024, under a Subordinated Indenture, supplemented by a second supplemental indenture, with Deutsche Bank Trust Company Americas serving as Trustee.
Interest on the Notes will accrue from December 6, 2024, and is payable semi-annually in arrears on January 15 and July 15 of each year, starting July 15, 2025, until maturity on July 15, 2055. The Notes will bear interest at a rate of 6.950% per annum until July 15, 2030, after which the rate will reset based on the Five-year U.S. Treasury Rate plus a spread of 2.890%.
AES retains the option to defer interest payments on the Notes for up to 20 consecutive semi-annual periods, provided no event of default has occurred. Additionally, the company may redeem the Notes under specified conditions, offering flexibility in managing its debt obligations.
This financial initiative underscores AES's commitment to maintaining a robust capital structure while pursuing growth opportunities and enhancing shareholder value.
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