AES Corp. is considering further divestitures on top of its previously planned $2 billion asset sales target for the period from 2018 to 2020.

Andres Gluski, the company's president and ceo, said on its fourth quarter 2018 earnings call on Feb. 27 that the company is on track to realize and potentially exceed the $2 billion proceeds goal.

“Going forward, we will continue to fine-tune our portfolio,” he said. “So there may be additional sales but as part of the portfolio. So they may not be sort of wholly exiting. They may be, like we did it at sPower, selling down a portion and reinvesting that money at higher return. So that remains part of our modus operandi going forward.”

He was referring to the recent sale by AES and Alberta Investment Management Corp. of a stake in sPower’s 1.3 GW operating wind and solar portfolio (PFR, 1/23).

“There wouldn’t necessarily be a major divestiture like the Eletropaulo Brazilian utility, but it could be a minority interest,” says Charles Fishman, an equity analyst for Morningstar based in St. Louis, commenting on the new information. “And Tom O’Flynn is full-time on that.” 

O’Flynn, the company's former cfo and executive vice president, moved to a new role within the company at the beginning of the year to focus on raising third-party capital (PFR, 11/8). He was replaced by former deputy cfo Gustavo Pimenta.

“AES acquired a 50% interest in sPower in 2017 and then sold off 24% last year," says Fishman. "With Tom totally focused on this activity, I expect the total divestitures and selling of minority interests could go north of the $2 billion AES had previously outlined.”  

During his six-year tenure as cfo, Flynn oversaw asset sales that generated proceeds totaling $5 billion and a 40% reduction in parent company debt as the company exited from 13 countries.

“Tom will be working on the more systematic way of getting partnership money into our projects,” said Gluski on the call. “Stay tuned."

Problem child

Fishman points to the 670 MW Maritza Iztok coal-fired complex in Bulgaria as an asset that could be divested. “It’s a wonderful coal plant but it’s a problem child.”

The European Commission's competition department, the DG Comp, is reviewing the Maritza project's 15-year power purchase agreement with state-owned utility NEK for potential infringements of state aid rules.

"Since the renegotiation of the PPA in April 2016, Maritza has been collecting receivables from NEK in a timely manner," reads AES's annual report. "Maritza believes that its PPA is legal and in compliance with all applicable laws."

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