Brief Description:  Acquisition and long-term debt financing (fully non-recourse, off balance sheet) by AES Tiete,  subsidiary of The AES Corporation, of Cia de Geracao de Energia Eletrica Tiete (Tiete), one of the four power generators spun off from Cia Energetica de Sao Paulo (CESP) for privatization.  Tiete is a system of ten hydroelectric power projects with a capacity of 2,644MW. 

Country: Brazil.

Tiete is one of the few long-term debt financings of an acquisition (privatization) to close in Brazil this year and it closed solely because OPIC brought a unique political risk product to the deal.  That product (the formal name of which is the "Foreign Exchange Liquidity Facility Guaranty") was created by Ken Hansen, Chadbourne partner in the D.C. office.  This guaranty is a two-part product: insurance which kicks in when the currency dips and, the deal-clincher which provided comfort for the banks, a credit facility for automatic drawdowns to cover currency devaluations.  Additionally, the deal has a 10:1 debt/equity ratio - the total amount of the acquisition was US$330 million:  the bank financing totaled US $300 million and the equity invested was US$30 million.  It's also a very interesting deal because AES, when it purchased Tiete, agreed to increase electricity capacity in the region by 15% of the capacity it purchased (2,664MW).  AES has already begun placing 10MW hydrogen facilities in remote regions.  

Award Category:  Deal of the Year -  Sector : Power

Sponsors & Equity Share: The AES Corporation; Equity Share: 10%

Date of Financial Close:  June 30, 2001

Total Project Cost:  US$330 million

Total Debt: US$300 million

Total Equity: US$30 million

Arranger: Bank of America Securities, Inc.

Participants: Bank of America, Securities, Inc., AES Tiete

Legal Adviser to OPIC, Political Risk Insurer and Co-Senior Lender: Chadbourne & Parke LLP

Legal Adviser to Lender, Bank of America Securities, Inc.: Milbank Tweed