AES to recognize $800M-$1B loss related to bankrupt Chilean hydroelectric plant

AES Corp. expects to recognize an after-tax loss of $800 million to $1 billion in fourth-quarter results associated with a loss of control at subsidiary Alto Maipo SpA, a Chilean hydropower producer that has filed for bankruptcy.

Alto Maipo, a direct subsidiary of AES Andes SA, filed for Chapter 11 Nov. 17 in the U.S. Bankruptcy Court for the District of Delaware.

AES said in a Nov. 17 filing it is no longer considered to have control over Alto Maipo and will derecognize it from its consolidated statement of financial position of assets and liabilities. The company will also recognize an after-tax loss of approximately $800 million to $1 billion, net of controlling interests, in its consolidated financial statements for the fourth quarter, associated with the loss of control attributable to the former controlling interest.

Alto Maipo's bankruptcy filing follows unexpected challenges during the construction of an unfinished hydroelectric plant built to run on snowmelt from the Andes mountains, according to a report by Dow Jones Newswires. Global warming has reduced the amount of water available, according to the company's bankruptcy filing, with low power prices in Chile also contributing to the project's hurdles. The company owes more than $1.5 billion in senior debt.