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AES agrees to sell stake in Philippine subsidiary for $1.05B

AES Corp. is divesting its 51% equity interest in its Philippines subsidiary to SMC Global Power Holdings Corp. for $1.05 billion to pay down parent debt.

Under the deal, AES will sell its stake in Masin-AES Pte. Ltd., which owns the 630-MW Masinloc coal-fired power plant in operation, the 335-MW Masinloc 2 coal-fired power plant under construction, and the 10-MW Masinloc energy storage project in operation, according to a Dec. 18 news release.

SMC Global Power Holdings, a San Miguel Corp. subsidiary, will also purchase the remaining 49% equity interests in the assets from Thailand-based Electricity Generating Public Co. Ltd. for $850 million. The transaction has a total enterprise value of approximately $2.4 billion.

The transaction is anticipated to close in the first half of 2018, subject to regulatory approval by the Philippine Competition Commission.

The deal with SMC Global Power is expected to help AES achieve investment grade metrics one year early in 2019. "[W]e are establishing a goal to attain investment grade ratings by 2020," AES President and CEO Andrés Gluski.

The company is currently rated Ba2 by Moody's and BB by S&P Global Ratings. Fitch Ratings recently upgraded AES' long-term issuer default rating to BB from BB- with a positive outlook.

AES in early November upsized its asset sales target to realize $2 billion of proceeds from 2018 to 2020. During the Nov. 2 third-quarter earnings call, Gluski said AES plans to reduce the number of countries it operates in and focus on a less carbon-intensive fleet. AES Corp. is upsizing its asset sales target and now expects to realize $2 billion of proceeds from 2018 to 2020.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.