Some $30 million of AES Corp. paper was said to have traded in the 81-82 context last week, with market players saying the paper changed hands because of fears that a refinancing will not be completed. The paper has trickled down from the 84-87 range, where it was trading in early October following the refinancing announcement. "It would make sense that people would want to get out from under this thing," said Jon Kyle Cartwright, a fixed income analyst with Raymond James & Associates. "The credit markets should be closed to AES. The industry as a whole is having trouble getting financing." Repeated calls to Barry Sharp, cfo, and Sandra Ross, a company spokeswoman, were not returned by press time.
The refinancing plan in question includes a new $1.6 billion senior secured credit facility. The new loan has been tagged to take out the company's $850 million revolver set to mature in 2003, a $425 million term loan due in August 2003, and a $262.5 million term loan to the company's AES EDC Funding II subsidiary, which expires in July 2003. The one caveat is that, in addition to the 100% approval needed from its lending group, the new bank debt is contingent upon an exchange offer for up to $500 million of senior notes due in 2002 and 2003. Last week, the deadline for the exchange offer was extended to Dec. 3.
In its Nov. 13 8-K, the company admitted to the critical nature of the refinancing plan. "This refinancing is an integral part of the company's liquidity plan. The inability to complete this refinancing may adversely impact whether the company will or be able to pay its debt maturities as they come due," the filing said.