The AES Corporation (AES)

Sale of EDC

        On February 22, 2007, the Company entered into a definitive agreement with PDVSA dated February 15, 2007, to sell all of its shares of EDC, a Latin America distribution business reported in the Latin America Utilities segment, for $739 million net of any withholding taxes. In addition, the agreement provided for the payment of a US$120 million dividend in 2007. On March 1, 2007, the shareholders of EDC approved and declared a US$120 million dividend to all shareholders on record as of March 9, 2007. A wholly-owned subsidiary of the Company was the owner of 82.14% of the outstanding shares of EDC, and therefore, on May 31, 2007, this subsidiary received approximately US$97 million in dividends.

        The sale of EDC and the payment of the purchase price occurred on May 16, 2007. During the first quarter of 2007, the Company recognized an impairment charge of approximately $638 million related to this sale. As a result of the final disposition of EDC in May 2007, the Company recognized an additional impairment charge of approximately $38 million net of income and withholding taxes. The total impairment charge of $676 million represented the net book value of the Company's investment in EDC less the selling price. The impairment expense is included in the loss from disposal of discontinued business line item on the statement of operations for the nine months ended September 30, 2007.

Sale of EDC

On February 22, 2007, the Company entered into a definitive agreement with Petróleos de Venezuela, S.A. (“PDVSA”) dated February 15, 2007, to sell all of its shares of EDC, a Latin America distribution business reported in the Latin America Utilities segment, for $739 million net of any withholding taxes. In addition, the agreement provided for the payment of a US$120 million dividend in 2007. On March 1, 2007, the shareholders of EDC approved and declared a US$120 million dividend, payable on March 16, 2007, to all shareholders on record as of March 9, 2007. A wholly-owned subsidiary of the Company is the owner of 82.14% of the outstanding shares of EDC, and therefore, on May 31, 2007, this subsidiary received approximately US$97 million in dividends (representing approximately $99 million in gross dividends offset by fees).

The agreement provided that PDVSA would acquire the Company’s EDC common shares in a tender offer. PDVSA commenced and publicly announced the commencement of concurrent tender offers in Venezuela and the United States (the “Offers”) on April 9, 2007. The Offers provided for the purchase of 2,704,445,687 of EDC common shares at a U.S. Dollar equivalent amount of $0.2734 per common share, which is consistent with the price per share implied by the purchase price within the agreement. The closing of the Offers occurred on May 8, 2007, and the actual transfer of the shares along with payment of the purchase price occurred on May 16, 2007.

We have therefore concluded that EDC should be classified as “held for sale” as of March 31, 2007 and reflected as such on the financial statements for the three months ended March 31, 2007 and 2006. The Company recognized an impairment charge of approximately $638 million net of income and withholding taxes, representing the net book value of the Company’s investment in EDC less the selling price. The Company impaired the carrying value of EDC’s electric generation and distribution assets to their net realizable value. The impairment expense is included in the loss from disposal of discontinued business line item on the statement of operations for the three months ended March 31, 2007.

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Sale of EDC

On February 22, 2007, the Company entered into a definitive agreement with PDVSA dated February 15, 2007, to sell all of its shares of EDC, a Latin America distribution business reported in the Latin America Utilities segment, for $739 million net of any withholding taxes. In addition, the agreement provided for the payment of a US$120 million dividend in 2007. On March 1, 2007, the shareholders of EDC approved and declared a US$120 million dividend, payable on March 16, 2007, to all shareholders on record as of March 9, 2007. A wholly-owned subsidiary of the Company was the owner of 82.14% of the outstanding shares of EDC, and therefore, on May 31, 2007, this subsidiary received approximately US$97 million in dividends (representing approximately $99 million in gross dividends offset by fees).

The sale of EDC and the payment of the purchase price occurred on May 16, 2007. During the first quarter of 2007, the Company recognized an impairment charge of approximately $638 million related to this sale. As a result of the final disposition of EDC in May 2007, the Company recognized an additional impairment charge of approximately $38 million net of income and withholding taxes. The total impairment charge of $676 million represented the net book value of the Company’s investment in EDC less the selling price. The impairment expense is included in the loss from disposal of discontinued business line item on the statement of operations for the six months ended June 30, 2007.

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Sale of EDC

On February 22, 2007, we entered into a definitive agreement with Petróleos de Venezuela, S.A., (“PDVSA”), pursuant to which we have agreed to sell to PDVSA all of our shares of EDC. The agreement is dated as of February 15, 2007.

Subject to the terms and conditions in the agreement, PDVSA has agreed to pay us a purchase price of US$739 million at closing, net of any withholding taxes. In addition, the agreement provided for the payment of a US$120 million dividend in 2007. On March 1, 2007, the shareholders of EDC approved and declared a US$120 million dividend, payable on March 16, 2007, to all shareholders on record as of March 9, 2007. A wholly-owned subsidiary of the Company is the owner of 82.14% of the outstanding shares of EDC, and therefore, on March 16, 2007, this subsidiary received the equivalent of approximately US$99 million in Bolivares that is currently being held in trust at a U.S. bank until the funds can be converted to U.S. Dollars. Under the terms of the purchase and sale agreement with the Republic of Venezuela, PDVSA has agreed to ensure that the Company’s portion of the dividend is converted by the Venezuelan government’s Foreign Exchange Commission, CADIVI, from Bolivares into U.S. Dollars at the current official exchange rate within 90 days of the dividend payment date. As of the date of this filing, the conversion of the Company’s portion of the dividend from Bolivares to U.S. Dollars has been submitted to CADIVI and is awaiting their approval.

The agreement provided that PDVSA would acquire our EDC common shares in a tender offer. PDVSA commenced and publicly announced the commencement of concurrent tender offers in Venezuela and the United States (the “Offers”), on April 9, 2007. The Offers provided for the purchase of 2,704,445,687 of EDC common shares at a U.S. Dollar equivalent amount of $0.2734 per common share, which is consistent with the price per share implied by the purchase price within the agreement. The closing of the Offers occurred on May 8, 2007 and the actual transfer of the shares along with payment of the purchase price occurred on May 16, 2007.

As a result of signing this agreement, we have concluded that a material impairment of our investment in EDC has occurred, which was recorded in the first quarter ending March 31, 2007. This material impairment represents the net book value of our investment less the estimated purchase price. Management recorded a pre-tax, non-cash impairment charge of $638 million.

We purchased a controlling interest in EDC in 2000. EDC is the largest private electric utility in Venezuela. It is a provider of power and light to approximately one million customers in the Caracas metropolitan area. EDC also owns and operates five generation plants with a total of 2,616 MW of generation capacity. These facilities collectively represent approximately 14% of the electricity consumed in Venezuela.

For the year ended December 31, 2006, EDC represented 5% of AES’ consolidated revenues and 12% of the Latin America Utilities segment revenues, 5% of AES’ consolidated gross margin and 17% of the Latin America Utilities segment gross margin. In addition, EDC represented 37% of AES’ consolidated net income and 36% of basic earnings per share. Excluding the net after-tax loss impact of $512 million related to the sale of Eletropaulo shares and debt restructuring, EDC represented 12% of

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AES’ consolidated net income and 12% of basic earnings per share. AES received a dividend of approximately $101 million from EDC in 2006. EDC’s five generation plants represented approximately 7% of AES’ approximate 35 gigawatts of capacity installed.

Sale of EDC

On February 22, 2007, the Company entered into a definitive agreement with Petróleos de Venezuela, S.A. (“PDVSA”) dated February 15, 2007, to sell all of its shares of EDC, a Latin America distribution business reported in the Latin America Utilities segment, for $739 million net of any withholding taxes. In addition, the agreement provided for the payment of a US$120 million dividend in 2007. On March 1, 2007, the shareholders of EDC approved and declared a US$120 million dividend, payable on March 16, 2007, to all shareholders on record as of March 9, 2007. A wholly-owned subsidiary of the Company is the owner of 82.14% of the outstanding shares of EDC, and therefore, on May 31, 2007, this subsidiary received approximately US$97 million in dividends (representing approximately $99 million in gross dividends offset by fees).

The agreement provided that PDVSA would acquire the Company’s EDC common shares in a tender offer. PDVSA commenced and publicly announced the commencement of concurrent tender offers in Venezuela and the United States (the “Offers”) on April 9, 2007. The Offers provided for the purchase of 2,704,445,687 of EDC common shares at a U.S. Dollar equivalent amount of $0.2734 per common share, which is consistent with the price per share implied by the purchase price within the agreement. The closing of the Offers occurred on May 8, 2007, and the actual transfer of the shares along with payment of the purchase price occurred on May 16, 2007.

We have therefore concluded that EDC should be classified as “held for sale” as of March 31, 2007 and reflected as such on the financial statements for the three months ended March 31, 2007 and 2006. The Company recognized an impairment charge of approximately $638 million net of income and withholding taxes, representing the net book value of the Company’s investment in EDC less the selling price. The Company impaired the carrying value of EDC’s electric generation and distribution assets to their net realizable value. The impairment expense is included in the loss from disposal of discontinued business line item on the statement of operations for the three months ended March 31, 2007.

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Sale of EDC

On February 22, 2007, we entered into a definitive agreement with Petróleos de Venezuela, S.A., (“PDVSA”), pursuant to which we have agreed to sell to PDVSA all of our shares of EDC. The agreement is dated as of February 15, 2007.

Subject to the terms and conditions in the agreement, PDVSA has agreed to pay us a purchase price of US$739 million at closing, net of any withholding taxes. In addition, the agreement provided for the payment of a US$120 million dividend in 2007. On March 1, 2007, the shareholders of EDC approved and declared a US$120 million dividend, payable on March 16, 2007, to all shareholders on record as of March 9, 2007. A wholly-owned subsidiary of the Company is the owner of 82.14% of the outstanding shares of EDC, and therefore, on March 16, 2007, this subsidiary received the equivalent of approximately US$99 million in Bolivares that is currently being held in trust at a U.S. bank until the funds can be converted to U.S. Dollars. Under the terms of the purchase and sale agreement with the Republic of Venezuela, PDVSA has agreed to ensure that the Company’s portion of the dividend is converted by the Venezuelan government’s Foreign Exchange Commission, CADIVI, from Bolivares into U.S. Dollars at the current official exchange rate within 90 days of the dividend payment date. As of the date of this filing, the conversion of the Company’s portion of the dividend from Bolivares to U.S. Dollars has been submitted to CADIVI and is awaiting their approval.

The agreement provided that PDVSA would acquire our EDC common shares in a tender offer. PDVSA commenced and publicly announced the commencement of concurrent tender offers in Venezuela and the United States (the “Offers”), on April 9, 2007. The Offers provided for the purchase of 2,704,445,687 of EDC common shares at a U.S. Dollar equivalent amount of $0.2734 per common share,

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which is consistent with the price per share implied by the purchase price within the agreement. The closing of the Offers occurred on May 8, 2007 and the actual transfer of the shares along with payment of the purchase price occurred on May 16, 2007.

As a result of signing this agreement, we have concluded that a material impairment of our investment in EDC has occurred, which will be recorded in the first quarter ending March 31, 2007. This material impairment represents the net book value of our investment less the estimated purchase price. Management estimates that this pre-tax, non-cash charge will be in the range of $600 to $650 million.

We purchased a controlling interest in EDC in 2000. EDC is the largest private electric utility in Venezuela. It is a provider of power and light to approximately one million customers in the Caracas metropolitan area. EDC also owns and operates five generation plants with a total of 2,616 MW of generation capacity. These facilities collectively represent approximately 14% of the electricity consumed in Venezuela.

For the year ended December 31, 2006, EDC represented 5% of AES’ consolidated revenues and 12% of the Latin America Utilities segment revenues, 5% of AES’ consolidated gross margin and 17% of the Latin America Utilities segment gross margin. In addition, EDC represented 37% of AES’ consolidated net income and 36% of basic earnings per share. Excluding the net after-tax loss impact of $512 million related to the sale of Eletropaulo shares and debt restructuring, EDC represented 12% of AES’ consolidated net income and 12% of basic earnings per share. AES received a dividend of approximately $101 million from EDC in 2006. EDC’s five generation plants represented approximately 7% of AES’ approximate 35 gigawatts of capacity installed.