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Debt

9 Months Ended

Sep. 30, 2019

Recourse Debt

In September 2019, the Company prepaid $343 million aggregate principal of its LIBOR + 1.75% existing senior secured term loan due in 2022 and $100 million of its 4.875% senior unsecured notes due in 2023. As a result of these transactions, the Company recognized a loss on extinguishment of debt of $5 million for the three and nine months ended September 30, 2019.

In March 2018, the Company purchased via tender offers $671 million aggregate principal of its existing 5.50% senior unsecured notes due in 2024 and $29 million of its existing 5.50% senior unsecured notes due in 2025. As a result of these transactions, the Company recognized a loss on extinguishment of debt of $44 million for the nine months ended September 30, 2018.

In March 2018, the Company issued $500 million aggregate principal of 4.00% senior notes due in 2021 and $500 million of 4.50% senior notes due in 2023. The Company used the proceeds from these issuances to purchase via tender offer in full the $228 million balance of its 8.00% senior notes due in 2020 and the $690 million balance of its 7.375% senior notes due in 2021. As a result of these transactions, the Company recognized a loss on extinguishment of debt of $125 million for the nine months ended September 30, 2018.

Non-Recourse Debt

During the nine months ended September 30, 2019, the Company’s subsidiaries had the following significant debt transactions:



Subsidiary	Transaction Period	Issuances		Settlements			Loss on Extinguishment of Debt
Southland ⁽¹⁾	Q1, Q2, Q3	$	535	$	—		$	—
Gener ⁽²⁾	Q1, Q2	550		(450		)	(11		)
DPL ⁽³⁾	Q2	825		(835		)	(43		)
Tietê	Q2	561		(533		)	(3		)
Mong Duong ⁽⁴⁾	Q3	1,120		(1,081		)	(31		)
Colon	Q3	610		(579		)	(28		)

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⁽¹⁾	Issuances relate to the June 2017 long-term non-recourse debt financing to fund the Southland repowering construction projects and a September 2019 non-recourse bridge loan.


⁽²⁾	Repayments in June 2019 complete the tender offer initiated in March 2019 on existing notes.


⁽³⁾	Includes transactions at DPL and its subsidiary, DP&L.


⁽⁴⁾	Non-cash transaction via an equity affiliate. See below for further information.

Mong Duong — In August 2019, Mong Duong refinanced $1.1 billion aggregate principal of its existing senior secured notes due in 2029 with variable interest rates ranging from LIBOR + 2.25% to LIBOR + 4.15% in exchange for a fixed rate loan with a newly formed SPV, accounted for as an equity affiliate, due in 2029 with interest rates that vary from 4.41% to 7.18%. This refinancing was a non-cash transaction as the SPV acquired all of the

outstanding rights and obligations of the original Mong Duong lenders. As a result of these transactions, the Company recognized a loss on extinguishment of debt of $31 million for the three and nine months ended September 30, 2019.

DP&L — In June 2019, DP&L issued $425 million aggregate principal of 3.95% First Mortgage Bonds due in 2049. The net proceeds from the issuance were used to prepay the outstanding principal of $435 million under its variable rate $445 million credit agreement due in 2022.

DPL — In April 2019, DPL issued $400 million aggregate principal of 4.35% senior unsecured notes due in 2029. The net proceeds from the issuance were used to redeem, at par, $400 million of the $780 million aggregate principal outstanding of its 7.25% senior unsecured notes due in 2021. As a result of these transactions, the Company recognized a loss on extinguishment of debt of $43 million for the nine months ended September 30, 2019.

Non-Recourse Debt in Default — The current portion of non-recourse debt includes the following subsidiary debt in default as of September 30, 2019 (in millions).



Subsidiary	Primary Nature of Default	Debt in Default		Net Assets
AES Puerto Rico	Covenant	$	295	$	158
AES Ilumina (Puerto Rico)	Covenant	33		19
AES Jordan Solar ⁽¹⁾	Covenant	13		3
Total		$	341

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⁽¹⁾	Classified as current held-for-sale liability on the Condensed Consolidated Balance Sheets.

The above defaults are not payment defaults. In Puerto Rico, the subsidiary non-recourse debt defaults were triggered by failure to comply with covenants or other requirements contained in the non-recourse debt documents due to the bankruptcy of the offtaker.

The AES Corporation’s recourse debt agreements include cross-default clauses that will trigger if a subsidiary or group of subsidiaries for which the non-recourse debt is in default provides 20% or more of the Parent Company’s total cash distributions from businesses for the four most recently completed fiscal quarters. As of September 30, 2019, the Company had no defaults which resulted in or were at risk of triggering a cross-default under the recourse debt of the Parent Company. In the event the Parent Company is not in compliance with the financial covenants of its senior secured revolving credit facility, restricted payments will be limited to regular quarterly shareholder dividends at the then-prevailing rate. Payment defaults and bankruptcy defaults would preclude the making of any restricted payments.