Empresa Distribuidora Electrica Este

distressed

The government of the Dominican Republic sold 50% of its shares in local energy distribution company Empresa Distribuidora Electrica Este (EDE Este) to AES Distribution Dominicana. AES was given operational control of EDE Este, even though the government retained a 50% stake in the company. EDE Este served approximately 293,000 customers with an average annual output of 2,400 GWh. The company operated in the eastern region of the Dominican Republic, an area that included part of the capital city, Santo Domingo. The partial divestiture was part of wider effort undertaken in 1999 by the Dominican government to privatize the country’s electricity distribution network. The divestiture took place in August 1999. AES Distribution Dominicana was a special purpose company created by the AES Corporation. By 2003 AES also owned three generation plants in the Dominican Republic, with a total capacity of over 900 MW. AES paid $109.3 million for EDE Este. The minimum set by Corde, the government holding company, was $105.7 million. In 2003 AES and the Domincan government started a dispute in Dominican courts. AES alleged the government owed it over $20 million for used electricity. In December 2003 AES acknowledged its interest to sell the 50% share it held in EDE Este. In mid-November 2004 AES announced the sale of its 50% stake in EDE Este to Dominican Energy Holdings LP, an investor group whose main shareholder was TCW Energy Advisors LLC—a unit of Los Angeles-based Trust Company of West Energy & Infrastructure. Also in November 2004 the Dominican government's Chamber of Accounts released a report claiming there had been irregularities in the company's internal operations. The government audit claimed AES owed the Dominican Republic some $50 million for undeclared operations. The government also claimed that AES Dominicana violated its contract by not first offering the 50% in EDE Este to state owned electricity distributor CDEEE. After the sale AES was still going to operate the EDE Este. AES sold its shares back to the government in 2004. In March 2007, Societe Generale, via its subsidiary TCW group filed a claim against the Government of the Dominican Republic for alleged breach of contract, failure to enforce rate increase agreements and failure to clamp down on rampant electricity theft. TCW operated Empresa Distribuidora Electrica Este through DR Energy Holdings, Ltd. None None