Empresa Distribuidora Electrica Sur SA

distressed

The Argentinean state-owned company Eseba was divided into three distribution companies that provide electricity distribution facilities in the Buenos Aires province. One of these three distribution companies was Empresa Distribuidora del Sur SA (Edes SA). Edes SA operates the southern area of the province, and had a 4,600km distribution system to serve 128,000 customers in 1996. The other two distribution companies are Empresa Distribuidora del Norte SA (Eden SA) for the northern area and Edea SA for the Atlantic area of the province. Eden SA and Edes SA were jointly privatized in April 1997 when Eseba sold a 90% stake in the two new companies for $565 million to a consortium comprising AES Corporation and CEA. The remaining 10% of the equity was reserved to be sold to the employees of the companies. By 1997, AES owned 60%, CEA 30% and employees 10%. The winning consortium split its bid as follows: $420 million for Eden SA and $145 million for Edes SA. Both companies operate under 95-year exclusive concession contracts. In 1996, Eden and Edes served a combined total of approximately 400,000 customers and were contractual customers of the San Nicolas generating facility, which is also jointly owned by AES and CEA. In 2001, CEA (renamed PSEG Global) attempted to sell its stake in Edes to AES but the deal was not complete until 2003 due to disagreement between PSEG and AES over the sale price (PSEG sold its stake in several projects in Argentina to AES). In 2002, AES Corporation filed legal proceedings with an international arbitration tribunal (International Centre for Settlement of Investment Disputes - ICSID) against the Argentinean government. The proceeding seeks compensation for losses incurred by the company at the time of the devaluation of the Argentinean currency. For updates on the international arbitration proceedings, check http://www.worldbank.org/icsid (case # ARB/02/17).