Financing plan: Fiscals 2015 to 2018
As of June 30, 2015, AES Corporation’s (AES) total debt stood at $20.8 billion, as opposed to $20.9 billion at the end of fiscal 2014. A major part of this debt is long-term debt. By fiscal 2018, AES Corporation is planning to fund its capital expenditure through refinancing, equity investments, strategic partnerships, and proceeds from sale of assets. The company plans to reduce its parent debt from $840 million to $181 million by 2018.
AES Corporation has a net worth of $7.1 billion and EBITDA (earnings before interest, tax, depreciation, and amortization) of $988 million in 2Q15. With an LTM (last twelve months) debt-to-EBITDA ratio of 5.0 and debt-to-equity ratio of 5.4, the company is heavily leveraged.
AES Corporation’s leverage is extremely high compared to those of peers Southern Company (SO), Exelon Corporation (EXC), and PG&E Corporation (PCG). These companies account for nearly 19% of the Utilities Select Sector SPDR ETF (XLU).
As of June 30, 2015, AES Corporation had around $2.2 billion in terms of cash, short-term investments, restricted cash, debt services reserves, and other deposits. The company’s current ratio stood at 1.2 as of 2Q15, compared with 1.1 in same quarter last year. Additionally, AES Corporation has access to $100 million in unused credit facilities. Going forward, management expects that working capital requirements will be met though operating cash flows and credit facilities.