LONG-TERM FINANCING RECEIVABLES

Long-term financing receivables represent receivables from certain Latin American governmental bodies, primarily in Argentina, that have contractual maturities of greater than one year pursuant to amended agreements or government resolutions. These financing receivables are included in “Noncurrent assets — other” in the Condensed Consolidated Balance Sheets.

As a result of energy market reforms in 2004 and consistent with contractual arrangements, certain of our subsidiaries entered into three agreements with the Argentine government called Fondos de inversion Mercado Electrico Mayorista (“Foninvemem Agreements”) to contribute a portion of their accounts receivable into a fund for financing the construction of combined cycle and gas-fired plants. These financing receivables accrue interest and are collected in monthly installments over 10 years once the related plant begins operations. In addition, these subsidiaries receive an ownership interest in these newly built plants once the receivables have been fully repaid. The financing receivables under the first two Foninvemem Agreements are being actively collected since the related plants commenced operations in 2010. However, the financing receivables related to the third Foninvemem Agreement are not currently due as commercial operation of the two related gas-fired turbines has not been achieved. In June 2013, receivables relating to the 2008-2009 period, which were previously covered under Resolution 724/2008 were contributed to FONINVEMEM III project when the Execution Committee of Central Térmica Guillermo Brown Trust instructed that the EPC contract negotiations be initiated on the two gas turbines simultaneously. The construction of the second gas turbine represents an expansion of the original FONINVEMEM III project, and consequently, the Secretary of Energy formally accepted the contribution of Resolution 724/2008 receivables to fund the expansion.

On March 26, 2013, the Argentine government passed Resolution No. 95/2013 ("Resolution 95") to develop a new energy regulatory framework that would apply to all generation companies with certain exceptions. The new regulatory framework remunerates fixed and variable costs plus a margin that will depend on both the technology and fuel used to generate the electricity. To qualify, each generator needs to adhere to the preconditions under Resolution 95. On May 31, 2013, these subsidiaries sent a letter to adhere to such preconditions which made Resolution 95 effective retroactively to February 1, 2013. During June 2013, CAMMESA, the administrator of the wholesale electricity market in Argentina, started the implementation by billing the transactions according to the Resolution 95 procedures. In addition, according to Resolution 95 any outstanding receivables which have not been previously committed for the execution of other projects and/or for the maintenance of existing facilities shall be contributed into the new trusts. This would affect 2012-2013 receivables and may also impact outstanding receivables from 2011.

Collection of these financing receivables is subject to various business risks and uncertainties including timely payment of principal and interest, completion and operation of power plants which generate cash for payments of these receivables, regulatory changes that could impact the timing and amount of collections and economic conditions in Argentina. The Company periodically analyzes each of these factors and assesses collectability of the related financing receivables. The Company’s collection estimates are based on assumptions that it believes to be reasonable but are inherently uncertain. Actual future cash flows could differ from these estimates.

The following table sets forth the breakdown of financing receivables by country as of June 30, 2013 and December 31, 2012. The increase in long-term financing receivables from December 31, 2012 is primarily due to the incorporation of Resolution 724/ 2008 receivables in FONINVEMEM III project as mentioned above partially offset by a decrease due to the impact of foreign currency translation.



	June 30, 2013		December 31, 2012
	(in millions)
Argentina⁽¹⁾	$	247	$	196
Dominican Republic	27		35
Brazil	16		8
Total long-term financing receivables	$	290	$	239

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⁽¹⁾	Excludes noncurrent receivables of $63 million and $120 million, respectively, as of June 30, 2013 and December 31, 2012, which have not been converted into long-term financing receivables and currently have no due date.