Held-for-Sale Businesses

Masinloc — In December 2017, the Company entered into an agreement to sell its entire 51% equity interest in Masinloc for approximately $1 billion, subject to customary purchase price adjustments. Masinloc consists of a coal-fired generation plant in operation, a coal-fired generation plant currently under construction, and an energy storage facility all located in the Philippines. Closing of the sale is expected during the first half of 2018, subject to certain regulatory approvals. As of December 31, 2017, Masinloc was classified as held-for-sale, but did not meet the criteria to be reported as discontinued operations. On a consolidated basis, the net carrying value of Masinloc at December 31, 2017 was $475 million. Masinloc is reported in the Eurasia SBU reportable segment.

In 2014, the Company completed the sale of 45% of its ownership interest in Masinloc for $436 million, including $23 million of consideration that was contingent upon the achievement of certain tax restructuring efficiencies. The transaction was accounted for as a sale of in-substance real estate. In December 2017, the related contingency expired and the $23 million of contingent consideration was recognized as a gain in Gain (loss) on disposal and sale of businesses in the Consolidated Statement of Operations.

Electrica Santiago — In December 2017, AES Gener entered into an agreement to sell Electrica Santiago, comprised of four gas and diesel-fired generation plants in Chile, for $300 million, subject to customary purchase price adjustments. The sale is expected to close during the first half of 2018, subject to conditions precedent in the agreement. As of December 31, 2017, Electrica Santiago was classified as held-for-sale, but did not meet the criteria to be reported as discontinued operations. Electrica Santiago's carrying value at December 31, 2017 was $186 million. Electrica Santiago is reported in the Andes SBU reportable segment.

DPL Peaker Assets — In December 2017, DPL entered into an agreement to sell six of its combustion turbine and diesel-fired generation facilities and related assets ("DPL peaker assets") for $241 million, subject to purchase price adjustments. The sale is subject to regulatory approvals, and is expected to close in the first half of 2018. As of December 31, 2017, the DPL peaker assets were classified as held-for-sale but did not meet the criteria to be reported as discontinued operations. After impairment, the net carrying value of the DPL peaker assets at December 31, 2017 was $237 million. The DPL peaker assets are reported in the US SBU reportable segment. See Note 19—Asset Impairment Expense for further information.

Excluding any impairment charges or gain/loss on sale, pre-tax income attributable to AES of businesses held-for-sale as of December 31, 2017 was as follows (in millions):



Year Ended December 31,	2017		2016		2015
Masinloc	$	103	$	103	$	99
Electrica Santiago	9		11		10
DPL Peaker Assets	17		20		24
Total	$	129	$	134	$	133

Dispositions

Zimmer and Miami Fort — In December 2017, DPL and AES Ohio Generation completed the sale of Zimmer and Miami Fort, two coal-fired generating plants, for net proceeds of $70 million, resulting in a gain on sale of $13 million. The sale did not meet the criteria to be reported as discontinued operations. Prior to their sale, Zimmer and Miami Fort were reported in the US SBU reportable segment.

Kazakhstan Hydroelectric — Affiliates of the Company (the “Affiliates”) previously operated Shulbinsk HPP and Ust-Kamenogorsk HPP (the “HPPs”), two hydroelectric plants in Kazakhstan, under a concession agreement with the Republic of Kazakhstan (“RoK”). In April 2017, the RoK initiated the process to transfer these plants back to the RoK. The RoK indicated that arbitration would be necessary to determine the correct Return Share Transfer Payment ("RST") and, rather than paying the Affiliates, deposited the RST into an escrow account. In exchange, the Affiliates transferred 100% of the shares in the HPPs to the RoK, under protest and with a full reservation of rights. The Company recorded a loss on disposal of $33 million in the fourth quarter of 2017. In February 2018, the Affiliates initiated the arbitration process in international court to recover at least $75 million of the RST placed in escrow, based on the September 30, 2017 RST calculation. Additional losses may be incurred if some or all of the disputed consideration is not paid by the RoK via a mutually acceptable settlement, or upon any unfavorable decision rendered by the arbiter. The transfer did not meet the criteria to be reported as discontinued operations. Prior to their transfer, the Kazakhstan HPPs were reported in the Eurasia SBU reportable segment. See Note 19—Asset Impairment Expense for further information.

Kazakhstan CHPs — In April 2017, the Company completed the sale of Ust-Kamenogorsk CHP and Sogrinsk CHP, its combined heating and power coal plants in Kazakhstan, for net proceeds of $24 million. The Company recognized a pre-tax loss on sale of $49 million, primarily related to cumulative translation losses. The sale did not meet the criteria to be reported as discontinued operations. Prior to their sale, the Kazakhstan CHP plants were reported in the Eurasia SBU reportable segment. See Note 19—Asset Impairment Expense for further information.

U.K. Wind — During the second quarter of 2016, the Company deconsolidated UK Wind and recorded a loss on deconsolidation of $20 million to Gain (loss) on disposal and sale of businesses in the Consolidated Statement of Operations. Prior to deconsolidation, UK Wind was reported in the Eurasia SBU reportable segment. See Note 14—Equity and Note 19—Asset Impairment Expense for further information.

DPLER — In January 2016, the Company completed the sale of DPLER, a competitive retail marketer selling electricity to customers in Ohio, and recognized a gain on sale of $49 million. Proceeds of $76 million were received in December 2015. DPLER did not meet the criteria to be reported as a discontinued operation. DPLER's results were therefore reflected within continuing operations in the Consolidated Statements of Operations. Prior to its sale, DPLER was reported in the US SBU reportable segment.

Kelanitissa — In January 2016, the Company completed the sale of its interest in Kelanitissa, a diesel-fired generation plant in Sri Lanka, for $18 million, resulting in a loss on sale of $5 million. The sale did not meet the criteria to be reported as discontinued operations. Kelanitissa's results were therefore reflected within continuing operations in the Consolidated Statements of Operations. Prior to its sale, Kelanitissa was reported in the Eurasia SBU reportable segment.

Armenia Mountain — Under the terms of the sale agreement for certain U.S. Wind Projects, the buyer was provided an option to purchase the Company's 100% interest in Armenia Mountain, a wind project in Pennsylvania, for $75 million. The buyer exercised this option and AES completed the sale of Armenia Mountain in July 2015. The sale did not meet the criteria to be reported as discontinued operations. Upon completion, net proceeds of $64 million were received and a pre-tax gain on sale of $22 million was recognized. Prior to its sale, Armenia Mountain was reported in the US SBU reportable segment.

ACQUISITIONS

Alto Sertão II — On August 3, 2017, the Company completed the acquisition of 100% of the Alto Sertão II Wind Complex (“Alto Sertão II”) from Renova Energia S.A. for $181 million, subject to customary purchase price adjustments, plus the assumption of $348 million of non-recourse debt, and up to $30 million of contingent consideration. At closing, the Company made an initial cash payment of $143 million, which excludes holdbacks related to indemnifications and purchase price adjustments. As of December 31, 2017, the purchase price allocation for Alto Sertão II is preliminary. The Company is in the process of assessing the fair value of the assets acquired and liabilities assumed in the acquisition, and expects to complete the purchase price allocation within the one year measurement period. Alto Sertão II is a wind farm reported in the Brazil SBU reportable segment.

Bauru Solar Complex — On September 25, 2017, AES Tietê executed an investment agreement with Cobra do Brasil to provide approximately $140 million of non-convertible debentures in project financing for the construction of photovoltaic solar plants in Brazil. As of December 31, 2017, approximately $45 million of non-convertible debentures have been executed and distributed to the project. Upon completion of the project, expected in the first half of 2018 and subject to the solar plants’ compliance with certain technical specifications defined in the agreement, Tietê expects to acquire the solar complex in exchange for the non-convertible debentures and an additional investment of approximately $55 million.

Distributed Energy — On February 18, 2015, the Company completed the acquisition of 100% of the common stock of Main Street Power Company, Inc. for approximately $25 million. The purchase consideration was composed of $20 million cash. After the date of acquisition, Main Street Power Company, Inc. was renamed Distributed Energy, Inc.

In September 2016, Distributed Energy acquired the equity interest of various projects held by multiple partnerships for approximately $43 million. These partnerships were previously classified as equity method investments. In accordance with the accounting guidance for business combinations, the Company has recorded the opening balance sheets of the acquired businesses based on the purchase price allocation as of the acquisition date.