Fitch credit rating report 2012 01

Corporates Electric-Corporate / Dominican Republic

Empresa Generadora de Electricidad Haina S.A. (Haina) Update Key Rating Drivers

Ratings Foreign Currency Long-Term FC and LC IDR Intl. Senior Unsecured

B B

National Rating

A(dom)

Local Senior Unsec. USD30 Mil. A(dom) Local Senior Unsec. USD50 Mil. A(dom) FC  Foreign currency. LC  Local currency. IDR  Issuer default rating.

Rating Outlooks Long-Term Foreign Currency IDR Positive

Financial Data Empresa Generadora de Electricidad Haina S.A. (USD Mil.) Total Assets Total Equity Net Income EBITDA Total Debt

12/31/11 745 374 65 112 281

12/31/10 583 324 42 79 207

Dependence on Public Transfers: Empresa Generadora de Electricidad Haina S.A.’s (Haina) ratings reflect the electricity sector’s high dependency on transfers from the central government to service its financial obligations. Although Fitch expects the continuation of recent policy changes to allow distribution companies (EDEs) to reach breakeven cash flow generation in the medium term, the expiration of the standby arrangement (SBA) with the International Monetary Fund (IMF) on Feb. 28, 2012, and the presidential election in May 2012, hold the potential to derail the modest progress achieved by the sector so far.

Ratings Constrained by Government’s Credit Quality: The Dominican Republic’s power sector is characterized by low collections from end users and high electricity losses. These conditions have kept distribution companies from effectively transferring cash to the country’s generation companies, and the government subsidies have covered this gap during recent years. This links the credit quality of the country’s distribution and generation companies to that of the sovereign.

Transition Risk: There is a latent risk of disrupting the progress the sector has achieved when the SBA with the IMF expires and the country has a presidential election. The expiration of the SBA with the IMF removes third-party pressure on the government to stay current on its payments to generation companies, and there is no guaranty that the new administration will have the same willingness to overcome the structural problems that affect the financial sustainability of the country’s electricity sector. Fitch will closely monitor these events to determine the impact of any potential change on the credit quality of all generation companies in the Dominican Republic.

Recent Payments Bolster Liquidity: Haina received an extraordinary payment from the government during December 2011 (USD106 million), which contributed to maintaining days of sale (DOS) within the agreed target of 45 days and ensured a payment rate from distribution companies of 93% by Dec. 31, 2011.

Adequate Credit Metrics: Haina’s credit metrics are strong for the rating category. For the fiscal year 2011, the company reported EBITDA of USD112 million, an increase from USD79 million in fiscal 2010. CFFO improved due to an extraordinary payment of USD106 million by the government during December, which strengthened the company’s liquidity. As of Dec. 31, 2011, Haina had a cash and marketable securities balance of USD184 million. Haina’s leverage ratio and net leverage were 2.5x and 0.9x, respectively, during this period.

Related Criteria Corporate Rating Aug. 12, 2011

Methodology,

What Could Trigger a Rating Action Rating Drivers: Lower dependence of the sector on government subsidies could lead to a rating upgrade. The ratings would also be positively affected by a positive rating action on the sovereign.

Analysts Julio Ugueto +58 212 286-3356 julio.ugueto@fitchratings.com Lucas Aristizabal +1 312 368-3260 lucas.aristizabal@fitchratings.com

www.fitchratings.com

Liquidity and Debt Structure The company’s liquidity is supported by USD184 million of cash on hand. Total debt of USD281 million is composed of senior unsecured notes due 2012 (USD12 million), 2014 (USD8 million), 2016 (USD40 million), and 2017 (USD165 million). The balance also consists of bank debt and other short-term financing.

January 26, 2012

Corporates Financial Summary  Empresa Generadora de Electricidad Haina, S.A. (USD 000, Fiscal Years Ended Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income

2011

2010

2009

2008

2007

111,745 111,745 18.0 18.0 15.5 (1.7) 18.5

78,670 78,670 18.6 18.6 16.1 12.5 13.6

44,555 44,555 14.5 14.5 9.1 (14.1) 4.7

74,174 74,174 16.1 16.1 18.0 (6.7) 12.6

70,535 70,535 20.5 20.5 13.2 (0.6) 13.5

5.4 5.9 5.9 1.7 1.7 5.4 0.1 2.9 1.1

4.2 3.9 3.9 2.0 2.0 4.2 1.8 4.6 2.7

1.7 1.7 1.7 1.4 1.4 1.7 (0.5) 0.7 (2.9)

3.7 3.1 3.1 2.9 2.9 3.7 (0.3) 0.6 0.4

4.6 5.0 5.0 2.7 2.7 4.6 0.4 3.0 0.4

2.8 2.5 0.9 2.5 0.9 7.8  0.2

2.4 2.6 1.2 2.6 1.2 9.9  0.09

4.5 4.5 3.7 4.5 3.7 13.6  0.03

2.0 2.4 2.1 2.4 2.1 13.1  0.01

2.9 2.7 1.7 2.7 1.7 9.5  0.07

744,772 183,879 47,656 233,751 281,407  281,407 0 281,407 374,260 655,667

583,385 110,924 19,600 186,967 206,567  206,567 0 206,567 324,181 530,748

554,309 39,548 6,000 196,367 202,367  202,367 0 202,367 291,804 494,171

584,234 22,340 1,703 175,000 176,703  176,703 0 176,703 316,687 493,390

531,494 67,053 12,442 175,000 187,442  187,442 0 187,442 299,914 487,356

82,617 (39,043) 43,574 0 (40,041) (13,999) (10,466) 0 9,095 74,326 0 0 72,955

65,263 34,552 99,815 0 (37,099) (10,000) 52,716 0 14,488 4,170 0 0 71,374

19,021 (36,323) (17,302) 0 (5,881) (20,003) (43,186) 0 32,978 27,737 0 (322) 17,207

65,116 (58,979) 6,137 0 (17,098) (20,000) (30,961) 0 16,986 (10,738) 0 0 (24,713)

50,282 (49,058) 1,224 0 (3,329) 0 (2,105) 0 (16,043) 57,779 0 0 39,631

619,313 46.6 95,397 18,928 0 64,570

422,509 37.5 62,588 20,304 0 41,973

307,198 (33.3) 29,015 25,837 0 14,403

460,567 33.7 58,870 23,792 0 38,934

344,519 11.3 55,211 13,985 0 37,973

Source: Empresa Generadora de Electricidad Haina S.A.

Empresa Generadora de Electricidad Haina S.A. January 26, 2012

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Corporates

The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

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Empresa Generadora de Electricidad Haina S.A. January 26, 2012

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