Material Information

On October 26, 2011, the SVS was informed that the board had agreed to distribute the sum of Ch$34,257,026,448 against the earnings for 2011, as an interim dividend.

The Company’s interim dividend No.53 therefore amounts to Ch$5.5985 per share, payable as from November 23, 2011.

On October 25, 2011, the SVS was informed that the Company’s board on that date unanimously agreed to register in the Securities Register of the SVS two lines of bonds whose main characteristics are the following:

• Maximum amount of each line: 5,500,000 Unidades de Fomento, notwithstanding the limitation mentioned below. The bonds may be issued in pesos or Unidades de Fomento.
• Maximum term of the lines: Up to 30 years from the date of registration in the Securities Register of the SVS, during which all the payment obligations of the different bond issues against the lines should mature.
• Security: None.
• Use of the funds: Refinancing of liabilities and financing of investments, as determined in each of the indentures.
• Other general conditions: The bonds may be placed in the general market, shall be issued dematerialized, to bearer, not convertible into shares of the Company and be payable in pesos.

Despite the total amounts of the lines of bonds referred to above, bonds may be placed and/or be already placed against both lines for up to a total of 5,500,000 Unidades de Fomento, considering all the bonds placed and outstanding issued against these lines.

The board also agreed to grant powers for carrying out the issue and placing the bonds against these lines, on the terms and conditions determined at the time.

On July 26, 2011, the SVS was informed that the board had agreed to proceed with the obligatory redemption in advance of all the Series B bonds, sub-series B1 and B2, whose issue is registered in the Securities Register under number 266, on August 13, 2001.

The redemption was made on September 1, 2011 at their nominal value plus interest to that date.

The board expressly authorized the chief executive, Víctor De La Barra Fuenzalida, to follow all the procedures which in accordance with the law and the indenture are necessary for carrying out the redemption and prepayment of the bonds indicated.

On July 26, 2011, the SVS was informed that Felipe Larrain Aspillaga had resigned from his position as Chief Executive of the Company. It was also informed that the extraordinary shareholders meeting held that day proceeded with the revocation and subsequent renovation of the board, resulting in the following being elected:

Rodrigo Manubens Moltedo, Gonzalo Rojas Vildósola, Luis Hernán Paúl Fresno and their respective alternates Rodrigo Terré Fontbona, Jaime Cuevas Rodríguez and Alejandro Danús Chirighin, were elected as independent directors.

The Company’s board then met and agreed to appoint Felipe Larrain Aspillaga as chairman of the board and the Company, and Patricio Prieto Sánchez as vice chairman.

It was then agreed that Rodrigo Manubens, Luis Hernán Paúl and Xavier Amorós, and their respective alternates would conform the directors’ committee.

The meeting finally agreed to appoint Víctor De La Barra Fuenzalida as Chief Executive of the Company from that date.

On June 22, 2011, the SVS was informed that the Company’s board, on June 22, 2011 agreed to call an extraordinary shareholders meeting for July 26, 2011 at 10 a.m. to renew the members of the board through their revocation and the election of a new board. This was in consideration of the fact that Corporación de Fomento de la Producción had sold 1,834,539,519 shares, representing 29.98% of the share capital of Aguas Andinas.

On June 7, 2011, the SVS was informed, in relation to the reports dated December 22, 2010 and March 29, 2011, that an extraordinary shareholders meeting of Aguas Andinas S.A. on June 3 approved the signing of a contract with Gener on the terms approved by the board and that, on June 6, Aguas Andinas S.A. signed an agreement with AES Gener S.A. relating to the Alto Maipo hydroelectric project.

The principal matters of the agreements covered the following:

• To guarantee Aguas Andinas will continue to extract water stored in the El Yeso reservoir at the foot of its dam as before, in such a way for Gener to be able to use this in the exercise of the non-consumptive water rights related to the project.
• To provide Gener, for its non-consumptive use in the project, a flow of up to 2.5 cubic meters of the waters received from the lakes Negra and Lo Encañado, with the obligation of Gener to return waters upstream of the independent sluice.
• The payments that Gener makes to Aguas Andinas for the obligations assumed will be received once the project is in operation, estimated to be from 2016, which would be variable according to the hydrology for the year and the cost of electricity, and be calculated based on the following: – 50% of the net energy sold by the project during the immediately preceding calendar month with the flows from Laguna Negra and Lo Encañado, valued at the average weighted marginal cost at the Alto Jahuel node.
  • The expected value equivalent to 70 GWh annually by the flows provided by El Yeso reservoir, valued at the average marginal cost at the Alto Jahuel node.
  • 50% of the difference between the firm capacity recognized by the authority or competent entity for the project and 160 MW (or between sufficiency capacity and 235MW), if positive, multiplied by the capacity node price.
• A regulation is established referring to the form of use of the projected duct to connect the El Yeso reservoir with the Laguna Negra aqueduct in cases of cloudiness or contamination of the waters or their surpluses.
• The form of use of properties is regulated with respect to which Aguas Andinas S.A. has easements.
• Functioning protocols are established in the project’s construction and operating phases.
• The term of the agreement is 40 years.

On March, 29, 2011, the SVS was informed that the board of Aguas Andinas S.A. had agreed to the formation of a subsidiary whose objects would be to develop any kind of energy project related to services or natural assets of sanitation companies such as the generation of bio-gas, electricity cogeneration, and hydro-electricity. It would be a closely-held corporation in which Aguas Andinas would hold 99.99% of the shares and Aguas Cordillera the remaining 0.1%. The initial capital of the company would be Ch$250,000,000.

With respect to the reserved information given to the SVS on December 22, 2010, conversations have taken place with the company AES Gener S.A. (Gener) relating to the that company’s hydroelectric project, called Alto Maipo (the Project).

The board of Aguas Andinas S.A. approved the terms of an understanding with Gener regarding the Project, which would be formalized in one or more contracts signed between Gener and a subsidiary of Aguas Andinas S.A.

The principal matters forming part of this agreement are:

• To ensure that Aguas Andinas continues to use without restrictions the El Yeso reservoir and the associated water rights in order to meet its obligations as concession-holder for the production of water to supply the Metropolitan Region.
• To guarantee it will continue to extract water stored in the El Yeso reservoir at the foot of its dam as before, in such a way for Gener to be able to use this in the exercise of the non-consumptive water rights related to the Project.
• To provide Gener, for its non-consumptive use in the Project, a flow of at least 2.5 cubic meters of the waters received from the lakes Negra and Lo Encañado, with the obligation of Gener to return waters upstream of the independent sluice.
• Regulations referring to the form for using the duct projected which will connect the El Yeso reservoir with the Lake Negra aqueduct in cases of cloudiness or contamination of the waters or their surpluses.
• The form of use of properties with respect to which Aguas Andinas S.A. has easements and assignments of mining concessions related to the Project.
• Payments by Gener for the obligations assumed. vii) Guarantees of Gener with respect to the payments mentioned (bank performance bond).
• Functioning protocols in the phases of construction and operation of the Project
• Term of the agreements, i.e. 40 years.

In economic terms, the payments the subsidiary would receive once the Project is operating (estimated by Gener for the years 2015 and 2016), would vary according to the hydrology of the year and the cost of electricity. It was expected that the respective agreements between Gener and a subsidiary of Aguas Andinas S.A. would be signed in the following six months.