Material Information

By virtue of the information established in Article 9 and Paragraph #2 of Article 10 of Law #18.045 of the Superintendence of Securities and Insurance, the following information has been communicated: That in its last session, the Board of the business adopted unanimously by the present member the following agreements:

1. Provisory Dividend: Distribute amongst the shareholders of the society the sum of $38,855,428,766. – acting as an interim dividend accounting for the profits for the 2014 period. In view of the above, the provisory dividend Number 59 of the company, amounts to the sum of $6.35. – per share and is payable from the date: January 13, 2015.

2. Registry of Bond Lines: Register and enroll in the Superintendence of Securities and Insurance two lines of bonds (individually the "Bond Lines" and collectively the "Lines") whose main characteristics are as follows:
   1. Maximum amount of each Bond Line: 4.000.000 UF (four million Unidades de Fomento or "Development Units"), which will be inscribed in pesos or in UF.
   2. Maximum Maturity Term of each Bond Line: 30 years starting from the date of its inscription in the Registry of Securities of that Superintendence, within which they must overcome the payment obligations of the different bond issues that are made under each Line.
   3. Guarantees: There will be no special guarantees.
   4. Use of funds: Debt refinancing and financing of investments of the company, as determined in each case by the complementary articles.
   5. Other general conditions: Bonds could be placed on the general market, they will be emitted dematerialized, to the bearer, and will not be convertible into company stock and would be paid in pesos.

It is expressly stated that notwithstanding the maximum amount of each of the Bond Lines, there can only be bonds placed and/or outstanding loans of existing bonds, up to a total amount of 4,000,000 UF (four million Unidades de Fomento, or "Development Units"), considering both the placed bonds, and the outstanding bonds given for each of the mentioned Lines.

The Board has also agreed to permit its agents to carry out the registration, issuance and placement of bonds under respective Lines in terms that will be determined in due course

According to the available information in Article 10 of the D.F.L. MOP No 453/1989 of the Regulation of the Tariffs Law for Sanitation Services, the Superintendence of Sanitation Services ("SISS") and the company arrived at an agreement under the sixth process of the regulation of tariffs for public sanitary services, that is concessionary, for a five-year period, 2015 – 2020 (the "agreement").

In accordance with the agreement, the agreed tariff level as of December 31, 2013 (reference date of the establishment of fixed Base Tariffs by the SISS), amounts to a Total Long Term Net Cost (TLTNC) of $311,117,000,000.-, which does not represent the variation in comparison with the agreed tariffs for the five year period (2015-2020, above) for active services and standards. The agreement provides for additional investments for a TLTNC of $3,663,000,000.-, with the startup of new works related to security and safety in order to increase the continuity and quality of service in events of extreme turbidity and power outages, and for a TLTNC of $4,343,000,000.-, with the startup of works related to the improvement in the quality of treated wastewater. These additional objectives must be included in the Development Plan updated by the company and must carry the approval of the SISS.

For an increased understanding of the agreed tariff regimen, Article 4 of the Tariffs Law for Sanitation Services defines TLTNC as the constant annual amount required to cover the costs of efficient operation and those of investment in a replenishment project optimized by the concessionary, sized to meet demands, and that is consistent with a net present value of said project equal to zero, in a timeframe of no less than 35 years. By definition, this concept corresponds to the incomes (under a theoretical demand) of a sanitation company which have been deducted from the replacement value of a given investment project from the concessionary, which corresponds to the networks and facilities supported by third parties. The values above correspond to the revenue from existing services (TLTNC) obtained through application of the current annual demand for the years 2015-2020, to the newly agreed and indexed tariff rates as of December 31, 2013. The agreement expressly stated that the constancy of the indexing polynomials will correspond to those currently in place.

The referred agreement establishes a discount in the tariffs in respect of services not regulated by the Alto Maipo project. For the tariff period 2015-2020, and once it enters into operation, an annual discount in the TLTNC of $3,680,000,000.-, will be applied, corresponding to 80.17% of the annuity investment (reservoir and water rights) determined by the company in its study, which will represent, approximately, 1.2% of the tariffed annual revenue.

It must be noted that it is not possible to exactly determine the magnitude of the impact of the results that will come with the new tariffs on the financial statements of the company, given that this tariff regimen is one of the many elements that contribute in determining the results for each period, as well as counting factors such as potable water, costs, expenses, the applicable index polynomials, among others.

Finally, the agreed tariff formulas will be fixed by decree of the Minister of Economy, Development and Tourism, which must be published in the Official Journal before the date of its entry into effect, this being March 2015.

According to what has been established in Article 9 and the second paragraph of article 10 of Law # 18.045 of the Securities Market, and General Standard #30 of the Superintendence of Securities and Insurance, it was reported as an Essential Fact with respect to Aguas Andinas S.A. (the "partnership" or the "company"), its businesses, its publicly offered securities or the public offer of these, the following information: That last October 9, the company estimated the effect on its consolidated financial statements, by reason of the enactment of Law #20.780, due to the increase in net deferred tax liabilities, given the International Financial Reporting Standards (IFRS).

However, this Superintendence through the Official Letter #856, dictated October 17, ordered that notwithstanding the standards of the IFRS, the difference in current assets and liabilities through deferred taxes as a result of the increase in the amount of income tax, should be accounted for a respective period against equity.

Thus, we report that according to the instructions given in the Official Letter mentioned above, the effect on deferred taxes as a result of the increase in First Category Taxes, will not impact the results of the company, directly accounting against a decrease in equity attributable to the proprietors of the parent company to the approximate sum of $5,000 million. The above will be reflected in the quarterly financial statements of the company referred to September 30, 2014.

Lastly, we present that the impact in question has been calculated, taking into account that the company is subjected by default to the partially integrated tax system, as the Board of Extraordinary Shareholders does not agree to submit to the alternative system of attributed rent, in which case, the appropriate financial adjustments shall be made.

It is public knowledge that Law # 20.780, which modifies the system of income taxation and introduces various adjustments in the tax system (the "Law"), has established a progressive increase of First Category Taxes for the year 2014 and onward, in accordance with the tax system by which the contributors opt in (partially integrated or attributed rent), a decision which should be adopted conforming to the provisions of the Law.

The company, by default, is subjected to the partially integrated tax system, so long as the Board of Extraordinary Shareholders does not agree to submit to the alternative system of attributed rent. Consequently, and, in accordance with International Financial Reporting Standards (IFRS), the impact of the progressive increase in First Order Taxes must be immediately recognized in its financial statements.

Considering the above, to the present date, it is estimated that the effect on the consolidated financial statements of the company will result in an increase in net deferred tax liabilities, thanks to an increased cost due to income taxes, amounting to approximately $8,700 million, which combined with the 2014 increase in First Category taxes, will reduce the net profit attributable to the proprietors of the controlling company in an amount close to $6,000 million as of September 2014.

On this date, the company undertook a placement in the local market of dematerialized bearer bonds, "Series W" (mnemonic code: BAGUA-W), (the "Series W Bonds"), charged to a line of debt securities recorded in the Securities Register of the Superintendence under N° 778, dated March 3, 2014.

The placement of the Series W Bonds was realized for a total amount of 2,300,000 UF (two million, three hundred thousand "Development Units"), for a period of 23 years, with a 3 year amortization wherein the last installment is due on June 1, 2037, and semiannual interest payments at a placement rate of 3.16%.

The funds sourced from the placement of the Series W Bonds will be used to redeem the bonds denominated under Series F, issued by the company and charged to a line of ten-year bonds registered in the securities register under Number 305, dated October 10, 2002. The remaining balance will be used in full to refinance long- and short-term liabilities of the issuer.

On this date, the company undertook a placement in the local market of dematerialized bearer bonds, "Series V" (mnemonic code: BAGUA-V), ("Series-V Bonds"), charged to a line of debt securities recorded in the Securities Register of the Superintendence under N° 778, dated March 3, 2014.

The placement of the Series V Bonds was realized for a total of 2,000,000 UF (two million "development units"), for a period of 23 years, with one final repayment on April 1, 2037 and semiannual interest payments, obtaining a placement rate of 3.48%.

The funds coming from the placement of the Series-V Bonds will be used to pay, or prepay, short and long term liabilities and the financing of investments.