Ege haina 3q 2009

Quarterly Quarterly Financial Report Financial Report September 30th, 2009

September 30th, 2009

EGE Haina Reports Third Quarter 2009 Net Income of US$8.1 million; Revenues of US$88.4 million

Special points of interest:

Santo Domingo, Dominican Republic, November 10th, 2009 – EGE Haina

• US$18 million of Local Bond issued at the end of September 2009.

to net income of US$19.4 million in the third quarter 2008, driven by a

• US$4.5 million in repurchases during the 3rd Q’09 of the 144-A Senior Notes.

announced today third quarter 2009 Net Income of US$8.1 million, compared decrease in energy sales price and lower demand. Third quarter 2009 revenues were US$88.4 million, showing a 40% decrease when compared with revenues for the same period of the previous year.

• EDE Este was declared in default under the rescheduling agreement signed in August 2006.

Financial and Operational Summary

• US$13.7 million offset contract entered into with Ede Sur and CDEEE.

Inside this Issue:

(US$ Thousands, except for Operational data)

Description

3Q'09

3Q'08

Var %

YTD'09

YTD'08

Var %

Revenues

88,421

146,176

-40%

212,399

368,014

-42%

Operating Costs

77,803

121,645

-36%

193,483

309,482

-37%

Variable M argin

29,392

45,141

-35%

72,272

117,648

-39%

EBITDA¹

14,474

28,955

-50%

30,499

71,475

-57%

Operating Income

10,618

24,531

-57%

18,916

58,532

-68%

Net Income

8,119

19,448

-58%

9,589

41,206

-77%

(10,153)

(7,083)

43%

(18,341)

(4,425)

315%

Availability, %

86

99

-13%

90

91

-1%

• Quarter highlights

2

• External factors

2

• MD&A

3

• Financial Debt

5

Sales, GWh

514

588

-13%

1,449

1,650

-12%

• Collections

6

Generation, GWh

384

350

10%

1,059

1,088

-3%

• Financial results

7

Spot Purchase, GWh

130

238

-45%

390

562

-31%

1

Operating cash, net

EBITDA is a non-GAAP financial measure, which is calculated by adding depreciation and amortization expenses to the Operating income.

1

Quarterly Financial Report September 30th, 2009

Quarter Highlights and Recent Developments On July 1st, 2009, the Company sold US$5.0 million face value of sovereign bonds maturing 2011.

On July 14th, 2009, the Company sent a letter to EDE Este, declaring the latter in default under the rescheduling agreement signed in August 2006. Specifically, EDE Este failed to comply with the minimum monthly payment of $5.5 million during April, 2009. The PPA was suspended until May 2010.

On September 3rd, 2009, the issuance of third tranche for US$6 million of the local bond ended. This tranche has a maturity of 24 months and an annual interest rate of 8.5% that will be paid monthly to investors.

During 3Q’09, the Company made partial repurchases of the 144A Senior Notes up to the amount of $4.5 million (face value).

As a result of a decrease in fuel oil prices during the period, EGE Haina experienced a drop in the Consolidated EBITDA for the most recently ended period of four consecutive fiscal quarters. Consequently, EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio and a Consolidated Interest Coverage Ratio of 5.0:1.0 and 2.6:1.0, respectively, as of September 30th, 2009.

In October EGE Haina offset accounts receivable from EDE Sur with accounts payable to CDEEE by US$13.7 million.

On October 22nd, the issuance of fourth tranche of the local bond initiated. This tranche has a maturity of 30 months and an annual interest rate of 8.75% that will be paid monthly to investors. The tranche was fully placed within four working days; the fastest compared to prior tranches.

In November 2009, the Company sold US$2.0 million face value of sovereign bonds maturing 2012.

In November 2009, the Company repaid US$7.5 million corresponding to the debt with Banco de Reservas.

On November 9th, the Executive Board of the International Monetary Fund (IMF) approved a 28-month Stand-By Arrangement for the Dominican Republic in the amount of SDR 1,094.5 million (about US$1.7 billion) to support the country’s strategy to cope with the adverse effects of the global economic environment.

The authorities’ program aims to pursue short-term countercyclical policies; strengthen medium-term sustainability; reduce vulnerabilities exposed during the global crisis; and lay the foundations for a gradual recovery and sustained growth. The Stand-By Arrangement is designed to bolster confidence in the policy framework and catalyze additional 2 financing from other multilateral sources.

External Factors Average price of fuel for the month of September was US$64.10 /Bbl for Platt’s US Gulf Coast HFO #6, 3% Sulfur (fuel used to index the energy price under our PPAs). th

Exchange rate as of September 30 , 2009, closed at RD$36.26/USD. th

Accumulated inflation in DR, as of September 30 , 2009 was 4.31%.

30 25 20 15 10 5 Q1

Q2

Q3

2006

According to IMF DR GDP is estimated to grow 0.5% in 2 2009.

2 3

Q4

Q1

Q2

Q3

2007

Q4

Q1

Q2

Q3

Q4

Q1

2008

HFO US$/MMBTU

LFO US$/MMBTU

CARBON US$/MMBTU

NG US$/MMBTU

Q2

Q3

2009

IMF Press Release No.09/393, published November9, 2009.

Source: IMF World Economic Outlook, published in October, 2009.

2

Quarterly Financial Report September 30th, 2009

Consolidated Financial Results3 Revenues (US$ Thousands) Description

3Q'09

3Q'08

Var %

YTD'09

YTD'08

Var %

Contracted Energy

77,207

136,566

-43%

178,803

341,346

-48%

Contracted Capacity

10,924

9,179

19%

31,982

26,237

22%

290

432

-33%

1,614

432

274%

88,421

146,176

-40%

212,399

368,014

-42%

Others Total Revenues

3Q’09 revenues decreased by 40% when compared with the same period of previous year (US$ 88.4MM Vs. US$ 146.2MM). This negative variance is essentially driven by a 41.4% decrease in the average energy sales price for the period (3Q’09 US$150.3/MWh vs 3Q’08 US$232.4/MWh) as a result of the reduction in Fuel Oil prices, which is the main escalator of our PPAs’ formula, and lower demand (3Q’09 513.7 GWh vs 3Q’08 587.3 GWh) as a result of the suspension of the EDE Este PPA in November 2008.

Operating Expenses (US$ Thousands) Description

3Q'09

3Q'08

Var %

YTD'09

YTD'08

Var %

Fuel Expense

33,770

44,944

-25%

83,159

120,759

-31%

Transmission Tolls

2,695

3,044

-11%

8,070

10,264

-21%

Purchased Power

21,389

52,756

-59%

47,492

117,519

-60%

Frequency Regulation

1,174

291

303%

1,405

1,823

-23%

Operation & M aintenance

7,689

7,720

0%

22,436

23,573

-5%

General & Administrative

7,229

8,466

-15%

19,338

22,600

-14%

Depreciation

3,856

4,423

-13%

11,583

12,943

-11%

Total Operating Expenses

77,803

121,645

-36%

193,483

309,482

-37%

During 3Q’09 operating expenses were lower than 3Q’08 comparative figures by 36% (US$77.8 MM Vs. US$121.6 MM). The positive variance is the result of: Own generation: 25% or US$11.2 MM decrease in fuel costs, essentially as a result of a positive average price effect for the period (3Q’09 US$66.0 per BBLS vs 3Q’08 US$102.5 per BBLS); partially offset by higher fuel consumption (3Q’09 442.0 thousand of BBLS vs 3Q’08 348.4 thousand of BBLS).

Transmission Tolls: 11% or US$0.3 MM decrease when compared to 3Q’08, as a result of lower energy demand.

Purchased power: 59% or US$31.4 MM decrease is mainly the result of lower spot energy purchases due to a positive average price effect for the period (3Q’09 US$151.4/MWh vs 3Q’08 US$226.5/MWh) and a decrease in energy purchases (3Q’09 131.9 GWh vs 3Q’08 181.7 GWh), driven by a lower demand for the period.

General and administrative expenses: 15% or US$1.2 MM decrease mainly due to i) lower management fee expenses by US$1.1 MM as a consequence of a decrease in revenues; ii) lower regulatory payments by US$0.4 MM; iii) partially offset

by US$0.3 MM higher minimum taxes provision (asset tax).

3

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (USGAAP). These consolidated financial statements include the accounts of EGE Haina, and those of its wholly owned subsidiary EGE Haina Finance Company. Intercompany balances and transactions have been eliminated in consolidation.

3

Quarterly Financial Report September 30th, 2009

Net Income Net income was US$8.1 MM in the 3Q’09, compared to US$19.4 MM in the same period of the prior year. The negative variance of US$11.3 is explained by: Lower EBITDA by US$14.5 MM as explained in the paragraphs above.

US$3.5 MM higher financial expenses net, mainly due to i) lower interest income from distribution companies by US$2.0 MM; ii) lower interest gain in investment by US$0.5; iii) higher interest expenses paid to local banks by US$0.4 MM; iv) higher interest expenses due to the local bond by US$0.3 MM and v) higher interest expenses and taxes due to the 144-A bond by US$1.3 MM and vi) partially offset by US$0.2 MM lower bank commission and interest to private investors.

The abovementioned is partially offset by lower other expenses by US$3.7 MM. This variation is mainly the result of: i) US$1.3 MM gain in repurchase of 144-A Senior notes; ii) lower withholding taxes on management fees in US$2.4 MM, since these were presented as part of other expenses in 3Q 2008 while in 2009 are being shown in G&A expenses.

US$3.0 MM lower income tax.

Cash Flow Cash used in operating activities Net cash used in operating activities was US$10.2 MM during the 3Q’09, compared to US$7.1 MM in the same period of 2008.

The most significant factors that increased the cash used in operating activities were: a) US$11.3 MM decrease in net income; b)US$10.8 MM decrease other liabilities; c)US$4.3 MM decrease in accounts payable; d)US$2.2 MM decrease in accounts payable to related parties and d)US$1.8 MM decrease in other non current liabilities; partially offset by: i) US$12.3 MM decrease in inventories; ii) US$10.8 MM decrease in accounts receivable and iii))US$4.2 MM of adjustments reconciling net income to the net cash used in operating activities.

Cash provided by investing activities Net cash provided by investing activities was US$6.8 MM during the 3Q’09, compared to US$1.7 MM in the same period of the prior year. The US$5.1 MM increase is the net result of i) US$2.9 MM higher sale of property, plant and equipment essentially as a consequence of the engines sold to Megacentro; ii) US$4.4 MM higher proceeds from long term investments due to the sale of sovereign bonds and iii) US$16.3 MM lower additions to property plant and equipment partially offset by US$19.3 MM lower collections from long term receivables due to the full collection during the 3Q’08 of such balance.

Cash provided by (used in) financing activities Net cash provided by financing activities was US$2.8 MM in the 3Q’09, compared to US$2.0 MM used in the same period of prior year for a variance of US$4.8 MM. Such variance is mainly driven by the issuance of long-term debt by US$6.0 MM of the 3rd tranche of the local bond and short term debt by US$2.0 MM, partially offset with debt repurchase of the 144-A Senior Notes by US$3.2 MM paid during 3Q’09.

4

Quarterly Financial Report September 30th, 2009

Financial Debt FINANCIAL DEBT GENERAL CONDITIONS AND RELEVANT STATISTICS

Instrument 144 A Bond Local Bond-1st tranche Local Bond-2nd tranche Local Bond 3rd tranche Reservas-sov bond collateral BHD-sov bond collateral

Outstanding balance in US$ Million 170,532,000 6,000,000 6,000,000 6,000,000 10,000,000 5,000,000

Weighted av. Interest rate Weighted av. Life (years) Total financial debt

9.36% 6.46 203,532,000

Interest type fixed fixed fixed fixed variable variable

Average Current Rate Life (Years) 9.50% 7.46 8.00% 0.95 8.50% 1.54 8.50% 1.70 9.00% 0.89 9.00% 1.64

Repayment Schedule Balloon payment April 2017 Balloon payment October 2010 Balloon payment May 2011 Balloon payment July 2011 7.5 MM balloon June 2010 - 2.5 MM June 2011 Payment June 2011

US$ Million

Debt Amortization vs Financial Assets 200 175 150 125 100 75 50 25 0 2009

2010

Debt

2011

2012

2013

2014

Investment in Sovereign Bonds

2015

2016

2017

Cash on Hand

Financial Expenses (US$ Thousands) Description

3Q'09

3Q'08

YTD'09

YTD'08

Financial Expenses* : Interest on Senior Notes Interest on Short-Term Debt

(5,595)

(4,249)

(14,138)

(12,558)

(380)

(1)

(692)

(147)

Interest on Long-Term Debt

(304)

-

Interest on Payables to Power Vendors

(246)

(1,135)

(3,226)

(1,827)

Amortization of Deferred Charges

(474)

-

(1,234)

-

Other Financial Expenses

(427)

-

(12)

(148)

(96)

(590)

(7,011)

(5,532)

(19,814)

(15,121)

Financial Income: 1,910

3,949

8,605

7,748

Interest on Short-Term Investments

Interest on Trade Accounts Receivable

8

572

26

1,629

Interest on Long-Term Investments

614

Other Financial Income

Total Financial Expenses, Net

-

2,758

15

21

38

2,546

4,542

11,427

(4,466)

(990)

(8,387)

143 9,520 (5,602)

* Net of capitalizaed interests

5

Quarterly Financial Report September 30th, 2009

Collections Cash Collection rate for 3Q’09 was 43% as compared to the 89% level of last year’s same quarter. The negative variance is mainly due to lower cash collections from Edenorte and Edesur, which was 28% for the 3Q’09 compared to 50% in the same period of previous year; partially offset by the effect of the suspension of the EDE Este PPA, since the Company continues to receive the payments of pledged customers and credit card collections.

Cash Collections Vs Billings 140%

120%

100%

80%

60%

40% 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 Collection 105% 74%

81%

70%

129% 83%

72%

92%

95%

108% 89%

52%

100% 64%

43%

Operational Statistics Description

3Q'09

3Q'08

Var.%

YTD'09

YTD'08

Var.%

Heat Rate, Btu/KWh

9,520

9,681

-1.7%

9,264

9,339

-0.8%

Availability, %

86.4

99.3

-13.0%

90.2

90.8

-0.7%

Forced Outage Rate, %

12.8

1.4

814.3%

6.7

1.4

378.6%

Installed Capacity, M W

599

599

0.0%

599

599

0.0%

Effective Capacity, M W

547

547

0.0%

547

547

0.0%

Firm Capacity, M W

259

326

-20.3%

265

345

-23.1%

Energy Balance 580

430

GWh

280

130

(20)

(170) GWh - Spot Purchase

1Q06

2Q06

3Q06

16

(78)

(133) (152) (105) (132) (116) (149) (127) (197) (238) (139) (110) (150) (130)

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

GWh - Sales

471

547

551

531

490

539

596

544

505

558

588

496

457

478

514

GWh - Generation

486

469

420

386

389

409

480

395

377

361

350

357

346

330

384

6

Quarterly Financial Report September 30th, 2009

EMPRESA GE ERADORA DE ELECTRICIDAD HAI A, S.A. A D SUBSIDIARY U AUDITED CO DE SED CO SOLIDATED BALA CE SHEETS AS OF SEPTEMBER 30, 2009 A D DECEMBER 31, 2008 Amounts in thousands of US$ Sep-09

Dec-08

Assets: Current Assets: Cash and cash equivalents Restricted cash Short Term Investment Short Term Investment, restricted Accounts receivable Inventory Prepaid expenses and other Deferred income tax Total current assets

20,382 3,190 8,692 164,311 32,804 20,206 6,551 256,135

22,340 3,014 200,544 25,105 9,603 4,901 265,507

Deposits in banks, restricted Long term receivables Long term investments Long Term Invesment, restricted Property, plant and equipment Intangible assets, net Other assets Total Assets

8,100 9,848 22,961 236,493 9,727 23,093 566,359

8,313 32,473 262,637 10,654 6,450 586,034

7,495 36,382 944 22,364 67,185

1,703 59,441 2,186 17,205 80,537

196,032 16,170 13 279,400

175,000 11,660 351 267,547

289,000 10,627 20,115

289,000 10,627 49,892

(31,032) (1,750) 286,959

(31,032) 318,487

Liabilities and shareholders' equity: Current liabilities: Short-term debt Accounts payable Accounts payable to related parties Other Liabilities Total current liabilities Long-term debt, Deferred income tax Other non-current liabilities Shareholders' equity: Common stock Legal reserve Retained earnings Accumulated other comprehensive loss: Currency translation adjustment Investments revaluation reserve Total shareholders' equity Total liabilities and shareholders' equity

566,359

586,034 7

Quarterly Financial Report September 30th, 2009

EMPRESA GE ERADORA DE ELECTRICIDAD HAI A, S.A. A D SUBSIDIARY U AUDITED CO DE SED CO SOLIDATED I COME STATEME TS FOR THE THREE A D I E MO TH PERIODS E DED SEPTEMBER 30, 2009 A D 2008 Amounts in thousands of US$ Three month period ended September 30, 2009 Revenues Energy Capacity Others

Operating costs Fuel Transmission Purchased power Compensation for frequency regulation Operating and maintenance Administrative and general expenses Depreciation and amortization Operating income Financial expenses, net Foreign exchange gain (loss) Other income (expenses), net Income before income tax Income tax: Current Deferred Net income

2008

ine month period ended September 30, 2009

2008

77,207 10,924 290

136,566 9,179 432

178,803 31,982 1,614

341,346 26,237 431.56

88,421

146,176

212,399

368,014

33,770 2,695 21,389 1,174 7,689 7,229 3,856 77,803

44,944 3,044 52,756 291 7,720 8,466 4,423 121,645

83,159 8,070 47,492 1,405 22,436 19,338 11,583 193,483

120,759 10,264 117,519 1,823 23,573 22,600 12,943 309,482

10,618 (4,466) (244) 1,965 7,873

24,531 (990) 369 (1,740) 22,170

18,916 (8,387) 126 2,044 12,699

58,532 (5,602) 250 (5,798) 47,382

246

(2,753) 32

(3,110)

(4,520) (1,656)

8,119

19,448

9,589

41,206

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Quarterly Financial Report September 30th, 2009

EMPRESA GE ERADORA DE ELECTRICIDAD HAI A, S.A. A D SUBSIDIARY U AUDITED CO DE SED CO SOLIDATED CASH FLOW STATEME TS FOR THE THREE A D I E MO TH PERIODS E DED SEPTEMBER 30, 2009 A D 2008 Amounts in thousands of US$ Three month period ended September 30, 2009 Cash flows from operating activities: Net income Adjustments to reconcile net income to the net cash used in operating activities: Gain on sale of fixed asset Loss on asset dispossal Gain on early liability extinguishment Deferred income tax Depreciation and amortization Investments revaluation reserve Financial expenses Others Change in assets and liabilities: Accounts receivable Inventories Prepaid expenses Other assets Accounts payable Payable to related parties Other liabilities Other non-current liabilities Net cash used in operating activities Cash flows from investing activities: Net changes in restricted cash Sale of property, plant and equipment Long Term Invesment Additions to property, plant and equipment Short-term investments Changes in Long Term Receivables Net cash provided by investing activities Cash flows from financing activities: Proceeds from long-term debt Proceeds from short-term debt Repayment of long-term debt Repayment of short-term debt Dividends Debt issuance costs paid Net cash provided by (used in) financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of period Cash and cash equivalents at the end of period Supplemental cash flow information of non-cash activities Decrease in accounts receivable through offsets wiht accounts payable Reclassification of accounts receivable from non-current to current Unpaid additions of property, plant and equipment $19.9 million dividend paid to Minority Interest with sovereign bonds with a fair market value of $19.3 million

8,119

2008

ine month period ended September 30, 2009

2008

19,448

9,589

41,206

(662) 151 (1,314) (246) 3,856 550 5,529 97

(31) 4,983 -

(37,750) 2,598 (1,076) (262) 11,607 169 (1,511) (8)

(48,591) (10,322) (1,387) (579) 15,970 2,359 9,323 1,744

(666) 151 (1,314) 3,110 11,583 (5,723) 8,564 97 (60,717) (8,916) (10,823) (644) 40,703 (1,240) (2,094) -

1,656 12,943 (74,929) (16,309) (2,991) (28) 20,146 2,505 11,367 9

(10,153)

(7,083)

(18,341)

(4,425)

212 2,878 4,400 (504) (220) 6,766

(16,777) (867) 19,348 1,704

3,226 2,882 4,400 (1,195) (728) 8,585

(18,569) 19,132 7,717 8,280

6,000 15 (3,154) (69) (34) 2,758

47,116 (49,163) (2,047)

25,500 17,015 (3,154) (11,223) (20,003) (338) 7,797

63,684 (501) (71,924) (8,742)

(629)

(7,426)

(1,958)

(4,886)

21,011

49,593

22,340

47,053

20,381

42,167

20,381

42,167

6,671 8,307 1,543

32,281 698 3,528

64,287 12,497 3,857

61,340 7,018 3,528

-

-

19,364

-

9

Quarterly Financial Report September 30th, 2009

The consolidated financial statements presented herein have not been audited and were prepared in conformity with Generally Accepted Accounting Principles in the United States (USGAAP).

EGE Haina is the largest generator of electricity in the Dominican Republic, based on installed capacity, currently operating 11 electric power generation units at six plants, consisting of San Pedro, Sultana del Este – barge, Haina and Barahona in the southern part of the country, Puerto Plata in the northern and Pedernales in the western part of Santo Domingo. EGE Haina has contracted approximately 96% of its power generation to the three Dominican Republic distributors. For more information, visit the Company's Web site at www.egehaina.com.

Caution Concerning Forward-Looking Statements: This report may contain “forward-looking statements”- that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” believe,” “seek,” or “will”. Forward-looking statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of the Company may differ materially from those expressed or implied by such forward-looking statements and assumptions. For us, particular uncertainties that could adversely or positively affect our future results include, but are not limited to: changes in general economic, political, governmental and business conditions; the behavior of financial markets; changes in commercial market regulations. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. EGE Haina assumes no obligation and does not undertake to update forward-looking statements.

Investor Contact: Please address any questions or comments related to this report to our investor’s e-mail: hainainvestors@egehaina.com.

10