The Missouri Public Service Commission (PSC) last week approved the purchase of Aquila Inc.'s Missouri operations by Great Plains Energy Inc. and its subsidiary, Kansas City Power & Light Co. (KCPL). It was the final regulatory approval needed to complete the Great Plains-Aquila merger, the company said. The companies have scheduled a tentative closing date of July 14.
At closing Great Plains will acquire all outstanding shares of Aquila and its Missouri-based electric utility assets for $1.80/share in cash plus 0.0856 of a share of Great Plains common stock for each share of Aquila common stock. In addition, Great Plains Energy will assume Aquila's net debt remaining after closing. Upon consummation of the transactions, Aquila shareholders will own approximately 27% of Great Plains common stock.
As part of its decision, the PSC determined that Great Plains will not be allowed to recover transaction costs from ratepayers.
The Aquila deal will add about 300,000 electric utility customers to KCPL's existing 505,000 customers. It is part of a three-way deal that includes South Dakota-based Black Hills Corp. acquiring Aquila's electric and gas operations in Colorado, Kansas, Nebraska and Iowa for $940 million. Great Plains is to pay approximately $1.7 billion in cash and stock and assume $1 billion of Aquila debt for the Missouri operations, effectively putting a period at the end of the 100-year saga of Aquila and its predecessor companies. The linked transactions were first announced in early 2007 (see NGI, Feb. 12, 2007).
Earlier this year the Kansas Corporation Commission approved the acquisition, leaving Missouri as the deal's final obstacle (see NGI, March 3). Highlights of the Kansas settlement included:
Great Plains said that overall the deal would generate benefits and net customer savings of about $140 million by 2013 and $482 million by 2017.
Last month Great Plains completed the sale of subsidiary Strategic Energy LLC to Centrica plc subsidiary Direct Energy for $300 million. Proceeds from that sale will be used to offset some of Great Plains' anticipated financing needs in 2008, the company said.
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