Aquila, UtiliCorp at Share Purchase Impasse
UtiliCorp United wants to buy the rest of Aquila Gas Pipeline
Corp. it doesn't already own, but the companies cannot agree on a
deal. UtiliCorp currently owns about 82% of Aquila Gas Pipeline's
outstanding common shares.
On Nov. 10, UtiliCorp proposed acquiring the 5.4 million shares
of the pipeline held by the public for $8/share. UtiliCorp has been
in talks with a special committee of independent directors of
Aquila Gas Pipeline.
UtiliCorp also said it is reviewing its options, including
whether to proceed with an offer directly to the public for the
shares. Such an offer could be equal to, lower than, or higher than
the $8/share proposed in November.
Based in San Antonio, TX, Aquila Gas Pipeline gathers, processes
and markets gas and gas liquids through its gathering systems and
gas processing plants in Texas and Oklahoma. The company is about
82% owned by Aquila Energy Corp., a wholly-owned subsidiary of
UtiliCorp United. The remaining shares were sold to investors in an
initial public offering in 1993. An attorney representing the
Aquila Gas Pipeline special committee declined to comment on the
negotiations with UtiliCorp. A UtiliCorp spokesman could not be
reached for comment by press time Monday.
In March 1998 Aquila Gas Pipeline hired Merrill Lynch & Co.
to assist in a possible sale of the company (see Daily GPI March
11, 1998). Then in August it took itself off the auction block,
citing low prices for natural gas liquids, which created a soft
market for the company. "Consolidations within the pipeline
industry in the past few years signaled that it may be in the best
interest of our stockholders to consider selling the company. Since
March we have gone through an exhaustive process and determined
that more shareholder value can be achieved through continued
growth," said Aquila Gas Pipeline CEO Joe Becraft.
Last month, Aquila Gas Pipeline said it would cut 60 people from
its staff of 310 and take a $1.7 million pre-tax charge to earnings
(see Daily GPI March 3, 1999). Last year the company fell prey to
low commodity prices. For the year, net income was $4.9 million,
compared to 1997 net income of $25.2 million. Cash flow from
operations was $32.6 million in 1998, down from $56.7 million in
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