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UtiliCorp to Buy Back All AQP Shares at a 23% Premium

UtiliCorp to Buy Back All AQP Shares at a 23% Premium

After taking Aquila Gas Pipeline off the auction block in August, UtiliCorp United announced plans last week to buy back 5.4 million common shares of the company, representing the 18% of outstanding AQP common shares it does not already own, for $8 per share. The price represents a 23% premium to the closing AQP share price of $6.50 on Nov. 11.

"It simply allows us -- since we were unsuccessful in finding a strategic alternative earlier this year -- [to gain] 100% control," UtiliCorp CEO Richard C. Green said in an interview with NGI. "We could do many different things with it. It could be selling it. It could be merging it. It could be continuing to buy property. I mean we'll continue to buy and grow it because we can't let this business stagnate.

"We like midstream assets. What we don't like is the sensitivity to liquids prices that we have in the current assets that we have," he said. "We don't have any plans at this point in time that we can talk about other than what we did today."

UtiliCorp sold the 18% stake in 1992 in an initial public offering of AQP. Previously, the company was a wholly owned subsidiary. The repurchase proposal has been submitted in a letter to the chairman of the board of Aquila Gas Pipeline and an independent committee of the board of directors. Any agreement with regard to the proposed buyback of shares, including the form of consideration to be paid, is subject to negotiations and agreement with the independent committee.

Based in San Antonio, AQP gathers, processes and markets natural gas and natural gas liquids through its natural gas gathering systems and gas processing plants in Texas and Oklahoma. AQP share prices rose sharply yesterday, following the announcement. Prices jumped 33%, or $2.19, during the day to close at $8.69/share.

Rocco Canonica

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