Aquila Inc. last week said that its near-term liquidity won’t be affected as a result of MEP Pleasant Hill LLC’s defaulting on $270 million of construction loans that were used to fund construction of a 580 MW, gas-fired combined cycle power plant located near Pleasant Hill, MO. Aquila holds a 50% interest in MEP Pleasant Hill.

The letters of credit were fully cash collateralized “and thus this action does not impact Aquila’s near-term liquidity,” the company said. Aquila is exploring alternatives to restructure the project.

The project financing is non-recourse to Aquila and as such the default has no impact on Aquila’s other credit arrangements or utility operations, the company added.

According to Aquila, the plant, known as the Aries power project, will continue to run according to contractual obligations and market needs. Other operating contracts, including tolling agreements for the power generated by Aries, remain current and are not affected by the default, Aquila said.

The major purchaser of electricity from the baseload plant is Missouri Public Service Co. A Calpine Corp. affiliate owns the remaining 50% of the facility, which is operated by Calpine Central L.P.

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