Aquila Inc. on Thursday said that it has initiated steps to terminate an agreement to sell its 79.9% interest in Aquila Sterling Ltd., the owner of Midlands Electricity plc, to a subsidiary of Scottish and Southern Energy plc.

The agreement among Aquila, FirstEnergy Corp. and Scottish and Southern Energy, announced in May, called for a subsidiary of Scottish and Southern Energy plc to purchase Aquila Sterling from Aquila and FirstEnergy (see Power Market Today, May 23). Aquila Sterling is held by a joint venture company that is owned 79.9% by Aquila and 20.1% by FirstEnergy.

The sale was subject to a number of conditions including the successful redemption of outstanding bonds issued by Avon Energy Partners Holdings, an Aquila Sterling Holdings subsidiary, at 86% of their nominal value plus all accrued interest. The collective efforts to meet this bond redemption condition were unsuccessful and, therefore, all three parties have agreed to initiate steps to terminate the sales and purchase agreement.

“We are very confident with this business, and we are comfortable with this outcome,” said Keith Stamm, Aquila’s chief operating officer. “We will now continue to work with the management and employees of Midlands to maximize the value of the business in the best interest of our customers and shareholders.”

Midlands is the fourth largest electricity distribution utility in the United Kingdom, serving 2.4 million network customers through a 38,000-mile distribution network. Midlands also owns interests in a combined 884 MW of net generation capacity in the United Kingdom, Turkey and Pakistan.

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