Aquila Inc. will exit its once promising gas and power business in Australia, where it had been an active participant since 1995, after agreeing to sell its assets for nearly $589 million to a consortium representing Australian-based AlintaGas, AMP Henderson and their affiliates.

The net cash proceeds, expected to bring Aquila nearly $445 million, will be applied toward prepayment obligations under its new 364-day secured loan and toward its restructuring plan. The transaction is targeted to close in the third quarter after a series of agreed regulatory, shareholder and related approvals are completed. Citigroup acted as Aquila’s adviser.

“The ultimate sale of our Australian properties will be another significant step in our plan to enhance our balance sheet and return our focus to operating highly efficient electric and natural gas utilities in North America,” said Keith Stamm, Aquila’s COO.

Aquila had been an active participant in Australia’s energy business after acquiring a 34.5% indirect interest in United Energy Ltd. in 1995, the first electric distribution utility to be privatized by the state of Victoria. United Energy serves 583,000 customers. In 1999 Aquila also acquired a 25.5% equity interest (48% economic interest) in Multinet Gas, a gas distribution business serving 630,000 customers in Victoria.

Just three years ago, Aquila acquired a 30% indirect ownership in AlintaGas. AlintaGas is a gas distributor and operates a retail gas business serving 463,000 customers in the state of Western Australia.

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