Coming closer by the day to reaching its planned $1 billion asset divestiture goal, Aquila Inc. said Friday that its subsidiary UtiliCorp NZ Ltd. has completed the sale of its 70.2% interest in UnitedNetworks Ltd., a New Zealand-based energy company, to Vector Ltd. for approximately $503 million. Kansas City, MO-based Aquila said it expects to book a fourth quarter gain on the transaction estimated at approximately $28 million.

Earlier in the week, Aquila announced that it had completed its $265 million sale of its Southeast Texas and Mid-Continent natural gas pipeline systems and natural gas and gas liquids processing assets, as well as its 50% stake in the Oasis pipeline system, to Energy Transfer Co. (see Daily GPI, Oct. 8).

Under its takeover offer, Vector purchased all shares of UnitedNetworks that were held by UtiliCorp NZ. The takeover offer was conditional upon Aquila’s receipt of bank consents and Vector’s acquisition of the 70.2% stake in UnitedNetworks. Both conditions were satisfied last week, the companies reported. Under New Zealand law, Vector then had seven days to settle its takeover offer in cash, and it funded the acquisition of UtiliCorp NZ interest in UnitedNetworks Thursday in Auckland.

Aquila, whose share of net proceeds from the transaction is estimated to be approximately $362 million, said the funds will be used to retire debt related to its acquisition of UnitedNetworks and other utilities in Australia, Canada and the United Kingdom. In preparation for the sale to Vector, Aquila last week repurchased the minority stake in UtiliCorp NZ held by its financial partner for approximately $38.5 million, increasing its interest in UnitedNetworks from 55.5% to 70.2%. The sale is the culmination of a bid process announced in June by UnitedNetworks as part of Aquila’s ongoing effort to sell $1 billion or more in assets to strengthen its balance sheet and credit ratings (see Daily GPI, June 3; June 19).

“Since beginning our strategic restructuring a few months ago, Aquila has now sold or agreed to sell assets with net proceeds totaling $876.1 million,” said Richard C. Green, Jr., Aquila CEO. “The transfer of ownership in UnitedNetworks brings the total of completed transactions to about $696 million, or more than two-thirds of our stated goal of $1 billion.”

As of Thursday (Oct. 10), Aquila said it had gained net proceeds from asset sales including:

Green added that asset sales, elimination of costs and management restructuring have been the principal focus of Aquila as it repositions itself as an electric and gas utility and owner of fully contracted generation. “As we continue to press ahead with these important steps, we will now redouble our efforts toward the next phase of our repositioning, the continued exit from the remaining non-core elements of our previous energy merchant strategy,” he said. “This task is essential to addressing the concerns expressed by the market.”

As one of New Zealand’s largest infrastructure companies, UnitedNetworks distributes energy to about 30% of the country’s electricity consumers and more than half of its natural gas consumers. It also owns and manages telecommunications networks in the central business districts of Auckland and Wellington.

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