UtiliCorp United wants to buy the rest of Aquila Gas PipelineCorp. it doesn’t already own, but the companies cannot agree on adeal. UtiliCorp currently owns about 82% of Aquila Gas Pipeline’soutstanding common shares.

On Nov. 10, UtiliCorp proposed acquiring the 5.4 million sharesof the pipeline held by the public for $8/share. UtiliCorp has beenin talks with a special committee of independent directors ofAquila Gas Pipeline.

UtiliCorp also said it is reviewing its options, includingwhether to proceed with an offer directly to the public for theshares. Such an offer could be equal to, lower than, or higher thanthe $8/share proposed in November.

Based in San Antonio, TX, Aquila Gas Pipeline gathers, processesand markets gas and gas liquids through its gathering systems andgas processing plants in Texas and Oklahoma. The company is about82% owned by Aquila Energy Corp., a wholly-owned subsidiary ofUtiliCorp United. The remaining shares were sold to investors in aninitial public offering in 1993. An attorney representing theAquila Gas Pipeline special committee declined to comment on thenegotiations with UtiliCorp. A UtiliCorp spokesman could not bereached for comment by press time Monday.

In March 1998 Aquila Gas Pipeline hired Merrill Lynch & Co.to assist in a possible sale of the company (see Daily GPI March11, 1998). Then in August it took itself off the auction block,citing low prices for natural gas liquids, which created a softmarket for the company. “Consolidations within the pipelineindustry in the past few years signaled that it may be in the bestinterest of our stockholders to consider selling the company. SinceMarch we have gone through an exhaustive process and determinedthat more shareholder value can be achieved through continuedgrowth,” said Aquila Gas Pipeline CEO Joe Becraft.

Last month, Aquila Gas Pipeline said it would cut 60 people fromits staff of 310 and take a $1.7 million pre-tax charge to earnings(see Daily GPI March 3, 1999). Last year the company fell prey tolow commodity prices. For the year, net income was $4.9 million,compared to 1997 net income of $25.2 million. Cash flow fromoperations was $32.6 million in 1998, down from $56.7 million in1997.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.