The dismantling of former gas and power titan Aquila Inc. moved a step closer to completion last week. Great Plains Energy Inc., the parent company of Kansas City Power & Light, received approval from its shareholders to issue common stock for its acquisition of Aquila.
On Feb. 7 Great Plains said it had agreed to acquire all the outstanding shares of Aquila for $1.80 in cash plus 8.56 cents in Great Plains common stock for each share of Aquila common stock. Immediately prior to the acquisition, Black Hills Corp. will acquire from Aquila its electric utility in Colorado and its gas utilities in Colorado, Kansas, Nebraska and Iowa along with the associated liabilities. Each transaction is conditioned on the closing of the other (see NGI, Feb. 12).
The acquisition of Aquila by Great Plains is still subject to the approval of the Federal Energy Regulatory Commission and the state public service commissions of Missouri and Kansas. The Aquila-Black Hills transaction is still subject to the approval of FERC and the state public service commissions of Colorado, Nebraska and Kansas. The transactions are currently expected to close in the first quarter of 2008.
“We are very pleased that shareholders of both Aquila and Great Plains Energy approved the pending deal,” said Black Hills CEO David R. Emery. “With these milestones accomplished, we are making good progress with our plans to acquire the gas and electric operations from Aquila. We are continuing our efforts to receive the remaining state and federal regulatory approvals so that the transaction can close in the first quarter of 2008.”
Great Plains will be the parent of Aquila and have revenues of more than $3 billion and approximately 800,000 customers. Aquila will continue to own its Missouri-based utilities and its merchant services operations, primarily consisting of the 340 MW Crossroads power generating facility and residual natural gas contracts. By acquiring Aquila’s Missouri-based utilities — Missouri Public Service Co. and St. Joseph Light & Power — Great Plains will expand its utility service territory around the Kansas City metro area. The Aquila transaction will add about 300,000 electric utility customers to the existing base of about 500,000 customers. The combined generating capacity will consist of approximately 5,800 MW.
The combined Black Hills/Aquila regulated utility and other operations will have approximately 750,000 retail and wholesale customers in 12 states.
Proceeds from the utilities sale to Black Hills will be used to fund the cash portion of the Great Plains acquisition and to reduce existing Aquila debt. Aquila shareholders will own approximately 27% of Great Plains common stock.
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