Kansas City, MO-based UtiliCorp United Inc. has asked the Federal Energy Regulatory Commission for authorization “as soon as practicable” to re-acquire the nearly 20% interest in its natural gas and power marketer, Aquila Inc., that it sold to the public earlier in the year. Upon the completion of the transaction, the company plans to adopt Aquila as its corporate name possibly as early as the first quarter of 2002.

UtiliCorp filed the application for an exchange offer less than a week after it announced its intention to buy back the shares in Aquila that it sold last April (See Daily GPI, Nov. 8). UtiliCorp currently owns about 80% of the outstanding shares of Aquila common stock, and holds 98% of the voting power of the stock.

Although it did not cite the financial problems at Enron Corp. as the reason for its action, UtiliCorp told the Commission that it “based its decision for the exchange offer on recent significant changes in the merchant energy sector,” as well as changes in the “general economy and the impact of these changes on the capital markets and UtiliCorp’s strategic direction.”

Given that the “present application raises no issues regarding competition,” the Midwest utility concern called on the Commission to approve it by no later than Dec. 20 of this year [EC02-22]. The UtiliCorp buy-back also requires the blessing of the Securities and Exchange Commission.

Under the deal, UtiliCorp proposes to offer Aquila shareholders shares of UtiliCorp common stock in return for their shares of Aquila common stock. Upon successful completion of the exchange, UtiliCorp said it plans to complete a “short-form merger” of Aquila with a subsidiary of UtiliCorp. Aquila again would become a wholly-owned subsidiary of UtiliCorp, it said.

When it sold the 20% interest in Aquila in April, UtiliCorp told FERC that “it was the intention of the UtiliCorp board of directors to spin off the remaining shares of Aquila held by UtiliCorp. to [its] shareholders.” However, the company board “has now determined that it would be in the best interest of UtiliCorp and its shareholders to re-acquire the shares of Aquila owned by the public.”

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