After taking Aquila Gas Pipeline off the auction block inAugust, UtiliCorp United announced plans last week to buy back 5.4million common shares of the company, representing the 18% ofoutstanding AQP common shares it does not already own, for $8 pershare. The price represents a 23% premium to the closing AQP shareprice of $6.50 on Nov. 11.
“It simply allows us — since we were unsuccessful in finding astrategic alternative earlier this year — [to gain] 100% control,”UtiliCorp CEO Richard C. Green said in an interview with NGI. “Wecould do many different things with it. It could be selling it. Itcould be merging it. It could be continuing to buy property. I meanwe’ll continue to buy and grow it because we can’t let thisbusiness stagnate.
“We like midstream assets. What we don’t like is the sensitivityto liquids prices that we have in the current assets that we have,”he said. “We don’t have any plans at this point in time that we cantalk about other than what we did today.”
UtiliCorp sold the 18% stake in 1992 in an initial publicoffering of AQP. Previously, the company was a wholly ownedsubsidiary. The repurchase proposal has been submitted in a letterto the chairman of the board of Aquila Gas Pipeline and anindependent committee of the board of directors. Any agreement withregard to the proposed buyback of shares, including the form ofconsideration to be paid, is subject to negotiations and agreementwith the independent committee.
Based in San Antonio, AQP gathers, processes and markets naturalgas and natural gas liquids through its natural gas gatheringsystems and gas processing plants in Texas and Oklahoma. AQP shareprices rose sharply yesterday, following the announcement. Pricesjumped 33%, or $2.19, during the day to close at $8.69/share.
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