Aquila Announces Plans to Sell New Zealand Assets as Part of Its Project BBB+/Baa1

Business Wire, June 11, 2002

Business Editors

KANSAS CITY, Mo.--(BUSINESS WIRE)--June 11, 2002

Aquila, Inc. (NYSE:ILA) announced today that as majority owner of New Zealand-based UnitedNetworks Limited it has requested that UnitedNetworks seek expressions of interest from potential buyers.

The move supports Aquila's Project BBB /Baa1, a focused effort to increase its credit rating and strengthen the company's balance sheet.

"We previously announced our intention to sell $500 million to $1 billion in assets," said Robert K. Green, president and chief operating officer of Aquila. "This is an attractive asset in Australasia. It is the largest energy distribution company in New Zealand and has performed well as we implemented efficiencies and integrated acquired operations. The action supports our BBB /Baa1 initiative and is consistent with our invest, optimize and monetize strategy."

Aquila currently owns 55 percent of UnitedNetworks, which it created in 1998 by combining operations acquired from three other utilities. Expressions of interest are due by late June. The full text of the UnitedNetworks announcement distributed earlier today in New Zealand follows.

Based in Kansas City, Aquila, Inc. is an international electric and gas company with energy customers and operations across the U.S. and in Canada, the United Kingdom, New Zealand and Australia. Its Aquila Merchant Services subsidiary is one of the largest wholesalers of electricity and natural gas in North America. Aquila Merchant Services also provides wholesale energy services in the U.K. and has a presence in Scandinavia and Germany. At March 31, 2002, Aquila had total assets of $12.3 billion and 12-month sales of $37.3 billion. Additional information is available at www.aquila.com.

The following announcement was released on June 12 in New Zealand by UnitedNetworks:

UnitedNetworks announces sale process

UnitedNetworks Limited today announced that following an approach made to it by its principal shareholder, UtiliCorp N.Z. Limited (whose ultimate parent company is Aquila, Inc.), the company is considering a possible sale of its entire operation.

UnitedNetworks Chief Executive Officer Dan Warnock today said that the company has appointed Deutsche Bank as its adviser to seek expressions of interest from potential buyers of either:

(a) all the shares in the Company; or

(b) the assets and business of the Company, either as a whole or

for one or more of its three regional electricity distribution

networks, its gas distribution network, its broadband

telecommunications network and other assets.

UnitedNetworks envisaged both processes running concurrently and that the process should take approximately 3 months. "The ultimate decision of whether to divest, and on what basis, will be made based on what UnitedNetworks considers to be the best value outcome for all UnitedNetworks shareholders," said Mr Warnock.

Mr Warnock said that any share sale process would proceed by way of a full offer made under the Takeovers Code.

In order to facilitate a possible sale of its shares, UnitedNetworks has signed an agreement with Aquila, Inc. and UtiliCorp N.Z. Limited, amending the Cornerstone Relationship Deed between them. This amendment grants Aquila, Inc. and UtiliCorp N.Z. Limited a limited waiver of their obligations under the Cornerstone Relationship Deed. This will enable them to undertake communications and other actions with third parties of a non-binding nature.

Mr Warnock said that depending on what develops in relation to the possible sale of its operations, the company might grant further waivers in order to facilitate a sale of its shares so long as it is satisfied that this will not defeat the objectives of the Cornerstone Relationship Deed.

He also noted, however, that UnitedNetworks has the ability to withdraw the waiver it has given (but not with retrospective effect), and therefore has the ability to require any disposal by Aquila that would result in its ceasing to hold at least 35% of the voting securities in the company to be transacted through the company.

Mr Warnock indicated the process would be a typical one. The key milestones are as follows.

-- An Information Flyer for potential purchases has been developed and will be
provided immediately.

-- Parties will be asked to file Expression Of Interest notifications by June
28, 2002.

-- A comprehensive Information Memorandum will be provided to selected parties
in early July with non-binding indicative bids required mid-July.

-- Short-listed parties will then be provided an opportunity to conduct formal
due diligence with the submission of final, binding bids in late August.

-- Subsequently, a decision on the bids will also occur late August.

UnitedNetworks is recognised as a strongly performing infrastructure company, returning an earnings per share increase of 72% since March 1998. In the year to December 2001, UnitedNetworks posted a net surplus of NZ$120.8 million, up 10.5% on the previous year.

The company is New Zealand's 11th largest by market capitalisation with assets of NZ$2.3 billion. The company is one of the largest network infrastructure companies in New Zealand distributing electricity to about 30% of New Zealand's electricity consumers, gas to over 50% of the country's gas consumers and owns and manages broadband communications networks in the Auckland and Wellington CBDs.