Aquila Announces More Asset Sales, Raising Total to $976.6 Million; Winds Up European Energy Merchant Operations

Business Wire, Oct 16, 2002

Business Editors

KANSAS CITY, Mo.--(BUSINESS WIRE)--Oct. 16, 2002

Aquila, Inc. (NYSE:ILA) today reported additional asset sales under its previously announced restructuring program, bringing the current total of assets it has sold or agreed to sell to $976.6 million. The company's stated goal since May has been to sell at least $1 billion in assets to strengthen its balance sheet and credit.

"We are continuing to focus on our transition back to our roots as a regulated utility company and our exit from the elements of our previous energy merchant strategy that are not consistent with our current business model," said Aquila Chairman, President and Chief Executive Officer Richard C. Green, Jr.

An Aquila subsidiary has sold to Black Hills Corporation for $30.5 million a credit facility it provided to Mallon Resources Corporation and Mallon Oil Company in 1999. The financing was for development of oil and gas properties in New Mexico.

On October 15, Aquila sold 8 million common shares of Quanta Services, Inc. (NYSE:PWR) for $3.00 per share in a privately negotiated transaction. Through open market and private sales since July, Aquila has sold more than 16 million Quanta shares for total proceeds of about $44 million. It now holds approximately 12.8 million shares and has a 14.3 percent equity interest in Quanta, which builds and maintains energy and communications networks across the United States.

As part of the ongoing reduction in Aquila's energy marketing and trading activities, the company is on track with plans to close its European headquarters in London and its office in Essen, Germany by the end of this month. The office in Sandefjord, Norway has been closed and all of Aquila's trading through Nord Pool, the trading organization that handles energy in Scandinavia, has ceased. Aquila also has terminated or restructured the majority of its historical trading positions in Europe and the remainder will be managed by Capacity Services staff at its headquarters in Kansas City.

Aquila's announced agreements to sell assets are listed below. The transactions closed to date total $796.6 million.

Aquila Asset Sales As of October 15, 2002      Net Proceeds (Millions)
-----------------------------------------      -----------------------
Completed:
----------
Lockport, N.Y., power project                           $  37.5
Natural gas pipeline and processing assets                265.0
UnitedNetworks (New Zealand distribution utility)         362.0
U.K. gas storage assets                                    34.9
Quanta Services stock (open market and private sales)      44.0
Mallon credit facility                                     30.5
Other businesses and assets                                22.7
                                                         -------
Subtotal                                                  796.6

Pending:
--------
Texas gas storage assets                                  180.0
                                                         -------
Total asset sales closed or pending                      $976.6

Based in Kansas City, Missouri, Aquila operates electricity and natural gas distribution networks serving customers in seven states and in Canada, the United Kingdom, and Australia. The company also owns and operates power generation assets. At June 30, 2002, Aquila had total assets of $11.9 billion. More information is available at www.aquila.com.