KANSAS CITY, Mo., Aug 8, 2002 — Aquila Inc. announced Tuesday that it is exiting the wholesale energy marketing and trading business operated by its Aquila Merchant Services subsidiary by the end of the third quarter.
Since announcing plans on June 17 to reduce its risk exposure and restructure the business, Aquila has eliminated all market-making activity and speculative trading, commonly referred to as “proprietary trading.” The elimination of this activity has resulted in an approximately 90 percent reduction in physical throughput.
As a part of the restructuring process, Aquila has worked with The Blackstone Group during the past several weeks to explore its strategic exit options.
“While we had explored the idea of securing a partner, we believe it is in the best interest of our shareholders to completely exit the wholesale energy marketing and trading business,” said Robert K. Green, president and chief executive officer of Aquila. “Our focus now is to ensure a coordinated and seamless exit.”
As a result of recently’s announcement, Aquila Merchant Services’ North American and European workforce of approximately 500 will be significantly reduced. Since May, about 550 positions have been eliminated across all merchant operations.
In conjunction with its exit strategy, Aquila has reached an agreement with Chicago-based Citadel Investment Group to provide potential career opportunities with the investment firm for those Aquila employees directly impacted.
“Our wholesale energy marketing and trading business is operated by some of the best talent in the industry, and they have created considerable value for Aquila in the past decade,” said Green. “Their skills and experience have played a major role in our growth.
“The process of taking this business from a top-five energy marketer to a complete exit of trading has required tremendous effort and that reflects well of the professionalism and commitment of Aquila’s people.”
Following the late-September shutdown of the energy trading business, Capacity Services, which manages Aquila’s non-utility assets, will only market energy from the assets the company owns or controls.
Based in Kansas City, Missouri, Aquila operates electricity and natural gas distribution networks serving more than six million customers in seven states and in Canada, the United Kingdom, New Zealand and Australia. The company also owns and operates power generation and mid-stream natural gas assets. At March 31, 2002, Aquila had total assets of $12.3 billion. More information is available at www.aquila.com.