Aquila’s acquisition of Cogentrix uncertain

KANSAS CITY, Mo., Aug. 1, 2002 — Aquila Inc. announced that recent downgrades of Dynegy’s credit ratings, together with other adverse circumstances and events, have decreased the likelihood that Aquila’s acquisition of privately held Cogentrix Energy can be completed as planned.

The pending transaction includes a purchase price of $415 million and the assumption of recourse and non-recourse debt.

Dynegy’s downgrades by Standard & Poor’s, Fitch Ratings and Moody’s Investors Service are expected to cause a Dynegy subsidiary to default under a sizeable agreement to purchase power from a Cogentrix subsidiary, calling into question the Aquila-Cogentrix agreement.

Aquila signed a definitive agreement on April 29 to purchase 15 Cogentrix combined-cycle power plants in service or under construction.

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.

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