Kansas City, MO, April 5, 2007 — Great Plains Energy Inc., its public utility subsidiary Kansas City Power & Light Co. (KCP&L) and Aquila Inc. filed applications with the Missouri Public Service Commission and the Kansas Corporation Commission seeking approval of the proposed acquisition by Great Plains Energy of Aquila. The parties announced the proposed merger of Aquila and a subsidiary of Great Plains Energy, with Aquila surviving the merger and becoming a wholly owned subsidiary of Great Plains Energy, on February 7, 2007.
In the applications, the companies stated the transaction will provide benefits for customers, communities and investors. In particular, Great Plains Energy anticipates that the transaction will result in significant synergies, economies of scale and efficiencies, which are currently estimated to be approximately $500 million over the five-year period of 2008-2012, with costs to achieve (including transaction costs) of approximately $181 million.
In Missouri, the companies have requested that Aquila be authorized to use an additional amortization mechanism to maintain credit ratios once Aquila achieves financial metrics necessary to support an investment-grade credit rating. This mechanism is similar to the one used in KCP&L’s last rate case. Aquila and KCP&L also requested authorization to amortize transaction and incremental transition-related costs over five years, and to collectively retain for a five-year period 50 percent of any synergy savings resulting from the transaction. The companies are not seeking to recover any acquisition premium. In Kansas, the companies requested similar regulatory treatment of costs and synergies only for KCP&L; no regulatory treatment was requested for Aquila, as it will be selling its non-Missouri utility operations to Black Hills Corporation immediately before the merger closes.
Aquila further requested approval in Missouri to distribute to Great Plains Energy approximately $677 million of the proceeds from the sale of its non-Missouri utility operations to Black Hills to fund substantially all of the cash portion of the merger consideration payable to its shareholders by Great Plains Energy.
The regulatory applications, along with the regulatory applications filed by Aquila and Black Hills with respect to the sale of Aquila’s non-Missouri operations to Black Hills, are the first joint regulatory filings made by Great Plains Energy and Aquila regarding the proposed acquisition. The companies expect to file an application with the Federal Energy Regulatory Commission and to file Hart-Scott-Rodino antitrust notifications in the future. Great Plains Energy expects that, upon closing of the transaction, Aquila will be renamed and its operations integrated with KCP&L operations.
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