KANSAS CITY, Mo., Oct. 5, 2000Aquila Energy, a wholly owned subsidiary of UtiliCorp United, and GPU Inc. have executed a definitive $225 million agreement for Aquila to purchase GPU’s wholly owned subsidiary, GPU International Inc., including its interests in six independent U.S.-based generating plants and a development generating project.
GPU’s interests in the generating plants represent about 500 megawatts of capacity, and it owns a one-half interest in the 715-megawatt development project. At closing, the corporate employees currently associated with GPU International will be considered for transfer to Aquila. The transaction is expect to close by the end of the year.
“These assets are an excellent strategic fit for us,” said Robert K. Green, chairman of Aquila Energy and president and CEO of UtiliCorp.
“With this transaction, Aquila owns or controls more than 3,500 megawatts of generation in operation, construction and under active development. We expect the earnings stream from additional ownership in generation to complement our income from energy marketing and risk management, as well as enhance our portfolio of independent power projects.”
The purchase will be accretive to UtiliCorp’s earnings. GPU reported that it expects to realize an after-tax gain on the sales of $60 to $80 million to be reflected upon closing of the transaction. The net proceeds will be used by GPU to reduce outstanding debt.
“We are pleased that the sale of our interests in these properties will enable us to further focus on opportunities related to our core infrastructure business, such as GPU’s acquisition of the MYR Group, a utility infrastructure services firm, as well as unregulated businesses such as GPU Telcom strategic partnership with Sting Communications to provide high-speed data services in the Northeast,” said Fred D. Hafer, chairman, president and CEO of GPU.
The sale is subject to certain regulatory approvals. Salomon Smith Barney and Donald Lufkin & Jenrette were the investment advisors for GPU and Aquila, respectively.