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Aquila agrees to sell Australian interests

23 April 2003 – Aquila, Inc. announced Tuesday that it has reached an agreement to sell all of its Australian interests for approximately $589m, which after fees, expenses and taxes is projected to yield net cash proceeds of approximately $445m at closing.

Aquila intends to apply the net proceeds toward its prepayment obligations under its new 364-day secured loan and use the remainder to carry out its restructuring plan. Aquila’s interests in Multinet Gas, United Energy and AlintaGas are to be sold to a consortium representing AlintaGas, AMP Henderson and their affiliates.

Completion of the transaction is conditional upon a series of agreed transaction steps; regulatory, shareholder and related approvals; and the completion of the consortium’s funding arrangements. The financial close is targeted for the third quarter of 2003. Citigroup served as Aquila’s advisor on the transaction.

“The ultimate sale of our Australian properties will be another significant step in our plan to enhance our balance sheet and return our focus to operating highly efficient electric and natural gas utilities in North America,” said Keith Stamm, Aquila senior vice president and chief operating officer.

Over the past year, Aquila has had extensive discussions with potential Australian and overseas buyers. After reviewing its options, Aquila believes terms agreed with the AlintaGas and AMP Henderson consortium, upon completion, will maximize the value of its Australian assets.

Aquila had been an active participant in Australia’s energy business since 1995 when it acquired a 34.5 per cent indirect interest in United Energy Limited, the first electric distribution utility to be privatized by the state of Victoria. United Energy serves 583 000 customers. In 1999 Aquila acquired a 25.5 per cent equity interest (48 per cent economic interest) in Multinet Gas, a gas distribution business serving 630 000 customers in Victoria, and in 2000 Aquila acquired a 30 per cent indirect ownership in AlintaGas. AlintaGas is a gas distributor and operates a retail gas business serving 463 000 customers in the state of Western Australia.