26 September 2003 – Aquila Inc. said Thursday that it has scrapped its plan to sell UK utility Midlands Electricity after failing to persuade bondholders to accept 86 per cent of their bonds’ value.
Scottish and Southern Energy PLC, based in Perth, Scotland, had agreed to buy Aquila Sterling Ltd., the owner of Midlands Electricity, from Kansas City-based Aquila and FirstEnergy Corp. of Akron, Ohio, in a deal valued at $1.8bn.
Aquila owns 79.9 per cent of Aquila Sterling Ltd. and FirstEnergy owns 20.1 per cent.
The deal was subject to agreement by holders of the outstanding Avon Energy Partners Holdings bonds to accept a cash payment equivalent of 86 per cent of face value from Aquila Sterling. Avon Energy is the holding company through which Aquila Inc. and FirstEnergy control Aquila Sterling. Aquila had been negotiating with representatives of certain holders of the £360m ($597m) variable coupon bonds due 2006, the $250m 7.05 per cent notes due 2007 and the $250m 6.46 per cent notes due 2008 issued by Avon Energy Partners Holdings
Aquila announced Thursday that efforts to meet that condition were unsuccessful, so all three parties agreed to initiate steps to terminate the sales and purchase agreement.
“We are very confident with this business, and we are comfortable with this outcome,” said Keith Stamm, Aquila’s chief operating officer. “We will now continue to work with the management and employees of Midlands to maximize the value of the business in the best interest of our customers and shareholders.”
Midlands is the fourth largest electricity distribution utility in the United Kingdom, serving 2.4 million network customers through a 38,000-mile distribution network. Midlands also owns interests in a combined 884 MW of net generation capacity in the United Kingdom, Turkey and Pakistan.
The acquisition would have made Scottish and Southern the largest electricity network owner and operator in Britain with more than 112 500 miles of overhead lines and underground cables serving 5.7 million customers.