3V Capital joins Pirate Capital in opposition of Aquila deals with Great Plains Energy, Black Hills

By Lisa Kerner

Charlotte, N.C., Feb. 9 - 3V Capital Management LLC and Pirate Capital LLC oppose the proposed transactions that would give Great Plains Energy Inc. and Black Hills Corp. portions of Aquila, Inc.

"In our view, the implied sale price is materially lower than what we believe to be the fair value of the company, lower than the value assigned to the shares by certain Wall Street Analysts, lower that the 50 day moving average price of the stock over the last four months and lower that the average volume-weighted average price over the last six months," 3V Capital's managing director David D.R. Bullock said in the letter to Aquila president Richard Green.

Bullock also noted in the letter that one Great Plains investor said Great Plains was getting Aquila at a discount.

3V Capital manages funds that are the beneficial owners of Aquila common stock.

Aquila shareholder Pirate Capital also opposed the company's deal with Great Plains Energy and Black Hills in a letter to Aquila's president.

Pirate Capital, which advises funds including Jolly Roger, is the beneficial owner of some 17.6 million shares of Aquila common stock, according to a company news release.

"As the company has already lost hundreds of millions of dollars under your watch, this outrageous deal, which destroys shareholder value and triggers sizeable severance packages, causes us to question your ability as a manager and your commitment to Aquila shareholders," Pirate Capital portfolio manager Thomas R. Hudson, Jr. said in his letter to Green.

"We strongly urge you to nullify the deal immediately, reevaluate your commitment to Aquila shareholders and either resign from the company or get back to the drawing board to negotiate a better deal."

In one proposed transaction, Great Plains Energy will acquire all the outstanding shares of Aquila and its Missouri-based electric utility assets for $4.54 per share, or about $1.7 billion, including the assumption of about $1 billion of Aquila's net debt.

Black Hills will acquire Aquila's electric utility in Colorado and its gas utilities in Colorado, Kansas, Nebraska and Iowa, as well as associated liabilities for $940 million in cash, immediately prior to Great Plains Energy's acquisition of Aquila.

Great Plains Energy is a Kansas City, Mo., holding company for Kansas City Power & Light and Strategic Energy, LLC.

Based in Kansas City, Mo., Aquila owns electric power generation assets and operates electric and natural gas transmission and distribution networks.

Black Hills is a diversified energy company based in Rapid City, S.D.

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