Aquila $500 million notes seen pricing at "high yield" levels

By Paul A. Harris

St. Louis, Mo., June 18 - Aquila, Inc.'s upcoming offering of $500 million senior notes (existing: Baa3/BBB) is seen pricing at levels that mean the deal will be "high yield," according to a syndicate source.

Early indications suggest the offering will come at a 500 basis points spread to Treasuries, the source added.

Credit Suisse First Boston and UBS Warburg are the joint leads. Banc One Capital Markets, BMO Nesbitt Burns, RBC Capital Markets and TD Securities are co-managers.

The Rule 144A offering is expected to price during the week of June 24, according to an informed source.

Further details are expected to emerge Wednesday on the transaction.

The maturity and call structure of the Rule 144A notes could not be determined prior to press time.

In addition to the notes, Aquila also announced Tuesday that it intends to issue 37.5 million shares of common stock.

Altogether it expects the financing to generate approximately $900 million.

Proceeds will be used to refinance current maturities and to provide permanent funding for the acquisition of Midlands Electricity completed in May 2002 and the acquisition of Cogentrix Energy, expected to close later in 2002.

The Kansas City, Mo.-based company operates electricity and natural gas distribution networks, and provides asset-based risk management products and energy services.

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