Aquila sets pricing in exchange for PIES

New York, July 5 - Aquila, Inc. said it has set pricing in its exchange offer to encourage early conversion of its $345 million of 6.75% Premium Income Equity Securities (PIES).

Investors will receive a conversion premium of 1.5896 shares in addition to the regular 8.0636 shares that they would receive for an optional conversion under the existing terms of the convertibles.

Pricing was set after the close on July 1. Holders will receive a number of additional shares equal to $5.50 divided by the average of the daily volume-weighted average price from June 22 to the pricing date, with a maximum total number of shares of 9.8039. The maximum is equivalent to the highest conversion rate for the PIES at their mandatory conversion date of Sept. 15, 2007.

The Kansas City, Mo., electricity and natural gas utility announced the exchange on June 2.

It ends at 5 p.m. ET on July 6.

Union Bank of California, NA is the exchange agent. The Altman Group, Inc. is the information agent (800 461-9316). Credit Suisse First Boston is the dealer manager.

Aquila said it is carrying out its exchange to reduce its debt and interest expense and to provide it with additional financial flexibility.

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