(GXP)X(ILA)---Great Plains Energy and Aquila File Acquisition Approval Applications in Missouri and Kansas
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Great Plains Energy Incorporated (NYSE: GXP), its public utility subsidiary Kansas City Power & Light Company (KCP&L) and Aquila, Inc. (NYSE: ILA) today filed applications with the Missouri Public Service Commission and the Kansas Corporation Commission seeking approval of the proposed acquisition by Great Plains Energy of Aquila. The parties announced the proposed merger of Aquila and a subsidiary of Great Plains Energy, with Aquila surviving the merger and becoming a wholly owned subsidiary of Great Plains Energy, on February 7, 2007.
In the applications, the companies stated the transaction will provide benefits for customers, communities and investors. In particular, Great Plains Energy anticipates that the transaction will result in significant synergies, economies of scale and efficiencies, which are currently estimated to be approximately $500 million over the five-year period of 2008-2012, with costs to achieve (including transaction costs) of approximately $181 million.
In Missouri, the companies have requested that Aquila be authorized to use an additional amortization mechanism to maintain credit ratios once Aquila achieves financial metrics necessary to support an investment-grade credit rating. This mechanism is similar to the one used in KCP&L’s last rate case. Aquila and KCP&L also requested authorization to amortize transaction and incremental transition-related costs over five years, and to collectively retain for a five-year period 50 percent of any synergy savings resulting from the transaction. The companies are not seeking to recover any acquisition premium. In Kansas, the companies requested similar regulatory treatment of costs and synergies only for KCP&L; no regulatory treatment was requested for Aquila, as it will be selling its non-Missouri utility operations to