Power Engineering - Aquila to acquire Cogentrix Energy, adding 3,500 MW of contracted generation

KANSAS CITY, Mo. & CHARLOTTE, N.C., April 30, 2002 -- Aquila, Inc. and Cogentrix Energy, Inc. announced Tuesday that they have signed a definitive agreement for Aquila to acquire privately held Cogentrix, an independent power producer.

The transaction includes a purchase price of $415 million for 100 percent of the common stock of Cogentrix, as well as the assumption of $355 million of recourse debt and approximately $770 million of non-recourse project-level debt.

This transaction is expected to be immediately accretive to earnings and exceed Aquila's targeted investment returns.

The agreement is another example of Aquila delivering on its client-focused strategy by further extending its national generation presence and adding one of the industry's operating and development teams. The addition of 3,496 megawatts increases Aquila's current portfolio of 3,655 net megawatts in operation and under construction by almost 100 percent and further diversifies Aquila's portfolio by region, fuel type and technology.

After combining operations, Aquila's generation mix will be approximately 70 percent contracted, an optimal position for balancing Aquila's targets for predictable cash flow and earnings while maximizing commercial optimization opportunities.

"Since its inception in 1983, Cogentrix has established itself as one of the most successful and largest independent power producers in North America, with top-quality people and assets as well as a proven track record," said Robert K. Green, president and chief executive officer of Aquila. "This is a compelling transaction for Aquila. It is expected to accelerate our strategy and improve the predictability of our cash flow and earnings. It adds industry- operating and build-to-suit development expertise, while leveraging our ability to optimize our collective assets."

Cogentrix operating, environmental and safety records are consistently among the best in the industry and, at the same time, the company has delivered strong earnings and cash flow year after year.

Substantially all Cogentrix generation capacity is financed on a stand-alone project basis, supported by long-term power purchase agreements or tolling agreements with investment-grade customers. This transaction is expected to contribute to Aquila's strategic goal of adding highly predictable cash flow and earnings. At closing, Cogentrix will have 13 projects in service and two plants under construction, which are scheduled to be fully operational by June 2003. Upon completion of the transaction, which is expected in the third quarter of 2002, Cogentrix operations will be combined with Aquila Merchant Services' North American Capacity Services business.

"This transaction offers the best result for our shareholders and employees," said David J. Lewis, chairman and chief executive officer of Cogentrix. "Aquila's corporate philosophy and business management are remarkably similar to our own and were important considerations in the eventual success of this transaction. The combination of collective strengths in risk management and power generation development and operation will help ensure Aquila's continued growth and success."

Immediately prior to Aquila's acquisition of Cogentrix, General Electric Capital Corporation (GECC) or its subsidiaries will acquire 1,024 net megawatts of Qualifying Facility power plant assets currently owned by Cogentrix in order for the plants to maintain their Qualifying Facility status under the Public Utility Regulatory Policy Act (PURPA).

The transaction initially will be financed with an acquisition bank facility underwritten by Credit Suisse First Boston. Aquila intends to refinance the acquisition facility with a combination of common stock and mandatorily convertible securities. Credit Suisse First Boston acted as exclusive financial advisor to Aquila.

The acquisition is conditioned on Hart-Scott-Rodino clearance, approvals by the Federal Energy Regulatory Commission (FERC), and completion of the asset sale to GECC.

Based in Kansas City, Missouri, Aquila (formerly UtiliCorp United) is an international energy and risk management company. Aquila is one of the largest wholesalers of electricity and natural gas in North America, provides wholesale energy services in the United Kingdom and has a presence in Germany and Scandinavia. It also operates electricity and natural gas distribution networks in seven states and in Canada, New Zealand and Australia. Aquila will serve 2.3 million customers in the United Kingdom following its early May purchase of Midlands Electricity. At December 31, 2001, Aquila had total assets of $11.9 billion and 12-month sales of $40.4 billion. More information is available at www.aquila.com.

Cogentrix Energy, Inc., headquartered in Charlotte, North Carolina, acquires, develops, owns and operates electric generation and other power assets in the United States and internationally. Cogentrix has, in whole or in part, equity interests in 28 facilities in 14 states with a total generating capability of approximately 7,800 megawatts. For more information on Cogentrix, visit the corporate website at www.cogentrix.com.

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