Aquila Inc. (Kansas City, Missouri, U.S.) has signed definitive agreements to sell four utility businesses identified for potential sale on March 14, 2005, for a total of US$896.7 million. Proceeds from the transactions will be used to reduce debt and other liabilities.

The sale agreements mark a significant advance in Aquila's previously announced repositioning plan. The plan seeks to strengthen Aquila's balance sheet, improve its credit profile, and position the company to invest in utility infrastructure to provide safe and reliable service to customers as an integrated natural gas and electric utility.

The transactions include:

• WPS Resources Corp., a publicly traded holding company for a number of energy-related subsidiaries based in Green Bay, Wisconsin, will purchase the assets and liabilities of Aquila's natural gas operations in Michigan and Minnesota for a base purchase price of $269.5 million and $288 million, respectively.

• The Empire District Electric Co., a publicly traded electric utility based in Joplin, Missouri, will purchase the assets and liabilities of Aquila's natural gas operations in Missouri for a base purchase price of $84 million.

• Mid-Kansas Electric Co. (MKEC), a coalition of six consumer-owned cooperatives that also own Sunflower Electric Power Corp., a regional generation and transmission service provider, will purchase the assets and liabilities of Aquila's electric operations in Kansas for a base purchase price of $255.2 million.

Following the completion of these sales, Aquila will operate in five states, with natural gas operations in Kansas, Colorado, Nebraska and Iowa, and electric operations in Missouri and Colorado. Of the utilities identified for potential sale on March 14, Aquila will retain ownership of its St. Joseph Light & Power electric operations in Missouri as well as its electric operations in Colorado as part of its ongoing business. Aquila continues to consider the sale of its three merchant peaking plants and Everest Connections, as well as a settlement of its Elwood toll contracts.

Completion of each of these trans-actions is subject to certain closing conditions, including the nonoccurrence of a material adverse event, the approval of relevant state utility commissions, the expiration or early termination of any waiting period under the Hart-Scott-Rodino Antitrust Act, and other closing conditions set forth in each asset purchase agreement.

The closing of the Kansas electric operations transaction is also subject to the approval of the Federal Energy Regulatory Commission and the receipt of third-party financing by the acquirer. Aquila anticipates receiving timely regulatory approvals for these transactions within approximately 12 months.