UtiliCorp unsure of Enron effect on UK Midlands purchase

UtiliCorp United Inc. Monday warned it is unsure if Enron Corp.'s Chapter 11 bankruptcy protection filing will have a 'materially adverse' effect on its proposed acquisition of the UK's Midlands Electricity PLC. UtiliCorp and a partner made a $2.1 billion deal in October to buy Midlands, including an investment in the 1,875 Mw Teesside power generating plant, which is majority owned by Enron.

By the OGJ Online Staff

HOUSTON, Dec. 3 -- UtiliCorp United Inc. Monday warned it is unsure if Enron Corp.'s Chapter 11 bankruptcy protection filing will have a "materially adverse" effect on its proposed acquisition of the UK's Midlands Electricity PLC.

UtiliCorp United Inc. and its affiliate Aquila Inc. also said the companies' exposure to Enron Corp. totals about $72 million, including unsecured promissory notes for $31.5 million.

UtiliCorp and a partner made a $2.1 billion deal in October to buy Midlands Electricity's 38,000-mile electric distribution network, an investment in the 1,875 Mw Teesside power generating plant, and investments in other energy businesses.

Enron is the majority owner of Teesside. A UtiliCorp spokesman said the company doesn't have an estimate of that exposure.

The deal with FirstEnergy Corp. for Midlands included UtiliCorp's assumption of $1.7 billion of debt that would be off-balance sheet to UtiliCorp and nonrecourse to UtiliCorp and its partner and $362 million of equity to be provided by UtiliCorp and its partner on a 50-50 basis.

UtiliCorp also holds two promissory notes that would allow UtiliCorp to participate in the cash flows of Enron's Northern Border pipeline. The spokesman said he isn't sure how the deal was structured.

Last week , Northern Border said it expected Enron subsidiary Northern Plains to be able to meet its operational and administrative services obligations to Northern Border under existing agreements. Northern Border Pipeline also reported financial exposure over the next 12 months of $9 million, or 2.8%, of revenues under its firm transportation contracts with Enron North America (ENA).

Even if ENA fails to perform its obligations under the firm transportation contracts, Northern Border said it doesn't expect a material adverse impact on its financial condition.

Aquila's exposure to Enron is under $40 million, UtiliCorp said. Aquila began reducing its energy trading activities with Enron prior to Enron's announcement of possible accounting irregularities in October 2001.

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