Aquila Reaches $37.95 Million Settlement in Appraisal Rights Lawsuit.

Business Editors

KANSAS CITY, Mo.--(BUSINESS WIRE)--June 9, 2004

Aquila Inc. (NYSE:ILA) announced today that the Delaware Court of Chancery has approved a settlement in which Aquila will pay $37.95 million to shareholders who properly asserted their appraisal rights in connection with the recombination of Aquila and its former energy trading and merchant subsidiary, Aquila Merchant Services Inc. (AMS).

When the company recombined with AMS in January 2002, shareholders owning 1.684 million AMS shares challenged the value they received for their AMS shares. The settlement includes interest from 2002.

When the recombination procedure was complete, approximately 91 percent of AMS's outstanding shares were tendered. Shareholders who received Aquila shares in the tender offer or subsequent short-form merger were not part of this suit and, therefore, are not eligible for payment. As a result of the settlement, Aquila will record a charge to its second quarter earnings of approximately $7.5 million, plus litigation costs.

Based in Kansas City, Mo., Aquila operates electricity and natural gas distribution utilities in Colorado, Iowa, Kansas, Michigan, Minnesota, Missouri and Nebraska. The company also owns and operates power generation assets. More information is available at www.aquila.com.