UtiliCorp Announces Power New Zealand Transaction Creating Largest New Zealand Electric Lines Company.

KANSAS CITY, Mo.--(BUSINESS WIRE)--Nov. 13, 1998--UtiliCorp United (NYSE:UCU) today reported that Power New Zealand (PNZ), in which it holds a 78.6 percent ownership interest, has agreed to a transaction that will make PNZ that country's largest operator of electric distribution lines.

Under an agreement with TransAlta, PNZ will purchase the assets of TransAlta's Wellington-based lines business, and in turn will sell to TransAlta its own retail electric business with 227,000 customers.

PNZ's new combined lines business will serve 370,000 customers. TransAlta will become by far the dominant supplier of electricity in New Zealand, with more than 500,000 retail customers. The value of the two transactions was not disclosed.

Both companies are required by New Zealand's Electricity Industry Reform Act of 1998 to separate ownership of their lines (network) and supply (retail and generation) businesses.

Power New Zealand, with approximately 90 percent of its assets and earnings in the lines area, has opted to remain in the lines business, while TransAlta, with significant investment in generation, has chosen to remain in the supply business.

"This deal makes a lot of sense," said Robert K. Green, president and chief operating officer of UtiliCorp and chairman of Power New Zealand. "Both parties have a clear view of opportunities created by this new environment, so it was logical to see if there was a way that we could rationalize our assets, both to comply with the Reform Act and to meet some of our overseas growth objectives.

"When this transaction is completed, UtiliCorp will have added a total of more than $400 million in 1998 to its investment in New Zealand," Green said. "Since we expect these additional 1998 investments to be at least $.10 accretive to UtiliCorp earnings per share in 1999, this is a significant step toward achieving our objective of 8 percent EPS growth next year."

Green said he was disappointed that Power New Zealand was unable to continue in the electricity supply business.

"Power New Zealand's retail operations are already established as one of New Zealand's leading electricity suppliers, and we regret that we will be unable to see it reach its full potential ourselves. However, we're pleased that TransAlta has recognized the value of this business, and is purchasing it as a going concern, complete with the employees, systems and brand name."

The transactions are subject to consent by New Zealand's Overseas Investment Commission as well as the approval of shareholders. Each company will be holding a special shareholders' meeting prior to Christmas, with closing expected by early 1999. Power New Zealand was advised by Bankers Trust on the transaction.

Power New Zealand is an electric distribution utility serving approximately 227,000 customers in the Auckland area. It had revenues of NZ$436.6 million and net earnings of NZ$65.9 million for the fiscal year ended March 31, 1998. Minority holders are the PNZ Shareholder Society, the public and PNZ's Employee Share Ownership Plan.

UtiliCorp United is an international electric and gas company with customers and operations across the United States and in Canada, Great Britain, New Zealand and Australia.

Based in Kansas City, the Fortune 500 company operates regulated electric and gas utilities in eight states and one Canadian province and through its Aquila Energy subsidiary markets natural gas and electricity across most of North America.