NEW YORK (Standard&Poor's) July 8, 2003--Standard&Poor's Ratings Services today noted Aquila Inc.'s (B/Negative/--) announcement that MEP Pleasant Hill LLC, the power plant operator in which Aquila holds a 50% interest, defaulted on $270 million of construction loans, causing lenders to draw on letters of credit totaling $37.5 million pledged by Aquila. Because the project financing is non-recourse to Aquila, the default will not affect Aquila's credit ratings or outlook. Furthermore, Standard&Poor's does not anticipate the default will affect Aquila's near-term liquidity since the letters of credit were cash collateralized. Aquila's ability to successfully restructure its business, improve its financial condition, and maintain adequate liquidity to meet near-term obligations will be necessary to sustain current
