NEW YORK (Standard&Poor's) June 2, 2005--Standard&Poor's Ratings Services said today that Aquila Inc.'s (B-/Negative/B-3) decision to make a premium offer for the early exchange of its $345 million 6.75% premium income equity securities (PIES) supports its credit quality, but does not affect the rating or outlook on the company at this time. Early conversion to common stock of all outstanding PIES would contribute to modest reductions in debt (14%) and cash interest expense (10%). Lower cash interest expense over the next two years would enhance the company's liquidity, which is currently marginal. Stronger liquidity could stabilize the company's negative outlook. The exact percentage of holders willing to convert to common stock prior to the mandatory conversion
