The ratings on Aquila Inc. reflect marginal credit measures, uncertainty associated with plans to restructure its gas prepay and tolling contracts, and a burdensome debt level, not quite mitigated by management's efforts to refocus on its traditional regulated utility business. Due to weak cash flow generation from operations, asset sales have been necessary for Aquila to reduce its debt levels and shore up its balance sheet. Management has executed more than $2.4 billion of asset sales over the past two years. Still, expected cash flow from the company's reconstituted business plan is currently insufficient to fully service Aquila's debt. Cash flow generation relative to total debt should remain weak and not exceed 10% in the near term. Aquila's cash position
