Aquila Paying for Loan-Fueled Reprieve

Aquila (ILA Quote) has paid so much for breathing room that, in the end, it may have no money left for anything else.

UBS Warburg analyst Ronald Barone warned Thursday that Aquila must continue to sell off assets just to meet its debt obligations through the end of next year. After that, Barone predicted, Aquila will run out of cash and face another liquidity crisis like the one it just escaped -- but with few assets left to sell.

Ultimately, Barone believes Aquila will be cash flow negative by 2005 and, therefore, sees no value in the company's shares using traditional cash flow analysis. Even by adding up the pieces of Aquila, he concludes that the company is worth just $2 a share -- or 36% less than the $3.13 the stock last fetched before his Thursday morning report. ...