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Energy company



was dropping about 9% in premarket trading after the company said it was lowering its 2002 guidance as a result of a new "repositioning plan."

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The company said it will reduce its wholesale energy services business in response to the high cost of capital involved. Aquila will cut the capital allocated to its wholesale business to less than $150 million, reducing its value at risk to less than $5 million from $15 million. The company also plans an accompanying workforce reduction.

Aquila also announced plans to cut its annual dividend by 50 cents a share, from $1.20 to 70 cents. The company said the move comes from an examination of the dividend's impact on the company's increasing capital and liquidity demands and the impact of those demands on the company's credit rating. Aquila said it will issue $900 million in new equity and debt, which will complete all of the compay's 2002 capital market funding requirements.

As a results of these changes, Aquila reduced its 2002 operating earnings guidance to $1.30 to $1.40 a share, well below the consensus estimate of $2 a share provided by Thomson Financial/First Call. The company said the reduction reflects lowered expectations from the wholesale energy services business.

In a press release, the company said, "In the current environment, we believe the best way to preserve and increase value for our shareholders is to pursue a new structure for our wholesale energy services business with a much lower risk profile."

Shares of Aquila were recently trading down 90 cents to $9.60 in premarket action on the news after closing at $10.50 Friday.