19 June 2002 – In a further attempt to shore up its balance sheet and improve its credit rating, US energy trader Aquila announced 71 job losses at its European headquarters in London.
The move comes after announced on Monday that it was reducing its exposure to the energy trading business and issuing $900m of equity and debt securities to shore up its balance sheet.
The company said it was likely that it would close its London operation but that no closure date had been set. “We do not have an exact end date. But this is not another Enron – we are not going to disappear,” it said.
Aquila employs 179 people across Europe, of whom more than 150 work in the London office. The European office trades electricity, natural gas, oil and weather derivatives. The company is cutting 71 jobs in London, on top of 300 it shed in the US earlier this week.
Its debt issuance strategy is an attempt to increase liquidity and stave off a possible credit rating downgrade. Aquila said it would sell 37.5m shares and $500m in senior notes next week.
Some of the credit rating agencies said Aquila’s plans were positive, adding that they would lower Aquila’s business risk and improve its credit profile.
Fitch is maintaining its investment grade rating on the company and said its outlook remained stable. Standard & Poor’s said the company’s actions were “a positive step towards ratings stability”.
Standard & Poor’s has assigned Aquila a triple-B rating and has it on credit watch, while Moody’s currently rates the company at the same level, which is one level above junk status, and has placed it on review for a downgrade.
In May, the Missouri-based group put about $1bn worth of assets up for sale, and cut 150 jobs in its power trading unit.
Aquila’s moves follow attempts by other US energy traders to reduce exposure to energy trading activities in the wake of the US energy trading scandal.
Energy company shares have been hit hard by a widened inquiry into energy trading in California, and investigations into bogus trading activities.