Great Plains Energy looking at up to $500 million in breakup fees on Westar deal

As Great Plains Energy negotiates a revised deal to buy Westar Energy by May 31, a hefty figure lurks in the background for the parent company of Kansas City Power & Light: $500 million.

That’s the amount that Great Plains Energy could be on the hook for if the agreement to acquire Westar fails. When both utilities agreed to a $12.2 billion merger acquisition in 2016, the terms included a provision that Great Plains Energy pay a $380 million termination fee if the deal fails to earn regulatory approval.

Great Plains officials disclosed during an earnings call last week that additional breakup costs include $40 million to redeem debt issued for the transaction and a separate $80 million cost to unwind the deal.

The Kansas Corporation Commission on April 19 rejected Great Plains’ bid for Westar, concluding that Great Plains was paying too much to buy Westar and that the deal would leave the buyer with too much debt, among other concerns.

Great Plains and Westar have asked the KCC to reconsider its decision, adding that both utilities would try to come up with a revised acquisition that would address the regulatory agency’s concerns and still result in a good deal for shareholders.

Read more: Kansas City Star


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