Avista Corp. Commences Consent Solicitation With Respect to Its 9.75 Percent Senior Notes Due June 1, 2008

July 10, 2006

SPOKANE, Wash., July 10 /PRNewswire-FirstCall/ — Avista Corp. (NYSE: AVANews) announced today that it is soliciting consents from all holders of its 9.75 percent Senior Notes due June 1, 2008, CUSIP No. 05379BAC1 (the “Notes”), to a one-time dividend of the stock of Avista Capital, Inc., which is the holding company of Avista Corp.’s non-utility businesses. Avista Corp. is soliciting consents from Note holders of record as of July 7, 2006.

As previously reported, Avista Corp. is in the process of forming a holding company, which has already been approved by the holders of Avista Corp.’s common stock and by the Federal Energy Regulatory Commission. Avista Corp. has not yet received approval from all of the state utility commissions. After the holding company is formed, Avista Corp., subject to the approval of its Board of Directors, would distribute all the stock of Avista Capital to its new corporate parent and sole shareholder. This would effect the structural separation of the non-utility businesses of Avista Corp.’s subsidiaries from the regulated utility business.

The purpose of the consent solicitation is to solicit consents to a one- time waiver of compliance with certain covenants contained in the indenture governing the Notes so as to permit the Avista Capital dividend. The waiver will become effective if holders of a majority in principal amount of the Notes deliver their consent.

The solicitation will expire at 5:00 p.m. Eastern daylight time on July 20, 2006, unless extended or terminated by Avista Corp. Note holders of record as of July 7, 2006, will be able to revoke their consents until valid consents from holders of a majority in aggregate principal amount of the outstanding Notes are received by Avista Corp. and the proposed waiver becomes effective, which may occur before the expiration of the solicitation.

If the proposed waiver becomes effective and the conditions to the payment of the consent fee described in the consent solicitation statement relating to the solicitation are satisfied or waived, Avista Corp. will pay a consent fee of $1.25 in cash per $1,000 principal amount of Notes for which valid consents are received prior to the expiration of the solicitation and not revoked prior to the effectiveness of the waiver.

The detailed terms and conditions of the consent solicitation are contained in a consent solicitation statement dated July 10, 2006. Goldman, Sachs & Co. will act as Solicitation Agent for the consent solicitation. Georgeson Shareholder Communications, Inc., will act as the Information Agent. Requests for documents may be directed to Georgeson Shareholder Communications, Inc., by telephone at (800) 509-1303 (toll-free) or (212) 440-9800. Questions regarding the consent solicitation may be directed to Goldman, Sachs & Co. at (800) 828-3182 (toll-free) or (212) 357-7867.

This press release contains forward-looking statements based on current management expectations. Numerous factors, including those related to market conditions and those detailed from time to time in Avista Corp.’s filings with the Securities and Exchange Commission, may cause results to differ materially from those anticipated in the forward-looking statements. Many of the factors that will determine Avista Corp.’s future results are beyond the ability of Avista Corp. to control or predict. These statements are subject to risks and uncertainties and, therefore, actual results may differ materially.

Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. Avista Corp. undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Avista Corp. is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. Avista Utilities is a company operating division that provides service to 338,000 electric and 297,000 natural gas customers in three western states. Avista Corp.’s non-regulated subsidiaries include Avista Advantage and Avista Energy. Avista Corp.’s stock is traded under the ticker symbol “AVA.” For more information about Avista Corp., please visit www.avistacorp.com.

NOTE: Avista Corp. and the Avista Corp. logo are trademarks of Avista Corporation.


Source: Avista Corp.

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