* Revised $14 bln merger after regulator blocked previous plan
* New deal structured as merger of equals, no debt used
* Cost savings to fund consumer, shareholder pay-outs
* H1 2018 targeted for deal closing (Recasts, adds detail, content throughout)
By David French and Yashaswini Swamynathan
July 10 (Reuters) - Utilities Great Plains Energy Inc and Westar Energy Inc announced Monday new terms for their proposed $14 billion merger, hoping the revised structure would satisfy regulatory concerns which nixed the previous tie-up plan.
The duo spent nearly a year in consolidation talks only for the Kansas Corporation Commission in April to rule against the transaction, insisting the deal as it stood was not in the best interests of the companies' 1.6 million customers in Kansas and Missouri.
State regulators have become more proactive in recent months toward utility mergers and acquisitions, intervening in deals as they seek to protect local markets amid tough operating conditions for the power industry.
Regulatory considerations are also a big part of the $18 billion-plus battle for Texas' Oncor Electric Delivery Co, which is subject to competing interest from Berkshire Hathaway and Elliott Management.
"I'm okay admitting that we were disappointed with the order in April, but the order was specific in what [the regulator] wanted changed and that they were open to us working together to reach a solution," Mark Ruelle, chief executive officer of Westar Energy, told Reuters in a phone interview.
The companies are working with all stakeholders including regulators to gain necessary approvals, with the aim of closing the merger in the first half of 2018, according to a joint statement.
Under the revised terms, the two firms will approach the tie-up as a merger of equals, with a holding company created, in which Westar Energy shareholders will get one share for each of their current shares, and Great Plains stockholders getting 0.5981 shares for each they own.
Previously, Great Plains had proposed buying Westar and making it a subsidiary, using around $8 billion of borrowing: a level of debt with which the Kansas regulator was unhappy.
"The ultimate structure of merger of equals was the only way to meet the interests of both (shareholders and consumers)," Terry Bassham, chief executive officer of Great Plains, told Reuters.
The duo have proposed a one-off pool worth upwards of $50 million, which would be distributed to consumers in 2018, while Westar shareholders should expect a 15 percent increase in dividend payouts to match the payout Great Plains stockholders currently receive.
The combined company will also buy back around 30 million shares in both 2018 and 2019, Bassham added.
Annual cost savings generated by the merger, rising to $140 million to $170 million in 2021, from $35 million to 45 million next year, would help finance these measures, while also allowing the company to achieve the profit level allowed by a regulated utility without increasing customer rates.
U.S. power firms are battling the financial impact of greater consumer efficiency on demand, making mergers which help cut costs attractive.
Goldman Sachs, Barclays and Lazard were financial advisers to Great Plains, with Guggenheim Securities advising Westar. Bracewell and Baker Botts were the respective legal advisers. (Editing by Shounak Dasgupta and Nick Zieminski)