Walter Higgins, CEO of AGL Resources Inc., stood and faced themusic recently at the annual shareholders meeting in Atlanta asstock owners voiced their opinions concerning AGL Resources’subsidiary Atlanta Gas Light’s (AGL) over-billing controversy. Thecompany’s earnings did nothing to ease shareholders’ pain. AGLResources’ revenues for this quarter were down $75.2 million from1997 to $323.9 million. Operating margins fell from $145.1 millionin the year-ago quarter to $136.9 million for the quarter endedDec. 31. Weather and poor results stemming from the company’spartnership with Sonat caused the poor performance.
The Georgia Public Service Commission and AGL settled theover-billing issue earlier this month, with AGL agreeing to alterits billing methods and refund $14.5 million to customers. Theincident enraged many people, including one shareholder whodemanded Higgins’ resignation.
“It happened on my watch, and it is an intolerable mistake.There’s no sidestepping that,” Higgins said in an apology to theshareholders.
Many at the meeting demonstrated loyalty to the CEO. “This won’tbe the last hiccup,” said Raymond Riddle, an AGL Resources boardmember. “He’s plowing new ground.”
Higgins said his future is tied to the company’s board ofdirectors. They could “fire me or take it out of my pay.”
His salary is tied heavily to the company’s performance, so itmight be cut anyway. AGL Resources said its consolidated net incomewas $15.9 million, down $9.8 million from the same period of 1997.The company said the primary factor was a loss incurred from ajoint gas marketing venture with Sonat Inc., which drained $4.1million. For the same quarter in 1997, the venture netted $2.1million in earnings. Higgins hinted changes could occur in the nearfuture.
“We’re very disappointed with the results of the natural gasmarketing venture with Sonat,” Higgins said. “We are evaluatingwhether to continue our investment in the [Sonat venture]. Our[agreement] provides an option to exit the business on favorableterms.”
AGL Resources is a 35% partner in the joint venture. The companyis not disclosing how much it has invested in the partnership. Itdid say it has the option, through 2000, to sell its interests inthe venture to Sonat for a “fair market price” or a predeterminedfixed price. AGL Resources said if this option is exercised, itwould not incur a loss on its original investment.
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