Unrelenting in their goal of creating a new statewide public power utility in Montana, five cities have agreed to offer $2 billion, including assumption of $825 million in debt, to purchase the electricity transmission and distribution assets of South Dakota-based NorthWestern Corp, including facilities in the two other states in which it operates -- Nebraska and South Dakota.
The move came a few days before NorthWestern announced improved earnings at an earning conference call last Tuesday. Despite another nagging loss in consolidated net income, Sioux Falls, SD-based NorthWestern -- less than a year after emerging from Chapter 11 bankruptcy -- reported a profit ($6.4 million, or 18 cents/share) from continuing operations for the second quarter, compared to a loss of $14.4 million from continuing operations for the same period last year.
Montana Public Power Inc., the creation of the cities of Bozeman, Great Falls, Helena and Missoula, along with the consolidated local government of Butte-Silver Bow, said it wants to buy NorthWestern's common stock for $32.50/share, or about $1.18 billion, along with assumed debt. In turn it would sell 20% of the assets located in the two states outside of Montana to South Dakota Power Co., a similar local government-created public power entity.
Earlier last month, NorthWestern's board of directors rejected an informal offer from the Montana public sector contingent. A new formal offer would have to be reviewed by the board, but CEO Mike Hanson has made it clear the company is on the upswing and is strengthening its finances.
NorthWestern purchased the Montana energy utility assets from Montana Power Co. for $1.2 billion three years ago.
The sponsoring cities said they are concerned about reliability and stability, given NorthWestern's somewhat unstable finances over the past three years. The cities think collectively they could run the local utility operations better than the out-of-state-based company.
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