MDU Resources Group Inc. and Basin Electric Power Cooperative said they have formed an alliance to offer NorthWestern Corp. stakeholders a “superior plan” to the reorganization outlined in a Sept. 14 bankruptcy filing. The MDU-Basin alliance also includes Montana Associated Cooperatives LLC and East River Electric Power Cooperative in South Dakota.
“We are joining with Basin Electric and its member group to explore opportunities for our companies around NorthWestern’s utility assets while offering a secure energy future for NorthWestern’s stakeholders,” said MDU Chairman Martin A. White, noting that MDU and the cooperatives have “deep roots” in Montana and the Dakotas.
“We feel it is a natural fit,” said White. “However, we take a very conservative, disciplined approach to all our business ventures. We will not pay more for these assets than we feel they are worth. We will better understand their value after we have completed an in-depth evaluation of the company and its assets.”
Although it had not yet received the proposal, Northwestern immediately dismissed it as a bad idea. “We view it as a plan that doesn’t make sense,” said NorthWestern spokesman Roger Schrum. He said breaking up NorthWestern, as the MDU-Basin alliance proposes to do, would be bad for the company, its employees, its creditors and the state. It would eliminate $10 million/year in taxes that cooperatives do not have to pay, said Schrum. It would spilt up the company and eliminate existing efficiencies. It would eliminate the benefits that employees currently receive.
“We will compile our own restructuring plan and submit it in mid-January,” he said. “Any competing proposals will come after that, most of them from creditors, most of whom are more interested in an integrated utility.”
NorthWestern filed for bankruptcy protection in September after a diversification strategy ran its debt up $2.2 billion (see Daily GPI, Sept 17). In February 2003, the company announced that it was suspending its common stock dividend and expected about $700 million in special charges for 2002 because of the poor performance of its investments in CornerStone Propane, communications network provider Expanets, and heating and air conditioning unit Blue Dot. Following its Chapter 11 filing, the company separately announced the sale of Expanets. It plans to sell off all of its remaining non-utility businesses.
NorthWestern’s utility operations remain strong, said Schrum. The company serves 590,000 gas and electric customers in Montana, eastern South Dakota and central Nebraska.
MDU Resources said it is interested in the assets that serve the larger communities in NorthWestern’s Montana and South Dakota service area as well as all of NorthWestern’s natural gas properties. The coalition of electric cooperatives in the two states are interested in the smaller communities now served electricity by NorthWestern and located within areas already served by co-ops.
Basin Electric CEO Ron Harper said the alliance companies are convinced that a commercial transaction can be structured that provides fair value to NorthWestern. “Most importantly, this provides customers and their communities greater assurance that they will have reliable and cost-effective electric service.”
For more information on the alliance go to www.secureenergyfuture.com.
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