A Michigan city pension fund that owns shares in NorthWestern Corp. last week filed a lawsuit in a South Dakota court, seeking to make a class action issue out of the utility company’s reluctance so far to accept public- or private-sector buyout offers. The City of Livonia Employees’ Retirement System filed the suit in a federal court.

NorthWestern would not comment on the filing. It was busy Wednesday notifying utility customers and regulators about its response to a severe ice storm in the past week that has wreaked havoc on its utility operations in South Dakota. In addition, the company also announced on Tuesday that it sold power generation equipment for $20 million to Navasota Holdings Texas Partners LP and the deal will close in the first quarter next year.

While a still-pending offer from a coalition of cities in Montana has been rejected by NorthWestern’s board, the directors and company are now reviewing a subsequent offer from neighboring South Dakota-based Black Hills Corp. However, in establishing a shareholder protection plan in the event of hostile takeover moves, the NorthWestern board earlier in the week did not set a timetable for responding to Black Hills (see (NGI/Power Market Today, Dec. 7).

Missoula’s mayor, Mike Kadas, leader of the municipal move to buy NorthWestern and make a public sector utility out of it, told local news media that the pension fund obviously views the municipal offer as “pretty good” and is taking it seriously. The cities have offered $32.50/share for NorthWestern, along with assuming $1 billion of the company’s debt. NorthWestern’s board rejected the offer and has refused to allow the cities to conduct a full examination of the company’s financial records.

The lawsuit alleged that the board members are acting in their own personal interest and ignoring their fiduciary duty to the company’s shareholders. Noting it wants to prevent what it called “impedence to maximizing shareholder value,” the pension fund lawsuit said it sought to prevent “further harm to NorthWestern and its public shareholders.”

News coverage out of Montana indicated that NorthWestern is perceived as being hostile to both the public- and the private-sector offers.

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