Citing it as the “best value” of several competing offers, NorthWestern Energy’s CEO Wednesday predicted that the $2.2 billion sale to Australian-based Babcock & Brown Infrastructure (BBI) will put the South Dakota-based energy holding company in a stronger financial position, with local management operating in a “business as usual” fashion in a deal that should clear all regulatory hurdles quickly.

NorthWestern and Babcock officials plan to meet with regulators in three states in the next few days to brief them on sale. The agreement has a termination date of two years, but the companies said they expect to close the deal “long before that time,” sometime next year.

A definitive proxy statement on the proposed sale will be sent to NorthWestern shareholders prior to their vote on the deal, and the company will be announcing first quarter financial results next week (May 4), according to Mike Hanson, NorthWestern CEO, who held a conference call for financial analysts Wednesday. Hanson stressed that BBI’s proposal was “superior to all the others received by the company’s board,” including long-standing offers from a public-sector coalition of cities in Montana and a neighboring South Dakota energy holding company, Black Hills Corp.

As part of a detailed merger/acquisition process established last December, a special subcommittee of NorthWestern’s board contacted 23 potential parties designated as “qualified,” Hanson said. This included 15 strategic investors; 10 parties signed confidentiality agreements, with eight of those submitting bids. Six ultimately were asked to participate in the final round, he said. Montana Public Power and Black Hills were among five submitting binding bids.

An independent board member at BBI joined Hanson on the conference call, emphasizing that BBI is a “long-term, conservative utility owner, with a proven track record of owning and investing in energy transmission and power generation assets.” The company’s business approach emphasizes local management.

In response to analysts questions, Hanson said there are so-called “break-up fees” as part of the sales agreement in case one of the companies decides to back out of the deal. For BBI, it would pay NorthWestern $70 million; conversely, if NorthWestern backed out, it would pay $50 million to BBI.

“We’re very pleased that this board-led process has yielded a very positive outcome for stockholders, one that is far superior to the unsolicited proposals received in 2005, and the best value for our shareholders among the proposals we received as part of this process,” said Hanson, who thinks the BBI deal also presents “far less risk” to NorthWestern’s stockholders and the communities it serves in electric and natural gas utility operations in Montana, South Dakota and Nebraska.

There is no increase in debt as a result of the all-cash sale, and the Sydney, Australia-based buyer has committed to providing NorthWestern all the capital it needs in its electric and gas transmission and distribution infrastructure. In Montana, NorthWestern operates 7,000 miles of electric transmission lines and associated terminal facilities with five major interconnections to other parts of the Western Electric Coordination Council (WECC) reliability area covering 14 western states, two Canadian provinces and the northern part of western Mexico, including North Baja California.

Hanson said the companies feel that the deal meets the stipulation of NorthWestern’s Chapter 11 bankruptcy reorganization two years ago with the Montana Consumer Counsel and the Montana Public Service Commission, including the evaluation factors outlined by the Montana regulators. “BBI has a strong track record and philosophy of owning its assets long term, and it has extensive experience in owning and operating gas and electric utilities,” said Hanson, stressing that the acquiring company is committed to funding NorthWestern’s current business plan, including various maintenance and upgrades of the system coming out of a recent audit.

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