Slashing the heavy debt that helped finance its major Montana utility additions and at the same time helped drive it into Chapter 11 protection, South Dakota-based NorthWestern Corp. emerged from bankruptcy last Monday, leaving remaining shareholders with worthless stock that was wiped out when a new board took over and 35.5 million shares of new stock were issued, most going to creditors.

Debt was shrunk to $850 million from its pre-bankruptcy $2.2 billion level, the company said, and it started fresh with a book value of $710 million. Now shrunk to a utility holding company with operations in three states (Montana, Nebraska and South Dakota), NorthWestern originally bought the electric transmission and distribution assets and natural gas properties of Montana Power Co. in February 2002 for $1.1 billion.

The new board will be headed by E. Linn Draper Jr., the former chairman and CEO of Ohio-based American Electric Power.

NorthWestern CEO Gary G. Drook called the emergence from Chapter 11 a “new phase” in which the holding company that took on too much debt, buying more than 100 businesses over a five-year spree (1998-2002), will focus on utility operations with a goal of creating “a solid capital structure, greatly reduced debt and improved operational efficiency.”

Drook emphasized the holding company known for pursuing telecommunications and heating-ventilation-cooling companies will now turn its “full attention” to growing the utility business in what he characterized as a “smart way.”

A new common stock (NWEC) will now be traded on the NASDAQ market. The old NorthWestern common stock was traded on the over-the-counter “pink sheet” market, but was cancelled on Monday.

A final potential hurdle to NorthWestern’s bankruptcy emergence was swatted away two weeks ago when a South Dakota federal district court rejected an eleventh-hour legal challenge from one unsecured creditor, Magten Asset Management Corp.

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