South Dakota-based NorthWestern Corp., parent of NorthWestern Energy, announced Tuesday that it was granted a handful of bankruptcy motions to continue its utility operations, including energy buying, by the Delaware federal district court following its Chapter 11 filing on Monday.

NorthWestern, which blamed a diversification strategy for running its debt up to $2.2 billion, had been trying to restructure without filing for bankruptcy, but threw in the towel this week. The company bought Montana Power Co.’s energy transmission and distribution business in February, 2002 for cash and debt assumption totaling $1.09 billion. NorthWestern Energy serves 590,000 gas and electric customers in Montana, eastern South Dakota and central Nebraska.

Following its first bankruptcy court hearing Monday, the company said it won approval on five motions to: (a) continue normal pay/benefits to employees, (b) pay suppliers for post-bankruptcy filing goods/services, (c) pay unpaid property taxes in Montana counties, (d) continue bank and cash systems in place, and (e) allow continuation of forward power contracts and the “ability to enter into such contracts in the ordinary course of business.”

The bankruptcy court also okayed NorthWestern’s access to $50 million of the $100 million debtor-in-possession financing facility the company arranged with Bank One in conjunction with the Chapter 11 filing.

NorthWestern’s CEO Garry Drook said the first-day court approvals will allow the company to maintain its focus on serving utility customers and rebuilding its financial platform with the sale of various non-utility assets.

Following its Chapter 11 filing Monday, NorthWestern separately announced the sale of its nationwide communications services subsidiary, Expanets, Inc., under a “definitive agreement” with Cerberus Capital Management LP, and TenX Capital Management, Inc.

Trading in NorthWestern’s stock was suspended, and the company was informed that it would be “de-listed” by the New York Stock Exchange. NorthWestern said it would not oppose this move, and noted in its announcement that the company had previously stated publicly that if it filed for Chapter 11 protection, “common stockholders could lose their entire investment.”

The company filed its Chapter 11 case before U.S. Bankruptcy Judge Peter J. Walsh to move along its now several-month-old attempt at financial restructuring. Its non-utility units — Expanets and a heating-ventilation-cooling business, Blue Dot Services Inc. — are not part of the filing. Blue Dot is a national amalgam of local heating-cooling contractors, many of which are being sold off individually, a company spokesperson said Monday.

Noting that the sales agreement was entered prior to the bankruptcy filing, NorthWestern said “substantially all of the assets” of Expanets will be sold for $107.5 million in cash, less the amount of debt and capitalized leases assumed, plus a contingent note tied to operating results at the time of the deal’s closing, which is anticipated during the fourth quarter this year.

“The cash amount is subject to an adjustment based on the net current assets of Expanets transferred at closing,” NorthWestern said in announcing the sale.

After working for the past several months on an out-of-court restructuring, NorthWestern failed to accomplish this goal, turning to the bankruptcy court where it now hopes to “significantly reduce debt, improve its capital structure and ensure the long-term financial health of its core utility operations.” Not unlike other utility holding companies, NorthWestern attributed its current financial troubles to a failed “diversification strategy and the significant amount of debt incurred as part of that strategy.”

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