HELENA, Mont., July 18, 2005 (PRNewswire) — Montana Public Power, Incorporated (“MPPI”), a Montana non-profit corporation formed for the purpose of bringing NorthWestern Corporation’s utility businesses under local control and public ownership, today set the record straight in response to several comments made by NorthWestern at its July 14, 2005 Annual Meeting and subsequent press release:
NorthWestern: “The review process [of MPPI’s offer] included many meetings between our advisors and those of Montana Public Power Inc., and at every stage we have provided MPPI with specific guidance on the areas that rendered their proposal unacceptable.”
Montana Public: MPPI endeavored for over four months to engage NorthWestern’s Board in a good faith discussion of its proposal, without success. MPPI was promised a written letter detailing NorthWestern’s concerns, but this was never received. MPPI believes that it has addressed NorthWestern’s apparent issues and remains willing to discuss any outstanding concerns they may have.
NorthWestern: “MPPI’s proposal relies upon 100 percent leverage and would increase the Company’s debt to more than $2 billion.” NorthWestern goes on to describe the proposed transaction as a “‘no equity’ leveraged buyout” in its attempt to scare consumers and distract investors.
Montana Public: While MPPI contemplates financing this transaction with debt, this is the typical financing structure for public entities since they have no outside shareholders, no retained profits and therefore no initial equity. The financing would be consistent with published rating agency criteria for investment grade credit ratings for public power entities.
NorthWestern: “The proposal requires unprecedented regulatory flexibility and cooperation.”
Montana Public: MPPI anticipates a relatively straightforward approval process that it believes will, with NorthWestern’s cooperation, allow the transaction to close by year-end. Importantly, MPPI is well-positioned to satisfy the criteria established by the Montana Public Service Commission in evaluating any sale of NorthWestern. Unlike other recently announced utility transactions, there is no PUHCA approval required and there are no other unusual regulatory issues.
NorthWestern: “Citigroup has offered only a ‘best efforts’ commitment for financing.”
Montana Public: MPPI has received a fully underwritten commitment letter from Citigroup in an amount sufficient to consummate the transaction.
NorthWestern: “Montana state law may not permit MPPI to own and operate a utility that operates outside the jurisdiction of its members and state of Montana.”
Montana Public: The Montana Attorney General has issued a final Opinion with respect to MPPI’s legal authority to acquire NorthWestern and operate the utility. In his July 13, 2005 opinion, the Montana Attorney General states: “Nothing in MPPI’s articles appears to prohibit the operation of an electric and natural gas utility business, and nothing in the [Montana] statutes would appear to prevent the corporation from carrying on business activities in states other than Montana. I therefore conclude that MPPI has the corporate power to do so.” Attorney General’s opinions carry the weight of law unless a court overturns them or the legislature modifies the laws involved.
NorthWestern: “MPPI is depending on the performance and support of more than 25 governmental entities.”
Montana Public: MPPI and South Dakota Power Company are fully authorized to proceed with the transaction.
NorthWestern: The offer is “subject to [a] lengthy due-diligence … process.”
Montana Public: MPPI has requested customary due diligence and anticipates that its due diligence would be largely confirmatory in nature.
NorthWestern: “There are no precedents to the transaction.”
Montana Public: In a more complex transaction, Long Island Power Authority acquired the common stock of LILCO for $2.5 billion, financed through the issuance of municipal bonds. Simultaneously, Brooklyn Union Gas Company merged with a new company set up to hold the non-nuclear and non-electric transmission and distribution assets previously held by LILCO.
MPPI remains confident in its ability to complete the transaction expeditiously if NorthWestern’s board can be persuaded to do the right thing for its shareholders and customers and agree to a negotiated transaction.
MPPI reiterated that its offer is full and fair, real, executable, and clearly in the best interest of NorthWestern shareholders and customers.
MPPI’s mergers & acquisitions advisor is Citigroup Global Markets Inc. Nixon Peabody LLP is acting as mergers & acquisitions counsel and as co-bond counsel with Koegen Edwards LLP. Luxan & Murfitt, PLLP; Bullock Law Firm, PLLC; Woods, Fuller, Shultz & Smith P.C.; and Danforth & Meierhenry, LLP are also providing legal counsel.
About Montana Public Power, Incorporated [ www.montanapublicpower.org ]
MPPI is a non-profit corporation formed in 2004 for the purpose of bringing NorthWestern’s utility businesses under public ownership. MPPI’s sole member is The Montana Public Power Authority, which is comprised of the cities of Bozeman, Great Falls, Helena and Missoula, along with the consolidated city/county government of Butte-Silver Bow, Montana.
About South Dakota Power Company
SDP is a non-profit corporation formed in 2005 for the purpose of acquiring NorthWestern’s electrical and gas transmission facilities in South Dakota and natural gas transmission and distribution facilities in three cities in Nebraska. SDP represents the interests of municipalities in South Dakota which comprise 70% of NorthWestern’s service territory in South Dakota.
