Posted on 02/19/2004 10:12:24 PM PST by calcowgirl
Portland General Electric has sailed past its first legal hurdle in breaking free from its troubled and broke parent, Enron Corp.
Ignoring a letter from city officials saying Portland could pay more, U.S. Bankruptcy Judge Arthur Gonzalez on Thursday quickly approved the $2.35 billion sale of PGE to the Texas Pacific Group, a San Francisco-based private investment group with $13 billion in assets.
Gonzalez's stamp of approval follows 10 months of intense negotiations among Enron management, its attorneys and creditor groups, said the company's managing director, Mitchell Taylor, during Thursday's bankruptcy hearing in New York City.
"We're pleased the court has seen we are acting in the best interests of our creditors and stakeholders in the sale of this company," added Enron spokesman Mark Palmer.
At PGE, the news was greeted with nonchalance.
"It is a new chapter in a sense," said Vice President Fred Miller. "We felt like we left Enron a long time ago; they lost interest in us years ago. Peggy's (Chief Executive Officer Peggy Fowler) been in charge."
Steve Lacey, a PGE lineman, said Texas Pacific was the "best offer out there. I think it's the best thing that could have happened for us. But we still have to wait for it to be approved."
Oregon Electric Utility Co., the holding company created by Texas Pacific to oversee the PGE sale, is expected to file an application with the Oregon Public Utility Commission sometime in March. Hearings are expected to begin in the next month, said Kelvin Davis, a Texas Pacific partner who oversees energy investments.
The proposed sale also faces scrutiny from a half-dozen other regulatory agencies, including the Federal Energy Regulatory Commission and Nuclear Regulatory Commission.
City officials had indicated that they would address their concerns about the sale at the PUC hearings.
Consumer groups wary
Oregon Electric spokesman Tom Imeson called the bankruptcy court decision "an important step in returning PGE to independent operation with strong local participation."
Consumer groups and state regulators plan to hold Oregon Electric's feet to the fire -- along with its general partners, former Gov. Neil Goldschmidt, developer Tom Walsh and Northwest Airlines board Chairman Gerard Grinstein -- to provide rate cuts and long-term stability to PGE's estimated 750,000 customers.
Davis said Texas Pacific is still working on the proposal, but promised it would address rate benefits and other requirements of the application process "in a comprehensive and compelling manner. We have every expectation of meeting the criteria applied to make our application acceptable."
Enron anticipates closing the deal in the second half of 2004, according to Enron's Taylor.
Two other attempts to sell PGE -- to the Nevada-based utility Sierra Pacific in 1999 and to the NW Natural gas utility in 2001-- were scrapped because of financing problems and complications from Enron's bankruptcy proceedings and liabilities.
Firm takes on PGE debt
Texas Pacific, which announced its proposal in November, is putting $525 million of its own money into the deal. Another $700 million will come from other investment groups. The group also will assume $1.1 billion in PGE debt.
City officials who wanted Portland to acquire PGE opted not to challenge Texas Pacific's $2.35 billion bid, saying in a letter to the investment group handling the sale, the Blackstone Group, that they were prohibited from competing in a bidding war. In the letter, the city's chief administrative officer, Tim Grewe, left the door open for the city to negotiate to buy PGE.
But on Thursday Judge Gonzalez squelched that effort. He quickly granted approval to the Texas Pacific bid, even after Enron's legal team read the city's letter indicating a potential higher offer for PGE. Mitchell told the court that Portland had never submitted an actual dollar amount.
Enron spokesman Palmer confirmed that there had been meetings between Enron managers and city officials in San Francisco, Chicago and Portland, but that even though invited to do so, the city never submitted a formal offer to Enron.
"They want a seat at the table, and that table is moving down to Salem," Palmer said.
Calls to city officials for comment were not returned by deadline.
Item 5. Other Events
(a) FERC Investigations - Wholesale Power Markets, Enron Trading Strategies Docket No. EL02-114-000;
People of the State of California ex rel. Bill Lockyer, Attorney General v. Portland General Electric Company and Does 1 through 100, Superior Court of the State of California for County of San Francisco. Case No. CGC-02-408493/USDC Northern District of California, Case No. C-02-3318-VRW(California Case); and
Oregon Public Utility Commission Staff Report on Trading Activities by Portland General Electric, PacifiCorp, and Idaho Power Company during the Western Electricity Crisis of 2000-01 (Proposed OPUC Investigation)
On December 17, 2003, the Federal Energy Regulatory Commission (FERC) approved the settlement (Settlement) agreement entered into by Portland General Electric Company (Company) with the Staff of the FERC, the California Attorney General, the California Public Utilities Commission, the City of Tacoma, Washington, the Oregon Public Utility Commission (OPUC) and other parties resolving FERC Docket No. EL02-114-000, the California Case, related non-public investigations by the California Attorney General, and the Proposed OPUC Investigation. The Settlement was uncontested and there is no further appeal.
(b) Portland General Electric Company v. Hardy Meyers, In His Official Capacity as Attorney General of the State of Oregon, United States District Court for the District of Oregon, Case No. 03-1641-HA, and State of Oregon, ex rel Hardy Meyers, Attorney General for the State of Oregon v. Portland General Electric Company, Multnomah County Oregon Circuit Court, Case No. 0312-13473
On November 26, 2003, the Company filed a complaint for Declaratory Relief in United States District Court for the District of Oregon seeking to end the Oregon Attorney General’s investigation into the Company’s participation in wholesale power trading markets related to the California energy crisis of 2000-2001. The complaint is based on Federal preemption grounds and judicial estoppel because the State of Oregon, through the Oregon Public Utility Commission, has settled with the Company on these issues. On December 16, 2003, the Oregon Attorney General filed a motion to dismiss the complaint. Also on that date, the Oregon Attorney General filed in the Multnomah County Oregon Circuit Court a Motion for Order to Show Cause why the Company should not comply with the Oregon Attorney General’s investigation. The Company intends to contest the Motions.
Source: SEC - Portland General 8K Filing Dated 12/22/2003
Item 5. Other Event
Proposed Acquisition of Portland General Electric Company
On February 5, 2004, the bankruptcy court in the chapter 11 bankruptcy proceeding of Enron Corp. (Enron), approved the sale of Portland General Electric Company (the Company) to Oregon Electric Utility Company, LLC (Oregon Electric), an Oregon limited liability company backed by investment funds managed by Texas Pacific Group. The approval followed completion of an “overbid” process in which other potential buyers were given the opportunity to submit superior bids. No other bids were received. The transaction, which has been approved by the Enron Board of Directors, will require approval of the Oregon Public Utility Commission, the Federal Energy Regulatory Commission, and certain other regulatory agencies prior to closing.
At closing, Enron will sell all of the issued and outstanding common stock of the Company to Oregon Electric. The transaction is valued at approximately $2.35 billion, including the assumption of debt. The final amount of consideration will be determined on the basis of PGE’s financial performance between January 1, 2003 and closing.
Source: SEC - Portland General 8K Filing Dated February 5, 2004
About Texas Pacific
Texas Pacific Group, with offices in San Francisco, London and Fort Worth, TX, is a private equity investment firm. TPG has significant experience working in regulated industries including airlines, financial services and healthcare. Since its founding in 1993, TPG has invested in more than 50 companies, of which it continues to own more than 30. These companies have combined revenues of more than $32 billion and employ more than 225,000 employees.
SEC Info Name Date Form Type Company KOEHLER ANNE 3/07/00 S-1/A Amended Initial Registration Stmt FIRSTWORLD COMMUNICATIONS INC KOEHLER ANNE 3/13/00 SC 13D/A Amended Ownership Statement ENRON CORP/OR/ KOEHLER ANNE 3/13/00 SC 13D/A Amended Ownership Statement FIRSTWORLD COMMUNICATIONS INC KOEHLER ANNE 2/22/00 SC 13D Ownership Statement TPG ADVISORS III INC KOEHLER ANNE 2/22/00 SC 13D Ownership Statement FIRSTWORLD COMMUNICATIONS INC KOEHLER ANNE 6/19/00 S-1/A Amended Initial Registration Stmt BASIC ENERGY SERVICES INC
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