Cities close in on NorthWestern Energy stock deal

A deal between a major stockholder of NorthWestern Corp. and Montana Public Power Inc. – a nonprofit grouping of five Montana cities, including Missoula – could be reached as early as next week.

The $2 billion deal hinges on whether MPPI can convince Harbert Distressed Investment Master Fund, which owns about 24 percent of NorthWestern’s stock, that bonds issued to finance the purchase would earn investment-grade ratings from bond-rating companies, said Missoula Mayor Mike Kadas, who is chairman of MPPI’s board.

If the bonds are rated as investment-grade, the interest rate will be low and the bonds will sell quickly. If the bonds fail to earn an investment grade, the interest rates will be higher. Higher interest rates would erode MPPI’s revenue stream, Kadas said, and could kill the deal.
Montana Public Power – which includes Bozeman, Butte-Silver Bow, Great Falls, Helena and Missoula – announced a bid last summer to buy the South Dakota-based NorthWestern and turn the investor-owned utility into a publicly owned entity. NorthWestern spurned the offer.

If Harbert agrees to sell, the purchase would still need to cross a number of regulatory and other barriers.

"But we’d be 90 percent of the way there," Kadas said.

By ROBERT STRUCKMAN of the Missoulian

Full Story: http://missoulian.com/articles/2005/09/14/news/mtregional/news05.txt