The fight was intense and the vote went against them, but Cleco Corp. asked state regulators to revisit their decision and allow a coalition of Australian and Canadian investors to buy the Pineville-based utility for $4.9 billion.
The five-member Public Service Commission reported that representatives of Cleco and Macquarie Infrastructure and Real Assets, based in Sydney, Australia, have been reaching out to them for about a week. The transaction’s participants formalized their interests late Monday in filing for reconsideration of the PSC’s Feb. 24 decision rejecting the sale. The PSC posted the request on its website Tuesday.
“Applicants submit that the Commission’s vote was procedurally flawed and wrongly decided on the merits of the transaction,” wrote Alan C. Wolf, the New Orleans lawyers hired to represent Cleco Power LLC, which sells electricity to about 286,000 customers on the North Shore, in Acadiana and throughout central Louisiana.
Macquarie took the lead for a coalition of buyers that included British Columbia Investment Management Corporation and other investors.
“We believe this time will allow us the opportunity to address incorrect statements made during the February meeting and clearly explain why the proposed transaction is in the public interest,” Cleco and the investor group stated in a prepared statement.
The $4.9 billion deal would have been good for Cleco shareholders, who would have sold their stock at a 15 percent premium — about $55.37 per share. Cleco’s stock fell moments after the vote and was selling Tuesday at $46.42. The new company would be privately held, rather than owned by the holders of publicly traded stock.
But PSC Chairman Clyde Holloway, of Forest Hill, had concerns about a tax scheme that would have allowed the new owners of Cleco to pocket taxes collected as part of the monthly rates, rather than turning the proceeds over to state and federal authorities. (Cleco President Darren Olagues has testified that other utilities benefit from the tax break.) Holloway also didn’t like plans of the investors to resell the 80-year-old company after eight-to-10 years.
Much of the negotiations between the regulators and proponents of the sale took place behind closed doors. Much of the documentation was kept private — an administrative law judge eventually required some of information to be released publicly in a heavily redacted order — and the PSC has prohibited most of its staff from speaking to reporters.
But Cleco customers, employees and some shareholders held multiple town hall meetings to publicize issues they had with the transaction.
Holloway said a commissioner needs to sponsor Cleco’s request for rehearing to get it on the agenda for the panel’s March 16 meeting. At least three of the five commissioners would have to agree to a rehearing.
Holloway said it wasn’t going to be him.
“We had more than six and half hours of this,” Holloway said in an interview Tuesday. “We’ve reviewed thousands of pages of testimony. I think this thing has been thoroughly reviewed.”
Cleco and the Macquarie partners did sweeten their offer but the changes were very minor, he said.
“There’s no doubt about one thing, I’m going to vote no and I’m going to fight it with every ounce in my body,” Holloway said.
Cleco and Macquarie contend their side was short shrifted in the seven-hour February hearing. Andrew M. Chapman, the managing director of Macquarie Infrastructure Management (USA) Inc., complained that he was given only about 30 minutes to speak during a seven-hour hearing that featured opponent after opponent criticizing the sale.
During the hearing, PSC Commissioner Scott Angelle, of Breaux Bridge, moved to delay a decision based on the contention that the buyers and sellers didn’t have adequate opportunity to rebut some of opponents’ testimony.
But the motion failed when only two commissioners – he and Eric Skrmetta, of Metairie, the two who most aggressively questioned opponents — voted to delay. As the overcrowded hearing room erupted in applause and shouts, Holloway quickly called to reject the transaction. Neither Angelle nor Skrmetta objected.
Casey DeMoss, who heads the New Orleans-based consumer group Alliance for Affordable Energy, pointed out that the sale’s proponents testified all morning at the hearing and opponents got the afternoon. Chapman’s testimony may have been truncated, but his partners in the transaction got plenty of time to speak.
“We’ll be filing a motion to oppose (the rehearing) on Wednesday,” DeMoss said, adding that, though Angelle and Skrmetta made their support for the transaction clear, the actual vote to reject was unanimous. The Alliance’s lawyers interpret PSC rules and precedents as not allowing the rehearing of issues that are decided unanimously.
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