Seabrook’s Bankrupt Owner Receives $2-Billion Offer
New England’s largest electricity company, Connecticut-based Northeast Utilities, said Thursday it offered to acquire bankrupt Public Service Co. of New Hampshire in a plan valued at $2 billion.
Analysts said the proposal, which put a higher price on the New Hampshire utility than the value determined by state regulators, could spark heated bidding between as many as 11 utilities.
Public Service declared bankruptcy almost a year ago because of liabilities associated with its $2-billion investment in the Seabrook, N.H., nuclear plant. The facility, which is located close to the Massachusetts border, has never been activated because of a dispute over emergency evacuation plans. Under the Northeast Utilities offer, Public Service’s 35.6% share of the Seabrook plant would be spun off into a separate company owned by existing unsecured creditors and security holders, the company said.
Northeast Utilities said it would pay $1.2 billion for the non-Seabrook assets. The company valued its related pledge to buy Seabrook power at $750 million, making the total deal worth roughly $2 billion.
Public Service said it welcomed the proposal from the larger company because it provided a starting point to achieve proper value for the company. Northeast Utilities said the plan was designed to remove Public Service Co. from bankruptcy and make it an operating unit of the company.
“We are glad to see that (Northeast Utilities), a serious qualified bidder, has valued PSNH at a level it describes as in excess of $2 billion,” the New Hampshire utility said. “Until now the State of New Hampshire has refused to recognize value anywhere near that range.”
“It is difficult to judge the ultimate strength of the offer at this point but I think it’s safe to say you can look for some type of bidding war as a result,” said Edward Graves, who follows the company for Standard & Poor’s.
Rate Increase Proposed
Public Service, its creditors and the state are negotiating a financial restructuring of the utility, but the talks have been punctuated by harsh rhetoric and charges of bad faith. In December, Public Service filed a reorganization plan that provides for a significant reduction in its debt and sharp increases in utility rates.
Northeast Utilities officials said their proposed buyout would provide Public Service with an opportunity to speedily resolve virtually all outstanding issues in the reorganization. Northeast Utilities, with operations in both Connecticut and Massachusetts, has yearly revenue of $2 billion. In 1987, Public Service Co. had sales of about $550 million.