KINGMAN – Will the sale of UniSource Energy to Saguaro Utility Group benefit ratepayers?
"There is a great deal of distrust about the sale in this area," local businessman Roy Dunton said.
"What is the benefit to sell the company again to New York bankers?"
The sale is a leveraged buyout of a utility company by a financial institution in the classic sense, Gleason said.
Leveraged buyout means a company takes on debt to pay for acquiring another.
The proposed buyer is Saguaro Utility Group.
Sage Mountain LLC, an Arizona company managed and owned by Fredrick Rentschler, is a general partner.
Limited partners are New York investment firms Kohlberg Kravis Roberts and Co.
Morgan Partners and Wachovia Capital Partners, an investment bank based in Charlotte, N.C.
The Corporation Commission wants to be sure measures are taken so that the new owners cannot take the assets and leave a shell, Commissioner Jeff Hatch-Miller said
"Is this a good deal for Arizona? This hearing helps us to gather the evidence to decide," Hatch-Miller said.
UniSource Energy has a good reputation helping the Mohave Museum of History and Arts Board Chairwoman, Carol Hurst said.
She told commissioners that she wants to be sure the new owners would be as generous to the community.
Several speakers expressed the need for continued assistance for low-income customers who have not been able to pay the increased bills for gas and electricity.
Jeanne Caisse, representing the Kingman Resource Center, said the organization has turned away more than 300 needy families per month this winter after funds ran out.
She said she now meets monthly with UniSource Energy Vice President Tom Ferry to discuss needs and sources of help.
Commissioner Kristin Mayes said she has asked UniSource and Saguaro whether the same level of support for charitable giving would be maintained.
Commissioner William Mundell chaired the meeting in the absence of Chairman Mark Spitzer and summarized the commission's questions.
• Why is this sale in the public interest?
• How will consumers benefit?
• Is the 30 percent premium for stockholders reasonable.
• Does the sale overvalue the company?
Although no rate increases are included in the sale, the increased value of the company and changes in the market for electricity and gas could change that after 2008.
Any rate change would have to go before the commission.
The commission will complete hearings in Prescott, Nogales and Tucson by next week
The next step will be hearings before an administrative law judge in a courtroom setting beginning June 21, Mundell said.
The judge will make a recommendation to commissioners, who expect to vote on the sale later this year.