CVPS sells interest in Catamount Energy
October 12 2005 - 4:42PM
Business Wire
Central Vermont Public Service (NYSE:CV),Vermont's largest electric
utility, today announced that its wholly owned subsidiary,
Catamount Resources Corporation (CRC), has agreed to sell a
controlling interest in its wind energy business to Diamond Castle,
a New York-based private equity investment firm. Subject to certain
conditions, Diamond Castle will invest $62.5 million in Catamount
Energy Corp., CRC's unregulated wind development subsidiary, in
exchange for a controlling interest in Catamount. Diamond Castle's
investment will occur in phases, over the next three years, to
provide equity as needed by Catamount for it to continue its wind
energy development activities in the United States and United
Kingdom. Diamond Castle's initial investment of $15 million is
expected to be funded on Oct. 31, 2005, and will be made directly
into Catamount in exchange for newly issued shares of Catamount
common stock. Diamond Castle's obligation to provide funds in
excess of the initial $15 million investment is subject to it
providing CVPS, prior to Dec. 31, 2005, with documentation showing
that it has sufficient capital available to satisfy the proposed
equity funding obligations under the transaction. CVPS has been
informed by Diamond Castle that it expects to be able to provide
this documentation to CVPS in advance of such date. When this
occurs, Diamond Castle will receive a 51 percent voting interest in
Catamount, Catamount's board will be comprised of three Diamond
Castle appointees, three CRC appointees and Catamount CEO James
Moore, CRC and Diamond Castle will each have consent rights over
certain Catamount activities, and CRC and Diamond Castle will each
be subject to certain transfer restrictions with respect to their
shareholdings in Catamount. "Through a lot of hard work, we have
developed Catamount into a premier wind developer and operator,"
CVPS President Bob Young said. "Catamount needed a new partner with
the financial resources of Diamond Castle to enable it to continue
to grow its business." "This transaction will effectively double
the size of Catamount, and provide continued opportunities to
increase shareholder value," Young said. Contingent on completion
of Catamount's Sweetwater III project in Texas, Diamond Castle also
agreed to buy CRC's entire interest in Catamount for $60 million in
cash less certain transaction expenses, at CRC's option, at any
time prior to March 31, 2006. "Over the coming weeks, we will
continue to evaluate this and other options that could help improve
CVPS's financial strength," Young said. "Through the current
transaction with Diamond Castle, CVPS can continue to strengthen
Catamount even as we focus on improvements in the core utility
business, and investments in VELCO, Vermont's transmission
operator." Moore will stay on to lead Catamount, which is expected
to remain at its headquarters on Allen Street in Rutland, Vt. "We
look forward to continuing the growth of our U.S. and U.K. wind
business with Diamond Castle, which combines major financial
resources with excellent knowledge of the energy markets," Moore
said. Mike Ranger, a senior managing director of Diamond Castle,
said "We are delighted with the opportunity to invest in Catamount.
We believe Catamount is well positioned to take advantage of the
numerous growth opportunities in the rapidly expanding wind power
industry, and we look forward to partnering with James Moore and
his team in continuing to build the company." Catamount, formed in
1986, has focused exclusively on wind development since 2001. It
has six operating projects in the United States and Europe, and
eight projects under development in Wales, Scotland, Pennsylvania,
Texas, and Vermont. Catamount's focus on wind was the second foray
by CVPS into wind generation. Working with developers on Grandpa's
Knob in Castleton, CVPS was the first utility in the nation to feed
wind-generated electricity onto a customer distribution system in
1941. Young said that pioneering spirit would continue at CVPS. "We
have always looked at the environment as one of Vermont's most
important assets, and we will continue to seek out innovative and
environmentally sound energy sources to serve our customers," Young
said. CVPS, founded in 1929, is Vermont's largest electric utility,
serving about 150,000 customers. CRC was formed for the purpose of
holding CVPS's subsidiaries that invest in unregulated business
opportunities. Diamond Castle Holdings, LLC is a private equity
firm founded in September 2004. Lawrence Schloss, the former
chairman of Donaldson, Lufkin & Jenrette's and Credit Suisse
First Boston's successful private equity business, is the CEO of
Diamond Castle. Diamond Castle has 21 employees located in New York
and focuses on investments in the power, financial services, media
and telecom, and healthcare sectors.
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