CVPS Announces Reverse Dutch Auction Buyback, Investments In Utility
February 07 2006 - 9:37AM
Business Wire
Central Vermont Public Service (NYSE-CV) today announced that its
board of directors has approved a buyback of the company's stock in
a reverse Dutch auction tender offer, using approx $50 million in
proceeds from the sale of Catamount Energy Corp. The company also
announced plans to use an approx $20 million in cash on hand to
fund capital construction projects ($3.3 million), post-retirement
medical fund benefits ($3.8 million), and under-funded pension
costs ($12.9 million). This decision was made after conferring with
the state regulators about the use of the Catamount sale proceeds
and cash on hand. The tender offer is expected to commence within
the next few days and to extend through March 15, 2006. Under the
procedures of the reverse Dutch auction, shareholders may offer to
sell some or all of their stock to the company at a target price in
a range from $20.50 to $22.50 per share. Upon expiration of the
auction offer, the company will select the lowest-bid price that
will allow it to buy up to 2,250,000 shares. All shares accepted in
the tender offer will be purchased at the same price. If the number
of shares tendered is greater than the number sought, purchases
will be made on a pro rata basis from stockholders tendering at or
below the selected purchase price. On February 6, 2006, the closing
price of CVPS's common stock on the New York Stock Exchange was
$18.62 per share. Consequently, the tender offer represents a
premium of between 10 % and 21% over the closing price of CVPS's
common stock on the day prior to announcement of the tender offer.
"The Catamount sale proceeds and these funding decisions will
benefit customers, employees and shareholders," CVPS President Bob
Young said. "They will improve utility infrastructure, and reduce
retirement plan expenses in our cost of service, both of which
ultimately benefit our customers. We are also returning proceeds
from the Catamount sale to investors who participate in the
buyback. In reducing the number of outstanding shares, the buyback
will also boost earnings for remaining shareholders." In December,
CVPS subsidiary Catamount Resources Corporation sold its investment
in Catamount Energy, a wind energy company, to Diamond Castle, a
New York-based private equity investment firm, and its affiliated
funds. The sale netted CVPS $52 million. Use of on-hand cash
proceeds to fund capital expenses this year will allow the company
to do work in 2006 that previously had been expected to be deferred
to 2007 or beyond. Young said today's announcement complemented
previously announced plans to improve CVPS's financial outlook and
return the company to a position of financial strength. Those plans
include: -- Securing a $25 million revolving credit facility in
October 2005; -- $2.7 million in 2006 budget cuts, including a 10
percent cut in Young's salary and a 5 percent reduction in other
officers' salaries, which will help offset rising fuel and medical
costs; -- Restructuring the board of directors starting in 2006; --
Efforts to improve communication with Vermont regulators and find
common ground on customer and company needs. "The board of
directors, management and employees are working extremely hard to
return the company to a position of financial strength, which is
critical to shareholders and customers alike," Young said. CVPS,
founded in 1929, is Vermont's largest electric utility, serving
about 150,000 customers. Catamount Resources Corp. was formed to
hold CVPS's subsidiaries that invest in unregulated business
opportunities. Tender Offer Details The tender offer is subject to
market, economic, business and other customary conditions affecting
the company, and the other terms and conditions that will be
described in the offering materials. CVPS reserves the right, in
its sole discretion, to increase the number of shares purchased,
subject to compliance with applicable law. All of the shares that
are properly tendered (and not properly withdrawn) at prices at or
below the purchase price determined by CVPS will be purchased at
such purchase price, net to the seller in cash without interest, as
promptly as practical after the expiration of the tender offer,
subject to any withholding under applicable law, possible proration
and provisions relating to conditional tenders. In general,
stockholders that own beneficially or of record fewer than 100
shares in the aggregate may elect not to be subject to proration if
they properly tender all of their shares at or below the purchase
price before the tender offer expires. CVPS will promptly return to
tendering stockholders all shares that have been tendered and not
purchased. CVPS's Board of Directors has authorized this tender
offer as a prudent use of financial resources given CVPS's
business, assets and current stock price and as an efficient means
to provide value to stockholders. The offer represents an
opportunity for CVPS to return cash to stockholders who elect to
tender their shares while at the same time increasing non-tendering
stockholders' proportional interest in CVPS. Neither the company
nor its Board of Directors, the dealer manager, depositary or
information agent is making any recommendation to stockholders as
to whether to tender or refrain from tendering their shares into
the tender offer. Stockholders must decide how many shares they
will tender, if any, and the price within the stated range at which
they will offer their shares for purchase to the company. THIS
PRESS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT AN
OFFER TO BUY OR A SOLICITATION OF AN OFFER TO SELL ANY SHARES OF
ANY CLASS OF THE COMPANY'S COMMON STOCK. THE SOLICITATION OF OFFERS
TO BUY SHARES OF THE COMPANY COMMON STOCK WILL ONLY BE MADE
PURSUANT TO THE OFFER TO PURCHASE AND RELATED MATERIALS THAT THE
COMPANY WILL SEND TO ITS STOCKHOLDERS. STOCKHOLDERS SHOULD READ
THOSE MATERIALS CAREFULLY BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION, INCLUDING THE VARIOUS TERMS OF, AND CONDITIONS TO, THE
TENDER OFFER. STOCKHOLDERS WILL BE ABLE TO OBTAIN THE OFFER TO
PURCHASE AND RELATED MATERIALS FOR FREE AT THE SEC'S WEBSITE AT
WWW.SEC.GOV OR FROM OUR INFORMATION AGENT, MORROW & CO. WE URGE
STOCKHOLDERS TO CAREFULLY READ THOSE MATERIALS WHEN THEY BECOME
AVAILABLE PRIOR TO MAKING ANY DECISIONS WITH RESPECT TO THE TENDER
OFFER. A Reminder about Forward-Looking Statements Statements
contained in this release that are not historical fact are
forward-looking statements intended to qualify for the safe-harbors
from the liability established by the Private Securities Litigation
Reform Act of 1995. Statements made that are not historical facts
are forward-looking and, accordingly, involve estimates,
assumptions, risks and uncertainties that could cause actual
results or outcomes to differ materially from those expressed in
the forward-looking statements. There can be no assurance that such
indicated results will be realized. Readers are cautioned not to
place undue reliance on these forward-looking statements that speak
only as of the date of this press release. CV does not undertake
any obligation to publicly release any revision to these
forward-looking statements to reflect events or circumstances after
the date of this press release.
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