CVPS To Correct Earnings, Extend Tender Offer Deadline
March 14 2006 - 9:32AM
Business Wire
Central Vermont Public Service (NYSE:CV) today said it will restate
2005 and 2002 earnings to properly record the impairment of its
remaining investment in the Home Service Store ("HSS"). The
restatement is expected to decrease 2002 earnings by $0.8 million
after-tax, but will not impact 2004 or 2003 earnings. Previously
announced 2005 earnings are expected to increase by $0.8 million
after-tax. On March 9, 2006, Central Vermont's management announced
to the Audit Committee of the CVPS Board of Directors that the
company had a material weakness in its internal control over
financial reporting. The material weakness stems from treatment of
nonrecurring transactions, certain balance sheet classifications,
and preparation and review of account reconciliations. In the
fourth quarter of 2005, CVPS subsidiary Eversant impaired its
remaining $1.4 million investment in HSS, resulting in a $0.8
million after-tax charge to earnings. Eversant determined that its
investment was impaired based on HSS's current financial
information and slower-than-expected growth experience. Based on
further review and analysis it was determined that the impairment
should have been recorded in 2002. As part of the restatement, the
Company will also correct the classification of certain balance
sheet accounts from long-term to short-term in 2004 and correct the
classification of available-for-sale securities within the
investing section of the cash flow statements in 2004 and 2003. As
a result of the restatement and material weakness determination,
the company plans to reissue its 2005 earnings and file its Annual
Report on Form 10-K with the Securities and Exchange Commission on
March 31, 2006. The company has also decided to extend its tender
offer to repurchase up to 2,250,000 shares in a reverse Dutch
auction until 5:00 p.m., New York City time, on April 5, 2006.
Shareholders may tender to sell their stock or withdraw previously
tendered shares of stock until that time. 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 tender 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 percent and 21 percent over the closing price of CVPS's
common stock on the day prior to announcement of the tender offer.
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 are 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. CVPS,
founded in 1929, is Vermont's largest electric utility, serving
about 151,000 customers. 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 is made only pursuant to the offer to purchase and
related materials that the company has sent to its stockholders as
they have been amended in the company's filings with SEC.
Stockholders should read those materials carefully because they
contain important information, including the various terms of, and
conditions to, the tender offer. Stockholders can 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 prior to making any
decisions with respect to the tender offer. Forward-Looking
Statements This release contains statements that are
forward-looking, and that are not historical facts 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.
Actual results will depend, among other things, upon the actions of
regulators, performance of the Vermont Yankee nuclear power plant,
effects of and changes in weather and economic conditions,
volatility in wholesale electric markets and our ability to
maintain our current credit ratings. These and other risk factors
are detailed in CV's Securities and Exchange Commission filings. CV
cannot predict the outcome of any of these matters; accordingly,
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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