- The Louisiana Public Service Commission voted Wednesday to reject the proposed acquisition of public utility Cleco Corp. by an international constorium led by Australian investor firm Macquarie Infrastructure & Real Assets Inc. (MIRA) and Canada's British Columbia Investment Management Corp, SNL Energy reports.
- PSC Chairman Clyde Holloway said the deal was not in the public interest and recommended that it should be denied. The other four commissioners didn't raise opposition.
- The PSC decision comes after a Louisiana Administrative Law judge recommended greater scrutiny into the proposal to make Cleco private, casting doubt on customer benefits and a loan scheme that would move tax money into the pockets of investors.
Promises of significant boosts to customer rate credits failed to win over the Louisiana Commissioners, who rejected the deal yesterday.
Cleco Corp offered shareholders more than $55/share for their stock, a 15% premium to Cleco's closing price in October 2014, when the deal was announced. But the PSC staff said the $125 million would only maintain the status quo with little benefit for ratepayers.
In order to net support for the deal, the companies offered to increase customer rate credits above what staff suggested, to $125 million over 15 years. Customers will receive an estimated $1.2 million per year in cost-of-service savings from the deal, which the investor group believes will bring total customer savings to approximately $143 million in the next decade and a half.
In addition, the "proposed transaction brings substantial financial risks to Cleco Power and its ratepayers that are not sufficiently mitigated by the regulatory commitment," Chief adminstrative law judge Valerie Seal Meiners wrote earlier this week before the PSC decision.
One of the judge's major concerns is an intercompany loan which would create deductions and ultimately result in about $30 million in funds collected as taxes remaining with the company. PSC commissioners were directed not to talk about the deal before the decision, but Chairman Holloway told the New Orleans Advocate that "Cleco is in great shape today."
"So why in the world do they need to sell?" he asked. "Wall Street greed."
Cleco expressed disappointment with the decision in a statement:
"We are disappointed with the LPSC`s decision, which we believe fails to acknowledge the benefits this transaction would have provided to all Cleco stakeholders. We will review our options regarding this decision."