Co-op board OKs pol­icy to as­sess of­fers

Austin American-Statesman - - METRO & STATE - By Pa­trick Ge­orge

JOHN­SON CITY — The Ped­er­nales Elec­tric Co­op­er­a­tive is not for sale, its lead­ers say — again.

But in case some­one makes a play for the largest elec­tric co­op­er­a­tive in the U.S., the util­ity now has a pol­icy in place to eval­u­ate such of­fers.

At the co-op’s reg­u­lar meet­ing of its board of di­rec­tors in John­son City on Mon­day, board mem­bers unan­i­mously ap­proved the co-op’s first “dis­po­si­tion pol­icy,” two years af­ter a New Jersey in­vestor’s in­quiry into buy­ing Ped­er­nales was re­buffed.

“The cur­rent pol­icy is that we are not for sale,” board mem­ber Pa­trick Cox said. But the util­ity needed a process to ex­am­ine whether an un­so­licited of­fer to buy co-op as­sets should be se­ri­ously eval­u­ated, Cox said.

Act­ing Gen­eral Man­ager Luis Gar­cia stressed that though the board is re­spon­si­ble for de­ter­min­ing whether the of­fer is a qual­i­fied one, it is up to the co-op’s 230,000-plus mem­bers to de­cide whether to sell co-op as­sets. Ap­proval re­quires a two-thirds vote of mem­bers, Gar­cia said.

In 2008, New Jersey in­vest­ment firm man­ager Kurt Holmes floated an of­fer to buy the co-op for an es­ti­mated $300 mil­lion. The board re­jected the of­fer from his com­pany, Quentin Cap­i­tal LLC. Cox said at the time that it was “cer­tainly not any­thing even worth con­sid­er­ing.”

The new pol­icy takes a twophase ap­proach to eval­u­at­ing such of­fers, Gar­cia said. First, it must not in­ter­fere with the co-op’s by­laws, must iden­tify all mem­bers of the in­ter­ested par­ties, and in­di­cate a buy­out’s ef­fects on rates, ser­vice and ben­e­fits to its mem­bers.

Reach­ing the sec­ond phase means that it is a “very se­ri­ous of­fer,” Gar­cia said. If it reaches that point, the board can vote to look for ad­di­tional po­ten­tial buy­ers.

Board Pres­i­dent Larry Lan­daker said the pol­icy does not sig­nal that the co-op is for sale.

“It was de­ter­mined over a pe­riod of time that it’s not ad­e­quate to sim­ply have a pol­icy that said ‘we’re not for sale,’” Lan­daker said.

In other co-op news, the board ap­proved salary in­creases for Gar­cia and act­ing gen­eral coun­sel Aisha Nawaz Ha­gen, who took Gar­cia’s place as gen­eral coun­sel when he be­came the in­terim gen­eral man­ager.

Gar­cia will re­ceive a $20,000 in­crease to bump his pay to $238,000 an­nu­ally, and Ha­gen will re­ceive an in­crease of $12,000 to bump her pay to $152,000 an­nu­ally. The in­creases will be main­tained on a quar­ter-by-quar­ter ba­sis un­til the per­ma­nent po­si­tions are filled, of­fi­cials said.

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