Ulster County Resident Questions Utility Merger Via Shareholder Resolution
Much of the opposition to a proposed utility merger in the Hudson Valley has focused on community concerns, such as jobs, rate hikes, and investing locally. Now, at least one community member has taken his concerns to the Securities and Exchange Commission.
Canadian energy company Fortis would acquire Poughkeepsie-based CH Energy Group, parent of Central Hudson Gas and Electric Corporation, for about $1.5 billion. New Paltz resident Karl Budmen says shareholders will lose.
He points out the $65 per share buyout price equates to just $975 million for a purchase price, with the difference coming in the form of buyout incentives to CH Energy executives. And so Budmen, a retired State University of New York at New Paltz professor, sent a shareholder resolution to the U.S. Securities and Exchange Commission saying so, requesting that within one year or prior to the merger, CH Energy provide a report to shareholders detailing at least one alternative bid for CH Energy and /or an independent evaluation of the company’s value from a non-interested third party.
Central Hudson spokesman John Maserjian says the offer by Fortis represented a 9.5 percent premium to the all-time high share price for CH Energy Group. He points out that shareholders overwhelmingly approved the offer last June, with 92 percent of shares cast in favor of becoming part of Fortis. Budmen says he does recognize shareholder approval of the merger, but says that approval was premature.
Budmen says he spoke about his concerns during a public hearing held by the New York State Public Service Commission in Kingston, and was contacted by Taun Toay about submitting a shareholder resolution letter to the SEC. In fact, included with Budmen’s letter is a letter of support from Toay, who is a research analyst with the Levy Economics Institute of Bard College. Toay says he cannot co-file the resolution as he has held CH Energy stock for less than one year.
Meanwhile, two administrative law judges Friday issued a recommended decision, an advisory opinion that will be considered by the New York State Public Service Commission in determining whether to approve the acquisition. The judges write that they find it relatively easy to conclude that the benefits of the merger transaction pursuant to the Joint Proposal are outweighed by the detriments. They refer to a joint proposal from Fortis and CH Energy filed in January containing $50 million in customer benefits. CH Energy executives say they are concerned that the decision does not recognize the nature and value of the stand-alone model under which Fortis utilities operate. They add that despite the recommended decision, Central Hudson will continue working toward approval of the Fortis/CH Energy merger.