Entegrus offers $12 million for Amherstburg’s Essex Power shares

 

By Ron Giofu

 

EPOWER

The offer came during last Tuesday’s town council meeting where Entegrus president and CEO Jim Hogan indicated the offer is for 100 per cent of Amherstburg’s shares, which represent approximately 14 per cent of the total shares in Essex Power.

The Chatham-based power distribution company would own the shares but Hogan said the company would commit to holding at least two meetings per year with town council to go over any concerns the town may have. Hogan told town council their dividend in Essex Power averages about $200,000 per year so if council were to accept the $12 million offer, “it’s basically giving you 60 years of your dividend up front today.”

In making Entegrus’ case to town council, Hogan added the $12 million also represents over four times the town’s original investment in Essex Power and over three times the current book value of the shares. Hogan also stated rates would not be impacted by an Entegrus purchase.

“The customer rates will be regulated by the Ontario Energy Board,” said Hogan.

Hogan also didn’t believe Amherstburg residents are at risk for any liability because Essex Power and Entegrus are their own separate corporations.

The $12 million offer could fluctuate but Hogan didn’t believe it would change substantially in either direction. He said Entegrus has to perform its due diligence and still needs more information with factors that could influence a price fluctuation including Essex Power’s working capital and debt, environmental issues and any outstanding litigation.

Hogan added his company wants “no hidden surprises and not good surprises.”

Councillor Diane Pouget noted the town has hired its own consultant to assess the offer on behalf of the municipality. That report is due back in April.

“We are checking this out thoroughly and it is not costing the taxpayers anything,” she said.

Director of finance Wendy Dade said the consultant’s report is due back April 7. Deputy Mayor Ron Sutherland, who last week called for a public meeting on the issue, put forth his motion for such a meeting and that was adopted by council. No date was finalized as of Tuesday night’s council meeting but Sutherland said he wanted the public meeting “soon after” the April 7 town council meeting.

Pouget concurred with Sutherland’s request for a public meeting.

“There’s a big, big concern from our constituents,” said Pouget. “This is a very, very important decision.”

Hogan said after the meeting he believed council “asked the right questions” and that Amherstburg “seemed to have interest” when the offer was made. Other shareholders – including LaSalle, Tecumseh and Leamington – have been contacted regarding the issue, Hogan noted, but those communities “are not at this stage.”

Hogan said Entegrus could be flexible with the April date if the town needed a bit more time to consider their consultant’s report. He hoped a regulatory application could be filed with the Ontario Energy Board in June should other stakeholders not decide to match the offer in the meantime. If accepted and no counteroffers take place, the transaction would be completed in the fall and the payment would take place then.

 

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