Who Killed Montana Power?

    60 mins show 02/09/2002
This is very similar to what Energy East is doing right now to the RG&E
and Rochester !

Dave Kaspersin

(CBS) Former Montana Power shareholders say they were misled when the 
Montana Power Company was transformed into a telecom company. 

Montana Power, once worth $2.7 billion, now sits on the verge of 
bankruptcy. The lawyer for the shareholders says the New York brokerage 
firm Goldman, Sachs is as much to blame as the company's CEO for the debacle. 

Attorney Frank Morrison talked to Steve Kroft in a 60 Minutes interview. 

“There would be memos in which Goldman, Sachs would just keep pushing, 
‘This has to be done now...The market for this can only get worse’...
They were definitely the driver,” Morrison tells Kroft. 

Goldman, Sachs walked away with close to $20 million on the deal, 
says Morrison, but in the process sent a devastating ripple effect 
through the entire state of Montana. Many employees lost their jobs, 
most retirees lost their life savings and state legislators were 
persuaded to pass electricity deregulation laws, sending energy 
bills skyrocketing. Some energy-dependent companies were forced 
to shut down, because they couldn't pay their electricity bills. 

The plan, orchestrated by Goldman, Sachs and Montana Power's CEO, 
was to sell all the company's energy assets, its power plants, 
coal mines and transmission systems, to raise enough cash to 
transform itself into a hi-tech company, all to capitalize 
on the dotcom revolution. 

But then the stock market crashed and Touch America, the new name 
of the company, was stuck with thousands of miles of fiber-optic cable 
and not enough voice, video and data information to profit from. 

Montana Power's assets were once worth billions, its stock traded 
for more than $30 a share. Today, Touch America shares still trade in the 30s - 
but in cents, not dollars - and its assets are valued at a small fraction of 
what the utility's once were. 

CEO Robert Gannon and company executives orchestrated the deal but 
needed Goldman Sachs to pull it off, says Morrison. 

“Bob Gannon could never have sold this plan to the board. 
He didn't have enough credibility,” Morrison says, adding that 
it was Goldman, Sachs that made most of the presentations to the board.\ 

Morrison is suing Gannon and Goldman, Sachs on behalf of hundreds of 
former Montana Power shareholders, claiming they were not properly 
informed of the radical changes being made to the company. 

Central to the lawsuit, says Morrison, is the Goldman, Sachs contract 
with Montana Power that stipulates, “Any advice provided by Goldman, Sachs...
is exclusively for the information of the board of directors and 
senior management of the company.” Morrison says that means, “
Don't tell the shareholders.” 

Neither Goldman, Sachs nor Gannon would comment for the report. 
And like Goldman, Sachs, Gannon seems to have only profited from 
the transformation. After Touch America announced a $30 million loss, 
Gannon said he and three other executives would collectively 
receive a $5.4 million payout from the ailing company. 

This news incensed longtime shareholders like Mike Schmechel. 
"It appears to most people that they're stuffing their pockets 
with the last of the cash before the ship sinks and... 
leaving everyone else onboard," he tells Kroft.
©MMIII, CBS Broadcasting Inc. All Rights Reserved.

Click For More on The Proposed Rate Increase !

Click For More on Voltage Problems.

Click For More on Demand Metering.

Who Killed Montana Power?

Feds Find Power Manipulation in Calif.

400,000 to Keep Russell Station on line - - -
$75 Million to close it down - - -

Enron East/RGS/RG$E Give Ginna Station Away !