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.
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Who Killed Montana Power?
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