Date posted online: Sunday, April 29, 2007
NIPSCO's fate may come into focus in May
Speculation of NiSource sale to Duke fueling worker, Wall Street interest
MERRILLVILLE | Months of speculation about the future of NIPSCO should be put to rest when NiSource lays out a new "path forward" for the company by the end of May.
Parent company NiSource Inc. is promising it will wrap up a strategic review it began more than a year ago, which could determine the fate of Indiana's largest utility and utilities in eight other states.
"The intent of the process is to lay out strategic direction and action that will define a path forward for the company," said NiSource spokesman Karl Brack.Speculation among employees about a possible sale has reached new heights in the past week, according to union officials. Until Friday, many thought the company would reveal its plan during Thursday's upcoming report on quarterly earnings.
NIPSCO workers are growing increasingly sure Duke Energy will emerge as lead bidder for the utility, according to David Chlebek, USW Local 12775 vice president.
"A lot of the supervisors and a lot of others are saying this is a done deal," Chlebek said.
In January, Bloomberg News, citing unnamed sources, said NiSource was shopping its NIPSCO electric business, with Duke Energy, of Charlotte N.C., the most likely buyer.
Duke Energy has steadfastly refused to comment on what it calls "market speculation" when asked about any possible interest in buying NIPSCO.
NiSource's stock price has recorded its most consistent gains in five years on the sales speculation, rising 19 percent since September and trading above $25 per share in mid-April.
Ashar Khan, an analyst with private equity firm SAC Capital, called Times reporters last week asking about any news on a possible NIPSCO sale. He also wanted to know about a bill in the Indiana General Assembly which could set the state on the path of creating a public power authority to buy NIPSCO out.
Other analysts say the shape of any possible deal for NiSource is hard to divine at this point. Speculation ranges from a sale of the entire company, which is the nation's third largest natural gas distributor, to the sale of just NIPSCO's electric plants.
Paul Justice, an equities analyst with Morningstar Inc., thinks a Duke play for NIPSCO could be in the cards. But a play by Duke for a bigger chunk of NiSource is not as likely.
"If you are talking about the entire company, that would be a pretty massive empire," Justice said. "That would really be empire building."
NIPSCO has 445,000 electric and 712,000 natural gas customers in northern Indiana. Duke Energy has 766,000 electric customers in central and southern Indiana.
In late January, NiSource CEO Robert Skaggs Jr. promised Wall Street analysts he would have news to report on the company's year-long strategic review and any possible restructuring "sooner rather than later."
On Friday, the company put out a release on PRNewswire announcing it will host an analyst conference call this Thursday to review first-quarter financial results.
It also sought to tamp down speculation on any possible sale by stating that it does not anticipate completion of its "ongoing strategic and financial review" by that time.
Skaggs has acknowledged politics will play a major role in any company restructuring, as it has with other utilities nationwide. NIPSCO has been seeking to fend off the pending public power authority legislation currently before the Indiana General Assembly.
Consumer groups and state legislators fear a loss of local control and higher electric prices if NIPSCO, incorporated in Hammond in 1912, is swallowed up by an out-of-state conglomerate.
"There is plenty to give regulators cause for concern here," said Shaw Friedman, LaPorte County Attorney. "And we plan to highlight those if any deal is consummated."
The legislative push to look at creating a public power authority remained alive in the General Assembly as of late last week. Supporters had hoped it can gain passage by the time the General Assembly adjourns tonight.
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