This week, Collingwood Council met in a special meeting to discuss an request from its utility partner, PowerStream, to waive some conditions of the shareholder agreement. This meeting appears to have been called by the interim CAO, which seems to me to usurp the mayor’s authority, but we know the administration – in partnership with The Block – has long been pulling the strings in this town to serve its own ends. Plus the meeting was held mid-day at the fire hall; a time and location that appears intended to deter both public and media presence.
Well while the public was deterred, the media were present, but nothing appeared in either paper. That doesn’t surprise me in the increasingly lax EB, but I expected better from the Connection. Finally, a story appeared in the online Connection, Friday. And it – as is too often the case with local media – doesn’t tell the whole story.
First read the waiver requested by Powerstream here. It asks the town to waive, “…Article 7, Article 8 and Article 9 thereof, for purposes of the Offer up until December 14, 2016.”
Got that? No, probably not. What it means is that PowerStream intends to present its offer early next week, but doesn’t want the offer to invoke terms in the agreement that would trigger the shotgun clause. And what, you ask, is the shotgun clause? Well, let’s do a quick review of the history first.
In 2011, the former council initiated a public process to explore opportunities to sell all or a portion (up to 50%) of our electrical utility. After several public information sessions in which public input and comment was sought, and after the issue was discussed in public at the council table, requests for proposals (RFPs) were sent out to prospective LDCs across the province. A strategic committee consisting of the utility board, staff, the mayor and KPMG Consultants was created to oversee the process and report to council and the public. All of the RFPs came in for purchase at EXACTLY 50%. No one wanted to buy less and the direction from council was to sell no more than half.
After a lengthy review and analysis of the offers, PowerStream was chosen as the winner. The offer was reviewed by their lawyers and accountants, our lawyers and accountants, the lawyers and accountants and council members of their three member municipalities. The process then moved to the Ontario Energy Board whose lawyers and accountants reviewed it. And then Energy Probe’s lawyers and accountants reviewed it. Everyone approved it, the finances were clean. The deal was sealed.
In the agreement were two important clauses. First, each side had the first right of refusal to buy the other half, should the partner ever want to sell its share. Second is the shotgun clause: should either party want to sell or buy, it can make an offer to the other party. If that offer is not accepted, then the rejecting party is bound to purchase the remaining half at the amount stated in the offer. And do it within 30 days.
So why did Powerstream want to waive these clauses? Well, first of all, the town sent out RFPs to several other LDCs in the province, totally ignoring PowerStream’s first right of refusal. Yes, it’s highly unethical and sure looks illegal to me, but that’s the way things are done here this term.
I suspect PowerStream – being an honourable company highly regarded by everyone outside our town hall – decided not to drag the bad faith shown again by our town into a legal battle which would further tarnish our badly tattered reputation. And one we would lose. Badly.
Second, PowerStream clearly wants to put its offer in along with those expected (or possibly already received) from the RFP, and not force the shotgun clause. In other words, to have its offer considered in context with the rest, not start the irrevocable process the shotgun clause will effect.
And guess what The Block did? Yep: they voted NOT to waive the clauses. The Block demanded 45 days to consider the request. Which is risible since the letter clearly states an offer is coming December 14, not sometime in February.
Continue reading “Stumbling towards the utility’s demise”