Investors in the defunct Montana Power Co. of Butte and its strange reincarnation as the telecommunications company Touch America Holdings Inc. will receive 29 cents per share.
Shares once worth $65 each are apparently valued at $1 in this settlement. The $30 million bankruptcy settlement applies to investors holding at least 175 common shares as of Oct. 18, 2004.
The decision by Montana Power’s executives and board members, led by chief executive Bob Gannon, to follow investment giant Goldman Sachs’ advice to ditch its century-old, safe harbor of utilities and go into communications failed spectacularly.
The transformation began in 1997 when the Montana Legislature approved a deregulation bill that allowed Montana Power, which had been protected from competitors, to sell off its hydroelectric dams and other Montana assets. By 2002, the company had shed its energy role to become Touch America, trying to succeed in one of the most competitive industries.
A year later, the new company filed for bankruptcy protection, wiping out $2.7 billion in value, investors and employee pensions, not to mention well-paying Montana jobs. During the meltdown, executives enriched themselves with performance bonuses and golden parachute payments.
U.S. Bankruptcy Judge Kevin Carey in Delaware, where both Montana companies were incorporated, approved the shareholder settlement.
At least this was a good deal for Wall Street bankers and attorneys.
As of Feb. 26, this class-action lawsuit, one of many against MPC/Touch America, had 4,274 legal filings.
If you have questions, call the Touch America help line: 877-589-4112.