Cleco sale up for final approval

Whether Cleco Corp. is sold or not will finally be decided Wednesday.

The Louisiana Public Service Commission is expected to vote on whether to approve or reject the proposed sale at its meeting in Baton Rouge, capping a 16-month process.

Pineville-based Cleco agreed in October 2014 to a sale proposal for nearly $5 billion from an investment group led by Macquarie Infrastructure and Real Assets and British Columbia Investment Management Corporation, together with John Hancock Financial. The deal was approved by Cleco shareholders and has received other regulatory clearance, leaving the final decision in the hands of the Public Service Commission.

If approved, Central Louisiana's only publicly traded company would be in private hands.

RELATED:All your questions about the Cleco sale answered

Supporters of the sale say it offers stability because of promises the prospective new owners have made, including keeping Cleco headquartered in Pineville and operating independently, maintaining the number of employees and benefits at their current levels, continuing charitable and economic development contributions and extending service commitments. The new owners have also pledged to pay out $125 million in customer rate credits.

Opponents worry that the amount of debt Cleco is taking on will negatively impact the company (in addition to $1.35 billion in assumed debt, the buyers are proposing using $1.35 billion in new debt as part of the sale). That debt and additional revenue the new owners will expect, they say, will be paid through higher rates by customers who already pay the highest rates in the state. Opponents are also concerned about what happens 10 to 14 years down the road, when the Macquarie fund will look to sell its stake.

Public Service Commission staff and Administrative Law Judge Valerie Seal Meiners have advised the commission that, though the commitments the prospective new owners have made offer some protection, they do not fully protect ratepayers from risk, and thus the deal is not in the public interest.

Cleco released a statement Friday touting support the transaction has received from local governments, civic and business leader. According to the statement, the sale "keeps Cleco the same company it has been for more than 80 years."

"Recently, there has been a mischaracterization of the facts regarding this transaction," the statement read. "Most importantly, this transaction will not increase our customers’ rates, and they will not pay for any of the transaction-related costs. In fact, customers will receive approximately $143 million in credits on their bills and savings over the next 15 years.  This transaction offers unprecedented financial protections for our customers and our company and extends security to our customers they do not have today. Our employees and community are also protected, and Macquarie and their partners have an outstanding track record through the utilities they already own.  And, the LPSC is gaining significant additional protections over Cleco's operations, finances and credit protections through the transaction."

Lining up to oppose the sale are a group of intervenors, including the Alliance for Affordable Energy, a New Orleans-based nonprofit that advocates for consumer rights and environmentally responsible energy.

In addition to the potential financial weakening of the company, intervenors have posed several other objections to the deal, including the tens of millions of dollars in cash and benefits that would be paid to current CEO Bruce Williamson and board members under change of control agreements.

“The more we learn about the deal, the worse it gets,” said Alliance for Affordable Energy CEO Casey DeMoss. “Louisiana cannot afford this bad deal.”

"It's a matter of greed, not of need," said Helen Moore, a local shareholder who filed a lawsuit to block the sale. "Cleco is an outstanding company. I want to see it here another 80-plus years. I believe if it's sold, it will decline. Macquarie can't do anything for this company that it can't do for itself except bring in debt."

The Public Service Commission meeting Wednesday begins at 9 a.m. in Room C-109 of the Galvez Building (602 N. 5th St., Baton Rouge). It is open to the public and interested people will be given the chance to speak.

To contact commissioners, visit http://www.lpsc.louisiana.gov/DistrictMapPage.aspx.