Pacificorp

The company was bought by Scottish Power in 1999, and in May 2005 sold for $9.4bn (£5.1bn) to billionaire investor Warren Buffett ($1bn less than it paid in 1999). The deal is still subject to regulatory approval and expected to take 12-18 months to complete.

History

(1998)
PacifiCorp has recorded poor performance both in its regulated and non-regulated operations, inside and outside the USA. The company's repeated losses were due to inappropriate commercial strategies and incompetent management. The CEO had to resign in September 1998 due to investors' concerns for the registered stock under-performance.

Losses in regulated operations:
? In October 1998, PacifiCorp announced a shortfall in the third quarter earnings of $92 million, more than 50% the estimated figures. The losses were mainly incurred in regulated operations due to, in the company's own words, "significantly lower availability of low-cost hydroelectric resources" associated with "unexpected outages at certain of the company's low-cost generating plants" (Energy Daily Predicasts PROMT, 18 September 1998).

Losses in non-regulated operations:
? In May 1998, PacifiCorp reported $54 million losses due to the failed bid to acquire the UK utility The Energy Group. Such losses added to $70 million incurred to reduce PacifiCorp's work force in the USA (PacifiCorp Press Releases);
? In July 1998, the company's natural gas storage, marketing and trading business, acquired in April 1997, recorded a net loss of $6 million (Energy Daily Predicasts PROMT, 23 July 1998);
? In July 1998, PacifiCorp announced losses of $51 million incurred in a few days due to risky electricity trading operations. Standard & Poor's attributed the losses to "insufficient energy risk management practices" (Energy Trading Predicasts, 23 July 1998);
? In October 1998, PacifiCorp reported $151 million losses related in the exit of non-regulated energy businesses (PacifiCorp Press Releases).

Divestiture of non-electricity businesses:
In order to restore its financial situation, the company is divesting its non-electricity businesses, re-focussing its operations in the USA and Australia. Nevertheless, PacifiCorp's credit rating has been estimated negative by Moody's.

? In the second quarter of 1997, PacifiCorp sold its telecommunications operations (Energy Daily Predicasts PROMT, 18 September 1998);
? Early in November 1998, PacifiCorp received the regulator's approval to the sale of its electricity distribution operations in Montana, from which the company expected to obtain net proceeds of about $92 million. The company intended to sell also the electricity distribution business in California (Reuter News Service, 3 November 1998);
? In November 1998, PacifiCorp was downgraded to negative by Moody's as a result of the company's reduced financial flexibility (FT Bus Rep, 2 November 1998).

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