NorthWestern gets conditional state approval for exit facility

By Jeff Pines

Washington, Aug. 6 - NorthWestern Corp. said it obtained conditional approval from the Montana Public Service Commission on Tuesday for the company's exit financing and to issue up to 35.5 million new common shares to creditors.

The approval is conditioned on the confirmation of the Sioux Falls, S.D.-based utility's reorganization plan, the company said in a 10-Q quarterly report filed Friday with the Securities and Exchange Commission.

Under a U.S. bankruptcy court-approved agreement, the Montana Public Service Commission agreed to drop its objections to NorthWestern's plan on a number of conditions, one of them being the right to approve the exit financing.

The company has also requested the Federal Energy Regulatory Commission's approval for its exit financing and to issue the new common shares. NorthWestern expects to hear back from FERC shortly, a company spokesman said.

The exit financing includes a $100 million revolver maturing in five years that will have an interest rate of Libor plus a credit spread, a $150 million term B loan maturing in seven years and having an interest rate also based on Libor plus a credit spread, and up to $350 million of senior secured notes with a seven- to 10-year maturity and fixed interest rate expected to range between 6.75% and 7.25%.

NorthWestern said it only needs the $100 million revolver to emerge from bankruptcy. The exit financing will be secured by mortgage bonds and will be used to repay and refinance the company's debtor-in-possession financing, existing senior secured term loan of $384.2 million as of June 30 and potentially $150 million of Montana first mortgage bonds.

Last month, NorthWestern lowered its commitment under the DIP facility to $50 million. As of June 30, it had $15.4 million outstanding on the DIP facility.

Refinancing at lower rates and extending the maturities will lower NorthWestern's borrowing costs and improve its cash flow.

NorthWestern's reorganization plan calls for its common stock to be cancelled. Debts owed to the company's unsecured creditors and holders of its mandatorily redeemable preferred securities of subsidiary trusts will have their claims satisfied through a portion of the new common stock.

The reorganization plan confirmation hearing is scheduled for Aug. 25.

NorthWestern filed for bankruptcy on Sept. 14, 2003. Its Chapter 11 case number is 03-12872.

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