Rutland, VT, Nov. 22, 2005 — Central Vermont Public Service (CVPS) announced that its wholly owned subsidiary, Catamount Resources Corp., will sell its entire interest in subsidiary wind energy company Catamount Energy Corp., to Diamond Castle, a New York-based private equity investment firm, and its affiliated funds for $60 million in cash, less $750,000 in certain transaction expenses.
CVPS announced the sale of a 51 percent interest in Catamount to Diamond Castle last month, but retained an option to sell the entire business, which it has now exercised. CVPS was able to exercise the option earlier than previously expected because Diamond Castle waived a condition requiring completion of Sweetwater III, a Catamount wind development in Texas that is expected to be completed by early 2006.
As a result of the sale CVPS expects to realize approximately $52 million in cash and recognize a net gain in the fourth quarter yet the amount of the gain has not yet been determined.
The sale is scheduled to close in December. The definitive agreements were filed with the Securities Exchange Commission on a Form 8-K by the company on October 18, 2005.
CVPS is currently evaluating how it will apply the proceeds of the sale, but it currently expects to return approximately $52 million to shareholders, either through a stock buy-back or a special dividend to shareholders.
The sale is part of a larger restoration plan for CVPS which aims at returning the company to a strong financial position said CVPS president Bob Young.
The restoration plan includes:
* One-time 2005 budget cuts of $750,000 thereby securing a $25 million revolving credit facility in October 2005;
* $2.7 million in 2006 budget cuts, including a 10 percent cut in Young’s salary and a 5 percent reduction in other officers’ salaries, which will help offset rising fuel and medical costs;
* Deferral of $4.8 million of capital investments, which won’t affect service, from 2006 to the next few years;
* Restructuring the board of directors in 2006;
* Improve communication with Vermont regulators and find common ground on customer and company needs.