The last time Kaua’i Electric (KE) was sold, you could buy a copy of The Garden Island for 10 cents, a 10,000-square-foot lot at Molokoa for $12,500, or a brand new, four-door Fiat family car for $2,240. In October of
The last time Kaua’i Electric (KE) was sold, you could buy a copy of The Garden
Island for 10 cents, a 10,000-square-foot lot at Molokoa for $12,500, or a
brand new, four-door Fiat family car for $2,240.
In October of 1968, nearly
32 years ago to the day, it was announced on the front page of TGI that
Connecticut-based Citizens Utilities Co. had reached an agreement to buy the
stock of KE from its two principal owners, Amfac Inc. and Alexander & Baldwin,
Inc., for $2.2 million.
At the time, there were 50,000 outstanding shares
of stock, valued at $37.50 a share, for a total value of more than $1.8. The
$2.2 million sale price, then, represented around 15 percent above book value
of KE.
It appears, even back then, entities were willing to pay over book
value to acquire KE.
In a deal the state Public Utilities Commission shot
down in August of 2000, the Kaua’i Island Utility Cooperative agreed to pay
$270 million to Citizens Communications (which Citizens Utilities has become)
for KE, or $90 million above the estimated $180 million book value of
KE.
The co-op contends on its Web page that electric utilities on the
mainland are routinely sold for 1.5 times their estimated book value.
The
Kaua’i County Council has authorized spending up to $100,000 to hire a
consultant to obtain an accurate appraisal of the assets of KE.
A committee
of government, citizen and other interests is also meeting weekly to examine
management and operational issues of a Kaua’i electrical utility in the event
the county purchases KE.
In 1968, the $7 million in assets made KE the
largest operating unit of Citizens Utilities. At that time, KE was in the
middle of a $6 million expansion program, with additional power-generating
units at Port Allen, and new distribution lines to serve growing Kaua’i
communities.
Also in 1968, business observers were expecting a possible
merger between KE and Hawaiian Electric, especially after Hawaiian Electric got
Public Utilities Commission approval for a Big Island-Maui utility merger
thought to be the start of a statewide utility unification plan.
KE and
Hawaiian Electric had been in informal discussions in 1968 toward that end. But
the Citizens deal with KE came first. Ironically, Hawaiian Electric was one of
the unsuccessful bidders for KE in 2000, when it didn’t reach the second,
auction-like phase of the sale due to a too-low first-round offer.
While KE
remains for sale and the co-op and Citizens Communications have been
negotiating, co-op officials have said no new deal will be brought before the
Utilities Commission without county approval first.
Staff Writer Paul
C. Curtis can be reached at [
HREF=”mailto:pcurtis@pulitzer.net”>pcurtis@pulitzer.net] or 245-3681 (ext.
224).
