Exhibit 99.1
[GRAPHIC OMITTED] News Release
Contacts:
Media: Investors:
Roger Schrum Doug Morris
605-978-2848 605-782-5345
roger.schrum@northwestern.com investor.relations@northwestern.com
- --------------------------------------------------------------------------------
NORTHWESTERN CORPORATION FILES PLAN OF REORGANIZATION
- --------------------------------------------------------------------------------
COMPANY WILL NOT INCREASE UTILITY RATES TO CUSTOMERS
TENTATIVE SETTLEMENTS REACHED IN SHAREHOLDER LITIGATION
- --------------------------------------------------------------------------------
SIOUX FALLS, S.D. - March 12, 2004 - NorthWestern Corporation (OTC Pink
Sheets:NTHWQ) today announced that it has filed a Plan of Reorganization and
Disclosure Statement with the U.S. Bankruptcy Court for the District of
Delaware.
Under the proposed Plan, which is subject to creditor approval and confirmation
by the Bankruptcy Court, NorthWestern's financial reorganization will be
achieved through a debt-for-equity swap. NorthWestern's existing common stock
will be cancelled, and no distribution will be available for current
shareholders. The terms of the Plan include:
o Holders of senior unsecured notes of the Company and trade vendor claims
in excess of $100,000 would receive, pro rata, 98 percent of newly issued
common stock.
o Holders of secured bonds, including the Company's First Mortgage,
Pollution Control and Gas Transition Bonds, will not be impaired and will
be reinstated.
o Prepetition claims of trade vendors with claims of $100,000 or less will
be paid in full.
o Holders of the Company's five series of Junior Subordinated Deferrable
Interest Debentures (Trust Preferred Securities and QUIPs) would receive,
pro rata, 2 percent of newly issued stock.
o Appointment of seven new members of the Board of Directors of the
reorganized company by the Creditors Committee to include six independent
directors and the Company's Chief Executive Officer.
The Company said that its newly issued common stock will be listed on either the
New York Stock Exchange or NASDAQ. The Plan anticipates that the reorganized
company's new Board
-More-
NorthWestern Files Plan of Reorganization
March 12, 2004
Page 2
of Directors will consider paying a dividend on the new common stock, although
there can be no assurance of when the first dividend will be paid.
Upon emergence, the Plan contemplates that NorthWestern will have an enterprise
value of approximately $1.5 billion. The Company's debt will total approximately
$800 million, assuming an additional paydown of approximately $100 million of
secured debt upon emergence. This represents a decrease of approximately $1.4
billion or 64 percent, from approximately $2.2 billion in Company debt as of
Dec. 31, 2003. The Plan contemplates that the Company's equity position will be
approximately $710 million at emergence, and the Company will have an expected
debt-to-total capitalization ratio of 53 percent.
Gary Drook, President and Chief Executive Officer, said, "The Plan we have filed
is the result of a great deal of hard work with a number of our major creditor
constituents and other interested parties and marks a significant milestone in
our reorganization process. While the filing of the Plan is a major step
forward, our intention is to continue our discussions with our Creditors
Committee and other major creditor constituents and interested parties in the
next several weeks in the hope that we can present a consensual plan to the
Court.
"Since our Chapter 11 reorganization filing six months ago, we've made a
tremendous amount of progress in restoring stability to NorthWestern. We have
divested most of our nonutility businesses and are working to divest the
remainder, and we have resolved a number of other outstanding issues. None of
the costs of the bankruptcy proceeding will be borne by our customers, and we
will not be seeking to raise our utility rates as part of our reorganization
plan," Drook said. "Under the Plan that we have submitted to the Court, upon
emergence, NorthWestern will be a stable utility with a strong balance sheet and
quality assets. We have initiated discussions with the rating agencies regarding
our Plan and the Company's post-reorganization financial position with the goal
of regaining an investment-grade rating. We will continue to be focused on
reducing our debt and making the necessary investments in our utility operations
to help ensure that we can build on what we will have accomplished during our
reorganization."
-More-
NorthWestern Files Plan of Reorganization
March 12, 2004
Page 3
Utility Operations
NorthWestern's Plan does not contemplate seeking increases in
rates for its electric and natural gas customers in Montana, South Dakota or
Nebraska. Costs associated with purchasing electricity and natural gas for
NorthWestern's customers fluctuate based on market conditions and are a direct
pass through to customers.
The Company will increase capital spending in 2004 to approximately $77 million,
and is targeting an additional $287 million in capital investments from 2005 to
2008 to further enhance its transmission and distribution system. Additionally,
the Company said that it is in the process of contracting with an independent,
third-party engineering firm to review system integrity and reliability.
Mike Hanson, Chief Operating Officer, said, "We have stated all along that
NorthWestern's ability to operate its utility business would not be adversely
affected by the Chapter 11 reorganization. Our studies indicate that our utility
customers believe we are meeting their daily needs, and our system reliability
has been maintained and remains significantly better than industry averages.
We're proud that our employees have continued to deliver quality service to our
customers despite adversities."
Milltown Dam Settlement
NorthWestern, the United States and the State of Montana have reached an
understanding on the economic and certain other terms of an agreement in
principle that would resolve claims regarding the Milltown Reservoir Superfund
site near Missoula, Mont. The parties are working to incorporate these
understandings into an overall settlement that can be presented to the
Bankruptcy Court. Previously, NorthWestern and Atlantic Richfield Company
executed a settlement agreement which caps NorthWestern's potential liability
for remediation of the Milltown site at no more than $10 million. NorthWestern
is currently seeking approval of this settlement agreement from the Bankruptcy
Court.
Employee Issues
NorthWestern said that employee wages, welfare benefits and qualified pension
plans will not change under the Plan. Additionally, the Company said that it
will be making approximately $86 million in contributions to its qualified
pension plans over the next five years. The Company
-More-
NorthWestern Files Plan of Reorganization
March 12, 2004
Page 4
has approximately 1,270 full-time employees in Montana, South Dakota and
Nebraska. Likewise, the Plan will not change welfare and qualified pension
benefits for its approximately 1,000 retirees.
Securities Litigation Settlements
NorthWestern has entered into a tentative settlement agreement with parties
involved in certain pending class actions and derivative lawsuits involving the
Company, its subsidiaries and certain present and former officers and directors.
Under the terms of the proposed settlement, all claims against the Company, its
subsidiaries and other parties would be dismissed without admission of liability
or wrongdoing. The Company will establish a settlement fund for class members in
the amount of $41 million of which approximately $37 million will be contributed
by the Company's insurance carriers and $4 million would be contributed from
other persons or parties. In addition, if the Company's nonoperating subsidiary,
Netexit, Inc., formerly Expanets, Inc., determines to utilize a bankruptcy
proceeding to wind-up its affairs, the class action plaintiffs would receive a
liquidated securities claim in such proceeding of $20 million.
The fees and expenses of class counsel and administration costs will be paid
from the settlement fund. The settlement is subject to approval by the
Bankruptcy Court and by the U.S. District Court for the District of South
Dakota, where the consolidated class actions are pending. Assuming receipt of
necessary judicial approvals, a notice containing a more complete description of
the proposed settlement and the steps class members must take in order to share
in the proposed settlement will be mailed to class members.
Disclosure Statement and Solicitation
The Company said it expects the Bankruptcy Court to hold a hearing to approve
the Disclosure Statement for the Plan of Reorganization on May 17, 2004. Upon
approval of the Disclosure Statement, the Company will commence a solicitation
of votes of creditors to approve the Plan.
"We are focused on successfully completing reorganization and emerging as a
financially strong and publicly traded company in the fourth quarter of 2004,"
said Drook. "If we are successful, we will have completed the reorganization
process in approximately one year, which is substantially faster than other
recent or pending regulated utility bankruptcy proceedings."
-More-
NorthWestern Files Plan of Reorganization
March 12, 2004
Page 5
Copies of the Company's Plan of Reorganization and Disclosure Statement are
available on its Web site at www.northwestern.com.
About NorthWestern
NorthWestern Corporation is one of the largest providers of electricity and
natural gas in the Upper Midwest and Northwest, serving approximately 608,000
customers in Montana, South Dakota and Nebraska.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
On one or more occasions, we may make statements in this news release regarding
our assumptions, projections, expectations, targets, intentions or beliefs about
future events. All statements other than statements of historical facts,
included or incorporated by reference herein relating to management's current
expectations of future financial performance, continued growth, changes in
economic conditions or capital markets and changes in customer usage patterns
and preferences are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. On September 14, 2003, NorthWestern Corporation filed a voluntary petition
for relief under the provisions of Chapter 11 of the Federal Bankruptcy Code in
the United States Bankruptcy Court for the District of Delaware. Our
subsidiaries, including Netexit, Inc. (f/k/a Expanets Inc.) and Blue Dot
Services, Inc., (Blue Dot) are not party to the Chapter 11 case.
Words or phrases such as "anticipates," "may," "will," "should," "believes,"
"estimates," "expects," "intends," "plans," "predicts," "projects," "targets,"
"will likely result," "will continue" or similar expressions identify
forward-looking statements. Forward-looking statements involve risks and
uncertainties which could cause actual results or outcomes to differ materially
from those expressed. We caution that while we make such statements in good
faith and we believe such statements are based on reasonable assumptions,
including without limitation, management's examination of historical operating
trends, data contained in records and other data available from third parties,
we cannot assure you that our projections will be achieved. Factors that may
cause such differences include but are not limited to:
(i) our common stock will be cancelled and our trust preferred
securities will likely be restructured in a manner that will
eliminate or very substantially reduce any remaining value. We
have previously stated that the planned sale of noncore assets is
not expected to change our view that our common stock has no
value. Accordingly, we urge that appropriate caution be exercised
with respect to existing and future investments in any of our
liabilities and/or securities;
(ii) our ability to successfully develop, prosecute, confirm and
consummate a plan of reorganization, emerge from bankruptcy as a
going concern and avoid liquidation under the U.S. Bankruptcy
Code;
(iii) risks associated with third parties seeking and obtaining
Bankruptcy Court approval for the appointment of a Chapter 11
trustee or to convert the case to a Chapter 7 proceeding;
-More-
NorthWestern Files Plan of Reorganization
March 12, 2004
Page 6
(iv) our ability to operate pursuant to the terms of our $85 million
debtor-in-possession financing facility arranged by us with Bank
One, N.A. (the DIP Facility) and other financing and contractual
arrangements;
(v) our ability to obtain Bankruptcy Court approval with respect to
material motions in the Chapter 11 proceeding from time to time;
(vi) our ability to obtain the support of the official committee of
unsecured creditors and other stakeholders of the company for a
plan of reorganization, which may be difficult in light of our
likely inability to preserve any material value in our common
equity and our trust preferred securities, or satisfy a material
amount of our current unsecured debt, in a plan of
reorganization;
(vii) our ability to offset the negative effects that the filing for
reorganization under Chapter 11 has had, or may have, on our
business, management and employees including constraints placed
on available capital;
(viii) our ability to obtain and maintain normal terms with vendors and
service providers;
(ix) our ability to maintain contracts, including leases, that are
critical to our operations;
(x) the potential adverse impact of the Chapter 11 case on our
liquidity or results of operations;
(xi) our ability to develop a long-term strategy and our ability to
fund and execute our business plan;
(xii) our ability to avoid or mitigate material uninsured monetary
judgments, or other adverse judgments, against us in (1) the
shareholder class action lawsuit relating to the disposition of
the generating and energy-related assets by The Montana Power
Company, excluding our acquisition of the electric and natural
gas transmission and distribution business formerly held by The
Montana Power Company, together with ERISA litigation regarding
The Montana Power Company ESOP and 401(k) plan and (2) existing
shareholder and derivative litigation or any additional
litigation and regulatory action, including the initiation by the
Securities and Exchange Commission (SEC) of a formal
investigation, in connection with the restatement of our 2002
quarterly financial statements, any of which could have a
material adverse affect on our liquidity, results of operations
and financial condition;
General Factors
(xiii) our ability to fully address and correct weaknesses in our
internal controls and to thereafter maintain an effective
internal controls structure;
(xiv) our ability to attract, motivate and/or retain key employees;
-More-
NorthWestern Files Plan of Reorganization
March 12, 2004
Page 7
(xv) potential additional adverse federal, state, or local legislation
or regulation or adverse determinations by regulators, including
the final order of the Montana Public Service Commission (MPSC)
disallowing the recovery of $6.2 million of natural gas costs we
incurred during the past tracker year, and an interim order
fixing the recovery price during the next tracker year, which has
had and could continue to have a material adverse affect on our
liquidity, results of operations and financial condition;
(xvi) unscheduled generation outages, maintenance or repairs which may
reduce revenues and increase cost of sales or may require
additional capital expenditures or other increased operating
costs;
(xvii) unanticipated changes in commodity prices or in fuel supply costs
or availability due to higher demand, shortages, weather
conditions, transportation problems or other developments, in
combination with reduced availability of trade credit, may reduce
revenues or may increase operating costs, each of which would
adversely affect our liquidity;
(xviii)increases in interest rates will increase our cost of borrowing;
(xix) adverse changes in general economic and competitive conditions in
our service territories; and
(xx) certain other business uncertainties related to the occurrence of
natural disasters, war, hostilities and the threat of terrorist
actions.
We have attempted to identify, in context, certain of the factors that we
believe may cause actual future experience and results to differ materially from
our current expectation regarding the relevant matter or subject area. In
addition to the items specifically discussed above, our business and results of
operations are subject to the uncertainties described under the caption "Risk
Factors" which is a part of the disclosure included in Item 7 in our report on
Form 10-K entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
From time to time, oral or written forward-looking statements are also included
in our reports on Forms 10-K, 10-Q and 8-K, Proxy Statements on Schedule 14A,
press releases and other materials released to the public. Although we believe
that at the time made, the expectations reflected in all of these
forward-looking statements are and will be reasonable, any or all of the
forward-looking statements in this news release, our reports on Forms 10-K, 10-Q
and 8-K, our Proxy Statements on Schedule 14A and any other public statements
that are made by us may prove to be incorrect. This may occur as a result of
inaccurate assumptions or as a consequence of known or unknown risks and
uncertainties. Many factors discussed in this news release, certain of which are
beyond our control, will be important in determining our future performance.
Consequently, actual results may differ materially from those that might be
anticipated from forward-looking statements. In light of these and other
uncertainties, you should not regard the inclusion of a forward-looking
statement in this news release or other public communications that we might make
as a representation by us that our plans and objectives will be achieved, and
you should not place undue reliance on such forward-looking statements.
-More-
NorthWestern Files Plan of Reorganization
March 12, 2004
Page 8
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
However, your attention is directed to any further disclosures made on related
subjects in our subsequent annual and periodic reports filed with the SEC on
Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.
###