Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 2
One of the key assumptions in the investment thesis is that the merger with MidAmerican does not fall through.

What the write-up fails to mention is that the Merger Agreement (on EDGAR has in Sections 8.2(k)/9.1(h) the provision that up until 2 days prior to Closing Date that if if the MidAmerican determines (in its sole discretion) that, since June 30, 2008 to the date which MidAmerican elects to terminate this Agreement pursuant to this Section, either the retail and/or wholesale businesses or assets of the Company, its Subsidiaries and the Company Joint Ventures taken as a whole have materially deteriorated. The parties hereby agree that, solely for the purposes of this Section, an adverse change in the net economic value of such businesses or assets in excess of $400 million from June 30, 2008 shall be deemed material.

As of June 30, 2008, Common Shareholders' Equity was $6.5 Bn which is what I assume they mean by "net economic value". $400 MM is 6% of $6.5 Bn.

Given the Closing Date is likely 9 months away, this seems like a big risk.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.