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Warren Buffet does not quite yet have his hand on NV Energy

Reported by: Jeff Gillan
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Updated: 7/23/2013 11:29 am
LAS VEGAS (KSNV MyNews3.com) -- It's been about two months since Warren Buffett dropped his $5.6 billion bombshell on Nevada. Since then, his takeover of NV Energy has been winding through the regulatory process.

Today the attorney general's bureau of consumer protection served notice it intends to intervene in this case.

That's to be expected. They are the consumer watchdog and will weigh in on whether this is a good deal for you, the ratepayer.

In the meantime, News 3 has been poring over the document called a "proxy" NV Energy filed with the Securities and Exchange Commission.

It details the merger, and what happens next.

It's this past January 8, a chance meeting at a business conference that would change the future for NV Energy and the state that relies on its electricity.

That's the day NV Energy chairman Michael Yackira ran into Greg Abel, the president and CEP of MidAmerican, which is billionaire Warren Buffet's energy company.

As the proxy statement says, it was an "unplanned meeting" but one where Able said he would be interested in discussing a, quote, "strategic combination" with NV Energy.

That chance encounter touched off four months of discussions that culminated in the May 29 proposed merger between the two companies.

“There's a pretty high probability to the transaction closing,” said Morningstar Analyst Andrew Bischoff, who follows NV Energy.

He says this is more than likely a done deal but there are hurdles ahead.

“They need approval from the state commission of Nevada, whose interests are looking out for the consumer,” Bischoff said.

That would be the Public Utilities Commission.

“And they need three federal approvals - the FERC, the FTC, Department of Justice, and then of course, shareholder approval,” Bischoff said.

According to the proxy, it turns out NV Energy was open to offers.

The filing says Yackira himself approached a company in 2012; the document does not say who it was but it does say that same company told Yackira is wasn't interested.

Ironically, Yackira got the final "no" at that same business conference the day before he ran into MidAmerican’s Abel.

In business, just like life, timing is everything. And the timing for this company is looking a lot better.

This is a different utility than the one that was at the mercy of Enron and those energy traders back in 2001.

Back then in this town, the lights actually went out.

In 2002, a state energy official called then-Nevada Power, "the Keystone Kops." And in 2003, its stock was at an all-time low.

But also in 2003, Yackira joined the company and in 2007, he became CEO.

His mission was to put NV Energy on firmer footing and to get NV Energy to make more of its own power.

Today, it generates 80 percent -- double from what it used to.

”They have a very strong management team that has kind of righted the ship over the past decade,” Bischoff said.

Most importantly, it is making money.

Its stock has recovered. From 2003 to 201, it shot up 147 percent.

And in the cold calculus of Wall Street, that's what matters nd got NV Energy noticed by America’s second richest person.

Buffett will pay $5.6 billion for the company.

According to the proxy, top execs will get to cash out stock, which they were required to hold, for seven figure paydays.

Yackira, who engineered the turnaround, stands to earn $21 million.

And they also get to keep their jobs.

No change is expected in management.

As has been reported and the proxy confirms NV Energy will remain in Las Vegas.

But just in case things go south, and pink slips fly, the proxy spells out so-called golden parachutes for top brass: they walk out with seven figures. Yackira would see a nearly $24 million payday. This total would include the amount that Yackira will earn from Buffett's purchase of the company.

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