▸ The gist: Nearly two weeks since The Current broke the news, Mayor Joel Robideaux presented a detailed timeline of his talks to privatize the electrical division of LUS through a management agreement with a private equity firm based in Baton Rouge. Robideaux had come under fire for leaving council members out of the conversation, most of whom only learned about the deal in media reports.
▸ We learned some new details. Most significantly, that Mayor Robideaux contracted LUS’s consultant of record, NewGen, to perform an internal review of the electrical division to price out its market value in early 2017. Robideaux had previously acknowledged in a July 17 interview with The Current a “back of the napkin” assessment of the utility, noting that a $1 billion deal would make an agreement with potential suitor Bernhard Capital Partners a no-brainer.
Here’s a rough summary of Robideaux’s timeline:
- 2015 - Robideaux first encounters the idea of selling LUS on the campaign trail.
- Early 2017 - Anticipating purchase offers, he requests the NewGen appraisal.
- Late 2017 - First meets with Bernhard re: LUS. Bernhard suggests management agreement option.
- Feb. 2018 - LUS requests $240 million bond, including $130 million for new power plant.
- March 2018 - LUS Fiber is found to have overcharged LUS $1.7 million for telecom services. The Public Service Commission announces an audit. LUS/LUS Fiber Director Terry Huval privately tells Robideaux he will retire. Robideaux directs Fiber to repay LUS. Facing an audit, a scandal at Fiber and what Robideaux believes are capital improvement needs, mayor re-opens discussions with Bernhard.
- April 9, 2018 - Robideaux signs non-binding letter of intent, authorizing Bernhard to review LUS’s electrical division for a possible deal.
- April 10, 2018 - Terry Huval officially announces his retirement.
- Mid-July - News reports of a potential transaction with Bernhard are published.
- Late July/early August - Bernhard will turn over LUS analysis. Robideaux says that will commence a needed public discussion on how to move forward with LUS.
▸ “LUS is not for sale. It never has been for sale,” Robideaux said at Tuesday’s LPUA meeting. That was clearly the fire he wanted to put out. He reiterated to the LPUA, the governing authority of LUS comprised of the five “city” council members, that he had no intention of selling LUS, despite rumors to the contrary. He acknowledged that the idea of monetizing LUS had been in his orbit as far back as his 2015 campaign for office, but insisted that he didn’t like the idea of a full sale of LUS and its assets and infrastructure. “My sense as a CPA is it was too risky,” he said. “That risk was too great relative to what anyone would be willing to pay.”
In a July 17 interview with The Current, Robideaux said that he previously considered a sale, among other options.
▸ When is a sale not a sale? That LUS is not literally for sale may not squash public outcry. The terms of the non-binding letter of intent signed with Bernhard Capital Partners subsidiary NextGen — unrelated to the consultant firm NewGen mentioned earlier — contemplate a $526 million deal, including the assumption of $213 million in LUS debt, a lump payment of $246 million and up to $64 million in payouts, pending growth benchmarks. A management agreement, skeptics argue, could have a similar impact to a full sale of the utility, including its assets. It’s unclear what would happen to LUS employees (currently protected by civil service), who would set rates and how, and what agency would regulate the privately managed public utility. “At this point, everyone knows what I know,” Robideaux said.