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HomeMy WebLinkAbout20060104_1427.pdfDECISION MEMORANDUM TO:CO MMISSI 0 NER KJELLAND ER COMMISSIONER SMITH COMMISSIONER HANSEN COMMISSION SECRETARY LEGAL WORKING FILE FROM:TOM MCKEOWN AND TERRI CARLOCK DATE:DECEMBER 28, 2005 RE:IN THE MATTER OF A VISTA CORPORATION'S APPLICATION FOR AUTHORITY TO ISSUE OF UP TO 7,000 000 SHARES OF AUTHORIZED BUT UNISSSUED COMMON STOCK; CASE NO. A VU-05- On December 7 2005 , Avista Corporation (A vista) applied for authority to offer, issue and sell up to 7 000 000 shares of authorized but unissued Common Stock, without par value Common Stock") under both the Applicant's Periodic Offering Program (2 000 000) and its Long- Term Incentive Plan (5 000 000). The proceeds will be used for one or more of the following purposes: (a) the acquisition of property, or the construction, completion, extension, or improvement of its facilities, (b) the improvement or maintenance of service, (c) the discharge or refunding of its obligations, (d) the reimbursement of moneys actually expended from income or from the treasury of Avista to the extent permitted, or (e) for other purposes permitted by law. Avista proposes that the 2 000 000 Common Stock issued and sold under the Periodic Offering Program will be subject to the following pricing limitations: the price received by Avista before agent commission, will not be less than $0.25 below the last price at which A vista Common Stock was reported in the record of composite quotations published in the Wall Street Journal on the trading day immediately preceding the day for the fixing of such price, and will also not be less than 100% of the book value per share of A vista s Common Stock as of the last day of the most recently ended calendar year. Avista proposes to issue up to 5 000 000 shares of authorized but unissued Common Stock under its Long-Term Incentive Plan ("L TIP"). A vista has issued awards under the L TIP and is currently using open market purchases to fulfill its obligations under the LTIP. Avista would also like the flexibility to issue authorized but unissued shares of Common Stock to more effectively DECISION MEMORANDUM DECEMBER 28, 2005 improve the common equity ratio of its capital structure and reduce costs associated with issuing stock through underwritings. STAFF RECOMMENDATION The proposed methods of Common Stock issuance provides an opportunity for A vista to reduce underwriting costs and provides flexibility in meeting its Long Term Incentive Plan commitments. Staff recommends approval of the requested Common Stock issuance authority. However, Staff recommends that A vista be required to file a status report with the Commission reflecting pertinent quarterly financial information to include the following: (a) Debt to Equity Ratio, (b) Enterprise Value, (c) Net Income Available to Common Stock, and (d) Common Shares Outstanding. Staff proposes to work on an acceptable format with A vista to meet these recommended filings. COMMISSION DECISION Does the Commission accept Staffs recommendations to: 1. Approve A vista s request to issue up to 2 000 000 shares of authorized but unissued Common Stock, without par value, under a periodic offering program. 2. Approve Avista s request to issue up to 5 000 000 shares of authorized but unissued Common Stock under its Long Term Incentive Plan. 3. Approve Staff s recommended additional filing requirements and for Staff to work with A vista to structure the format. Tom McKeown i:udmemos/avuuO5.2 dm DECISION MEMORANDUM DECEMBER 28 , 2005