Bankrupt but creditworthy
South Dakota State Roundup
Published November 1, 2003 | November 2003 issue
NorthWestern Corp., the Sioux Falls-based utility company that provides power to nearly 600,000 customers in South Dakota, Montana and Nebraska, filed for Chapter 11 bankruptcy protection in mid-September. The 80-year-old company had grown rapidly over the last eight years, acquiring communications and heating, ventilation and air conditioning businesses as well as expanding its core electricity and natural gas operations. In 2002, NorthWestern acquired portions of Montana Power Co., that state's major energy provider.
But NorthWestern's diversification plan failed, the stock price plummeted, and shareholders refused this fall to approve a proposal to raise cash to pay back the corporation's $2.2 billion debt. The company plans to reorganize while continuing to serve its utility customers.
Given its huge debt and a list of 9,418 creditors, it might seem ironic that NorthWestern is also seeking approval to keep using 1,270 corporate credit cards—roughly one per employee—to charge about $700,000 a month during bankruptcy reorganization. But regulators and analysts say that use of credit cards for business-related expenses is perfectly reasonable even if, as in this case, the number of cards seems high.