Allete plans to go on the road with new stock offer
Corporate leaders will soon be taking the Allette story on the road to attract a new and different type of stockholder. Armed with a solid bottom line from an unlikely consortium of industries, the Duluthbased company is issuing 6 million shares ...
Corporate leaders will soon be taking the Allette story on the road to attract a new and different type of stockholder.
Armed with a solid bottom line from an unlikely consortium of industries, the Duluthbased company is issuing 6 million shares of new common stock.
The new stock issue was just one of the items highlighted at the company's annual meeting on Tuesday in Duluth. Formerly known as Minnesota Power, the company changed its name last September to better reflect its diverse makeup.
Though best known as a utility, the company has four areas of operation. The segments are energy, automotive, water and investments.
Overall, Allette has about 15,900 employees and operates in most of the lower 48 states and parts of Canada.
To help gain a national presence, the company bought time on the FOX network to run a promotional video.
CEO Ed Russell said Allette is the second largest vehicle remarketer in the nation and the third lowest cost electric utility and a leading investor in emerging technology.
Closer to home, Russell mentioned the closing of LTV Steel and the Arrowhead-Weston power line project.
"We are doing everything we can to help make up for the loss of 1,000 jobs," he said, citing the wrongful dumping of cheap imported steel into the United States.
On the power line project, Russell pointed out that it took 18 months to get approval to upgrade 12 miles of existing line, and that they started in October 1998 to get the line approved in Wisconsin.
"Our state leaders must shorten the process ... get rid of unnecessary mandates, or we could look like California by the end of the decade," he said. "We need to improve our infrastructure; that's why we need the line."
Russell acknowledged the opposition to the project and its impact on some landowners. He said everyone should be at the table discussing it.
Some protesters had shown up outside the meeting and distributed brochures questioning the project's need.
Russell admitted he is passionate about the problem. "I see the need in the state of Minnesota and the state of Wisconsin," he said. "If we do not complete the project, we will not provide the same level of service we are providing now."
Turning to the automotive sector -- ADESA Corporation -- he said that on May 1, it acquired an auto auction in Tulsa, bringing the total number to 55.
"No business is changing more," Russell said. "We knew there was a major shakeup coming in the industry ... we put one-half a billion dollars on the line. This was an investment aimed at market leadership ... we did it in a week."
He went on to talk about the steady growth in the water division and its success in Florida real estate.
"We view all segments as very sound," he said.
Russell is hoping current stockholders will be joined by some large institutional holders with the new stock issue.
The estimated $150 million from the offering will be used to finance new investment opportunities, for the short-term securities portfolio and to pay down some debt.
But with the new stock offering will come the challenge of increasing earnings to keep the existing shares from dropping in value.
"Our objective is to have no dilution," he said.
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