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Saturday, December 20, 2008

Ind. Decisions - "Just Call This Deal Hoosier Baroque"

Gretchen Morgenson Sunday financial column in the NY Times this week features the Hoosier Egergy - John Hancock dispute.

The ILB had an entry on Nov. 25th headed "Judge gives reprieve to Hoosier Energy," with a follow-up on Dec. 12.

Some quotes from the Morgenson story:

COLLATERAL damage from the credit crisis continues to crop up in the most unlikely places. Consider southern Indiana, where the Hoosier Energy Rural Electric Cooperative, serving 800,000 farm, small-business and residential customers, is under threat.

Unlike many other enterprises today, Hoosier is not in financial distress. It is, in fact, thriving.

What imperils the cooperative is the kind of financial alchemy that has magnified our money mess: an atrociously convoluted deal that Hoosier struck with the John Hancock Life Insurance Company in 2002.

Because part of that deal is now in jeopardy, John Hancock is trying to force a termination payment of $120 million that could push Hoosier into bankruptcy protection.

Problems with the Hoosier-John Hancock transaction are the subject of a lawsuit in federal court in Indianapolis. David F. Hamilton, chief judge in the Southern District of Indiana, recently granted Hoosier’s request for a preliminary injunction preventing any termination payment from being made until the dispute between the parties could be resolved.

BTW, the story mentions the Nov. 25 order, but not the Dec. 13th opinion, where the court found that infsofar as injunction security was concerned, "John Hancock is adequately protected by a total of four different forms of security, plus a further restriction on Hoosier Energy’s ability to take on additional debt while the preliminary injunction is in effect."

Posted by Marcia Oddi on December 20, 2008 06:30 PM
Posted to Ind Fed D.Ct. Decisions