Bonneville Pacific Corp., the Utah alternative energy company whose founders saw their quest to become a major world player in electrical power cogeneration descend into scandal and bankruptcy, emerged from Chapter 11 bankruptcy Monday with a new board of directors, new corporate officers and a more modest agenda.
That the company still exists at all is an unlikely happy ending to the seven-year saga in which several of the firm's principals and insiders were criminally indicted, sentenced to prison, and had to pay back millions of dollars they had made from the operation.Roger G. Segal, the Salt Lake attorney who was relentless in pursuing those who had contributed to the company's bankruptcy, Monday turned over control of Bonneville Pacific to a new board of directors, headed by Chairman James W. Bernard, former president and CEO of chemical distribution company Univar Corp.
The board named Clark M. Mower as president of the new company. Steven H. Stepanek was named secretary and R. Stephen Blackham, treasurer.
Some 17.280 million shares of Bonneville's stock will be issued to creditors of the company, valued by the bankruptcy court at $2.36 per share.
On Thursday, Segal also will disburse approximately $153 million to creditors, money gained through litigation against the insiders, from outside interests, sales of some assets and profits generated by Bonneville's remaining operating units.
The creditors will get their original principal as of December 1991, together with interest through Nov. 5, 1998.
"I think we have a very good result here; it's the way the system is supposed to work," said Segal, who has dogged the case for the past 61/2 years. "Everyone has come out very well."
Well, everyone except the insiders, law firms, accounting firms and individuals who paid settlements to Segal without admitting any wrongdoing. Among the first to settle was Mayor Deedee Corradini, who was one of the founders of the company. She and her former husband, Yan Ross, paid $800,000 to be dropped as defendants in the bankruptcy case.
Shareholders who bought their stock in the original company on the public market - insiders had to forfeit all of their shares - will get shares in the "new" Bonneville Pacific in a reverse stock split. For every four shares that they held in the old BP, they will get one share in the reorganized company.
Following the reverse split, there will be about 7.240 million shares of the new company outstanding.
For now, the stock will be listed on the "pink sheets." The most recent trade that Segal could call up showed the stock trading at $1.37 per share. In coming months, the new board of directors will try to get the stock listed on the electronic Bulletin Board and then on NASDAQ. Broker Wilson Davis and other firms currently make a market in the stock.
Whether the shares will increase or even retain their current value remains to be seen. Segal believes it will depend on whether the shareholders decide to dump their newly issued shares as quickly as possible or whether they decide to hold them for the long term.
There are those who will decide they want nothing to do with any company named Bonneville Pacific Corp., tainted as the name has become over the years of court hearings. Segal said there was considerable thought given to changing the name of the reorganized company to something that would not carry the notoriety along with it, but it was eventually decided that there was a "fair amount of positive name recognition" and the decision was made to keep it.
In a release outlining the emergence of the company from bankruptcy, Segal's law firm, Cohne, Rappaport & Segal, implied that there are outside parties who may be interested in buying Bonneville Pacific, which is now free of debt, with a solid financial base, and "positioned to continue with and to expand its current operations."
The statement said the purchase price being discussed is "generally consistent" with the range of values in the trustee's disclosure statement and the new board intends to "review such inquiries . . ."
It was the Chapter 11 bankruptcy filing in 1991 that brought down the original Bonneville Pacific house of cards. Investigators discovered that the initial public stock offering was "based upon the grossly exaggerated and ever-increasing paper value of the non-existent assets continually transferred between Bonneville and its related entities."
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Additional Information
The operating units that survived bankruptcy
Some of Bonneville Pacific's operating units have survived and made money during the seven years of bankruptcy proceedings. They are:
Bonneville Fuels Corp., a wholly owned subsidiary of BP involved in natural gas and oil production and sales in the western United States.
Bonneville Nevada Corp., a wholly owned BP subsidiary that has a 50 percent partnership interest in Nevada Cogeneration Associates No. 1, which owns an 85- megawatt, gas-fired, cogeneration plant near Las Vegas. A Texaco subsidiary owns the other half.
Bonneville Pacific Services Co., operates power projects.
CONAV is a Mexican company that owns a four megawatt power plant near Navajoa, Mexico, currently in the start-up phase. BP owns 88 percent of the operation.
Kyocera Project is a 3.2 megawatt gas fired cogeneration plant in San Diego owned by BP.
Bonneville Pacific's new board of directors
Bonneville Pacific's new board of directors include:
James W. Bernard, chairman, former president and CEO of chemical distribution company Univar Corp.
Ralph F. Cox, a management consultant for oil industry clients, former CEO of Greenhill Petroleum Corp. and former president of Union Pacific Resources.
Michael R. Devitt, an attorney and professor at Georgetown University Law Center.
Harold E. Dittmer, president and CEO of Wellhead Electric Co., a power generation project developer and owner.
Michael D. Fowler, vice president and chief financial officer of Howa Construction Inc. and former chief financial officer of Grand Valley Gas Co. and the Utah affiliate of First Interstate Bank.
Harold H. Robinson III, a venture capitalist and management consultant, formerly an executive with California Energy Co. Inc.
Steven H. Stepanek, an employee of Bonneville Pacific subsidiary, Bonneville Fuels Corp., since 1989 and president of the company since 1994.