“We just never could reach an agreement on the valuation” (of Elizabethton Electric) Alexander said. The mayor provided a copy of the BrightRidge letter to the Johnson City Press.
The letter was dated March 1 and was from the BrightRidge Board of Directors and signed by B.J. King, chairman of the board. It was written to members of the Elizabethton City Council.
The BrightRidge letter gave the board’s reason for ending the acquisition effort: “At this time the BrightRidge Board does not believe continued meetings will bring a resolution to the wide variance in the monetary value of EES.” As a result it said “the BrightRidge Board is formally withdrawing from continued discussions regarding the consolidation of EES and BrightRidge. BrightRidge thanks the City of Elizabethton for their commitment to this extensive study and for working closely with BrightRidge to complete the work.”
BrightRidge and the City of Elizabethton had begun a joint evaluation of the Elizabethton Electric Department in January 2018, using to independent consultants Fisher Arnold and Chris Mitchell Management Consultants. The findings of the two were presented in separate meetings held in January 2019.
In the March 1 BrightRidge letter, King wrote that his board “understood the evaluation demonstrated efficiencies and symmetries which would benefit the customers of EES and BrightRidge now and in the future through rate stabilization, economic development, and reduced capital expenditures. A joint meeting in early February between the City of Elizabethton and BrightRidge, with legal counsel present revealed that the two parties at this time are far apart related to the value of EES.”
Alexander addressed the disagreement between the two sides in an interview with the Johnson City Press on Feb. 9. He questioned using the evaluation on demonstrated efficiencies and symmetries to come up with a valuation between $29 million and $34 million.
“I know how they got that figure, it is based on cash flow,” said Alexander, a financial adviser with Edward Jones Investments.
But Alexander said a better figure on what the electric department was worth was the bottom line on the annual audit of the utility.
The 2018 audit by the Johnson City accounting firm of Blackburn, Childers and Steagall reported the electric department’s “total net position” as $54,988,177.
In the newspaper interview, Alexander addressed three other areas where there was disagreement, including the fact that all the Elizabethton substations have been rebuilt in the past few years and proposed billing of customers of the larger utility would be a disadvantage of Elizabethton customers. He said that those concerns kept the deal from going forward.
In concluding its March 1 letter, King wrote that BrightRidge would be open to future discussions with Elizabethton. Those would be at the request of the City of Elizabethton “as the Board does believe the data compiled confirmed both short- and long-term value to the customers of the two public power entities.”