MidAmerican Energy Holdings Co. to bu...

MidAmerican Energy Holdings Co. to buy Constellation Energy

There are 40 comments on the Baltimore Sun story from Sep 18, 2008, titled MidAmerican Energy Holdings Co. to buy Constellation Energy. In it, Baltimore Sun reports that:

Iowa-based MidAmerican Energy Holdings Company has reached a tentative agreement with Constellation Energy to purchase outstanding shares of Constellation for $4.7 billion, or $26.50 per share, Constellation ...

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waiting

Columbia, MD

#21 Sep 18, 2008
I hope the Sun still has the resources and the mettle to do an exhaustive investigation into the commodities trading that got CEG into trouble. Folks need to now why the economy is tanking.
Jerrard

Towson, MD

#22 Sep 18, 2008
I wonder if O'Malley even feels the slightest remorse for his role in devaluing of the CEG stock. I mean there are people whose retirement plans included CEG stock that was worth $12B to FPL vs. $4.7B today. It was O'Malley after all who sued to stop the merger with FPL and wrecked CEG's value so they could be bought at fire sale prices. How do you apologize to those people.
jtr

Pleasanton, CA

#23 Sep 18, 2008
Jerrard wrote:
I wonder if O'Malley even feels the slightest remorse for his role in devaluing of the CEG stock. I mean there are people whose retirement plans included CEG stock that was worth $12B to FPL vs.$4.7B today. It was O'Malley after all who sued to stop the merger with FPL and wrecked CEG's value so they could be bought at fire sale prices. How do you apologize to those people.
Though the stockholders suffered, the employees stand a better chance of retaining their jobs now then they did with FPL
rick

Glen Burnie, MD

#24 Sep 18, 2008
If the politicians were up to their eyeballs in this stench already someone would be up on charges. Keep an eye toward who uses the BGE suite at the game Sunday. Mike Miller and MO'M will both be there I bet. All the crap over the Pepco merger, all the noise over the FPL deal, and our state's last fortune 500 company disappears overnight? Why can't a regulated utility be "State"ized anyway?
Eddiebees

Stroudsburg, PA

#25 Sep 18, 2008
rick wrote:
If the politicians were up to their eyeballs in this stench already someone would be up on charges. Keep an eye toward who uses the BGE suite at the game Sunday. Mike Miller and MO'M will both be there I bet. All the crap over the Pepco merger, all the noise over the FPL deal, and our state's last fortune 500 company disappears overnight? Why can't a regulated utility be "State"ized anyway?
OK comrade!
Eddiebees

Stroudsburg, PA

#27 Sep 18, 2008
Jake wrote:
I had a bad dream about when Irsay rode away with the Colts last night-maybe it was Mayo III's evil vibes filtering out of his well furnish lair.
I always tighten my belt and stand with my back to the wall when politicians and CEOs like Mayo Sh*thack tell me that their CYA moves will make my life better in the end.
BTW both parties have been pushing dereg in this and most other forms for more than 30 years, this isn't something that sprang up from the blue in MD circa 1999-and it certainly wasn't a novel idea concocted by any MD pol). It was more like the entire MD legislature, both d and r, were playing follow the leader (and the leader wasn't us).
Our lemming leaders from both sides lead us off a cliff and we will continue to pay for these mistakes for the foreseeable future.
Its hard to turn a pickle back into a cucumber.
Look I'm no Mayo fan, when it comes to his compensation and such. However, he correctly called it right two years ago when he said CEG needed more access to capital markets and arranged a deal with FPL. No ifs ands or butts. It was a deal that would have totally mitigated this situation. O'Malley, Mille and the Demo legislature sh*t canned the deal. Don't reinvent the facts, with your its everybody's fault deal. Sure everyone wanted dereg, but the problem here isn't dereg, its the credit market collapse.

Since: Sep 08

Pasadena, MD

#28 Sep 18, 2008
I was listening to a radio talk show earlier today and there was some talk about a Legislative Special Session to address this transaction.

Note to Warren: Shakedown coming!

It will be interesting to see if anywhere in Buffet's experience he has seen anything like the Governor and Legislature of MD.
Eddiebees

Stroudsburg, PA

#29 Sep 18, 2008
Club Member wrote:
I was listening to a radio talk show earlier today and there was some talk about a Legislative Special Session to address this transaction.
Note to Warren: Shakedown coming!
It will be interesting to see if anywhere in Buffet's experience he has seen anything like the Governor and Legislature of MD.
He visited Russia numerous times.
Nora

AOL

#30 Sep 18, 2008
I do not think anyone knows what is wrong with the economy;hence, its impact on Constellation. The common denominator appears to be greed.
tbird

Boys Ranch, TX

#31 Sep 18, 2008
MidAmerican is the best thing to happen for Constellation Energy. Constellation, or as we say in the business CONRON, has been a poorly run company under Shattuck and his Ex Enron management team. As in Houston, it was all about greed. My bet is Buffett & Abel dump the losers at CEG.
Former BGE Employee

Baltimore, MD

#33 Sep 18, 2008
I knew when Mayo took over, BGE would transform into something different. He and his cronies took a nice, mom and pop company and made it into a company that acquired companies instead of a company that would get sucked up by a larger utility. I approved of the power generation acquired early on but grew increasingly concerned as the company derived more and more income from trading. It sure changed the fundamentals behind the stock! It also put the same shareholders used to a boring, reliable stock in a terrible high risk crap game.

This was all put in motion by Poindexter (sp) but Mayo did what Poindexter didn't have the "talent" to "accomplish".

I'm not sure if it's true but supposedly, Mayo hired alot of ERON "talent" to help.

It's nice Mayo admits it's us shareholders who pay. I guess the millions of dollars he "earned" will need to do to help him through these tough times!
Art

Nottingham, MD

#34 Sep 18, 2008
jtr wrote:
<quoted text>
Though the stockholders suffered, the employees stand a better chance of retaining their jobs now then they did with FPL
Hopefully, they learned something from the Enron and Beth Steel fiascos and diversified their portfolio and 401K. CEG stock was sexy a few months ago, riding high in the mid $90's, so there would not have seemed to be a good reason to dump it. But, carrying all that stock in one firm is a recipe for disaster. Unfortunately, many in Maryland are now finding that bad taste in their mouths.
Maryland Blows

Washington, DC

#35 Sep 18, 2008
Maryland sucks a&* and provides a horrible business climate. I wonder how you losers and your liberal government will fare once the CEG tax base is gone for good? Who will pay for welfare and needle exchanges Shelia? Obama and Martin can't help you now.
Joe M

Cockeysville, MD

#36 Sep 18, 2008
Jerrard wrote:
I wonder if O'Malley even feels the slightest remorse for his role in devaluing of the CEG stock. I mean there are people whose retirement plans included CEG stock that was worth $12B to FPL vs.$4.7B today. It was O'Malley after all who sued to stop the merger with FPL and wrecked CEG's value so they could be bought at fire sale prices. How do you apologize to those people.
So subsidizing florida rates, lame service and hurricane-induced capital expenditures is your idea of a better position than being funded by the one sane man on wall st. And of course, O'Malley is at fault for Bear-sterns, AIG and Lehman, keep mashing the facts to fit your ignorance.

Since: Mar 08

Frederick

#37 Sep 18, 2008
I'm a stockholder and I will vote no. I think we should unload assets like BGE.
Jake

Alexandria, VA

#38 Sep 19, 2008
Eddiebees wrote:
<quoted text>
Look I'm no Mayo fan, when it comes to his compensation and such. However, he correctly called it right two years ago when he said CEG needed more access to capital markets and arranged a deal with FPL. No ifs ands or butts. It was a deal that would have totally mitigated this situation. O'Malley, Mille and the Demo legislature **** canned the deal. Don't reinvent the facts, with your its everybody's fault deal. Sure everyone wanted dereg, but the problem here isn't dereg, its the credit market collapse.
Your the one inventing facts. You seem to be trying to make political hay for the republican party out of a problem with deep bipartisan roots. Are you going to sit there with a straight face and tell me democrats forces Shuttack into his risky investments? Or they created this credit crises, which by the way had a lot to do with bipartisan contempt for regulation of these investment banks. So it really is about dereg in the financial markettoo. I don't like regulations much either, but the past 10 years have shown the fox isn't a very good protector of the henhouse afterall.

I don't have an ideological ax to grind. From where I sit both parties have a lot of responsibility for these MESSES. The partisans in each party pointing fingers at everyone else are either uninformed, delude, or hypocrits.

Your entitled to your opinion eddie, but don't trash me when I express mine.
Jake

Alexandria, VA

#39 Sep 19, 2008
Joe M wrote:
<quoted text>
So subsidizing florida rates, lame service and hurricane-induced capital expenditures is your idea of a better position than being funded by the one sane man on wall st. And of course, O'Malley is at fault for Bear-sterns, AIG and Lehman, keep mashing the facts to fit your ignorance.
Exactly.
Jake

Alexandria, VA

#40 Sep 19, 2008
Former BGE Employee wrote:
I knew when Mayo took over, BGE would transform into something different. He and his cronies took a nice, mom and pop company and made it into a company that acquired companies instead of a company that would get sucked up by a larger utility. I approved of the power generation acquired early on but grew increasingly concerned as the company derived more and more income from trading. It sure changed the fundamentals behind the stock! It also put the same shareholders used to a boring, reliable stock in a terrible high risk crap game.
This was all put in motion by Poindexter (sp) but Mayo did what Poindexter didn't have the "talent" to "accomplish".
I'm not sure if it's true but supposedly, Mayo hired alot of ERON "talent" to help.
It's nice Mayo admits it's us shareholders who pay. I guess the millions of dollars he "earned" will need to do to help him through these tough times!
It must be tough stomaching Mayo's pontifications about how it isn't his fault.
Jake

Alexandria, VA

#41 Sep 19, 2008
"If regulators and politicians had just gotten out of Constellation's way, the thinking goes, this week's credit crisis wouldn't have threatened the company with bankruptcy. FPL's size and steady earnings, according to this argument, could have backstopped Constellation and prevented the loss of confidence that caused yesterday's deal.

"I agree with that," said Constellation Chairman and CEO Mayo Shattuck, when I put the proposition to him yesterday. An FPL merger, he said, was supposed to "diversify the earnings base of the company" so it wouldn't be so dependent on Constellation's trading operation - the one that threatened the whole enterprise this week.

Nice try, but scapegoating Annapolis won't work. A CEO's job is to take no more risk than his company's balance sheet can handle. Whatever its size.

Shattuck demonstrably failed to do that.

The credit crisis threatening Constellation and numerous other companies seemed a one-in-10,000 chance a few months ago. Its speed, breadth and depth have stunned everybody. There might have been concerted efforts to send Constellation into a tailspin by driving down its stock and sowing doubts about its credit.

It's a jungle out there. But that's why Shattuck and his colleagues get paid very, very well to protect shareholders against even long-shot threats.

Credit risks are economic risks. Just ask Constellation shareholders, whose stock is worth less than half what it was a week ago.

The General Assembly didn't cause Constellation's problems. Constellation did, first by betting on energy trends with buckets of borrowed money, then by misstating what would happen if the credit ratings it needed to borrow that money were ever downgraded.

Downgrades would have compelled the company to post hundreds of millions - in some cases, more than a billion - of dollars more than had previously been disclosed.

That goof, revealed a month ago, was "a disclosure error of some magnitude," Shattuck admits. "In normal circumstances, an issue like that in any market in history could be rectified within several weeks. In this environment, it has consequences that extended obviously into a perfect storm" of financiers going under or seeking help.
Jake

Alexandria, VA

#42 Sep 19, 2008
The market could see that huge collateral calls might push Constellation to bankruptcy if it got caught in the storm. That made lenders reluctant to lend, which increased chances of a downgrade, which boosted chances of a collateral call. When Standard & Poor's revealed Wednesday that it was considering a downgrade, things snowballed, and Constellation had to find a partner.

Not everybody's in trouble, though.

Notice that Warren Buffett, the canny owner of MidAmerican through the Berkshire Hathaway conglomerate, not only isn't in distress but has plenty of cash to buy fire-sale assets such as Constellation.

With billions in insurance and other financial assets, Buffett could have easily bet the farm in the manner of Constellation or American International Group, the insurance behemoth seized by the government this week.

But he didn't. He kept his powder dry and was happy with the notion that steady, prudent growth generates the best returns. What a concept. Don't be surprised if the wheeling and dealing on Constellation's trading desk diminishes under the new proprietors.

The General Assembly resisted Constellation's marriage with FPL, owner of Florida Power & Light, because of concern about the merger's effect on BGE, Constellation's subsidiary. Legislators also wanted to hold the merger ransom in return for a payoff to BGE residential customers.

But even if authorities had approved the deal, the combined company would have underwritten the same kind of bets on electricity, coal and natural gas prices that got Constellation into trouble. Who's to say that, given the greater financial backing, the wagers wouldn't have been larger and just as dangerous for its future?

The financial theme of 2008, for home buyers or Wall Street tycoons, is borrowing more money than you can handle if things go bad.

It's hard to blame overzealous regulators and business-hating politicians for that

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