Corporate Profile for ALLETE, Inc./Minnesota Power, dated January 31, 2003
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Published Date: January 31, 2003
Company Name: ALLETE, Inc./Minnesota Power
Address: 30 West Superior Street
Duluth MN 55802
Main Telephone
Number: 218-722-2625
Internet Home
Page Address
(URL) www.allete.com
Chief Executive
Officer: David G. Gartzke
Chief Financial
Officer: James K. Vizanko
Investor Relations
Contact: Tim Thorp
Business number: 218-723-3974
E-mail address: shareholder@allete.com
Public Relations
Contact: Eric Olson
Business number: 218-723-3947
E-mail address: eolson@allete.com
Industry: Automotive & Electric Utility
Trading Symbol/
Exchange: ALE
Market Makers: N/A
Company description:
Company Description: ALLETE, Inc. is a uniquely diversified corporation with energy and automotive services at its core. Its workforce of more than 13,000 employees is engaged in providing electric power to people and businesses in the upper Midwest and a full range of automotive services in 42 states and Canada. ALLETE common stock trades on the New York Stock Exchange under the ticker symbol ALE.
Energy Services include an electric utility, Minnesota Power, which serves 145,000 residents of Minnesota and Wisconsin and some of the nation's largest industrial customers. ALLETE also owns Enventis Telecom, a growing fiber optic communications data services provider, and BNI Coal of North Dakota.
ALLETE Automotive Services includes ADESA, the second-largest vehicle auction company with 52 wholesale auctions in North America, and ADESA Impact, which serves the 'total loss' vehicle market through its 24 salvage auctions. Automotive Finance Corporation is the leading provider of independent auto dealer inventory financing, with more than 80 offices. We also provide real-time field information through AutoVIN, and operate the largest independent commercial vehicle importation company in the U.S. Complete vehicle remarketing, liquidation and lease-end service is available through PAR North America.
Under Investments and Corporate Charges, ALLETE accounts for its real estate holdings, investments in emerging technologies related to the electric utility industry, and corporate charges. General corporate expenses and interest charges not specifically related to any one business segment are included in these corporate charges.
History
ALLETE's energy roots are deep, dating back to the formation of Minnesota Power's predecessor company early in the 20th Century. The corporation entered the automotive industry in 1995 with the acquisition of ADESA Corp., a network of wholesale used vehicle auctions. The corporation's name was changed from Minnesota Power, Inc. to ALLETE in 2000 when Automotive Services' contributions to revenue and earnings began to equal or exceed those of Energy Services.
A strategy for growth
Following a strategic review of the corporation's operations late in 2001, the management of ALLETE resolved to unlock shareholder value not reflected in the price of its common stock. To accomplish this, ALLETE is:
1. Selling its water and wastewater businesses and using the proceeds to strengthen the core components -- energy and automotive services.
2. Exiting businesses that didn't fit with those core competencies or that no longer were strategic or significant; and
3. Clarifying investor understanding of ALLETE's long-term value as an investment.
ALLETE announced September 13 that its Orlando-based water utility business, Florida Water Services, had entered into an agreement to sell its assets to Florida Water Services Authority. The total purchase price of the transaction is $507 million, including $36 million in future customer hookup fees to be paid through 2006. Cash proceeds to ALLETE, net of debt and taxes are expected to be approximately $190 million in 2002, and $260 million for the entire transaction. Terms of the purchase agreement call for a closing by December 15, 2002, subject to FWSA being able to issue bonds for the purchase price, and other conditions. The Florida Water Services Authority is a governmental entity established by an interlocal agreement between the Florida panhandle cities of Gulf Breeze and Milton.
The sale is a significant strategic event for ALLETE, consistent with a primary objective of unlocking the value of the corporation. Florida Water began as a small diversification initiative of ALLETE in the early 1980s and grew to become the largest investor-owned water utility in Florida, with customers in 120 communities in 26 Florida counties.
ALLETE has already exited or is in the process of liquidating selected businesses that, after thorough evaluation, were found to hold little promise for future growth or inconsistent with the core strengths of the corporation. These include Great Rigs, an automotive transport company, Electric Odyssey, a chain of retail stores and catalogue operation, and three non-regulated water services firms. In addition, in July a decision was reached to liquidate ALLETE's trading securities portfolio. The liquidation will reduce exposure to volatile securities markets; with the proceeds, ALLETE plans to reduce debt.
Unlocking value
ALLETE management is focused on its two core components -- automotive and energy services. After engineering the sale of our water proceeds and exiting several other businesses that did not strategically fit our core competencies, ALLETE's mission is clarified. On the automotive side, ALLETE will bolster its growing presence in the total loss vehicle market. In March, ALLETE purchased Sadisco East, a salvage vehicle auction in Clayton, NC that processes more than 20,000 vehicles per year. Further salvage auction acquisitions are expected. Minnesota Power has expanded its generation portfolio with the acquisition and refurbishing of the Taconite Harbor 225-MW generating plant purchased from LTV Steel last year. Minnesota Power's portion of the new Kendall County generating station near Chicago is operational. A natural gas-fired peaking plant in Superior, WI is in the planning and permitting process.