Welcome to The Closing Bell. This is your last stop for biz scoops and big news before the weekend — a roundup of stories that can’t wait till Monday.
How a California fire may affect the fate of Jewish Hospital
The Camp Fire that destroyed much of the town of Paradise, Calif., on Nov. 8, may play a role in the outcome of Jewish Hospital negotiations.
Would-be hospital buyer BlueMountain Capital Management in September upped to $200 million its stake into Pacific Gas & Electric, the utility that filed for bankruptcy protection this week as it fears its liabilities in the fire may exceed its insurance coverage. The utility’s shares have lost about 70 percent of their value since early November.
BlueMountain, a New York-based alternative asset management firm, had been the exclusive negotiating partner with Jewish Hospital owner KentuckyOne Health for a potential acquisition of the health system’s Louisville assets. KentuckyOne has been trying to sell the assets since May 2017. Jewish, together with Sts. Mary & Elizabeth Hospital, has been racking up operating losses of nearly $1.5 million per week.
BlueMountain had bought about 4.3 million shares of PG&E at a per-share price of $44.29 on Sept. 30. On Nov. 8, shares closed at $42.51. On Nov. 9, the day after the fire, the utility said in an SEC filing that if its “equipment is determined to be the cause, the Utility could be subject to significant liability in excess of insurance coverage that would be expected to have a material impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows.”
In the week after the announcement, the utility’s shares fell to $17.44, down 59 percent.
BlueMountain recently had sharply criticized the utility’s board, saying its intention to file for bankruptcy was “costly and unnecessary.”
In a letter on Jan. 24, BlueMountain had urged shareholders to replace PG&E’s current board with a “full slate of new directors” because the current board had “not only failed the company and its shareholders; it has failed its customers; it has failed its employees; and, it has failed the people of California. The Company has lost the public’s trust, and it has severely damaged its relationship with regulators and elected officials.”
The firm said that with “proper corporate governance and appropriate resolution of liabilities in the ordinary course, we believe that PG&E commons stock could be worth in excess of $50 per share.” Mid-afternoon Thursday, shares sold for less than $13.
About seven weeks after the fire, Insider learned that BlueMountain’s interest in the Louisville health care assets appeared to wane, as the University of Louisville had submitted a letter of intent to acquire the KentuckyOne facilities.
While both KentuckyOne and BlueMountain have said their negotiations are continuing, they have refused to say whether they remain exclusive talks.
A spokesman for BlueMountain told Insider via email Thursday that the firm declined to comment on whether its exposure to PG&E’s fiscal challenges and bankruptcy was affecting its interest in KentuckyOne’s Louisville assets. —Boris Ladwig
Public Service Commission schedules public meetings on rate case
The Public Service Commission said in a news release that it would hold the first meeting in Louisville, at Jefferson Community and Technical College, at 5:30 p.m. on Thursday, Feb. 21. Commissioners and staff will meet the Lexington public at the same time the following Tuesday, the 26th, at Bluegrass Community & Technical College.
LG&E, Metro Louisville’s sole power and gas supplier, has asked the PSC to allow it to raise the base rate part of the average monthly residential electric bill by about 4.3 percent, to $102.51. The average base rate portion of an LG&E residential gas bill would go up 13.7 percent, to $40.85 if the PSC approves the company’s request.
“These meetings will allow the public to learn about the PSC’s ratemaking process and to present their views directly to members of the Commission as we prepare to consider whether the proposed rates are fair, just and reasonable,” PSC Chairman Michael Schmitt said in the release.
An LG&E spokeswoman said staff members would attend but the company doesn’t play a formal role in the PSC’s public meetings.
In the rate case, the unit of Allentown, Penn.-based PPL Corp has asked the PSC to increase the minimum basic service charge. The company has said this would fairly spread fixed costs, such as for power lines. Critics say it would cut customers’ ability to economize by adjusting their energy use, and unfairly burdens the poor.
Separately, the Public Service Commission has sought to block some advocates for lower-income people from participating in the rate case, while allowing other “intervenors” like Walmart and Kroger. The issue is currently tied up in the courts, and a PSC spokesman declined to comment beyond saying the regulator’s position was stated in the court filings. —Mark R. Long
Heaven Hill names new master distiller, Conor O’Driscoll
In September, Insider shared the news that Denny Potter had left his role as master distiller at Heaven Hill to become master distiller of Maker’s Mark. This left a vacancy open at the Louisville-based distillery (with a headquarters in Bardstown), and just this week, it was announced that position has been filled by Conor O’Driscoll.
O’Driscoll brings with him 15 years of experience as a distiller, having worked at Brown-Forman’s Shively distillery, then Woodford Reserve, and then Angel’s Envy. He’ll become Heaven Hill’s fifth master distiller in its 84-year history.
“Conor is among the finest young distillers in our business, and we could not be more thrilled to have him at the forefront of distilling for our historic portfolio,” said Max L. Shapira, president of Heaven Hill Brands, in a news release. “In his 15 years in the industry, he’s played a key role in growing production and innovation, with an expectation of quality and a respect for craftsmanship. In that regard, he is a perfect fit for us.”
O’Driscoll will immediately begin his job at the Bernheim Distillery in Louisville, which distills all Heaven Hill whiskeys from Evan Williams and Elijah Craig to Larceny and Henry McKenna.
“I’m very proud to be a part of Heaven Hill’s storied whiskey legacy,” said O’Driscoll in the release. “The trust of the Shapira family is humbling. And I am excited and honored to carry on the traditions of the master distillers that helped establish Heaven Hill’s place in the industry.”
Grammy Award winner performing to Louisville Urban League Derby Gala
The conclusion of New Year’s celebrations is essentially the start of the Kentucky Derby season in Louisville. Business owners start talking in terms of pre- and post-Derby, and details start trickling out about annual Derby-related events.
The first out of the gate this year is the Louisville Urban League, which recently announced a featured artist for its 2019 Louisville Urban League Derby Gala. Eleven-time Grammy Award winner Kenny “Babyface” Edmonds, who’s written songs for Toni Braxton, Whitney Houston, Beyonce, Boyz II Men and many more, will perform at that gala.
“All proceeds raised at the gala enables us to ﬁnd equitable solutions for those whose voices often go unheard,” said Sadiqa Reynolds, president and CEO of the Louisville Urban League, in a news release. “Every single day the League strives to connect people with jobs, justice, education, health, and housing opportunities. We are thrilled to have Kenny ‘Babyface’ Edmonds on stage this year. This is one event you do not want to miss.”
Yum Brands promoted its president and chief financial officer David Gibbs to president and chief operating officer in charge of the company’s global KFC Division and the U.S. and international businesses of Pizza Hut and Taco Bell. Gibbs retains the title and duties of the chief financial officer as well.
Papa John’s declared a quarterly dividend of $0.225 per common share, payable on Feb. 22, to shareholders of record at the close of business on Feb. 11.
For the ninth time, the University of Louisville is one of the nation’s top campuses for tree conservation efforts according to the Arbor Day Foundation. “These are tough times for trees in Louisville, but UofL is honored to consistently be part of the solution by planting, protecting and investing in the health of trees,” Justin Mog, assistant to the provost for sustainability initiatives, said in a news release.
Cara Stewart, a health law fellow at the Kentucky Equal Justice Center, has been named Consumer Engagement Health Advocate of the Year by Families USA. She was honored with the award in Washington, D.C., for encouraging the public to speak out against efforts to limit health care access.
Photos, drawings and landscape designs for the forthcoming Waterfront Botanical Gardens will be on display at the U.S. Botanic Garden as part of a new exhibit called “Celebrating New American Gardens,” which runs through Oct. 15.