Northwestern will file for Chapter 11 if working capital facility not obtained

By Carlise Newman

Chicago, Aug. 14 - Northwestern Corp. said it is seeking a new working capital facility, and if it is not obtained, the company will file for Chapter 11 bankruptcy protection.

Northwestern said its condition has been negatively affected by the poor performance of its non-energy businesses and significant indebtedness. If the company is unable to generate cash from additional funding sources or proceeds from the sale of non-core assets, then the amount of cash generated from its continuing operation may not be sufficient to sustain current and anticipated interest payments, capital expenditures and working capital requirements.

If the company is unable to obtain funds to address immediate liquidity needs, or to execute a turnaround plan, then it may be required to seek bankruptcy protection from creditors.

Northwestern said it cannot predict when a bankruptcy filing would be made, but it could occur in the near term. If the company files, creditors will be paid prior to stockholders. Stockholders may lose their entire investment.

Interest obligations of $39 million are due in September with respect to Northwestern's outstanding debt. Northwestern can defer $31 million due on Sept. 15, regarding outstanding senior unsecured notes payable, for up to 30 days. The Sioux Falls, S.D., energy company owes $38 million in property taxes in Montana, which are due by the end of November.

At present Northwestern has no ability to access equity markets and no new bank lines to supplement working capital and must rely on cash balances to cover shortfalls.

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