Question:
A tempest has rolled across Big Sky Country, shattering Montana's only Fortune
500 company and raining resentment and regret among those stranded in its
aftermath.The storm took the form of one of the most surprising corporate
collapses in the Rocky Mountain West - yet one that few outside of Montana know
about.Amid its fury, hundreds of jobs were lost, history and wealth wasted,
greed decried.
Answer:
Ensconced below the Continental Divide in Butte, Mont., executives of Montana
Power Co. dismantled and sold the 90-year-old company piecemeal to devote all
its money and their attention to their promising but risky telecommunications
division, Touch America.
It was a disastrous bet. With $2.1 billion from the sale of Montana Power
squandered, Touch America careened toward bankruptcy this year. Some momentum
came from Denver, where Baby Bell Qwest sought to savage and then salvage its
smaller rival.
"The rock of the community was always the utility company," said Jim Smitham, a
52-year-old Montana Power retiree who watched his stock, converted to Touch
America shares, spiral from $500,000 to $50. "And now our rock is a bunch of
pebbles, and some of the pebbles have washed downstream."
Towering above Butte are 14 gallows frames, massive steel structures that once
lowered miners thousands of feet into the honeycombed interior of "the richest
hill on Earth."
Today, they linger as ghosts of Butte's glory days.
Even mining - the industry that ballooned Butte's population to above 100,000
in the early 1900s and spurred officials to name the city's streets after gold,
iron, silver and platinum - has abandoned Butte.
The 130-year-old copper mine in Butte went on indefinite suspension in 2000 as
energy prices soared and copper prices sank. The mine's closure left Montana
Power Co. as Butte's only significant employer. It has proved to be a perilous
reliance.
Actually, according to CBS News last night it was all driven by NY
bankers who wanted their millions in fat fees for the "reorganization."
The shareholders were also kept in the dark by the Board and Sr. Execs
who walked away with $15 million while the employees lost their jobs and
their pensions. There WILL be people ending up in jail on this deal.
The firm's contract with Montana Power stipulates that "any advice
provided by Goldman Sachs...is exclusively for the information of the
Board of Directors and senior management of the company..." Morrison
translates that into "don't tell the shareholders."
"Because until this thing was finalized they didn't want people
raising questions," he says. "It would be an extremely controversial
thing if that got out."
Does Morrison think that Goldman Sachs knew that this was not
particularly a good deal for the stockholders? "I don't think they
cared very much," he says. "They were making money."
