Westar Energy and Great Plains Energy leadership negotiated for about six weeks to reach a new merger agreement after the Kansas Corporation Commission brought their $12.2 billion deal to a halt in April.
The two could not agree on a sale price, and Westar CEO Mark Ruelle and Great Plains CEO Terry Bassham had given up on the idea of GPE acquiring Westar. They began to discuss a merger of equals, which turned out to be the path they hope leads to KCC approval in 2018.
In a 396-page Securities and Exchange Commission filing required for their latest merger attempt, the two companies walked painstakingly through multiple meetings, disagreement on what GPE would pay to buy Westar that might satisfy KCC regulators and what it took to reach a new deal.
Buried in the pages of filings are details important to Kansas consumers.
Company headquarters: In the new plan, Topeka will maintain an operational headquarters and will continue to be home to executives and professionals. Kansas City, Mo., will be the corporate headquarters.
In the filing, the company said it’s common in a merger for the larger city to hold the corporate headquarters.
“Practically speaking, a company must establish a single legal corporate headquarters even though we expect our senior management to be based out of two locations,” the filing said.
Severance for Westar employees: A lucrative severance package in the former merger agreement has disappeared in the new one. Voluntary severance will still be offered for non-union Westar employees, but the new plan won’t be as “unusually lucrative” as that in the first merger attempt, documents said.
Bassham and Ruelle said when the merger was announced that there would be no layoffs at either company.
“Because the original severance plan was designed to protect Westar employees from the possibility of losing their jobs, it was unusually lucrative. In the new transaction, we’ve agreed there will be no involuntary layoffs as a result of the merger,” an answer to a Frequently Asked Question said. “While complete details of the voluntary exit program are still being developed, the new voluntary exit program is anticipated to be similar to the standard Westar severance plan.”
Leadership after the merger: Bassham, as in the original merger, will be president and CEO of what the company is calling Monarch Energy. That is not the final name of the company, but Monarch Energy has been set up as a holding company during the merger proceedings.
Ruelle will become non-executive chairman of the Monarch board for three years, subject to re-election. He will continue to lead Westar Energy until the merger closes, at which time he’ll receive $15.3 million as a “change in control” payment, Penzig said.
“In the original acquisition agreement, Mark’s change in control payment was estimated at $10.7 million,” she said. “The difference is a result of how the U.S. tax code applies to the two transactions. Westar’s policy regarding how change in control payments has not changed in several years. Mark’s compensation was not a negotiated item in either transaction.”
Initial officers of Monarch Energy will be: Kevin Bryant, executive vice president and COO; Greg Greenwood, executive vice president and chief administrative officer; Anthony Somma, executive vice president and CFO; Jerl Banning, senior vice president and chief people officer; Charles Caisley, senior vice president, marketing and public affairs and chief customer officer; and Heather Humphrey, senior vice president, general counsel and corporate secretary.
New names: There will be new corporate names all around after the merger is complete, said Gina Penzig, Westar spokeswoman.
“The combined company will establish a new holding company name and stock ticker before the sale closes,” she said. “The utilities will have a new name. The timeline for deciding and implementing the new name is being determined.”