Newspaper article The Topeka Capital-Journal

Westar's Difference between Market, Book Value ; Chilson: Expo a Chance to Network

Newspaper article The Topeka Capital-Journal

Westar's Difference between Market, Book Value ; Chilson: Expo a Chance to Network

Article excerpt

Within weeks of starting at The Topeka Capital-Journal, I was covering Kansas Corporation Commission meetings and wondering how I'd managed not to cover that entity in more than 25 years of reporting. Yes, I've complained and made a lot of jokes about running off to the Bahamas rather than reading 100-plus pages of filings about the Westar Energy sale.

But one reason I like reporting is the opportunity to learn about all different kinds of things (see wine incubator on this page), and I've enjoyed exploring the inner workings of utility industries.

But the subject is complicated and I usually have a small amount of space to summarize those hundreds of pages of filings. So I'm using this column to clarify a number I used in this week's stories. I quoted that the Great Plains Energy offer for Westar was $2.3 billion above market value.

The deal is $4.9 billion above book value, described in the KCC filing by staff as "the $4.9 billion of goodwill that will be recorded on the books of Great Plains." That book value number is more pertinent than the market value, so I wanted to make the difference in these clear.

I thought it might help to explain the difference in those two numbers. Book value is the value you'll find on the company's books from its financial statements. Market value relates to the company's value according to the stock market.

I went to the KCC to explain the difference as related to Westar. After consulting with KCC staff, spokesman Samir Arif offered this explanation:

"Goodwill is the accounting term for the amount that will be recorded over book value, $4.9 billion. This is referred to as the Acquisition Premium in the Commission's merger standards. $2.3 billion is the amount that GPE wants to pay for Westar stock over the pre-leak price of the stock on the NYSE.

"The Commission's merger standards refer to the Acquisition Premium over book value, because book value of assets are what the utility actually earns a return on and a return of, through the ratemaking process."

Whew. I feel better now. On to more news.

Expo adds educational component

On Tuesday, plan time to attend the annual Greater Topeka Chamber of Commerce Business Expo, which will feature more than 100 vendors from a variety of industries.

"We have 109 exhibitors and that's max," said Ashley Charest, chamber vice president of resource development. "We sold out a few weeks ago. We were really excited about that. It's been sold out for years and years and years, but we sold out a little earlier than what we normally have."

Vendors offer products and services for personal and business use, she said. The event, to be held at the Ramada Topeka Downtown, 420 S.E. 6th Ave., is a free event, open to the public from 1 to 4 p. …

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