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Cooperative Mergers

Ruling Addresses Cooperative’s Consolidation and Liquidation of Subsidiaries

Cooperative’s Consolidation and Liquidation of Subsidiaries

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Like for-profit corporations owned by investors and shareholders, cooperatives provide services through subsidiaries.  Whereas for-profit corporations own and operate subsidiaries to generate greater income for shareholders, cooperatives typically own and operate subsidiaries to provide diverse services to patrons and non-patrons.  Like corporations, however, cooperatives occasionally find advantages in liquidating and consolidating subsidiaries when their need for such subsidiaries expires. Read More »Ruling Addresses Cooperative’s Consolidation and Liquidation of Subsidiaries

Cooperative Litigation Update: Texas Cooperative Lawsuit Considered on Appeal

Earlier this past July, the Texas Court of Appeals ruled on important aspects of the cooperative lawsuit concerning Denton County Electric Cooperative, Inc., d/b/a CoServ Electric (“CoServ”).  The court ruled, among other things, that (i) the cooperative was not subject to certain statutory rules governing non-profit corporations, and (ii) the electric cooperative statute did not impose a fiduciary duty on the cooperative itself.  Read More »Cooperative Litigation Update: Texas Cooperative Lawsuit Considered on Appeal

Electric and Telecom Cooperative Mergers

Mergers of electric cooperatives are nothing new.  Over the years, several mergers have occurred, mostly for the purpose of consolidating business functions and generating savings for members.  For example, currently DS&O Electric Cooperative and Rolling Hills Electric Cooperative, both located in Kansas, are considering a merger.  Such mergers often do not result in decreases in electric rates, because cooperatives typically already have long-term arrangements in place with their G&T or with third-party suppliers. Savings are most often achieved in the areas of human resources, IT, insurance, accounting, and legal fees.  On the basis of such savings, as demonstrated by extensive studies and a 10-year financial forecast, two cooperatives in Texas – Humboldt County REC and Midland Power Cooperative – recently decided to seek approval of merger from their members.   Of course any proposed merger must take into account complex issues such as tax considerations, regulatory issues, member relations, the effect on employees, management and the Boards of Directors, and financing and credit.Read More »Electric and Telecom Cooperative Mergers