Articles
June 16, 1992
BONNEVILLE SHARES SOLD JUST BEFORE FIRM'S EXIT
By John Keahey
© 1992, The Salt Lake Tribune
Nearly $429,000 in Bonneville Pacific stock owned by two top corporate officers was sold just days before Portland General walked away from its investment in the Salt Lake City-based alternative-energy company, an investigation by The Salt Lake Tribune shows.
Before Portland General's pullout, Bonneville's stock was worth roughly $1.20 a share. On Nov. 13, the day after Portland General announced it was abandoning its investment, the stock became virtually worthless -- skidding to 18.75 cents a share.
Documents obtained by The Tribune from the U.S. Securities and Exchange Commission show that stock owned by at least two corporate insiders was sold on Nov. 5 and 6, 1991. On those two days, Bonneville Director John T. ``Jack'' Dunlop sold 33,000 Bonneville Pacific shares for $35,124. On Nov. 6, Zions First National Bank sold nearly 365,000 shares owned by former Bonneville Pacific Chairman Robert L. Wood for $393,800.
The sale -- from stock held in Mr. Wood's family trust -- apparently was made to satisfy a loan defaulted on by another Utah company -- Northern Outfitters Inc. Mr. Wood had guaranteed a loan for the Orem firm owned by his Bonneville colleague Mr. Dunlop, according to Mr. Wood's attorney.
``Because they held the stock as security [for the loan to Northern Outfitters], Zions, without Mr. Wood's consent, sold the stock, effecting essentially a foreclosure on the collateral,'' maintained Mr. Wood's attorney, Richard Burbidge. ``Mr. Wood had no control over the sale . . . That's a decision Zions made. [Mr. Wood] didn't and wouldn't.''
Mr. Burbidge said the timing of the stock sale by Zions -- five business days before Portland General announced it was backing out of the Bonneville Pacific deal -- was coincidental.
Zions declined to throw any light on the situation. ``We do not make comments concerning our credit relationships with our borrowers,'' a spokesman said.
Mr. Dunlop, who earlier declined to comment on any aspect of the case, did not return telephone calls Monday.
The federal documents raise the question of whether the two top executives, as corporate insiders, suspected Portland General was preparing to pull its financial support of the beleaguered company. Bonneville Pacific, unable to support itself without help from the Pacific Northwest utility, filed for bankruptcy in December.
Bonneville Pacific's new president, Clark Mower, in March asked the FBI to investigate a variety of irregularities he discovered in the company's books.
Bankruptcy investigator Alan V. Funk's report repeatedly singled out five Bonneville Pacific principals as benefitting from a variety of corporate transactions. In addition to former chairman Wood and former director Dunlop, group members include Salt Lake City Mayor Deedee Corradini, a Bonneville Pacific founder; former director L. Wynn Johnson; and founder and former chairman Raymond L. Hixson.
Mr. Funk's report showed the sale of Wood family trust stock was made on Nov. 13 -- the day after Portland General's withdrawal. His report did list Mr. Dunlop's transactions on Nov. 5 and 6.
Portland General's interest in Bonneville was waning in late October and early November.
On Oct. 21, Portland General Controller Grieg L. Anderson wrote to Bonneville Pacific executives:
``We are surprised and saddened to send a letter like this, suggesting a concern about the value of some of Bonneville's assets.'' The letter suggested that some of the assets ``may be impaired and therefore should be written down.''
The letter pleaded with Bonneville Pacific executives to resolve the disparity and disclose the assets' values to the Securities and Exchange Commission, as required by law.
This issue was not resolved, according to Portland General spokesman Michael Tevlin.
Then, on Nov. 6, Portland General President Richard G. Reiten faxed another letter to Mr. Wood, saying he was ``disappointed to learn last night'' that Bonneville representatives had not discussed the devalued assets with their auditors -- Deloitte & Touche. ``Obviously, we believe it is important that Bonneville's public filings and public statements reflect the current financial picture of Bonneville,'' Mr. Reiten's letter said.
The following week, on Nov. 12, with still no resolution in sight, Portland General publicly announced it was pulling out of the deal. The stock price collapsed the same day.
© 2009 John Keahey