Progress Energy and Duke Energy have agreed to settle lawsuits filed by shareholders who allege the planned merger between the two companies shortchanges investors.
The settlement would end nine lawsuits filed in Wake County Superior Court and subsequently consolidated in the N.C. Business Court in Raleigh. The settlement requires approval from the business court.
As part of the settlement, two power companies would pay up to $550,000 to lawyers who represent the shareholders, with the final amount to be determined by the business court.
Raleigh-based Progress and Charlotte-based Duke also agreed to make additional public disclosures to provide shareholders more information about the proposed merger. The corporate union, announced in January, would create the nation's biggest electric utility with 7.1 million customers in six states.
Shareholders for both companies are scheduled to vote on the merger Aug. 23. The merger also requires approval from state and federal agencies, including the N.C. Utilities Commission.
Lawyers for the disgruntled shareholders last month asked the business court to postpone the Aug. 23 shareholder vote. If the court approves the settlement, the request to delay the vote would become moot.
The shareholder lawsuits accuse the two North Carolina utilities of breach of fiduciary duty and self-dealing by company executives. Translation: Duke and Progress execs are enriching themselves at the expense of shareholders, the suits allege.
The companies have denied those allegations from day one. They agreed to settle the suit to reduce the risk and expense of litigation, said Progress spokesman Mike Hughes.
Another translation: The utilities regard the class actions as nuisance suits and are paying the plaintiffs lawyers to go away.
As part of their settlement proposal, the two companies filed their additional disclosures Friday at the Securities and Exchange Commission.
The disclosures say that Progress and Duke decided to undertake a merger because chances were not as good of getting another merger approved with another suitor identified only as Company A.
A driving force behind the Duke-Progress merger is "new nuclear construction." The two companies say that state regulators here would be more likely to "support participation in several potential nuclear sites."
The filing also says that Progress's board considered the risks associated with Duke's controversial Edwardsport coal-burning plant in Indiana. That plant, still under construction, has experienced cost overruns that Duke hopes to recover through rate increases, but the chance of success is not certain.
The proposed settlement would end all pending shareholder suits but one filed in federal court. That suit, however, is not expected to delay of the Aug. 23 shareholder vote.