Shivering with anticipation

Like many of you, the Nose has been trying to do his bit for the economy, purchasing gifts for Hanukkah, Kwanzaa and Xmas. And like many of you, the Nose has been losing a little bit of sleep, thinking about that judgment day in January when his Visa bill arrives.

"Cash is King," Daddy used to tell the Nose when he was just a wee little beak--a lesson particularly true in an economy softer than a baby's rump.

For that reason, the Nose has also been losing some Zs over the proposed purchase of Portland General Electric by Northwest Natural Gas.

The announcement that Northwest would buy the much larger PGE for just under $3 billion was made back in October. But it is only recently that the Nose has begun to fret over what that would mean for the company that heats his home and warms his bath water. One reason has been the subsequent collapse of PGE's parent company, Enron. The other was the announcement last week that Oregon now has the highest unemployment rate in the entire nation, which ain't exactly a great time to be saddled with huge debt.

Yet that is exactly what Northwest Natural will be taking on: $2.6 billion in debt. Given that the gas company is much smaller than PGE (it has half the employees, two-thirds the customers and less than half the revenue of the company it wants to buy) it raises the same question that the Nose asked himself as he was buying his sweetie that hand-knit Norwegian sweater that set him back a week's salary: Will he actually be able to pay for the damn thing when the bill comes due?

Here's the rub: For a company this small to buy a company this big with this much debt, a number of things will have to happen, many of which seem doubtful. They are:

1) The gas company saves big bucks from the efficiencies of the merger. (This will happen, but not in a large enough way to satisfy the debt. For one thing, there are no duplications in the physical infrastructure, since gas comes through pipes and electricity runs through wires.)

2) The new company grows itself out of the debt by selling oodles and oodles more gas and electricity. (Even in a good economy, this is questionable.)

3) The new company sells more stock to raise cash to pay off debt. (Betting on the stock market right now might not be the best idea.)

4) The new company tries to raise the Nose's gas and electricity bill to pay down the debt.

You know, buying that sweater may be the best idea of all.

'TIS THE SEASON
AN APPEAL TO READERS

Get real. You're never going to fix up that shattered Schwinn in the garage. But The Nose knows who will. Since 1994, CCC has been teaching low-income kids how to work on bikes and donating rigs to kids who need them. In the process it promotes self-reliance, sets up mentorships and creates a sense of belonging. CCC needs bikes for its Holiday Bike Drive--mechanics are ready and waiting for your wrecked Raleigh. Take it to CCC or any of three Bike Gallery locations (5329 NE Sandy Blvd., 281-9800; 1001 SW Salmon St., 222-3821; 200 B Ave., Lake Oswego, 636-1600). If your attic is bare, CCC could also use your tax-deductible cash.

Community Cycling Center
1700 NE Alberta, 288-8864
Portland, OR 97209
www.communitycyclingcenter.org

Last week: The First Octave fund supports music programs at Portland public schools
to replace dwindling government funding.
Short on cash? They also need volunteers.
Call 234-5404 for more information.

NEXT WEEK: WALLACE MEDICAL CONCERN

WWeek 2015