A nonbinding agreement between Murfreesboro and Middle Tennessee Electric Membership Corp. will sell the city’s power department for $202 million in cash, but that’s not the entire picture, an official says.
The proposed price of $202 million will have to be approved by the Murfreesboro City Council, the MTEMC board of directors and the Tennessee Valley Authority, said City Manager Craig Tindall. The sale documents are being drafted and then will be presented to the city council, he said. No timeline has been set.
The $202 million will be paid to the city over a period of time, Tindall said. The city will keep certain MED assets such as the headquarters building and unencumbered cash (money not designated for certain costs). Taken together, that will push the value closer to $300 million, he said.
According to the term sheet, a nonbinding document setting the transaction’s terms, MTEMC will pay the $202 million over 15 years at an annual rate of 3.3 percent per annum. The term sheet ends on Dec. 31. It was signed by Tindall and MTEMC President and CEO Chris Jones on Aug. 14.
In addition to the $202 million, the city’s general fund will receive MED’s unencumbered cash on hand at closing as well as any prepaid expenses, minus MED’s outstanding debt at closing, the document says. MED shall not assume any new debt while the term sheet is in effect without MTEMC’s permission.
The city will keep a storage yard next to the office building the city is retaining, the term sheet says.
MED’s service territory will be represented on MTEMC’s board of directors through a new sub-district seat, which at first will be filled for at least two years through an appointment acceptable to both the city and MTEMC. Then, the seat will be filled through an open election process via MTEMC’s by-laws.
All MED employees will receive job offers, the term sheet says. The MED employee pension plan will continue to be held and run by the city on terms agreed upon by the city and MTEMC.
MTEMC will pay or indemnify the city for any tax consequence of the sale up to $100,000. MTEMC will pay its own transaction costs and pay the city up to $400,000 in costs including accounting, legal and financial advice.