PUBLIC UTILITIES: Myers Deal

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One young man who believes in Horace Greeley's famed maxim is balding Banker Guy C. Myers of No. 35 Wall Street. For several years Mr. Myers has been going West with profit. Last week he turned a neat profit in Nebraska.

A seasoned promoter who helped put together Montana Power Co., Banker Myers was discovered by James Delmage Ross when that alert public utilitarian was trying to raise money for the municipal system he managed in Seattle. After Mr. Ross was turned down by PWA and cold-shouldered by bigtime financiers, Mr. Myers raised $22,500,000 for him. When Mr. Ross went on to SEC, and Los Angeles started looking around for $47,000,000 for a municipal utility system, he put Mr. Myers in the way of that job. Few months before leaving SEC to administer Washington's Bonneville Project, Mr. Ross heard of the tribulations of Nebraska's "little TVA" and recommended Mr. Myers.

Nebraska's "little TVA," a combination of three hydroelectric projects financed by $60,000,000 of PWA funds, encountered, besides charges of bad engineering, much the same sort of opposition as big TVA— suits, injunctions, bitter antagonism from already established power companies. As in the case of big TVA it finally boiled down to how the PWA "hydros" could market their power. The private companies were not interested in pulling the chestnuts out of the fire. Little TVA then considered building its own distributing system, which probably would mean ruin for all concerned. Then Guy Myers entered.

In May 1937 Entrepreneur Myers began promoting a deal: let little TVA buy Nebraska's private utility systems outright, finance the purchase by a bond issue of about $90,000,000. Banker Myers tied up with young Paul H. Nitze, a former officer of Dillon, Read & Co., arranged a nationwide syndicate to market the bonds. The first Nebraska utility man Mr. Myers interviewed practically threw him out. But back in Wall Street the holding-company financiers who run utilitydom were seeing the handwriting on the wall in Wendell Willkie's losing fight against big TVA. A few judicious telephone calls soon smoothed Mr. Myers' path.

Last week, having labored to level local obstacles and brought all the utilities except big Nebraska Power Co. into line, Banker Myers rejoiced at a milestone which seemed to assure complete success for the "Myers Deal." The Federal Power Commission approved the sale to his clients of the Nebraska part of Iowa-Nebraska Light & Power Co., second biggest in the State, for $20,195,991—a compromise figure considerably higher than FPC's cost valuation but slightly under Iowa-Nebraska's original cost valuation.

Before approving the transaction the FPCommissioners asked Promoter Myers some questions. He said his commission was 24½% or $504,899 on the deal. After a split with Partner Nitze, and expenses, he expected to net between $70,000 and $80,000. On this basis his commission on the entire $90,000,000 purchase would be $2,250,000—which would mean a tidy net for Mr. Myers, even after deducting expenses, taxes and Mr. Nitze's cut.