'1

Worked On. ..
Electr1CltY Maine was in the process of

being SOld.

 

Before 
efore we talked about the marina, 5

we had 
sold ElectriCity Maine, and that was a big

 

 

process. 


Whom did you sell it to? 
We sold it to a publicly traded company out of Texas
called Spark, and at that time, we had an operation in
Maine, New Hampshire, and Massachusetts. So they
bought Electricity Maine. i
Not Massachusetts or New Hampshire? Ji
They bought all three books of business. I refer to it
as Electricity Maine, but there was also ENH Power,
which was in New Hampshire, and Provider Power Mass,
which was in Massachusetts.

So did Spark buy all of your retail electricity

 

 

business?

 

Spark bought, yes, and they had kept Kevin and I on for

a one?year consulting agreement after the sale. So we

had that in play as well as our other various

businesses that were still operating.

And was there an earn?out under your agreement with

Spark?
Yes The way Spark had structured the deal, there was
and then there was a certain amount that i





a certain bas

 

 

 

 

 

55
1 be earned, and they built a grid and it was based
2 on the price per kilowatt and the number of customers
3 that were retained or grown over a certain period of
4 time, and if you hit milestones, they would look to pay
5 more. It was it was a format I guess that they use
6 quite regularly.
7 SO so many customers at this price, so many customers
8 at that price?
9 A So many customers with a certain profit margin.
10 Okay. And did you and Kevin talk about those
11 milestones?
12 A Yeah. We talked about the milestones. It was a little
13 bit discouraging because, you know, to get anywhere is
14 really with it, you had to sell a lot of electricity at

a pretty strong price compared to what the current

market was to a fair number of customers using, you
know, a method, which for us was mostly direct mail
that yielded very few results because the thing about
the electricity business and the customers is we
already had such a good percentage of customers that
mathematically, there are only so many customers to
get. So once we have so many trying to get more is
incrementally more difficult because it's not a growing
pool. It's fixed. So we had at one point, one out of

every four homes in Maine. Well, getting anything more

a-

973)406?2250 I <2th I Mamet

 

 

 

 

 



56

than that was very expensive and very difficult.

Spark had given us a budget to go out and market and
try to get those new incremental customers, but it was
kind of like banging your head against the wall because
getting those extra customers -- for example, we do a
mailing and expect to get a two percent return, two or
three percent return, historically. That's a return on
what a direct mail campaign would be, and the returns
were dropping to much below that. And then we were
trying to get a certain margin, which was fixed at an
electricity rate that had been set during times of
price spikes in our polar vortex. I don't if you
remember that word? And prices were coming down, so it
was more difficult to maintain a margin because the new
market or the current market had lower rates. So you
were trying to get a diminishing pool with diminishing
results in a method we had used to get incremental
customers in a price that -- a product that was priced
pretty high.

So we had talked even about -- Kevin and I talked, and
Kevin had gone back, I think to Nathan (phonetic)
because Spark even with an idea that we had that why
would we spend a million of their dollars in marketing

to try to get these incremental customers in a futile

effort, when maybe instead of spending a million


B-



 

 

 

ng-w 

 

?up .

 

 

57

dollars on marketing, they -- we split it, and they
give us half a million, and they can keep the other
half because this isn't going to work, but Nathan said
that it was the way he had proposed it to his board and
gotten it accepted and he couldn't change itlive with what we had.

And what were yours and Kevin's respective involvement
in pursing that (indiscernible)?

Well, we were both 

MR. ROSENTHAL: Object, Your Honor. I'm not sure what

  
   

-he relevance is.

THE COURT: Mr. Ruprecht?

MR. RUPRECHT: Your Honor, Mr. Dean, I expect is going to
ome in and say that Mr. Clavet was not at all involved in the
.usiness and that 

THE COURT: In the Electricity Maine buyout or just any
of the businesses?

MR. RUPRECHT: In their overall business.
THE COURT: Okay. I'll allow it briefly.
BY MR. RUPRECHT:
So briefly.
A Briefly, Kevin was managing some of the day?to-day
mailing and campaign to try to mail to folks to get
customers. I was working with Nathan, the president of

Spark, to try to get him into a national contract with





mammal58

the to see if we could get a big bunch of

customers all at once, which was kind of the onlY

 

chance I thought we had to get any volume of anY 5123'
The sale of the hotels, when was that completed?

Oh, I forget, but I'm going to think it was '14, '15,
maybe '15.

Okay, And so would events that happened in '15, when

..-- - . '1f- 
wand.)- (Misha .mm-uuwmu?m?

would those be? When would you pay taxes on those, you

 

and Kevin?

Well, we normally get our taxes done by late. You
know, we have so many returns. There -- there there
are a lot. We don't generally get anything done until
October.

So October of '16 would be the taxes for 2015?

Right.

Okay. And were any tax issues that needed to be worked

 

out regarding the sale of those hotels?

There were taxes that we're always keeping in mind.
There was a tax bill that would be coming that we would
prepare for and we would be thinking about tax strategy
throughout the year.

And overall from the sale of Spark, what was that
effect on you and Kevin financially?

It was good. I mean, we had you know, we had sold

the hotels. We had some cash. We had sold a lot of

a-