A newly reorganized SME board took the first steps this week to determine ownership and liens against its only asset — 470 acres of farmland in Cascade County.
The land was once part of larger package of property to be used to build the Highwood Generating Station, a 40-megawatt gas-fired plant ultimately built by its parent company, Southern Montana Electric Generation and Transmission Cooperative.
Southern filed for bankruptcy more than a year ago, in part because it borrowed about $85 million to build the Highwood plant and also because it was buying more power than it needed and had to sell excess electricity at a loss.
SME is a separate company from Southern Montana Electric Generation and Transmission Cooperative and is not in bankruptcy. SME is composed of Beartooth, Fergus, Mid-Yellowstone and Tongue River electric cooperatives, which also are members of Southern. Southern’s other members are Yellowstone Valley Electric Cooperative and the city of Great Falls.
Confusion over the two companies and ownership of the land may have led to about $90 million in liens being filed in Cascade County against SME’s parcel, board members said during a meeting in Billings on Tuesday.
The Highwood plant was built on adjacent property by Southern, said SME President Dave Dover, from Fergus. SME leases its property to local landowners.
SME’s one known obligation is a $600,000 loan from First Interstate Bank, Dover said. The loan was a line of credit, which has been maxed out, and was borrowed by the previous SME board, he said.
SME has about $9,000 and no staff, and it has not hired an attorney. In a reorganization in October, SME doubled the size of its board and named two representatives from each of its members.
The board agreed to get a land ownership report to clear up ownership questions and to begin sorting out what, if any, liabilities it may have related to Southern’s bankruptcy. “This is a first step,” Dover said.
SME also agreed to follow a request by Beartooth to follow its by-laws, which include having financial audits, to follow standard business practices and to hold open meetings unless there is a particular issue where a closed session is needed.
The previous SME board closed its meetings to all but board members. The old board held separate and confidential meetings when it was building Highwood, then in 2010 transferred the project to Southern, which financed the construction. SME’s previous practices were long criticized by Yellowstone Valley and Great Falls, with Beartooth also questioning its affairs.