Constellation Energy Group boss Mayo A. Shattuck III knew he had a crisis on his hands in early September.
Financial markets were churning. Another huge Wall Street bank was near failure. And credit-rating agencies trained a withering eye on Constellation and other companies that borrowed big money and chanced it on derivatives and futures.
Still, Shattuck and other Constellation directors finished an emergency conference call on Sept. 12, with the idea that they had time, according to company documents released late last week. They were trying to raise cash as a shield against the financial storm. Executives said that credit-rating agency Moody's had marked October as the earliest it might change Constellation's rating.
How wrong they were.
A 174-page proxy statement filed late Friday with the Securities and Exchange Commission provides the first behind-the-scenes details of the unfolding financial crisis Constellation faced. It also outlined how its lawyers were preparing bankruptcy papers before Constellation revealed its troubles and how the Baltimore company was forced to sell at a bargain price that Shattuck at first resisted.
The filings and interviews with executives highlight the intense negotiations leading up to the shotgun sale agreement and a frenzied, caffeinated week in which no fewer than five companies expressed interest in buying all or pieces of Constellation.
At one point during that third week in September, four suitors had representatives at Constellation headquarters, with Constellation executives shuttling between trying to make a deal to survive. Within a week Shattuck was forced to sell Constellation and subsidiary Baltimore Gas and Electric Co. to the shrewd Warren E. Buffett.
The price he got for one of Baltimore's two Fortune 500 employers was $26.50 a share, a fourth of its market value at the beginning of the year.
"The events of the last week obviously were dramatic," chief executive Shattuck told analysts three days after he signed the sale agreement. "The combination of several issues placed the company in an extremely difficult situation."
Shattuck, an investment-banking whiz with deal-making in his blood, didn't do much negotiating. Buffett's first and unsolicited offer turned out to be his final offer.
