In the News: Recent Developments

November 9, 2000

Saber Partners Targets Muni, Corporate Sides of Power Industry

By Darrell Preston

DALLAS – Long-time Wall Street investment banker Joseph S. Fichera is seeking to combine his experience in both the municipal and corporate sides of the fixed-income business into Saber Partners, a new boutique firm he formed this fall that will focus on electric, power, and other energy issues.

Fichera, who left Prudential Securities Inc. late this summer before the firm announced its plans in October to get out of the institutional fixed-income business, said that his firm, which is located on Wall Street, intends to focus on mergers and acquisitions, as well as financing structures in the energy and power industries. The firm’s current clients include the Public Utility Commission in Texas, Exxon-Mobil Corp., which has a large number of municipal bond issues outstanding, and the Vermont Independent Power Producers Association.

Saber’s prospective clientele will include corporations that have to deal with municipal debt, as well as municipal issuers that must restructure their debt, and in some cases get out from under tax-exempt debt, to compete in deregulated markets. According to Fichera, electric utility deregulation is expected to cause some major realignments among power producers and investment banks.

“With firms, such as Prudential, dropping out of the municipal bond business, who is going to worry about the power sector?” Fichera asked. “We have put together a firm with individuals with a depth of knowledge about all aspects of utilities and finance.”

Along with developing deregulation strategies, Fichera also intends for the company to provide analysis and advice on financial strategy, acquisition strategies, evaluating competitors, and reviewing investment banking proposals.

To create the firm, Fichera has pulled together a blend of investment banking, energy, and public sector expertise, as well as legal and corporate management professionals from around the country. Besides Fichera’s experience in handling public power issues at Prudential, where he was a managing director from 1997 until late August, he also has worked at Bear, Stearns & Co. and Smith Barney, the predecessor to Salomon Smith Barney Inc. Fichera is a senior managing director and the chief executive officer of the new firm.

Other partners in the firm include Kevin Stacey, senior managing director, a lawyer with an extensive background serving as underwriter’s counsel on municipal and corporate financings; William B. Moore, a managing director who is the former Chief Financial Officer of Western Resources, the parent of Kansas Gas and Electric and Kansas Power & Light Companies; and Paul R. Sutherland, a managing director who also has extensive utility finance experience. Fichera has worked with these individuals on various deals since the 1980s.

The firm also has an advisory board that includes the four partners and, as of this week, Alan Blinder, former vice chairman of the Federal Reserve and now a professor of economics at Princeton University.

Fichera said his goal in forming the company was to find a market amongst the companies that have been lost in the power industry reshuffling spurred by deregulation.

“We felt that this was a niche that was not being addressed,” Fichera said. “The muni sector needs help in dealing with deregulation, and the corporate sector needs help understanding the muni sector. It’s clear in terms of deregulation that both sides don’t understand each other. We want to be a bridge between the public and private sectors.”

One of the firm’s first clients is the Texas Public Utility Commission, which hired Prudential to be the state’s financial adviser on stranded cost bond deals undertaken as part of deregulation in Texas. When Fichera left Prudential, he and the firm agreed to split the job and become co-financial advisers. Under the contract, Saber and Prudential are in charge of ensuring that stranded cost deals are structured to protect ratepayers, who would ultimately repay stranded cost debt.

Saber has also added Exxon-Mobil to its client list and will evaluate some $600 million of conduit municipal debt issued around the country on behalf of the company. In the wake of the merger between Exxon Corp. and Mobil Corp. last year, the combined company is reviewing all of its outstanding debt to see where it can save money.

Brian Maher, assistant treasurer at Exxon-Mobil who worked with Fichera on previous deals, said the oil giant hired Fichera’s firm because of his experience.

“We have used him on our work for a long time,” Maher said. “His attention to detail and state-of-the-art skills have helped us in many ways over the years. We find that Joe is a creative banker with a lot of expertise in corporate finance.”

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