Avista golden share gives holder veto power over voluntary bankruptcy

“Avista and the Golden Share” sounds like the beginning of a fairy tale, but a golden share actually is a financial term related to mergers and acquisitions.

A golden share gives the holder the ability to exercise veto power over certain business activities. The term crops up in documents related to Avista Corp.’s proposed sale to Hydro One Ltd., of Toronto.

If the Avista sale goes through, an outside firm would be designated as the holder of the golden share. That shareholder would have veto power over Hydro One’s ability to put Avista into a voluntary bankruptcy.

Casey Fielder, an Avista spokeswoman, said the golden share provision is designed to protect Avista from a voluntary bankruptcy when the bankruptcy isn’t in the best interests of Avista or its customers.

Designating a golden share “provides extra comfort to state regulators” that Avista’s ratepayers would be insulated from financial risks at Hydro One, Fielder said in an email.

Avista and Hydro One would work together to designate the golden shareholder.

The shareholder acts as an independent third party. No dividends are paid on the golden share and the holder doesn’t participate in shareholder activities other than a bankruptcy, Fielder said.