Several thousand employees at Progress Energy and Duke Energy will soon find out whether they have job security or whether the time has finally come to polish their resumes.
The employees have been in limbo for more than a year as theyve waited to find out whether Raleigh-based Progress and Charlotte-based Duke will win regulatory approval for their proposed corporate merger.
The anxiety at both companies is reaching a climax in anticipation of a federal ruling on the merger, expected as early as next month. If approved by the Federal Energy Regulatory Commission, the ruling would trigger a corporate consolidation eliminating 1,860 positions, most of them in Raleigh, where the Progress headquarters would close.
As a reminder that big changes are imminent, Progress and Duke have resumed their integration planning. They had suspended those plans for more than three months this year in the wake of federal regulators rejection of earlier versions of the merger.
Theres no question theres been a lot of anxiety, said Mark Mulhern, Progresss chief financial officer, after the company reported quarterly earnings Thursday. This has caused a lot of turmoil.
Executives at both companies still predict the merger will win approval. But after two rejections by federal regulators last year, executives acknowledge their third try is not a sure thing.
If somebody tells you no three times, eventually you get it, that they dont want this deal done, Duke CEO Jim Rogers said after a shareholders meeting in Charlotte. (But) it depends on how they reject it. When I say three strikes and youre out, what Im really saying is, do we reach a point of total frustration and the realization we can never satisfy them?
Plans for both scenarios
The companies are preparing to operate under either outcome. In version one, the FERC approves the merger and utility executives proceed with interviewing thousands of employees to determine who gets to stay and who doesnt. This would be a continuation of a winnowing process begun last year, when several hundred executives and managers made the first round of cuts and their colleagues didnt.
In the alternate scenario, the federal agency rejects the merger for a third time and the companies walk away from their $26 billion deal. Duke and Progress will then attempt to proceed as if nothing had happened: They would welcome back into the family the hundreds of managers who didnt survive those early cuts.
They would also notify the 1,153 employees who opted for early retirement that the program is canceled and its back to work as usual.
People raised their hands and said theyre willing to go, Mulhern said, noting the complications. They effectively made life plans.
Progress is legally committed to vacating one of its two downtown towers whether the merger happens or not, clearing out to make room for the new tenant: software developer Red Hat.
Mulhern said if the merger bid fails, Progress will be able to accommodate all of its employees in Raleigh and in Cary, where the company leased 125,000 square feet in September. Toward that end, Progress is rehabbing the downtown office its keeping so it can squeeze in more employees.
Monopoly issue stalls deal
Executives had expected to complete their merger last December, but the Federal Energy Regulatory Commission twice rejected the deal on monopoly concerns. The companies filed their third version of the merger plan last month and asked for a federal ruling by June 8. They hope for quick approval afterwards from state regulators so they can close the merger by July 1.
During the prolonged interim, employees in legal, finance and other corporate departments have reported for work unsure whether they will have a job in the combined company. The new headquarters will be in Charlotte, forcing many Progress employees who keep their jobs to relocate 150 miles southwest.
Some are looking for other opportunities, and several hundred have already found other jobs rather than take their chances in a corporate reorganization.
Mulhern, for example, would relocate to Charlotte as part of the merger but said he would keep his primary residence in Raleigh so that his daughter, now a sophomore at Enloe High School, could complete her studies here instead of starting a new school.
He said others are facing similar dilemmas. The thing that comes home to me is July 1 is not very far away.
Charlotte Observer reporter Bruce Henderson contributed.