FirstEnergy officials updated investors Thursday on the ongoing investigation into the fallout from House Bill 6 during its fourth quarter earnings call while also disclosing billionaire investor Carl Icahn is looking to acquire a stake in the company.

Officials said it disclosed in its most recent filing with the Securities and Exchange Commission that it received a letter Feb. 16 from Florida-based Icahn Capital informing them that Icahn is making a filing with the Federal Trade Commission of its intention to acquire voting securities of FirstEnergy in “an amount exceeding $184 million but less than $920 million,” depending on market conditions. The company’s market capitalization is almost 18.5 billion.

FirstEnergy said it does not know whether Icahn or his associates have already acquired FirstEnergy stock, and it did not know his intentions regarding the company. The letter was the only contact so far with Icahn, officials said.

Icahn earned a reputation in the 1980s as a “corporate raider,” known for his hostile takeover and asset stripping of airline TWA. Icahn briefly served as an economic adviser in the Trump administration in 2017.

FirstEnergy’s share price jumped 7.2% to $34.25 by the end of trading on Thursday on the news involving Icahn, climbing as high as $35.36 per share after noon. Nearly 19 million shares traded hands, about three times as many on a typical day in the last year. The share price closed Friday at $34.03 on a trading volume of 5.3 million shares.

“We thought it was noteworthy, and that’s why we’re just being open and transparent about it,” acting CEO and FirstEnergy President Steven Strah said. “We just don’t know enough at this point.”

An electric utilities industry analyst at KeyBanc in Cleveland said in a note to clients that Icahn was likely attracted because FirstEnergy is undervalued.

“We believe that there are multiple avenues for [FirstEnergy] to close its valuation gap where an activist could have an impact – up to and including a sale of the company,” said KeyBanc analyst Sophie Karp, who added that Icahn’s interest could result in a sale of the utility or of non-core assets.

HB 6 Investigation

Thursday’s earnings call was the first held since five FirstEnergy officials were fired in the wake of the fallout surrounding the alleged $61 million bribery scheme that resulted in the passage of HB 6 to rescue struggling nuclear plants in Ohio at a cost to the public of more than $1 billion. The scandal also claimed Ohio Public Utilities Commission Chair Sam Randazzo, who resigned after the FBI raided his home. Randazzo has not been charged in the Justice Department investigation of the scheme. (See Chief Ethics, Legal Officers ‘Separate’ from FirstEnergy and PUCO Chair Randazzo Resigns.)

Neither FirstEnergy nor its former executives have been charged.

But on Friday, the Justice Department’s Southern District of Ohio announced that Generation Now, a nonprofit social welfare agency at the center of the purported racketeering scheme created to conceal more than $60 million in corporate money to former Ohio House Speaker Larry Householder, pleaded guilty to one count of racketeering conspiracy.

Householder and his longtime political strategist Jeffrey Longstreth signed the guilty plea on behalf of Generation Now. Longstreth pleaded guilty in October to an identical individual charge and faces up to 20 years in prison. Householder has pleaded not guilty and is awaiting trial. Stripped of his title as speaker, Householder continues to serve as a state representative. Strah, who took over for former CEO Charles Jones after he was fired in late October, said FirstEnergy is “deeply committed” to creating a culture in the company where its leaders “encourage open and transparent communications with all of our stakeholders.” (See FirstEnergy Fires Jones over Bribe Probe.)

“We are dedicated to re-emphasizing that every employee at every level has the responsibility to consistently act in accordance with our core values and behaviors and to speak up if they see inappropriate behavior anywhere in the organization,” Strah said. “At the same time, we’re taking decisive actions to rebuild our reputation and brand and focus on the future.”

Strah said FirstEnergy is continuing to cooperate with the Department of Justice and SEC as the investigation into the alleged bribery scheme continues.

Christopher Pappas, FirstEnergy executive director and independent board member, said the company’s internal investigation has not resulted in any new material to disclose. Pappas said investigators have found certain transactions, including vendor services, that were either improperly classified, misallocated to utility or transmission companies or lacked proper supporting documentation.

The transactions, Pappas said, resulted in amounts collected from customers that were “immaterial” to FirstEnergy and will work with regulatory agencies “to address these amounts.” The exact amounts were not disclosed.

“Our internal investigation continues to be thorough and robust and includes assistance from external law firms who are supported by several other consultants,” Pappas said.

FirstEnergy announced it has stopped making political contributions and will no longer make contributions to political nonprofit 501 (c) (4) organizations.

The company on Thursday also named John Somerhalder, a former executive with CenterPoint Energy in Texas, as vice chairman of FirstEnergy. Somerhalder will also serve as executive director and a member of FirstEnergy’s executive leadership team in a transitional capacity and is tasked with improving the company’s governance and rebuilding relationships with regulators.

Clean Energy Investment

FirstEnergy reaffirmed its commitment to modernizing its grid and becoming carbon neutral by 2050. Last year, the company invested $3 billion in its distribution and transmission system and grid modernization. FirstEnergy continues to operate about 3,100 MW of coal-fired power plants in West Virginia, according to its most recent 10K filing. The company has committed to owning 50 MW of solar generation in West Virginia by 2030 and has pledged to look for other ways to reduce coal burning in the state. “We believe robust long-term organic growth opportunities are well aligned with the focus on electrification and the critical role the grid plays in supporting the transition to a carbon neutral economy,” Strah said.

The company recently announced a $19.6 million project to construct a new transmission substation in Trumbull County, Ohio, to support the energy demands of the electric vehicle industry expanding in the region. The new transmission infrastructure will provide electric service to Ultium Cells — a 3 million-square-foot EV battery-cell manufacturing plant backed by General Motors and South Korea’s LG Chem.

In its strategic plan announced last month, FirstEnergy pledged to achieve carbon neutrality by 2050. It said all new light-duty and aerial trucks will be electric or hybrid vehicles beginning this year and 30% of the fleet will be electrified by 2030.

“This ambitious goal reflects our transformation to a regulated electric utility and our responsibility to help create a sustainable energy future,” Strah said.

Earnings

The company reported earnings of $1.1 billion ($1.99/share), on revenue of $10.8 billion for fiscal year 2020 and $242 million ($0.45/share) on revenue of $2.5 billion for its fourth quarter.

The year-end results were an improvement over 2019, when the company earned $908 million ($1.70/share) on revenue of $11 billion.

FirstEnergy CFO Jon Taylor said he expects a profit of $1.3 billion to $1.4 billion for the current 2021 fiscal year.

FERC Docket Closed

Also Friday, FERC terminated a docket it had opened to consider whether FirstEnergy Solutions, FE’s former merchant generation unit, could abrogate its contracts with Maryland Solar and the Ohio Valley Electric Corp. (OVEC). The commission said the proceeding was made moot after a U.S. bankruptcy court approved settlements FES’ successor, Energy Harbor, made with Maryland Solar and OVEC (EL20-35). (See Energy Harbor Settles with Solar Co. for $66M.)

John Funk contributed to this report.