Mountain Water Company to be Sold to Algonquin Power and Utilities, Move Complicates Eminent Domain Lawsuit
Today, September 19, the Canadian company Algonquin Power and Utilities, announced that it had agreed to purchase Mountain Water Company from the Carlyle Group for $327 million.
Public Service Commissioner Tavis Kavulla, said he was unclear what implication the sale would have on the city of Missoula's lawsuit against Carlyle Group, but said the move certainly "adds another layer of complication." Still, official filings have not been made.
"We certainly expect that Algonquin or Mountain Water would make a filing to the Public Service Commission, asking for authority to sell or transfer this utility to Algonquin," Kavulla said. "The PSC asserted its authority in that respect last time, in 2011 when that utility was sold. We do expect a filing, but none has been made and I don't know when one will be made."
Many have noted that the original sale of Mountain Water to Carlyle Group included a right of first refusal for the City of Missoula if the Water Company was sold again, Kavulla says that that right won’t come into play in this sale.
"If Mountain Water Company were to be sold individually, separate from the two California companies, then the city of Missoula would have the right of first refusal. But in this case, the water companies are being sold as a whole."
Kavulla said that promises made by Carlyle Group when they bought Mountain Water, including statements that the system would not be promptly sold for a quick profit, will be taken into account during the sale to Algonquin power and utilities.
"Any process like this will include a thorough review of the record: of the previous sale and transfer. Any representations that were made that may, in light of this transaction, turn out to be misleading or untruthful... well, I know that's something I will take very seriously."
During the last sale in 2011, Kavulla was one of three commissioners that agreed to sell Mountain Water to Carlyle Group.
Below is the press release from Algonquin Power and Utilities about the sale, obtained via NBC Montana:
Algonquin Power & Utilities Corp. ("APUC") (TSX: AQN) today announced that Liberty Utilities, APUC's regulated utility business, has entered into an agreement with Western Water Holdings, a wholly-owned investment of Carlyle Infrastructure, to acquire the regulated water distribution utility Park Water Company ("Park Water"). Park Water owns and operates three regulated water utilities engaged in the production, treatment, storage, distribution, and sale of water in Southern California and Western Montana. The three utilities collectively serve approximately 74,000 customer connections and have more than 1,000 miles of distribution mains.
Total consideration for the utility purchase is expected to be approximately U.S. $327 million, which includes the assumption of approximately U.S. $77 million of existing long-term utility debt. The acquisition will maintain APUC's strategic business mix and further enhance its investment grade consolidated capital structure. The acquisition is expected to have net property, plant and equipment and other assets for rate making purposes at closing of U.S. $259 million.
"The acquisition of Park Water strategically expands our utility presence in California and marks our entry into the state of Montana," commented Ian Robertson, Chief Executive Officer of APUC. "The acquisition builds on our strong water utility expertise, provides continuing opportunity for organic growth, and increases the proportion of our earnings from long-term, stable utility assets. We look forward to bringing our caring, local and responsive business approach to the communities served by Park Water."
The following statement was issued by Carlyle Managing Director Robert Dove:
"We are delighted to have reached a signed agreement with Liberty, an experienced U.S.-regulated utility, to acquire Park Water and its subsidiaries. Liberty Utilities' water utility expertise, commitment to customer service and long term ownership approach will enable Park Water to continue to provide excellent service to its customers."