Pennsylvania American Water Announces Agreement to Acquire McKeesport Wastewater System
September 09 2016 - 10:19AM
Business Wire
Pennsylvania American Water, a subsidiary of American Water
(NYSE: AWK), announced today that it has signed an asset purchase
agreement to acquire the McKeesport wastewater system. The
agreement signing follows recent votes by the McKeesport City
Council and the Municipal Authority of the City of McKeesport
(MACM) in favor of Pennsylvania American Water purchasing the
wastewater assets.
“I firmly believe this transaction is being made in the best
interest of the wastewater customers served by this system now and
in the future,” Mayor Michael Cherepko said. “It became very clear
to this administration that the only way to save our community from
municipal bankruptcy, while continuing to offer the same level of
services our residents deserve, would be to transfer our local
sewage system to a regional or national utility company. This
transaction will balance the city’s current financial problems,
allow this administration to safeguard the city’s future and ensure
reliable wastewater service for 22, 000 customers.”
The total value of the transaction is approximately $156
million, subject to certain adjustments provided in the agreement.
The McKeesport wastewater system serves approximately 22,000
customers.
"Our company and our employees have been providing water service
in the Mon Valley for decades, and we are excited for the
opportunity to be the future wastewater provider to the residents
of McKeesport, Dravosburg, Duquesne and Port Vue,” said
Pennsylvania American Water President Kathy L. Pape. “We look
forward to closing the proposed acquisition and to providing
wastewater services that reflect our commitment to environmental
stewardship and quality customer service.”
Pennsylvania American Water and the City of McKeesport will seek
approval of the acquisition from the Pennsylvania Public Utility
Commission (PUC) and other necessary approvals, such as the
Pennsylvania Department of Environmental Protection. The MACM
initially issued a request for bids in June 2016 for the potential
acquisition of its wastewater system.
Pape said long-term rate stability is one of the most important
benefits for wastewater customers. Under the purchase agreement,
Pennsylvania American Water will not increase base wastewater rates
any earlier than one calendar year after the closing.
The company’s rates are regulated by the PUC and any future rate
changes would have to be reviewed and approved by the PUC.
Pennsylvania American Water offers its low-income wastewater
customers grants and discounted service to those who qualify
through its H2O Help to Others Program.
Pape said upon closing the proposed acquisition that “we look
forward to welcoming the MACM’s employees and customers to the
Pennsylvania American Water family.” The company currently expects
to close the transaction in the second half of 2017, pending
regulatory approvals and the satisfaction of other closing
conditions.
Pennsylvania American Water, a subsidiary of American Water, is
the largest investor-owned water utility in Pennsylvania, providing
high-quality and reliable water and/or wastewater services to
approximately 2.3 million people. Founded in 1886, American Water
is the largest publicly traded U.S. water and wastewater utility
company. Marking its 130th anniversary this year, the company
employs more than 6,700 dedicated professionals who provide
regulated and market-based drinking water, wastewater and other
related services to an estimated 15 million people in 47 states and
Ontario, Canada. More information can be found at
www.amwater.com.
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements in this press release are forward-looking
statements within the meaning of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements relate to, among other things, the execution of a
definitive purchase agreement; the completion of the proposed
acquisition; the ability to satisfy closing and other conditions
related to the proposed transaction, including obtaining regulatory
approvals; anticipated capital investments; and the ability to
achieve certain benefits, synergies and goals relating to the
transaction and the operations to be acquired. These statements are
based on the current expectations of management of Pennsylvania
American Water. There are a number of risks and uncertainties that
could cause actual results to differ materially from these
forward-looking statements, including with respect to (1) obtaining
the regulatory and other approvals required for the acquisition;
(2) satisfying other conditions to the closing of the acquisition;
(3) the occurrence of the benefits and synergies expected or
predicted to occur as a result of the acquisition; (4) unexpected
costs, liabilities or delays associated with the acquisition or the
integration of the acquired business; (5) regulatory, legislative,
local or municipal actions affecting the water and wastewater
industries, which could adversely affect Pennsylvania American
Water; and (6) other economic, business and other factors.
Forward-looking statements are not guarantees or assurances of
future performance or results, and Pennsylvania American Water and
its affiliates do not undertake any duty to update any
forward-looking statement.
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version on businesswire.com: http://www.businesswire.com/news/home/20160909005544/en/
Pennsylvania American WaterGary LobaughT: 724-873-8674M:
724-944-5148gary.lobaugh@amwater.com
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