Advisors have been selected to aid in possible PGW sale
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Advisors have been selected to aid in possible PGW sale
Check out the press release below:
Philadelphia, August 17, 2012 – The City of Philadelphia (City) and the Philadelphia Gas Works (PGW) today announced the selection of a team of advisors that will help guide the City and PGW through a process that could lead to a sale of PGW in 18-24 months. The advisors were selected through a request for proposals (RFP) process that included senior administration officials from both the City and PGW as well as members of the Philadelphia Facilities Management Corporation (PFMC), which acts as the board of directors for PGW.
“The selection of these experts represents the first step in a process designed to elicit bids for the assets of PGW. Through this process we will determine if PGW customers and Philadelphia taxpayers would benefit from having PGW under private ownership,” said Mayor Michael A. Nutter. “The hiring of a team of top-flight professionals is a clear demonstration to all, including potential buyers, how committed the City and its utility are to exploring the sale of PGW.”
The City, PFMC and PGW have selected Lazard and M.R. Beal, both based in New York, to be their financial advisors.
"In our prior analysis, we found PGW to be a valuable asset for the right buyer and recommended further exploration of a sale," said George Bilicic, a Vice Chairman of Investment Banking at Lazard. "We will carefully advise on the potential sale of PGW to reach an outcome that is in the best interests of the City and the tax- and rate-paying citizens of Philadelphia."
Lazard’s first task will be to assist in writing a proposal to hire a broker. The broker will manage the sale process on behalf of the City and PGW, under supervision of the City, PGW and Lazard, and is expected to be selected before the end of the calendar year.
Lazard is an independent investment bank and one of the world's preeminent financial advisory firms. It has advised on numerous Power & Utility engagements globally over the past ten years and is the same organization that earlier this year completed an analysis that projected the City-owned utility has the potential to command a sales price that could exceed PGW’s liabilities and net the City a substantial profit.
M.R. Beal is a full-service investment banking firm. Its broad range of activities includes public finance, corporate debt and equity, fixed-income sales and trading, and financial advisory services. M.R. Beal has extensive experience advising municipal entities on their financing strategies and alternatives, including serving as bookrunning manager for more than $5.4 billion of refunding financings. M.R. Beal will advise on various financing aspects of the project, including PGW debt and swap defeasance considerations.
Philadelphia-headquartered Ballard Spahr, along with The Smyler Firm and Andre Dasent, will lead the legal effort as the City’s and PGW’s primary transaction advisors, including negotiating any agreement of sale on the city’s behalf. Ballard Spahr, a national law firm with more than 500 lawyers in 13 offices, is recognized for its work in mergers and acquisitions, energy law, project and public finance, and public-private infrastructure. Ballard Spahr advises some of the nation's largest power and utility companies, and is among a handful of firms with extensive experience representing state and local governments in the structuring of transactions involving the transfer of significant public assets. All of these areas will be critical to producing a successful outcome for the city, the utility, and the utility's ratepayers.
"We are pleased to have been selected for this very important assignment," said Mark Stewart, Chair of Ballard Spahr. "We have assembled a diverse team of attorneys who are among the best in their fields and who will bring uncommon focus, judgment, and knowledge to a complex transaction that offers enormous potential benefits for our city."
The Smyler Firm and Andre Dasent bring to the team experience representing public and private sector organizations in the areas of corporate and public finance, securities, labor and employment, mergers and acquisitions, complex commercial litigation and general liability defense.
Other firms selected for the legal advisory team include Manko Gold, based in Bala Cynwyd, for environmental law and Hangley Aronchick, based in Philadelphia, for litigation.
Additional legal advisors will be selected later from the pool of law firms that submitted proposals as part of this recent RFP process.
Other members of the PGW sale project team include:
- Kleinbard Bell & Brecker and Luminous Strategies, both located in Philadelphia - Government Relations.
- Ceisler Media and Cardenas Grant Communications, both from Philadelphia, – Communications.
“I look forward to working with the City and this team of seasoned professionals as we move forward in this process,” said Craig White, CEO of PGW.
The process of accepting bids from potential buyers, evaluating proposals and negotiating a final deal is expected to take more than a year, with a target date for any sales agreement of no later than the end of 2013. Closing of the transaction is expected to occur six to nine months following the signing of a definitive agreement.
Any sale would require approval from the Pennsylvania Public Utility Commission and Philadelphia City Council.
“After years of uneven performance and a period in which PGW’s financial situation almost had a disastrous effect on our City's fiscal future, the company is now on firm footing. This is the right time to determine whether our government should stay in the utility business or whether we can get an offer that makes sense for ratepayers and taxpayers,” Mayor Nutter said.
Founded in 1836, PGW is the nation’s largest municipally-owned gas utility. It serves approximately 500,000 residential, commercial and institutional customers throughout the City, and generated revenues of $766 million last year.