BRADENTON, Fla. - The Florida Governmental Utility Authority on Friday lowered its offer to buy Florida Water Services Corp. and asked the water and sewer company's owner, Allete Inc., to reopen negotiations.
The FGUA's request came after a Feb. 14 deadline for closing a sale of the company's utility assets to the Florida Water Services Authority passed, opening the door for new third-party negotiations. The offer was revised to $416 million, excluding the Jacksonville and Clay County utilities, from $419 million, excluding only the Jacksonville utility.
The FGUA was negotiating the purchase of Florida Water Services last fall when the FWSA unexpectedly signed an exclusive contract to buy the system of about 150 water utilities in 27 counties with the sale of up to $550 million of bonds. Both the FGUA and the FWSA are government entities empowered by Florida law to issue debt to purchase utilities.
But the closing on the contract was delayed in December, and again on Feb. 14, due to numerous legal challenges filed by local communities and others to the planned sale. A temporary injunction blocking the sale is in force until a hearing on Feb. 28 to determine if a permanent injunction should be issued.
"FGUA officials are publicly saying we have an offer on the table that is supported by local governments," said Honey Rand, spokeswoman for the FGUA. "Obviously, what we see is an opportunity to reopen communications with Allete."
"For now, the next big thing on the calendar is Feb. 28th and that's what we're putting our efforts into," said Florida Water Services spokeswoman Lisa Lochridge, who said she was not aware of the FGUA's actions.
Allete chief financial officer James Vizanko could not be reached for comment.
Ed Gray, director of the FWSA, said attorneys for the authority and Florida Water Services believe they will be successful in preventing a permanent injunction so the sale to FWSA can move forward.
FWSA plans to pay about $420 million for all the utilities, but the figure is dependent on market conditions. An additional $72.5 million would be paid over six years.
The new FGUA agreement would provide for the entire purchase price to be paid at closing whereas the FWSA purchase would be paid out over six years and the final price paid would depend on the cost of financing. The sale agreement between Allete and FWSA stipulates a fixed debt service figure regardless of the interest rate when the bonds are sold, leaving the price dependent of the interest cost at closing. The proposed FWSA bond offering is expected to raise $420 million for the sale but that amount could change with market interest rates -- a risk Allete currently is taking in the agreement with FWSA.
FGUA also said all litigation against Florida Water Services would be dropped on the condition that all litigation by Florida Water Services against the local governments challenging the sale is terminated.
