City of Indianapolis to buy NiSource water assets for $522.5 million
The City of Indianapolis and NiSource Inc. announced the city intends to buy the assets of the Indianapolis Water Company and other assets of NiSource's IWC Resources (IWCR) Corporation and its subsidiaries for $522.5 million.
INDIANAPOLIS, and MERRILLVILLE, Ind., July 18, 2001 — The City of Indianapolis and NiSource Inc. announced today that they have signed a letter of intent for the City to buy the assets of the Indianapolis Water Company and other assets of NiSource's IWC Resources (IWCR) Corporation and its subsidiaries for $522.5 million, which includes $132.4 million in IWCR debt.
In the transaction, NiSource will retain $80 million of long-term Indianapolis Water Company debt.
"We are pleased to come to this bipartisan resolution which the City believes will maintain low, reasonable rates, and local control and ownership over this most precious resource," Mayor Bart Peterson said. "Without using taxpayer dollars, we are confident that public ownership of the Indianapolis Water Company will benefit Indianapolis and central Indiana customers for years to come."
Mayor Peterson was joined at the announcement by City-County Council President Dr. Beurt SerVaas.
"The combination of low-cost municipal ownership, with professional third- party management of the water company, will be a positive development for ratepayers and businesses in our community," Mayor Peterson and President SerVaas said. "Local taxpayers and rate payers alike will benefit because public ownership will allow for very low-cost interest rates and the absence of any need to pay federal or state taxes, while still allowing the payment of equivalent local property taxes."
NiSource Chairman, President and Chief Executive Officer Gary L. Neale said, "We believe the City of Indianapolis will maintain IWCR's commitment to superior customer service and reasonable rates. This transaction will enable NiSource to better focus on our core natural gas and electric businesses and reduce debt following our merger last year with Columbia Energy Group."
NiSource was given three years to sell its water assets as part of the order by the U.S. Securities and Exchange Commission approving the NiSource- Columbia merger, which was completed Nov. 1, 2000. The Public Utility Holding Company Act of 1935 requires utility holding companies to divest operations not integral to their primary operations.
NiSource and the City have begun negotiating a definitive agreement. Closing of the sale will be subject to various conditions, including:
* receipt of all necessary consents, including approval by the Indiana
Utility Regulatory Commission; and
* the ability of the City to finance the transaction using investment-
grade tax-free municipal bonds on terms that are reasonably satisfactory
to the City.
The City has committed to offering IWCR employees comparable employment following completion of the sale and will honor all collective bargaining agreements.
Mayor Peterson and Dr. SerVaas added that the publicly-owned water company will continue to pay the same amount of money, in the form of a payment in lieu of taxes, that IWC pays to local entities in Marion County and other counties that receive property tax revenues. This way, the City and local schools will not lose the revenue that helps fund so many vital community neighborhood and educational functions.
They also said the city would hire experienced professional managers to operate the water company efficiently, just as former Mayor Stephen Goldsmith did with the city's wastewater treatment facilities.
NiSource Inc. (NYSE: NI) is a holding company with headquarters in Merrillville, Ind., whose operating companies engage in the exploration and production, transmission, storage and distribution of natural gas, as well as electric generation, transmission and distribution. Its operating companies provide service to 3.6 million customers located within the high-demand energy corridor that stretches from the Gulf of Mexico through the Midwest to New England. Information about NiSource and its subsidiaries is available via the Internet at www.nisource.com .