St. Petersburg Times
December 01, 2000
HOLIDAY, Fla. — A financially troubled water company has acquired the company that runs Port Richey's utilities department.
Azurix North America, a Houston-based water utility, said Thursday that it acquired H20 Utility Services Inc. of Holiday for an undisclosed price. H20's 70 employees will not lose their jobs as a result of the acquisition, according to a Azurix spokesman Mark Hudson. None of the services that H20 provides on its 93 contracts will be affected by the acquisition, Hudson added.
H20 president Gary Deremer, who also serves as the city of Port Richey's utilities consultant/director, will maintain his position with H20, Hudson said.
Deremer did not return calls seeking comment.
Port Richey City Manager Vince Lupo said that he did not think the acquisition would affect the city's water service.
"The only thing that concerns me is that the service we have been provided so far by H20 continues," Lupo said. "If it deteriorates, we would move to replace them (H20), even given Deremer's position."
Azurix also announced that it acquired E. Carver Pumping Inc., a Jacksonville-based company that hauls and processes treated sludge from wastewater utilities.
The acquisitions come at a time when Azurix's future is uncertain.
Energy giant Enron Corp. started Azurix in 1998 and retains a 67-percent stake in the company. Azurix embarked on an acquisition strategy based on the expectation that utilities worldwide would be privatized. By late 1999, when some of those privatizations failed to materialize, Azurix laid off 206 employees, and started to restructure, according to the company's quarterly filing with the Securities and Exchange Commission.
Azurix recorded a $3.6-million loss on revenues of $183.7-million in the quarter ending Sept. 30, 2000, compared with net income of $18.8-million on revenues of $170.5-million in the same quarter of 1999. Shares of Azurix have fallen as low as $3.38 from its initial public offering price of $19 and closed at $6 in trading Thursday. Azurix's chief executive officer, Rebecca Mark, resigned in August. The company promoted John Garrison to its top spot.
Enron has made Azurix an offer to finance a buyout of the company by minority shareholders.
"Azurix is a very troubled company," said Tim Winter, an analyst who follows the company for A.G. Edwards in St. Louis. "It's not clear why they're out buying things when they should be in a mode to sell themselves."
Azurix's problems are rooted in its business strategy, Winter added. It overpaid for some acquisitions and got into some contracts and ventures such as e-commerce that won't be profitable for years.
"I don't know how stable the companies (H20 and E. Carver) are, but Azurix is not a stable company," Winter said.
Hudson of Azurix said that if the minority buyout goes through, "there won't be any negative impact on H20.
"Our purpose for buying both companies is to grow them," he added.
H20, a seven-year-old company, operates, maintains and manages water and wastewater facilities throughout Florida. H20 manages and maintains Port Richey's water utilities, which serve close to 4,000 people.
By virtue of Deremer's positions with the city and H20, Deremer assigns the city's work to his company and its employees. H20 then designs, supervises and inspects the jobs and bills the city for the work his company performs.
- Jennifer Goldblatt covers business in Pasco County. She can be reached in west Pasco at 869-6229 or (800) 333-7505, ext. 6229. Her e-mail address is mailto:[email protected].
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