SouthWest Water Company (NASDAQ:SWWC) today announced it has
entered into a definitive merger agreement to be acquired for
approximately $275 million in cash, or $11.00 per share, by
institutional investors advised by J.P. Morgan Asset Management and
Water Asset Management L.L.C. (the partnership).
The all-cash offer represents a 56% premium over SouthWest
Water’s closing share price on March 2, 2010 and a premium of 71%
over the average 30-day closing price ended March 2, 2010. After
taking into account SouthWest Water’s outstanding debt the
transaction represents a total enterprise value of approximately
$427 million.
The Board of Directors of SouthWest Water and the members of the
partnership unanimously approved the agreement, which is subject to
customary closing conditions, including approval of SouthWest
Water's shareholders and various regulatory agencies.
“I am excited about the opportunity that this transaction
presents for our customers, employees and the communities we serve,
as well as the value it provides to our shareholders," said Mark
Swatek, president and chief executive officer of SouthWest Water.
"The partnership is extremely committed to our industry and its
infrastructure needs, as well as the stability of the company’s
operations, quality customer service and community involvement. We
are confident that this transaction will facilitate SouthWest
Water’s access to long-term capital and enhances our ability to
invest in systems to the benefit of the customers and communities
we serve.”
Andrew Walters, vice president of J.P. Morgan Asset Management’s
Infrastructure Investments Group, said, "We believe that SouthWest
Water is an excellent, long-term investment for the partnership. We
look forward to working with SouthWest Water’s experienced
management and talented workforce to deliver cost effective
customer service to a growing customer base over time. A seamless
transition and continuity are high priorities for us and we look
forward to continuing to work with management and employees in the
company’s service territories to ensure continued responsiveness to
needs of local customers and communities.”
"SouthWest Water has made a significant commitment to improve
the water service infrastructure in the regions it serves, and, in
turn, enhance service and reliability to its customers," said
Disque Deane Jr. of Water Asset Management. "Our partnership is
committed to funding necessary maintenance and upgrades over the
long-term.”
Prior to the closing of the acquisition, members of the
partnership will invest approximately $16 million in 2.7 million
newly issued SouthWest Water shares under a private placement,
priced at $6.00 per share. SouthWest Water intends to use the
proceeds to assist the financing of ongoing utility infrastructure
investments. As the offer and sale of the shares of common stock
will not be registered under the Securities Act of 1933 or
applicable state securities laws, the shares of common stock may
not be offered or sold in the United States absent registration or
an applicable exemption from such registration requirements. This
document is being issued pursuant to and in accordance with
Rule 135c under the Securities Act and does not constitute an
offer to sell or a solicitation of an offer to buy the shares of
common stock.
Upon completion of the transaction, SouthWest Water's common
stock will cease to be publicly traded. Wells Fargo Securities, LLC
acted as financial advisor to the Special Committee of the Board of
Directors of SouthWest Water which was formed to evaluate SouthWest
Water’s strategic alternatives. Macquarie Capital (USA) Inc. acted
as financial advisor to the partnership.
Conference Call
The company will hold a conference call to discuss the
transaction at 12:30 p.m. Eastern (9:30 a.m. Pacific). The call
will be web cast live so that interested parties may listen over
the Internet at the company’s website at www.swwc.com under the
investor relations button at the top of the page. For those unable
to participate in the live web cast, a replay will be available
shortly after the call on the company’s website. A telephonic
replay will also be available beginning at 3:30 p.m. Eastern (12:30
p.m. Pacific) until midnight March 10, 2010 at 888.286.8010
(international callers 617.801.6888), passcode 37139231.
About SouthWest Water Company
SouthWest Water Company provides a broad range of operations,
maintenance and management services, including water production,
treatment and distribution; wastewater collection and treatment;
customer service; and utility infrastructure construction
management. The company owns regulated public utilities and also
serves cities, utility districts and private companies under
contract. More than a million people in 9 states depend on
SouthWest Water for high-quality, reliable service. Additional
information may be found on the company’s website:
www.swwc.com.
About J.P. Morgan Asset Management - Global Real
Assets
J.P. Morgan Asset Management - Global Real Assets has
approximately $43 billion in real estate and infrastructure assets,
as of December 31, 2009. With a 40-year history of successful
investing and a staff of 359 professionals, J.P. Morgan Asset
Management - Global Real Assets identifies, analyzes, negotiates,
acquires, develops, redevelops, renovates, operates, maintains,
finances and sells assets, on behalf of its clients. J.P. Morgan
Asset Management's broad investment capabilities and framework for
analyzing opportunities in today's complex real estate and
infrastructure markets provide critical insights for its
institutional clients in both the public and private markets.
About J.P. Morgan Asset Management
J.P. Morgan Asset Management, with assets under supervision of
$1.5 trillion, is a global leader in investment and wealth
management. J.P. Morgan Asset Management's clients include
institutions, retail investors and high-net worth individuals in
every major market throughout the world. J.P. Morgan Asset
Management offers global investment management in equities, fixed
income, real estate, hedge funds, private equity and liquidity.
J.P. Morgan Asset Management provides trust and estate, banking and
brokerage services to high-net-worth clients and retirement
services for corporations and individuals. JPMorgan Chase & Co.
(NYSE:JPM), the parent company of J.P. Morgan Asset Management, is
a leading global financial services firm with assets of $2.1
trillion and operations in more than 60 countries. Information
about JPMorgan Chase & Co. is available at
www.jpmorganchase.com.
About Water Asset Management, L.L.C.
Water Asset Management, L.L.C. is a water industry focused
investment firm, that invests exclusively in water related
companies and assets worldwide. As the third largest shareholder of
SouthWest Water Company, WAM has been a committed and engaged
shareholder for many years. Additional information is available at
www.waterinv.com.
Forward-Looking Statements
This document contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.
These statements, including, but not limited to, statements
relating to the proposed transaction and its potential effects on
the company and its operations, involve risks and uncertainties, as
well as assumptions that, if they prove incorrect or never
materialize, could cause the results of the company to differ
materially from those expressed or implied by such forward-looking
statements. Actual results may differ materially from these
expectations due to changes in regulatory, political, weather,
economic, business, competitive, market, environmental and other
factors. More detailed information about these factors is contained
in the company’s filings with the Securities and Exchange
Commission, including under the caption “Risk Factors” in the
company’s 2008 Annual Report on Form 10-K. The company assumes no
obligation to update these forward-looking statements to reflect
any change in future events.
Additional Information
In connection with the proposed transaction, SouthWest Water
will file a proxy statement with the Securities and Exchange
Commission (SEC). Before making any voting or investment decision,
investors and security holders are urged to carefully read the
entire proxy statement and any other relevant documents filed with
the SEC, as well as any amendments or supplements to those
documents, because they will contain important information about
the proposed transaction. A definitive proxy statement will be sent
to shareholders in connection with the proposed transaction.
Investors and security holders may obtain a free copy of the proxy
statement (when available) and other documents filed at the SEC's
website at http://www.sec.gov. The proxy statement and such other
documents may also be obtained at no cost from SouthWest Water by
directing the request to SouthWest Water Company, 624 S. Grand
Avenue, Suite 2900, Los Angeles, CA, 90017, Attention: Shareholder
Services.
The company and its directors, executive officers and other
members of its management and employees may be deemed to be
participants in the solicitation of proxies from the security
holders of the company in connection with the proposed transaction.
Information concerning the special interests of these directors,
executive officers and other members of the company’s management
and employees in the proposed transaction will be included in the
company’s proxy statement referenced above. Information regarding
the company’s directors and executive officers is also available in
its Annual Report on Form 10-K for the year ended December 31, 2008
and in its proxy statement for its 2009 Annual Meeting of
Stockholders, which documents are filed with the SEC. These
documents are available free of charge at the SEC’s website at
www.sec.gov and from the company at the address provided above.
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