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From the current print issue of NHBR
NHBR Article
Delay sought in USA Springs bankruptcy sale
Wednesday, November 4, 2009
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A letter from an opponent of the bankrupt USA Springs bottling plant to the attorney for a prospective buyer could delay the sale of the controversial company for another two months, according to a U.S. Bankruptcy Court filing.
In the letter, Jim Hadley, chairman of the organization Neighborhood Guardians urged the thus far unknown buyer – which has signed a letter of intent to buy two-thirds of the assets of the company for $55 million – to do “due diligence” in checking out whether the permits needed for the half-finished plant in Nottingham to extract up to 300,000 gallons of water a day are valid.
“The plan sponsor would use this additional time to evaluate certain permit issues and to accommodate additional due diligence, if necessary,” according to the filing, which was entered last week. It went on to say that USA Springs was “disturbed by such attacks, which have included false and misleading statements and efforts to ‘relitigate' decided matters, because the purpose is apparently to interfere with the transaction.”
Attorneys for USA Springs “reserve all rights to seeks appropriate redress for any stay violations or any torts, including intentional interference by third parties, including Mr. Hadley,” the wrote.
“I'm pretty pleased that we got them to do their due diligence,” said Hadley. “The judge made it clear about the permits – buyer beware -- and we were just saying the same thing.”
But Alan Braunstein, an attorney for USA Springs, was not pleased at all.
Braunstein denied that the buyer was getting the jitters, saying that there was nothing in the content of Hadley's letter that is preventing the sale, “but it takes time to check these things out, even if it is proven untrue.”
He called Hadley's attempt to contact the buyer's attorney as “improper interference” that was “designed to chill a sale” and that his “efforts may end up hurting the community.”
Braunstein repeated the term “reserves all rights” to pursue legal action against Hadley.
He added that Hadley isn't a member of the community. Hadley replied that he lived in Northwood, one of eight towns that would be affected by the water withdrawal.
“Groundwater doesn't respect town boundaries,” he said, adding this isn't the first time that USA Springs has tried to intimidate opponents through legal threats.
“We were told to contact the attorneys rather than go though the press, and this is what we get.”
The exchange is the latest skirmish in what has been a decade-long effort by USA Springs, headed by Pelham entrepreneur Francesco Rotondo, to build the water plant.
Opponents say that the company couldn't extract that much without affecting the local drinking water supply, and local residents should not have to jeopardize their water supply so private interests could make a profit selling it out of the state, or perhaps, out of the country.
(Bankruptcy papers indicate that USA Springs has an organization in Malta, an island outside of Italy, that is willing to purchase the water.)
USA Springs contends that there is more than enough water to go around, and residents were opposing the plant because they were prejudiced against Italians.
While the company finally did get a large water withdrawal permit in 2004, the long, drawn-out battle -- and recession -- forced the company to declare bankruptcy in June 2008.
In October, USA Springs filed a letter of intent, with the name of the buyer redacted, to acquire two-thirds of the company for $55 million. Under the deal, USA Springs would hold the rest of the stock, and Rotondo would be paid as a consultant.
While USA Springs maintains that all of its permits are transferable, Hadley questions that claim, arguing that several local and state permits have expired or are about to expire. He also noted that the state Supreme Court is hearing the appeal of a key wetlands permit.
The state Department of Environmental Services agrees that some permits will need to be renewed, but renewal is not the same process as starting from scratch. In any case, existing permits – under state law – are transferable.
The prospective buyer apparently wants to check out the situation for itself. To do so, USA Spring is asking a 60-day delay in previous deadlines which would push the date for the plan to reveal the buyer to Jan. 8. A hearing on the delay request is set for Friday. – BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW
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