CEO: Utility open to settle with city

Pennichuck Corp. sees merit in a push by one of its largest investors to settle the eminent domain case out of court but is not sold on the details.

Chief executive officer Duane Montopoli said Monday that the proposal to sell the entire company to the city of Nashua oversimplifies complex issues and miscalculates the stock price. However, Pennichuck is open to the possibility of a private settlement with the city, he said.

“I must add, however, that considering the complexities involved, no assurance can be given that any such discussions would ultimately lead to a comprehensive settlement,” Montopoli said.

A proposal last month by GAMCO Investors billionaire Mario Gabelli suggests Pennichuck sell the whole company to Nashua for $203 million – the same price state regulators have set for subsidiary Pennichuck Water Works.

Pennichuck Corp. owns five companies, including three water utilities.

The proposal is positioned as an alternative to the 6-year-old eminent domain battle. In July, the New Hampshire Public Utilities Commission ruled in favor of the city taking Pennichuck Water Works by eminent domain, but the company is appealing.

Although Gabelli’s proposal lowers the price, he argues it is the best possible deal for the city and investors. The city would get an extra 450 acres near the watershed that it wants to protect from development and could sell off the other four companies owned by Pennichuck Corp., thus reducing the overall price of Pennichuck Water Works, Gabelli told New Hampshire Business Review last month.

Stockholders would get $33 a share, $2 more than under eminent domain, and they would get the money a lot faster, he said.

According to a statement from Pennichuck, Gabelli’s calculation that a sale by eminent domain would yield $31 a share “misses the mark.”

However, the statement suggests the value would be less than $31 because the calculation ignores some expenses of liquidating Pennichuck Water Works.

It’s unclear where the city stands on the idea of reaching a settlement. Mayor Donnalee Lozeau was in meetings late Monday afternoon and could not be reached for comment.

A six-month attempt at private settlement talks between the two parties failed last year.

Tony Fritz, a research analyst for Gabelli & Co., a subsidiary of GAMCO, said a settlement is the best option for investors in this climate of financial uncertainty. It’s unclear where the stock price will be by the time the eminent domain appeal is decided. The value of the company and its land could also be different, he said.

If the company were to remain as it is today without being sold, it would have a “bright future,” Fritz said. But that too is an unknown because of the eminent domain case, he said.

GAMCO also said last month it wanted a seat on Pennichuck’s board of directors. As of Monday afternoon, Montopoli said no candidates had been recommended.
GAMCO owns nearly 600,000 Pennichuck shares, or about 14 percent of the company.