Investor group gains Pennichuck clout
A group of investors that has been pushing Pennichuck Corp. to resolve its battle with Nashua will now have more of an official say in the matter.
A deal announced Thursday morning by Pennichuck would allow Gamco Asset Management Inc. to increase its stock holdings in the firm from 15 percent to 20 percent. Pennichuck revised its “poison pill” provision last month to allow a purchase of more than 15 percent of stock.
The board also expanded its size from nine to 11, allowing the company to seat two nominees from Gamco, an investment company owned by Wall Street financier Mario Gabelli.
“In terms of beneficial ownership, Gabelli is our largest shareholder, and we think it appropriate for them to recommend two candidates for addition to our board,” said Duane C. Montopoli, Pennichuck’s president and chief executive.
In exchange, Gabelli won’t go ahead with what could have been a nasty proxy fight challenging Pennichuck board members as part of a May 6 board meeting in Nashua.
Gabelli had been pushing for governance changes as part of an effort to encourage Pennichuck to sell the entire company to the city of Nashua, which has been trying to take over the subsidiary Pennichuck Water Works, Nashua’s water utility company, by eminent domain.
The state Public Utilities Commission had approved the takeover for $203 million for just the waterworks piece of the company, a decision reaffirmed Monday. Pennichuck is appealing the ruling, but at the same time, it is negotiating with the city for sale of some or all of its assets.
Pennichuck Corp. also has land holdings, owns other smaller water systems and manages waterworks for others.
Gabelli seemed neither pleased or displeased by the news that his company could buy as much as a fifth of Pennichuck stock and place two people on the board.
“The only thing I’m displeased about is when the Yankees lose to the Red Sox,” Gabelli said. His company’s deal with Pennichuck, he said, “is what’s right for the shareholders. This is just a step forward, a very healthy compromise.”
“The next event is to work thought this legal imbroglio and breaking this Gordian knot that Montopoli is tied into,” said Gabelli. “People are pushing from him a variety of angles – the community, the management and now, hopefully, the shareholders – and he has to cut through all this with a bold stroke.”
Gabelli also said he appreciates the opportunity and flexibility to get a greater stake in the company, but he also was coy about whether he would actually increase his company’s holdings to 20 percent.
Pennichuck is an undervalued stock, he said, and “is fundamentally a good buy,” but he added, there might even be better stock deals these days.
The two new board nominees are Clarence Davis and Michael German. Davis is a former board member of the Gabelli Global Deal Fund and German is a vice president at Southern Union Co., a national gas company headquartered in Houston.