New talk of utility sale rises

NASHUA – An idea for Pennichuck Corp. to sell the entire company – not just part of it – to the city is being pushed by some shareholders and getting a warm reception from city officials.

However, the question remains whether the idea will fly with the company’s board of directors.

Shareholder Peter Jacobs, of Portland, Maine, believes there is overwhelming support for the sale among shareholders, he said in a letter to Pennichuck president and CEO Duane Montopoli.

Selling the company would result in an immediate return for shareholders, said Jacobs, who controls only about 1 percent of Pennichuck stocks.

He claims there is widespread support for the sale, which was proposed in September by billionaire investor Mario Gabelli, whose investment company owns about 14 percent of Pennichuck stock.

“I entirely concur with Mr. Gabelli that this sale would be advantageous both to the shareholders of Pennichuck Corporation and to the taxpayers of Nashua and would represent a practical compromise to end the long dispute between the city and the company in a way that would benefit both sides,” Jacobs said in the letter, which also was forwarded to Joseph Bellavance III, of Nashua, a member of the board of directors.

The advantage of owning the entire company is that Nashua would control the watershed that feeds the water system, city officials have said.

The sale of the company to Nashua might not be as profitable for shareholders if the company is sold on the open market, Jacobs said.

That could happen if Pennichuck’s appeal overturns the decision of state regulators to allow Nashua to take over Pennichuck Water Works by eminent domain, or if the city decides it doesn’t want to run the water utility, he said.

But the sale to Nashua is much safer and wouldn’t mean a long delay for shareholders while the company’s appeal winds its way through the legal process, potentially, the state Supreme Court, Jacobs said.

Bellavance declined to comment on behalf of Pennichuck about the letter-writing campaign.

“There’s only one spokesman for Pennichuck, and that’s Duane Montopoli,” Bellavance said, referring to the company’s chief executive officer.

Mayor Donnalee Lozeau confirmed that the city has received letters from stockholders. She said the city has not ruled out the possibility of an out-of-court settlement or any other type of resolution.

“Virtually any option or scenario that anyone can think of is on the table,” Lozeau said.

The mayor said she personally believes eminent domain should be a last resort, but cannot say much about what the city is discussing privately because Pennichuck is a publicly traded company.

Generally, public statements about the fate the potential fate of a company tend to influence stock prices.

“I’ve always said that would be a great idea,” Alderman-at-Large Brian McCarthy said. “We would love to have a negotiated settlement to buy the whole thing.”

“I think they’re starting to see the forest through the trees,” Alderman-at-Large David Deane said of the push by shareholders to sell the company to Nashua.

“They’re starting to understand that maybe this is something they should have done a while ago,” Deane said.

One potential pitfall, from the city’s viewpoint, is Pennichuck’s other holdings, such as Pittsfield Aqueduct and Pennichuck East, he said.

“I just look at these little satellite water companies. What do you do with them? I guess sell them, but you’ve got to find somebody who wants them,” Deane said.

McCarthy doesn’t think that would be a problem. Many towns find it desirable to control their own water system, which might apply to Pittsfield. Also, Pennichuck East is closed tied to the larger Pennichuck Water Works system that serves Nashua, he said.