American Water Works Company, Inc.: Form 8-K

Source Press Release
Company American Water Works Company, Inc.SC Water LLC 
Tags Corporate Deals, Deals, Oil Services
Date November 20, 2019
Item 1.01.  Entry into a Material Definitive Agreement. 

On November 20, 2019, American Water Works Company, Inc. (the “Company”) and New York American Water Company, Inc. (“NYAW”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Liberty Utilities Co. (“Purchaser”). Pursuant to the Stock Purchase Agreement, on and subject to the terms and conditions set forth therein, Purchaser will purchase all of the capital stock of NYAW (the “Stock Purchase”) for an aggregate purchase price of approximately $608 million in cash, subject to adjustment as provided in the Stock Purchase Agreement. NYAW owns all of the water and wastewater assets of the Company’s New York regulated utility operations, with approximately 125,000 customer connections in the State of New York. Concurrently with the execution of the Stock Purchase Agreement,  Algonquin Power & Utilities Corp., Purchaser’s parent company, executed and delivered an absolute and unconditional guaranty of the performance of all of the obligations of Purchaser under the Stock Purchase Agreement.

The Stock Purchase Agreement contains customary representations, warranties and covenants of the Company, NYAW and Purchaser. The completion of the Stock Purchase is subject to various conditions, including without limitation: (1) obtaining the approval of the New York State Public Service Commission (the “NYSPSC”) without any terms or conditions that would reasonably be expected to be adverse to the Company or its affiliates (other than NYAW or its affiliates) or have a material adverse effect (as defined in the Stock Purchase Agreement) on NYAW or its affiliates or on Purchaser and its affiliates; (2) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and (3) other customary closing conditions, including (a) subject to materiality qualifiers, the accuracy of the parties’ representations and warranties contained in the Stock Purchase Agreement; (b) the absence of any law or order prohibiting the completion of the Stock Purchase or granting substantial damages in connection therewith; (c) the absence of any proceeding (excluding any such matter initiated by Purchaser or any of its affiliates) pending before any governmental authority seeking to prohibit the completion of the Stock Purchase or recover substantial damages from Purchaser or any affiliate resulting from the Stock Purchase; and (d) the compliance by the parties with their respective covenants, agreements and closing deliveries under the Stock Purchase Agreement. The Stock Purchase is not subject to any financing condition. The Company currently estimates that the Stock Purchase is to be completed during the latter half of 2020.

The Stock Purchase Agreement contains certain termination rights for both the Company and Purchaser, including if the Stock Purchase is not consummated by June 30, 2021 (subject to extension for an additional six months if all of the conditions to closing, other than the conditions related to obtaining regulatory approvals, have been satisfied or are capable of being satisfied), as well as a termination right for Purchaser if any governmental authority initiates a condemnation or eminent domain proceeding against a majority of the consolidated properties of NYAW, taken as a whole. If the Stock Purchase Agreement is terminated, such termination will be without liability of any party to the other parties to the Stock Purchase Agreement, except for liability or damages resulting from a willful breach of a party’s representations, warranties, covenants or agreements in the Stock Purchase Agreement prior to termination.

The foregoing description of the Stock Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Stock Purchase Agreement, which has been filed as Exhibit 2.1 hereto and is incorporated by reference herein.

Item 7.01  Regulation FD Disclosure. 

On November 20, 2019, the Company issued a press release announcing the transactions described in Items 1.01 and 8.01 herein. A copy of the press release has been included as Exhibit 99.1 and is incorporated by reference herein.

The information furnished in Item 7.01 of this Current Report, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 8.01.  Other Events. 

On November 20, 2019, as part of a strategic review undertaken by the Company, American Industrial Water LLC, a wholly owned subsidiary of the Company (“AIW”), and Water Solutions Holdings, LLC (“WSH”), a wholly owned subsidiary of AIW, entered into a Membership Interest Purchase Agreement with SC Water LLC, a natural gas and oil industry investment group and an affiliate of Hydro Recovery LP, to sell all of the outstanding membership interests in WSH for total cash consideration of $31 million. WSH is the parent company of Keystone Clearwater Solutions, LLC (“Keystone”). Keystone provides water transportation services to shale natural gas exploration and production customers in the Appalachian Basin. The transaction is subject to compliance with customary covenants and the satisfaction of various closing conditions and deliveries. The parties expect to close the transaction in the fourth quarter of 2019.

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