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  • Staff photo by Don Himsel/Norstar Helicopter^^A view of the Pennichuck ponds looking west from above the water treatment plant.
  • Staff photo by Bob Hammerstrom

    About two dozen people showed up to listen to city officials discuss the Pennichuck acquisition during a public information meeting Monday, November 15, 2010, at Nashua City Hall.
  • Staff photo by Bob Hammerstrom


    Shareholders listen to Pennichuck President and CEO, Duane Montopoli, above, during a special shareholders meeting Wednesday, June 15, 2011, at the Pennichuck Corporation headquarters in Merrimack.
  • Staff photo by Bob Hammerstrom


    Shareholder Madeleine Rousseau discusses her vote following a special shareholders meeting Wednesday, June 15, 2011, at the Pennichuck Corporation headquarters in Merrimack.
Monday, December 26, 2011

9. City clears hurdles in Pennichuck purchase

EDITOR’S NOTE: The Telegraph will run the 10 biggest local stories of 2011 in the paper during the next several days.

NASHUA – For nearly a decade, the city tried and tried again to acquire Pennichuck Corp. and its water utility. Mark 2011 as the year the dam broke.

The day before Thanksgiving, state regulators approved the city’s $152 million purchase of the company in what was the last of three significant hurdles.

The first hurdle was cleared last year, when aldermen approved the signing of a merger agreement with Pennichuck. The second hurdle was surpassed in spring, when Pennichuck shareholders voted in favor of the sale.

After those accomplishments, city officials had prepared for making the purchase official by year’s end. But early this month, Mayor Donnalee Lozeau obtained aldermanic approval to delay the acquisition until Feb. 3 so the city can get better bond rates in January. The bond market slows considerably in late December, Lozeau said.

That delay shouldn’t pose any challenge to the city’s bid to control the future of its water. It seems like a mere technicality when compared with the protracted legal movements that led to this moment.

For nearly a decade, city officials and Pennichuck executives entangled in actions, counteractions, a takeover attempt and a lawsuit before finally agreeing to settle their differences in the $152 million merger.

It started when Nashua stepped into the middle of Pennichuck’s pending sale to a Philadelphia company by offering to buy the company. The offer sent the Philadelphia company packing, and the city then pursued an eminent domain takeover. Pennichuck retaliated by suing the city.

Finally, the two sides started to warm to one another. Pennichuck started offering its shares, while the city refused the offers and considered further takeover options. They eventually came to an agreement.

The city will pay $29 for each share of Pennichuck stock. That amounts to $137.8 million for 4.7 million shares.

The $152.1 million bill also includes $2.2 million for severance packages for outgoing Pennichuck executives, $5.3 million in legal and other fees, $5 million for a water rate stabilization fund and $1.8 million in bond issuance costs.

The bonds will be paid with Pennichuck revenue, in large part through water rates that will be set by regulators.

The city potentially could bond an additional $60 million in outstanding Pennichuck debt that it will assume upon purchase. Aldermen have approved the borrowing of as much as $220 million.

City officials have long advocated buying Pennichuck to stop the company from selling watershed acreage.

Starting in the 1920s, Pennichuck had acquired land at little to no cost to protect the water supply along Nashua’s northern border. In the mid-1980s it began selling, for considerable profit, some 1,500 acres the company deemed could be developed without environmental harm.

The real estate deals shaped the landscape of north Nashua and southern Merrimack with a bevy of housing and commercial developments.

The issue resonated this year with a commercial developer about to buy Pennichuck property on Concord Street for $2.2 million with the intent of building an 85-unit elderly housing complex on 33 acres. Opponents claim the project will harm the watershed, but Pennichuck officials say the complex’s water runoff will flow away from a nearby pond and won’t damage the watershed.

Pennichuck and the developer delayed their purchase and sales agreement while Lozeau talks to both parties about a resolution.

The parcel is the last bit of developable Pennichuck land left untouched in Nashua. Critics of the Pennichuck purchase, such as former alderman Fred Teeboom, have argued that if the city can’t stop Pennichuck from developing the last parcel of land, then it might not meet the challenge of running a water utility.

But city officials have pointed to how Pennichuck has had an agreement to sell the Concord Street property since 2007 and Nashua had no authority to intervene. Moreover, by buying Pennichuck, the city can stop the company from selling about 400 acres of developable land in Merrimack, said Alderman-at-Large Brian McCarthy, who has been closely involved with the city’s negotiations with the company.

Albert McKeon can be reached at 594-6528 or amckeon@nashuatelegraph.com. Also check out McKeon (@Telegraph_AMcK) on Twitter.