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Friday, February 17, 2012

Pennichuck had many shareholders, but their identities are unknown

NASHUA – It’s no mystery who now owns Pennichuck Corp., but finding out who owned shares of the company and its three water utilities prior to the city’s recent acquisition is.

The city made history last month when it purchased, for $29 each, all 4.7 million shares of the company, a $137.8 million transaction.

Prior to the sale, all sorts of banks, brokers and people shared ownership in the company.

The Telegraph requested the names of all entities that had previously held those shares, the objective being to learn who got paid what when the city purchased the stock.

Under its current public ownership, Pennichuck doesn’t have the names of entities that held shares in the company when it was private, according to interim CEO John Patenaude.

“Pennichuck Corporation does not possess the names of specific persons, either individuals, entities, or other institutions, who held certificates directly or who were the ultimate beneficial owners of shares held by nominees,” Patenaude wrote in response to The Telegraph’s request.

In a telephone interview Thursday, Patenaude said that prior to his arrival, Pennichuck, as with many companies, would have had a list of shareholders only at its annual stockholder meeting.

Typically, a trust company holds all information on a company’s shareholders and provides the list for the meeting, he said.

Shares are traded on a daily basis, so it matters less who owns the stocks than the fact that there are shareholders, Patenaude said.

“You know there are ‘X’ amount of shares. You’re not worried about Sally Mae selling shares to John Doe,” Patenaude said of the outlook of companies.

Patenaude did provide The Telegraph with a grouping of how the shares of the privately owned Pennichuck were held.

4.06 million shares of common stock were held in the name of CEDE & Co., which is the nominee name for the Depository Trust Co., a large clearinghouse that holds shares in its names for banks, brokers and institutions.

29,425 shares of common stock were held in the names of brokers.

163,293 shares of common stock were held in book-entry form.

437,364 shares of common stock were held by persons who had physical stock certificates.

Alderman-at-Large Barbara Pressly was one of those 437,364 certificate stockholders. She owned one share.

Pressly purchased the share so she could obtain the names of all other stockholders when, a decade ago, Pennichuck executives prepared to sell the company to Philadelphia Suburban Corp., which had French controlling interests.

Pressly and other residents were concerned about the future of the Pennichuck watershed. The company already had sold as many as 1,000 acres in the watershed area of Nashua and Merrimack for commercial development, and now the future seemed even more unsure with the pending Philadelphia Suburban deal.

When Pennichuck refused to provide shareholder information to Pressly, she took the company to court. With the secretary of state agreeing that all shareholders should possess the information, a judge sided with Pressly.

She got the list of names but had to keep them confidential, she recalled in an interview Thursday. By the time she had the information, though, Philadelphia Suburban had abandoned its pursuit of Pennichuck, and the list had little value, she said.

Pressly is surprised that Pennichuck, under city ownership, doesn’t have the list of previous shareholders. “The names of all owners should be available,” she said.

The Telegraph’s request for shareholder information was made on the same day the newspaper asked for the names of all Pennichuck employees and their salaries.

The union for most Pennichuck employees objected and received a temporary court injunction prohibiting the company from providing the information and The Telegraph from publishing anything.

At a court hearing Tuesday, the workers’ union argued that although Pennichuck is owned by taxpayers, it is still operated as a private entity and employee salaries should remain out of the public domain.

The Telegraph countered that the company’s bylaws were devised with the state Right to Know Law in mind and the information should be scrutinized by taxpayers.

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