Final candidates to receive additional detailed information.
Philadelphia, November 19, 2013– The Nutter administration announced today that it has narrowed the field of bidders seeking to buy the Philadelphia Gas Works (PGW). This decision was based upon indicative bids it received on November 1. In August, more than 30 qualified parties responded to the City’s Request for Qualifications, expressing interest in the opportunity to own PGW.
“We were extremely pleased with the response to our initial Request for Qualifications (RFQ) given both the number and quality of parties interested in acquiring PGW,” said Mayor Michael A. Nutter. “The number and strength of the indicative bids we received earlier this month were equally encouraging. Now, working with our brokers and financial advisers, we have selected and notified those companies still in contention to attempt to reach an agreement to purchase PGW. The indicative bids we received reinforce our belief that a sale of PGW will benefit Philadelphia taxpayers and PGW customers.”
The remaining bidders will now receive additional detailed information about the company’s operations so as to formulate final and binding bids to acquire PGW.
Final bids are due in January, negotiations will follow, and the City expects to finalize the sales terms by February. If an agreement is reached, the sale must then be authorized by Philadelphia’s City Council and approved by the Pennsylvania Public Utility Commission.
A cost/benefit analysis completed last month by financial advisor Lazard Frères & Co. LLC (“Lazard”) showed that a sale could command a price ranging from $1.45 billion to $1.9 billion, resulting in net sales proceeds to the City between $422 million and $872 million. Mayor Nutter has proposed using the proceeds to help shore up the City’s pension fund. Making this investment would enable the City general fund to be held harmless from the foregone $18 million annual PGW franchise payment while simultaneously allowing the City to put more than the amount required under state law each year into its municipal pension fund.
PGW is the nation’s largest municipally-owned gas utility, with annual revenues of more than $600 million, more than 500,000 residential, commercial and industrial customers, and more than 1,600 employees. Read more about the sale process and submit questions or comments at www.exploringasale.com.