Ni America Texas

Ni America Texas, LLC purchased in April 2016

Situation:

Ni America Texas is a water utility that serves residential customers in Johnson and Wise counties near Ft. Worth, Texas. All aspects of the utility are regulated by the Public Utility Commission of Texas, (PUCT). They provide potable water service to approximately 1,030 residences. In 2015, Pacolet Milliken Enterprises, Inc. (PME) of Greenville South Carolina obtained Ni America Texas as part of a much larger transaction in South Carolina where they purchased Ni America from its private equity owners.

Pacolet Milliken Enterprises is a private, family owned investment company that was founded as a separate corporate entity by the shareholders of Milliken & Company with a mandate to preserve and grow its capital with a values driven, multi-generational outlook through the ownership of very high quality real assets. Their regulated utility experience was confined to South Carolina and they decided strategically it was best to concentrate their efforts in South Carolina and sell the acquired Texas assets. Given that the utility was financially sound and providing a desirable cash flow, there was no exit time table established and they would wait for the right purchaser that they could build a relationship of trust.

SouthWest Water Company has a strategic growth initiative to build around their established utilities in the states they operate in. Through their business development efforts, they identified Ni America Texas as a potential acquisition target and reached out to Pacolet Milliken Enterprises for their interest in a sale. The timing was excellent as they were having difficulties with the PUCT approval of their purchase of Ni America. SouthWest Water was able to provide assistance and guidance during the process. As the trust grew, private negotiations began for a sale of Ni America Texas to SouthWest Water Company.

Facilities Description:

Ni America Texas is comprised of seven water systems serving 1,030 residences in PUCT approved service areas in Wise and Johnson counties. Potable water is obtained in accordance with the Texas Commission on Environmental Quality (TCEQ) standards from deep wells within each system. Disinfection is performed to TCEQ standards through the use of gaseous chlorine which poses a significant health risk to operators and residents if not properly handled. The water distribution system consists of modern polyvinyl chloride (PVC) piping.

Solution:

PME had several objectives in picking the right acquirer for the Ni Texas utility. They had just finished the transaction for the overall company and as part of that, established a value with the PUCT for the value of Ni Texas. SouthWest Water recognized the value they had established and were able to match that amount by utilizing a long term 25 year acquisition model. SouthWest Water’s approach to ownership is perpetual and driven by a long term view of assets.

SouthWest Water Company has extensive knowledge and experience in working with the PUCT and TCEQ in servicing the needs of their 45,000 Texas customers. This proved invaluable to PME as they were fully engaged in absorbing their South Carolina acquisition and did not have the expertise or time necessary to deal with a Texas transition. SouthWest Water handled all the filings and transition documentation in a timeframe that was significantly quicker than established precedence.

Maintaining excellent customer relations has always been an important concern for Pacolet Milliken in dealing with their tenants and customers. SouthWest Water developed and implemented an integration plan that ensured that the utility customers would have a seamless transition to a new provider. The customers also benefitted from the integration into SouthWest Water’s Enterprise Resource Planning (ERP) system. They will now be able to utilize electronic and credit card payments as well as view their billing information online.
SouthWest Water is committed to safety and immediately converted the water treatment facilities from potentially dangerous gaseous chlorine to a more stable disinfection process utilizing liquid bleach. This eliminated any possibility of a dangerous gas leak into each of the communities that are served. In addition, they converted all the water meters to an automated meter reading system that is safer for the utility workers and provides more timely information for the customers.

Conclusion:
Pacolet Milliken Enterprises was able to execute this transaction with SouthWest Water Company with a minimal amount of disruption to their current priorities and accomplish all their objectives in a very timely manner.

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