8-KRegulation FDOther EventsExhibits & Filings

American Water Works Company, Inc. 8-K Report, Regulation FD Disclosure (Mar 30, 2016)

Filed March 30, 2016For Securities:AWK

Summary

This 8-K filing announces a significant development for American Water Works Company, Inc. (AWK) through its wholly-owned subsidiary, Pennsylvania American Water. The subsidiary has entered into an Asset Purchase Agreement to acquire substantially all of the wastewater collection and treatment system assets of The Sewer Authority of the City of Scranton (SSA) for approximately $195 million. This acquisition, if completed, would add approximately 31,000 wastewater customers in Scranton and Dunmore Borough, Pennsylvania, to Pennsylvania American Water's service territory, marking a substantial expansion of its wastewater operations.

Key Highlights

  • 1Pennsylvania American Water to acquire Scranton's wastewater system for approximately $195 million.
  • 2Transaction involves acquiring substantially all wastewater collection and treatment system assets from The Sewer Authority of the City of Scranton (SSA).
  • 3The acquired system serves approximately 31,000 wastewater customers in Scranton and Dunmore Borough, Pennsylvania.
  • 4Closing is targeted for September 30, 2016, with potential extensions up to March 31, 2017, depending on various conditions.
  • 5Acquisition is subject to significant regulatory approvals, including the Pennsylvania Public Utility Commission, EPA, PaDEP, U.S. Department of Justice, and U.S. District Court, due to the SSA's existing Consent Decree.
  • 6Pennsylvania American Water will assume obligations under the SSA's Consent Decree with the EPA and PaDEP, requiring significant system upgrades estimated at $140 million.
  • 7The agreement includes termination clauses based on material adverse effects, regulatory hurdles, or failure to meet closing conditions.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce that American Water Works Company's subsidiary, Pennsylvania American Water, has entered into a definitive Asset Purchase Agreement to acquire the wastewater system of The Sewer Authority of the City of Scranton.

The total transaction value is approximately $195.0 million, subject to certain adjustments. Pennsylvania American Water is acquiring substantially all of the wastewater collection and treatment system assets of The Sewer Authority of the City of Scranton, which serves about 31,000 customers.

The closing is contingent upon several factors, including approval from the Pennsylvania Public Utility Commission, consent from the EPA, PaDEP, U.S. Department of Justice, and the U.S. District Court to amend the SSA's Consent Decree, as Pennsylvania American Water will assume those obligations. Satisfying other customary closing conditions and covenants is also required.

The Sewer Authority of the City of Scranton is under a Consent Decree with the EPA and PaDEP requiring approximately $140 million in upgrades to its sewer system. Pennsylvania American Water will be required to assume these obligations, which is a critical condition for the closing of the acquisition and will involve substantial capital investment.