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Phila. Suburban buys AquaSource

July 31, 2003

Philadelphia Suburban Corp. on Thursday said it completed the acquisition of AquaSource Inc. for approximately $195 million in cash, subject to post-closing adjustments.

The acquisition was announced almost a year ago. It required approval by regulators in all the states where AquaSource does business. AquaSource had been owned by DQE Inc. of Pittsburgh, which will now concentrate on its electric utility operations.

The acquisition expands PSC's customer base by more than 20 percent to about 2.5 million in 15 states.

PSC has agreed to sell AquaSource's regulated and nonregulated Connecticut operations and its regulated New York operations to two subsidiaries of BIW Ltd., an investor-owned water utility based in Ansonia, Conn., for about $5 million.

To help pay for AquaSource, PSC used $100 million of a total of $135 million unsecured debt with an average life of 12 years issued at 4.87 percent to a consortium of lenders. It will use the additional $35 million from the debt to refinance higher cost debt at its largest subsidiary, Pennsylvania Suburban Water Co.

PSC is based in Bryn Mawr, Pa. It became the largest publicly traded water company headquartered in the United States in January when Thames Water PLC, the Reading, England-based water division of Essen, Germany-based RWE Group AG, acquired American Water Works Co. for $8.6 billion, including assumed debt.