Don Correll's Pennichuck fights back against Nashua
NASHUA -- Donald L. Correll, president and chief
executive officer of
Nor does he care to use the word when characterizing the lawsuit the company filed earlier this month in Hillsborough County Superior Court, accusing city leaders of holding the company ''hostage" as the leaders have talked for more than a year and a half about taking the company by eminent domain, but have failed to initiate the process with state regulators.
''It's not a bad term, but it sometimes has a negative connotation," Correll said last Thursday morning as he sat in his second-floor office in downtown Nashua. ''We are just being more proactive. We are trying to get our story out."
That story, he said, is of a company that has served its customers well, both in the city and across southern New Hampshire, with quality drinking water and reasonable rates for more than 150 years. It's a story, he said, of a company trying to prosper, but unfairly coming under attack by city leaders and other town officials across the region, who are fearful the Nashua-based company could be sold someday to an international conglomerate that may or may not be a good steward of the region's water.
Most of all, he said, it's a story of deception against customers and shareholders by grandstanding city leaders, particularly Mayor Bernie Streeter, who say they are in active negotiations to acquire Pennichuck with company officials, when those negotiations are not taking place.
''Public statements that there have been active negotiations have been just a charade," said Correll, who could recall only four meetings with city leaders on the municipalization effort, each lasting approximately an hour, since he arrived at Pennichuck six months ago. ''That's hardly active negotiations."
He prefers to characterize the meetings as ''cordial banter" -- a characterization that Streeter strongly refutes.
''They halted all discussions," Streeter said. ''We had hoped against hope that the negotiations would be friendly."
Streeter believes the advertising campaign, the
lawsuit and the public statements are merely ''smoke screens" to
hide the real story: Pennichuck still wants to be sold to a larger
corporation. That almost happened last year in a deal with
The collapse of the deal cost Pennichuck $2.2 million at a time when the company's water service businesses have an average annual operating income of $1.9 million, according to the company's lawsuit.
''Mr. Correll was hired to sell the company," said Streeter, referring to a clause in Correll's contract, which would provide him with two year's salary as severance if he loses his job because Pennichuck is sold to another company. ''He has a real incentive to put a kibosh on" municipalization.
Correll is considered a major player in the water service industry. He served nearly a decade as president and chief executive officer of United Water, guiding the New Jersey company's growth through numerous acquisitions to become one of the nation's largest investor-owned water utilities until shortly after it became a wholly-owned subsidiary of Paris-based Suez in 2000. Correll took an early retirement a year later, going to baseball games (he's a die-hard Yankees fan) and working on his golf game.
But in early 2003, Correll returned to the water service industry as a consultant, and later in the year was approached by Pennichuck to replace its longtime president and chief executive officer, Maurice Arel, who resigned in the spring in the midst of federal and state investigations into the 1998 purchase of his Nashua home from a joint venture between one of the company's subsidiaries and a real estate developer.
Correll realized his new post could be a short-term assignment, should the city succeed with municipalization, but he disputes any claim that he is under a mandate to sell the business.
''I wasn't brought in to liquidate the business or sell the business," said Correll. ''I have a mandate to work through the process, and I certainly have a mandate to protect the interests of our shareholders and customers, even if that means working with the city to buy some or all the assets in Nashua."
But at this point, he believes municipalization would be a wrong move and questions the city's financial ability to raise enough money to buy the company. The company's board of directors rejected a $121 million offer from the city two months ago to buy the company, believing the company has a value of more than $200 million and the city failed to accurately estimate the tax liability of stockholders who would be forced to sell their shares.
The city's offer has been a sore point with Pennichuck. The offer was announced at a City Hall press conference late in the afternoon of Nov. 20, before company executives received it. The next day, the offer, which the city asserted was comparable in value to the Philadelphia Suburban merger, caused abnormally high sales of the company's shares and wide fluctuations in its stock price, forcing NASDAQ to temporarily halt trading, Correll said.
In one of 11 advertisements that has run since December in the local newspaper, The Telegraph, the company said the city's proposal constituted a ''heavy-handed, coercive attempt to obtain control of the company's assets without paying fair market value." The National Association of Securities Dealers is reviewing the trading to determine if there was any violation of federal or state securities laws. The exact scope of the investigation has not been made public.
In the meantime, two months after Pennichuck rejected the city's offer, the city has yet to file a petition with the state Public Utilities Commission, seeking to take Pennichuck's assets by eminent domain, even though Streeter has made statements to the press that he intends to do so, most recently last Friday, giving a timeline of within 60 days.
The uncertainty of when the city will execute its next move, Correll said, puts the company in a state of flux. It has to work extra hard to land consulting contracts with municipalities in New Hampshire and Massachusetts, desperately trying to convince town officials the company will be around for years to come. It also puts the company in a position where it's difficult to pursue acquisitions of smaller waterworks or to consider mergers with larger companies.
But the company has decided on one move: It will uproot its corporate headquarters from downtown Nashua, where it has been doing business since before the city officially incorporated 151 years ago, and will move to neighboring Merrimack, where one of its subsidiaries has extra space. Correll insists the move has nothing to do with the politically charged atmosphere in Nashua, but that the company has simply run out of space at its Water Street building, which the company has been looking to abandon for a number of years.
Barbara Pressly, a former state senator from Nashua who has been pushing municipalization but is growing frustrated by the city's sluggish pace in starting the eminent domain proceedings, said she is not surprised that Pennichuck has embarked on a public campaign and legal challenge. She thinks it should be taken as a warning that the city needs to move fast.
''It's time to get some new people at the table to replace those who have mucked it up so far," Pressly said. ''If we don't purchase Pennichuck now, we will never have an opportunity to do it again. It's only a matter of time before another larger company makes an offer to buy them."
© Copyright 2004 Globe Newspaper Company.