Wednesday, March 18, 2015

Apple Valley, Call Missoula re: Carlyle's Greed

  Hesperia Star reported:

Scores of residents turned out Monday for two public hearings on the proposed sale of a local water supplier to Algonquin Power Company's Liberty Utilities. More than 150 people crowded the conference room at Apple Valley's Development Center at 2 p.m. Monday. A night session at 6 p.m. attracted even more people.

The proposed sale faces approval or denial by the California Public Utilities Commission and would include payment of $325 million, including assumption of $80 million in debt. 

The Carlyle Group owns Park Water Co. and Western Water Holdings LLC.  The sale price would be $405 million, plus whatever fees Carlyle can take on.  Carlyle paid $102 million for Park/WWH in 2011.  That's a $303 million profit, nearly a triple bagger. 

Also, Carlyle charged Mountain Water $2 million a year in management fees.  They frequently charge a multiple of that amount to cancel those fees.  In addition, Carlyle siphoned off at least $5 million in dividends from Park Water/WWH.

Carlyle's offered their usual spin at the town hall meeting in Apple Valley:

"Carlyle recognized the short-term ownership was an issue," Robert Dove, managing director of The Carlyle Group, told the Daily Press during a break in the first of two sessions. "I think (Liberty) would be a good steward of the asset." 

Flash back to 2011:

While Carlyle often sells companies it acquires for a profit, "it's a very long-term process," Searles said. "These folks are characterized by their ability to boost capital."

Carlyle has been willing in the past to have a fairly long-term investment horizon. The group's approach, generally, is not to drain money out of an acquired company and then try to sell it, Searles said. In fact, Carlyle could spend as long as a decade investing in the water companies to increase their value.

"They typically have not been quote ‘flippers,' " Searles said.

Carlyle is a six pack short of a decade.  Say whatever is necessary to look good in the present moment, that's what PEU boys do.  Robert Dove transformed from a long term investor to a "short-term owner."  It's flipping time.

Update 7-2-17:  Missoulian reported how Liberty Utilities ran Mountain Water after Carlyle flipped it.  I wonder what recourse Liberty had against Carlyle since the City of Missoula prevailed in their eminent domain lawsuit.