American Water to Sell Arizona and New Mexico Services to EPCOR

EPCOR will reportedly purchase these water and wastewater services for an estimated $470 million.

American Water Works Company, Inc. has entered into an agreement with EPCOR Water (USA) Inc. to sell 100 percent of the stock of its companies that provide regulated water and wastewater services located in Arizona and New Mexico, for an estimated sale price of $470 million, subject to certain adjustments.

American Water’s total investment in both subsidiaries was approximately $450 million as of December 31, 2010. American Water said it plans to use the proceeds from the sale to reduce both equity and debt financing. The completion of the transaction is subject to customary closing conditions, including regulatory approval by public utility commissions in both Arizona and New Mexico.

“This transaction allows us to direct our focus to those operations where we can best serve customers and meet business objectives,” said Jeff Sterba, president and CEO of American Water. “Additionally, with this transaction we do not anticipate the need for an equity offering in 2011.”

American Water serves approximately 174,000 customers in Arizona and New Mexico. Both American Water and EPCOR are committed to working together to ensure that the transition is a smooth one for customers and that reliable service will continue throughout the transition. Both companies also place significant value in the more than 220 employees who work in New Mexico and Arizona and pledge to make this change as seamless as possible, the American Water press release said. EPCOR USA anticipates that employees will continue to operate these systems within the EPCOR family, once the transaction closes.

EPCOR USA is in the business of building, owning, and operating water and wastewater treatment facilities in the southwestern United States. In 2010, EPCOR USA entered into an agreement with American States Water to purchase and operate the Chaparral City Water Company, which serves 13,000 customers in the town of Fountain Hills, Ariz.

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