FC for long-awaited California water system
Rialto Water Services (RWS), a concession team comprised of Union Labor Life Insurance Co. (ULLICO) and private equity investor Table Rock Capital, has closed on a deal to upgrade and operate the City of Rialto (California) water and wastewater system for 30 years.
The deal between the city and Table Rock has been in discussion for nearly two years, and came to fruition this summer when the city Council chose to replace American Water Works with Veolia Water West Operating Services as its concession partner.
The City of Rialto will retain full ownership of Rialto’s water and wastewater systems, water rights, and public authority for rate setting. Veolia will operate and maintain the City’s water and wastewater system through a long-term contract with RWS. The deal represents the first infrastructure investment by Ullico, an umbrella organisation that offers insurance and financial services to several labor unions in the US.
The total amount of the deal was US$172 million, according to an executive familiar with the situation. Ullico contributed the majority of the US$25.8 million in equity that the deal required, while Table Rock contributed the remaining portion.
RWS also issued US$126 million in 30-year senior private placement notes to fund the remaining portion of the deal, said the executive. Barclays Capital and Goldman Sachs served as underwriters for the debt offering, which notched an A- rating by Fitch and carried a 5.5 per cent yield. Ullico was advised by Klehr Harrison Harvey Branzburg LLP and Davis LLP on the transaction.
Ullico President Edward Smith said that the deal should create 445 new labor jobs in Rialto and the surrounding region. “Our program focuses on investing in projects where the municipal partners and our investment partners share this philosophy,” he said in a statement. “The capital improvements will be done with union labor, in accordance with our strong pro-organised labor contracting policies, which maximise the use of firms that employ union workers. We are proud to make this Ullico’s first infrastructure investment.”