UNITIL Corporation filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation
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Item 1.01 Entry into a Material Definitive Agreement
Purchase Agreement
On May 6, 2025, Unitil Corporation, a New Hampshire corporation (the “Company”), entered into a Purchase and Sale Agreement (the “Purchase Agreement”) by and between the Company and Aquarion Water Authority, a public corporation and political subdivision of the state of Connecticut (“Seller” or “AWA”), and, solely with respect to Section 9.25 and Section 9.26 thereof, South Central Connecticut Regional Water Authority (“RWA”).
Neither the Company nor any of its controlled affiliates has any material relationship with Seller or RWA, other than with respect to the Purchase Agreement.
The following is a brief summary of the material terms and conditions of the Purchase Agreement:
| • | Pursuant to, and subject to the terms and conditions of, the Purchase Agreement, the Company agreed to acquire all of the issued and outstanding shares of common stock of Aquarion Water Company of Massachusetts, Inc., Aquarion Water Company of New Hampshire, Inc., and Abenaki Water Co., Inc. (collectively, the “Aquarion Companies”) from Seller (the “Acquisition”). |
| • | The Company’s purchase price for the shares of common stock of the Aquarion Companies is $100.0 million, including assumed indebtedness, which amount is subject to certain adjustments as provided in the Purchase Agreement. |
| • | The Purchase Agreement does not include an escrow or holdback mechanism. |
| • | Each of Seller and the Company has made customary representations, warranties, and covenants for a transaction of this type. Generally, (i) the representations and warranties will terminate at, and will not survive, the closing of the Acquisition and (ii) the covenants will terminate at, and will not survive, the closing except to the extent the covenants’ express terms contemplate performance after the closing. |
| • | The obligation of each of Seller and the Company to consummate the Acquisition is subject to closing conditions, including (i) receipt of an order of the Massachusetts Department of Public Utilities, the New Hampshire Public Utilities Commission, and the Maine Public Utilities Commission granting all approvals and authorizations required for the Acquisition, (ii) other customary closing conditions for a transaction of this type, and (iii) the closing of the sale of the ultimate parent company of the Aquarion Companies to AWA. |
| • | The Purchase Agreement includes customary termination provisions for a transaction of this type. |
The Company expects to obtain a buyer-side representations and warranties insurance policy as a means of potential recovery with respect to any breaches of Seller’s representations and warranties under the Purchase Agreement (the “R&W Policy”).
The Company expects the Acquisition to close in late 2025. The Company has obtained committed debt financing from The Bank of Nova Scotia to fund the purchase price.
Aquarion Water Company of Massachusetts, Inc., Aquarion Water Company of New Hampshire, Inc., Abenaki Water Co., Inc. are water utilities that serve customers in certain communities in Massachusetts and New Hampshire.
The foregoing summary of the Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement attached hereto as Exhibit 2.1.
The Purchase Agreement has been included to provide investors with information regarding its terms. The Purchase Agreement is not intended to provide any factual information about the Company or the Aquarion Companies. The representations, warranties and covenants contained in the Purchase Agreement were made only for purposes of the Purchase Agreement and as of specific dates, were solely for the benefit of the parties to the Purchase Agreement, and are subject to limitations agreed upon by the parties to the Purchase Agreement, including being qualified by information in confidential disclosure schedules delivered by the parties to the Purchase Agreement in connection with the execution of the Purchase Agreement. The confidential disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties contained in the Purchase Agreement. Moreover, the representations and warranties contained in the Purchase Agreement generally were made for the purpose of allocating contractual risk among the parties to the Purchase Agreement instead of establishing matters as facts, and may be subject to standards of materiality applicable to the parties to the Purchase Agreement that differ from those applicable to investors. Investors are not third-party beneficiaries under the Purchase Agreement and should not rely on the representations, warranties and covenants contained therein or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or the Aquarion Companies or any of their respective subsidiaries or affiliates. Additionally, information concerning the subject matter of the representations and warranties contained in the Purchase Agreement may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Debt Commitment Letter
On May 6, 2025, the Company entered into a debt commitment letter (the “Debt Commitment Letter”) between the Company and The Bank of Nova Scotia.
Neither the Company nor any of its controlled affiliates has any material relationship with The Bank of Nova Scotia, other than with respect to (i) the Debt Commitment Letter, (ii) advice provided by The Bank of Nova Scotia or its affiliates in connection with the Acquisition, (iii) the debt commitment letter dated July 8, 2024 between the Company and The Bank of Nova Scotia relating to the acquisition of Bangor Natural Gas Company, a Maine corporation, (iv) advice provided by The Bank of Nova Scotia or its affiliates in connection with the acquisition of Bangor Natural Gas Company, (v) the debt commitment letter dated March 31, 2025 between the Company and The Bank of Nova Scotia relating to the acquisition of Maine Natural Gas Company, a Maine corporation, (vi) advice provided by The Bank of Nova Scotia or its affiliates in connection with the acquisition of Maine Natural Gas Company, and (vii) other customary banking and investment banking relationships.
Pursuant to, and subject to the terms and conditions of, the Debt Commitment Letter, The Bank of Nova Scotia has committed to provide a $100.0 million senior unsecured delayed-draw term loan facility. If the Company draws on the facility, then the proceeds of the facility will be used (i) to pay (a) a portion of the consideration for the Acquisition and (b) fees, costs and expenses in connection with the consummation of the Acquisition and the closing of the facility and (ii) for general corporate purposes. The facility will have a maturity date of the first anniversary of the closing of the Acquisition. The debt commitment letter provides that the Company has an option for determining whether interest on loans under the facility will bear interest based on a base rate or based on the Secured Overnight Financing Rate (SOFR).
The debt commitment letter includes customary closing conditions, events of default, representations, warranties, and covenants for a transaction of its type. The debt commitment letter also includes covenants relating to (i) mandatory prepayments upon certain events and (ii) maintaining a 65% debt to capitalization ratio (tested quarterly on a consolidated basis).
Forward-Looking Statements
This Form 8-K contains forward-looking statements. All statements, other than statements of historical fact, included in this Form 8-K are forward-looking statements. Forward-looking statements include declarations regarding the Company’s beliefs and current expectations. These forward-looking statements are subject to the inherent risks and uncertainties in predicting future results and conditions that could cause the actual results to differ materially from those projected in these forward-looking statements. Some, but not all, of the risks and uncertainties include the following: the ability of the parties to consummate the proposed purchase of the Aquarion Companies in a timely manner or at all; the satisfaction of conditions precedent to consummation of the Acquisition, including the ability to secure regulatory approvals and the closing of the sale of the ultimate parent company of the Aquarion Companies to AWA; the Company’s ability to successfully complete its anticipated debt financing arrangements; the Company’s ability to obtain the R&W Policy on satisfactory terms or at all; the Company’s ability to successfully integrate the Aquarion Companies; the Company’s ability to retain employees of the Aquarion Companies; the Company’s ability to make the Aquarion Companies accretive to the Company’s earnings; the Aquarion Companies’ ability to meet their forecasted capital expenditures; the Company’s and the Aquarion Companies’ regulatory environment (including regulations relating to climate change, greenhouse gas emissions and other environmental matters); fluctuations in the supply of, the demand for, and the prices of, energy commodities and transmission and transportation capacity and the Company’s ability to recover energy commodity costs in its rates; customers’ preferred energy sources; severe storms and the Company’s ability to recover storm costs in its rates; general economic conditions; variations in weather; long-term global climate change; unforeseen or changing circumstances, which could adversely affect the reduction of company-wide direct greenhouse gas emissions; the Company’s and the Aquarion Companies’ ability to retain its existing customers and attract new customers; increased competition; and other risks detailed in the Company’s filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date they are made. The Company undertakes no obligation, and does not intend, to update these forward-looking statements except as required by law.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The disclosure in Item 1.01 under the headings “Debt Commitment Letter” and “Forward-Looking Statements” is incorporated by reference into this Item 2.03.
Item 7.01 Regulation FD Disclosure
On May 6, 2025, the Company issued a press release announcing its entry into the Purchase Agreement, a copy of which is attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Number |
Exhibit |
Reference (1) | ||
| 2.1 (2)(3) | Purchase and Sale Agreement between Unitil Corporation and Aquarion Water Authority, and, solely with respect to Section 9.25 and Section 9.26 thereof, South Central Connecticut Regional Water Authority. | Filed herewith | ||
| 99.1 | Press release dated May 6, 2025 | Filed herewith | ||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | Filed herewith | ||
| (1) | The exhibits referred to in this column by specific designations and dates have heretofore been filed with or furnished to the Securities and Exchange Commission under such designations and are hereby incorporated by reference. |
| (2) | Certain schedules and exhibits to the Purchase and Sale Agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. These schedules and exhibits consist of (i) the Seller Disclosure Schedule (as such term is defined in the Purchase and Sale Agreement) and (ii) the Operating Agreement (as such term is defined in the Purchase and Sale Agreement). Unitil Corporation hereby undertakes to furnish supplementally copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission or its staff. |
| (3) | Certain information has been excluded from this exhibit pursuant to Item 601(b)(2)(ii) of Regulation S-K. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
UNITIL CORPORATION
| By: | /s/ Daniel J. Hurstak | |
| Daniel J. Hurstak | ||
| Senior Vice President, Chief Financial Officer and Treasurer | ||
| Date: | May 12, 2025 | |