CORAL GABLES, Fla. -- Six Florida counties joined together and through a utility authority formed for this purpose, purchased their water and wastewater treatment plants from Avatar Holdings. Avatar previously provided their service.
Avatar Holdings Inc. and its Florida water and wastewater utilities subsidiaries have entered into a definitive agreement to sell substantially all their utilities operating assets located in the counties of Breward, Collier, Hillsborough, Lee, Osceola, Polk, and Sarasota, Florida. This transaction resulted from ongoing negotiations with the Florida counties and the Florida Governmental Utility Authority, a statutory entity organized by certain of the Counties to acquire the utilities assets.
The cash sales price is approximately $209 million, subject to certain adjustments. The available pre-tax net cash proceeds from the sale will be approximately $137 million after the payment of indebtedness, certain other utilities and expenses and the redemption of preferred stock.
Government agencies are common, but six counties joining to create one authority makes this unique. Individually, the counties could not make the deal. This agreement ensures continuation of operations and is more cost-effective for the counties.
The program took six months to complete. Attorneys with specialties in real estate, environmental law, public finance, public infrastructure worked together to complete the transaction. The international law firm Greenberg Traurig coordinated the deal.
This is the largest utility acquisition in Florida's history.
As part of the deal, the counties agreed to privatize the operations and maintenance of the now publicly owned utility systems with six separate system O&M contracts with an Avatar utilities operations subsidiary. In addition, because Avatar keeps the operation and maintenance contract, no employee jobs in the counties will be lost.
This deal benefits consumers and the public, according to officials. While the counties are paying for the transaction by issuing six separate bonds, they will not use taxpayer dollars to pay down the debt or fund the utility operations, Unlike standard general obligation bonds that are paid through tax increases, FGUA and Lee County will use net utility revenue to service the debt, in addition, the counties will now own and control their water and sewer infrastructure.
Avatar's contract management service subsidiary has also entered into definitive agreements to provide operation and maintenance services as well as billing and customer services for each water and wastewater system transferred.
Avatar Holdings Inc. is engaged in real estate and water and wastewater businesses primarily in Florida and Arizona. Its principal real estate operations are conducted at Poinciana in central Florida near Orlando. Cape Coral on Florida's West coast, Harbor Islands on Florida's east coast and at Rio Rico, south of Tucson, AZ. Avatar's common shares trade on the NASDAQ Stock Market under the symbol AVTR.
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