Aug 17 The city of Philadelphia said on Friday it could sell its public natural gas utility in two years now that it has hired nearly a dozen professional firms to work on the deal.
The city has discussed privatizing the Philadelphia Gas Works - the largest municipally owned gas utility in the United States - for some time. The utility generated an estimated $805 million in revenue in fiscal 2012, according to its operating budget.
"The hiring of a team of top-flight professionals is a clear demonstration to all, including potential buyers, how committed the city and its utility are to exploring the sale," Mayor Michael Nutter said in a statement.
Through a request for proposal process, the city, PGW and its board of directors hired a bevy of professional firms, including two New York investment banks, Lazard and M.R. Beal.
Also selected were five law firms, including the Philadelphia-based national law firm Ballard Spahr, with more legal advisers to be added in the future, Nutter said.
Two government-relations firms, as well as two public-relations firms, were also hired.
Together, the advisers will evaluate bids from potential buyers and negotiate a final deal. State regulators and the Philadelphia City Council must approve the sale.
Philadelphia will pay at least $2 million altogether to the advisors. It expects to hire more firms and incur additional costs in the future, said Nutter spokesman Mark McDonald.
The advisers will also select a broker, who will get paid a percentage of the transaction, he said.
The size and complexity of the deal call for "securing the very best advice we can get, and we believe we're well positioned to begin this process," McDonald said.
In July 2010, the city hired Lazard to assess a potential PGW sale or lease. This February, the firm reported that the utility could fetch between $1.4 billion and $2.15 billion, depending on the buyer, the structure of the transaction and the inclusion of certain liabilities - in particular, retiree healthcare costs.
Founded in 1836, the utility serves about 500,000 customers.