By Steve Tawa
PHILADELPHIA (CBS) — Two banking firms with extensive experience in similar deals will serve as the city’s brokers in the potential sale of Philadelphia Gas Works, the largest municipally owned gas utility in the United States.
Today, Mayor Nutter said the sale will happen only if it benefits Philadelphia taxpayers and PGW customers.
“That requirement remains in effect and is the primary focus,” he said.
JP Morgan is the lead broker, with help from Loop Capital, both of which were implicated years ago in the “pay to play” corruption case of the late lawyer Ronald White, when John Street was mayor.
“That is in a lockbox somewhere else,” the mayor (at lectern in photo) said in response to our question. “That has nothing to do with the transaction or the relationship going forward.”
If the deal is not consummated, the brokers will get $140,000 in expenses. If the sale goes through, JP Morgan and Loop Capital will get a sliding scale fee: 0.45 percent of the total price up to $1.6 billion, and 2 percent of the sale price above that amount.
The sale would require the approval of Philadelphia City Council and the Pennsylvania Public Utility Commission.
Paul Dabbar of JP Morgan (second from right in photo), who will lead the broker team, is optimistic about helping the city get a good price.
“From a private point of view, utilities are valued at an all time high,” he said.
A report last year commissioned by the city from the financial firm Lazard Frères speculated that PGW could fetch $1.85 billion, or more.