Local water officials would consider buying Valencia Water Co. should the water retailer be put up for sale, according to Dan Masnada, general manager of the Castaic Lake Water Agency.
Masnada, who stressed that the agency is not actively pursuing the prospect, answered the question put to him by The Signal Friday.
Would the water agency purchase Valencia Water Co., wholly-owned by the Newhall Land and Farming Co. which is now at the mercy of an East Coast bankruptcy court?
“Yes. We would consider buying it,” Masnada said. “It’s one of the several things we discussed in a special strategy planning session last month. It was one of the many things we looked at in examining ‘How can we best serve the people of Santa Clarita?’
“It made sense in the long term to consolidate retail operations,” he added. “If you have One Valley, One Vision then why not have One Valley, One Retail Water Purveyor?”
Lawyers representing LandSource Communities Development LLC, the company that owns Newhall Land which, in turn, owns the Valencia Water Co., are expected to appear June 30 in a bankruptcy court to learn LandSource’s fate.
On June 8, LandSource lawyers filed a voluntary petition for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington.
As a LandSource subsidiary, Valencia-based Newhall Land was included in the filing as one of 21 debtors.
Masnada said he’s been monitoring the LandSource case closely.
“We’re just kind of on the sidelines. We’re paying attention to (the court case) and if the opportunity comes up, we would look into it if, financially, it made sense.”
The Valencia Water Co. is one of four water retailers who purchase water from the agency, the other retailers being: Newhall County Water District, the Los Angeles Waterworks District No. 36 and the Santa Clarita Water Company which was purchased by the agency in 1999.
The Valencia Water Co. serves about 94,000 people in the Santa Clarita Valley, including those in Valencia, Stevenson Ranch, and parts of Newhall, Saugus and Castaic.
Its customers, according to the claims made on its Web site, are primarily homeowners making up about 86 percent of its revenue. The rest of its water is sold to growers, businesses and public agencies.
But, because it remains a public utility regulated by the California Public Utilities Commission it cannot be sold, The Signal has learned.
When a similar opportunity presented itself a decade ago, however, the Castaic Lake Water Agency ended up buying the Santa Clarita Water Co.
Despite legal opposition to the move, the agency purchased stock of the Santa Clarita Water Company – specifically, its retail account – on Sept. 3, 1999, having invested $63 million in the company. That investment is being repaid over 30 years at a 5 percent interest rate.
Comparatively, as an ongoing concern, the Valencia Water Co. collects a little less than a dollar a day from every person it serves in Santa Clarita.
A year ago, the California Public Utilities Commission authorized it to increase its rates so that it could collect more than $2.8 million in revenue, allowing it to pay for a water-softening test with the extra money.
On June 21, 2007, a year ago today, when the company was allowed to increase its rates, almost a third of its capital structure went to managing its long term debt.
Specifically, its company profile in terms of capital structure was broken down as: 27.95 percent debt, 69 percent equity and 3 percent in preferred stock.
Bill DiPrimio of the Valencia Water Co. Friday referred all comment about the company to its parent company Newhall Land.
“The water company is wholly owned by Newhall Land,” said Marlee Lauffer, spokeswoman for the longstanding local land development firm. “Its assets are not impacted by the Landsource bankruptcy. Because it is a utility, it cannot be sold.”
Basically, the bankruptcy judge in Delaware cannot order LandSource to sell its Santa Clarita water interests to pay for any of its debt.
LandSource, which plans and develops master-planned communities and transforms land into ready-to-build home sites and commercial properties in Arizona, California, Florida, New Jersey, Nevada and Texas, had attempted for several months to reach agreement with its lenders to restructure its debt.
LandSource defaulted on loan payments due April 22.
As with the other retailers, Valencia Water Company’s water is made up in almost equal parts of groundwater pumped from wells – both shallow wells tapping the Alluvial Aquifer and from water deposits set deep in the earth inside the Saugus Formation – and from state water imported from the San Joaquin Delta through the State Water Project.
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Newhall Land officials are breathing a sigh of relief today now that an East Coast bankruptcy court has given its parent company permission to keep the lights on – at least until the end of the month.
“It’s certainly another step in the right direction as we go through re-organization,” Marlee Lauffer, spokeswoman for Newhall Land and Farming Company, told The Signal Wednesday.
On Sunday, the land development company that owns Newhall Land – LandSource Communities Development LLC – filed a voluntary petition for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington, listing 21 affiliated companies as its debtors.
Newhall Land, a wholly-owned subsidiary of LandSource, is one of those debtors.
Many of the 21 debtor companies are affiliated with Newhall Land and Farming, including the Tournament Players Club at Valencia and the Valencia Corporation.
On Tuesday, a bankruptcy court judge in Delaware gave LandSource permission to continue its day-to-day operations, as well as permission to access $35 million.
Early in the week, when asked if filing a Chapter 11 petition is similar to pausing a movie on TV, they said “yes.” The company is still in business but no forward movement – planning, speculating, projecting – is taking place while court proceedings are ongoing, they explained.
It doesn’t diminish the fact that Newhall Land holdings are significant.
Earlier this week, Lauffer told The Signal: “Our land assets enjoy the benefit of longterm value.”
On June 30, LandSource lawyers are expected to return to bankruptcy court to continue discussion on DIP (debtor in possession) financing.
In the meantime, the fate of 21 companies hangs in the balance fueling speculation and rumor.
The Signal tried to get to the bottom of one claim made by a reliable sourse close to TPC Wednesday that golf celebrity Tiger Woods had reportedly expressed an interest in buying TPC and has been pursuing the prospect as recently as in the last two weeks.
LandSource representatives said they’ve heard nothing about Woods as it pertains to LandSource.
“I know nothing about that,” Lauffer said when asked about the golf course. “TPC will continue to be the first rate golf course it has been.
“It will not experience any difference in the club’s operations or the amenities it offers,” she said.
Efforts to contact Woods’ management company, IMG, through messages left at IMG officies in Los Angeles and in Cleveland Wednesday were not successful.
Once a course featured on the PGA Tour circuit, the TPC has gone through a few changes in the past couple of years.
In the last year, TPC General Manager Ron Horton left to pursue other opportunities, Lauffer said.
His replacement, current General Manager Mike Van Der Goes, started with the club this past year.
Reached Tuesday, Van Der Goes referred all comments about ownership of the club to Marlee Lauffer and Steve Zimmer, as did TPC Director of Sales Anthony Falasca.
LandSource, which plans and develops master-planned communities and transforms land into read-to-build home sites and commercial properties in Arizona, California, Florida, New Jersey, Nevada and Texas, had attempted for several months to reach agreement with its lenders to restructure its debt. LandSource defaulted on load payments due April 22.
What happens to its debts, its assets – including land owned by Newhall Land and specifically land earmarked for development as the 21,000-unit Newhall Ranch – and its future will be decided by a court in Delaware.
LandSource spokeswoman Tamara Taylor said no employees of LandSource have been laid off as a result of the company’s debtor woes.
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LandSource Communities Development, LLC, owner of Newhall Land, Sunday filed a voluntary petition for chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington.
As a LandSource subsidiary, Valencia-based Newhall Land is included in the filing.
LandSource, which plans and develops master-planned communities and transforms land into ready-to-build home sites and commercial properties in Arizona, California, Florida, New Jersey, Nevada and Texas, had attempted for several months to reach agreement with its lenders to restructure its debt. LandSource defaulted on loan payments due April 22.
“LandSource believes chapter 11 provides the most effective means for the partnership to preserve the value of its business, meet post-petition obligations and maintain constituents’ confidence while it works with creditors to achieve a long-term restructuring,” Tamara Taylor, Landsource spokeswoman, said in a statement.
Taylor’s statement added that LandSource has received commitments for debtor in possession (DIP) financing from a group of lenders led by Barclay’s Bank, including a $135 million revolving line of credit that will enable LandSource to meet post-petition obligations and fund operations during the chapter 11 reorganization.
According to LandSource, the DIP financing assures that its vendors, contractors and consultants will be paid for goods and services provided after the June 8, 2008 filing date.
“This post-petition financing assures that there will be no interruption in day-to-day operations,” Marlee Lauffer, Newhall Land spokeswoman, said in a separate statement.
“Newhall Land, a 125-year-old company and 40-year developer of Valencia, will continue to plan the remainder of Valencia and its future Newhall Ranch with the utmost integrity and commitment to the community,” she continued.
“Newhall Land has weathered fluctuations and retrenchments in both the California and national real estate markets before,” Lauffer said. “We have every intention not only to survive the current real estate downturn, but (also) to flourish once the market stabilizes.”
With the exception of one development project in Marina del Rey, Calif., LandSource does not build homes or commercial properties.
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