Southwest Water Company Sells Master Tek Subsidiary
Southwest Water Company announced that it has sold Master Tek International, Inc., a wholly owned subsidiary that provides utility submetering and billing and collection services for multi-family residential properties nationwide, to Minol USA for approximately $12 million. Southwest Water does not anticipate that this sale will have a significant impact on its ongoing operations.
Southwest Water expects to record a pretax loss of approximately $4 million on the sale. The company sold the stock of Master Tek, for which it received net cash of approximately $10 million after transaction costs and other retained liabilities. Both the loss on sale and historical business results of Master Tek will be reflected as discontinued operations in the company's financial statements.
Acquired by Southwest Water in April 2000, Master Tek employed approximately 50 people at the time of the sale, had revenues of approximately $8.4 million in 2004 and total assets of $15.9 million as of Dec. 31, 2004.
"We completed a strategic review process and concluded that the growth opportunities involving our core competencies of operating and managing water and wastewater systems exceed those of the submetering business. In the five years since we acquired Master Tek, significant changes in the utility submetering market have reduced our ability to grow the business profitably without making a significant capital commitment,” said Anton C. Garnier, Southwest Water chairman and chief executive officer. “We also determined that submetering services did not provide benefits to our other businesses, and, at this time, a sale to a company that specializes in the submetering industry is the best solution. We believe rate-regulated water and wastewater utilities and contract services offer the potential for a higher return on investment, and for that reason it simply makes sense for us to focus our efforts on what we do best."