Lafayette officials on Friday received a formal bid to run LUS worth $1.3 billion over 40 years from Baton Rouge-based Bernhard Capital Partners’ newly created subsidiary NewGEN Utility Systems, The Current reports.
The package includes $140 million in cash and $184 million in retired debt up front, and $920 million in in-lieu-of-tax payments and up to $64 million in shared profits over the contract’s lifetime.
Mayor-President Joel Robideaux has previously said a $1 billion deal for LUS would be a “no brainer.”
The direct payment of $388 million—cash, debt relief and earn-outs—is a significant reduction, according to The Current, from an earlier $526 million enterprise value set in a non-binding agreement the firm signed with Robideaux in April.
That agreement, which formally authorized Bernhard Capital Partners/NextGEN to assess LUS via a due diligence study, offered $246 million in cash, $216 million in debt relief and included the same $64 million in shared earn outs should LUS exceed revenue growth projections, according to the online news site.
The previous agreement did not address the ILOT payments already made by LUS, which in recent years have grown to a roughly $23 million annual payout to the city of Lafayette’s general fund. Increased capital expenditures and reduced revenue forecasts provided by LUS also account for the cheaper buyout.
That earlier agreement included only the electric division of LUS. The official proposal, termed a cooperative endeavor agreement, includes management of all three LUS divisions: electric, water and wastewater. It states categorically that the arrangement is neither a sale or lease.
