Professional advisers selected to guide a PGW sale

Posted: August 17, 2012

How many professional advisers does the city need to sell Philadelphia Gas Works?

A lot.

Mayor Nutter has selected two investment-banking firms, five law firms, two lobbying groups, and two public-relations companies to guide the city through the potential sale of PGW, the nation's largest municipal gas utility.

The array of professionals includes some familiar names to city government work: Lazard Freres & Co. L.L.C.; the Ballard Spahr law firm; Ceisler Media, and Cardenas Grant Communications. The city chose them after issuing requests for proposals earlier this year.

The professionals will initially receive up to $2 million in fees, said Mark McDonald, the mayor's spokesman. The utility, which the city has owned for 176 years, could sell for as much as $1.85 billion, according to a consultant's report.

The city divided the professional work among several firms to fulfill its legal mandate to steer some contracts to firms owned by minorities and women, McDonald said.

The potential sale of the city-owned utility is likely to be a complex legal, financial and political undertaking. Several mayors and blue-ribbon panels have advocated the sale for years, saying that private investors could run the utility more efficiently. But some strong constituencies, including members of City Council, PGW's employees, and advocates for low-income customers, contend that public ownership is a better deal.

On Friday, Nutter will formally announce that he has picked Lazard Freres as financial adviser. In February, Lazard completed a $200,000 feasibility report that suggested the city might net nearly $496 million by selling PGW, which convinced Nutter to explore the sale.

Seven firms competed for the job as financial adviser, McDonald said, and Lazard "presented a clear and convincing case that they know the industry and know the company."

Lazard will be joined by M.R. Beal & Co., a minority-owned investment bank in New York. Lazard will receive up to $600,000 for its services, and Beal will receive up to $150,000, said McDonald. The sales process is expected to take up to two years.

Ballard Spahr, the Philadelphia firm whose partners include Ed Rendell, the former mayor and governor, will head the city's legal team. Eighteen law firms bid on the legal work, McDonald said.

Ballard Spahr will be joined by the Smyler Firm, led by former city attorney Denise J. Smyler, and Andre C. Dasent.

The legal firms anticipate billing the city $700,000 for the first year, of which Ballard would receive 80 percent, or $560,000, and Smyler and Dasent would receive 10 percent, or $70,000 each.

In addition, the city has retained two specialist law firms. Manko Gold, based in Bala Cynwyd, will receive up to $125,000 for the first year for work on environmental law. Hangley Aronchick, of Philadelphia, will receive up to $50,000 for litigation.

Kleinbard, Bell & Brecker will receive up to $166,000 for work as a lobbyist. Luminous Strategies, a minority-owned lobbying firm in Philadelphia, will receive up to $34,000.

Ceisler Media, the Philadelphia communications firm owned by Larry Ceisler, and Cardenas Grant Communications of Philadelphia, will split $171,000 of public-relations work. Cardenas Grant is owned by Barbara A. Grant, the city's former director of communications, and Luz Cardenas, former first deputy director of communications.

McDonald said the contract amounts are ceilings. He said Ceisler, which the city hired in March for initial public-relations work, billed $7,000 under its $30,000 contract.


Contact Andrew Maykuth at 215-854-2947, @Maykuth on Twitter or amaykuth@phillynews.com

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