THIRTY-FIRST IN A SERIES
 

NH'S LEADING BUSINESS ORGANIZATION SAYS NASHUA'S
HOSTILE TAKEOVER BID IS "BAD PUBLIC POLICY"

Dear Customers and Shareholders,

Some things are worth repeating.

We think an article entitled “It’s time for Nashua to stop abusing threat of eminent domain” is one of those things.

Authored by John Crosier, president of the Business & Industry Association of New Hampshire, the state’s leading trade association, the article appears in the November edition of the BIA Report. Its readership includes 1,200 business leaders, 424 New Hampshire legislators, the New Hampshire executive branch and major department heads, as well as leading New Hampshire Chambers of Commerce. The Nashua Telegraph also published the article in its November 14th edition.

We have provided some excerpts from the article. The full text can be accessed at www.nhbia.org or www.nashuatelegraph.
com.

As we said, some things are truly worth repeating.

Pennichuck Corporation
New Hampshire’s Oldest
Continuously Operating Business
November 21, 2004

For more than two years, the city of Nashua and Pennichuck Corporation have been at odds over the city’s professed intention to acquire the company by eminent domain. The takeover was triggered by an announcement that the local water company planned to merge with Philadelphia Suburban, a large publicly traded water utility.

Pennichuck is a 150-year-old company that serves 21,000 residential, commercial and industrial customers in Nashua and 110,000 other customers in 36 communities throughout southern New Hampshire and northern Massachusetts.

The price tag on this eminent domain proceeding is sobering. Nashua's mayor and aldermen have spent $600,000 in legal and consultant fees in their attempt to take over Pennichuck so far and will likely spend at least that much more over the coming year.

Pennichuck estimates the harm to its business at $5 million dollars and has sued the city to recover these damages.

The situation, to be blunt, is a mess. This is clearly a lose-lose situation for the taxpayers of Nashua and the employees and shareholders of Pennichuck.

While the Business & Industry Association of New Hampshire does not routinely weigh in on local issues, there are times when one is so precedent-setting, or so egregious, that we feel compelled to speak out on behalf of the state’s business community. This is one of those instances.

Eminent domain is a power that is normally reserved for use when a governmental entity needs property in order to perform an essential function, such as building a road, and occasionally for other beneficial purposes such as urban redevelopment.

Government's power of eminent domain can be abused, however. And we believe that the city of Nashua has clearly overreached its authority in this instance.

The city is not only attempting to take the company’s water works inside the boundaries of Nashua, but also laying claim to Pennichuck subsidiaries that provide water service outside of Nashua through systems that are entirely unconnected to the one serving the city.

Trying to take over Pennichuck is clearly bad public policy.

The prospect of Nashua taking all of the utility assets of a company that provides water service throughout the southern tier of the state and into central New Hampshire and the Seacoast is obviously ridiculous.

Government seizure of private businesses isn't viewed favorably in the USA. We expect that the courts and the New Hampshire Public Utilities Commission will agree in Pennichuck’s case. Nashua’s efforts are nothing more than a hostile takeover bid trying to disguise itself as legitimate public policy.