IPO Watch: American Water Works

www.amwater.com
(Nasdaq:AWK)
Scheduled for the week of April 21
$1.6 billion estimated proceeds
$4 billion estimated post-money valuation

Water is necessary for life. We can engineer around petroleum and probably will one of these days, but we will not be able to figure out a substitute for water. Someday, the Great Lakes region will be America’s Saudi Arabia.

Rather than buy Cleveland real estate right now, you could consider shares in American Water Works. It’s an old-line water utility that’s been around in one form or another since 1886. The company now serves customers in 32 states and one Canadian province. Right now, it’s 100% owned by RWE, a German water utility. RWE has been trying to lighten its American Water Works stake for a while and has been hampered by the lousy stock market. This offering is for 40% of RWE’s position, and the company says it would like to sell more of its stock in the future.

The deal might be a tough sell for those who can’t navigate financial statements. American Water Works has been losing money on a GAAP basis, reporting a loss of $342.8 million in 2007 on revenues of $2.2 billion. However, part of that loss came from $509.3 million in non-cash goodwill impairment charges. The company . . .

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