Dark Clouds Form Over Ginnie Springs
The following guest editorial appeared in the July edition of the Observer and we thank Barbara Llewellyn for publishing this in its entirety.
Dark Clouds Form Over Ginnie Springs
In 1998, the Suwannee River Water Management District (SRWMD) issued the Seven Springs Water Company of High Springs a permit to pump water from two pumps located near Ginnie Springs. The Seven Springs Water Company sells and transfers the water to a nearby bottling plant. That permit expired in 2018. After a complicated period of denials, lawsuits, and an administrative law judge’s ruling – and despite nearly 20,000 letters of opposition – the SRWMD Governing Board voted unanimously to renew the permit on February 23, 2021. Although the meeting was called by the district governing board, it was conducted by lawyers from the District and Seven Springs Water Company.
During the twenty-year period that the permit was in effect, the bottling plant changed hands several times. In December of 2018, it was purchased by Nestle Waters North America (NWNA.) In March of 2021, Nestle sold to private equity companies, One Rock Capital Partners and Metropoulos & Co. and the product was renamed BlueTriton Brands. The new CEO, Dean Metropoulos, is an investor known for his marketing tactics and for buying companies to manipulate and then quickly sell for a profit before his loans come due. Many times, these are companies in decline, which is the case with Nestle Waters. NWNA admitted sales were down, facing bad PR for unsustainable environmental practices and on-going lawsuits.
Metropoulos’ success in his investments stems from a pattern to which he usually adheres. First, he follows the old investor’s rule of risking other people’s money. He purchased NWNA for over 4 billion dollars, using a little over one billion of his own money and over three billion in loans. Most of these were high-risk “junk bonds.” For his investment to bear fruit he must flip the company (BlueTriton) before the loans come due in 2028. To do this and make a profit, he must stop the sales decline and make the company attractive to new buyers.
In the next step, Dean Metropoulos has shown himself to be efficient but ruthless in attacking the new company in order to increase profits by any means. His methods do not tend to make happy employees because he may reduce wages, cut jobs, increase work hours and outsource certain operations. Automation and streamlining resulted in unsafe working conditions in some of his operations. Another tactic Metropoulos used involved reopening a closed plant, only to suddenly close it again, causing hundreds of employees to lose their jobs.
When Seven Springs was applying for their pumping permit renewal, a few Nestle employees came before the Fort White and High Springs city councils with praises for their employer. If Metropoulos follows his usual modus operandi, the employees may change their tune. At the Ginnie Springs plant one of the most salient points of expense is the highly lucrative contract with Seven Springs to purchase their water. It seems highly likely Metropoulos will seek to renegotiate that contract, and thus the owners of Seven Springs Water Company, may, to some degree, be among BlueTriton’s casualties.
If Metropoulos runs true to form, the next step with BlueTriton will be to form a special-purpose acquisition company (SPAC.) This is a shell company formed to raise money which has no assets or business base. Investors put their money in the company without knowing exactly how the owner/sponsor will invest it. The attraction for investors is the possibility of acquiring stock on the ground floor at or near the initial price without being subjected to the regulations required by the Securities & Exchange Commission in a traditional initial public offering (IPO.) The SPAC sponsor normally has two years in which to acquire a company or he must return the funds to the investors. A loophole, however, allows the time limit to be extended if stockholders vote to do so. This may occur when the sponsor dumps a large payment into the SPAC or otherwise convinces them to wait.
What we see here leads us to expect that the Ginnie Springs bottling plant will have a new ownership within the next few years and that workers there will experience negative changes not to their liking. The profitable water sales contract may be rewritten and lawsuits are pending over the issuance of the bottled water permit. In addition, the permit-issuing procedure exposed definitively that the SRWMD has no workable plan for restoration of the Santa Fe River nor any desire to work with the public nor adhere to the spirit of Florida’s water statutes.
Jim Tatum is Historian and board member of Our Santa Fe River, Inc., Fort White