Archive for the ‘Opinions’ Category
Culligan Bankrupt?
Once Culligan started selling off the corporate stores, the writing was on the wall this this would inevitably happen. Culligan’s Billion Dollars of debt is proof positive that the water industry is more complex than the average corporate suit realizes.
Big Business is about making money for stakeholders – Large corporations have been trying to dominate the water treatment business for years and continue to fail because it is not a traditional commodity business. It is not about economics of scale and cannot be universally marketed.
An MBA will not help you run a water business – You have to see it from a consumer and dealer’s perspective – the microeconomic climate is incredibly complex and misleading.
The water business is about caring for customers…one at a time, each with their own unique set of problems and concerns. Every home/business is different, every water source is different, and every clients needs are unique and different.
A small group of Culligan franchise owners are still trying to buy the troubled behemoth to protect the integrity of the brand and help their customers with repair parts and equipment. I wish them success, but fear that the damage is too great to make it work. They have their own loyal base of customers who buy from them because of who they are, not just the Culligan brand (In fact some buy in spite of the Culligan brand,because the dealer provides such good customer service). It is my opinion that these dealers would be better served to promote their own identity and reputation while using components from a reputable manufacturer like Pentair/Fleck and working with a dedicated regional OEM who can properly serve them.
The individual Culligan franchisees will do their best to struggle along as the corporate machine breaks down around them. Quality control will decline and corporate warranty support will go the same way. I know a number of excellent Culligan dealers who will step up for their customers – I also know a few who probably will not.
It is sad to see how a great brand has declined to the state that it is in – without passion for the company’s identity or a strong corporate culture and vision. Personally, I’m surprised that they held on for this long.
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Here’s Nick Brown’s article:
(Reuters) – Culligan International Co, which sells water coolers and filters and installs water softening devices in homes, has hired restructuring advisers and is considering options including a possible bankruptcy, according to sources familiar with the matter.
Culligan, known for its advertisements starting in the 1950s that featured a cartoon housewife beckoning “Hey Culligan man!”, is owned by private equity firm Clayton Dubilier & Rice.
The company, based in Rosemont, Illinois, has hired law firm Debevoise & Plimpton and financial adviser Evercore Partners, according to the people familiar with the situation, who declined to be named because they were not authorized to speak publicly.
One option is a possible Chapter 11 bankruptcy filing, as the company struggles under roughly $900 million in loan debt that it has not refinanced, the sources said. The debt matures starting in May.
Clayton Dubilier is also considering a sale of the company, a move that could take place in or out of bankruptcy, one of the people said.
Culligan representatives did not respond to requests for comment. Clayton Dubilier and Evercore declined to comment, while a spokeswoman from Debevoise had no immediate comment.
Culligan’s key debt holders include private equity firms Centerbridge Partners and Angelo Gordon & Co, according to sources. Both firms did not return calls requesting comment.
Since its founding in 1936, Culligan has made water treatment products and distributed water worldwide through its dealers. The company operates through a network of more than 800 franchise dealers in 90 countries, according to its website.
Clayton Dubilier bought the company in 2004 from France’s Veolia (VIE.PA) for $610 million, including $200 million in equity and the rest in debt.
Starting in the 1950s, Culligan became well known for its iconic advertisements. The company eventually retired the image of a woman yelling “Hey Culligan man!”
This year, it redefined the Culligan Man character as a more knowledgeable expert, according to a January statement from the company.
Culligan’s loans include a $110 million revolving credit line that matures in May, a $565 million bank loan maturing in November and a 175 million euro loan maturing in May 2013, according to ThomsonReuters data. Sources said the agent on the loans is JPMorgan, which declined comment.
Culligan’s debt dates to 2007, when it did a $900 million leveraged recapitalization, including a $375 million dividend payment to its equity holders, which included Clayton Dubilier, according to a Moody’s Investor Service 2007 press release.
In November, Standard & Poor’s Financial Services said in a report that the company had a significant refinancing risk in the next 6 to 12 months and that it had insufficient liquidity and negative free cash flow.
S&P in May downgraded the company’s credit rating on the heels of Culligan’s announcement that it planned to start seeking buyers for about 100 company-owned dealerships.
(Editing by Phil Berlowitz)
Copper fouling in a water softener in Utah
One of Intermountain Soft Water’s Utah soft water service technicians sent me this photo today:
The photo shows the rear view of an Imperial 2.x series water softener with its solenoid back-cap removed. The flow path of this control valve is such that the backwash port is at the bottom, and soft water flows through the top port for time brine refill.
The softener is 5 years old and the homeowner has been neglecting to maintain his Pur-Gard fluid level. It is evident that there are low levels of copper in his influent water supply. The low levels of copper have been retained within the softening resin and then discharged as a concentrate during the regeneration process. The milky blue color in this picture is from copper sulfate which forms during the regeneration process.
Copper can come from a variety of sources, not just from the city supply. This particular city’s Consumer Confidence Report indicates negligible levels of copper at the plant, so evidently the elevated copper is a localized issue.
Ionic copper levels can increase due to localized corrosion from dissolved CO2 gas, electrolysis, and even microbially induced corrosion.
Water softeners are primarily designed to remove calcium and magnesium ions from water. All cation resins are attracted to metallic ions, but very few resins are able to release them properly and uniformly during a regeneration.
Resin cleaners like Pur-Gard assist the resin in purging metallic ions from it’s structured matrix. As a side benefit, Pur-Gard will hold the metals in suspension through the use of EDTA, an effective chelating agent.
By not keeping their Pur-Gard reservoir consistently full, the resin was unable to effective purge heavy metals from its matrix. Metallic fouling will cause a decrease in the overall effective capacity of the resin. This capacity decrease results in the softener being unable to maintain a continuous supply of soft water.
The homeowner noticed evidence of hard water bleed-through with hard water spotting, poor laundry results, and soap scum. Being enterprising, he adjusted the efficiency setting on his Evertech controller and causes the system to use more salt to clean itself. This was a temporary solution to the symptoms, but did not actually address the underlying problem.
High concentrations of salt brine can induce osmotic shock to resin and accelerate natural attrition. Accelerated attrition induces premature physical failure and the resin will begin to crack and fracture. Cracking and fracturing result in a net pressure drop across the resin bed which diminishes the systems overall ability to properly clean itself and causes a greater deltaP (Pressure differential) during service.
The solution to this problem was a complete cleaning and disinfection as well as augmenting the resin with Hydrolyte 525-2, designed specifically to accommodate metallic ions in water with a minimum of physical attrition.