Veolia Water Awarded Management of the Water and Wastewater Systems of Rialto, California

  Veolia Water Awarded Management of the Water and Wastewater Systems of
  Rialto, California

Business Wire

PARIS -- January 31, 2013

Regulatory News :

The city of Rialto and Rialto Water Services (RWS) have awarded Veolia Water
North America, a Veolia Water (Paris:VIE) subsidiary, a contract to manage the
city’s water and wastewater systems. The 30-year contract is valued at
approximately $300 million in revenues for Veolia Water.

The city of Rialto and Rialto Water Services (RWS) are using a public–private
concession model—one rarely seen in the United States—to strengthen the city’s
financial position and improve infrastructure services. As part of that
concession, RWS hired Veolia Water North America, a Veolia Water subsidiary,
to manage the city’s water and wastewater systems.

The financing mode mode is highly original, as the city of Rialto has received
$35 million in an upfront cash payment and secured $41 million in funding for
future water and wastewater system improvements through a concession contract
signed with RWS, a special purpose company established by Table Rock Capital
and a Ullico affiliate.

In a context where many municipalities are facing financial difficulties, this
cash injection will enable Rialto to upgrade its water and wastewater systems
and services, create jobs and benefit from the expertise of the world’s
leading water services and technology company.
RWS has responsibility for managing the 30-year contract with Veolia Water,
which is estimated to be worth over $300 million in revenues for Veolia Water.
RWS will oversee the infrastructure upgrade program that aims to improve the
efficiency, level of compliance, water quality and reliability of Rialto’s
water and wastewater systems. The program will create 445jobs in the
construction sector. In addition, all affected municipal employees have
accepted positions offered by Veolia Water.

The RWS concession will enable the aging facilities to be refinanced without
being privatized. Public ownership, control and transparent public authority
over rate setting are maintained by the city. The concession provides the
capital needed to rehabilitate and replace the water mains and sewers, design
new infrastructure and carry out seismic retrofits. The planned program will
strengthen the city’s finances with annual lease payments that can support
economic development and local jobs.

The public–private partnership offers an example for other US cities. The
partnership’s “blue growth” strategy of sustainable water management and
support for economic and social development can be emulated in cities faced
with the problems of aging infrastructure, a slow-moving economy and reduced
revenues.

Veolia Water has been present in California for 40years and has been
operating the Rialto wastewater collection system and treatment plant for the
past nine years. For this new kind of contract, the company stood out as the
ideal partner.

“The RWS partnership ensures that the city’s water and wastewater
infrastructure is upgraded and run in the most cost-efficient manner, while
also laying the groundwork for new economic development,” says Rialto City
Administrator Mike Story. “We’ve worked with Veolia for years in the community
and this arrangement allows for both continuity and improvement in the water
resource and wastewater service, and it assures us that the total commitment
to the residents of the city of Rialto is met.”

“We’ve worked with Rialto for almost 10 years and have established a
relationship of trust that helps stimulate the city’s economic vitality,” 
said Laurent Auguste, who has responsibility for operations in North and South
America at Veolia Water. “The city has made the right decision in choosing to
renovate and upgrade its facilities, and we are excited to be able to help
them through our new responsibilities.”

Table Rock Capital and an affiliate of Ullico Inc., the only labor-owned
insurance and investment company in the United States, provided equity
financing, with additional parties providing debt financing on the $172
million total financing for this innovative public–private concession. “With
the loss of redevelopment financing, creative partnerships such as these are
increasingly critical to communities who want to restore infrastructure, gain
efficiencies, and get a competitive edge when it comes to creating jobs and
economic growth,” said Peter Luchetti, head of Table Rock.

For Jean-Michel Herrewyn, Chief Executive Officer of Veolia Water, “these
public–private partnerships bring together different organizations, each of
them specialized in their own field, whether as public-sector managers,
financiers or operators. It’s a way forward for the future to ensure we have
ever-more efficient, sustainable and accessible services.”

Veolia Water, the Water Division of Veolia Environnement, is the world leader
in water and wastewater services. Specialized in outsourcing services for
municipal authorities, as well as industrial and service companies, it is also
one of the world's major designers of technological solutions and constructor
of facilities needed in water and wastewater services. With 96,651 employees
in 69 countries, Veolia Water provides water service to 103 million people and
wastewater service to 73 million. Its 2011 revenue amounted to €12.617
billion. www.veoliaeau.com

Veolia Environnement (Paris Euronext: VIE and NYSE: VE) is the worldwide
reference in environmental solutions. With more than 315,000 employees, the
company has operations all around the world and provides tailored solutions to
meet the needs of municipal and industrial customers in four complementary
segments: water management, waste management, energy management and passenger
transportation. Veolia Environnement recorded revenue of €29.6 billion* in
2011. www.veolia.com

  *Excluding Veolia Transdev revenues currently under divestment

 Press release also available on our web site: http://www.finance.veolia.com

Contact:

Veolia Environnement
Analyst and institutional investor contact:
Ronald Wasylec
+33 1 71 75 12 23
or
US Investors contact
Terri Anne Powers
Tel +1312-552-2890