Company: MWA
Filing Date: 2025-02-05
Form Type: 10-Q
Source: 0001350593-25-000012
Chunk: 16

Company: Mueller Water Products, Inc.
Filing Date: 2025-02-05
Form: 10-Q
Item: Part I, Item 1
Chunk 16
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million in Strategic reorganization and other charges consisting of expenses associated with our leadership transition and cybersecurity incidents, as well as other transaction-related expenses.  Activity in accrued Strategic reorganization and other charges, reported as part of Other current liabilities, is presented below: Three months endedDecember 31,20242023(in millions)Beginning balance$3.4 $6.6 Expenses incurred1.7 6.6 Amounts paid and other adjustments, net(1.5)(5.4)Ending balance$3.6 $7.8 New Markets Tax Credit ProgramOn December 22, 2020, we entered into a financing transaction with Wells Fargo Community Investment Holdings, LLC (“Wells Fargo”) related to our brass foundry construction project in Decatur, Illinois under a qualified New Markets Tax Credit program (“NMTC”).  The NMTC is a federal program intended to encourage capital investment in qualified lower income communities.  Under the NMTC, investors claim federal income tax credits over a period of seven years in connection with qualified investments in the equity of community development entities (“CDE”s), which are privately managed investment institutions that are certified to make qualified low-income community investments, such as in our foundry project.Under the NMTC, Wells Fargo contributed capital of $4.8 million to an investment fund and we loaned $12.2 million to the fund.  Wells Fargo is entitled to the associated tax credits, which are subject to 100% recapture if we do not comply with various regulations and contractual provisions surrounding the foundry project.  We have indemnified Wells Fargo for any loss or recapture of tax credits related to the transaction until the seven-year period elapses.  We do not anticipate any credit recaptures will be required in connection with this arrangement.The investment fund contributed $16.5 million cash for a 99.99% stake in a joint venture (“Sub-CDE”) with a CDE.  The Sub-CDE then loaned $16.2 million to us, with the use of the loan proceeds restricted to foundry project expenditures.  This transaction also includes a put/call provision under which we may be obligated or entitled to repurchase Wells Fargo’s interest in the investment fund.  We believe that Wells Fargo will exercise its put option in December 2027 for nominal consideration, resulting in our becoming the sole owner of the investment fund, cancelling the related loans, and recognizing an estimated gain of $3.9 million