EXHIBIT 8
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[Letterhead of Wiggin & Dana LLP]
May 20, 2002
BIW Limited
230 Beaver Street
Ansonia, CT 06401
Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax
matters in connection with the formation of a holding company structure through
a reverse triangular merger (the "Merger") pursuant to an Agreement and Plan of
Merger and Share Exchange as described below.
FACTS
In rendering this opinion we have examined and relied on copies of
the following documents:
1. AMENDMENT NO. 2 TO FORM S-4 REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 OF BIW LIMITED AND THE PROXY / PROSPECTUS CONTAINED
THEREIN (the "Registration Statement");
2. THE AGREEMENT AND PLAN OF MERGER AND SHARE EXCHANGE, dated as of
March 14, 2002 (the "Merger Agreement") by and between BIW Limited ("BIW"),
Birmingham Mergings, Inc. ("Mergings") and Birmingham Utilities, Inc. ("BUI");
3. APPLICATION OF THE Birmingham Utilities, Inc. FOR AUTHORITY TO
IMPLEMENT PROPOSED HOLDING COMPANY STRUCTUre submitted to the Connecticut
Department of Public Utility Control on January 17, 2002; and
On the basis of these materials, and other information provided to
us by the parties, our understanding of the facts is as follows:
THE PARTIES
BIW is a Connecticut corporation, which was incorporated on March
13, 2002. BIW was organized to become the parent of BUI and currently has only
minimal equity capital and no debt. BUI is currently the owner of 100 shares of
BIW common stock, representing all of BIW issued and outstanding common stock.
MERGINGS is a Connecticut corporation, which was incorporated on
March 13, 2002. Mergings was organized as a wholly-owned subsidiary of BIW to
facilitate the Merger. BIW is currently the owner of 100 shares of Mergings
common stock, representing all of Mergings issued and outstanding common stock.
At the effective time of the Merger, Mergings will cease to exist as a result of
its merger with and into BUI.
BUI is a specially chartered Connecticut public service company
engaged principally in the collection, distribution and sale of water for
residential, commercial and industrial purposes and fire protection in Ansonia
and Derby Connecticut, and in small parts of the contiguous Town of Seymour,
Connecticut. As of March 7, 2002, 1,632,879 shares of BUI common stock were
outstanding. There will be no shares of preferred stock or preference stock
outstanding at the time of the Merger.
THE REORGANIZATION
The Merger Agreement provides that, at the effective time of the
Merger, the following events will occur:
1. Mergings will merge with and into BUI with BUI being the
surviving corporation;
2. Each outstanding share of Mergings common stock will be
automatically converted into one share of BUI common stock;
3. Each previously outstanding share of BUI common stock will be
automatically converted on a share-for-share basis into one share of BIW common
stock, except for shares with respect to which dissenters' rights have been
properly exercised;
4. Each share of BIW common stock owned by BUI will be automatically
cancelled;
5. No BUI securities or debt other than BUI common stock will be
exchanged or converted into BIW securities or debt as a result of the Merger;
and
6. Upon completion of the Merger, the BIW common stock will be
listed on the American Stock Exchange and BUI common stock will be delisted.
The result of Merger is that BUI will become the wholly-owned
subsidiary of BIW. After the exchange of shares, each person who owned BUI
common stock prior to the share exchange (excluding persons who have properly
perfected dissenters' rights with respect to their BUI common stock) will own a
corresponding number of shares of the outstanding BIW common stock.
BUSINESS REASONS
BUI believes that as a result of the current business climate there
are numerous non-regulated business opportunities that exist that it could
consider if the operations of its business were separated into regulated and
non-regulated entities. The holding company structure will allow BIW the
managerial, structural and financial flexibility necessary to meet challenges in
the competitive marketplace. In addition, changing the corporate structure so
that unregulated activities are not conducted in concert with regulated
activities will provide more definitive legal insulation of such activities.
REPRESENTATIONS
For purposes of obtaining our opinion as to the principal federal
income tax consequences of the proposed Merger, in addition to providing the
facts set forth above, BUI has made each of the following specific
representations:
1. The fair market value of the assets of BUI will exceed the
liabilities of BUI, both on the date of adoption of the Merger Agreement and at
the time the Merger will be consummated.
2. Mergings will retain no assets following the consummation of the
Merger. After the Merger is consummated, Mergings will cease to exist.
3. BUI has not redeemed any of its outstanding common stock within
the three-year period preceding the adoption of the Merger Agreement. Neither
BIW nor BUI has plans or intentions to sell or otherwise dispose of any of the
assets of BUI, other than in the ordinary course of business.
4. The owners of at least 80% of BUI's common stock will exchange
their stock for BIW common stock.
OPINION
In rendering our opinion, we have considered the applicable
provisions of the Internal Revenue Code of 1986 as amended (the "Code"),
Treasury Regulations, pertinent judicial authorities, interpretative rulings of
the Internal Revenue Service ("IRS") and such other authorities as we have
considered relevant. On the basis of the foregoing statement of facts and
representations, and subject to the concluding paragraphs of this letter, it is
our opinion that:
1. The Merger will be treated as a transfer of all of the
outstanding BUI common stock by the owners of such common stock to BIW solely in
exchange for all of the outstanding BIW common stock, in an exchange qualifying
for nonrecognition under Code Sections 368(a)(1)(A) and 368(a)(2)(E);
2. No gain or loss will be recognized by the owners of BUI common
stock, other than dissenting shareowners, as a result of the Merger;
3. The tax basis of the shares of BIW common stock received in the
Merger by a BUI shareowner will have the same tax basis as the shares of BUI
common stock that the BUI shareowner owned immediately prior to the Merger, and
the holding period for the shares of BIW common stock will include the period
during which the BUI shareowner held the shares of BUI common stock, provided
that the shares of BUI common stock were held as capital assets at the effective
time of the Merger;
4. No income, gain or loss will be recognized by BIW as a result of
the Merger;
5. Gain or loss will be recognized by BUI shareowners who properly
perfect their dissenters' rights under the Connecticut Business Corporation Act,
measured by the difference between the amount of cash received (other than any
amount constituting interest) and the basis of the shares of BUI common stock
that are exchanged therefor. The gain or loss will be capital gain or loss,
provided that the shares of BUI common stock were held as capital assets at the
effective time of the Plan of Merger, and will be long-term capital gain or loss
if the shares were held for more than one year at that time.
Our opinions and the legal conclusions expressed herein are based on
the facts, conditions and representations in existence as of the date hereof,
including those set forth in this opinion letter. Any alteration of such facts
or representations may adversely affect our opinion.
Our opinion as to federal income tax matters is limited to the
matters addressed herein, and no other opinions are rendered with respect to
other federal income tax issues or to any issues arising under the laws of the
State of Connecticut or any other jurisdiction. The opinion expressed herein is
based upon present judicial interpretations of the Code and Treasury Regulations
and present judicial and administrative positions related thereto, all of which
are subject to change. We can give no assurance that new or amended Treasury
Regulations or new or amended administrative rulings or procedures will not be
proposed or that new legislation will not be enacted that would have an impact
on the opinion set forth herein. Our opinions are not binding upon the IRS or
any court. The information set forth above is as of the date hereof, and except
as provided herein, we undertake no obligation to advise you of any changes that
may be brought to our attention after delivery of this opinion.
We have not been asked, and we do not, render any opinion with
respect to any matters other than those expressly set forth above. We hereby
consent to the filing of this opinion with the Securities Exchange Commission as
Exhibit 8 to the Registration Statement.
Sincerely,
/s/ Wiggin & Dana LLP