Scottish Power Completes Its Exit from Non-energy Operations with Water Sale
Scottish Power PLC chief executive Ian Russell said the sale of Southern Water has completed the group's exit from non-energy operations.
"This is an important transaction as it concludes the process of redefining Scottish Power as an international energy company," Russell said.
First Aqua bought Southern Water for 2.05 bln stg, of which 1.9 bln stg will be paid in cash and the balance in assumed debt.
The group will use proceeds from the deal to repay its debts and fund investments.
"This is a good price. It enhances our balance sheet and gives us the chance to grow our international energy activities," he added.
Scottish Power bought Southern Water in 1996 for 1.79 bln stg, including assumed debt. However, it decided to dispose of the company last year as the circumstances and outlook for the UK water industry changed significantly since the acquisition and the financial return from the business has been negatively impacted by the windfall tax and the 1999 Regulatory Review.
Russell said the transaction has a "low completion risk" as it would mainly require Scottish Power shareholders' approval and EU merger clearance.
"We will complete the deal in April (this year)," he said.
The deal would enable the group to reduce its gearing to 81 pct from 112 pct.
First Aqua is a company specifically formed to undertake the proposed acquisition, and is financed by third party debt underwritten by The Royal Bank of Scotland with equity funding from private and institutional investors.