Last checked at 23 Nov 2007 13:36
United Utilities PLC
23 November 2007
UNITED UTILITIES AGREES SALE OF ITS ELECTRICITY DISTRIBUTION ASSETS FOR ‚£1,782 MILLION
United Utilities PLC today announces that it has agreed the sale of its electricity distribution assets for a total enterprise value of ‚£1,782 million (note 1) to North West Electricity Networks Limited.
This represents a 45 per cent premium to the regulatory asset value (note 2). In addition, United Utilities has a ‚£1.5 billion (note 3) contract to operate these assets and manage the capital expenditure programme which runs through to 2015, with the potential to extend the contract for a further five years to 2020.
Chief Executive of United Utilities, Philip Green, said:
"We are very pleased to announce the sale of our electricity distribution assets for a substantial premium to the regulatory asset value. This meets our target of agreeing the sale by the end of this calendar year and is consistent with our view that shareholders' interests are best served by our focusing on the much larger water asset base."
Completion of the sale is expected by 31 December 2007.
As a result of this transaction, United Utilities intends to return the net equity proceeds of approximately ‚£1 billion (note 4) to its shareholders in the next financial year.
Details of the proposed return of value to shareholders and the outcome of the group's capital structure and dividend policy review will be provided in United Utilities' half year results announcement on Thursday 29 November 2007.
United Utilities' contacts
For further information please contact:
Philip Green, Chief Executive +44 (0) 1925 237000 Tim Weller, Chief Financial Officer +44 (0) 1925 237000 Gaynor Kenyon, Communications Director +44 (0) 7753 622282 Darren Jameson, Head of Investor Relations +44 (0) 7733 127707
Alan Brown / Anthony Parsons, Deutsche Bank (note 5) +44 (0) 20 7545 8000
Dominic Fry / Peter Hewer, Tulchan Communications +44 (0) 20 7353 4200
Notes
1. Comprises ‚£1,140 million cash consideration and ‚£642 million in net debt at fair value assumed by the purchaser.
2. Based on 31 March 2008 regulatory asset value of ‚£1,230 million (based on a forecast RPI for 2007/08 of 3.2%).
3. Contract estimated to generate total revenues of around ‚£1.5 billion through to 2015.
4. Represents cash consideration net of United Utilities' group debt apportioned to the electricity distribution assets and transaction costs.
5. Deutsche Bank AG, London Branch ("Deutsche Bank") is acting as sole financial adviser to United Utilities.
Notes
United Utilities announced at its 2006/07 preliminary results, on 5 June 2007, that the Board had taken the decision to initiate a sale process for United Utilities' electricity distribution assets, with a view to maximising shareholder value. The Board believes that shareholders' interests are best served by the group focusing on the much larger water asset base, which offers significantly more growth potential than its electricity assets.
In the year to 31 March 2007, United Utilities Electricity Limited generated revenue of ‚£315.6 million and reported an operating profit of ‚£176.1 million and profit before taxation of ‚£144.9 million. The value of the gross assets which are the subject of the transaction was ‚£2,255.3 million as at 31 March 2007.
North West Electricity Networks Limited has been jointly established by Colonial First State Global Asset Management ("CFS") and IIF Int'l Holding GP Ltd. for and on behalf of IIF Int'l Holding L.P. ("JPM IIF") to effect the acquisition of UUE. CFS and JPM IIF will each provide 50% of the equity in relation to the acquisition.
CFS is the asset management division of the Commonwealth Bank of Australia. CFS currently manages in excess of US$141 billion of investments across a broad spectrum of traditional and alternative asset classes including managing in excess of US$2.5 billion of equity invested in infrastructure assets in the utility and transport sectors in Australia and Europe.
JPM IIF is a fund advised by JPMorgan Asset Management Infrastructure Investments Group - part of JPMorgan Asset Management, and is focused exclusively on the infrastructure sector. The fund holds investments in North America and Europe.
UNITED UTILITIES PLC