AWG investors to collect £400m
SHAREHOLDERS in AWG, the Anglian Water and Morrison construction group, are to receive about £400m back as a result of the company's major restructuring, substantially less than previously hoped.
The company has been trying for more than a year to engineer a split to ring-fence its regulated Anglian Water business from its growth infrastructure management and construction arms. It detailed its plans but admitted the go-ahead from its lenders, and from the Ofwat regulator, is likely to delay closure until next June.
The group declined to put a figure on the amounts it would distribute to shareholders as a result of the deal but indicated it is likely to be nearer to £400m than either the £1.6bn that was being talked of earlier this year or the more recent estimates of £600m.
The plan is to put its regulated water and waste-water businesses into a new company called AWS, which can be financed more cheaply by reconfiguring debt exposure. The business will have a regulated asset value of £3.8bn. It is intended all group debt will be lumped into AWS up to a level not exceeding £3.4bn, the balance representing the equity in the business.
Group debt is expected to be about £2.6bn when the deal is done, leaving £800m of shareholder value. Of that, £200m will be retained by AWS as cash reserves, while up to £200m could be spent on the deal itself and pushing money across to its unregulated businesses leaving £400m, or about 142p a share, to equity investors.
The cost of the deal is set to spiral after AWG took a £14.7m charge to cover the expenses so far of its team of advisers - Barclays Capital, Dresdner Kleinwort Wasserstein, Cazenove, Citigroup, and a separate team from its subsidiary Schroder Salomon Smith Barney.
Goodwill write-downs, exceptional items and a 50% leap in interest took pre-tax profits down to £36m in the six months against £60m last time. The interim dividend is up 1.7% at 13.42p.
The group is still considering legal action against the Morrison brothers, who sold their construction group to AWG for £262m last year. The business contributed operating profits of £7.1m on turnover of £415m.
