The owner of South West Water is raising capital to fund about 1 billion pounds of extra investment and is considering a sale of its renewables arm.
Pennon Group launched a fully underwritten 550 million pound rights issue on Wednesday and cut its dividend, Reuters reported. The company, which owns South West Water and SES Water, said the raise would help fund about 1 billion pounds of additional investment.
Capital spending in the regulated water business over the five years to March 2030 is now expected to reach about 3.6 billion pounds, around 1 billion more than first planned. The reset is led by new chief executive Keith Haslett. Debt stood at 4.51 billion pounds at the end of March.
Pennon cut the total dividend for the year to March 2027 to about 125 million pounds from 138 million pounds, implying an about 30 percent cut per share. It is also considering a sale of Pennon Power, its renewables arm, to focus on water and reduce debt. MarketScreener, citing Reuters, said the issue price of 250 pence is a 35.5 percent discount to the theoretical ex-rights price.
Shares fell 22.4 percent to 350.8 pence by 10:37 GMT, the lowest since August 2011 and on track for the steepest one-day drop since 1999, that report said. The offer was larger than many analysts expected.
The update follows Prime Minister Andy Burnham's September statement that he would legislate to repeal a ban on public ownership of water companies. Britain's water sector has been under scrutiny over environmental breaches, dividends and rising bills. The dollar figure in the Reuters dispatch used a rate of 0.7550 pounds.
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- MarketScreener reported the rights issue was larger than many analysts expected.
- Pennon said the capital would fund an operational reset under Keith Haslett.