Sweetener for AWG bondholders
ANGLIAN Water utility and construction group AWG called off an extraordinary general meeting today after agreeing to an 11th hour sweetener to persuade bondholders to back its £2.7bn restructuring.
AWG plans to ring-fence its regulated water business in a new debt-financed vehicle to allow greater freedom for its growth operations in infrastructure management.
However, bondholders in two of AWG's series of seven bonds - led by Aegon Asset Management - had threatened to scupper the plans by voting against the proposals at a meeting scheduled for today.
AWG said that holders of its £100m 12% 2014 bonds and £100m 51/8% 2008 bonds have been offered a 0.375% increase in the annual coupon on the bonds. The deal will mean an extra £7.5m on top of the £120m that AWG has already admitted its restructuring will cost.
The meeting will be reconvened in late May when the company expects its proposals to be accepted. That should clear the way for a payout to shareholders reckoned to be worth between £400m and £600m or between 150p and 200p a share.
Analysts at Merrill Lynch had warned ahead of today's meeting: 'AWG and its advisers appear to have been unsuccessful in their efforts to win their bondholders over.
'The lack of give on either side - indeed relations appear to have deteriorated through the process - suggests that refinancing would be blocked on existing terms, thus forcing AWG to reconsider its options.'
