 |
ENRON CORP. FORMS NEW GLOBAL WATER COMPANY; ALL CASH OFFER SUBMITTED FOR WESSEX WATER PLC
FOR IMMEDIATE RELEASE: Friday, July 24, 1998
HOUSTON and LONDON - Enron Corp. announced today the formation of a new company to pursue opportunities in the global water business. The new water company will own and operate strategic water and wastewater assets, such as local distribution systems and treatment facilities, and develop related infrastructure.
As a key step in establishing this new business, Enron announced an all cash offer, which has been unanimously recommended by the board of directors of Wessex Water Plc ("Wessex") for all outstanding common shares of Wessex. The offer, which will be made by a subsidiary of Enron, will be made on the basis of £6.30 (US$10.33) for each share and values the common equity of Wessex, on a fully diluted basis, at approximately £1.4 billion (US$2.2 billion). The offer represents a 28 percent premium based on Wessex's closing price of £4.93 (US$8.08) per share on July 23, 1998. The offer will be made subject to certain regulatory and other customary conditions.
"The development, ownership and operation of water infrastructure is a logical extension of Enron's expertise developed in the worldwide energy business," said Kenneth L. Lay, Enron chairman and CEO. "The proposed acquisition of Wessex represents an outstanding opportunity to build an international water business through a separate subsidiary. Wessex has a superior operational track record and a high-quality core management team that has been in place since the privatization of the industry in England and Wales in 1989. Those attributes, combined with our expertise in energy infrastructure project development, asset management, regulatory, finance and risk management services, will enable the new company to become a strong competitor in the global water industry.
"Currently, there are only a handful of large private sector companies operating in the US$300 billion worldwide water market, and there are tremendous opportunities for future growth as the water industry moves toward privatization and consolidation," Lay said. "In order to be successful in this global market, players must have water and wastewater operating experience, financial strength and project development expertise, including capital-raising ability."
"Enron's water subsidiary initially will pursue the development of water projects in Europe, Latin America and Asia - markets in which privatization is occurring and in which Enron already has gained significant international experience and has established a substantial operating presence," said Rebecca P. Mark, newly appointed chairman and CEO of the water subsidiary and vice chairman of Enron Corp., where she focuses on the development of new businesses. "The new water company also will pursue water opportunities in North America, where Enron has participated in the energy industry for more than 60 years."
"The new company is expected to be accretive to Enron's financial results in the first full year of operations, and we intend to pursue a strategy such that the new water company will be accretive in the future," Lay said. "We expect the new water company to be able to finance its own ongoing activities rather than depend on Enron's financial resources. In the near term, Enron plans to replace the acquisition financing with permanent financing on terms which maintain its existing capital structure.
"Wessex will be the flagship of the new water company," Lay said. "As such, Wessex will be the center of excellence for the new international water business while continuing to provide its existing customers with high quality water and wastewater services through continued investment in its infrastructure and in the latest technology."
The current Wessex management team will retain their existing roles following completion of the transaction. Chairman Nicholas Hood will be appointed as vice chairman and a director of the new water company and will continue to serve in his role as chairman of Wessex. Colin Skellett will serve as chairman and CEO of Wessex Water Services Limited, the principal operating company, as well as continue as CEO of Wessex. Both Hood and Skellett will play an active role in the new international water business. The remaining executive directors of Wessex, Nick Wheatley, Chris Bishop and Libby Gawith, will continue to serve as directors of Wessex following the completion of the offer.
"Wessex has built a reputation for first class water service and efficiency," Hood said. "For some time, Wessex has been seeking ways to expand the opportunities for our company and for our people. This offer will make Wessex the heart of a global water infrastructure business, which we believe will become a world leader.
"The terms of the offer recognize the strength of Wessex's business and represent excellent value for Wessex shareholders," Hood added. "This deal is good for shareholders, customers and employees of Wessex. As such, the board therefore unanimously recommends the offer to shareholders."
Wessex's principal business is the provision of water supply and wastewater services in southwestern England, a region which covers most of the counties of Avon, Dorset and Somerset and parts of Devon, Gloucestershire, Hampshire and Wiltshire.
Wessex provides water services to an area with a population of approximately 1.1 million using its water infrastructure which includes 131 treatment plants, 320 pumping stations, 340 storage reservoirs and more than 6,800 miles of water mains. Wessex also provides wastewater services to an area with a population of approximately 2.5 million through its infrastructure of 1,300 pumping stations, 360 sewage treatment plants and 9,320 miles of sewers. Wessex's other business activities include UK Waste, a joint venture with Waste Management International, which provides waste collection, disposal and recycling services nationwide, and SC Technology, which sells and operates sludge drying plants. For the year ended March 31, 1998, Wessex reported before-tax profits of £139.0 million (US$227 million), revenues of £266.0 million (US$434 million) and had total assets of £1,225.2 million (US$1,997 million). As of March 31, 1998, Wessex and its subsidiaries employed approximately 1,380 employees.
Enron is one of the world's leading integrated electricity and natural gas companies. The company, which owns approximately $24 billion in energy related assets, produces electricity and natural gas, develops, constructs and operates energy facilities worldwide and delivers physical commodities and risk management and financial services to customers around the world. Enron's Internet address is www.enron.com, and the stock is traded under the ticker symbol, "ENE."
This press release includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Enron believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include political and regulatory developments affecting Wessex, the level of Wessex's capital expenditures, the availability of new acquisition opportunities, the timing and success of future acquisitions and conditions of the capital markets and equity markets during the periods covered by the forward looking statements.
Any statement relating to improvements in financial results is made prior to considering any synergy or other benefits that the acquisition of Wessex may give rise to, and should not be interpreted to mean that the future earnings per share of Enron, as enlarged by the acquisition of Wessex, will necessarily be greater than the historical earnings per share of Enron.
Click here to download this press release in Microsoft Word format.
For additional information please contact:
Carol Hensley (U.S.)
(713) 853-6498
Jackie Gentle (U.K.)
0385-291471
|
