Pennon Group PLC has announced its intention to raise gross proceeds of up to 180 million through an equity capital raise. The raise will include a non-pre-emptive placing of new ordinary shares to both existing institutional shareholders and new institutional investors. In addition, the company intends to offer new ordinary shares via the PrimaryBid platform to provide retail investors with an opportunity to participate in the equity capital raise. The company also plans to have certain directors and executives subscribe for new ordinary shares to contribute approximately 150,000 in aggregate to the equity capital raise.
The rationale for the equity capital raise is the recent acquisition of Sumisho Osaka Gas Water UK Limited, the holding company of Sutton and East Surrey Water plc, for 89 million. The company is launching the equity capital raise in connection with the acquisition to ensure that the pro forma leverage and capital structure for the enlarged group remains consistent with Pennon's well-established water business gearing range of 55-65%.
The placing will be conducted through an accelerated bookbuilding process, and the price at which the placing shares are to be placed will be determined at the close of the bookbuilding process. The new ordinary shares, when issued, will be fully paid and will rank pari passu in all respects with each other and with the existing ordinary shares of the company.
The company consulted with a significant number of its shareholders to assess their feedback as to the purpose of the placing, and the board has concluded that the placing is in the best interests of shareholders and wider stakeholders and will promote the long-term success of the company. The board intends to apply the principles of pre-emption when allocating placing shares to those shareholders that participate in the placing.
Barclays Bank PLC and Morgan Stanley & Co. International plc are acting as Joint Global Coordinators and Joint Bookrunners in connection with the placing. The company will make a separate announcement shortly regarding the retail offer and its associated terms.