Azurix Corp. to Sell Wessex Water to YTL for US$777 Million Plus Assumption of Debt

Azurix Corp. has signed an agreement to sell all of the stock of its wholly owned indirect subsidiary Wessex Water Ltd. to YTL Utilities (UK) Ltd., a wholly-owned subsidiary of YTL Power International Berhad, for 544.6 million pounds in cash (approximately US$777). As part of the transaction, YTL will also assume approximately 694.9 million pounds (approximately US$991) in Wessex debt anticipated to be outstanding at closing. In conjunction with the proposed sale, Azurix Europe Ltd. is required to repay all borrowings under its 400 million pound credit facility and Azurix Corp. will be tendering for all of its outstanding senior notes and soliciting consents to approve the sale at a total purchase price of 88 percent of par.

The sale and purchase has been approved by the boards of Azurix, Azurix Europe Ltd. and YTL and by Azurix's shareholders. The sale also requires the approval of the shareholders of YTL Power; however, YTL Power's majority shareholder has committed to vote in favor of the sale. The sale is subject to certain conditions, including approval of the US Bankruptcy Court relating to Enron Corp.'s partial ownership interest in Azurix and Azurix's receipt of the senior note holder consents approving the sale of Wessex. Financial close is expected to occur in approximately two months. Azurix is being advised by Schroder Salomon Smith Barney.

"The sale of Wessex is the biggest step we will take in winding down Azurix's business," said J. Michael Anderson, chairman and chief executive officer of Azurix. "The terms of the sale to YTL will allow us to retire substantially all of our debt. It also brings certainty to Wessex's customers and employees."

"We are delighted to welcome YTL with their long term commitment to Wessex Water. This deal will bring stability and certainty to Wessex Water," said Colin Skellett, chairman and chief executive of Wessex. "We can now put the uncertainty of the last few months behind us and focus on continuing to deliver first class water and sewerage services to our 2.5 million customers."

In conjunction with its sale of Wessex, Azurix will commence a tender offer for all of the following series of its debt securities: 10-3/8 percent Series B Senior Dollar Notes due 2007, 10-3/8 percent Series B Senior Sterling Notes due 2007 and 10-3/4 percent Series B Senior Dollar Notes due 2010. Azurix also will be soliciting consents from the holders of these notes to amendments to the indenture governing the notes to permit the sale of Wessex on these terms and to eliminate certain covenants, restrictions and events of default, and waiver of the timely filing of certain financial and other information. Registered holders of at least a majority of the aggregate principal amount outstanding of each series of the notes must consent to each action described above for its approval.

Salomon Smith Barney is acting as dealer manager of the tender offer. Questions regarding the tender offer and consent solicitation may be directed to Salomon Smith Barney at 800/558-3745. Documentation will be available shortly. Requests for documentation can be made to Mellon Investor Services at 866/293-6625.

Source:

Azurix Corp.

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