Azurix Gains Approval for Wessex Water Sale

May 9, 2002
Azurix, the water arm of Enron, has gained bondholder approval for the £1.24bn ($1.8bn) sale of Wessex Water, its UK subsidiary, to YTL of Malaysia.

The move brings to an end weeks of bargaining with bondholders and comes after Azurix last week agreed to increase the purchase price for its bonds for the third time.

Azurix needs to buy back its bonds so that YTL does not have to take on responsibility for Wessex's debt following the sale. The deal could have been blocked unless 51 per cent of bondholders for each of three tranches of bonds agreed to the terms of the buy back.

Azurix first offered to re-purchase bonds at 88 per cent of face value but increased this to 92.25 per cent last week as holders of two tranches of dollar-denominated bonds held out.

The group said it had now gained approval from the required majorities of both groups of bondholders, smoothing the way for the sale.

Enron bought Wessex in 1998 for £1.36bn as part of its diversification out of its core energy business.

Since then stock market values of UK water companies have fallen due to tightening regulatory controls on water charges.

The offer from YTL beat competition from a financial consortium led by Royal Bank of Scotland and will be the group's first significant investment in Europe.

Source: Financial Times

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