S&P puts United Waterworks on developing watch

Standard & Poor's said it placed its ratings on United Waterworks and United Water New Jersey on CreditWatch with developing implications following a revision in the terms of the pending merger between parent Suez SA and Gaz de France SA. Previously, the ratings were on CreditWatch with positive implications.

The sale of Suez Environment, Suez's water and wastewater subsidiary, suggests potentially less support by Suez-GDF than previously incorporated into the ratings, the agency said. Under the revised terms, 65% of the share capital of Suez Environment (20% of first-half 2007 Suez EBIT) will be spun off to Suez shareholders during the merger, with the enlarged group retaining a 35% stake. United Waterworks and United Water New Jersey are part of Suez Environment's international segment, which represented 18% of consolidated Suez Environment's EBIT in the first half of 2007.

The CreditWatch with developing implications indicates that the ratings could be raised, lowered or affirmed depending on the post-merger business strategy, financial structure and financial policy of United Waterworks by Suez Environment, S&P said.

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