Southern Water: STID proposal approved after bondholders meeting

By Marisa Wong

Los Angeles, Nov. 29 – Southern Water Services (Finance) Ltd. announced the results of a STID proposal by Southern Water Services Ltd. regarding some amendments described in the proposal dated Oct. 26.

Following a bondholders’ meeting on Nov. 23, the decision of the majority creditors was in favor of the STID proposal, according to a Friday press release.

With approval of the STID proposal, the issuer will pay the instruction fee.

Background

As previously reported, Southern Water Services (Finance) solicited consents to change the issuer on several series of bonds to a U.K.-based issuer from a Cayman Islands issuer.

To avoid speculation that the company is using the Cayman Islands for tax avoidance purposes and to decrease pressure and scrutiny from the economic regulator Ofwat, the company is setting up two new wholly owned direct subsidiaries in the United Kingdom, one public and one private.

The company intends to substitute the new subsidiaries as issuers on debt.

The public company would be the newly listed issuer on the bonds, private placement notes and their related liquidity facilities. The private company would be listed as the borrower on some other debt, specifically term facilities with Artesian Finance.

After the transfer, the Cayman Islands issuer would be dissolved on a solvent basis.

The bonds would continue to be listed on the main market of the London Stock Exchange.

The following bonds were part of the consent solicitation:

• £350 million 6.192% sub-class A1 wrapped bonds due 2029 (ISIN: XS0172989252);

• £150 million sub-class A2 index-linked wrapped bonds due 2034 (ISIN: XS0173036194);

• £35 million sub-class A2b index wrapped bonds due 2034 (ISIN: XS0173059998);

• £350 million 6.64% sub-class A4 unwrapped bonds due 2026 (ISIN: XS0172992637);

• £150 million sub-class A5 index-linked unwrapped bonds due 2023 (ISIN: XS0173041517);

• £150 million 5% sub-class A8 wrapped bonds due March 31, 2041 (ISIN: XS0220566383);

• £200 million 4.5% sub-class A9 wrapped bonds due March 2052 (ISIN: XS0271386244); and

• £300 million 5.125% sub-class A10 wrapped bonds due September 2056 (ISIN: XS0308998144).

All of the bonds are guaranteed by Southern Water Services Ltd., SWS Holdings Ltd. and SWS Group Holdings Ltd.

Bondholders who wished to vote at the meeting held at 6 a.m. ET on Nov. 23 had to take action before 11 a.m. ET on Nov. 18.

The company needed a simple majority of votes cast during the voting period.

Implementation is planned for some point in the next six months; however, the timing is at the discretion of Southern Water.

With the proposal approved, bondholders who delivered a valid electronic voting instruction before the instruction fee deadline will be paid an instruction fee of 0.025% of the principal amount of bonds that were the subject of the voting instruction.

The instruction fee deadline was 11 a.m. ET on Nov. 12.

The payment date for the instruction fee will be the fifth business day after the announcement of the results of the STID proposal.

The solicitation agent was NatWest Markets plc (+44 20 7678 5222 or liabilitymanagement@natwestmarkets.com).

The tabulation agent was Lucid Issuer Services Ltd. (+44 20 7704 0880 or southernwater@lucid-is.com).

The company is a subsidiary of Worthing, England-based Southern Water Services Ltd.

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