Southern Water solicits consents to substitute U.K. for Cayman issuer

Chicago, Oct. 26 – Southern Water Services (Finance) Ltd. is soliciting consents to change the issuer on several series of bonds to a U.K.-based issuer from a Cayman Islands issuer, according to an announcement.

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 be continued to be listed on the main market of the London Stock Exchange.

The following bonds are 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.

A single meeting of bondholders is being held at 6 a.m. ET on Nov. 23.

Bondholders who wish to vote should take action before 11 a.m. ET on Nov. 18.

The company needs 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 absolute discretion of Southern Water.

If the proposal is approved and the extraordinary resolution is passed, bondholders who deliver 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 are the subject of the voting instruction.

The instruction fee deadline is 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 is NatWest Markets plc (+44 20 7678 5222, liabilitymanagement@natwestmarkets.com).

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

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

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