By Elena Vardon
Pennon Group is launching a rights issue at a discount to support increased investment after accepting regulator Ofwat's final review.
The U.K. water utility said Wednesday that it accepted the final determinations for the 2025-30 period for its businesses South West Water and Sutton and East Surrey and won't be seeking a reference to the competition watchdog.
The review includes increased investment, with capital expenditure rising to 3.2 billion pounds ($3.98 billion) from 1.9 billion pounds for the 2020-25 period.
"The investment will be across a range of transformational projects that are focused on areas like tackling the use of storm overflows, bolstering water resources through a new reservoir in the South West, and expanding our program of nature recovery," Pennon said.
To finance this and keep a strong balance sheet, the company is proposing a 490 million-pound capital raise through the issue of 185.9 million shares at 264 pence each. The price represents a 35% discount to Tuesday's closing price of 500.8 pence when adjusted for the 14.69 pence interim dividend which won't be payable on the new shares.
Pennon is also revising its dividend policy to take the final determinations and rights issue into account. The fiscal 2024 dividend will be rebased on a dividend-per-share basis and it is introducing an inflation-linked growth policy to 2030, it said.
Write to Elena Vardon at elena.vardon@wsj.com
(END) Dow Jones Newswires
January 29, 2025 02:58 ET (07:58 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.