Vol 11, Issue 7 (July 2010)

Need to know

• LET’S GO TO THE PUB

  Singapore’s Public Utilities Board published the tender for its new 318,500m3/d desalination plant during Singapore Water Week at the end of last month.

• CALIFORNIA MASOCHISTS

  Before Poseidon Resources, the Californian private water company everyone loved to hate was Nasdaq-quoted Cadiz Inc.

• STOCK MARKET ESCAPES

  Sembcorp has won its battle to buy out the minority shareholders in Cascal.

• CONTRACT WINS

  Befesa, with its local partner Princesse Groupe, have won the tender for the 50,000m3/d desalination plant at Djerba Island in Tunisia.

Analysis

• Being a chicken-pig

  Christopher Gasson reflects on his interview with Veolia Environnement CEO Antoine Frérot.

• David Lloyd Owen - The turning of the tide – China really means business

  Globalisation is a simple idea with complex realities.

• Chart of the Month - How will US design & construction revenues grow this year?

  This month’s chart comes from the annual design and construction firm CEO survey carried out by consultancy firm Farkas Berkowitz and Company.

• Consolidation reduces pool of water stocks

  Ongoing merger activity in the water industry is threatening to reduce the universe of investible stocks. Who will step up to fill the gap?

General

• Positive reception for Veolia debt exchange

  Veolia has lengthened the average maturity of its liabilities without increasing net debt. It will have to wait until later in the year to access the long end of the curve.

• Eastern rebels under pressure to stick with SEDIF

  Veolia has taken a 50% cut in its profit to retain Europe’s largest water contract, and forced the nine rebel towns into a difficult position. If the hold-outs don’t sign up to the offer, the other 135 municipalities will face higher bills.

• Bristol Water ruling raises concerns for AMP6

  The provisional decision on the company’s appeal to the Competition Commission has yielded a mixed bag of results. The effects could have implications for the whole industry.

• Thames to pay down holdco debt with new sub bond

  The lifting of a leverage restriction has allowed Thames Water to issue its inaugural subordinated Class B bond. The proceeds will take out some of the Kemble Water acquisition debt.

• Moody’s raises concerns over derivatives use

  The ratings agency has warned that the creation of synthetic index-linked liabilities by UK water companies could leave them – and their investors – worryingly exposed.

• Spain’s new municipal model

  The mixed management model has doubled its share of the Spanish water market, according to new data from industry body AEAS. The state of sewerage networks, meanwhile, has declined alarmingly.

• Agbar furthers its Catalan ambitions

  An offer for Aigües de Sabadell will bring Agbar’s share of the Spanish outsourced water market close to 30%. It may stop short of a full take-over.

• NWG rises on Middle East takeover rumours

  Over £200 million has been added to the market value of Northumbrian Water over the past month on speculation of an imminent buyout. Extracting value from such a deal will be a challenge.

• Metito takes on new capital ahead of 2012 IPO

  A $40 million cash injection from international investors will help Metito Utilities to broaden its project portfolio. It will also act as a bridge to a planned IPO for Metito Holdings in 2012.

• Breaking new ground in the Holy City

  Saur and Zomco have secured a breakthrough management contract in the city of Mecca. The team is already eyeing bigger prizes in Saudi Arabia.

• Saur pursues its industrial ambitions

  The French operator is looking to extend its operating experience to two of Saudi Arabia’s industrial cities.

• Greens question desal push

  The Israeli’s government’s approval of extra desalination capacity at Soreq has raised the ire of the environmental lobby. Are their demands realistic?

• New bill allows for grey water reuse

  Imminent legislation in Israel will allow the use of treated grey water for irrigating gardens. It could save 137,000m3/d of potable supplies.

• Sabesp enters a new era of management

  Sabesp has formalised a deal to continue operating in São Paulo for another 30 years. The agreement does not resolve the question of who has the legal right of concession.

• Opinions divided over Cali water bond delay

  Governor Schwarzenegger’s call to remove the $11bn bond from the November ballot has drawn a mixed reaction.

• Cadiz water project inches forward

  A series of agreements signed at the end of June resulted in cautious optimism that Cadiz’ water resources may finally find a home. The question of how to convey the water to major urban areas is still unresolved.

• Hazleton pulls back from the brink

  A Pennsylvania town facing bankruptcy may have negotiated a compromise, but the sale of its water utility has not been ruled out completely.

• As long as you water it, ITT will grow

  ITT’s recent acquisitions underscore the company’s ambition to move away from being a pure equipment supplier to a provider of broader solutions for its clients in the water industry. Emily Pickrell reports.

• A Yellow River Cantata

  Charles Bodhi sings the praises of a ground-breaking project in China.

• Singapore aims for 1 million m3/d of desal

  PUB has unveiled its water resourcing strategy for the next 50 years. It involves a tripling of reuse capacity, and a ten-fold increase in desalination.

• Acciona broadens its Australian proposition

  The Spanish company has been shortlisted for two key water projects in Australia. A shrinking pipeline of largescale desal plants meant that it was a case of diversify or die, finds Max Borchardt.

• Aqualyng stays the course in China

  As financial close nears on the Caofeidian project, Kathy Liu looks at how project finance for desalination projects is gaining a foothold in China.

• Ex-Degrémont boss takes charge at SPML Infra

  SPML Infra’s water business has been growing at 20% a year. New president Srinivas Kishore talks to GWI’s Rama Rastogi about where the next spurt of growth will come from.

Brief

• EUROPE WATER NEWS BRIEF

  Amplio Filtration – the company which acquired Basin Water out of Chapter 11 last year – has made its first European acquisition, taking a majority stake in Puresep Holdings of the UK.

• MIDDLE EAST WATER NEWS BRIEF

  The International Barges Company for Water Desalination has commenced operation of the first of its two separate 25,000m3/d barge-based desalination plants at the Red Sea port of Yanbu in Saudi Arabia.

• AMERICAS WATER NEWS BRIEF

  Cascal expects that the last day of trading in its shares on NYSE will be 6th August, after the company announced its intention to voluntarily delist its stock following the successful take-over bid by Sembcorp Utilities.

• ASIA WATER NEWS BRIEF

  Singapore’s national water agency PUB launched a S$400 million (US$290 million) 12-year bond issue in early July, carrying a 3.012% coupon.

Companies

• Frérot sees salvation in operations

  Piqued by GWI’s suggestion that his business model was dead, and he was running the company for cash, Veolia CEO Antoine Frérot offers a robust defence of his strategy. The long-term outlook remains strong, he argues.

Market insight

• The desalination market returns

  It has been a tough couple of years in the desal market. The end of the major build-outs in Algeria, Spain and Australia coincided with the global financial crisis.