Vol 4, Issue 6 (June 2003)

Need to know

• COMPANY RESULTS

  UK: United Utilities (UU) announced its preliminary results for the year ended 31 March 2003.

• CORPORATE

  UK: Following recent market rumours about the future of International Water Limited (IWL), GWI contacted Bechtel to get the full story.

• DEALS

  Abu Dhabi: TotalFinaElf announced that the Taweelah A1 power and desalination plant had been commissioned – on schedule and on budget.

• INVESTMENT

  United States: NADB signed a $4.04 million grant with the Heber Public Utility District for a project to upgrade and expand its water treatment & distribution system and wastewater collection system.

• PEOPLE/PUBLICATIONS

  United States: Brian Chase joined the San Francisco office of Nossaman Guthner Knox & Elliott.

Analysis

• A world of water without capital

  Is it time for water companies to concentrate on what they do best and leave the bankers to finance the infrastructure?

• Multilateral headache

  What to do next now that private water companies are reluctant to participate in developing markets?

General

• Bechtel gives more details of Iraq reconstruction work

  Contractors and equipment suppliers eager for a slice of the pie turned up at conferences in the US, UK and Middle East last month.

• Chicago wastewater study

  Black & Veatch and Greeley & Hansen have won a contract to plan capital improvements for a 1,200MGD wastewater plant.

• Chinese attraction

  China is still a good proposition for private investors – both local and international.

• Earth Tech wins Connecticut O&M contract

  The company will be responsible for O&M services and asset management for the New London water and wastewater systems.

• Framework deals agreed by environment ministry

  The Italian environment ministry has closed framework agreements worth €10 billion for the provision of clean drinking water.

• Italian PSP gets political again

  Rules that would have given local authorities greater flexibility in assigning services to private firms have been scrapped from a new fast-track law going through parliament.

• Jordanians extend Disi deadline again

  Bidders have been given until the start of July to submit their offers for the 40-year BOT project.

• New Northumbrian structure questioned

  There are concerns that the newly floated Northumbrian Water Group could struggle to raise capital cost-effectively following a downgrading of its debt.

• Sabesp 1Q profits up

  Exchange rates have worked in the company’s favour in the first quarter of the year.

• Suez’s perspective

  The Northumbrian deal has enabled Suez to further reduce its debt burden.

• UK companies get ready for 2004 review

  While stories about the industry’s preference for highly geared debt structures have made all the headlines in recent months, water company business managers have been quietly getting on with the task of preparing for the next periodic review.

• Water company efficiencies

  Can the companies really become more efficient?

Market insight

• Come on in – the water’s lovely

  Any investor who bought into one of the three big international water companies, Suez, Veolia (then named Vivendi Environnement) and RWE in June 2001 must feel now as if they had spent the last two years in an acid bath.

• Do water and electricity mix for RWE?

  GWI’s German correspondent examines the importance of RWE’s investment in water as the group is swamped with debt and facing a difficult fight in the energy market.

• Italy: Positioning for a privatisation play

  Privatisation should bring rich pickings for investors – but only those with patience.

• Philadelphia Suburban: Hedge Fund in miniature

  Matthew Johnson looks behind the success of the largest investor owned utility in the US.

• Real value in Brazil

  Brazil’s Sabesp offers an opportunity to invest directly in an emerging market water system. GWI’s Brazilian correspondent finds strong analyst support for it.

• Spain: Overshadowed by Argentina

  In theory, Spain should be a good market for water investors. The combination of increased wealth, population pressure in its arid areas, and the trend towards privatisation all bode well. But the reality is somewhat different.

• Three point turnaround

  Christopher Gasson looks at what distinguishes the three major players in the water industry, and whether they have turned a corner on their recent performance.

• UK: Financial engineers welcome

  Since last month’s flotation of Northumbrian Water Group, the London Stock Exchange offers a choice of six water-related investment vehicles. Although each faces the same regulatory regime in its core water business, the difference lies in their non-water interests and their financial structure. The alternatives offered to investors are as follows:

• Water technology pulls ahead

  In their regular monthly analysis of water related shares, Clay Landry and Matthew Johnson trace the impact of the weakening dollar on the sector.

• Zenon Environmental: Having it both ways

  How has the Canadian membrane specialist been able to capture the best of both worlds?