Veolia Water UK sale proceeds hinge on debt load

Veolia Environnement is likely to pocket less than half the £1.236 billion transaction value it announced for the sale of its regulated UK water business to a joint venture of Infracapital and Morgan Stanley’s infrastructure fund.

For the figure must surely include the 10% stake in the business that Veolia intends to retain for at least five years, in addition to the outstanding debt of the three companies that make up the regulated entity.

“What we don’t know is how much debt is in each of these businesses,” said independent industry analyst Robert Miller-Bakewell. “There are not enough facts in this announcement to draw any sensible conclusion.”

While the exact debt figures will not be known until mid-July, the figure is likely to amount to at least 60% of their regulated asset value (£948 million as 31 March). This would subtract a further £568 million from Veolia’s cash sale proceeds.