Southern Water lines up debt portfolio reshuffle

Published June 7th, 2018

Southern Water’s owners are looking to refinance £450 million of holding company debt before it falls due next year.

The debt comprises a £250 million 8.5% bond issued by Greensands Holdings, which matures in April 2019, along with £200 million spread across various banking facilities.

The Greensands shareholders, which include funds managed by JP Morgan, UBS, and Hermes – as well as Hong Kong’s CKI – are understood to have hired investment bank Rothschild to advise them on the process.

The Southern investors also plan to move debt out of the regulated utility business into a new “midco” to reduce the leverage in the regulated business, while restructuring a portfolio of index-linked swaps that currently has a negative mark-to-market value of £1.3 billion.

The de-leveraging is a response to regulatory moves which require highly geared companies to share any financial benefits they derive from their debt structures with customers.