UK water utility Pennon Group (owner of South West Water and SES Water) has unveiled a £550 million ($729 million) rights issue and cut its dividend as part of a balance sheet overhaul under new CEO Keith Haslett.
📌 Key Details & Critical Metrics:
- Market Reaction: Pennon shares plummeted 22.4% to 350.8p, reaching a 15-year low and pacing for their steepest single-day decline since 1999.
- Capital Raise Terms: The rights issue is priced at 250p per share, offering a 35.5% discount to the theoretical ex-rights price.
- Expanded Capex Plan: Proceeds will support ~£1 billion in additional capital expenditure, raising Pennon’s total investment package to £3.6 billion for the current regulatory period.
- Asset Divestment & Debt Reduction: Pennon will sell its renewables arm, Pennon Power, to help tackle its £4.51 billion debt pile.
- Dividend Cut: Reduced FY2027 total dividend payout to ~£125 million (down from £138 million in FY2026), representing a ~30% cut in dividend per share (targeting a ~5% yield).
🌐 Sector Context: The move comes amid escalating regulatory and political scrutiny over environmental breaches and debt levels across the UK water sector, following public calls to re-evaluate utility ownership models.