Bechtel eyes up Anglian Water's overseas arm
Saturday 31 January 1998
According to industry sources, Bechtel has been investigating Anglian's non-regulated operations, which range from stakes in a Czech water and sewerage company to concessions to operate services in Buenos Aires. Sources close to Bechtel confirmed that Anglian was one of a number of possible opportunities being considered.
A spokesman said Bechtel was not conducting a due-diligence inquiry into Anglian's non-regulated businesses, called Anglian Water International. "If by due diligence you mean going through their books, then we are not doing a due diligence investigation into Anglian."
Anglian Water yesterday declined to comment on what it described as "speculation", though the company is not yet thought to have received an approach from Bechtel. However, it has been interested in selling its process engineering arm, Purac, and Fluid Systems, a US based business involved with the building of desalination plants.
Anglian's attempts to use its expertise to win lucrative overseas business have met with mixed success. Despite attempts to turn the division around, Anglian's non-regulated operations have remained consistently loss-making.
In the year to the end of March losses at Anglian Water International edged up from pounds 5.7m to pounds 6.1m, while turnover rose by pounds 23m, to pounds 154.7m. Anglian blamed the losses on the cost of winning new business overseas. Marketing and development costs doubled over the year, to pounds 6.3m.
The company received a humiliating setback last year with a joint venture to build a waste water treatment works in the south of Brazil. Anglian admitted it was suing its partner, a smaller construction company called Cejen.
In May Anglian wrote off pounds 20m to cover a restructuring programme, of which more than pounds 7m was to cover the ill-fated Brazilian venture. The write-offs represented about 60 per cent of the pounds 12m Anglian had pumped into the project. At the time, Chris Mellor, then Anglian finance director who has since been appointed group managing director, admitted it was "not an episode we are proud of".
Bechtel has expanded its interests in water projects and since 1995 has been responsible for the running of North West Water's infrastructure investment programme. The joint venture with North West Water, part of United Utilities, also involves bidding for overseas privatisation projects.
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