Hyder may break up rather than accept bid

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The Independent Online

Fresh uncertainty surrounded the fate Hyder, the embattled Welsh water and electricity supplier, yesterday after the company said it might break itself up rather than accept one of two competing takeover offers.

Fresh uncertainty surrounded the fate Hyder, the embattled Welsh water and electricity supplier, yesterday after the company said it might break itself up rather than accept one of two competing takeover offers.

In a surprise announcement, the Cardiff-based group said it was considering whether a sale of its electricity distribution business, Swalec, and the transfer of Welsh Water to a customer-owned mutual organisation would deliver greater value to shareholders.

Hyder is the subject of two rival bids - one worth 300p a share, or £464m, from the American company WPD, and one worth 260p from the Japanese bank Nomura. Hyder's board is recommending neither bid while it waits to see whether Nomura raises its offer.

Hyder said it had decided to re-examine a possible break-up after indications from some of its biggest bondholders thatthey could be prepared to accept such an arrangement. Initially, Hyder rejected this option on grounds of regulatory uncertainty and cost, believing it would have to repay much of its debt at a premium. But a group of bondholders have told Hyder they are prepared to be "flexible" in regard to a restructuring.

The US investment bank Merrill Lynch is advising Hyder on the option of a break-up and sale of the water assets to a debt-funded mutual organisation. The bank is already advising Kelda, the owner of Yorkshire Water, on a similar scheme.

The outgoing water regulator, Sir Ian Byatt, is due to set out his views on Kelda's proposals next week although the final decision will rest with his successor, Philip Fletcher.

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