Norweb sale raises pounds 113m

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The Independent Online
United Utilities, the water and electricity supplier for the North-west, yesterday completed another leg of its disposal programme following the Norweb acquisition by selling the loan portfolio business of Norweb's electrical retail chain for pounds 113m.

The buyer is Lombard Tricity Finance, the credit finance arm of NatWest, which is paying pounds 100m in cash and a further pounds 13m from cash flow up to the date of completion, expected to be some time in December.

The sale brings the amount raised so far from disposals to pounds 238m against the pounds 350m targeted by United Utilities a year ago when North West Water bought Norweb to create the new multi-utility company.

The disposal programme covers Norweb's retail and contracting arms and its interests in electricity generation along with the process equipment division of North West Water.

Kingfisher is in talks with United to buy Norweb's electrical retail division for an estimated pounds 70m. These are likely to be rebranded under the Comet name. However, of the 70 stores in the portfolio, Kingfisher is only likely to be interested in the larger out-of-town sites, where Comet is under-represented.

Norweb is the latest in a long line of electricity companies to pull out of the cut-throat retail sector. Though many have incurred heavy losses, Norweb's retail operation recorded profits of pounds 6m on sales of pounds 130m last year.

Brian Staples, chief executive of United Utilities, said the proceeds would be used to reduce debts. Gearing rose from 27 per cent to 89 per cent as a result of the pounds 1.7bn Norweb acquisition.

United Utilities expects to make operating cost savings of pounds 94m this year and pounds 140m by 1999-2000 through a rationalisation programme which includes 2,500 job losses.