Southern takes up Ziff scheme
As news of the two possible forthcoming cash windfalls emerged yesterday, Southern Electric, the regional electricity supplier, announced plans to adopt the scheme, handing back pounds 156m to shareholders.
Southern is the second privatised utility to take up the advice of City of London investment bankers SBC Warburg, which was replaced as its broker last year. On Thursday Yorkshire Water stirred up further controversy by proposing to return pounds 145m to its investors.
The scheme was devised by Max Ziff at SBC Warburg, the investment bank, after the Government changed the tax rules on share buy-backs last October. Mr Ziff, 38, had previously advised Northern Electric during its infamous "scorched earth" defence of the takeover bid from Trafalgar House.
The two companies most interested in Mr Ziff's latest idea are not thought to be utilities. However, he confirmed he had approached other privatised utilities which have not yet carried out share buy-backs.
Shares in Southern rose 13p to 800.5p yesterday. The surge followed a 16p rise the previous day after speculation about a buy-back. The arrangement involves Southern replacing every 100 existing shares with 184 new ordinary shares and 200 "B" shares. The company will then buy back all the B shares for 30p each, giving investors 60p in cash for each existing share they hold. The capital restructuring will raise the company's gearing from around 10 per cent to some 40 per cent.
In addition, Southern pledged yesterday that its dividend would remain unchanged, forecasting a final payout to shareholders of 30.1p, or 15.05p for each of the new ordinary shares.
Ian Marchant, Southern Electric's finance director, said one big advantage was that all shareholders would benefit.
Investment column, page 23
In pictures: Saturn images from Cassini probe as it prepares to turn lens towards Earth
Serena Williams apologises after comment that rape victim 'shouldn't have put herself in that position'
New banker bonus boom: Payouts leapt 64% to new record when Chancellor George Osborne cut top-rate tax to 45p in April
'There's something quite unpleasant going on': Nigel Farage confronted for second time on visit to Scotland ahead of Donside by-election
World news in pictures
- 1 Breaking the Silence: In the reality of occupation, there are no Palestinian civilians – only potential terrorists
- 2 Newcastle owner Mike Ashley wants blood after last season's trauma - and it won't stop with managing director Derek Llambias
- 3 Richard Nieuwenhuizen death: Six teenagers and 50-year-old father convicted of manslaughter in shocking case of referee killed over a game of football
- 4 Exclusive: Newcastle United's star talent-spotter Graham Carr on brink as Joe Kinnear sparks walkout at St James' Park
- 5 Vast methane 'plumes' seen in Arctic ocean as sea ice retreats
iJobs Money & Business
Excellent Salary: Austen Lloyd: We have a very exciting opportunity with a maj...
£500 - £600 per day: Orgtel: FX Options Front Office Java / C# Developer - Ba...
£600 - £700 per day: Orgtel: Project Manager - Front Office - Regulatory IT C...
£600 - £750 per day: Orgtel: FATCA Project Manager - Banking - London - £600-...