Wessex plans buybacks

Wessex Water yesterday revealed a plan to spend pounds 240m on share buybacks combined with a move to buy out most of the stake held by its biggest outside investor.

The latest water industry buyback, which in effect means Wessex is buying up 25 per cent of its share capital, will see the 19.5 per cent stake held by Waste Management International (WMI), a US waste company, reduced to just 3.3 per cent.

Nicholas Hood, Wessex chairman, said pounds 157m would be spent on buying up 43.5 million non-voting `B' and `C' shares, all of which were issued to WMI after privatisation, along with a small number of the US group's ordinary shares.

A further pounds 79.5m will go on buying back 10 per cent of the ordinary shares held by other investors. The deal needs to be approved by shareholders at an extraordinary general meeting in the new year.

Wessex was left with surplus cash after the Government recently blocked its attempt to buy neighbouring South West Water.

The rival bidder, Severn Trent, this week also announced it had spent pounds 122m buying back 5 per cent of its shares. The buyback will raise Wessex's gearing to around 40 per cent.

Mr Hood said the joint venture waste management company between Wessex and WMI would continue as before, though the buyback did not preclude further acquisitions. He explained: "There's a lot of speculation, but all I can say is we are reserving our firepower."

Wessex shares slipped 0.5p to 365.5p.