British water watchdog raises concerns over Welsh utility takeover
LONDON, Nov 13, 2000 (Knight Ridder/Tribune)—The water watchdog has raised concerns over the financial robustness of the so-called Welsh people's not-for-profit vehicle planning a UKpound 1.8 billion takeover of Welsh Water.
The news came as Guy Hands' Principal Finance Group at Nomura — which failed to land Welsh Water's parent Hyder in a summer takeover battle — confirmed it is ready to launch a counterbid.
Ofwat's concerns include whether the bonds by which Glas Cymru intends to debt-finance the business will be of sufficiently high rating, and whether customers will be protected if the company runs into financial difficulty.
The regulator questions whether a non-profit company without shareholder pressure and supposedly representing Welsh interests would be willing to cut jobs to improve efficiency, querying the independence of Glas's directors and whether the company might not be "captured by particular interest groups". Ofwat also suggests that Glas's plan to outsource its operations could raise problems with the Drinking Water Inspectorate and Environment Agency.
Philip Fletcher, the new Ofwat chief who endorsed blocking a similar non-profit bid for Yorkshire Water, said that despite a long list of issues, regulatory hurdles for Glas were not insurmountable.
Glas advisers said the watchdog comments were "very supportive". A spokesman for Nomura said: "We are watching developments."
© 2000, Evening Standard, London. Distributed by Knight Ridder/Tribune Business News.