£1.2bn scramble for Wessex Water
FINANCIAL companies headed by West LB and Royal Bank of Scotland have emerged as front runners in the £1.2 billion race for Wessex Water. The timetable for a sale has been accelerated by the collapse of its parent company, energy trading group Enron.
Last week, Thames Water was confidently suggesting that it was in pole position to buy Wessex, but a financial buyer is thought more likely to be favourite to win in a quick sale.
The venture capital arms of West LB and RBS are believed to head the list of likely buyers, but Barclays Capital, Thames Water and United Utilities are also in the race.
Centrica, the British Gas-to-AA services giant which recently failed to buy Southern Water as part of a consortium bid, has registered an interest, but is thought to be an outsider.
Wessex management is trying to organise an auction after the demise of US parent company Enron, which is likely to become the world's biggest corporate collapse.
When Enron bought Wessex for £1.4 billion three years ago, the water company's finances were ring-fenced by the industry regulator, so there is no risk to its business or the supply of water services to customers.
Other British assets likely to be sold include Enron's Teesside power generation business, which could attract UK utilities.
Enron's fate was sealed last week when US energy rival Dynergy cancelled a £6.7 billion rescue bid as the scale of Enron's problems emerged.
On Friday, US lawyers began issuing lawsuits against its board on behalf of shareholders. One alleging securities fraud said directors had failed to alert them to Enron's deteriorating finances.
Enron's British operations went into administration last week, which cost 1,100 employees their jobs. But most observers believe that Enron will move straight into liquidation.
There are worries in America that employees will have lost part of their pensions because the funds were heavily invested in Enron shares.
In the UK, some workers took up to 50% of their salaries in the form of now worthless share options.
Many more will see millions of pounds of paper profits on share investment schemes wiped out.
