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Macquarie has agreed to inject up to £1.2 billion of fresh stock into southern water as part of a deal that brings debt to holding company lenders that cut more than half.
As part of the deal with Southern owner Macquarie, the company initially committed to investing £655 million in shares in the utility.
Australian investors are expected to provide a minimum of £245 million in additional shares by December.
Thames Water, Southern’s largest water station, still under pressure in the debt market than concerns that could violate the contract.
This year, Southern asked bondholders, including ARES Management and Australian infrastructure investor Westbourne Capital, to amortize all of their liabilities of approximately £370 million, the Financial Times previously reported.
Rather than being used to further raise the capital structure, the prize money was seen as a way to allow new stocks to flow directly into the critically-indexed operating company of the utility.
Ares and Westhouse hold liabilities at the top holding company level in Southern, far from the utility’s operating assets, so there is a risk that investors own.
The prize money will reduce the amount of liabilities across Southern holding company from £865 million to £415 million. Those familiar with the matter say bondholders are given concessions in exchange for accepting fees.
The maturity of the remaining debt facilities has been expanded until at least September 2030.
In February, Macquarie promised to inject £900 million of fresh stock into the company.
