National Grid in pounds 1.1bn Energis sell-off
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.NATIONAL GRID moved to cash in on the soaring value of telecom stocks yesterday by reducing its shareholding in Energis, its fast-growing telecom subsidiary, from around 75 per cent to below 50 per cent.
National Grid will offer between 71 million and 75 million Energis shares in the form of shares and convertible bonds to institutional investors in Europe and the US. Dealings are expected to start once the offering closes next Tuesday.
The move will raise approximately pounds 1.1bn in cash, allowing National Grid to reduce its debt levels in the wake of last month's $3.2bn acquisition of New England Electric System, the US electricity distributor.
David Jones, chief executive of National Grid, said the sale would also increase the free float of Energis shares, satisfying demand from investors keen to buy into the telecom sector and allowing the company to be included in the FT All-Share index.
Energis shares duly soared 9 per cent, closing up 132.5p at 1655p in a falling market. Energis has watched its shares rise fivefold in the past 12 months on the back of booming data communications and Internet traffic, including its deal to provide the infrastructure for Dixons' innovative Freeserve Internet service provider.
The sale follows National Grid's announcement last year that it planned to sell down its shareholding in Energis over a three to five-year period. Under the current deal, it is not allowed to sell any more shares in the market for six months.
In a complex offering designed by HSBC, the investment bank, National Grid plans to raise between pounds 600m and pounds 800m by placing Energis shares directly with institutions. The remainder of the proceeds will come from the sale of convertible bonds based on Energis shares.
Each bond, which will mature after four years, will convert into a proportion of an Energis share dependent on how much the shares have risen since the offering. However, they will also carry a coupon of between 5 and 6 per cent, which will be paid by National Grid.
Mr Jones said the bonds were designed to broaden the appeal of Energis to other investors, many of whom do not invest in the company because it does not pay a dividend.
The entire exercise is expected to trigger a capital gains tax bill of about pounds 200m for National Grid, while advisers' fees will cost a further pounds 30m.
Outlook, this page
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments