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United Utilities to sell non-regulated European water businesses to Veolia

United Utilities (LON:UU) has agreed a deal worth £174.2 million with Veolia Water to sell its principal non-regulated water interests in the United Kingdom and Europe. Under the terms of the deal, Veolia will pay £108.6m in cash, a further £10 million in deferred payments, and it will assume debts of £65.6 million.

The FTSE100 constituent’s principal non-regulated water assets include various interests in European water services businesses and UK service contracts and PFI (Private Finance Initiatives).

The principal non-regulated water interests include a 57.8% stake in Sofiyska Voda AD, which maintains and operates the water and sewerage infrastructure of Bulgaria’s capital, Sofia city. In Estonia, United Utilities have a 26.5% stake in AS Tallinna Vesi, to provide water supply and wastewater services in the country's capital Tallinn. The company also has a 33.2% holding in Aqua Spolka Akcyjna, a water service group in Poland.
United Utilities has a stake in a 2010-15 capital management contract with Southern Water; a separate capital delivery contract with Southern Water to manage the design and build of a new wastewater treatment works in the Brighton and Hove area; and a UK industrial solutions business.

The business also includes stakeholdings in three PFI projects in Scotland – with a 33.33% stake in the Catchment Moray Holdings Ltd, a 33.33% stake in Catchment Tay Holdings Ltd and 50% in Catchment Highland Holdings Ltd. 

The transaction is expected to complete in the second half of 2010, and United Utilities said it expects to retain the proceeds within the group.