Rights Issue - UK Announcemen

RNS Number : 2415M

National Grid PLC

20 May 2010

 



THIS DOCUMENT IS NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, HONG KONG, INDIA, JAPAN, THE PEOPLE'S REPUBLIC OF CHINA, THE REPUBLIC OF SOUTH AFRICA OR SWITZERLAND.

20 May 2010

National Grid plc

2 for 5 Rights Issue to raise approximately £3.2 billion

The Board of National Grid plc announces a fully underwritten 2 for 5 Rights Issue to raise approximately £3.2 billion, net of expenses, through the issue of 990,439,017 New Shares at a price of 335 pence each.

National Grid's preliminary results for the year ended 31 March 2010 have been released today in an accompanying announcement.

HIGHLIGHTS OF THE TRANSACTION

§   2 for 5 fully underwritten Rights Issue to raise £3.3 billion (£3.2 billion net of expenses)

§   The Issue Price represents a 43.7 per cent. discount to the closing middle market price per ordinary share, adjusted for the recommended final dividend for 2009/10 of 24.84 pence, on 19 May 2010 (being the last business day prior to the announcement of the Rights Issue) and a discount of 35.7 per cent. to the theoretical ex-rights price on the same basis.

§   The Board believes that raising £3.2 billion through the Rights Issue will allow the Group to, in particular:

§   Fund a significant increase in its UK capital investment. Group capital investment is forecast to total approximately £22 billion in aggregate over the next five years

§   Maintain single A credit ratings for its UK operating companies

§   Strengthen the Company's long-term competitive position

Steve Holliday, Chief Executive, said:

"We are confident about the requirement for a step-up in UK investment. We have sized this Rights Issue at £3.2 billion to ensure we will have the financial flexibility to meet our investment needs over the coming years, whilst maintaining our current single A credit ratings."

The Rights Issue is fully underwritten by Morgan Stanley Securities Limited, BofA Merrill Lynch and Deutsche Bank AG, London Branch.

Further details of the Rights Issue will be set out in the prospectus (the "Prospectus") which is expected to be published on 25 May 2010 and will be made available on National Grid's website www.nationalgrid.com and sent to shareholders who request a copy provided they are persons outside the United States and the Excluded Territories.

CONTACTS

National Grid:

Investors                                                                                                                                                                    

David Rees	[phone]	[phone] (m)
Neil Pullen	[phone]	[phone] (m)
George Laskaris	[phone]	[phone] (m)
Victoria Davies	[phone]	[phone] (m)
Andy Mead	[phone]	[phone] (m)
Iwan Hughes	[phone]	[phone] (m)

Media                                                                                                                                                                          

Clive Hawkins	[phone]	[phone] (m)
Chris Mostyn	[phone]	[phone](m)
Gemma Stokes	[phone]	[phone](m)

Morgan Stanley (Lead Financial Advisor, Joint Sponsor, Joint Global Co-ordinator and Joint Bookrunner) Alastair Cochran Christopher Thiele	[phone]
BofA Merrill Lynch (Financial Advisor, Joint Global Co-ordinator and Joint Bookrunner) Richard Taylor Mark Astaire	[phone]
Deutsche Bank (Joint Sponsor, Joint Global Co-ordinator and Joint Bookrunner) James Agnew Alan Brown	[phone]
Brunswick Rebecca Shelley Tom Burns Tom Batchelar	[phone]
Capita Registrars Shareholder Helpline - UK Shareholder Helpline - outside UK	0871 664 9235 [phone]

IMPORTANT INFORMATION

This announcement has been prepared and issued by and is the sole responsibility of National Grid. This announcement does not constitute, or form part of an offer to sell, or the solicitation of an offer to subscribe for or buy, any Nil Paid Rights, Fully Paid Rights or New Shares.

This announcement is an advertisement. It is not a prospectus, disclosure document or offering document under the laws of England and Wales or any other law and does not purport to be complete. Investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of information in the Prospectus to be published by National Grid plc in due course in connection with the rights issue and made available on National Grid's website (www.nationalgrid.com). This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire, the Nil Paid Rights, Fully Paid Rights, or New Shares offered by any person in any jurisdiction in which such an offer or solicitation is unlawful. Any decision to participate in the Rights Issue or to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities should only be made on the basis of information contained in the Prospectus when it is published in due course, which will contain further information relating to National Grid as well as a summary of the risk factors to which any investment is subject.

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may or should be placed by any person for any purpose whatsoever on the information contained in this announcement or on its accuracy or completeness. The information in this announcement is subject to change.

This announcement is not for distribution, directly or indirectly, in or into the United States, Hong Kong, India, Japan, the People's Republic of China, the Republic of South Africa, or Switzerland. The distribution of this announcement and/or the Prospectus and/or the Provisional Allotment Letter and/or the Nil Paid Rights, Fully Paid Rights and New Shares into jurisdictions other than the United Kingdom may be restricted by law. Persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdiction.

This announcement and the information contained herein do not contain or constitute an offer for sale or the solicitation of an offer to purchase securities in the United States, or any other jurisdiction. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities Act") and may not be offered sold, taken up, exercised, resold, renounced, transferred or delivered directly or indirectly within the United States absent registration or an exemption from the registration requirements of the Securities Act. There will be no public offer of the securities in the United States.

This announcement and the information contained herein do not contain or constitute an offer for sale or the solicitation of an offer to purchase securities. No public offer of Nil Paid Rights, Fully Paid Rights or New Shares will be made in  the United States, Hong Kong, India, Japan, The People's Republic of China, The Republic of South Africa, or Switzerland or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction, and no public offer of rights or shares will be made in such jurisdictions. The Nil Paid Rights, Fully Paid Rights and New Shares have not been and will not be registered under the securities laws of such jurisdictions and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within such jurisdictions except pursuant to an exemption from and in compliance with any applicable securities laws.  It is noted, however, that pursuant to available exemptions under the securities laws of Australia, Canada, New Zealand and Singapore, Qualifying Shareholders (as defined in the Prospectus) from those jurisdictions will be able to participate in the Rights Issue.

The Joint Sponsors and the Underwriters, each of which is authorised and regulated in the United Kingdom by the FSA, are acting exclusively for National Grid and no one else in connection with the Rights Issue and will not regard any other person as their respective clients in relation to the Rights Issue and will not be responsible to anyone other than National Grid for providing the protections afforded to their respective clients or for providing advice in relation to the Rights Issue or any matters referred to in this announcement.

In connection with the Rights Issue, each of the Underwriters and any of their respective affiliates, acting as an investor for its own account, may take up New Shares in the Rights Issue and in that capacity may retain, purchase or sell for its own account such securities and any New Shares or related investments and may offer or sell such New Shares or other investments otherwise than in connection with the Rights Issue. Accordingly, references in the Prospectus, once published, to New Shares being offered or placed should be read as including any offering or placement of New Shares to any of the Underwriters or any of their respective affiliates acting in such capacity. None of the Underwriters intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

Apart from the responsibilities and liabilities, if any, which may be imposed on the Underwriters or Joint Sponsors by the FSMA, none of the Underwriters or Joint Sponsors or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for, and makes no representation or warranty, express or implied, in respect of, the contents of this announcement, including its accuracy, completeness or verification or regarding the legality of an investment in the Nil Paid Rights, the Fully Paid Rights or the New Shares by an offeree or purchaser thereof under the laws applicable to such offeree or purchaser or for any other statement made or purported to be made by them, or on their behalf, in connection with the Company, the Nil Paid Rights, the Fully Paid Rights, the New Shares or the Rights Issue, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. The Underwriters and the Joint Sponsors accordingly disclaim to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise which they might otherwise be found to have in respect of this announcement or any such statement.

Neither the content of National Grid's website nor any website accessible by hyperlinks on National Grid's website is incorporated in, or forms part of, this announcement.

This announcement contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information with respect to National Grid's financial condition, its results of operations and businesses, strategy, plans and objectives. Words such as 'anticipates', 'expects', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'targets', 'may', 'will', 'continue', 'project' and similar expressions, as well as statements in the future tense,  identify forward-looking statements. These forward-looking statements are not guarantees of National Grid's future performance and are subject to assumptions, risks and uncertainties that could cause actual future results to differ materially from those expressed in or implied by such forward-looking statements. Many of these assumptions, risks and uncertainties relate to factors that are beyond National Grid's ability to control or estimate precisely, such as changes in laws or regulations and decisions by governmental bodies or regulators; breaches of, or changes in, environmental, climate change and health and safety laws or regulations; network failure or interruption, the inability to carry out critical non-network operations and damage to infrastructure; performance against regulatory targets and standards, including delivery of costs and efficiency savings; customers and counterparties failing to perform their obligations; and unseasonable weather affecting energy demands. Other factors that could cause actual results to differ materially from those described in this announcement include fluctuations in exchange rates, interest rates, commodity price indices and settlement of hedging arrangements; restrictions in National Grid's borrowing and debt arrangements; changes to credit ratings of National Grid and its subsidiaries; adverse changes and volatility in the global credit markets; National Grid's ability to access capital markets and other sources of credit in a timely manner and on acceptable terms; deflation or inflation; the seasonality of National Grid's businesses; the future funding requirements of National Grid's pension schemes and other post-retirement benefit schemes, and the regulatory treatment of pension costs; the loss of key personnel or the inability to attract, train or retain qualified personnel; new or revised accounting standards, rules and interpretations, including changes of law and accounting standards that may affect National Grid's effective rate of tax; incorrect assumptions or conclusions underpinning business development activity, and any unforeseen significant liabilities or other unanticipated or unintended effects of such activities and the performance of National Grid's subsidiaries. In addition National Grid's reputation may be harmed if consumers of energy suffer a disruption to their supply. For a more detailed description of some of these assumptions, risks and uncertainties, together with any other risk factors, please see National Grid's filings with and submissions to the US Securities and Exchange Commission (the SEC) (and in particular the Risk Factors and Operating and Financial Review sections in its most recent Annual Report on Form 20-F). The effects of these factors are difficult to predict. New factors emerge from time to time and National Grid cannot assess the potential impact of any such factor on its activities or the extent to which any factor, or combination of factors, may cause its results to differ materially from those contained in any forward-looking statement. Except as may be required by law or regulation, National Grid undertakes no obligation to update any of its forward-looking statements, which speak only as at the date of this announcement. The content of any website references herein do not form part of this announcement.

20 May 2010

National Grid plc
2 for 5 Rights Issue to raise approximately £3.2 billion

Introduction

The Board of National Grid plc announces a fully underwritten 2 for 5 Rights Issue to raise approximately £3.2 billion, net of expenses, through the issue of 990,439,017 New Shares at a price of 335 pence each.

The Issue Price represents a 43.7 per cent. discount to the closing middle market price per ordinary share, adjusted for the recommended final dividend for 2009/10 of 24.84 pence, on 19 May 2010 (being the last business day prior to the announcement of the Rights Issue) and a discount of 35.7 per cent. to the theoretical ex-rights price on the same basis.

The Rights Issue is fully underwritten by Morgan Stanley Securities Limited, BofA Merrill Lynch and Deutsche Bank AG, London Branch.

Background to and reasons for the Rights Issue

In November 2006, National Grid set out its strategy to focus primarily on the transmission and distribution of electricity and gas in its chosen markets of the United Kingdom and the United States. We believe this strategy has maximised shareholder value by investing in organic growth under regulatory regimes and long-term contracts, by continuing to deliver operating efficiencies and by maintaining an efficient capital structure.

Over the last five years, National Grid has invested over £14 billion delivering a significant increase to our asset base. This major investment programme has been financed from internally generated cash flow and through the issue of debt, demonstrating the strength of our business model. In addition, over the same period National Grid has returned over £4 billion of capital to shareholders, and increased our ordinary dividend by 62 per cent. We believe our disciplined approach to investment delivers attractive, predictable and sustainable returns to investors.

In the United Kingdom, we continue to focus investment on replacing ageing assets and on major infrastructure reinforcement. In the United States, we are restoring baseline business performance through implementing new rate plans, strengthening our regulatory relationships and improving operating efficiency. Consistent with that focus, our US investment strategy will be driven by our ability to earn long-term acceptable returns.

National Grid's core strategy remains unchanged as we position the Group to respond to the ongoing developments in the UK energy landscape.

UK energy landscape

Since 2006, there have been significant developments in the UK energy landscape focused on maintaining security of supply and reducing carbon emissions. Environmental targets, legislation, age-related power station retirements and the decline of the UK's North Sea gas reserves are expected to result in a significant change in the generation mix between now and 2020.

The Electricity Networks Strategy Group has identified the electricity transmission reinforcements needed to support the Government's 2020 energy policy targets. National Grid has begun committing capital investment to a number of these projects under incentive arrangements provided by Ofgem. We believe that this investment in transmission networks is essential to facilitate the timely connection of new generation and to meet current energy policy commitments.

A step change in UK infrastructure investment is required

National Grid's capital expenditure has been steadily increasing in recent years in response to the changing energy environment and the need to replace end of life assets in our core regulated businesses. Capital expenditure reached a record £3.3 billion in 2009/10, of which £2.2 billion was focused on the United Kingdom.

Over the next five years, we forecast capital expenditure to increase significantly - totalling approximately £22 billion in aggregate. Of that amount, we expect that approximately three-quarters of this investment will be made in the United Kingdom and around sixty per cent. will be in the transmission business.

This significant increase in our UK capital expenditure over the period is required to:

•           increase investment in transmission asset replacement by £1.0 billion to continue to provide an efficient, economical and secure network in the future; and

•           invest £3.6 billion in reinforcing the on-shore transmission networks to enable connections of new generation in our core licence area to meet our obligations under the existing regulatory framework and renewable energy policy targets.

We expect this disciplined capital investment programme will be incorporated within National Grid's existing and future UK regulatory arrangements and therefore will deliver attractive returns to shareholders.

In addition, we have identified a pipeline of investment opportunities within the United Kingdom (including potential investment in offshore transmission, interconnectors, expansion of our LNG import facility and CO₂ networks associated with carbon capture and storage), which are aligned with our current core business. These opportunities would potentially require capital expenditure of up to £1.0 billion over the next five years. Investment in these opportunities is discretionary and may be contingent on a competitive tender process. Consequently, a commitment to invest will only be made if we expect these opportunities to generate attractive returns.

Maintaining single A credit ratings

National Grid is committed to maintaining single A credit ratings for its UK operating companies. This rating optimises National Grid's cost of capital and enhances its long-term competitive advantage. In prior years surplus capital has been returned to shareholders, consistent with this commitment to maintain an efficient balance sheet.

Reasons for the Rights Issue

The Board believes that raising £3.2 billion through the Rights Issue will give it the scope and appropriate financial flexibility to deliver the Group's strategy. In particular, the Board believes it will allow the Group to fund a significant increase in capital investment and continue to deliver attractive returns to shareholders, whilst maintaining single A credit ratings for our UK operating companies in a more volatile economic environment. The Board also believes that raising equity today will strengthen the Company's long-term competitive position to take advantage of an appropriate share of UK growth opportunities.

Dividends and dividend policy

In January 2008 we announced our objective to target an increase of eight per cent. per annum in our dividend until 2012. On 19 May 2010, the Board recommended a final dividend of 24.84 pence per ordinary share (US$1.7737 per ADS). This results in a proposed total dividend for the year of 38.49 pence per ordinary share (US$2.9217 per ADS), an increase of eight per cent. year on year in line with our long-term dividend policy. National Grid intends to maintain its policy of targeting an eight per cent. per annum increase in dividend until 31 March 2012, after adjusting the 2009/10 dividend to take account of the bonus element of the Rights Issue. Beyond 2012, National Grid intends to pursue a policy that targets real growth in dividends reflecting the strong growth prospects of the business.

The recommended final dividend, if approved, will be paid on 18 August 2010 to shareholders on the register as at 4 June 2010. Again, a scrip dividend alternative will be offered. New Shares issued as part of the Rights Issue will not be eligible for the final dividend

Principal terms of the Rights Issue

The Company is proposing to offer 990,439,017 New Shares by way of a Rights Issue. The New Shares will be offered to Qualifying Shareholders other than, subject to certain exceptions, Qualifying Shareholders with a registered address, or resident, in the United States, the Excluded Territories or the Restricted Territories. The Rights Issue is expected to raise approximately £3.2 billion (net of expenses). The Issue Price represents a 43.7 per cent. discount to the closing middle market price of 620 pence per Ordinary Share on 19 May 2010 (being the last business day before the announcement of the Rights Issue), adjusted for the recommended final dividend for 2009/10 of 24.84 pence per Ordinary Share which will not be paid on the New Shares, and a 35.7 per cent. discount to the theoretical ex-rights price on the same basis. The New Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Shares, save for the right to receive the final dividend of 24.84 pence per Ordinary Share proposed to be paid in respect of the year ended 31 March 2010.

The Rights Issue will be made on the basis of:

2 New Shares at 335 pence per New Share for every 5 Existing Shares

held by Qualifying Shareholders on the Record Date (being the close of business on 19 May 2010).

Entitlements to New Shares will be rounded down to the nearest whole number. The fractional entitlements not allotted to Qualifying Shareholders will be aggregated and placed in the market ultimately for the benefit of the Company. Holdings of Existing Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue.

The Rights Issue will result in 990,439,017 New Shares being issued (representing approximately 40 per cent. of the existing issued share capital and 28.6 per cent. of the enlarged issued share capital immediately following completion of the Rights Issue).

The Rights Issue is conditional, inter alia, upon:

(i)         the Underwriting Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been rescinded or terminated in accordance with its terms prior to Admission; and

(ii)         Admission becoming effective by not later than 8:00 a.m. on 26 May 2010 (or such later time and date as the Company and the Joint Bookrunners may agree).

Application will be made to the UK Listing Authority and to the London Stock Exchange for the New Shares to be admitted to the Official List and to trading on the London Stock Exchange. It is expected that Admission will occur and that dealings in the Nil Paid Rights on the London Stock Exchange will commence at 8:00 a.m. on 26 May 2010.

Structure of the Rights Issue

The structure of the Rights Issue is expected to have the effect of creating a merger reserve in an amount approximately equal to the net proceeds of the Rights Issue less the par value of the New Shares issued by the Company. The Company and the Subscribing Bank have agreed to acquire, by direct issue, ordinary shares in National Grid Jersey Investments Three Limited ("Newco"). Capita Registrars will receive, into an account set up specifically for the purpose and as agent for and on behalf of the Subscribing Bank, monies from Qualifying Shareholders, or renouncees, taking up New Shares under the Rights Issue, and from any persons procured by the Joint Bookrunners to acquire New Shares not taken up by Qualifying Shareholders or by the Joint Bookrunners as underwriters. Provided certain conditions are met, the Subscribing Bank will use certain amounts in the Capita Proceeds Account to acquire by direct issue redeemable preference shares in Newco.

The Company will allot and issue the New Shares to those persons entitled thereto in consideration for the Subscribing Bank transferring its holdings of ordinary shares and redeemable preference shares in Newco to the Company. Accordingly, instead of receiving cash as consideration for the issue of the New Shares, at the conclusion of the Rights Issue the Company will own the entire issued share capital of Newco whose only asset will be its cash reserves, which will represent an amount equivalent to the net proceeds of the Rights Issue.

To the extent the merger reserve is considered to be realised, this would result in distributable reserves, which would facilitate the payment of dividends and any potential return of capital to Shareholders.

Expected timetable of principal events

Each of the times and dates in the table below is indicative only and may be subject to change.

Dealings in Nil Paid Rights and Fully Paid Rights commence on the London Stock Exchange.................................................................................................................................................	8:00 a.m. on 26 May 2010
Existing Shares marked "ex-rights" by the London Stock Exchange...........................................	8:00 a.m. on 26 May 2010
Nil Paid Rights credited to stock accounts in CREST (Qualifying CREST Shareholders only)..........................................................................................................................................................	as soon as practicable after 8:00 a.m. on 26 May 2010
Nil Paid Rights and Fully Paid Rights enabled in CREST.............................................................	8:00 a.m. on 26 May 2010
Ex - dividend date...................................................................................................................................	2 June 2010
Latest time and date for acceptance, payment in full and registration of renunciation of Provisional Allotment Letters...............................................................................................................	11:00 a.m. on 11 June 2010
Dealings in New Shares commence on the London Stock Exchange.......................................	8:00 a.m. on 14 June 2010
Expected date of announcement of results of the Rights Issue...................................................	14 June 2010
New Shares credited to CREST stock accounts.............................................................................	as soon as practicable after 8.00 a.m. on 14 June 2010

Directors' recommendation and intentions regarding the Rights Issue

The Directors are fully supportive of the Rights Issue and each intends to take up his or her rights in full under the Rights Issue.

APPENDIX A: DEFINITIONS

In this document the following expressions have the following meaning unless the context requires otherwise:

Admission	admission of the New Shares to the Official List and to trading on the London Stock Exchange's main market for listed securities becoming effective in accordance with, respectively, the Listing Rules and the Admission and Disclosure Standards
Board	the board of Directors of the Company
BofA Merrill Lynch	Merrill Lynch International
the Company or National Grid	National Grid plc, incorporated in England and Wales with registered number 4031152
Directors	the directors of the Company
Excluded Territories	India and the Republic of South Africa and "Excluded Territory" means any one of them
Existing Shares	the existing Ordinary Shares in issue at the Record Date
FSA	Financial Services Authority
FSMA	Financial Services and Markets Act 2000, as amended
Fully Paid Rights	rights to acquire New Shares, fully paid
the Group	the Company and its subsidiaries and subsidiary undertakings
Joint Bookrunners	Morgan Stanley Securities Limited, Merrill Lynch International and Deutsche Bank AG, London Branch
Joint Global Co-ordinators	Morgan Stanley Securities Limited, Merrill Lynch International and Deutsche Bank AG, London Branch
Joint Sponsors	Morgan Stanley & Co. International plc and Deutsche Bank AG, London Branch
Issue Price	335 pence
London Stock Exchange	London Stock Exchange plc
New Shares	new Ordinary Shares to be issued by the Company in connection with the Rights Issue
Newco	National Grid Jersey Investments Three Limited
Nil Paid Rights	rights to acquire New Shares, nil paid
Ordinary Shares	the ordinary shares of 1117/43 pence each in the capital of the Company and "Ordinary Share" means any one of them
Part VI Rules	the rules contained in Part VI of the FSMA
Qualifying Shareholders	Shareholders on the register of members of the Company as at the Record Date and "Qualifying Shareholder" means any one of them
Record Date	close of business (London time) on 19 May 2010
Restricted Territories	Hong Kong, Japan, the People's Republic of China or Switzerland and "Restricted Territory" means any one of them
Rights Issue	the offer by way of rights of New Shares to Qualifying Shareholders on the basis to be described in the Prospectus and, in the case of Qualifying Non-CREST Shareholders, in the Provisional Allotment Letter (other than, subject to certain exceptions, Shareholders with a registered address in the United States, the Excluded Territories or the Restricted Territories)
Subscribing Bank	Deutsche Bank AG, London Branch
Shareholders	the holders of Ordinary Shares in the capital of the Company and "Shareholder" means any one of them
UK Listing Authority	the FSA acting in its capacity as the competent authority for the purposes of Part VI of the FSMA
Underwriters	Morgan Stanley Securities Limited, Merrill Lynch International and Deutsche Bank AG, London Branch
Underwriting Agreement	the underwriting agreement dated 20 May 2010 between the Company, Morgan Stanley & Co. International plc, Morgan Stanley Securities Limited, Merrill Lynch International and Deutsche Bank AG, London Branch
United Kingdom or UK	the United Kingdom of Great Britain and Northern Ireland and its dependent territories
United States or US	the United States of America (including the states of the United States and the District of Columbia), its possessions and territories and all areas subject to its jurisdiction

Important Information

This announcement has been prepared and issued by and is the sole responsibility of National Grid. This announcement does not constitute, or form part of an offer to sell, or the solicitation of an offer to subscribe for or buy, any Nil Paid Rights, Fully Paid Rights or New Shares.

This announcement is an advertisement. It is not a prospectus, disclosure document or offering document under the laws of England and Wales or any other law and does not purport to be complete. Investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of information in the Prospectus to be published by National Grid plc in due course in connection with the rights issue and made available on National Grid's website (www.nationalgrid.com). This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire, the Nil Paid Rights, Fully Paid Rights, or New Shares offered by any person in any jurisdiction in which such an offer or solicitation is unlawful. Any decision to participate in the Rights Issue or to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities should only be made on the basis of information contained in the Prospectus when it is published in due course, which will contain further information relating to National Grid as well as a summary of the risk factors to which any investment is subject.

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may or should be placed by any person for any purpose whatsoever on the information contained in this announcement or on its accuracy or completeness. The information in this announcement is subject to change.

This announcement is not for distribution, directly or indirectly, in or into the United States, Hong Kong, India, Japan, the People's Republic of China, the Republic of South Africa, or Switzerland. The distribution of this announcement and/or the Prospectus and/or the Provisional Allotment Letter and/or the Nil Paid Rights, Fully Paid Rights and New Shares into jurisdictions other than the United Kingdom may be restricted by law. Persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdiction.

This announcement and the information contained herein do not contain or constitute an offer for sale or the solicitation of an offer to purchase securities in the United States, or any other jurisdiction. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities Act") and may not be offered sold, taken up, exercised, resold, renounced, transferred or delivered directly or indirectly within the United States absent registration or an exemption from the registration requirements of the Securities Act. There will be no public offer of the securities in the United States.

This announcement and the information contained herein do not contain or constitute an offer for sale or the solicitation of an offer to purchase securities. No public offer of Nil Paid Rights, Fully Paid Rights or New Shares will be made in  the United States, Hong Kong, India, Japan, The People's Republic of China, The Republic of South Africa, or Switzerland or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction, and no public offer of rights or shares will be made in such jurisdictions. The Nil Paid Rights, Fully Paid Rights and New Shares have not been and will not be registered under the securities laws of such jurisdictions and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within such jurisdictions except pursuant to an exemption from and in compliance with any applicable securities laws.  It is noted, however, that pursuant to available exemptions under the securities laws of Australia, Canada, New Zealand and Singapore, Qualifying Shareholders (as defined in the Prospectus) from those jurisdictions will be able to participate in the Rights Issue.

The Joint Sponsors and the Underwriters, each of which is authorised and regulated in the United Kingdom by the FSA, are acting exclusively for National Grid and no one else in connection with the Rights Issue and will not regard any other person as their respective clients in relation to the Rights Issue and will not be responsible to anyone other than National Grid for providing the protections afforded to their respective clients or for providing advice in relation to the Rights Issue or any matters referred to in this announcement.

In connection with the Rights Issue, each of the Underwriters and any of their respective affiliates, acting as an investor for its own account, may take up New Shares in the Rights Issue and in that capacity may retain, purchase or sell for its own account such securities and any New Shares or related investments and may offer or sell such New Shares or other investments otherwise than in connection with the Rights Issue. Accordingly, references in the Prospectus, once published, to New Shares being offered or placed should be read as including any offering or placement of New Shares to any of the Underwriters or any of their respective affiliates acting in such capacity. None of the Underwriters intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

Apart from the responsibilities and liabilities, if any, which may be imposed on the Underwriters or Joint Sponsors by the FSMA, none of the Underwriters or Joint Sponsors or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for, and makes no representation or warranty, express or implied, in respect of, the contents of this announcement, including its accuracy, completeness or verification or regarding the legality of an investment in the Nil Paid Rights, the Fully Paid Rights or the New Shares by an offeree or purchaser thereof under the laws applicable to such offeree or purchaser or for any other statement made or purported to be made by them, or on their behalf, in connection with the Company, the Nil Paid Rights, the Fully Paid Rights, the New Shares or the Rights Issue, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. The Underwriters and the Joint Sponsors accordingly disclaim to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise which they might otherwise be found to have in respect of this announcement or any such statement.

Neither the content of National Grid's website nor any website accessible by hyperlinks on National Grid's website is incorporated in, or forms part of, this announcement.

This announcement contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information with respect to National Grid's financial condition, its results of operations and businesses, strategy, plans and objectives. Words such as 'anticipates', 'expects', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'targets', 'may', 'will', 'continue', 'project' and similar expressions, as well as statements in the future tense,  identify forward-looking statements. These forward-looking statements are not guarantees of National Grid's future performance and are subject to assumptions, risks and uncertainties that could cause actual future results to differ materially from those expressed in or implied by such forward-looking statements. Many of these assumptions, risks and uncertainties relate to factors that are beyond National Grid's ability to control or estimate precisely, such as changes in laws or regulations and decisions by governmental bodies or regulators; breaches of, or changes in, environmental, climate change and health and safety laws or regulations; network failure or interruption, the inability to carry out critical non-network operations and damage to infrastructure; performance against regulatory targets and standards, including delivery of costs and efficiency savings; customers and counterparties failing to perform their obligations; and unseasonable weather affecting energy demands. Other factors that could cause actual results to differ materially from those described in this announcement include fluctuations in exchange rates, interest rates, commodity price indices and settlement of hedging arrangements; restrictions in National Grid's borrowing and debt arrangements; changes to credit ratings of National Grid and its subsidiaries; adverse changes and volatility in the global credit markets; National Grid's ability to access capital markets and other sources of credit in a timely manner and on acceptable terms; deflation or inflation; the seasonality of National Grid's businesses; the future funding requirements of National Grid's pension schemes and other post-retirement benefit schemes, and the regulatory treatment of pension costs; the loss of key personnel or the inability to attract, train or retain qualified personnel; new or revised accounting standards, rules and interpretations, including changes of law and accounting standards that may affect National Grid's effective rate of tax; incorrect assumptions or conclusions underpinning business development activity, and any unforeseen significant liabilities or other unanticipated or unintended effects of such activities and the performance of National Grid's subsidiaries. In addition National Grid's reputation may be harmed if consumers of energy suffer a disruption to their supply. For a more detailed description of some of these assumptions, risks and uncertainties, together with any other risk factors, please see National Grid's filings with and submissions to the US Securities and Exchange Commission (the SEC) (and in particular the Risk Factors and Operating and Financial Review sections in its most recent Annual Report on Form 20-F). The effects of these factors are difficult to predict. New factors emerge from time to time and National Grid cannot assess the potential impact of any such factor on its activities or the extent to which any factor, or combination of factors, may cause its results to differ materially from those contained in any forward-looking statement. Except as may be required by law or regulation, National Grid undertakes no obligation to update any of its forward-looking statements, which speak only as at the date of this announcement. The content of any website references herein do not form part of this announcement.

 

END

 

 

ARIZMGMKMLZGGZZ