LAUNCH OF RPI LINKED 10 YEAR RETAIL BOND

RNS Number : 8258F

Severn Trent PLC

21 June 2012

 



NOT FOR DISTRIBUTION IN OR INTO OR TO ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES, ITS TERRITORIES AND POSSESSIONS (INCLUDING PUERTO RICO, THE U.S. VIRGIN ISLANDS, GUAM, AMERICAN SAMOA, WAKE ISLAND AND THE NORTHERN MARIANA ISLANDS), ANY STATE OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA

21 June 2012

The information contained herein may only be released, published or distributed in the United Kingdom, Jersey, Guernsey or the Isle of Man in accordance with applicable regulatory requirements.

The information contained herein is not for release, publication or distribution in or into the United States, Australia, Canada, Japan, South Africa, the Republic of Ireland or in any other jurisdiction where it is unlawful to distribute this document.

The securities referred to below may only be sold in Jersey in compliance with the provisions of the Control of Borrowing (Jersey) Order 1958.

SEVERN TRENT PLC LAUNCHES RPI LINKED 10 YEAR STERLING RETAIL BOND

Severn Trent Plc ("Severn Trent") has today launched an RPI linked 10 year Sterling bond available to retail investors.

The bonds will pay interest semi-annually at a real rate of interest of 1.3% per annum adjusted to take account of changes in the level of the UK Retail Prices Index ("RPI"). On maturity, the amount due to be repaid will be the full face value of the bonds, adjusted to take account of any overall increase in the RPI. However on maturity, even if there is an overall fall in the RPI, Severn Trent will be required to repay the bonds at no less than their full face value.

Severn Trent Plc is the first water company to issue an RPI linked bond available to retail investors, having historically only offered bonds to institutional investors. In accessing the retail bond market, Severn Trent aims to diversify sources of funding for its 2010-2015 capital investment programme of approximately £2.5 billion.

Mike McKeon, Chief Financial Officer at Severn Trent, said:

"We are pleased to be the first water company to issue a retail bond. With a large, inflation linked, investment driven, regulated water utility at the heart of our Group, we are well suited for this product. This retail bond issue diversifies our funding sources while also seeking to meet demand from retail investors for inflation linked products."

Barclays Bank PLC and Investec Bank plc have been appointed Joint Lead Managers of the bond issue. The bonds are expected to be issued on 11^th July 2012. The offer period for the bonds is expected to remain open until 4^th July 2012 or such other date as Severn Trent Plc may agree.

The bonds are being issued by Severn Trent Plc pursuant to its EMTN Programme and are expected to be listed on the Official List of the UK Listing Authority and to trade on the London Stock Exchange's Order book for Retail Bonds ("ORB").

For media enquiries please contact:

Severn Trent

Mike McKeon / John Crosse [phone]

Tulchan

Ed Orlebar / Anastasia Shiach / Martha Kelly [phone]

Notes to editors:

·     The bonds may not be suitable for all investors. Investors should ensure they fully understand the risks and seek independent financial advice.

·     Investors should note that the price of the bonds can rise and fall during the life of the bonds and the price of the bonds could fall below the issue price of £100.

·     In the event of deflation, the interest rate on the bonds may be less than 1.3% per year.

·     If an investor has, or is eligible to set up, a Stocks & Shares ISA or a SIPP which can hold bonds, depending on their individual tax circumstances and subject to any future changes in legislation, they may be entitled to interest paid on the bonds and any gain on sale or redemption of the bonds free of UK tax

·     During the life of the bonds, investors may sell the bonds at any time (within market hours and in normal market conditions) on the open market through their stockbroker

·     In the event that Severn Trent defaults or becomes insolvent, investors may lose some or all of their investment

Severn Trent

Severn Trent Plc is the holding company of the Severn Trent group of companies (comprising Severn Trent and its subsidiaries) (the "Group"). The Group comprises two main business divisions (i) Severn Trent Water which comprises the regulated water utility in Severn Trent Water Limited ("STWL"); and (ii) Severn Trent Services.

STWL is one of the larger water and sewerage companies in England and Wales in terms of area and turnover, and provides water and wastewater services to 4.2 million households and businesses in the Midlands and mid-Wales. Severn Trent Services provides water and wastewater treatment and operating services to utilities, municipalities and commercial customers around the world.  The turnover for the Group for the year ended 31 March 2012 was £1770.6 million with the underlying profit before interest tax and exceptional items being £504.2 million.

More details available on the Severn Trent website www.severntrent.com/retail-bond

OFFER AND DISTRIBUTION RESTRICTIONS

Neither this announcement nor the Drawdown Prospectus constitutes an invitation to participate in the bond offering (the "Offer") in any jurisdiction or to any person to whom it is unlawful for there to be such participation under applicable securities or other laws. Only persons resident in the United Kingdom, Jersey, Guernsey and the Isle of Man may participate in the Offer, The distribution of this announcement and/or the Drawdown Prospectus in certain jurisdictions may be restricted by law.  Persons into whose possession this announcement and/or the Drawdown Prospectus comes are required to inform themselves about, and to observe, any such restrictions, including as set out under "Subscription and Sale" in the Drawdown Prospectus.

United States

The Offer is not being made, and will not be made, directly or indirectly in or into, or by use of the mails of, or by any means or instrumentality of interstate or foreign commerce of or of any facilities of a national securities exchange of, the United States.  This includes, but is not limited to, facsimile transmission, electronic mail, telex, telephone, the internet and other forms of electronic communication.  The Notes may not be offered or sold by any such use, means, instrumentality or facility from or within the United States or by persons located or resident in the United States.  Accordingly, copies of the Drawdown Prospectus and any other documents or materials relating to the Offer are not being, and must not be, directly or indirectly mailed or otherwise transmitted, distributed or forwarded (including, without limitation, by custodians, nominees or trustees) in or into the United States or to any persons located or resident in the United States. For the purposes of this paragraph, United States means the United States of America, its territories and possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands), any state of the United States of America and the District of Columbia.

ISA and SIPP eligibility of the bonds

At the time of issue the bond can be invested in a stocks and shares ISA or SIPP. However, any bondholders or investors should seek advice as to whether the specific terms of their arrangement permits investments of this type.

Investors should refer to the information booklet dated 21 June 2012 ("Information Booklet") and the drawdown prospectus dated 21 June 2012 relating to the bonds. ("Drawdown Prospectus"). This is a press release and is not a prospectus for the purposes of EU Directive 2003/71/EC or Part VI of the Financial Services and Markets Act 2000 ("FSMA"). The Drawdown Prospectus has been prepared and made available to the public as required by Part VI of the FSMA. Investors should not purchase any bonds except on the basis of information contained in the Drawdown Prospectus. Investors may obtain copies of documents relating to the bonds from the website of the London Stock Exchange and inspect copies on request at the registered office of Severn Trent Plc, Severn Trent Centre, 2 St John's Street, Coventry CV1 2LZ, United Kingdom. Severn Trent Plc does not provide legal, tax, accounting or investment advice in relation to the bonds and is not responsible for any advice investors may receive from any third party. Severn Trent and its affiliates, connected companies, employees or clients may have an interest in securities of the type described in this press release. This is not an offer of securities of the type described in this press release. This is not an offer of securities for sale in the United States. The bonds have not been and will not be registered under the United States Securities Act of 1933, as amended, and include bonds in bearer form that are subject to certain U.S tax law requirements. Subject to certain exceptions, the bonds may not be offered, sold, or delivered within the United States of America or to, or for the account of or benefit of, U.S. persons. There will be no public offering in the United States.

 

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