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Investing.com -- Pennon (LON:PNN) Group, a U.K. water utility company, announced on Wednesday that it is launching a rights issue at a discounted rate. The company is aiming to support increased investment, following its acceptance of the final review from the regulator Ofwat.
The final review pertains to the 2025-30 period for Pennon’s businesses, South West Water and Sutton and East Surrey. The company has confirmed that it won’t be seeking a reference to the competition watchdog in relation to these determinations.
The review includes a significant increase in investment, with capital expenditure projected to rise to £3.2 billion ($3.98 billion), up from £1.9 billion for the 2020-25 period.
Pennon Group stated that the investment would be allocated to a variety of transformative projects. These projects are primarily focused on areas such as addressing the use of storm overflows, enhancing water resources through a new reservoir in the South West, and expanding the company’s nature recovery program.
In order to finance these initiatives and maintain a robust balance sheet, Pennon Group is proposing a capital raise of £490 million. This will be achieved through the issuance of 185.9 million shares at 264 pence each. This price represents a 35% discount to Tuesday’s closing price of 500.8 pence, adjusted for the 14.69 pence interim dividend, which will not be payable on the newly issued shares.
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