United Utilities to sell stake in Tallinna Vesi to Tallinn, Utilitas

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Tallinn mayor Mihhail Kõlvart and head of Utilitas Priit Koit. Source: Siim Lõvi/ERR

United Utilities Tallinn B.V., the biggest shareholder of listed Estonian water services company Tallinn Vesi, will sell its holding in Tallinn Vesi to the city of Tallinn and the energy group Utilitas.

The price of the transaction is €100 million, which is divided equally between the City of Tallinn and Utilitas.

"Tallinn will acquire a majority stake in Tallinna Vesi and we will involve a partner, OÜ Utilitas. This means that Tallinn will restore the city's strategic position in a company providing vital services," Tallinn Mayor Mihhail Kõlvart (Center) said at a press conference on Wednesday morning.

He said the goal is for Tallinna Vesi is to continue as a listed company and current the dividend policy will also continue.

Kõlvart said United Utilities, a British company, wanted to get rid of its stake in Tallinna Vesi and the city then looked for an opportunity to buy it. The mayor said United Utilities no longer wanted its stake because it is the company's only investment outside of the UK. A tariff dispute that ended last year also played a role.

As of February 2, the biggest shareholders of Tallinna Vesi were United Utilities Tallinn B.V. which hold a 35.3 percent share and the city of Tallinn with 34.7 percent.

The city of Tallinn, United Utilities Tallinn B.V., United Utilities PLC and OÜ Utilitas will enter into a share sale and purchase agreement which will see United Utilities Tallinn B.V. sell 7,060,870 A-shares in AS Tallinna Vesi to the city of Tallinn and OÜ Utilitas in equal parts at a price of €14.20 per share, Tallinna Vesi informed the stock exchange on Wednesday.

As a result of the transaction, the city of Tallinn will hold 10,469,565 A-shares in AS Tallinna Vesi and 1 B-share, representing 52.35 of the share capital of AS Tallinna Vesi, and OÜ Utilitas will hold 530,435 A-shares which is 17.6 percent of the share capital of AS  Tallinna Vesi.

The share sale and purchase agreement will take effect when the transaction is approved by Tallinn City Council. It must also be approved by the Estonian Competition Authority. The transaction is expected to be completed in March 2021.

Following the approvals from the Financial Supervision and Resolution Authority, the City of Tallinn and OÜ Utilitas will jointly undertake a mandatory tender offer in respect of shares held by minority shareholders of AS Tallinna Vesi. The terms of the tender offer will be announced once they have been approved by the Financial Supervision and Resolution Authority.

The management board of AS Tallinna Vesi said the sale will not bring about changes to the provision of its services.

Utilitas is the largest district heating company and producer of renewable energy in Estonia. The company manages 550 kilometers of district heating pipelines and supplies heat to 174,000 households in eight Estonian cities - Tallinn, Maardu, Keila, Rapla, Haapsalu, Kardla, Jõgeva and Valga.

In 2020 Utilitas produced 1,7 terawatt-hours of heat and 394 gigawatt-hours  of electricity. Utilitas' consolidated sales revenue in 2020 was €127 million and the volume of assets was €386 million.

The company is owned by the European Diversified Infrastructure Fund II, whose holding amounts to 85 percent, and whose assets are managed by First Sentier Investors, and the companies of OÜ Utilitas' board members, with a holding of 15 percent.

As at the date of this release, the buyer city of Tallinn owns 6,939,130 shares of AS Tallinna Vesi and the buyer OÜ Utilitas does not own any shares in AS Tallinna Vesi.

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Editor: Helen Wright

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