Scottish & Southern placing set to raise 470 million pounds
SSE shares, up a fifth in value over the past four weeks, fell 8.2 percent to 1,159 pence by 10:30 a.m. British time on the news SSE will place up to 5 percent of its issued ordinary share capital, which totalled 876 million shares on December 31.
"The successful placing of shares will reinforce our balance sheet strength and enhance the range of options open to us," chief executive Ian Marchant said in a statement.
The company said in a statement that it expected the proceeds of the placing to provide an extra source of funding to help it to take advantage of investment opportunities of up to 6.7 billion pounds over five years.
It said it would assist it in buying small and medium-sized assets "which may become available from time to time."
The group said that in line with that strategy, it was finalising a couple of deals to acquire stakes in wind farm projects in Scotland and the Republic of Ireland.
SSE confirmed it was trading in line with management expectations and it was on track for a modest rise in adjusted pretax profit for 2008/09.
It also said it was on course to deliver a full-year dividend of at least 66 pence per share for the year to March 31, 2009, up 9.1 percent against a year earlier.
Charles Stanley analyst Tina Cook said the performance update was positive, but said the share price fall might reflect market uncertainty about the detail of the share placing.
"There may also be some question about whether they are having difficulties raising debt," she said.
Angelos Anastasiou at Pali International said SSE had not had problems accessing the debt markets, although he said the company had aggressive capital spending growth plans and the placing should underpin its position.
"While there will be a big step up in capex over the next few years, SSE's record is very strong, and the returns should rapidly accumulate as the various projects are completed," Anastasiou said.
"We also believe SSE remains very attractive to the Euro-consolidators. Overall, we still see SSE as a very good growth story, and we would look to participate in the placing."
(Reporting by Ben Deighton and Philip Waller; Editing by Matt Scuffham, Dan Lalor and Mike Nesbit)