ScotPower unrest amid sell-off vote

Robert Lea12 April 2012

INVESTORS in Scottish Power are meeting to vote on the company's £2.05bn sale of Southern Water - against a backdrop of increasingly vocal unrest over the performance of the group in the year since the elevation of Ian Russell to chief executive.

Last month, Scottish Power revealed that it is to sell the English water business to a consortium of banks, having previously signalled it would raise money by ring-fencing the operations and securitising its future income through bonds.

The City was horrified, however, by the announcement with the deal that Scottish Power would cut its dividend by about 30% because the group's earnings after the sale of Southern-Water would bring the dividend cover down to worryingly low levels.

Russell's year at the helm since he replaced his old boss Sir Ian Robinson has been punctuated by a series of shocks from the group's troubled US business PacifiCorp, exacerbated by a strategic volte-face away from constructing an international multiutility and services company to a simple energy business.

Over the year the shares have dived by 30% and last month hit a five-year low of 350p.

City analysts doing their sums on the Southern Water deal have been suggesting that next year the dividend could fall as low as 18p - a 35% cut.

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