Southern Sells Additional Stake in British Utility to PP&L Unit

Southern Energy Inc. has sold an additional 26 percent interest in SWEB Holdings -- the parent firm of South Western Electricity -- for $170 million to PP&L Global.

PP&L Global -- a subsidiary of PP&L Resources based in Allentown, Pennsylvania -- initially purchased a 25 percent stake in SWEB Holdings in 1996. Today’s transaction will increase PP&L’s economic interest in SWEB Holdings to 51 percent.

Under terms of the agreement, Southern Energy will retain operational and management control of SWEB and the SWEB Holdings Group. Southern Energy will continue to hold a majority of the voting shares in SWEB Holdings and will retain a majority of the Board of Directors. In addition, SWEB’s senior management team will remain in place.

SWEB, based in Bristol, England, provides electricity to more than 1.3 million customers in southwestern England.

“This transaction reflects our practice of seeking strong business partners in our international investments -- partners who share our long-term commitment to customers and the communities we serve,” said Tom Boren, Southern Energy President. “Since PP&L Global’s initial investment in SWEB Holdings two years ago, our companies have developed a strong working relationship based on a mutual pursuit of operational excellence.

“In addition to enhancing Southern Energy’s return on its investment in SWEB, the transaction reflects the performance improvements we’ve put in place over the past 2 1/2 years,” Boren said.

Since Southern Energy acquired SWEB in September 1995, the British utility has achieved numerous customer service and operational milestones including:

  • A 34 percent improvement in reliability (as measured by the number of outage minutes per customer).

  • Four price reductions for residential and small business customers.

  • A turnaround from having the most complaints of any electricity company in the UK (per 100,000 customers) to the fewest customer complaints in 1997.

    Boren pointed out that SWEB’s shares in the National Grid and the Grid’s pumped storage business -- both included in Southern Energy’s original acquisition price -- have since been sold and were not included in this transaction. In addition, a prudent amount of debt was previously issued to help finance the original investment.

    Southern Energy -- a unit of Southern Company -- develops, builds, owns and operates power production and delivery facilities and provides a broad range of services to utilities and industrial companies around the world. Southern Energy supplies energy in 10 countries on four continents.

    Southern Company (NYSE: SO), the largest producer of electricity in the United States, is also the parent firm of Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric. Based in Atlanta, its common stock is one of the 20 most widely held corporate stocks in America.

    PP&L Global, a subsidiary of PP&L Resources, Inc., develops, owns and operates electric generation and distribution companies worldwide. In addition to its interest in South Western Electricity, a U.K. distribution company, PP&L Global also owns 29 percent of Emel, a distribution company in Chile and has holdings in El Salvador, Argentina, Brazil, Bolivia, Peru, Spain and Portugal.

    PP&L Resources, based in Allentown, Pennsylvania, also is the parent company of PP&L, Inc., which provides electricity service to 1.2 million homes and businesses in Pennsylvania. PP&L generates and sells retail electricity throughout Pennsylvania and trades wholesale energy in 25 states and Canada. Other PP&L Resources companies include PP&L Spectrum, an energy services company, and H.T. Lyons, an energy management and heating, ventilating and air-conditioning firm.