Challenger Infrastructure to tide over Southern Water with A$26m(2)

England's Southern Water is borrowing money from its shareholders to avoid a liquidity crunch after it was hit by a drop in the retail price index. Challenger, which is a 15% share holder, is providing A$26m towards an £85m loan

An Australian infrastructure fund has been forced to lend money to an English water company it part owns so that it can renegotiate its bank debt.

In total, Southern Water borrowed £85 million to tide it over, some A$26 million (€13 million; $17 million) of which came from the Sydney-listed Challenger Infrastructure Fund (CIF), which owns a 15.6 percent stake in the water provider.

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The loan has been made, “In order to ensure Southern Water has sufficient headroom under the terms of its debt facilities at 31 March 2009,” CIF said in a letter to the Australia Securities Exchange.

CIF expects the majority of the loan to be repaid before the end of June this year.