Three offers to restructure French water firm

The management of SAUR, France’s third-largest water company, announced last week that it has received three “firm” offers to help restructure the company. 

The offers come from a consortium of banks which are currently the senior creditors of SAUR’s circa €2 billion of debt, French fund manager and SAUR shareholder Cube Infrastructure, and Impala, the investment vehicle of former Louis Dreyfus boss Jacques Veyrat. 

A fourth offer, from second-biggest shareholder Seche Environnement (Seche), is also forthcoming, the water utility said. 

In an interview with French newspaper Les Echos, SAUR chief executive Olivier Brousse said that “at the moment, each of the three offers would keep a majority French shareholder structure in place and would inject necessary fresh capital of around €200 million”. 

He added the water company is independently valued at between €800 million and €1 billion, or around six times its earnings before interest, tax, depreciation and amortisation, a far cry from its €2 billion-plus 2007 enterprise value. 

SAUR has had a difficult few years foreshadowing its tricky financing, including a failed takeover bid by Seche. 

The latter gave rise to a very public spat between French sovereign wealth fund Fonds Strategique d’Investissement (FSI), SAUR’s largest shareholder, AXA Private Equity and Cube Infrastructure – who opposed the takeover – and Seche. 

Originally acquired in 2007 by the FSI, AXA PE and Seche (Cube only joined in 2008) from private equity firm PAI Partners, the original plan was for Seche to buy an extra 18 percent in SAUR from the FSI through a call option. 

But the financial crisis derailed Seche’s ability to pay for the call option at the initially agreed price. In addition, fierce bickering between the shareholders ensued because any bid for majority control of SAUR would have triggered a clause in its debt covenants that could have paved the way for creditors to demand an immediate renegotiation of the utility’s debt. 

Most of SAUR’s debt, maturing in 2014, is related to its acquisition and is priced at comparatively cheap 2007 prices. Local sources have suggested the company will have difficulty servicing much more than €600 million of debt. They have also suggested the shareholders would probably see their equity wiped out. 

SAUR’s management said it will now enter into discussions with all of the parties that tabled an offer, but did not disclose when a final decision will be announced.