Veolia Slides to Record on Capital Increase Report: Paris Mover

Veolia Environnement SA (VIE), the French water utility trying to sell assets and cut debt, declined to a record following a report of a possible capital increase.

Veolia, which tonight denied any plans for a capital increase, fell 4.8 percent to 7.526 euros, the lowest since the Paris-based company began trading in July 2000. La Lettre A reported on Oct. 26 that Veolia would need a “minimum” of 1 billion euros ($1.3 billion), diluting shareholder stakes.

Chief Executive Officer Antoine Frerot pledged to cut debt to less than 12 billion euros by the end of 2013 with asset sales from 14.7 billion euros at the end of June. Frerot offered a 70 euro cent a share dividend this year and next, down from 1.21 euros. Veolia said in a statement that the “unfounded” report of a capital increase had prompted it to ask French authorities to open an inquiry into the “dissemination of false information.”

The stock’s drop, its sixth in the last seven trading days, raised Veolia’s loss this year to 11 percent.

French water rival Suez Environnement reported a 4 percent drop in nine-month profit last week, saying it sees industrial waste volumes treated in Europe down 3 percent over the year. Both utilities saw demand for industrial waste collection slide as producers shutter factories and European economies slow.

Suez Environnement said a plan to close 15 waste-handling sites in Europe is half-complete. Veolia has held talks on a possible tie-up with Suez Environnement, 34 percent held by the former French gas monopoly GDF Suez (GSZ) SA, according to three people with knowledge of the discussions.

The two utilities said Oct. 21 a merger wasn’t planned.

Electricite de France SA, the state-owned nuclear operator headed by Veolia’s former CEO Henri Proglio, said last week it had sued Veolia over the right to own half of their Dalkia energy-services business. Veolia said it will “strongly oppose” EDF’s suit as it’s without merit, according to a statement on Oct. 26.

Veolia is due to report third-quarter earnings on Nov. 7.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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