Veolia Rises After Denying Plans to Raise Capital: Paris Mover
Veolia Environnement SA (VIE), the French water utility trying to sell assets and cut debt, rose the most in two weeks after saying it’s not planning a capital increase.
Veolia gained as much as 2.3 percent, the most since Oct.17, and was 12 cents higher at 7.65 euros at 10:16 a.m. in Paris. The shares slumped to a record yesterday after La Lettre A reported it needed a minimum of 1 billion euros ($1.3 billion), which would have diluted shareholder stakes.
“Veolia denies any plans for a capital increase,” the Paris-based utility said yesterday in a statement after the market had closed. The company asked the regulator to “open an inquiry into this dissemination of false information.”
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. The chief executive is nearly one year into what he said would be a two-year “profound transformation” of the utility.
“The company does not face any tough bond repayment obligations” nor does it have covenant linked with debt or credit lines, Julien Desmaretz, an analyst at Bryan,Garnier & Co., wrote in a note today. The denial is “reassuring” because a capital increase on a scale described in the report would have been “much too harmful given the potential benefits.”
Speculation about Veolia’s talks with rival Suez Environnement on a possible tie-up and a legal conflict with Electricite de France SA has surfaced since former CEO Henri Proglio resigned from the board this month. Proglio ceded his position at the helm of Veolia to head EDF and was reported by the French press to have later tried to garner support for Frerot’s ouster. Frerot has since made management and board changes.
Veolia and Suez Environnment have denied a merger is planned. EDF 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 Nov. 7.
To contact the reporter on this story: Tara Patel in Paris at firstname.lastname@example.org