UPDATE 1-SSE looks to sell stake in regional gas distribution network

Wed May 18, 2016 4:49am EDT
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* SGN stake sale could fetch around 1 billion pounds - Jefferies

* SSE reports 3.3 pct fall in full-year adjusted pre-tax profit

* SSE loses 370,000 customer accounts in year to end March (Updates throughout)

By Karolin Schaps

LONDON, May 18 (Reuters) - Britain's second-biggest energy supplier, SSE, is considering selling up to a third of its 50 percent stake in regional gas distribution business SGN to raise cash for shareholders or to reinvest, it said on Wednesday.

The plan to sell down its interest in SGN, the operator of two regional gas networks, in Scotland and southern England, follows a similar move by National Grid, which is seeking to sell a majority stake in its own 8.5 billion-pound ($12.3 billion) UK gas networks business.

SSE could raise around 1 billion pounds ($1.4 billion) from its sale, based on a 20 percent premium to the regulated asset base value of SGN, analysts at Jefferies said. SGN is co-owned by two Canadian pension fund investors, Ontario Teachers' Pension Plan and Borealis.

SSE also reported on Wednesday a 3.3 percent fall in full-year adjusted pre-tax profits to 1.5 billion pounds ($2.16 billion) after making hefty impairment charges on the value of its coal and gas-fired power plants as well as its gas production business due to weak energy prices.

Like its biggest rival, Centrica, SSE has lost many customers in its retail business mainly to smaller and often cheaper suppliers who now control 15.4 percent of the dual gas-electricity fuel market, up from just 1 percent four years ago.   Continued...