DEAL OF THE WEEK – UNITED UTILITIES

Eversheds meets magic circle on UK utilities deal


Eversheds has won a large slice of work on a major transaction for client United Utilities, acting alongside Allen & Overy (A&O) and Linklaters.

The water and power distribution client recently won the UK’s first competitive gas metering contract. The contract, worth £225m over an initial five-year period, stipulates that United Utilities will provide metering services for approximately five million British Gas Trading customers.

A special projects joint venture company was set up between United Utilities and Abbey National, which provided the financing, in order to win the contract to instal, maintain and repair domestic gas and electricity meters. Abbey National and United Utilities each hold 50 per cent of the shares in the projects company. British Gas Trading was advised by John Crozier, a partner in Linklaters’ information technology and communications group.

Eversheds’ Manchester-based head of corporate Danny Hall, the relationship partner for United Utilities, project-managed the transaction. Other Eversheds partners acting on the deal included Leeds-based projects partner Katherine Ibbotson and banking partner John Finnigan.

Eversheds was initially instructed by United Utilities on property-related matters around 10 years ago, but began winning work on the corporate side three years ago. “The interesting aspect of the deal was the structure,” said Hall. “United Utilities added value by proposing a structure more akin to a public authority PFI project, although this was a private sector deal. As a result, negotiations centred around sensitive contractual issues such as control, variations, termination and the handling of disputes.”

The basic operational structure of the deal is for British Gas Trading to subcontract out all meter operating services for North East and North West customers. Other outsourcing deals for customers in the remaining five regions – Scotland, Midlands, South East, South West and East Anglia – have yet to be finalised.

A&O advised client Abbey National on the finance aspects of the transaction, which were a mixture of senior and mezzanine debt financing, and also played a large role in advising and negotiating the terms of the contract with United Utilities. Nigel Pritchard, a partner in the construction and projects group, led the deal on the projects and contract side, assisted by associate Stephen Blanche. Recently made-up partner Nicholas Williams and associate Conrad Andersen provided advice on the debt side of the transaction for Abbey National.

United Utilities head of legal Tim Rayner worked alongside Eversheds on the deal, assisted by in-house lawyers Joanne
Bream and David Fleming.