Severn Trent Regulatory News (SVT)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE TAKEOVER CODE. THERE CAN BE NO CERTAINTY THAT ANY OFFER WILL ULTIMATELY BE MADE EVEN IF THE PRE-CONDITIONS LISTED BELOW ARE SATISFIED.

For immediate release

LONGRIVER PARTNERS

PRE-CONDITIONAL CASH OFFER OF 2,200 PENCE PER SHARE FOR SEVERN TRENT PLC ("SEVERN TRENT" OR THE "COMPANY")

Further to their announcement on 3 June 2013, Borealis Infrastructure Management Inc. ("Borealis"), Kuwait Investment Office ("KIO") and USS Limited ("USS") (together, "LongRiver" or the "Consortium") announce that they have today submitted to the board of directors of Severn Trent (the "Severn Trent Board") a pre-conditional cash offer, which they consider to be full and fair, for the entire issued and to be issued share capital of Severn Trent of 2,200 pence for each Severn Trent share (the "Pre-conditional Offer"). The Pre-conditional Offer is inclusive of the final dividend of 45.51 pence per Severn Trent share proposed by the Severn Trent Board on 30 May 2013.

The Pre-conditional Offer values Severn Trent's fully diluted share capital at approximately £5.3 billion and would provide Severn Trent shareholders with an opportunity to realise certain value in cash for their shares at a compelling price, which:

·; implies a premium of 41 per cent. to Severn Trent's Regulatory Capital Value ("RCV") of £7.4 billion as at 31 March 2013 using the fair market value of Severn Trent's debt;

·; implies a premium of 31 per cent. to Severn Trent's RCV of £7.4 billion as at 31 March 2013, using the book value of Severn Trent's debt;

·; represents a premium of 34 per cent. to the average closing price of a Severn Trent share for the six months to 13 May 2013 (the last dealing day prior to the announcement by Severn Trent that it had received an approach from the Consortium); and

·; represents a premium of 21 per cent. to the closing Severn Trent share price on 13 May 2013.

The announcement by the Consortium of a firm intention to make an offer pursuant to Rule 2.7 of the City Code on Takeovers and Mergers (the "Takeover Code"), on the terms of the Pre-conditional Offer, is subject to the following pre-conditions:

·; completion of the Consortium's focused, confirmatory due diligence and the Consortium being satisfied with the results of that due diligence; and

·; the recommendation of the Severn Trent Board.

The Consortium will not announce a firm intention to make an offer unless both these pre-conditions are satisfied. The Consortium encourages the Severn Trent Board to engage with the Consortium ahead of the 'put up or shut up' deadline of 5.00pm on 11 June 2013.

Commenting on behalf of the Consortium, Michael Rolland, President and CEO of Borealis, said:

"LongRiver's proposal of 2,200 pence per share in cash represents certain and compelling value for Severn Trent shareholders. We look forward to engaging with the Severn Trent board to enable us to make our formal offer to Severn Trent shareholders. Without engagement there can be no offer from the Consortium."

This announcement does not constitute an announcement of a firm intention to make an offer under Rule 2.7 of the Takeover Code. Any offer will be made solely by formal offer documentation, which will set out the full terms and conditions of any offer. There can be no certainty that any offer will ultimately be made even if the pre-conditions set out above are satisfied.

In accordance with Rule 2.6(a) of the Takeover Code, the Consortium is required, by no later than 5.00 pm on 11 June 2013, either to announce a firm intention to make an offer for Severn Trent in accordance with Rule 2.7 of the Takeover Code or to announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Takeover Code applies. This deadline can be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Takeover Code.

The Consortium reserves the right to:

(i) make an offer at any time at a value below 2,200 pence for each Severn Trent share (inclusive of the final dividend of 45.51 pence per share proposed by the Severn Trent Board on 30 May 2013): (a) with the agreement and recommendation of the Severn Trent Board; or (b) to the extent that Severn Trent declares, makes or pays any dividend or distribution in excess of the 45.51 pence final dividend for each Severn Trent share proposed by the Severn Trent Board on 30 May 2013 in respect of the financial year ended 31 March 2013; and/or

(ii) vary the form and/or mix of consideration as set out above and/or introduce other forms of consideration such as securities in substitution for all or part of the cash consideration.

A copy of this announcement will be available on the Borealis website at www.borealis.ca.

Deutsche Bank and RBC Capital Markets are acting as financial advisers to the Consortium.

ENQUIRIES:

Pelham Bell Pottinger +44 (0) 20 7861 3232

Gavin Davis

Stephen Benzikie

Deutsche Bank +44 (0) 20 7545 8000

Alan Brown

Andrew Congleton

Martyn Nicholas

James Agnew (Corporate Broking)

RBC Capital Markets +44 (0) 20 7653 4000

Dai Clement

Kevin Smith

Bases and Sources

The relevant bases of calculation and sources of information are provided below in the order which the relevant information first appears in this announcement and by reference to the relevant statement:

1. Reference to the fully diluted equity value of the offer is based on (a) the Pre-conditional Offer of 2,200 pence for each ordinary share in Severn Trent and (b) 238,861,489 ordinary shares outstanding as set out in Severn Trent's Rule 2.10 announcement dated 3 June 2013 together with ordinary shares to be issued pursuant to options and awards as stated in Severn Trent's annual report for the year ended 31 March 2012.

2. The references to RCV premia are based on:

a. Severn Trent's RCV as shown on Ofwat's website for 31 March 2013;

b. the fair value of net debt and derivatives of £5,071 million and the pension deficit of £384 million (adjusted for expected regulatory recovery of 50 per cent.), as stated in Severn Trent's preliminary announcement of annual results for the year ended 31 March 2013, published on 30 May 2013;

c. the book value of net debt of £4,297 million and the pension deficit of £384 million (adjusted for expected regulatory recovery of 50 per cent.), as stated in Severn Trent's preliminary announcement of annual results for the year ended 31 March 2013, published on 30 May 2013;

d. a valuation of Severn Trent's non-regulated business of approximately £0.2 billion, in line with analyst research; and

e. 238,861,489 ordinary shares outstanding as set out in Severn Trent's Rule 2.10 announcement dated 3 June 2013 together with ordinary shares to be issued pursuant to options and awards as stated in Severn Trent's annual report for the year ended 31 March 2012.

3. References to share price premia are based on (a) the Pre-conditional Offer of 2,200 pence for each ordinary share in Severn Trent and (b) the average closing share prices for the periods stated, as derived from Thomson Reuters Datastream.

Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervisory Authority) and authorised and subject to limited regulation by the Financial Conduct Authority. Deutsche Bank is acting as financial adviser to the Consortium and no one else in connection with the contents of this announcement and will not be responsible to anyone other than the Consortium for providing the protections afforded to its clients or for providing advice in connection with the contents of this announcement or any matter referred to herein.

Deutsche Bank AG is authorised under the Financial Conduct Authority and is acting as financial adviser to the Consortium and no one else in connection with the contents of this announcement and will not be responsible to anyone other than the Consortium for providing the protections afforded to clients, or for providing advice in relation to any matters referred to herein.

RBC Europe Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is acting as financial adviser to the Consortium and no one else in connection with the contents of this announcement and will not be responsible to anyone other than the Consortium for providing the protections afforded to clients, or for providing advice in relation to any matters referred to herein.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Dealing Disclosure Requirements

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.