Bond Exchange Proposal

RNS Number:3691U
South Staffordshire Water PLC
18 November 2005





                    RELEASE BY SOUTH STAFFORDSHIRE WATER PLC


For the attention of holders of the #85m RPI+3.75% bond due 2025 issued by South
Staffordshire Water PLC.

                             BOND EXCHANGE PROPOSAL

Set out below is an announcement concerning the intended exchange of the
RPI+3.75% 2025 bond issued by South Staffordshire Water PLC ("SSW"), a
subsidiary of South Staffordshire PLC, into a new RPI+3.75% 2045 bond issued out
of Artesian Finance III PLC (Artesian).

Artesian is a special purpose vehicle created to facilitate the provision of
long dated index linked debt to UK regulated water companies.  Artesian uses the
proceeds from the issue of the bonds to, inter alia, acquire index linked long
dated structured loans made by The Royal Bank of Scotland Plc to UK regulated
water companies or their affiliates. Financial Security Assurance (U.K.) Limited
will unconditionally and irrevocably guarantee scheduled repayments of principal
and interest under the bonds issued out of Artesian.

SSW has worked together with a Special Committee of the Association of British
Insurers ('ABI'), representing approximately 60.2% of the outstanding bonds, and
has received their support for this specific exchange proposal.

The exchange will allow SSW to improve its financial flexibility, enhance the
financial ring-fence around the Issuer, increase its allowable debt levels to a
more optimum level for its sector, and lengthen its debt maturity profile. SSW
proposes to achieve this by seeking the consent of its current bondholders to
exchange their existing bonds into new bonds issued out of Artesian.

The consent solicitation document is available to existing bondholders from The
Royal Bank of Scotland plc, the solicitation agent (please contact Andrew
Burton; tel: [phone], email: [e-mail]).

The meetings for SSW bondholders to approve the exchange are to be convened
on Monday, 12 December 2005 at the offices of Linklaters at One Silk Street,
London EC2Y 8HQ.

18 November 2005


Adrian Page
Group Finance Director
01922 618001



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