German utility RWE AG (RWE.XE) Wednesday said it had to publicly list 36% of its its U.S.-based water unit American Water Works Co Inc. below book value.
As a result, the company lowered its 2008 net profit guidance.
A spokeswoman for RWE said that if the $21.50-per-share price achieved in today's listing applied to 100% of American Water, the market value would be around EUR600 million below the book value.
RWE previously said it expects 2008 net income to grow by more than 10% on year from the EUR2.66 billion reached in 2007.
"This forecast can no longer be maintained," the company said. "RWE now expects net income slightly below the previous year's level."
It added that operating result and recurrent net income, which is RWE's key dividend determinant, will remain unaffected.
RWE earlier Wednesday said it has sold 58 million of American Water's shares at $21.50 per share below the originally targeted price range between $24 and $26 per share. RWE has granted the underwriters of the IPO a 30-day greenshoe option to purchase up to 8.7 million shares in American Water.
News of the lower issue price for American Water shares and the profit warnings sent RWE shares sharply lower in premarket trade. However, at 0722 GMT the shares traded higher EUR0.36 or 0.5% at EUR74.23 in a broadly higher market.