Essen, Germany's RWE said today it decided to put plans for an initial public offering of its American Water Works unit on hold.

RWE, Germany's largest power producer, cited U.S. market turmoil for the delayed offering, with the news sending RWE's stock down 6 percent on the Frankfurt exchange.

RWE announced plans in 2005 to exit its water activities in the U.S. and the U.K., but didn't get around to filing for an IPO for American Water Works until August of this year (see IPO on track for America's biggest water company).

Since the Voorhees, N.J.-based water utility and wastewater treatment company wouldn't have seen any cash from the proposed $1.5 billion offering, it planned to run a concurrent $500 million equity offering.

In a statement, RWE said, "In light of the currently unfavorable conditions in the U.S. capital market, RWE does not expect that it can achieve an adequate value for American Water at present."

RWE had to rejigger its dividend payout for 2007 because of the delayed sale, as the conditions for the planned increased ratio of 70 percent to 80 percent of recurrent net income, as well as a share buyback, were linked to the deconsolidation of American Water.

The company said it still plans to use the cash from a future sale to buy back shares and pay out an increased ratio for the year when it finally sells American Water, but for now it reduced the payout ratio to as much as 60 percent of 2007 recurrent net income.

RWE acquired American Water Works for 4.5 billion euros in 2003. It's already sold its Thames Water Holdings division, the U.K.'s largest water company, for 8 billion pounds in 2006 to a consortium led by Macquarie Bank's European Infrastructure Funds unit.