Thames Water's rescue operation is under threat due to a shrinking period of opportunity, creditors have issued a warning.
Thames Water's future hangs in the balance after key investor KKR bailed on a critical rescue deal. This leaves Britain's largest water company in a precarious position, teetering on the edge as it battles to secure its survival and prevent nationalization.
The Thames Water Creditor Group warned that time is running short, and an 'urgent and fundamental reset' is needed to address the debt-stricken utility's issues. They assured they have the necessary capital, expertise, and capabilities to address the root causes of Thames Water's troubles, improve its balance sheet, restore customer trust, and set the business straight once and for all.
KKR's exit comes after it had pledged £4 billion to stabilize Thames Water's balance sheet and return the company to the stock exchange in ten years. Before KKR, potential suitors included Hong Kong's CKI Infrastructure, Castle Water, and a consortium led by investment service Covalis.
Thames Water has faced public outrage over sewage and pollution incidents in the sector, as well as criticism for poor infrastructure maintenance and excessive shareholder payouts. Moreover, household bills are expected to soar following a controversial funding package that was approved by regulators.
Reports suggest that U.S. investment firms Silver Point Capital and Elliott Management could step in with a rescue package worth over $13.5 billion (£10 billion plus). This package involves substantial debt restructuring, including a haircut for senior creditors, and an equity injection of between $3.9 billion and $5.3 billion (£3 billion to £4 billion), aimed at revitalizing Thames Water's financial health.
As Thames Water navigates these challenging times, it will continue talks with industry regulator Ofwat and the government in the coming weeks. With the looming threat of nationalization, all eyes are on these discussions to secure a turnaround that benefits customers and the environment.
The Thames Water Creditor Group, who have the necessary capital, expertise, and capabilities, are urgently seeking a reset to address the utility's issues and set the business straight, following KKR's exit from a critical rescue deal. Reports suggest that U.S. investment firms Silver Point Capital and Elliott Management could step in with a rescue package, involving substantial debt restructuring, to revitalize Thames Water's financial health and secure its future in the finance and business industry.
