Thames Water’s lenders have proposed a rescue plan aimed at preventing the collapse of the UK’s largest water company. The consortium, London & Valley Water, has suggested measures that would involve writing off approximately one-third of the company’s nearly £20 billion debt and investing to enhance services.
Concerns about Thames Water’s viability have persisted for over two years, prompting the government to remain prepared for a potential temporary nationalization of the company. However, investors assert that their strategy intends to revive the company without requiring taxpayer funding or government assistance.
Thames Water serves about 25% of the UK’s population, primarily in London and southern England, and employs around 8,000 individuals. The company has faced significant scrutiny in recent years due to various issues, including sewage discharges and pipe leaks. Recently, it was fined £122.7 million, the largest penalty imposed by the water industry regulator, for violations related to sewage spills and shareholder distributions.
The rescue plan is said to be the “fastest and most reliable route” to restore Thames Water’s operations, improve waterways, and rebuild public trust. Investors plan to inject £5.4 billion into the firm to stabilize its finances while establishing performance targets deemed realistic but challenging. During the turnaround period, no dividends will be distributed to shareholders, and new investors will agree not to sell their stakes before March 2030.
Outstanding fines will also be addressed by the lenders, who aim to finalize agreements with Thames Water and the regulator, Ofwat, as soon as possible this autumn. Mike McTighe, proposed future chair of Thames Water, emphasized the intention to make significant investments from the outset. The company is also under pressure following the withdrawal of US private equity firm KKR from a £4 billion deal this summer. Additionally, household water bills across England and Wales have increased by £10 per month on average in the past year, with Thames Water customers facing a rise from £488 to £639 annually.
Source: https://www.bbc.com/news/articles/cn82pm40915o?at_medium=RSS&at_campaign=rss