Britain's Thames Water says fines need to be deferred to help company avoid state rescue
The bosses of Britain's Thames Water said the company needed relief from fines to help it avoid nationalization when they were questioned by lawmakers on Tuesday.
Thames Water has been battling against financial collapse since last year. It is at the centre of a public backlash against the water sector which is blamed for polluting Britain's river and seas while also hiking bills.
Thames Water is trying to strike a deal with financial investor KKR to invest new equity to help it avoid the government's Special Administration Regime, but its poor performance means it is likely to face huge fines.
CEO Chris Weston said it would fail to secure equity unless regulators agreed to defer or reduce the fines.
'Discussing with the regulator the concept of a turnaround regime that might provide some relief from the normal regulatory environment while a company recovers its operations, I think that is an absolute imperative for Thames otherwise we will not be invested in,' Weston said.
'There is no point in continually penalizing someone if its going to exacerbate the situation.'
The company's CFO Steve Buck said he was factoring in the potential for 900 million pounds ($1.19-billion) of penalties for the 2025-2030 period.
Should Thames Water fail to attract new equity, debt investors could proceed with a debt for equity swap which would leave them in charge, Weston said. If that fails, Thames Water could enter SAR, a form of temporary nationalization.
'A SAR would be make life extremely difficult for everyone,' chairman Adrian Montague said.
'The government would have to finance this program, because there will be no other liquidity available.'
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