Thames Water survival hopes suffer fresh blow
The private equity firm that had been the frontrunner to lead a rescue of the UK's largest water provider - Thames Water - has pulled out.
Thames Water Utilities, which is staring down the prospect of a special administration process without fresh investment, said an alternative plan was now under discussion after KKR's exit from the process.
KKR was handed preferred bidder status back in March as Thames, which serves 15 million customers but has a £22.8bn debt pile, moved to secure fresh equity.
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Thames said that KKR had indicated it was not in a position to proceed and it was understood that no reasons had been given.
KKR's withdrawal was announced a week after Thames was handed a record fine by the industry regulator for failures related to its wastewater operations and dividend payouts.
The move was also released shortly after an interim report for the government raised the prospect of a super regulator being created to bolster and streamline oversight of the water industry.
Thames said it was now progressing talks with senior creditors for an alternative to stabilise its finances and was also planning discussions with regulator Ofwat on that plan.
The watchdog is understood to be studying a 400-page document which includes proposals including for new equity and debt facilities.
It is hoped a transaction could be completed by next month.
The company's chairman, Sir Adrian Montague, said: "Whilst today's news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.
"The company will therefore progress discussions on the senior creditors' plan with Ofwat and other stakeholders.
"The board would like to thank the senior creditors for their continuing support."
Cash-strapped Thames secured a £3bn lifeline to tide it over back in March as the company moved to secure fresh investment to guarantee its long-term survival.
It had kept open the prospect of an alternative solution, given there was no certainty over a KKR deal being agreed.
A failure to find new investment again raises the prospect of Thames falling into a special administration process.
That would effectively see the company come under temporary government ownership to maintain vital services until a new owner, or ownership solution, is found.
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