Thames Water preferred bidder KKR pulls out of rescue deal
US private equity group KKR has pulled out of a deal to inject fresh equity into Thames Water, leaving the troubled supplier's future in doubt and increasing the prospects of a temporary nationalisation.
The UK's biggest water supplier had picked KKR as its preferred partner, but the company has 'indicated that it will not be in a position to proceed,' Thames Water said.
The New York-based private equity group was expected to acquire a stake worth £4bn in the embattled water company, which is struggling under debts of nearly £20bn.
Thames said that, after completion of due diligence, KKR and the senior creditors had prepared detailed plans, including a turnaround strategy that had been shared with the company. It now intends to push on with discussions on the senior creditors' plan with the regulator Ofwat and other stakeholders.
Sir Adrian Montague, the company's chair, said: 'While 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.'
Thames, which serves 16 million customers in London and south-east England, needs to secure fresh funding for its operations by the end of June.
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If Thames Water fails to secure fresh funds it could be placed into a special administration regime by the UK government, effectively a temporary nationalisation.
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