Latest news with #nationalisation
Daily Mail
2 days ago
- Business
- Daily Mail
Thames Water rescue faces 'short and closing window', creditors warn
Thames Water faces a 'very short and closing window' to ensure its survival as a private business after a key investor pulled out of a crucial rescue deal, its major creditors have warned. Private equity giant KKR abandoned its pledge to inject £4billion of equity to stabilise Thames Water's balance sheet and ultimately return the company to the stock exchange in 10 years, it emerged on Tuesday. KKR's exit left Britain's biggest water company once again circling the drain as it struggles to secure its future and avoid nationalisation. The Thames Water Creditor Group said on Wednesday it would continue discussions with industry regulator Ofwat and the Government in the coming weeks, but warned there is little time to secure the 'urgent and fundamental reset' the debt-riddled utility requires. The creditors confirmed they have the 'committed capital, capabilities and expertise needed' to 'fix the root causes of Thames Water's problems, restore its balance sheet, rebuild customer trust and fix the fundamentals of the business once and for all'. Thames, which serves more than 16 million customers, kept the threat of nationalisation at bay in late March after judges dismissed an appeal against the company's £3billion emergency bailout package. Its chair Adrian Montague described KKR's decision as to abandon the group's rescue as 'disappointing'. Before KKR's selection as preferred investment partner, rival suitors included Hong Kong's CKI Infrastructure, UK-based Castle Water and a group of investors led by investment service Covalis. Thames Water became the central target of public outcry over sewage and pollution in the sector, while firms also faced criticism over poor upkeep of infrastructure and bumper shareholder payouts. It also comes as households around the country face double-digit bill increases in the coming years after a controversial funding package was approved by regulators. A spokesperson for the Thames creditors said: 'The [rescue] plan will break from the patterns of the past by delivering customers' priorities and improved outcomes for the environment in the shortest possible timeframe. 'The comprehensive recapitalisation proposal, which is fully-funded and targets a sustainable capital structure, will deliver substantial fresh investment to drive significant change under a new, highly experienced and accountable leadership team. 'These investors have the funding and experience required to deliver a transformation of the company's performance which marks a departure from past failings, creating a "new" Thames Water that works effectively alongside Government and regulators to deliver for the environment and economic growth. 'The creditors believe that Thames Water requires an urgent and fundamental reset and there is a very short and closing window in which a market-led solution can succeed. Discussions with Ofwat and the Government will be advanced in the coming weeks to reach an agreement and turnaround for the benefit of customers and the environment.'
Daily Mail
2 days ago
- Business
- Daily Mail
KKR abandons £4bn rescue of Thames Water: Nationalisation now looms for debt-ridden firm
Thames Water's future is in doubt after a US private equity giant abandoned a £4billion rescue plan. KKR walked away from the investment deal, partly due to growing concerns over political interference from the Labour Government. The decision is a major setback for the debt-riddled utility firm's scramble to avoid nationalisation. Environment Secretary Steve Reed said the Government was 'keeping a close eye' on the situation and is ready for 'any eventuality', which could include a taxpayer-funded bailout. But Thames Water – which is struggling under £20billion of debt – refused to confirm whether it would scrap executive bonuses despite the fresh financial hurdles. Only last week, industry regulator Ofwat fined the firm a record £123million for sewage spills and paying 'undeserved' dividends to shareholders. New York-based KKR had been chosen as the UK's biggest water supplier's so-called preferred partner in March. Bosses last year launched a search for a buyer after its former owners, including pension and sovereign wealth funds, said the company was 'uninvestable' – plunging the debt-laden firm into crisis. But after completing due diligence checks, KKR said it 'will not be in a position to proceed' with the takeover. The buyout firm was worried about potential future policy changes that could impact the running of the company. Tough government rhetoric over the water industry also spooked the firm, reports said. Thames Water yesterday stated it will hold talks with Ofwat and other stakeholders over a backup turnaround plan devised by its senior creditors. Chairman Sir Adrian Montague said KKR's decision was 'disappointing'. He added: '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.' However, it fuelled fears that the Government may be forced to take control of Thames Water, which serves 16m households in London and the South East. Reed told LBC Radio yesterday that 'Thames itself remains stable'. But MPs on the Environment Select Committee, which last month grilled the utility's bosses over plans to pay themselves huge bonuses, sounded the alarm over the future of Thames Water. Chairman Alistair Carmichael said: 'In May we raised concerns that Thames had only pursued one bidder at an early stage for its takeover bid, against the wishes of Ofwat, and highlighted the risks this could pose if KKR chose not to proceed. Unfortunately our concerns have been realised, putting Thames in a perilous position.' A company spokesman refused to confirm whether the payout proposals would be scrapped entirely after the KKR deal collapsed. South West Water owner plunges South West Water's owner reported widening losses following a parasite outbreak in Devon – while hiking water bills this year would help fund its £3.2billion investment plans. Pennon reported a pre-tax loss of £72.7million for the year to the end of March, widening from the £9.1million loss reported last year. Last year's incident in Brixham cost it about £21million, pushing it deeper into an annual loss, a spokesman said. An outbreak of cryptosporidium – a parasite that causes infection – in the water supply left some in hospital. More than 100 others reported symptoms including diarrhoea. Bills for South West Water customers rose by 28 per cent on average from April. Pennon said the rise would help fund around a third of its investments.
Sky News
3 days ago
- Business
- Sky News
Thames Water creditors line up McTighe to spearhead rescue deal
One of Britain's top corporate troubleshooters is being lined up to spearhead a multibillion pound rescue of Thames Water after the company's preferred bidder walked away. Sky News can reveal that Mike McTighe is working with Thames Water's largest group of creditors on a plan to restructure the company's debts and inject new funds in the hope of avoiding nationalisation. Mr McTighe, whose portfolio of chairmanships includes the Daily Telegraph's publisher and Openreach, BT Group's infrastructure arm, is said to have begun meeting stakeholders in recent weeks. If the Class A creditors' proposal is successfully executed, Mr McTighe would probably take over as chairman of Thames Water, according to people close to the situation. Mr McTighe has earned a reputation as a turnaround expert, but also chairs companies such as IG Group, the financial spreadbetting company, and Together Financial Services, the non-bank lender. The recruitment of such a prominent businessman to lead the lenders' efforts will add momentum to a plan which increasingly looks like the only alternative to landing British taxpayers with a vast rescue bill. The group's proposal would include swapping several billion pounds of Thames Water's debt for equity, as well as injecting substantial new funding. Thames Water is Britain's largest water utility, serving more than 15m customers. However, decades of poor performance and financial engineering have left it carrying close to £20bn of debt and facing hundreds of millions of pounds in regulatory fines. The Class A creditor group, which represents about £13bn of Thames Water's borrowings, includes some of the world's most powerful investors. Elliott Management, the New York-based firm, is among those exposed to a collapse that could leave Thames Water in a special administration regime (SAR) - a government-sponsored insolvency process aimed at providers of key infrastructure services. Other members of the creditor group include institutions such as Aberdeen, Invesco, Apollo Global Management and M&G. A source close to the creditor group said: "We have done a huge amount of diligence and work on a plan to turnaround Thames. "We are the only bidders who will be able to complete this transaction within the necessary timeframe." The fact that Mr McTighe has been persuaded to join their effort will revive hope that a private sector solution to Thames Water's crisis can still be found. On Tuesday, the company announced that KKR, its preferred equity partner for the last two months, had decided not to proceed with a deal. Sky News revealed that talks between Henry Kravis, the KKR co-founder, and Sir Keir Starmer's top business adviser had taken place over the weekend in an effort to prevent the deal from collapsing. It was unclear on Tuesday whether CKI, the Hong Kong-based company which controls swathes of UK infrastructure assets, might seek to revive its interest in a deal with Thames Water. Sir Adrian Montague, the company's current chairman, 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." In recent weeks, Thames Water has been fined a record £123m by Ofwat for separate transgressions relating to dividend payments and environmental pollution, and found itself embroiled in a bitter political row over whether retention payments it had lined up up executives were classified as bonuses. The company has also been at the centre of a legal battle which culminated in the Class A group of lenders providing a £3bn emergency loan in March following a court challenge launched by a smaller creditor group. The government described Thames Water as "stable" on Tuesday, but said it was ready to step in and take control of the company if required to. The company effectively faces a deadline of late July to finalise a rescue deal because of a referral of its five-year regulatory settlement to the Competition and Markets Authority.
The Independent
3 days ago
- Business
- The Independent
Thames Water nationalisation ‘not the answer' says minister after private equity rescue fails
Nationalisation of struggling Thames Water is 'not the answer,' environment secretary Steve Reed has warned after a private equity giant pulled out of a £4bn rescue deal, throwing the company's future into doubt. A bailout of the debt-laden utility would take money away from the NHS and other public services, he said. Thames Water is about £19 billion in debt and MPs were told last month that at one point this year it had about five weeks' worth of cash left before going bust. Britain's biggest water supplier, which has 16 million customers, chose KKR at the end of March to be its preferred bidder under plans to invest around £4 billion of new equity. But the firm said on Tuesday that KKR was no longer 'in a position to proceed' and that its status as preferred bidder had lapsed. At the despatch box, Conservative shadow environment secretary Victoria Atkins accused ministers of having 'talked themselves out of' a rescue plan. Mr Reed told MPs: 'The government stands ready for any eventuality and will take action as required. We are not looking at nationalisation because it would cost over £100 billion of public money that would have had to be taken away from other public services like the National Health Service to be given to the owners of the water companies. 'It will take years to unpick the current model of ownership, during which time pollution would get worse and we know that nationalisation is not the answer - you only have to look at the situation in Scotland to see that.' Mr Reed said he would 'make no apology' for tackling the behaviour of water companies under the previous government. 'I mean, we even had stories that have been confirmed by water companies of previous Conservative secretaries of state shouting and screaming at water company bosses but not actually changing the law to do anything about the bonuses that they were able to pay themselves.' Liberal Democrat environment spokesman Tim Farron said Thames Water should go into special administration and emerge 'as a public interest company.' Reform UK deputy leader Richard Tice proposed a plan to 'buy it for a pound - it's a good deal for the taxpayer - then it won't have to pay huge, egregious rates of interest, and the taxpayer and the customers will be the beneficiaries.' The move by KKR comes as an interim report by the Independent Water Commission found the water sector in England and Wales needs a 'fundamental reset' and called for a 'strengthening and rebalancing' of Ofwat's regulatory role. It is understood Thames Water is now working on alternative plans with senior creditors. These creditors are the bondholders who effectively own Thames Water after the High Court earlier this year approved a financial restructuring through a loan of up to £3 billion to ensure it can keep running until the summer of 2026. Sir Adrian Montague, chairman of Thames Water, said: '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.' KKR declined to comment. An Ofwat spokesperson said: 'We are liaising with the company on its next steps in light of its recent announcement to ensure its equity raise process continues to secure improved financial resilience and operational performance.' The firm was put under further pressure last week when it was fined a record £122.7 million by Ofwat after it was found to have broken rules over sewage treatment and paying out dividends. Water companies have faced public and political outrage over the extent of pollution, rising bills, high dividends, and executive pay and bonuses. Thames hiked consumer water bills for customers by an average of 31% in April and incurred further wrath over plans to pay senior bosses large bonuses linked to the water company securing a £3 billion emergency loan, which were later dropped.
The Independent
3 days ago
- Business
- The Independent
Thames Water nationalisation ‘not the answer' says minister after takeover rescue fails
Nationalisation of struggling Thames Water is 'not the answer,' the environment secretary has warned after a private equity giant pulled out of a £4bn rescue deal, throwing the company's future into doubt. Steve Reed said a bailout of the debt-laden utility would take money away from the NHS and other public services. Thames Water is about £19 billion in debt and MPs were told last month that at one point this year it had about five weeks' worth of cash left before going bust. Britain's biggest water supplier, which has 16 million customers, chose KKR at the end of March to be its preferred bidder under plans to invest around £4 billion of new equity. But the firm said on Tuesday that KKR was no longer 'in a position to proceed' and that its status as preferred bidder had lapsed. At the despatch box, Conservative shadow environment secretary Victoria Atkins accused ministers of having "talked themselves out of" a rescue plan. Mr Reed told MPs: 'The government stands ready for any eventuality and will take action as required. We are not looking at nationalisation because it would cost over £100 billion of public money that would have had to be taken away from other public services like the National Health Service to be given to the owners of the water companies. 'It will take years to unpick the current model of ownership, during which time pollution would get worse and we know that nationalisation is not the answer - you only have to look at the situation in Scotland to see that.' Mr Reed said he would 'make no apology' for tackling the behaviour of water companies under the previous government. 'I mean, we even had stories that have been confirmed by water companies of previous Conservative secretaries of state shouting and screaming at water company bosses but not actually changing the law to do anything about the bonuses that they were able to pay themselves.' Liberal Democrat environment spokesman Tim Farron said Thames Water should go into special administration and emerge 'as a public interest company.' Reform UK deputy leader Richard Tice proposed a plan to 'buy it for a pound - it's a good deal for the taxpayer - then it won't have to pay huge, egregious rates of interest, and the taxpayer and the customers will be the beneficiaries.' The move by KKR comes as an interim report by the Independent Water Commission found the water sector in England and Wales needs a 'fundamental reset' and called for a 'strengthening and rebalancing' of Ofwat 's regulatory role. It is understood Thames Water is now working on alternative plans with senior creditors. These creditors are the bondholders who effectively own Thames Water after the High Court earlier this year approved a financial restructuring through a loan of up to £3 billion to ensure it can keep running until the summer of 2026. Sir Adrian Montague, chairman of Thames Water, said: '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.' KKR declined to comment. An Ofwat spokesperson said: 'We are liaising with the company on its next steps in light of its recent announcement to ensure its equity raise process continues to secure improved financial resilience and operational performance.' The firm was put under further pressure last week when it was fined a record £122.7 million by Ofwat after it was found to have broken rules over sewage treatment and paying out dividends. Water companies have faced public and political outrage over the extent of pollution, rising bills, high dividends, and executive pay and bonuses. Thames hiked consumer water bills for customers by an average of 31% in April and incurred further wrath over plans to pay senior bosses large bonuses linked to the water company securing a £3 billion emergency loan, which were later dropped.
