Thames Water Creditors Offer £5 Billion Turnaround Plan
Creditors of Thames Water have put forward an emergency turnaround plan that includes £5 billion in funding for the struggling utility company.
Key Aspects of the Turnaround Plan
- £5 Billion Injection: The plan involves injecting £3 billion of equity and £2.25 billion in debt.
- Debt Write-off: Lenders would write off about £6.7 billion of their loans to Thames and its parent company.
- Regulatory Leniency: The plan hinges on Ofwat showing leniency regarding environmental fines.
Concerns and Challenges
Ofwat has raised concerns about the proposed plan. Creditors are requesting lower environmental standards and potential waivers for past breaches to prevent a "doom loop" of escalating fines that would hinder recovery.
Background
The proposed rescue comes after KKR, a US private equity firm, withdrew its bid due to the complexity and political scrutiny surrounding Thames Water. The company faces financial difficulties after years of underinvestment. The government is opposed to stepping in unless there is a direct threat to water and sewerage services for 16 million customers in London and south-east England.
Future Control
Control of Thames Water may fall to its creditors, including major institutional investors and hedge funds.
