Thames Water lenders provide £17 billion rescue deal in return for looser guidelines | EUROtoday

A bunch of Thames Water’s collectors have proposed a multibillion-pound rescue deal for the struggling provider, providing new funding in trade for regulatory leniency.

The proposal, submitted to Ofwat, contains funding companies reminiscent of Aberdeen, Elliott Management, and BlackRock providing to overtake £17 billion of Thames Water’s money owed. The companies would make investments £3 billion in new fairness and an additional £2 billion of funding.

The proposal would additionally contain writing off “several billion” kilos’ value of debt and a “complete loss for existing shareholders” in what they declare could be the “largest financial loss suffered by investors on an infrastructure asset in British history.”

The collectors are asking for leniency on efficiency targets and compliance, and warned that with no “regulatory reset” Thames Water’s “pollutions, asset health deterioration, and customer service levels are likely to worsen.”

Under the proposals submitted to Ofwat, buyer payments wouldn’t enhance by greater than the regulator has already accredited over the following 5 years.

They are holding intensive talks with Ofwat within the hope of securing approval for his or her deal in early July.

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The plans come after US personal fairness big KKR final week pulled out of a rescue deal to inject much-needed money into Britain’s greatest water provider, which has 16 million prospects and is sinking beneath £19 billion of debt.

It threw the way forward for Thames Water into doubt as soon as extra and raised the specter of short-term nationalisation by the Government if a deal can’t be agreed.

A spokesperson for the collectors stated their turnaround plan was “designed to fix the root causes of Thames Water’s problems, restore its balance sheet, rebuild customer trust, and provide the financial investment and operational capabilities to fix the fundamentals of the business once and for all”.

They added: “The plan seeks to break from the patterns of the past by delivering customers’ priorities and improved outcomes for the environment in the shortest possible timeframe.

“The creditors include some of the largest investors in UK water companies, as well as UK and global infrastructure more broadly, with a proven track record of corporate turnarounds and long-term stewardship.

“These investors have the funding and experience required to deliver a transformation of the company’s performance which is intended to mark a departure from past failings, creating a ‘new’ Thames Water that works effectively alongside Government, regulators, and customers to deliver for the environment and economic growth.”

The collectors are the bondholders who successfully personal Thames Water after the High Court earlier this yr accredited a monetary restructuring by means of a mortgage of as much as £3 billion to make sure it could hold working till the summer season of 2026.

Other funding and pension companies within the group embody Apollo Global Management, M&G and Silver Point Capital.

As a part of their plans, the collectors would appoint a brand new board at Thames Water to run the utility.

They would decide to spending £20.5 billion over the following 5 years, as agreed beneath the present five-year plan with Ofwat.

But they’re calling for a “pragmatic approach” to regulation – together with “re-basing incentives and performance targets – and “realistic levels of compliance”.

“Without the regulatory support requested, the creditors believe that customers will remain exposed to the risk of a continued ‘doom loop’ of underperformance and non-compliance,” in response to the collectors.

“A clean slate that would see Thames Water and investors held to account to deliver an ambitious trajectory for the company’s return to compliance,” they added.

A spokeswoman for Ofwat stated the regulator had been “engaging regularly” with Thames over the funding plans.

“We have commenced a thorough review of the submission from the group of senior creditors,” Ofwat stated.

“The submission includes their turnaround plans, approach to financial resilience and proposals for governance.

“Our focus is on assessing whether the plans are realistic, deliverable and will bring substantial benefits for customers and the environment.”

Liberal Democrat MP Charlie Maynard, who has beforehand appealed towards a £3 billion rescue deal for the utility, stated: “What will it take for the Government and the regulator to put a stop to this horror show Thames Water customers are forced to suffer through and pay for?

“Having created a mountain of debt, all at customers’ expense, this latest plan for Thames Water would let them continue to pollute with impunity.”

He stated his get together’s plan could be to place Thames Water into particular administration after which have it grow to be mutually owned by its prospects.