THAMES Water’s future hangs in the balance after a major investor pulled out of a rescue deal.
The troubled water firm, which services around 16million customers, said US private equity giant KKR no longer plans to invest.
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It is now in talks with creditors, who it owes money to, for an alternative to stabilise its finances, with the firm in billions of pounds’ worth of debt.
It will also hold talks with regulator Ofwat on the senior creditors’ plan.
Sir Adrian Montague, chairman of Thames Water, 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.
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“The board would like to thank the senior creditors for their continuing support.”
KKR was chosen as preferred bidder at the end of March to invest more than £3billion of new equity into Thames Water to help keep it operating amid fears the supplier was running out of cash.
Thames Water said at the time it would also continue talks with senior creditors on a parallel alternative transaction, given there was no certainty over a deal being finalised with KKR.
Thames Water is about £19billion 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.
That was before it secured an extra £3billion loan deal.
However, it still needs substantial ongoing financial support to put its finances on a long-term stable footing.
Doubling Compensation for Water Issues: Government’s Big Move
Should Thames Water not find a suitor take on its debt, it could see the company taken under government ownership.
Russ Mould, investment director at AJ Bell, said: “It looks increasingly like Thames Water will have to be renationalised, after KKR pulled out of plans to inject £4billion into the business.
“KKR’s U-turn is a surprise, given its investment seemed like a done deal.
“The government indicated all through the fundraising process that it was ready to step in and take over Thames Water if necessary.”
The Thames Water group was dealt a blow last week when it was fined a record £122.7million by Ofwat after it was found to have broken rules over sewage treatment and paying out dividends.
Ofwat insisted that the money must be paid by Thames and its investors, not by customers.
Environment Secretary Steve Reed said the Government was “keeping a very close eye” on the Thames Water situation following today’s news.
Mr Reed told LBC Radio that “Thames itself remains stable” but added: “The Government is clearly keeping a very close eye on what’s going on.
“We’re monitoring the situation, but there’s no disruption to water supply.
“Thames have got a number of options that they’re exploring.”
He said that “as things stand” Thames Water is “a stable, ongoing company” but the Government was “ready for any eventuality”.
“If the circumstances happened with any company, any water company, where there was a breach and it would need to be put into special administration, that would happen but, as things stand, that’s not applying to any company right now.”
Downing Street also would not be drawn on whether the Government intended to nationalise Thames Water or place the company into special administration following the collapse of a takeover deal.
The Prime Minister’s official spokesman said: “We wouldn’t comment on the detail of a specific commercial company, but we are obviously monitoring the situation and obviously (there is) no impact on water supply.
“The chairman of Thames Water has said themselves they have got a number of options they are now exploring.
“The Government and Ofwat will be working with them on that in the usual way.”
Thames Water bosses last month were forced to defend multi-million pound bonuses despite the firm facing major financial troubles and revealing it needs £1.2billion to find and fix leaks across its network.
The troubled company is losing around 56million tones of water every day.
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Sir Adrian told MPs in Westminster that if Thames Water was “unable to pay bonuses, headhunters will come knocking and we’ll lose our talent”.
His comments came after him receiving a 156% bonus worth £1.3million, in comparison to frontline staff who received 3% bonuses.
What water bill support is available?
IT’S always worth checking if you qualify for a discount or extra support to help pay your water bill.
Over two million households who qualify to be on discounted social water tariffs aren’t claiming the savings provided, according to the Consumer Council for Water (CCW).
Only 1.3million households are currently issued with a social water tariff – up 19% from the previous year.
And the average household qualifying for the discounted water rates can slash their bills by £160 a year.
Every water company has a social tariff scheme which can help reduce your bills if you’re on a low income and the CCW is calling on customers to take advantage before bills rise in April.
Who’s eligible for help and the level of support offered varies depending on your water company.
Most suppliers also have a pot of money to dish out to thousands of customers who are under pressure from rising costs – and you don’t have to pay it back.
These grants can be worth hundreds of pounds offering a vital lifeline when faced with daunting water bills.
The exact amount you can get depends on where you live and your supplier, as well as your individual circumstances.
Many billpayers across the country could also get help paying off water debts through a little-known scheme and even get the balance written off.
Companies match the payments eligible customers make against the debt on their account to help clear it sooner.
If you’re on a water meter but find it hard to save water as you have a large family or water-dependent medical condition, you may be able to cap your bills through the WaterSure scheme.
Bills are capped at the average amount for your supplier, so the amount you could save will vary.
The Consumer Council for Water estimates that bills are reduced by £307 on average through the scheme.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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