Lenders holding £12bn of Thames Water’s debt have held face-to-face talks with Ofwat this week to pitch a rescue deal that they imagine would avert the nationalisation of Britain’s largest water utility.
Metropolis sources stated that the group now accounted for over £12bn of Thames Water’s borrowings – roughly two-thirds of its whole money owed – and comprised 100 separate lenders.
The syndicate is racing to discover a answer that will permit a restructuring that will incorporate an enormous debt-for-equity swap and see recent fairness injected into the crisis-hit utility, which serves about 15 million clients in London and the South East.
A deal must be agreed by the center of November as a result of Ofwat is because of log off its ultimate regulatory willpower for the corporate’s marketing strategy at a board assembly within the second half of the month.
Collectors argue that Ofwat must show flexibility in its consideration of Thames Water’s marketing strategy to be able to make the corporate investible.
Additional particulars of the creditor group’s proposals have been unclear on Wednesday, though flexibility in relation to buyer invoice will increase will inevitably be a part.
Thames Water can be going through a litany of regulatory fines over its poor customer support efficiency and dire report on sewage and water leaks.
Plans for an emergency liquidity facility of greater than £1bn are additionally being drawn up, though they’re but to be finalised.
That finalising would purchase Thames Water a number of months extra to finalise a rescue plan.
Bankers at Rothschild have been making an attempt to drum up funding in new Thames Water inventory in current months, however with little success amid an absence of visibility in regards to the firm’s survival prospects.
Thames Water’s woes deepened just lately when its credit standing was downgraded additional into junk territory by two main score companies.
Its future stays so shrouded in uncertainty as a result of the trade watchdog, Ofwat, has rejected the corporate’s preliminary spending plans for the subsequent five-year regulatory interval.
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From September: Thames Water boss can ‘save’ firm
Ofwat is predicted to log off on the appointment of an impartial monitor inside days to scrutinise the corporate’s progress towards its turnaround plan.
If new funding into Thames Water isn’t forthcoming earlier than it runs out of money, the federal government can have little alternative however to sanction the momentary nationalisation of the corporate.
This could be carried out via a Particular Administration Regime (SAR), a process examined solely as soon as earlier than when Bulb Power collapsed in 2021.
As a part of its contingency planning for implementing a far-reaching restructuring, Thames Water has booked courtroom dates in November to progress a rescue deal.
Shareholders have lengthy since written off their funding within the firm and won’t play a task in any rescue deal.
These embody quite a few sovereign wealth funds and pension funds which plan to attend subsequent week’s Worldwide Funding Summit in London.
A spokesperson for the creditor group declined to remark, whereas Ofwat has been contacted for remark.
