KKR, one of many world’s largest personal fairness traders, is advancing plans to play an important function in a rescue of Britain’s largest water provider.
PJT Companions has been engaged to behave for KKR on its curiosity in Thames Water forward of a deadline for proposals for an fairness increase later this month, in keeping with insiders.
The appointment of PJT implies that KKR is severely involved in aiding a rescue of Thames Water, which is drowning beneath £19bn of debt and faces the prospect of short-term nationalisation amid a bitter authorized struggle amongst rival creditor teams.
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A listening to on the Excessive Court docket starting on Monday pits one syndicate of lenders – which need to lengthen as much as £3bn of financing to the corporate – in opposition to one other group, which has submitted another plan that it insists is cheaper.
With out the brand new financing, Thames Water might be compelled into an insolvency course of often called particular administration, which has been used within the UK earlier than within the case of the home power provider Bulb.
Particular administration would in all probability price the federal government billions of kilos whereas a break-up of Thames Water is finalised or a purchaser is discovered, and Sir Keir Starmer’s administration has stated it needs to keep away from such an final result.
Nevertheless, political stress is mounting from critics of the corporate who argue that it shouldn’t be allowed so as to add to its debt burden.
Charlie Maynard, the Liberal Democrat MP for Witney and a long-standing campaigner for an overhaul of water firm regulation has submitted a witness assertion to the courtroom, urging it to reject a restructuring plan which has secured the endorsement of Thames Water’s board.
“Successive governments have watched on as Thames Water has plunged themselves into billions of pounds of debt,” Mr Maynard stated.
“Thames Water is running out of money, it is operating in breach of its licence, it is unable to pay its debts and its customers are suffering for it.
“The deal the collectors are pushing for serves their pursuits solely; it’s a short-term repair on the expense of the corporate, Thames Water prospects and UK taxpayers.”
Approval of the £3bn debt financing would purchase the corporate time to boost new fairness.
Along with KKR, the Hong Kong-based investor CK Infrastructure Holdings, Covalis and Fort Water have all been linked with potential gives.
Trade sources consider that KKR and CK Infrastructure supply essentially the most credible paths to an fairness increase, though there isn’t a certainty that any of the curiosity will lead to agency proposals.
The emergence of KKR’s work with advisers additionally is available in the identical month that Thames Water is required to resolve whether or not it needs to attraction in opposition to an Ofwat ruling on its spending plans for the following 5 years.
Thames Water requested permission to extend costs for patrons by 53% over 5 years however was instructed by the business regulator it will be restricted to a 35% enhance.
Quite a lot of different water firms are additionally contemplating appeals.
Final autumn, the atmosphere secretary, Steve Reed, established an unbiased assessment of the business that can have a look at far-reaching reforms.
It stays unclear which of KKR’s funds is taking part within the Thames Water equity-raise course of, which is being run by bankers at Rothschild.
The agency owns John Laing, an infrastructure investor, which it took personal in 2021.
It additionally beforehand owned South Staffordshire, one other water firm, promoting its 75% curiosity in 2018.
KKR declined to remark.
