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Thames Water hires restructuring advisers amid fears of collapse | Thames Water

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Thames Water has assembled a team of City experts to lead urgent restructuring talks this week amid fears that its parent company may collapse by the end of the month.

The crunch talks are expected to take place days after Thames Water’s investors signalled they would not put further funds into the company to secure its short-term cashflow, according to a source.

Britain’s biggest water company is understood to have appointed experts at Teneo, the adviser that managed the collapse of Bulb Energy, amid an investor standoff that has raised fresh fears for the future of its parent company, the Kemble Water Group. Thames is also continuing to work with advisers at Rothschild to explore potential financing options for the company.

Thames said last week that Kemble’s owners – which include the major pension funds Omers and USS, and Abu Dhabi and Chinese sovereign wealth funds – had hired restructuring advisers at Alvarez & Marsal, which oversaw the Chapter 11 bankruptcy of WeWork in the US last November.

Teneo declined to comment. Rothschild and Alvarez & Marsal did not respond to requests for comment.

The talks to steer a future for the heavily indebted water company, which were first reported by the Financial Times, come after Kemble’s owners pulled the plug on £500m of emergency funding amid an impasse with the industry regulator over calls to raise household bills.

The company has more than £18bn of debt and Kemble is due to repay a £190m loan by the end of this month, which has heightened concerns that the parent company could become insolvent without government intervention.

Thames could be placed into special administration, which would result in the government stepping in and temporarily renationalising the company. It is understood that Teneo would be in line to oversee this process. The government is understood to be eager to avoid this outcome ahead of a general election expected later this year.

Chris Weston, Thames Water’s chief executive, told BBC Radio 4 last week that special administration was “a long way off” and could be avoided if shareholders agreed to provide funds.

Thames said it has £2.4bn of cash and access to other facilities that means it could continue operating until 2025, and that it would pursue all options to secure new investment “from new or existing shareholders”. Thames and Kemble declined to comment further.

Sarah Olney MP, the Liberal Democrat Treasury spokesperson, accused the government of being “asleep at the wheel for years” and called on ministers to put the company into special administration.

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“Now Thames Water customers are facing the worst of all worlds, with water bills set to skyrocket while local rivers are ruined by sewage. Ministers must step in before it’s too late,” she said. “It’s time they put Thames Water into special administration and turned it into a public benefit company, to prevent customers and the environment paying the price for this calamity.”

James Wallace, a campaigner for River Action, said: “Whatever Thames Water tries to do in their final death throes we will be guaranteed of one thing: putting shareholders greed before customer needs. Following decades of rampant profiteering of a privatised geographic monopoly, this is the price we pay for deregulation and cutting so-called red-tape, AKA environmental protection.”

The government and the industry regulator, Ofwat, declined to comment.

Read More: Thames Water hires restructuring advisers amid fears of collapse | Thames Water

2024-04-01 22:29:00

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