Introduction to Thames Water Crisis
One of the top corporate resolutions of Great Britain is a rescue of Thames Water with a rescue of billions of pounds after the preferred bidder of the company has gone away. Thames Water is the UK’s largest water supply company and serves more than 15 million customers.
Background of the Crisis
For decades of poor performance and financial mismanagement, however, it has exposed it to almost 20 billion pounds in debt and hundreds of millions of pounds in regulatory fines. The company was also at the center of a legal dispute that culminated in the group of lenders offering an emergency loan of 3 billion pounds in March after a judicial challenge of a smaller group of believers was started.
Restructuring Efforts
Mike McTighe is working with the largest group of creditors in Thames Water to restructure the company’s debt and bring new funds to hope to avoid nationalization. Mr. McTighe, whose presidential portfolio includes the publisher of the Daily Telegraph and OpenReach, the BT Group’s infrastructure arm, is said to have started in recent weeks. If the proposal of the Class A creditors is successfully carried out, Mr. McTighe would probably take over as chairman of Thames Water.
The Proposal
The group’s proposal would include the exchange of several billions of pounds of Thames Water debt against equity as well as the injection of a significant new financing. The Class-A creditor group, which corresponds to around 13 billion pounds from Thames Water’s loan groups, includes some of the most powerful investors in the world, such as Elliott Management, Aberdeen, Investco, Apollo Global Management, and M&G.
Government Involvement
The government described Thames Water as "stable" but said that it was ready to get in and take control of the company if necessary. The company is effectively offset at the end of July to have concluded a rescue contract. A source near the creditor group said: "We made a large amount of care and worked on a plan for turnaround Thames. We are the only bidders who can complete this transaction within the required time frame."
Recent Developments
On Tuesday, the company announced that KKR, its preferred stock partner, had decided not to continue with a deal in the past two months. It was unclear whether CKI, the company based in Hong Kong, which controls swaths of British infrastructure capacity, could try to revive its interest in a deal with Thames Water. Sir Adrian Montague, the current chairman of the company, said: "While today’s news is disappointing, we continue to believe that sustainable recapitalization of the company is in the best interest of all stakeholders and continues to work with our creditors and stakeholders to achieve this goal."
