By Sarah Young
LONDON (Reuters) -Senior creditors of Thames Water presented their plan to fix the company’s finances and stop the utility being nationalised, proposing 7.5 billion pounds ($10 billion) of debt is written off.
Thames Water, which has 16 million customers, has been at the centre of an environmental scandal in Britain where it has been fined over 100 million pounds for sewage spills, while debts of 20 billion pounds have left it close to collapse.
As part of the proposals, the group also committed to paying no dividend during the turnaround process, or until the company is listed, and pledged not to sell Thames Water prior to March 2030. Under the plan, all Thames Water’s outstanding fines will be paid.
The turnaround plan put forward by institutional investors including Aberdeen Investments, Elliott, PIMCO and Silverpoint Capital is the only remaining option for Thames Water to avoid the government’s special administration regime, a form of temporary nationalisation.
Water regulator Ofwat will consider the proposal as quickly as possible this autumn given the urgent need to stabilise Thames Water, the investor group said in its statement on Thursday.
“We continue to engage with them (the creditor group) and are reviewing their plans carefully to assess whether they deliver a turnaround in Thames Water’s operational performance and strengthen its financial resilience to the benefit of customers and the environment,” Ofwat said in a statement.
The investor group – calling itself the London & Valley Water consortium – said in addition to a 3.15 billion pound equity commitment, it would write-off 4 billion pounds of existing Class A debt, 1 billion pounds of Class B debt, alongside an effective write-off of 2.5 billion pounds of holdco debt.
Thames Water CEO Chris Weston said in a separate statement that the group’s proposals were an “important milestone” towards securing a market-led recapitalisation which would establish the foundations to improve the company’s performance.
In exchange for the write-off, Class A debt will receive a minimum of 10% of the new equity, the group’s statement added.
If the regulator accepts the plan, it will need High Court approval.
($1 = 0.7421 pounds)
(Reporting by Sarah Young;Editing by Catarina Demony and Elaine Hardcastle)
