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Numerous bids have been submitted to Thames Water, the UK’s largest water company, as it faces financial struggles and warns of the possibility of running out of cash by 2022. Conservative Party treasurer Graham Edwards’ Scottish utility firm Castle Water is among the bidders, and infrastructure investor Covalis, supported by French firm Suez, has also made an offer for the company. Brookfield Asset Management, the Canadian investment giant chaired by former Bank of England governor Mark Carney, and Hong Kong’s CKI are among the other potential buyers.
Thames Water has reported debts set to increase to nearly £18bn by March next year, and customers face the possibility of a steep rise in their water bills, adding 53% more, up from an initial request of 23%, between 2025 and 2030. Thames’ creditors have secured a £3bn loan to be released in two tranches, with the first £1.5bn likely to be released in February. Thames requires at least £4bn in new equity, which does not have to be repaid, and both Castle Water and Covalis have plans to list Thames on the stock exchange.
Bidders are seeking clarity on how much of Thames’ £18bn debt will be written off and how much the company will be allowed to charge customers over the next five years. This will be contingent on Ofwat’s announcement of its final determination on bills for the next five-year period on 19 December. Of the six reported bidders, some have emerged publicly, for example, Castle Water and Covalis, but Thames has not commented. The possibility of selling the ailing company will remain uncertain until the aforementioned factors are addressed.
When Thames Water was privatised in 1989, it didn’t have any debt, though it has since borrowed heavily. The majority of its debt was accrued when Macquarie, an Australian infrastructure bank, owned the company, with the debt reaching more than £10bn when the company was sold in 2017. With more than half of its debt set to accumulate interest payments that rise with inflation, many see London-based Thames Water’s struggle as a signal of the difficulties water utilities may encounter over the next few years
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