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Thames Water, the UK’s largest water company, is facing a new rescue plan from its lenders to prevent its collapse. London & Valley Water, a consortium of financial institutions and investors, has put forward proposals to address the company’s massive debt of nearly £20bn. The plan involves writing off a third of the debt and injecting an initial £5.4bn to stabilize Thames Water’s finances.
Concerns about Thames Water’s potential collapse have been looming for over two years, prompting the government to prepare for a form of temporary nationalization. However, the investors behind the new plan assert that their proposal will rebuild the company without the need for taxpayer funding or government assistance. The company serves about a quarter of the UK population, predominantly in London and parts of southern England, and employs 8,000 individuals.
Despite being a crucial utility provider, Thames Water has been under scrutiny for its performance in recent years due to sewage discharges and pipe leaks. In May, the company received a record £122.7m fine for breaches related to sewage spills and shareholder payments. London and Valley Water emphasized that their plan is the most efficient way to revamp Thames Water, enhance water quality, and restore public confidence. Investors pledged to infuse £5.4bn into the company to bolster its finances and support future investments, conditioned on meeting performance targets.
The plan also stipulates that no dividends will be distributed to shareholders during the turnaround period, and new shareholders are restricted from selling the business before March 2030. Outstanding fines will be settled as part of the agreement. Mike McTighe, the proposed future chair of Thames Water, highlighted the commitment to injecting billions into the company from the outset to enhance environmental practices and regain public trust. The revised proposals come on the heels of a failed deal with US private equity firm KKR, signaling a challenging path forward for Thames Water as it navigates its financial woes
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