Thames Water bidder says it is offering £1bn extra cash injection
A bidder for Thames Water has said it would inject £1bn more into the struggling utility company than rival proposals if it gained control.John Reynolds, the chief executive of the independent water retailer Castle Water, said the current plans under discussion with creditors to rebuild Thames Water’s finances does not go far enough and does not properly address its environmental crisis.Castle Water would provide a cash injection of at least £1bn over current proposals, he told the Times.“No one wants a restructuring that does not stick. The negotiations are not heading anywhere,” he said.“You cannot compromise on the pollution problem. It has to be resolved and that means changing the way the company spends its money.”Thames Water, which supplies water to about 16 million people, has been on the verge of collapse for several years as it struggles under the weight of net debt of £17bn, built up over the decades since privatisation.Its lenders, led by a group of hedge funds including the combative US firms Elliott Investment Management and Silver Point Capital, have effectively taken over Britain’s biggest water company.Their turnaround plan includes writing off billions of pounds of debt, and proposals that mean Thames Water may not fully comply with rules on pollution of England’s waterways for as long as 15 years. Reynolds told the Times that there should be “zero tolerance” of serious pollution incidents.“There has to be investment upfront without which you cannot sort it out,” he said, adding that his plans would target the ageing Mogden sewage works in west London.The extra investment, he told the paper, could be freed up by the creditors taking a greater haircut on their liabilities and with an extra injection of equity investment.The alternative to a creditor-led turnaround plan is a special administration regime, under which the water company would come under temporary government control to impose debt write-offs and find a buyer.Reynolds, who is a former investment banker and turnaround specialist, said that talks between creditors and Ofwat, the industry regulator, to restructure Thames had stalled. However, a spokesperson for the creditor group, London & Valley Water, denied that talks were not progressing and said it still aimed to gain approval for its plan by Christmas.Castle Water is a relatively small company, backed by the property empire of the billionaire Pears family, and co-founded by the Conservative party treasurer, Graham Edwards. It bought Thames Water’s non-household water and sewerage retail business in 2016.skip past newsletter promotionSign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningPrivacy Notice: Newsletters may contain information about charities, online ads, and content funded by outside parties. If you do not have an account, we will create a guest account for you on theguardian.com to send you this newsletter. You can complete full registration at any time. For more information about how we use your data see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.after newsletter promotionLate last year, Castle Water reportedly offered to inject £4bn into Thames in return for a majority stake.A spokesperson for London & Valley Water said: “It is simply not true that discussions have stalled. Thames Water needs £5bn of urgent funding from committed and experienced new investors to deliver improved outcomes for its customers and employees. We are working hard to secure a solution as quickly as possible.“The London & Valley Water plan will invest £20.5bn over the next five years to fix the foundations, upgrade the network and reduce pollution so that Thames Water can once again be a reliable, resilient and responsible company for its 16 million customers.”A Thames Water spokesperson said: “Discussions between Thames Water Utilities Ltd’s senior creditors, the London & Valley Water consortium, Ofwat, and other regulators in relation to a potential market-led solution to the recapitalisation of the company are continuing.“TWUL remains focused on delivering a recapitalisation transaction which delivers for its customers and the environment as soon as practicable.”Ofwat was approached for comment.
Castle Water says restructuring plans do not go far enough and extra funds will help resolve pollution crisisBusiness live – latest updatesA bidder for Thames Water has said it would inject £1bn more into the struggling utility company than rival proposals if it gained control.John Reynolds, the chief executive of the independent water retailer Castle Water, said the current plans under discussion with creditors to rebuild Thames Water’s finances does not go far enough and does not properly address its environmental crisis. Continue reading...
A bidder for Thames Water has said it would inject £1bn more into the struggling utility company than rival proposals if it gained control.
John Reynolds, the chief executive of the independent water retailer Castle Water, said the current plans under discussion with creditors to rebuild Thames Water’s finances does not go far enough and does not properly address its environmental crisis.
Castle Water would provide a cash injection of at least £1bn over current proposals, he told the Times.
“No one wants a restructuring that does not stick. The negotiations are not heading anywhere,” he said.
“You cannot compromise on the pollution problem. It has to be resolved and that means changing the way the company spends its money.”
Thames Water, which supplies water to about 16 million people, has been on the verge of collapse for several years as it struggles under the weight of net debt of £17bn, built up over the decades since privatisation.
Its lenders, led by a group of hedge funds including the combative US firms Elliott Investment Management and Silver Point Capital, have effectively taken over Britain’s biggest water company.
Their turnaround plan includes writing off billions of pounds of debt, and proposals that mean Thames Water may not fully comply with rules on pollution of England’s waterways for as long as 15 years. Reynolds told the Times that there should be “zero tolerance” of serious pollution incidents.
“There has to be investment upfront without which you cannot sort it out,” he said, adding that his plans would target the ageing Mogden sewage works in west London.
The extra investment, he told the paper, could be freed up by the creditors taking a greater haircut on their liabilities and with an extra injection of equity investment.
The alternative to a creditor-led turnaround plan is a special administration regime, under which the water company would come under temporary government control to impose debt write-offs and find a buyer.
Reynolds, who is a former investment banker and turnaround specialist, said that talks between creditors and Ofwat, the industry regulator, to restructure Thames had stalled. However, a spokesperson for the creditor group, London & Valley Water, denied that talks were not progressing and said it still aimed to gain approval for its plan by Christmas.
Castle Water is a relatively small company, backed by the property empire of the billionaire Pears family, and co-founded by the Conservative party treasurer, Graham Edwards. It bought Thames Water’s non-household water and sewerage retail business in 2016.
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Late last year, Castle Water reportedly offered to inject £4bn into Thames in return for a majority stake.
A spokesperson for London & Valley Water said: “It is simply not true that discussions have stalled. Thames Water needs £5bn of urgent funding from committed and experienced new investors to deliver improved outcomes for its customers and employees. We are working hard to secure a solution as quickly as possible.
“The London & Valley Water plan will invest £20.5bn over the next five years to fix the foundations, upgrade the network and reduce pollution so that Thames Water can once again be a reliable, resilient and responsible company for its 16 million customers.”
A Thames Water spokesperson said: “Discussions between Thames Water Utilities Ltd’s senior creditors, the London & Valley Water consortium, Ofwat, and other regulators in relation to a potential market-led solution to the recapitalisation of the company are continuing.
“TWUL remains focused on delivering a recapitalisation transaction which delivers for its customers and the environment as soon as practicable.”
Ofwat was approached for comment.
