LONDON – The British utility firm, Thames Water, announced on Tuesday that a prospective rescue offer from a US investment company has been withdrawn. Thames Water, which is burdened with debt, revealed that private equity firm KKR has opted not to proceed with their offer, and consequently, the company’s preferred bidder status has lapsed. Following this development, Thames Water is in discussions with “senior creditors” to explore alternative strategies for raising necessary funds.
Arian Montague, the chairman of Thames Water, expressed disappointment over the day’s news but remained optimistic about the future. Montague emphasized the importance of securing a sustainable recapitalization of the company, highlighting its benefits for all stakeholders and the ongoing collaboration with creditors to achieve this aim.
Faced with approximately 19 billion pounds ($26 billion) in debt, the company, which supplies water and sewage services to 16 million people across London and its surrounding areas, has been on the brink of insolvency. In March, Thames Water obtained court approval for an emergency fund of 3 billion pounds aimed at preventing it from falling under government administration.
With KKR retracting its proposal, the probability of the British government stepping in to nationalize Thames Water, even if just for a temporary period, has increased. Environment Secretary Steve Reed reassured the public, stating that while the government is keeping a close watch on the situation, “Thames (Water) itself remains stable.”
Thames Water has faced widespread criticism across the UK due to incidents where sewage contamination has polluted lakes, rivers, and beaches. These spillages have coincided with rising water and sewage service bills, as companies attempt to modernize outdated systems and address challenges associated with climate change and growing population demands.
Recently, the utility faced a hefty fine of nearly 123 million pounds ($166 million) for discharging sewage into water bodies. This penalty came in the wake of the company distributing dividends to its shareholders.
The controversy has sparked backlash from both consumers and politicians who argue that Thames Water’s financial troubles are self-inflicted. Critics cite lavish dividend payments to investors and high executive salaries as the company neglected investments in crucial infrastructure like pipelines, pumps, and reservoirs.
In defense, executives from Thames Water pointed to regulators, blaming them for keeping bills excessively low for prolonged periods. This, they argue, deprived the company of essential funds needed for significant upgrades and improvements.