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Home » Creditors Of Thames Water Devise Backup Funding Strategies Amid Nationalisation Fears

Creditors Of Thames Water Devise Backup Funding Strategies Amid Nationalisation Fears

A group of Thames Water’s creditors are reportedly formulating backup plans for a renewed cash injection in an attempt to prevent the company from being effectively renationalised. The UK’s largest water company is grappling with an £18.7bn debt crisis and is currently in discussions with lenders for fresh funding.

According to the Financial Times, the struggling utility firm is working with financial advisors from Rothschild and reaching out to specialist infrastructure investors for an equity raise, aimed at funding investment across the water network and addressing its debt pile. However, a separate group of creditors are exploring their own rescue strategy, involving a restructuring of loan repayments, should Thames’ efforts prove unsuccessful, as reported by City AM.

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Read more: Next 15 shares halve as major client drops out This group of 90 creditors, who hold approximately £10bn of debt at Thames’ operating company, are devising their own safety net in hopes of preventing the company from entering ‘special administration’. Potential strategies for those collaborating with Akin lawyers and Jefferies bankers could resemble a partial debt-to-equity swap or a cash injection into Thames.

Reportedly involved creditors include UK asset manager Abrdn, US insurance firm Assured Guaranty, and debt fund Elliott Management.

The water company in question has been striving to stay afloat this summer, disclosing in June that its liquidity stood at £1.8 billion, which is “sufficient to fund our operations for the next 11 months”. The firm is actively developing a recovery plan alongside regulator Ofwat.

With rising interest rates, the company’s debt has become increasingly challenging to manage, and earlier this year, shareholders rejected proposals for a £500 million investment, igniting the current crisis.

Environment Secretary Steve Reed, just yesterday, dismissed the idea of nationalising water companies as a solution to pollution issues, emphasising that all necessary investments for essential sewage network improvements must originate from the private sector.

However, there are views that the special administration regime (SAR), an insolvency framework tailored to safeguard crucial public interests, might as well be tantamount to nationalisation a move that would necessitate shareholders to reimburse any government funds provided, according to the Financial Times.

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