- Creditors of Thames Water are seeking talks with Andy Burnham as the prospect of nationalisation looms.
- Lenders are preparing a legal challenge if a Burnham-led government attempts to nationalise Thames Water.
- Thames Water is currently about £20bn in debt, with lenders proposing to write off nearly half of that and inject new cash.
- Burnham has indicated that nationalisation could be a possibility, stating that there should be a review of Thames Water.
- The existing lenders have made it clear they would join bidders for Thames Water if placed in a special administration regime (SAR).
- Under either a SAR or full nationalisation, Thames Water's ongoing problems could leave taxpayers with a bill of up to £2bn.
- London & Valley Water (L&VW), a consortium of investors, is open to government involvement but not public ownership.
Thames Water's creditors are bracing for potential nationalisation as they prepare a legal challenge against a Burnham-led government. The company, which serves 16 million customers, is grappling with £20 billion in debt and a projected £2 billion cash shortfall by next year.12345
The lenders have proposed a deal to write off £9.4 billion of Thames Water's debt and inject £3.35 billion in cash, but they seek leniency from future pollution fines. This proposal was previously rejected by the government as 'weak' and detrimental to consumers and the environment.
Sources indicate that if nationalisation occurs, creditors would demand full payment of outstanding debts, potentially leaving the government with a multi-billion-pound bill. Emma Reynolds has voiced concerns about customers bearing the financial burden of the company's failures.
The consortium of lenders, including London & Valley Water, is open to government involvement but not public ownership. They are keen to collaborate with Burnham to enhance public control over operations. Mike McTighe, leading the governance overhaul, stated, “We are keen to meet new ministers as soon as possible to discuss how we can work together in the best interests of customers.”8
Burnham's administration may consider placing Thames Water into a special administration regime (SAR), a temporary public ownership model, which could shift operational costs to taxpayers. A Burnham ally emphasized that if taxpayers are to shoulder costs, they must receive control to ensure the company’s stability.67
The future of Thames Water remains a pressing issue for Burnham, with creditors ready to pursue a solvent restructuring to avoid taxpayer-funded administration and recover as much as possible.
“London & Valley Water, the consortium holding £17bn of Thames' £21bn debt, has hired litigation firm Pallas Partners as a precautionary measure against nationalisation. Mike McTighe, likely to become chair if the rescue deal is approved, said the group wants to enhance public control of operations.”
The Guardian
