Blow to Thames Water as KKR pulls out of equity raise
Thames Water’s battle to escape nationalisation has suffered a hammer blow after KKR withdrew its bid to acquire an equity stake in the business.
The US private equity giant had been selected as a preferred partner for the debt-laden utility business as part of its efforts to raise funds, with KKR having “prepared detailed plans, including turnaround plans which have been shared with the company.” It was expected to acquire a stake worth as much as £4bn.
But KKR has now pulled out of any deal, a move which Thames Water described as “disappointing.”
The business had sought to secure an equity raise by the end of June, a deadline which it now looks unlikely to achieve. KKR had been selected as the preferred bidder at the end of March.
“KKR has indicated that it will not be in a position to proceed, and its preferred partner status has now lapsed,” Thames Water said.
News is ‘disappointing’ for Thames Water
Thames Water Chairman Sir Adrian Montague said: “Whilst today’s news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.
“The company will therefore progress discussions on the senior creditors’ plan with Ofwat and other stakeholders. The board would like to thank the senior creditors for their continuing support.”
Thames Water has been struggling to avoid entering administration after struggling to manage a £20bn debt pile.
To add to its woes, last week the ailing utilities business was handed a £123m fine for breaching rules over sewage spills and shareholder payouts, the largest of its kind issued by water regulator Ofwat.
In March, the firm won approval from the court of appeal for a £3bn emergency debt bailout from existing creditors as it fought to swerve an immediate collapse into a special administration regime, a form of temporary nationalisation.
Ofwat had agreed to Thames’s request for an 18-week delay for its referral to the competition regulator over its ability to increase its bills, in order to help its efforts to secure a buyer.
“The company remains focused on putting Thames Water on a more stable financial foundation, implementing its turnaround plan and delivering a market led solution that is in the best interests of customers, UK taxpayers and the wider economy,” Thames Water said.