Thames Water's 100-plus creditors have proposed a £5bn recapitalisation plan to avoid special administration, which includes £3.2bn in debt writedowns. However, the plan is criticized for being 'too greedy' as it seeks significant leniency from regulators (Ofwat and Environment Agency) on fines for environmental failings and only proposes a 20% writedown on senior debt, which is seen as insufficient for the company to achieve an investment-grade credit rating.
Thames Water’s creditors are being too greedy
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TL;DR: Key points with love ❤️Thames Water's 100-plus creditors have proposed a £5bn recapitalisation plan to avoid special administration, which includes £3.2bn in debt writedowns. However, the plan is criticized for being 'too greedy' as it seeks significant leniency from regulators (Ofwat and Environment Agency) on fines for environmental failings and only proposes a 20% writedown on senior debt, which is seen as insufficient for the company to achieve an investment-grade credit rating.
Trending- 1 Last week: Sir Jon Cunliffe’s Independent Water Commission released its interim report.
- 2 Recently: Thames Water's creditors proposed the £5bn rescue plan.
- 3 Next step: Ofwat will assess whether the plans are realistic and deliverable.
- 4 Next couple of months: Final report from the Cunliffe commission is expected.
- Potential for continued financial instability for Thames Water
- Political difficulty for the environment secretary, Steve Reed
- Potential for temporary nationalisation if the plan fails
- Ongoing debate over regulatory flexibility and creditor responsibility
- Risk of substantial financial penalties being waived
What: Thames Water's creditors propose a £5bn rescue plan, but it is criticized by regulators and analysts for being insufficient and demanding too much regulatory leniency.
When: The proposal was made recently, following an interim report last week.
Where: UK, specifically concerning Thames Water's service area in London and south-east England.
Why: To recapitalize Thames Water and avoid temporary nationalisation (special administration), while creditors aim to minimize their losses and escape substantial financial penalties.
How: Creditors propose injecting £3bn of equity and £2.25bn of debt, along with writing off approximately £6.7bn of total debt, contingent on 'regulatory support' including lower performance targets and leniency on historic and future fines.